ALMS 10-K & 10-Q changes, risk factors and insider trading

Investing in our common stock involves a high degree of risk. Before deciding to invest in shares of our common stock, you should carefully consider the risks described below, together with the other information contained in this Annual Report on Form 10-K, including in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our audited financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. We cannot assure you that any of the events discussed below will not occur. These events could adversely impact our business, financial condition, results of operations and prospects. If that were to happen, the trading price of our common stock could decline, and you could lose all or part of your investment.

We are a clinical stage biopharmaceutical company with a limited operating history on which to base your investment decision. We have no product candidates approved for commercial sale and have not generated any revenue. Biopharmaceutical product development is a highly speculative undertaking. It entails substantial upfront capital expenditures and significant risk that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval or become commercially viable.

Our most advanced candidate is ESK-001,envu, an oral, small molecule allosteric inhibitor of TYK2. We are currently conducting twoa parallelPhase 2 open-label extension trial, as well as a Phase 3 clinicalLTE trialstrial of ESK-001envu in PsO and a Phase 2b clinical trial of ESK-001envu in SLE. In addition, we are advancing A-005, an investigational CNS penetrant allosteric inhibitor of TYK2 that has a potential application in MSmultiple sclerosis and other neuroinflammatory and neurodegenerative diseases, currently in Phase 1 clinical development. Our ability to achieve profitability in the future is dependent upon obtaining regulatory approval for and successfully commercializing our most advanced candidate, ESK-001,envu, either alone or with third parties. However, our operations may not be profitable even if ESK-001envu is successfully developed, approved and thereafter commercialized.

We have and will continue to incur significant development and other expenses related to our research and clinical development programs and ongoing operations. For the years ended December 31, 20242025 and 2023,2024, our net losses were $294.2$243.3 million and $155.0$294.2 million, respectively. As of December 31, 2024,2025, we had an accumulated deficit of $658.6$901.9 million. Substantially all of our losses have resulted from expenses incurred in connection with the acquisition and development of our pipeline and from general and administrative costs associated with our operations. We expect to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our development of our product candidates. Likewise, we expect to incur substantial costs and expenses in connection with completing the Merger and integrating ACELYRIN’s business. While we expect that a certain level of transaction and integration costs and expenses would be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of its integration costs and expenses, including any ACELYRIN liabilities that arise, or become known, following the Closing. Many of the costs and expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and integration costs and expenses could be greater or could be incurred over a longer period of time than we currently expect.

Even if we succeed in commercializing one or more product candidates, we expect to incur substantial development costs and other expenditures to develop and market additional product candidates. We may also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue or raise additional capital. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity (deficit) and our working capital.

We could also encounter delays if a clinical trial is suspended, put on clinical hold or terminated by us, the IRBs or ethics committees of the institutions in which such trials are being conducted, the FDA, or other comparable foreign regulatory authorities, or if a clinical trial is recommended for suspension or termination by the Data Safety Monitoring Board for such trial. A suspension, clinical hold or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, failure by our contract research organizations (“CROs”) or clinical trial sites to perform in accordance with GCPs, or applicable regulatory guidelines in other countries, inspection of the clinical trial operations or trial site by the FDA or other comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results. For example, we discontinued our proof-of-concept Phase 2a clinical trial of ESK-001envu in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with ESK-001’senvu’s safety profile in psoriasis patients. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Further, the FDA or other comparable foreign regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials.

Enrollment and retention of participants in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control, including difficulties in identifying patients, the availability of competitive products,products and significant competition for recruiting participants in clinical trials.

Participant enrollment, a significant factor in the timing of clinical trials, is affected by many conditions, including the size and nature of the patient population, the number and location of clinical sites we enroll, the proximity of participants to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the inability to obtain and maintain participant consents, the risk that enrolled participants will drop out before completion, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs or biologics that may be approved for the indications being investigated by us. Risks related to patient enrollment are heightened in longer clinical trials, including the 48-week trial period contemplated by our ongoing Phase 2b clinical trial of ESK-001envu in SLE. In particular, this trial has been and may continue to be challenging to enroll due to the fact that patients must be experiencing active disease at the time of screening to be eligible for enrollment. In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same areas as our product candidates, and this competition will reduce the number and types of participants available to us, because some participants who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors, or to use currently marketed therapies. Additionally, participants, including participants in any control groups, may withdraw from the clinical trial if they are not experiencing improvement in their underlying disease or condition or if they experience other difficulties or issues. Additionally, we could encounter delays if treating clinicians encounter unresolved ethical issues associated with enrolling participants in clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles.

We have in the past experienced and expect to continue to experience participant withdrawals or discontinuations from our trials. For example, as long-term treatment with ESK-001envu continues to be evaluated in our STRIDE OLE, ONWARD3 LTE study and LUMUS Part B OLE, we expect to see discontinuation rates rise over time. Withdrawal of participants from our clinical trials may compromise the quality of our data. Even if we are able to enroll a sufficient number of participants in our clinical trials, delays in enrollment or small population size may result in increased costs or may affect the timing or outcome of our clinical trials. Any of these conditions may negatively impact our ability to complete such trials or include results from such trials in regulatory submissions, which could adversely affect our ability to advance the development of our product candidates.

We will require substantial additional financing to achieve our goalsgoals, and failure to obtain additional capital when needed, or on acceptable terms to us, could cause us to delay, limit, reduce,reduce or terminate our product development or future commercialization efforts.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements. For example, in March 2026, we entered into a Controlled Equity OfferingSM Sales Agreement (as amended from time to time, the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), pursuant to which we may offer and sell, from time to time through Cantor, at our option, shares of our common stock having an aggregate offering price of up to $300.0 million. To the extent that we raise additional capital through the sale of equity or convertible debt securities, including pursuant to sales under the Sales Agreement, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our common stock. Any future debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness. Such restrictions could adversely impact our ability to conduct our operations and execute our business plan. We could also be required to seek collaborators for product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.

As a result of our recurring losses from operations and recurring negative cash flows from operations, our management concluded that there is a substantial doubt about our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern. See the risk factor below titled, “As a result of our history of losses and negative cash flows from operations, our consolidated financial statements contain a statement regarding a substantial doubt about our ability to continue as a going concern.” Based on our current operating plan, we will need to raise additional financing to continue our products’ development for the foreseeable future, and until we become profitable.profitable, if ever. Any additional fundraising efforts may divert our management from our day-to-day activities, which may adversely affect our ability to develop and commercialize product candidates. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to obtain funding when and as needed on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations. Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.

Once initiated, clinical testing can take many years to complete, and its outcome is inherently uncertain. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials and results in one indication may not be predictive of results to be expected for the same product candidate in another indication. For example, notwithstandingwhile extensivewe preclinicalplan testingto demonstratingcontinue thatto A-005 can penetrateevaluate the CNS,development program for lonigutamab, which was ACELYRIN’s lead product candidate, and its potential differentiation in a capital efficient manner, lonigutamab’s potential to improve on the safety and side-effect profile of the sole currently-approved therapy in the United States for the treatment of TED is unproven. In particular, if lonigutamab is shown to have similar adverse events or side effects as the existing therapy, or other safety or tolerability concerns, such as hearing impairment, then our clinicalopportunity trialsto disrupt the current standard of A-005care in TED will be limited or precluded altogether. In this regard, ACELYRIN observed certain adverse events in its Phase 2 clinical trial of lonigutamab including, without limitation, headache, tinnitus and injection site reactions. If we determine that, whether due to emerging clinical data or otherwise, any of our drug candidates will be unable to improve on the current standard of care in the indications we are pursuing, we may showdecide thatto itmodify, cannotsuspend penetrateor theabandon humansuch CNSdevelopment as fully as was observed in preclinical testing.program. Differences in trial design between early-stage clinical trials and later-stage clinical trials make it difficult to extrapolate the results of earlier clinical trials to later clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unfavorable safety profiles, notwithstanding promising results in earlier trials, and we have experienced and may experience setbacks in our programs in the future. For example, we discontinued our proof-of-concept Phase 2a clinical trial of ESK-001envu in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with ESK-001’senvu’s safety profile in psoriasis patients. Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain regulatory approval of such product candidates.

In addition, we have historically leveraged our extensive analyses of immune-relevant genome-wide association studyGWAS results from both the public domain and the UK Biobank biomedical resource to identify the right therapeutic target on which to focus our preclinical and clinical development efforts. If our access to GWAS results from the public domain or the UK Biobank biomedical resource were to be restricted, including as a result of any potential future legislative policies or regulations that may seek to restrict the sharing of genetic data, our ability to efficiently identify additional therapeutic targets may be limited.

