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

We are a clinical-stage biotechnology company incorporated in March 2017 and our operations, to date, have consisted primarily of organizing and staffing our company, business planning, raising capital, in-licensing rightsproduct to itolizumab (EQ001), conducting preclinical development of EQ302, filing three INDs,rights, conducting clinical development of itolizumab (EQ001), EQ101, and EQ102,preclinical development, filing INDs, conducting CMC and formulation development activities, conducting business development activities including the acquisitions of Bioniz, Inc. and Ariagen, Inc., effecting a stock repurchase program, and the general and administrative activities associated with being a public company. We have never completed the development of any product candidate through to marketing approval, and we have never generated any revenue from sales of an approved product. Consequently, we have no meaningful operations upon which to evaluate our business, and predictions about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing biopharmaceutical products.

Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable. We have never generated any revenues from sales of an approved product, and we cannot estimate with precision the extent of our future losses. For the years ended December 31, 20242025 and 2023,2024, our net losses were $8.1$22.4 million and $13.3$8.1 million, respectively. As of December 31, 2024,2025, we had an accumulated deficit of $193.8$216.2 million. We expect to incur operating losses for the foreseeable future as we execute our plan to perform research and development activities, conduct preclinical and clinical studies on ourEQ504 and potentially other product candidates, potentially perform discovery research, conduct formulation development of our product candidates, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new products and/or product candidates, seek regulatory approvals of and potentially commercialize any approved products, hire and retain additional personnel, maintain compliance with regulatory requirements, protect our intellectual property, and manage the administrative aspects of our business. Furthermore, strategic transactions have and may in the future accelerate the rate at which our operating losses increase, including as a result of preclinical, clinical and regulatory expenses incurred to advance our potential product candidates. In addition, if we obtain regulatory approval of any of our product candidates, we expect to incur increased sales and marketing expenses, with certain of such investments potentially being made in advance of an approval. As a result, we expect to continue to incur significant operating losses and negative cash flows for the foreseeable future. These losses have had and will continue to have an adverse effect on our financial position and working capital.

To become and remain profitable, we must develop or acquire and eventually commercialize a product with significant market potential. This will require us to be successful in a range of challenging activities, including completing non-clinicalpreclinical studies and clinical studies of our product candidates, obtaining marketing approvals of our product candidates, manufacturing, marketing and selling our product candidates if we obtain marketing approval, and satisfying post-marketing requirements, if any. We may never succeed in these activities and, even if we succeed in obtaining approval of and commercializing our product candidates, we may never generate revenues that are significant enough to achieve profitability. In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges. Furthermore, because of the numerous risks and uncertainties associated with biopharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis and we may continue to incur substantial research and development and other expenditures to develop and market additional product candidates. Our failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

Our need for additional capital raises substantial doubt about our ability to continue as a going concern. We will require substantial additional funding to complete the planned or future development and any commercialization of itolizumab (EQ001) andEQ504, EQ302 if we resume development activities, and any future product candidates. If we are unable to raise this capital when needed, we may be forced to delay, reduce or eliminate our research and development programs or other operations.

Although we have recently implemented operating changes and plan to take further actions as necessary to decrease our expenditures and conserve our cash, weWe expect our expenses to potentially increase substantially over the next few years if ourEQ504 or other product candidates successfully advance through additional stages of development andwhich may include larger, more expensive clinical studies or if we receive positive feedback from the FDA that leads us to submitting a BLA and potentially preparing to commercialize itolizumab (EQ001), if approved.studies. The development of biotechnology product candidates is capital intensive. As we conduct non-clinicalnonclinical research and clinical development of our product candidates, we will need substantial additional funds to maintain and expand our capabilities in a variety of areas including discovery and non-clinicalnonclinical research, clinical development, regulatory affairs, product development, product quality assurance, and pharmacovigilance. In addition, if we obtain marketing approval of any of our product candidates, we expect to incur significant commercialization expenses for marketing, sales, manufacturing and distribution. Some of those commercialization investments may be made at-risk in advance of receiving an approval.