Our clinical trials may reveal SAEs and AEs and may result in a safety or tolerability profile that could delay or prevent regulatory approval or market acceptance of ESK-001,envu, A-005 or any future product candidates.

We have observed SAEs and AEs in our trials of ESK-001,envu, and as more patients become exposed to ESK-001envu over longer periods of time, we expect to see additional SAEs and AEs emerge. Further, long term treatment with ESK-001envu continues to be evaluated in an OLE trial, and additional AEs and SAEs will continue to accumulate. Certain conditions occur more frequently in patients with psoriasis compared to the general population. Examples include obesity, cardiovascular disease, psoriatic arthritis,arthritis and depression. Immune modulating treatments including ESK-001envu may result in increasing susceptibility to various infections, including serious or life-threatening infections, and there is a theoretical risk with immune-modulating agents that dampening immune responses could increase the risk of malignancies.

Other TYK2 inhibitors, such as deucravacitinib (marketed as Sotyktu), which is approved for the treatment of adults with PsO, have shown AEs such as hypersensitivity reactions, infections, tuberculosis, malignancy and rhabdomyolysis. The label for deucravacitinib includes a warning concerning the potential for JAK-related AEs, such as cardiovascular and thrombotic events. We have observed, and expect that additional AEs and SAEs consistent with known side effects of TYK2 inhibition may emerge, in our ongoing and future clinical trials of ESK-001.envu.

The most common AEs observed in our Phase 2 STRIDE and OLE PsO trials that were considered related to ESK-001envu treatment by the principal investigator include headaches, upper respiratory tract infections, nasopharyngitis, rash and nausea. As of December 31, 2024, there were four SAEs from the STRIDE OLE trial that were considered related to ESK-001 treatment by the investigator: one serious infection case (peritonsillar abscess), two malignancy cases (non-small cell lung cancer, renal cell carcinoma), and one arthritis case. We continue to evaluate the safety profile of ESK-001envu in our ongoing Phase 2 OLE and Phase 3 trials.

If AEs, SAEs or other side effects are observed in any of our ongoing or future clinical trials that are atypical of, or more severe than, the known side effects of the respective class of agents that each of our product candidates are a part of, we may have difficulty recruiting participants to our clinical trials, participants may drop out of our trials, or we may be required to abandon those trials or our development efforts of one or more product candidates altogether. If such effects are more severe or less reversible than we expect, or not reversible at all, we may decide or be required to perform additional studies or to halt or delay further clinical development of ESK-001,envu, A-005 or any future product candidates, which could result in the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.

If ESK-001envu fails to demonstrate an acceptable benefit/risk profile, versus current approved therapies or others in clinical development, then our opportunity to disrupt the current standard of care may be limited. AEs and SAEs that emerge during clinical investigation of or treatment with ESK-001,envu, A-005, or any future product candidates have in the past been and may in the future be deemed to be related to our product candidates. This may require longer and more extensive clinical development, or regulatory authorities may increase the amount of data and information required to approve, market, or maintain ESK-001,envu, A-005 or any future product candidates and could result in warnings and precautions in our product labeling or a restrictive REMS or comparable foreign strategies. This may also result in an inability to obtain approval of ESK-001,envu, A-005 or any future product candidates. We, the FDA or other comparable foreign regulatory authorities, or an IRB or ethics committee, may suspend clinical trials of a product candidate at any time for various reasons, including a belief that participants in such trials are being exposed to unacceptable health risks or adverse side effects. Some potential product candidates developed in the biotechnology industry that initially showed promise in early-stage trials have later been found to cause side effects that prevented their further development. Even if the side effects do not preclude the product candidate from obtaining or maintaining regulatory approval, undesirable side effects, like those mentioned above, may limit market acceptance of the approved product due to its tolerability versus other therapies. Any of these developments could materially harm our business, financial condition, results of operations and prospects.

Third-party payors increasingly are challenging prices charged for biopharmaceutical products and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when equivalent generic drugs, biosimilars or less expensive therapies are available. It is possible that a third-party payor may consider our product candidates, if approved, as substitutable and only be willing to cover the cost of the alternative product. Even if we show improved efficacy, safety or improved convenience of administration with ESK-001,envu, A-005 or any of our future product candidates, if approved, pricing of competitive products may limit the amount we will be able to charge for our product candidates, if approved. Third-party payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in our product candidates. In some cases, when new competitor generic and biosimilar products enter the market, there are mandatory price reductions for the innovator compound. In other cases, payors employ “therapeutic category” price referencing and seek to lower the reimbursement levels for all treatments in the respective therapeutic category. Additionally, new competitor brand drugs can trigger therapeutic category reviews in the interest of modifying coverage and/or reimbursement levels. The potential of third-party payors to introduce more challenging price negotiation methodologies could have a negative impact on our ability to successfully commercialize our product candidates, if approved.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. This discussion and analysis and other parts of this Annual Report on Form 10-K contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of several factors, including those set forth under Part I, Item 1A. “Risk Factors” in this Annual Report on Form 10-K. See also see the section titled “Special Note Regarding Forward-Looking Statements.”

Since our inception, we have devoted substantially all of our efforts to organizing our company, hiring personnel, business planning, acquiring and developing our product candidates, performing research and development, conducting preclinical studies and clinical trials, establishing and protecting our intellectual property portfolio, raising capitalcapital, integrating the acquired ACELYRIN business and personnel, and providing general and administrative support for these activities. We do not have any products approved for sale and have not generated any revenue from product sales. We expect to continue to incur significant and increasing expenses and increasing substantial losses for the foreseeable future as we continue our development of and seek regulatory approvals for our product candidates and commercialize any approved products, seek to expand our product pipeline and invest in our organization.expanded organization following the ACELYRIN Merger. Our ability to achieve and sustain profitability will depend on our ability to successfully develop, obtain regulatory approval for and commercialize our product candidates. There can be no assurance that we will ever earn revenue or achieve profitability, or if achieved, that the revenue or profitability will be sustained on a continuing basis.

We have incurred significant operating losses and negative cash flows since our inception. Our net loss for the years ended December 31, 20242025 and 20232024 was $294.2$243.3 million and $155.0$294.2 million, respectively. As of December 31, 2024,2025, we had an accumulated deficit of $658.6$901.9 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development efforts, including acquisitions of in-process research and development assets, and, to a lesser extent, from general and administrative costs associated with our operations. Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of acquisition of any new product candidates, the timing of our preclinical studies and clinical trials, our other research and development expenses, and the timing and amount of any milestone or royalty payments due under our existing or future license agreements. In addition, weWe have incurred and will continue to incur additional costs associated with operating as a public company, including significant legal, audit, accounting, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer liability insurance costs, investor and public relations costs, and other expenses that we did not incur as a private company.expenses.

We do not have any products approved for sale and have not generated any revenue from product sales since our inception. We do not expect to generate revenue from any product candidates that we develop until we obtain regulatory approval for one or more of such product candidates and commercialize our products or enter into collaboration agreements with third parties. Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we may never achieve or sustain profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financings, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as and when needed, or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

We do not currently own or operate any manufacturing facility. We rely on CMOs to produce our product candidates in accordance with the FDA current cGMP regulations for use in our clinical studies. We have entered into development and manufacturing agreements with various CMOs relating to process development, manufacturing of drug substance and drug product, and quality testing of our product candidates. We expect to rely on our CMOs in the future for the manufacturing of our product candidates in order to expedite readiness for future clinical trials. Most of these CMOs have demonstrated capability in preparation of materials for commercialization. Additionally, we may decide to build our own manufacturing facility in the future to provide us with greater flexibility and control over our clinical or commercial manufacturing needs.

Given our stage of development, we do not yet have a fully established marketing or sales organization or commercial infrastructure; however, we have begun building foundational capabilities and intend to buildcontinue expanding the necessary sales, marketing and commercialization capabilities and infrastructure over time as our product candidates advance through clinical development.development and regulatory approval. We expect to spend a significant amount in commercial development and marketing costs prior to obtaining regulatory and marketing approval of one or more of our product candidates.

On June 27, 2024, our Registration Statement on Form S-1 for our IPO was declared effective, and, on July 1, 2024, we completed our IPO, pursuant to which we issued and sold 13,125,000 shares of our common stock at $16.00 price per share to the public. Net proceeds from the IPO were $193.3 million, after deducting underwriting discounts and commissions and other offering costs totaling $16.7 million. In connection with the IPO, on July 17, 2024, an existing investor and a holder of more than 5% of our capital stock, purchased an additional 2,500,000 shares of our common stock at the IPO price per share for total gross and net proceeds of $40.0 million in a private placement transaction (the “Concurrent Private Placement”).

Our business and results of operations may be affected by worldwide economic conditions, which may continue to be impacted by global macroeconomic challenges and uncertainty in the markets, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks and uncertainty about economic and geopolitical stability (for example, related to the ongoingevolving conflicts in UkraineU.S. and Israelex-U.S. andtariff the surrounding areaslandscape). Further, the United States and other countries have imposed and may continue to impose new trade restrictions and export regulations, have levied tariffs and taxes on certain goods, and could continue to significantly increase tariffs on a broad array of goods. For example, in April 2025, the currentU.S. government imposed a 10% baseline global tariff and in August 2025, the United States imposed higher “reciprocal” tariffs on numerous other territories, including EU member states and South Korea. While the U.S. Supreme Court recently issued a ruling invalidating tariffs imposed by the Trump administration hasunder proposedthe orInternational enactedEmergency Economic Powers Act, other tariffs imposed by the U.S. government remain in place, including the 10% global tariff imposed by the Trump administration under Section 122 of the Trade Act of 1974 following the U.S. Supreme Court decision. Moreover, the Bureau of Industry and substantialSecurity, changesU.S. Department of Commerce, has initiated an investigation to tradedetermine policies,whether whichpharmaceutical could adversely affect our business,ingredients, including imposingfinished tariffsdrug onproduct, certainmanufactured foreignoutside products,the mostUnited recentlyStates frompose China,a thatnational havesecurity risk and mayshould resultbe insubject retaliatoryto tariffsadditional on U.S. goods and services.tariffs. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. Moreover, negative macroeconomic conditions could adversely impact our ability to obtain financing in the future on terms acceptable to us, or at all. To date, the macroeconomic trends discussed above have not had a material adverse impact on our business, financial condition or results of operations. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.

Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.expenses, and include ACELYRIN’s operations subsequent to the Closing Date.

We have acquired and may continue to acquire the rights to develop and commercialize new product candidates. Upfront andpayments milestonerelated to acquired IPR&D assets are recognized as expenses when we determine that the assets acquired do not have alternative future uses. Milestone payments are accrued for and expensed as in process research and development (“IPR&D”) assets expense when the achievement of the milestone is probable up to the point of regulatory approval and, absent obtaining such approval, have no alternative future use. Milestone payments made after a product’s regulatory approval will be capitalized and amortized over the remaining useful life of the related product.

We expense research and development costs as incurred. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as research and development prepaid expenses in our consolidated balance sheets. The capitalized amounts are recognized as expense as the goods are delivered or services are performed. Since our inception and through December 31, 2024,2025, our external research and development expenses were primarily related to the discovery and advancement of programs under our TYK2 platform, including our two most advanced product candidates, ESK-001envu and A-005. We use internal resources primarily for managing our research, process development, manufacturing and clinical development activities. In particular, with respect to internal costs, we deploy our personnel across all of our research and development activities as our employees work across multiple programs, and therefore the costs cannot be allocated to a particular product candidate or research program.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We anticipate that our total research and development expenses in 2025 will increase compared to 2024 due primarily to higher costs for the development of our product candidates and ACELYRIN research and development activities, if the Merger closes.

We expect that our general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates and facility occupancy costs, and support of general operations and ACELYRIN general and administrative activities, if the Merger closes.costs. We also expect anto increasecontinue inincurring costs associated with being a public company, including costs related to accounting, audit, legal, consulting fees, regulatory and tax-related services associated with maintaining compliance with applicable Nasdaq and SEC requirements, additional director and officer insurance costs, and investor and public relations costs.

Other income (expense) consists primarily of interest income, including amortization of premiums and accretion of discounts on marketable securitiessecurities, gain on bargain purchase and change in fair value of derivative liability.

In May 2023 and in March 2024, in connection with our redeemable convertible preferred stock financings, we issued options to purchase additional shares of redeemable convertible preferred stock at a specified price, which were accounted for as derivative liabilities. Changes in fair value of these derivative liabilities were included in the other income (loss) in the consolidated statement of operations and comprehensive loss for each reporting period until the derivatives were exercisedsettled orin expired.May 2024.

Results of Operations and Comprehensive Loss

Milestones related to previously acquired IPR&D assets for the year ended December 31, 2024, included a $23.0 million clinical milestone payment made in connection with the FronThera Acquisition. No clinical milestones were achieved or probable during the year ended December 31, 2023.

CRO, CMO and clinical trials expenses increased by $82.5$79.7 million, to $231.1 million for the year ended December 31, 2025, from $151.4 million for the year ended December 31, 2024, from $69.0 million for the year ended December 31, 2023, primarily due to an increase in clinical trial and CRO expenses duerelated to increasedthe activitiesprogression related toof our clinical trials for ESK-001envu and A-005other andprograms, anincluding increasecosts to support acceleration of clinical trial activities for our Phase 3 ONWARD clinical program, partially offset by a decrease in CMO expenses associated with manufacturing of clinical supplies to support our trials.

Professional consulting services expenses increased by $6.0$11.0 million, to $30.2 million for the year ended December 31, 2025, from $19.2 million for the year ended December 31, 2024, from $13.2 million for the year ended December 31, 2023, primarily due to increasedservices to support for our clinical trialstrial for ESK-001, A-005envu and other research programs.

Other research and development costs decreased by $1.2 million, to $9.1 million for the year ended December 31, 2025, from $10.3 million for the year ended December 31, 2024, from $11.5 million for the year ended December 31, 2023, primarily due to the timing of preclinical studies to support our clinical trials for ESK-001 and A-005.studies.

Personnel-related costs increased by $14.7$45.9 million, to $92.7 million for the year ended December 31, 2025, from $46.8 million for the year ended December 31, 2024, from $32.1 million for the year ended December 31, 2023, primarily due to increasedan increase in research and development headcount and severance costs related to the ACELYRIN Merger, and included an increase in stock-based compensation expense of $5.4$11.2 million asresulting afrom resultequity ofawards assumed in the ACELYRIN Merger and additional stock options granted, which included awards granted under the 2024 POP.granted.

Facilities and overhead costs increased by $2.9$8.0 million, to $22.9 million for the year ended December 31, 2025, from $14.9 million for the year ended December 31, 2024, from $12.0 million for the year ended December 31, 2023, primarily due to an increase in software license costs and depreciationfacility expenses allocated to research and development activities.activities and an increase in information technology costs.

During the years ended December 31, 20242025 and 2023,2024, our external research and development expenses were primarily related to the clinical development of our ESK-001envu program and, to a lesser extent, advancingthe ourlonigutamab and A-005 productdevelopment candidateprograms and our research pipeline. The following table summarizes our external costs by program for the years ended December 31, 2024 and 2023 (in thousands):

Personnel-related expenses increased by $9.0$28.8 million, to $48.9 million for the year ended December 31, 2025, from $20.0 million for the year ended December 31, 2024, from $11.0 million for the year ended December 31, 2023, primarily due toan increasedincrease in general and administrative headcount and severance costs related to the ACELYRIN Merger, and included an increase in stock-based compensation expense of $5.5$12.9 million asresulting afrom resultequity ofawards assumed in the ACELYRIN Merger and additional stock options granted, which included awards granted under the 2024 POP.granted.

Professional consulting services expenses increased by $5.4$28.1 million, to $41.4 million for the year ended December 31, 2025, from $13.3 million for the year ended December 31, 2024, from $7.9 million for the year ended December 31, 2023, primarily due to the ACELYRIN Merger transaction costs, a loss reserve and an increase in consultingconsulting, audit and tax, legal and accounting services to support our growth, public company requirements,requirements and business development and market analysis, and an increase in recruiting costs.development.

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. To date, we have primarily funded our operations withthrough proceedsthe from salesissuance of sharescommon ofstock, including in connection with the ACELYRIN Merger, our common stockIPO and Concurrent Private Placement, the issuance of redeemable convertible preferred stock and the issuance of convertible promissory notes in private placements and, moremost recently, from our IPOpublic andoffering Concurrentof Privatecommon Placement.stock In July 2024, wewhich closed ouron IPOJanuary and9, the Concurrent Private Placement and received net proceeds of $193.3 million and $40.0 million, respectively. See “—Recent Development” above for a discussion of the proposed Merger.2026.