Changing circumstances or inaccurate estimates by us may cause us to use capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. For example, our ongoingplanned andor future clinical studies of our product candidates may encounter technical, enrollment or other issues that could cause our development costs to increase more than we expect. As of December 31, 2024, we had repurchased 298,385 shares of our common stock under the stock repurchase program for a total of approximately $0.3 million. Our authorization for repurchasing stock expired on December 31, 2024 and there are no plans to seek renewing such authorization or purchasing additional shares.

We do not have sufficient funds to complete the clinical development of itolizumab (EQ001)EQ504 or any of our other product candidates, through regulatory approvals for our current indications.candidates. We will need to raise substantial additional capital to complete the development and commercialization of eachEQ504 ofand thoseany other product candidates, which additional capital, if capable of being raised, may be raised through the sale of our common stock or other securities or through the entering into of alternative strategic transactions, the terms of which may require us to divest one or more of our product candidates, or cause our stockholders to incur substantial dilution.

the initiation, progress, timing, costs and results of our ongoingplanned andor future non-clinicalnonclinical and clinical studies of ourEQ504, EQ302 and other future product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaksoutbreaks, the evolving conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, tariffs and inflationary pressures on the economy;

the number and scope of indications we decide to pursue for the development of our product developmentcandidates;

the cost, timing and outcome of regulatory review of any BLANew Drug Application, or NDANDA, we may submit for our product candidates;

the costs and timing of manufacturing ourEQ504 and other product candidates and products;

the extent to which we acquire or in-license other product candidates and technologies or engage in in-house discovery and preclinical research of new product candidates;

the legal and other transactional costs associated with our business development activities; and the cost associated with commercializing our product candidates if any are approved for commercial sale.

In OctoberAugust 2023,2025, we entered intoamended the 2023 ATM Facility with Jefferies,Jefferies underLLC, whichto replace Jefferies LLC as the sales agent with LifeSci Capital LLC. Under the 2023 ATM Facility, we may offer and sell shares of our common stock having an aggregate offering price of up to $21.95$75.0 million from time to time through JefferiesLifeSci Capital LLC acting as our sales agent. As of the filing of this Annual Report on Form 10-K, we have not sold any1,719,485 shares under the 2023 ATM Facility.

Our commercial revenues, if any, are expected to be primarily derived from sales of products, which is unlikely to happen withinfor theat nextleast 12several months,years, if ever. We will need to obtain substantial additional funding into connection withcontinue our continuing operations. Adequate additional financing may not be available to us on acceptable terms, or at all. Our ability to raise additional capital may be adversely impacted ifby our expected FDA feedback is negative,the potential worsening global economic conditions and disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from public health epidemics or outbreaks, bank failures, potential tariffs, the conflict between Russia and Ukraine, the conflicts in the Middle East, government shutdowns and monetary policy changes of federal agencies that have increased interest rates to address increasing inflationary pressures on the economy. If such disruptions persist and deepen, we could experience an inability to access additional capital. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or other operations, potentially entirely,operations or enter into partnerships or otherwise monetize our pipeline through strategic transactions on terms that may not be as favorable to us as if we developed or commercialized the product candidates ourselves. Further, we may not be able to access a portion of our existing cash, cash equivalents and investments due to market conditions.

We are highly dependent on the successful planned or future development of our current product candidates, including itolizumab (EQ001)EQ504 and to a lesser extent EQ302 if we resume development activities,EQ302, and we may not be able to obtain regulatory or marketing approval of, or successfully commercialize, these product candidates in any of the indications for which we plan to develop them.

Our future success will depend almost entirely on our ability to successfully develop, obtain regulatory approval of and then successfully commercialize itolizumab (EQ001) and potentially EQ302 if we resume development activities, in any of the indications for which we are currently planning to develop them, including treatment of aGVHD with itolizumab (EQ001) or treatment of celiac diseaseEQ504 or other gastrointestinalproduct conditions with EQ302,candidates, which may never occur. We currently generate no revenues from sales of any biopharmaceutical products, and we may never be able to develop or commercialize a marketable biopharmaceutical product.

Before we canwould be able to market and sell any of our product candidates in the United States, we willwould need to manage research and development activities, commence and complete our planned or future clinical studies, obtain necessary regulatory approvals from the FDA and build a commercial organization or enter into a marketing collaboration with a third party, among other things. We cannot assure you that we will be able to successfully complete the necessary planned or future clinical studies and/or obtain regulatory approval and develop sufficient commercial capabilities for any of our product candidates. Further, we may decide to modify the design of our planned or future clinical studies, which could adversely impact the likelihood of obtaining regulatory approval. We have not submitted a BLA or an NDA to the FDA or filed for approval with any other regulatory authority outside the United States for any product candidate. Further, our product candidates may not receive regulatory approval even if they are successful in planned or future clinical studies. If we do not receive regulatory approvals, our business, prospects, financial condition and results of operations will be adversely affected. Even if we obtain regulatory approval, we may never generate significant revenues from any commercial sales of any of our products. If any of our product candidates are approved and we fail to successfully commercialize them, we may be unable to generate sufficient revenues to sustain and grow our business, and our business, prospects, financial condition and results of operations will be adversely affected.

We may enter into partnerships or similar arrangements or otherwise monetize our pipeline through strategic transactions for purposes of raising additional capital and allocating our available capital and other resources to developing and commercializing our other or future product candidates. For example, in October 2024, we entered into the Stock Purchase Agreement with all the stockholders of Ariagen to acquire control of that company and its preclinical stage therapeutic drug product.product, Innow December 2022 we entered into the Asset Purchase Agreement with Ono pursuantreferred to whichas we granted Ono the exclusive option to acquire our rights to itolizumab (EQ001), which Ono subsequently decided not to exercise.EQ504. Despite our efforts, we may be unable to enter into future partnerships or otherwise monetize our pipeline through strategic transactions with third parties on favorable terms or at all. Supporting diligence activities conducted by third parties and negotiating the financial and other terms of a strategic arrangement are long, costly and complex processes with uncertain results, and we may fail to derive any financial benefit from these activities. Any efforts toward finding a strategic partner for one or more of our product candidates may divert the time and attention of our management away from their day-to-day activities, which may adversely affect our focus on the discovery and development of our current product candidates that we intend to continue to develop and commercialize. Further, potential strategic partners may develop alternative products or pursue alternative technologies either on their own or in collaboration with others, potentially resulting in us receiving no future milestone or royalty payments under any such arrangement. We may enter into a strategic transaction for one or more of our product candidates that prove to be more successful than the product candidates we decide to continue to develop and commercialize. As a result, our financial position and the return we realize on our research and development activities could be negatively affected, and we could be required to seek additional funding to support our operations through equity offerings, debt financings or other capital sources, which could result in substantial dilution to our existing stockholders and could cause the price of our common stock to decline.affected. Any of the foregoing could have a material adverse effect on our competitive position, business prospects, financial condition and results of operations.

The development and potential commercialization of our product candidates will require substantial additional capital to fund expenses. We may, in the future, decide to collaborate with biotechnology or pharmaceutical companies for the development and potential commercialization of product candidates. We will face significant competition in seeking appropriate collaborators. We may not be successful in our efforts to establish other strategic partnerships or alternative arrangements for any product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and potential parties may not view such product candidates as having the requisite potential to demonstrate safety and efficacy. If and when we collaborate on the development and commercialization of product candidates, we can expect to relinquish some or all of the control over the future success of that product candidate to the partner. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.factors, Thosemany factorsof which may includebe theout following:of our control.

TheAny collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. We may also be restricted under any license agreements from entering into agreements on certain terms or at all with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators and changes to the strategies of the combined company. As a result, we may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of such product candidate, reduce or delay one or more of our other development programs, delay the potential commercialization or reduce the scope of any planned sales or marketing activities for such product candidate, or increase our expenditures and undertake development, manufacturing or commercialization activities at our own expense. If we elect to increase our expenditures to fund development, manufacturing or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our future product candidates or bring them to market and generate product revenue. Even if we are successful in our efforts to establish such collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such collaborations if, for example, development approval of a product candidate is delayed, the safety of a product candidate is questioned or sales of an approved product candidate are unsatisfactory.