Based on our current operating plan, our existing cash, cash equivalents and marketable securities of $288.3$308.5 million as of December 31, 2024,2025, as well as net proceeds of $324.4 million, after deducting underwriting discounts and commissions, from our public offering of common stock, which closed on January 9, 2026, will not be sufficient to meet our operating and capital requirements for at least 12 months from the date of issuance of our consolidated financial statements included in Part II,II. Item 8.8 of this Annual Report on Form 10-K and there is substantial doubt about our ability to continue as a going concern.10-K. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital. We will need to raise significant additional capital to fund ongoing research and development activities and maintain future operations. We plancontinuously monitor and, where necessary, may reduce our operating expenses in response to monitorour expensesclinical development progress and mayour ability and need to raise additional capital through a combination of public and private equity, debt financings, strategic alliances, and licensing arrangements. For example, should any of our ongoing trials not meet our clinical development objectives, we may scale back or discontinue related activities and reallocate our working capital to extend our ability to meet our operating and capital requirements. Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts, needed, on the terms which are favorable, we could be required to delay, scale back, or abandon some or all of our planned development programs and other operations, which could materially harm our business, financial condition and results of operations.

Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant and increasing expenses for the foreseeable future as we continue to advance our product candidates, expand our corporate infrastructure, including the costs associated with being a public company, further our research and development initiatives for our product candidates, and incur costs associated with potential commercialization. In addition, we anticipate committing substantial capital resources to the transactions contemplated by the Merger Agreement and, assuming the consummation of those transactions, the anticipated integration and development activities related to the acquired ACELYRIN business. We are subject to all of the risks typically related to the development of new drug candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.

Net cash used in operating activities for the year ended December 31, 2024,2025 was due to our net loss for the period of $294.2$243.3 million,million partially offset byand changes in non-cash items totaling $24.4$144.0 millionmillion, andpartially offset by changes in operating assets and liabilities of $14.8$17.8 million. Non-cash items included $19.5$187.9 million related to stock-basedgain compensationon expense,bargain $5.4purchase millionin relatedconnection towith the changeACELYRIN in fair value of the derivative liabilityMerger and $3.2 million related to depreciation and amortization, partially offset by net accretion of discounts on marketable securities of $3.7$5.3 million.million, partially offset by $43.5 million related to stock-based compensation expense, $3.5 million related to depreciation and amortization, $1.7 million related to non-cash lease expense and $0.5 million related to impairment of long-lived assets. The changes in operating assets and liabilities primarily included ana increasedecrease of $18.2$17.2 million in research and development accrued expenses, an increase of $8.5 million in accounts payable and a $3.5 million increase in other accruedprepaid expenses and currentother liabilities,assets, partiallya offset by an increasedecrease of $10.8$11.5 million in research and development prepaid expenses, an increase of $2.9$6.0 million in other prepaidaccrued expenses and current liabilities, an increase of $4.1 million in deferred revenue, and an increase of $2.1 million in research and development accrued expenses, partially offset by an $8.6 million decrease in deferred tax liability, a decrease of $6.0 million in accounts payable, an increase of $5.5 million in other assetsassets, non-current and a decrease of $1.9$3.2 million in operating lease liabilities.

Net cash used in operating activities for the year ended December 31, 2023,2024 was due to our net loss for the period of $155.0$294.2 million, partially offset by changes in non-cash items oftotaling $13.0$24.4 million and changes in operating assets and liabilities of $12.0$14.8 million. Non-cash items primarily included $8.6$19.5 million ofrelated to stock-based compensation expense, $2.0$5.4 million related to the change in fair value of non-cashthe leasederivative expenseliability and $1.3$3.2 million ofrelated to depreciation and amortization.amortization, partially offset by net accretion of discounts on marketable securities of $3.7 million. The changes in operating assets and liabilities primarily included aan decreaseincrease of $5.5$18.2 million in research and development accrued expenses, an increase of $8.5 million in accounts payable and a $3.5 million increase in other accrued expenses and current liabilities, partially offset by an increase of $10.8 million in research and development prepaid expenses, an increase of $5.2 million in research and development accrued expenses and an increase of $2.5$2.9 million in other accruedprepaid expenses and currentother assets and a decrease of $1.9 million in operating lease liabilities.

Net cash provided by investing activities of $60.5$287.9 million for the year ended December 31, 2023,2025, was related to proceeds from maturities of marketable securities of $76.3$448.0 million and cash, cash equivalents and restricted cash acquired in connection with the ACELYRIN Merger of $49.7 million, partially offset by purchases of marketable securities of $11.3$209.2 million and by purchases of property and equipment of $4.5$0.7 million.

We have and will continue to incur significant development and other expenses related to our research and clinical development programs and ongoing operations. For the three and six months ended MarchJune 31,30, 2026 and 2025, we incurred net income (loss) of $93.1$(142.2) million, $59.3 million, $(235.3) million and $99.0$(39.6) million, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $994.9$1,137.2 million. Substantially all of our losses have resulted from expenses incurred in connection with the acquisition and development of our pipeline and from general and administrative costs associated with our operations. We expect to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our development of our product candidates.

Once initiated, clinical testing can take many years to complete, and its outcome is inherently uncertain. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials and results in one indication may not be predictive of results to be expected for the same product candidate in another indication. For example, lonigutamab’s potential to improve on the safety and side-effect profile of the sole currently-approved therapy in the United States for the treatment of TED is unproven. In particular, if lonigutamab is shown to have similar adverse events or side effects as the existing therapy, or other safety or tolerability concerns, such as hearing impairment, then an opportunity to disrupt the current standard of care in TED will be limited or precluded altogether. In this regard, ACELYRIN observed certain adverse events in its Phase 2 clinical trial of lonigutamab including, without limitation, headache, tinnitus and injection site reactions. Following completion of our strategic review of the lonigutamab program, we decided to explorepursue strategic alternatives for lonigutamab. There can be no assurance that any such strategic alternative will be successfully identified or consummated on favorable terms, if at all, and the foregoing observed adverse events, among other factors, could limit our ability to realize value from the program. Differences in trial design between early-stage clinical trials and later-stage clinical trials make it difficult to extrapolate the results of earlier clinical trials to later clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unfavorable safety profiles, notwithstanding promising results in earlier trials, and we have experienced and may experience setbacks in our programs in the future. For example, we discontinued our proof-of-concept Phase 2a clinical trial of envu in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with envu’s safety profile in psoriasis patients. Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain regulatory approval of such product candidates.

Moreover, following a public consultation that began in 2022, the government of the United Kingdom government(“UK”) has enacted new legislation to overhaul the clinical trials regulatory framework. In April 2025, the UK adopted an amendment to the Medicines for Human Use (Clinical Trials) Regulations 2004 intended to support a more streamlined and flexible regulation of clinical trials, remove unnecessary administrative burdens on trial sponsors, and protect the interests of trial participants. It also intends to bring the UK regulatory framework for clinical trials into closer alignment with the CTR. The amendment will becomebecame applicable on April 28, 2026 following a one-year transition period. While these changes introduce efficiencies and align with some principles of the EU’s CTR, divergence between the United KingdomUK and EU regulatory systems remains. Any significant divergence could affect the cost and complexity of conducting clinical trials in the United KingdomUK and may impact the acceptability of United Kingdom-basedUK-based trial data for seeking marketing authorizations in the EU, and vice versa.

We have observed SAEs and AEs in our trials of envu, and as more patients become exposed to envu over longer periods of time, we expect to see additional SAEs and AEs emerge. Further, long term treatment with envu continues to be evaluated in an OLE trial,trials, and we anticipate additional AEs and SAEs will continue to accumulate. Certain conditions occur more frequently in patients with psoriasis compared to the general population. Examples include obesity, cardiovascular disease, psoriatic arthritis and depression. Immune modulating treatments including envu may result in increasing susceptibility to various infections, including serious or life-threatening infections, and there is a theoretical risk with immune-modulating agents that dampening immune responses could increase the risk of malignancies.

The most common AEs observed in our Phase 2 STRIDE and OLEPhase PsO3 trials that were considered related to envu treatment by the principal investigator include headaches, upper respiratory tract infections, nasopharyngitis, rashrash, nausea and nausea.acne. We continue to evaluate the safety profile of envu in our ongoing Phase 2 OLE and Phase 3 trials.program.

We have conducted, are currently conducting, and may in the future conduct, clinical trials outside the United States, including (without limitation) in the EU, the United Kingdom (“UK”),UK, Japan, Latin America and Asia-Pacific countries. We expect to continue to conduct trials internationally in the future. The acceptance of data from clinical trials conducted outside the United States or another jurisdiction by the FDA or comparable foreign regulatory authorities may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for regulatory approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice and (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept the data as support for an application for regulatory approval unless the study is well-designed and well-conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Many foreign regulatory authorities have similar requirements for clinical data gathered outside of their respective jurisdictions. In addition, such foreign trials are subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction. If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which could be costly and time-consuming, and which may result in current or future product candidates that we may develop being delayed or not receiving approval for commercialization in the applicable jurisdiction.