We have limited experience in clinical development and have not successfully completed late-stage clinical studies or obtained regulatory approval offor any product candidate.

We initiatedpreviously ourconducted first clinical study in the first quarter of 2019, which was afour Phase 1 studies, one Phase 2 study and one Phase 3 study of discontinued product candidates and indications. To date we have not successfully completed late-stage clinical studies or obtained regulatory approval for any product candidate. Prior to initiating a clinical study of itolizumabEQ504, (EQ001)data forfrom theanimal treatment of aGVHD. Since then, we have initiated three additional clinicaltoxicology studies ofwill itolizumabbe (EQ001),required twoas ofwell whichas wereformulation Phase 1 clinical studies in uncontrolled asthma and lupus/LN and one was a Phase 3 clinical study in aGVHD. The Phase 1 studies of itolizumab (EQ001) have been completed. The Phase 3 study in aGVHD stopped enrollment in October 2024 and long-term patient follow-up is currently ongoing. We completed a Phase 1 first-in-human clinical study of EQ102 in healthy volunteers in Australia and a Phase 2 clinical study of EQ101 in subjects with AA in Australia and New Zealand. We currently have two active INDs with the FDA for the use of itolizumab (EQ001) in the treatment of aGVHD and LN. Through the acquisition of Bioniz, we also have INDs with the FDA for the use of EQ101 in the treatment of HTLV-I-associated myelopathy/tropical spastic paraparesis, cutaneous T cell lymphoma, or CTCL, and AA.development. Because of our limited interaction with the FDA, we may not learn of certain information or data that the FDA may request until future interactions. In part because of our limited infrastructure, experience conducting clinical studies as a company and regulatory interactions, we also cannot be certain that our ongoingplanned andor future clinical studies will be completed on time, if at all, that our planned or future clinical studies will be initiated on time, if at all, or that our planned development programs would be acceptable to the FDA.

Adverse safety and toxicology findings may emerge as we conduct non-clinicalour planned or future nonclinical research or clinical studies. In addition, success in early clinical studies does not mean that later clinical studies will be successful, because later-stage clinical studies may be conducted in broader patient populations and involve different study designs. For example, results seen in clinical studies of itolizumab conducted by Biocon may not be predictive of the results ofFurthermore, our clinicalplanned studies of itolizumab (EQ001). Furthermore, ouror future clinical studies will need to demonstrate sufficient safety and efficacy in larger patient populations for approval by the FDA. Companies frequently suffer significant setbacks in advanced clinical studies, even after earlier clinical studies have shown promising results, and we cannot be certain that we will not face similar setbacks. Moreover, non-clinicalnonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in non-clinicalnonclinical studies and clinical studies have nonetheless failed to obtain marketing approval of their products. In addition, only a small percentage of product candidates under development result in the submission of a BLA oran NDA to the FDA and even fewer are approved for commercialization.

Our ability to generate product revenues, which we do not expect will occur for at least the next several years, if ever, will depend heavily on our ability to raise additional capital and successfully complete the above activities and any other activities required for the successful development and eventual commercialization of our product candidates. The success of our product candidates will further depend on factors such as:

completion of our ongoingplanned andor future non-clinicalnonclinical and clinical studies with favorable results, including activities that may be adversely impacted by public health epidemics or outbreaks;

acceptance of INDs by the FDA for our planned or future clinical studies, as applicable;

timely and successful enrollment in, and completion of, our planned or future clinical studies with favorable results;

maintaining arrangements with Biocon, our manufacturer of itolizumab (EQ001), for cell lines and drug product clinical supply and, if and when approved, for commercial supply of itolizumab (EQ001) and with our other CMOs for clinical supply and, if and when approved, commercial supply of EQ504 and EQ302, if we resume development;

obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates; and maintaining a continued acceptable safety profile of our products, followingif approval.and when approved.

We acquired the exclusive worldwide rights to EQ101EQ302 and a proprietary platform for discovering additional, novel multi-cytokine targeting product candidatescandidates, such as EQ302EQ302, through the acquisition of Bioniz Therapeutics, Inc., or Bioniz, in February 2022. That product discovery platform can be leveraged to design novel peptides to target and inhibit multiple cytokines that are involved in validated biological and disease pathways. We also have ongoing translational biology programs to assess the therapeutic utility of our product candidates in additional indications where the mechanism of action is believed to play an important role in the pathogenesis of a particular disease. Our selection of current and future indications is driven by our analysis of the scientific, translational, clinical and commercial rationale for advancing our product candidates into further development.

Since our inception, substantially all of our efforts have been focused on organizing and staffing our company, business planning, raising capital, in-licensing rightsproduct to itolizumab (EQ001),rights, conducting preclinical development, filing three Investigational New Drug applications, or INDs, conducting clinical development of itolizumab (EQ001), EQ101 and EQ102,development, conducting CMC and formulation development activities, conducting business development activities such as the acquisitions of Bioniz and Ariagen, the Asset Purchase Agreement with Ono and other transactions not completed, implementing a prior stock repurchase program, and the general and administrative activities associated with operating a public company.biotech Furthermore,company infocused connectionon ouradvancing acquisitions,novel we expanded our pipeline to multiple product candidates, all at various stages of development. This expansion may accelerate the rate at which our operating losses increase as we incur costs to further the development and seek regulatory approval for these product candidates.therapeutics. We have generated revenue from theour Asset Purchase Agreement with Ono, related to thea one-time, upfront payment from Ono in exchange for an exclusive option to acquire our rights to itolizumab (EQ001), or the OptionOption, as well as from the itolizumab (EQ001) development funding from Ono. Ono made a strategic business decision to allow its Option to expire on October 30, 2024 and, as a result, the Asset Purchase Agreement automatically terminated on that date pursuant to its terms. We have not generated any revenue from product sales, milestone payments or royalties. Since inception, we have primarily financed our operations through debt and equity financings and revenue generated from the Asset Purchase Agreement.

We have incurred losses since our inception. For the years ended December 31, 20242025 and 2023,2024, our net losses were $8.1$22.4 million and $13.3$8.1 million, respectively. As of December 31, 2024,2025, we had an accumulated deficit of $193.8$216.2 million. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development activities, preclinical and clinical activities, acquired in-process research and development,activities and general and administrative costs associated with our operations.

We expect to continue to incur significant expenses and operating losses into the foreseeable futurefuture. We anticipate our expenses will increase substantially as we advance our research and development activities,activities includingfor theEQ504, ongoingpotentially andpursue any future development of itolizumab (EQ001), potentially resume development activities related to EQ302, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new product candidates, including preclinical drug candidates identified through our multi-cytokine targeting drug discovery platform, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property, and incur general corporate costs. Although we have recently implemented operating changes and plan to take further actions as necessary to decrease our expenditures and conserve our cash, weWe expect that our existing cash,cash and cash equivalents and short-term investments as of December 31, 2024,2025 plus the gross proceeds from the March Private Placement will enable us to fund our operations into the third quarter of 2025, based on certain assumptions and estimates that may prove to be inaccurate. As a result, there is substantial doubt about our ability to continue as a going concern. If we are unsuccessful in raising additional capital, which ability would be adversely impacted if our expected FDA feedback is negative, we expect we will need to promptly pursue strategic alternatives, including mergers, or wind up the company’s operations entirely.2029.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for itolizumabEQ504, (EQ001), EQ302 if we resume development activities,EQ302, or any future product candidate, which is unlikely to happen within the next 12 months, if ever. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. However, we may not be able to secure additional financing or enter into such other arrangements in a timely manner or on favorable terms, if at all. As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, government shutdowns, bank failures, potential tariffs, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including from diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Our failure to raise capital, which ability would be adversely impacted if our expected FDA feedback is negative,capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