We currently have no products approved for commercial sale or for which regulatory approval to market has been sought. We have invested a significant portion of our efforts and financial resources in the development of our most advanced product candidate, envu, which is still in clinical development, and expect that we will continue to invest heavily in envu, as well as our second product candidate, A-005, and any future product candidates we may develop. Additionally, in May 2026, we completed our strategic review of the lonigutamab program, ACELYRIN’s lead product candidate. While we decided to explorepursue strategic alternatives for the lonigutamab program, there can be no assurance that any such strategic alternative will be successfully identified or consummated on favorable terms, if at all. Our business and our ability to generate revenue, which we do not expect will occur for many years, if ever, are substantially dependent on our ability to develop, obtain regulatory approval for, and then successfully commercialize our product candidates, which may never occur.

We have not previously submitted an NDA or similar marketing application to the FDA or comparable foreign regulatory authorities for any product candidate, and we cannot be certain that our current or any future product candidates will be successful in clinical trials or receive regulatory approval. Although we plan to submit an NDA for envu for PsO in the secondfourth halfquarter of 2026, we will need to meet with the FDA and they may raise concerns or requirements that delay submission beyond our anticipated timeline. The FDA may also consider its approvals of competing products, which may alter the treatment landscape concurrently with their review of any NDA we may submit, and which may lead to changes in the FDA’s review requirements that have been previously communicated to us and our interpretation thereof, including changes to requirements for clinical data or clinical study design. Such changes could delay approval or necessitate withdrawal of any such NDA submission. Similar risks may exist in foreign jurisdictions.

As of MarchJune 31,30, 2026, we had 225237 full-time and 2 part-time employees. As our development and commercialization plans and strategies develop, we expect to expand our employee base for managerial, operational, financial and other resources.

We conduct business globally and our operations, including third-party suppliers, span numerous countries outside the United States. There is inherent risk, based on the complex relationships among the United States and the countries in which we conduct our business, that political, diplomatic, and national security factors can lead to global trade restrictions and changes in trade policies and export regulations that may adversely affect our business and operations. The current international trade and regulatory environment is subject to significant ongoing uncertainty. The ongoing trade tensions between the United States and other jurisdictions have resulted in multiple rounds of tariffs and potential tariffs affecting pharmaceuticals and pharmaceutical ingredients, including finished drug products, manufacturing equipment and related supplies. In April 2025, the U.S. government imposed a 10% baseline global tariff and in August 2025, the U.S. government imposed higher “reciprocal” tariffs on numerous other territories, including EU member states and South Korea. While the U.S. Supreme Court recently issued a ruling invalidating tariffs imposed by the Trump administrationAdministration under the International Emergency Economic Powers Act, other tariffs imposed by the U.S. government remain in place, including thea temporary 10% global tariff imposed by the Trump administrationAdministration under Section 122 of the Trade Act of 1974 following the U.S. Supreme Court decision. Moreover, the Bureau of Industry and Security, U.S. Department of Commerce, has initiated an investigation to determine whether pharmaceutical ingredients, including finished drug product, manufactured outside the United States pose a national security risk and should be subject to additional tariffs. Further, following the expiration of tariffs under Section 122 of the Trade Act of 1974, on July 23, 2026, the Administration announced new tariffs ranging from 10% to 12.5% on 60 trading partners, including South Korea and the EU as part of an investigation under Section 301 of the Trade Act of 1974 that began on June 2, 2026.

The complexity of announced or future tariffs may also increase the risk that we or our customers or suppliers may be subject to civil or criminal enforcement actions in the U.S. or foreign jurisdictions related to compliance with trade regulations. Foreign governments may also adopt additional non-tariff measures, such as procurement preferences or informal disincentives to engage with, purchase from or invest in U.S. entities, which may limit our ability to compete internationally and attract non-U.S. investment, employees, customers and suppliers. Foreign governments may also take other retaliatory actions against U.S. entities, such as decreased intellectual property protection, increased enforcement actions, or delays in regulatory approvals, which may result in heightened international legal and operational risks. In addition, the U.S. and other governments have imposed and may continue to impose additional sanctions, such as trade restrictions or trade barriers, which could restrict us from doing business directly or indirectly in or with certain countries or parties and have imposed and may continue to impose additional costs and complexity to our business.

Future acquisitions may also require us to obtain additional financing, which may not be available on favorable terms or at all. These transactions may never be successful and may require significant time and attention of our management. Even if we are able to successfully identify and acquire complementary products, technologies or businesses, we cannot assure you that we will be able to successfully manage the risks associated with integrating acquired products, technologies or businesses or the risks arising from anticipated and unanticipated problems in connection with an acquisition or in-licensing transaction. For example, as a result of the ACELYRIN Merger, we now operate our historical core business along with the acquired ACELYRIN business as one combined organization utilizing common information and communication systems, operating procedures, financial controls and human resources practices. There may be difficulties, costs and delays involved in the integration of our historical core business with the acquired ACELYRIN business, including as a result of challenges relating to the diversion of management’s attention, the possibility of faulty assumptions underlying expectations regarding the integration process, retaining and attracting business and operational relationships, eliminating duplicative operations and inconsistent standards and procedures and increased or unforeseen liabilities or costs relating to the ACELYRIN Merger or the acquired ACELYRIN business. We have also incurred substantial expenses in connection with and as a result of completing the ACELYRIN Merger and may incur additional expenses as we continue to finalize integration of the businesses, operations, policies and procedures of the combined company.Merger. Further, while we seek to mitigate risks and liabilities of potential acquisitions and in-licensing transactions through, among other things, due diligence, there may be risks and liabilities that such due diligence efforts fail to discover, that are not disclosed to us, or that we inadequately assess. Any failure in identifying and managing these risks, liabilities and uncertainties effectively, including in connection with the ACELYRIN Merger, could have a material adverse effect on our business and adversely affect our results of operations and financial condition. Additionally, we may not realize the anticipated benefits of the ACELYRIN Merger or any other such transactions, including the possibility that expected synergies and accretion will not be realized or will not be realized within the expected time frame. Accordingly, although there can be no assurance that we will undertake or successfully complete any additional transactions of the nature described above, any additional transactions that we do complete could adversely affect our business, financial condition, results of operations and prospects.

We and certain of our service providers have been and are from time to time subject to cyberattacks and security incidents. Any of the previously identified or similar threats have or could cause a security incident or other interruption that resulted or results in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure, or other processing of, or access to our sensitive information or our information technology systems, or those of the third parties with whom we work. A security incident or other interruption could disrupt our ability (and that of third parties with whom we work) to conduct clinical trials. Additionally, our sensitive information of the company could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s or vendors’ use of generative Artificial Intelligence (“AI”) technologies.

TheAny additional future impairment of the acquired IPR&D intangible assets related to the ACELYRIN Merger may negatively affect our results of operations and financial position.

As of March 31, 2026, we had $51.0 million of acquired IPR&D intangible assets related to the ACELYRIN Merger. As of March 31, 2026, we evaluated our acquired IPR&D intangible asset for indicators of impairment and concluded that no such indicators were present. In May 2026, following completion of our strategic review of the lonigutamab program, we decided to explorepursue strategic alternatives,alternatives for the outcome of which could represent an event or change in circumstancesprogram, requiring an interim impairment assessment of the acquired IPR&D intangible asset.asset Acquiredrelated to the ACELYRIN Merger. The assessment resulted in the recognition of an impairment loss of $41.8 million, which was recognized in operating expenses in our unaudited condensed consolidated statement of operations and comprehensive income (loss) for the three and six months ended June 30, 2026. The impairment loss reduced the carrying value of the acquired IPR&D intangible asset to its estimated fair value of $9.1 million as of June 30, 2026. Indefinite-lived intangible assets are subject to an impairment analysis whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Additionally, indefinite-lived assets are subject to an impairment test at least annually. Events giving rise to impairment are an inherent risk in the pharmaceutical industry and cannot be predicted. Our results of operations and financial position in future periods could be negatively impacted should any additional future impairmentsimpairment of acquired IPR&Dindefinite-lived intangible assets occur.

The patent position of biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation, resulting in court decisions, including U.S. Supreme Court decisions, which have increased uncertainties as to the ability to enforce patent rights in the future. As a result, the issuance, scope, validity, enforceability and commercial value of any patent rights are highly uncertain. Our pending and future owned or in-licensed patent applications may not result in issued patents that protect our product candidates effectively to prevent others from commercializing our product candidates or otherwise provide any competitive advantage. In fact, patent applications may not issue as patents at all. The coverage claimed in a patent application can also be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States, or vice versa.