To date, we have not generated any revenues from therapeutic product sales, developmental milestones or royalties. In 2022, 2023 and 2024, our revenues were derived from an upfront payment under the Asset Purchase Agreement as well as from development funding from Ono. In the future, we may generate revenue from collaboration or license agreements we may enter into with respect to our product candidates, as well as product sales from any approved product, which approval is unlikely to happen within the next 12 months, if ever. Our ability to generate product revenues will depend on the successful development and eventual commercialization of itolizumab (EQ001), EQ302 if we resume development activities,EQ504 and any future product candidates. If we fail to complete the development of itolizumab (EQ001), EQ302 if we resume development activities,EQ504, or any future product candidates in a timely manner, or to obtain regulatory approval for our product candidates, our ability to generate future revenue and our results of operations and financial position would be materially adversely affected.

Research and development expenses primarily consist of costs associated with our non-clinicalnonclinical research and clinical development of our product candidates. Our research and development expenses include:

costs related to preparing and filing three INDs with the FDA and other regulatory interactions and submissions;

external expenses related to chemistry, manufacturing, and controls, or CMC,CMC and supply of drug product; and costs related to general overhead expenses such as travel, insurance, rent expenses, lab supplies and equipment associated with our research and development activities.

Our direct research and development expenses consist principally of external costs, such as fees paid to CROs and consultants in connection with our non-clinicalnonclinical research and clinical development.

We plan to continue to incur substantial research and development expenses for the foreseeable future as we advance the development of itolizumab (EQ001),EQ504, and EQ302potentially if resume development activities,EQ302, potentially expand the number of indications for which we are developing those product candidates, and potentially acquire or develop new product candidates. The successful development of itolizumab (EQ001)EQ504 and EQ302 if we resume development activities is highly uncertain. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of our product candidates or the period, if any, in which material net cash inflows from the sales from our product candidates may commence. Clinical development timelines, the probability of success, and development costs can differ materially from expectations.

Completion of planned of future clinical studies may take several years or more, and the length of time generally varies according to the type, complexity, novelty, and intended use of a product candidate. The cost of clinical studies may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

the number of planned or future clinical studies required for approval;

the number of sites and the number of countries included in our planned or future clinical studies;

the inefficiencies and additional costs related to any delays and potential restarts of planned or future clinical studies;

the number and complexity of procedures, analyses and tests performed during our planned or future clinical studies;

the costs of procuring drug product for our planned or future clinical studies;

Other Expense,Income (Expense), Net

Other expense,income (expense), net consists primarily of foreign currency transaction gains and losses related to our Australian subsidiary.

During the year ended December 31, 2025, there was no revenue recognized under our Asset Purchase Agreement with Ono. During the year ended December 31, 2024, we recognized revenue of $41.1 million under our Asset Purchase Agreement with Ono. For the year ended December 31, 2024, development funding represented $28.3 million and amortization of the upfront payment represented $12.8 million.

Other Expense,Income (Expense), Net

Other expense,income (expense), net was other income of $0.4 million for the year ended December 31, 2025, compared to other expense of $0.8 million for the year ended December 31, 2024,2024. comparedThe tochange $0.1in millionother income (expense), net for the year ended December 31, 2023.2025, Forcompared to the yearssame endedperiod Decemberin 31,2024, 2024 and 2023, other expense, net consistedwas primarily ofdue to fluctuations in net realized foreign currency transaction lossesunrealized relatedgains toand our Australian subsidiary.losses.

Even if our product candidates receive marketing approval in any indication, they may fail to achieve the degree of market acceptance by physicians, patients, hospitals, healthcare payors and others in the medical community necessary for commercial success; and We have in the past and may in the future fail to maintain compliance with the listing requirements of the Nasdaq Capital Market, and as a result, our common stock may be delisted from the Nasdaq Capital Market which could have a material adverse effect on our financial condition and could make it difficult for you to sell your shares.