We and the third parties with whom we work are subject to stringent and evolving U.S. and foreign laws, regulations, rules;rules, contractual obligations;obligations, policies; and other obligations related to data privacy and security. Our (including the third parties with whom we work) actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences for our business, results of operations and financial condition.

Certain of our employees, other personnel and/or vendors use generative artificial intelligence (“AI”) technologies to perform their work, and the disclosure and use of personal information in generative AI technologies is subject to various privacy laws and other privacy obligations. Any errors, flaws or other unintended issues in or associated with AI inputs, outputs or technologies could result in adverse impacts on our business. Governments have passed and are likely to pass additional laws regulating generative AI. Our, or our vendors’, use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits. If we, or our vendors, are unable to use generative AI, it could make our business less efficient in some cases, and result in increased costs or competitive disadvantages.

An active and liquid trading market for our common stock may not develop, and you may not be able to resell your shares of common stock at or above the price you paid for them.sustained.

Our common stock is currently listed on The Nasdaq Global Select Market under the symbol “ALMS”. However, we cannot assure you that an active trading market for our common stock will be sustained. Accordingly, we cannot assure you of the liquidity of any trading market or your ability to resell your shares of our common stock at or above the price you paid for them. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. Furthermore, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic collaborations or acquire companies or products by using our shares of common stock as consideration.

We expect our operating results to be subject to quarterly and annual fluctuations which may, in turn, cause the price of our common stock to fluctuate substantially. Our net losslosses and other operating results will be affected by numerous factors, including:

Based on the beneficial ownership of our capital stock as of MarchJune 31,30, 2026, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 34% of our outstanding voting stock. The interests of these stockholders may not be the same as or may even conflict with your interests. For example, these stockholders could delay or prevent a change of control of our company, even if such a change of control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or our assets and might affect the prevailing market price of our common stock. The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. In addition, as a result of this concentration of ownership, there is a limited number of shares of our common stock that are not held by officers, directors and controlling stockholders (which is referred to as our public float), thereby adversely impacting the liquidity of our common stock and potentially depressing the price at which you may be able to sell shares of common stock.

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”),Act, as modified by the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to the other public companies that are not “emerging growth companies,” including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (iii) exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not approved previously. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of reduced reporting obligations in this report. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. These provisions allow an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. We have elected to take advantage of such extended transition period. We cannot predict whether investors will find our common stock less attractive as a result of its reliance on these exemptions. If some investors find our common stock to be less attractive as a result, there may be a less active trading market for our common stock and the price of our common stock may be more volatile than the current trading market and price of our common stock.

Global economic and business activities continue to face widespread uncertainties, and global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks and uncertainty about economic and geopolitical stability (for example, related to the evolving U.S. and ex-U.S. tariff landscape). Further, the United States and other countries have imposed and may continue to impose new trade restrictions and export regulations, have levied tariffs and taxes on certain goods, and could continue to significantly increase tariffs on a broad array of goods. For example, in April 2025, the U.S. government imposed a 10% baseline global tariff and in August 2025, the United States imposed higher “reciprocal” tariffs on numerous other territories, including EU member states and South Korea. While the U.S. Supreme Court recently issued a ruling invalidating tariffs imposed by the Trump administrationAdministration under the International Emergency Economic Powers Act, other tariffs imposed by the U.S. government remain in place, including thea temporary 10% global tariff imposed by the Trump administrationAdministration under Section 122 of the Trade Act of 1974 following the U.S. Supreme Court decision. Moreover, in 2025, the Bureau of Industry and Security, U.S. Department of Commerce, initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether pharmaceutical ingredients, including finished drug product, manufactured outside the United States pose a national security risk and should be subject to additional tariffs. Based on this investigation, on April 2, 2026, the President issued a proclamation imposing up to a 100% tariff on certain patented pharmaceuticals and associated pharmaceutical ingredients.ingredients, including a 15% tariff on imports from South Korea and EU member states. These tariffs will become effective September 29, 2026, unless they are “expressly reduced, modified, or terminated.” With the expiration of tariffs under Section 122 of the Trade Act of 1974, on July 23, 2026, the Administration announced new tariffs ranging from 10% to 12.5% on 60 trading partners, including South Korea and the EU as part of an investigation under Section 301 of the Trade Act of 1974 that began on June 2, 2026. Given the volatility and uncertainty regarding the scope and duration of tariffs and other aspects of U.S. and foreign government trade policies, the ultimate impact on our operations and financial results remains uncertain. Likewise, our financial condition and results of operations may continue to be affected by global volatility and general market disruption resulting from geopolitical tensions, such as the ongoing Russia-Ukraine military conflict and the ongoing military conflict involving the U.S., Israel and Iran. In particular, the continued escalation of hostilities in the Middle East, including involving Iran, could further disrupt global energy markets, fuel prices, transportation networks, and supply chains, which may disrupt or otherwise negatively impact our supply chain and increase our costs. The extent of the impact of these conditions on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected timeframe, as well as that of third parties upon whom we rely, will depend on future developments which are uncertain and cannot be predicted. There can be no assurance that further deterioration in economic or market conditions will not occur, or how long these challenges will persist. If the current equity and credit markets further deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.

We are not currently required to comply with the rules of the SEC implementing Section 404(b) of the Sarbanes-Oxley Act, which requires including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, we are required to comply with the SEC’s rules implementing Sections 302 and 404(a) of the Sarbanes-Oxley Act, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting. Although we will be required to disclose changes made in our internal control over financial reporting on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting until our second annual report on Form 10-K. Furthermore, as an emerging growth company, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm would need to issue a report that is adverse in the event that there are material weaknesses in our internal control over financial reporting.

In connection with the ACELYRIN Merger, we assumed the liabilities of ACELYRIN, which include a purported federal securities class action lawsuit which was commenced against ACELYRIN in the United States District Court for the Central District of California (the “Court”) on November 15, 2023. On February 15, 2024, the Court appointed joint lead plaintiffs and lead counsel. An amended complaint was filed on March 26, 2024, naming ACELYRIN and current and former officers and directors as defendants. The complaint alleges that the defendants violated the Exchange Act and Securities Act in disclosures regarding the primary endpoint of HiSCR75 at week 16 not meeting statistical significance in ACELYRIN’s Phase 2b trial of izokibep in hidradenitis suppurativa. The amended complaint seeks damages and an award of reasonable costs and expenses, as well as such other and further relief as the courtCourt may deem just and proper. On May 3, 2024, the defendants filed their motion to dismiss the amended complaint, which was granted by the court,Court, with leave to amend, in January 2026. On February 5, 2026, the plaintiffs filed a second amended complaint which seeks damages and an award of reasonable costs and expenses, as well as such other and further relief as the courtCourt may deem just and proper. On February 19, 2026, the defendants filed their motion to dismiss the second amended complaint, which remains pending. This lawsuit is subject to inherent uncertainties, including its outcome. We could be forced to expend significant resources and incur substantial legal fees and costs in the defense of this suit, and we may not prevail. We have not established any reserve for any potential liability relating to this lawsuit. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages. In addition, we may be the target of other securities litigation in the future. Securities litigation (including the cost to defend against, and any potential adverse outcome resulting from any such proceeding) can be expensive and time-consuming, damage our reputation and divert our management’s attention from other business concerns, which could seriously harm our business.

You should read the following discussion and analysis of our financial condition and results of operations and the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q in conjunction with the financial statements and related notes thereto as of and for the year ended December 31, 2025 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 19, 2026. This discussion and analysis and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of several factors, including those set forth under Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q. See also the section titled “Special Note Regarding Forward-Looking Statements.”

We are a clinical stage biopharmaceutical company with an initial focus on developing our two Tyrosine Kinase 2 (“TYK2”) inhibitors: envu, a second-generation inhibitor that we are developing to maximize target inhibition and optimize tolerability, and A-005, a central nervous system (“CNS”) penetrant molecule. Envu is currently being evaluated in an ongoing Phase 2 open-label extension (“OLE”) clinical trial, as well as a Phase 3 long-term extension (“LTE”), or ONWARD3, clinical trial in patients with PsO and we plan to submit an NDA for envu in PsO to the U.S. Food and Drug Administration (“FDA”) in the secondfourth halfquarter of 2026. Envu completed enrollment in the pivotal Phase 3 ONWARD1 and ONWARD2 clinical trials in patients with PsO, and we reported positive topline results in the first quarter of 2026. In August 2026, we reported topline results from our ongoing ONWARD3 LTE trial. In addition, envu is currently being evaluated in a Phase 2 clinical trial in patients with systemic lupus erythematosus (“SLE”), for which we expect to report topline results in the third quarter of 2026. We are currently evaluating additional immune-mediated disease indications for envu,envu beyond PsO and SLE, andwith forSjögren’s A-005 in CNSdisease and peripheralcutaneous diseases.lupus erythematosus currently prioritized. In April 2024, we initiated our Phase 1 program of A-005 in healthy volunteers and reported initialPhase 1 results in December 2024. We plan to initiate an A-005 Phase 2 biomarker trial in Parkinson’s disease in the first half of 2027. In addition, in connection with the ACELYRIN Merger, we acquired lonigutamab, a subcutaneously delivered, monoclonal antibody targeting IGF-1R for the potential treatment of TED. In May 2026, we completed our strategic review of the lonigutamab program, and decided to explorepursue strategic alternatives for the program.