We are a clinical-stage biotechnology companyinnovator incorporated in March 2017 with a mission to develop highly impactful therapies to treat severe autoimmune and inflammatory disorders, and our operations, to date, have consisted primarily of organizing and staffing our company, business planning, raising capital, in-licensing product rights, conducting clinical and preclinical development, filing INDs, conducting CMC and formulation development activities, conducting business development activities and the general and administrative activities associated with being a public company. We have never completed the development of any product candidate through to marketing approval, and we have never generated any revenue from sales of an approved product. Consequently, we have no meaningful operations upon which to evaluate our business, and predictions about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing biopharmaceutical products.

Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable. We have never generated any revenues from sales of an approved product, and we cannot estimate with precision the extent of our future losses. For the threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025, our net losses were $5.3$10.0 million and $8.7$22.4 million, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $221.5$226.2 million. We expect to incur operating losses for the foreseeable future as we execute our plan to perform research and development activities, conduct preclinical and clinical studies on EQ504EQ504, EQ302 and potentially other product candidates, potentially perform discovery research, conduct formulation development of our product candidates, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new products and/or product candidates, seek regulatory approvals of and potentially commercialize any approved products, hire and retain additional personnel, maintain compliance with regulatory requirements, protect our intellectual property, and manage the administrative aspects of our business. Furthermore, strategic transactions have and may in the future accelerate the rate at which our operating losses increase, including as a result of preclinical, clinical and regulatory expenses incurred to advance our potential product candidates. In addition, if we obtain regulatory approval of any of our product candidates, we expect to incur increased sales and marketing expenses, with certain of such investments potentially being made in advance of an approval. As a result, we expect to continue to incur significant operating losses and negative cash flows for the foreseeable future. These losses have had and will continue to have an adverse effect on our financial position and working capital.

We expect our expenses to potentially increase substantially over the next few years if EQ504EQ504, EQ302 or other product candidates successfully advance through additional stages of development which may include larger, more expensive clinical studies. The development of biotechnology product candidates is capital intensive. As we conduct nonclinical research and clinical development of our product candidates, we will need substantial additional funds to maintain and expand our capabilities in a variety of areas including discovery and nonclinical research, clinical development, regulatory affairs, product development, product quality assurance, and pharmacovigilance. In addition, if we obtain marketing approval of any of our product candidates, we expect to incur significant commercialization expenses for marketing, sales, manufacturing and distribution. Some of those commercialization investments may be made at-risk in advance of receiving an approval.

We expect to use the net proceeds from the March 2026 Private Placement and August 2025 Private Placement to accelerate the clinical development of EQ504 into a Phase 1 proof-of-mechanism study in mid-2026,the fourth quarter of 2026, with data expected to follow approximately six months thereafter. However, we cannot provide any assurances that we will be able to obtain data within those time frames or that the data which may be obtained will be favorable to the further clinical development of EQ504. With respect to the August 2025 Private Placement, we cannot provide any assurances that the milestones related to the clinical study initiation and stock price conditions will be met or that the second closing will occur.

As of MarchJune 31,30, 2026, we had $61.3$57.2 million in cash and cash equivalents. We expect that our cash and cash equivalents as of the filing of this Quarterly Report on Form 10-Q will enable us to fund our operations into 2029, based on certain assumptions and estimates that may prove to be inaccurate.

We do not have sufficient funds to complete the clinical development of EQ504EQ504, EQ302 or any of our product candidates. We will need to raise substantial additional capital to complete the development and commercialization of EQ504EQ504, EQ302 and any other product candidates, which additional capital, if capable of being raised, may be raised through the sale of our common stock or other securities or through the entering into of alternative strategic transactions, the terms of which may require us to divest one or more of our product candidates, or cause our stockholders to incur substantial dilution.

the initiation, progress, timing, costs and results of our planned or future nonclinical and clinical studies of EQ504, EQ302 and other future product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks, the evolving conflict between Russia and Ukraine, the conflictconflicts in the Middle East, government shutdowns, bank failures, tariffs and inflationary pressures on the economy;

the cost, timing and outcome ofwith respect to any regulatory reviewfiling ofor submission including any New Drug Application, or NDA, that we may submitmake for our product candidates;

the costs and timing of manufacturing EQ504EQ504, EQ302 and other product candidates;

the cost associated with commercializing EQ504EQ504, EQ302 or any of our other product candidates, if approved for commercial sale; and the cost, timing and impact of our new cryptocurrency treasury reserve strategy, if implemented.