We have incurred significant operating losses and negative cash flows since our inception. Our net income (loss) for the three and six months ended MarchJune 31,30, 2026 and 2025 was $93.1$(142.2) million, $59.3 million, $(235.3) million and $99.0$(39.6) million, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $994.9$1,137.2 million.

On March 18, 2026, we entered into the Sales Agreement with Cantor as sales agent, pursuant to which we may offer and sell, from time to time through Cantor, at our option, the ATM Shares. The ATM Shares include shares of our common stock having an aggregate offering price of up to $300.0 million. The sales of the ATM Shares will be made by any method permitted that is deemed to be an “at-the-market” equity offering as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the Nasdaq Global Select Market. We agreed to pay Cantor a commission of up to 3.0% of the aggregate gross proceeds from any ATM Shares sold by Cantor. As of MarchJune 31,30, 2026, no ATM Shares werehave been sold under the Sales Agreement.

Our business and results of operations may be affected by worldwide economic conditions, which may continue to be impacted by global macroeconomic challenges and uncertainty in the markets, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks and uncertainty about economic and geopolitical stability (for example, related to the evolving U.S. and ex-U.S. tariff landscape). Further, the United States and other countries have imposed and may continue to impose new trade restrictions and export regulations, have levied tariffs and taxes on certain goods, and could continue to significantly increase tariffs on a broad array of goods. For example, in April 2025, the U.S. government imposed a 10% baseline global tariff and in August 2025, the United States imposed higher “reciprocal” tariffs on numerous other territories, including European Union (“EU”) member states and South Korea. While the U.S. Supreme Court recently issued a ruling invalidating tariffs imposed by the Trump administration (the “Administration”) under the International Emergency Economic Powers Act, other tariffs imposed by the U.S. government remain in place, including thea temporary 10% global tariff imposed by the Trump administrationAdministration under Section 122 of the Trade Act of 1974 following the U.S. Supreme Court decision. Moreover, in 2025, the Bureau of Industry and Security, U.S. Department of Commerce, initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether pharmaceutical ingredients, including finished drug product, manufactured outside the United States pose a national security risk and should be subject to additional tariffs. Based on this investigation, on April 2, 2026, the President issued a proclamation imposing up to a 100% tariff on certain patented pharmaceuticals and associated pharmaceutical ingredients.ingredients, including a 15% tariff on imports from South Korea and EU member states. These tariffs will become effective September 29, 2026, unless they are “expressly reduced, modified or terminated.” With the expiration of tariffs under Section 122 of the Trade Act of 1974, on July 23, 2026, the Administration announced new tariffs ranging from 10% to 12.5% on 60 trading partners, including South Korea and the EU as part of an investigation under Section 301 of the Trade Act of 1974 that began on June 2, 2026. Given the volatility and uncertainty regarding the scope and duration of tariffs and other aspects of U.S. and foreign government trade policies, the ultimate impact on our operations and financial results remains uncertain. Likewise, our financial condition and results of operations may continue to be affected by global volatility and general market disruption resulting from geopolitical tensions, such as the ongoing Russia-Ukraine military conflict and the ongoing military conflict involving the U.S., Israel and Iran. In particular, the continued escalation of hostilities in the Middle East, including involving Iran, could further disrupt global energy markets, fuel prices, transportation networks, and supply chains, which may disrupt or otherwise negatively impact our supply chain and increase our costs. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. Moreover, negative macroeconomic conditions could adversely impact our ability to obtain financing in the future on terms acceptable to us, or at all. To date, the macroeconomic trends discussed above have not had a material adverse impact on our business, financial condition or results of operations. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.

We expense research and development costs as incurred. Acquired IPR&D intangible assets recognized in a business combination are recorded as indefinite-lived intangible assets and are subject to impairment testing. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as research and development prepaid expenses in our consolidated balance sheets. The capitalized amounts are recognized as expense as the goods are delivered or services are performed. Since our inception and through MarchJune 31,30, 2026, our external research and development expenses were primarily related to the discovery and advancement of programs under our TYK2 platform, including our two most advanced product candidates, envu and A-005. We use internal resources primarily for managing our research, process development, manufacturing and clinical development activities. In particular, with respect to internal costs, we deploy our personnel across all of our research and development activities as our employees work across multiple programs, and therefore the costs cannot be allocated to a particular product candidate or research program.

At the closing of the ACELYRIN Merger in May 2025, we recognized a gain on bargain purchase which represents the excess of fair value of net assets acquired in the ACELYRIN Merger over the purchase consideration on the Closing Date. The gain on bargain purchase was recognized as other income in the condensed consolidated statements of operations and comprehensive income (loss) as of the Closing Date of the ACELYRIN Merger. See Note 3 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Results of Operations and Comprehensive Income (Loss)

The following tabletables summarizessummarize our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):

We recognized license revenue of zero for both the three months ended June 30, 2026 and 2025, and collaboration revenue of $1.7 million and $2.7 million for the three months ended June 30, 2026 and 2025, respectively, related to the Kaken Collaboration Agreement. We recognized license revenue of zero and $17.4 million,million for the six months ended June 30, 2026 and 2025, respectively, and collaboration revenue of $1.7$3.4 million and zero$2.7 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, related to the Kaken Collaboration Agreement. At inception of the contract, we allocated the transaction price to the License Obligation and Development Services Obligation by allocating the transaction price based on the relative standalone selling price of each obligation. The license revenue was recognized upon the transfer of the license to Kaken in March 2025. We expect to recognize revenue under the Development Services Obligation and Manufacturing Services Obligation through the term of the Kaken Collaboration Agreement as the services are performed. See Note 78 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

The following tabletables summarizessummarize our external and internal research and development expenses for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):

Research and development expenses decreased by $15.1$23.4 million, to $81.5$85.3 million for the three months ended MarchJune 31,30, 2026, from $96.6$108.8 million for the three months ended MarchJune 31,30, 2025.

CRO, CMO and clinical trials expenses decreased by $24.1$25.7 million, to $40.9$40.4 million for the three months ended MarchJune 31,30, 2026, from $65.1$66.1 million for the three months ended MarchJune 31,30, 2025. The decrease was primarily due to lower clinical trial and CRO expenses reflecting the progression of our envu clinical program following the completion of enrollment and reporting of positive topline results for the pivotal Phase 3 ONWARD1 and ONWARD2 clinical trials in patients with PsO.PsO, partially offset by an increase in clinical trial and CRO expenses for the Phase 3 ONWARD3 clinical trial.

Professional consulting services expenses increased by $0.4$1.2 million, to $6.8$8.6 million for the three months ended MarchJune 31,30, 2026, from $6.4$7.4 million for the three months ended MarchJune 31,30, 2025. The increase was primarily due to higher professional services costs incurred to support the envu clinical programprogram, including dissemination efforts related to reporting of topline results for the pivotal Phase 3 ONWARD1 and ONWARD2 clinical trials in patients with PsO.PsO and our plan to submit an NDA in the fourth quarter of 2026.

Other research and development costs increased by $0.1$0.4 million, to $2.4$3.4 million for the three months ended MarchJune 31,30, 2026, from $2.3$3.0 million for the three months ended MarchJune 31,30, 2025, primarily due to the timing of preclinical studies related to our development programs and research pipeline.

Personnel-related costs increased by $8.4$0.4 million, to $26.1$27.2 million for the three months ended MarchJune 31,30, 2026, from $17.7$26.8 million for the three months ended MarchJune 31,30, 2025, primarily due to an increase in research and development headcount, and included an increase of $4.4 million in stock-based compensation expense of $3.6 million driven by additional equity awards granted, aspartially welloffset asby employerseverance contributionscosts related to ourthe 401(k)ACELYRIN planMerger reflectingincurred ain matchingthe programprior effective January 1, 2026.year.

Facilities and overhead costs increased by $0.2 million, to $5.7 million for the three months ended June 30, 2026, from $5.4 million for the three months ended MarchJune 31, 2026, from $5.2 million for the three months ended March 31,30, 2025, primarily due to an increase in information technology costs, and facilities expenses allocated to research and development activities.

The following table summarizes our external costs by program for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):

During the three and six months ended MarchJune 31,30, 2026, our external research and development expenses were primarily related to the clinical development of the envu program and, to a lesser extent, the A-005 and lonigutamabother development programsprograms, including lonigutamab, and our research pipeline.

General and administrative expenses decreased by $3.7$11.1 million, to $18.6$23.4 million for the three months ended MarchJune 31,30, 2026, from $22.3$34.5 million for the three months ended MarchJune 31,30, 2025.

Professional consulting services and otherPersonnel-related expenses decreased by $6.4$10.6 million, to $7.5$11.0 million for the three months ended MarchJune 31,30, 2026, from $13.9$21.6 million for the three months ended MarchJune 31,30, 2025, primarily due to severance costs related to the ACELYRIN Merger transaction costs incurred in the prior year and a decrease in consulting and accounting costs,year, partially offset by an increase of $2.0 million in legalstock-based andcompensation marketexpense researchdriven servicesby toadditional supportequity ourawards growth and business development activities.granted.

Total other income (expense), net increaseddecreased by $2.8$186.4 million, to $5.4$4.9 million for the three months ended MarchJune 31,30, 2026, from $2.6$191.3 million for the three months ended MarchJune 31,30, 2025. Total other income (expense), net decreased by $183.6 million, to $10.2 million for the six months ended June 30, 2026, from $193.9 million for the six months ended June 30, 2025.

Interest income increased by $2.7$1.5 million, to $5.3$4.9 million for the three months ended MarchJune 31,30, 2026, from $2.6$3.4 million for the three months ended MarchJune 31,30, 2025, primarily due to higher balances of cash equivalents and marketable securities held. Interest income increased by $4.3 million, to $10.3 million for the six months ended June 30, 2026, from $6.0 million for the six months ended June 30, 2025, primarily due to higher balances of cash equivalents and marketable securities held.

Based on our current operating plan, our existing cash, cash equivalents and marketable securities of $569.5$502.3 million as of MarchJune 31,30, 2026, will be sufficient to meet our operating and capital requirements for at least 12 months from the date of issuance of the unaudited condensed consolidated financial statements included in Part I Item 1 of this Quarterly Report on Form 10-Q. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital. We will need to raise significant additional capital to fund ongoing research and development activities and maintain future operations.

The following table summarizes our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Net cash used in operating activities was $87.1$168.6 million and $80.4$186.7 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 included net income (loss) of $93.1$(235.3) million and changes in operating assets and liabilities of $6.3$1.0 million, partially offset by non-cash items totaling $12.3$67.7 million. Non-cash items included $12.3$41.8 million related to intangible assets impairment loss, $26.6 million related to stock-based compensation expense, $0.9$1.7 million related to depreciation and amortization, $0.6$1.1 million related to non-cash lease expense and $0.4 million related to impairment of long-lived assets, partially offset by $2.0$4.0 million related to net accretion of discounts on marketable securities. The changes in operating assets and liabilities included a decrease of $9.7$5.9 million in other accrued expenses and current liabilities, a decrease of $1.2$2.3 million in operating lease liabilities, ana increasedecrease of $0.5$1.8 million in otherdeferred assets,tax non-current,liability and an increase of $0.4$1.5 million in research and development prepaid expenses, partially offset by ana increasedecrease of $2.3$4.4 million in deferredother revenue,assets, non-current, an increase of $1.4$2.7 million in accounts payable, an increase of $1.2$2.6 million in deferred revenue and an increase of $0.8 million in research and development accrued expenses, and a decrease of $0.8 million in other prepaid expenses and other assets.expenses.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2025 was due to our net income (loss) for the period of $99.0$(39.6) million and non-cash items totaling $162.1 million partially offset by changes in operating assets and liabilities of $11.5 million and non-cash items totaling $7.1$15.0 million. Non-cash items included $7.0$187.9 million related to stock-basedgain compensationon expense,bargain $0.8purchase millionin relatedconnection towith depreciationthe ACELYRIN Merger and amortization and $0.3 million related to non-cash lease expense, partially offset by net accretion of discounts on marketable securities of $1.0$2.2 million.million, partially offset by $25.6 million related to stock-based compensation expense, $1.7 million related to depreciation and amortization and $0.6 million related to non-cash lease expense. The changes in operating assets and liabilities primarily includesincluded an increase of $5.6$11.0 million in research and development accrued expenses, a decrease of $7.4 million in research and development prepaid expenses, an increase of $5.0$6.5 million in other accrued expenses and current liabilities, an increase of $2.6 million in deferred revenue, an increase of $0.2 million in other liabilities, non-current, and a decrease of $0.6$0.1 million in other prepaid expenses and other assets, a decrease of $0.6 million in research and development prepaid expenses, partially offset by a decrease of $2.2$8.6 million in accountsdeferred payableincome tax liability, an increase of $1.7 million in other assets, non-current, a decrease of $1.3 million in operating lease liabilities and a decrease of $0.6$1.2 million in operatingaccounts lease liabilities.payable.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 of $285.7$217.0 million was related to purchases of marketable securities of $428.4$468.1 million and purchases of property and equipment of $0.2$0.4 million, partially offset by proceeds from maturities of marketable securities of $142.9$251.5 million.

Net cash provided by investing activities for the threesix months ended MarchJune 31,30, 2025 of $39.4$168.8 million was related to proceeds from maturities of marketable securities of $64.0$144.3 million and cash, cash equivalents and restricted cash acquired in connection with the ACELYRIN Merger of $49.7 million, partially offset by purchases of marketable securities of $24.5 million and purchases of property and equipment of $0.7 million.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026 of $347.0$359.6 million was related to proceeds from public offering of common stock, net of underwriting discounts, commissions and offering costs of $323.8 million andmillion, proceeds of common stock upon exercise of stock options of $23.2$34.2 million and proceeds of common stock under the 2024 ESPP of $1.6 million.

We have operating lease arrangements for office and laboratory space in South San Francisco, California and office space in Southern California. As of MarchJune 31,30, 2026, we had total undiscounted lease payment obligations under non-cancelable leases of $50.7$50.8 million, including $6.3$4.3 million payable through December 31, 2026. See Note 910 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

On March 5, 2021, we entered into the FronThera Acquisition, and the transaction was accounted for as an asset acquisition. Under the stock purchase agreement, we are obligated to pay contingent consideration of up to an aggregate of $120.0 million based on the achievement of specified clinical and approval milestones, including receipt of first commercialization approval in the United States or certain other jurisdictions, of up to an aggregate of $70.0 million payable for clinical milestones, and of up to an aggregate of $50.0 million payable for approval milestones, all related to technology acquired under the agreement. In the year ended December 31, 2022, we incurred and made a $37.0 million milestone payment for the first administration of envu to a patient enrolled in a Phase 2 clinical trial of envu, which was recorded in research and development expenses in the consolidated statement of operations and comprehensive loss.envu. In July 2024, we met a milestone in connection with the first administration of envu to a patient enrolled in a Phase 3 clinical trial of envu and made a $23.0 million milestone payment in August 2024, which was recorded in research and development expenses in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024. No additional milestones were achieved or were probable of being achieved as of MarchJune 31,30, 2026.

No milestones were achieved or were probable of being achieved as of MarchJune 31,30, 2026.

We enter into contracts in the normal course of business with suppliers, CROs, CMOs and clinical trial sites. Upon the closing of the ACELYRIN Merger, we became the successor to contracts with non-cancellable obligations under ACELYRIN contracts. The total value of non-cancellable obligations under contracts was $1.5$0.6 million as of MarchJune 31,30, 2026. This presentation of non-cancellable purchase obligations does not include any estimates of potential reduction of such liabilities related to mitigation obligations of the counterparties in the event of cancellation under the terms of our engagements.

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported expenses during the reporting period. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in the Annual Report on Form 10-K filed with the SEC on March 19, 2026. If actual results or events differ materially from the estimates and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no material changes to our critical accounting policies from those described in the Annual Report on Form 10-K.10-K for the year ended December 31, 2025.

Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions, including without limitation exemptions to the requirements for (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier to occur of (a) the last day of the fiscal year (A) following the fifth anniversary of the completion of our IPO, (B) in which we have total annual gross revenues of at least $1.235 billion or (C) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common stock and non- votingnon-voting common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.