In August 2025, we amended the 2023 ATM Facility with Jefferies LLC, to replace Jefferies LLC as the sales agent with LifeSci Capital LLC. Under the 2023 ATM Facility, we may offer and sell shares of our common stock having an aggregate offering price of up to $75.0 million from time to time through LifeSci Capital LLC acting as our sales agent. AsWe ofdid not sell any shares under the 2023 ATM Facility during the six months ended June 30, 2026 or through the filing date of this Quarterly Report on Form 10-Q,10-Q. weAs haveof soldthe 1,719,485filing sharesdate, $75.0 million is available for future sales under the 2023 ATM Facility.

We are highly dependent on the successful planned or future development of our current product candidates, EQ504 and EQ302, and we may not be able to obtain regulatory or marketing approval of, or successfully commercialize, these product candidates in any of the indications for which we plan to develop them.*

Our future success will depend almost entirely on our ability to successfully develop, obtain regulatory approval of and then successfully commercialize EQ504EQ504, EQ302 or other product candidates, which may never occur. We currently generate no revenues from sales of any biopharmaceutical products, and we may never be able to develop or commercialize a marketable biopharmaceutical product.

We have limited experience in clinical development and have not successfully completed late-stage clinical studies or obtained regulatory approval for any product candidate.*

We previously conducted four Phase 1 studies, one Phase 2 study and one Phase 3 study of discontinued product candidates and indications. To date we have not successfully completed late-stage clinical studies or obtained regulatory approval for any product candidate. Prior to initiating a clinical study of EQ504, data from animal toxicology studies will be required as well as formulation development. Because of our limited interaction with the FDA, we may not learn of certain information or data that the FDA may request until future interactions. In part because of our limited infrastructure, experience conducting clinical studies as a company and regulatory interactions, we also cannot be certain that our planned or future clinical studies will be completed on time, if at all, that our planned or future clinical studies will be initiated on time, if at all, or that our planned development programs would be acceptable to the FDA.

maintaining arrangements with our CMOs for clinical supply and, if and when approved, commercial supply of EQ504 and EQ302, if we resume developmentEQ302;

We expect to be ready to initiate a Phase 1 proof-of-mechanism study of EQ504 in mid-2026,the fourth quarter of 2026, and we may conduct this study at clinical sites outside of the United States. In addition, if we advance EQ302 or our other future product candidates into clinical studies, we may decide to utilize clinical sites in countries outside of the United States. Although the FDA may accept data from clinical studies conducted entirely outside of the United States and not under an IND, acceptance of such clinical study data is generally subject to certain conditions. For example, the FDA requires the clinical study to have been conducted in accordance with GCPs, and the FDA must be able to validate the data from the clinical studies through an onsite inspection if it deems such inspection necessary. In addition, when clinical studies are conducted only at sites outside of the United States, the FDA generally does not provide advance comment on the clinical protocols for the studies, and therefore there is an additional potential risk that the FDA could determine that the study design or protocol for a non-U.S. clinical study was inadequate, which would likely require us to conduct additional clinical studies. Conducting clinical studies outside the United States also exposes us to additional risks, including risks associated with:

We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us. If their product candidates are shown to be safer or more effective than ours, then our commercial opportunity will be reduced or eliminated.*

We are aware that other products addressing the same indications as EQ504 and EQ302 are in development, and some have been approved. There are multiple private and public companies with numerous active clinical development programs for the treatment of UC.UC and other GI diseases such as celiac disease. Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, nonclinical studies, conducting clinical studies, obtaining regulatory approvals and marketing approved products than we have. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical study sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs. In addition, these larger companies may be able to use their greater market power to obtain more favorable distribution and sales-related agreements with third parties, which could give them a competitive advantage over us.

If market opportunities for our product candidates are smaller than we believe they are, our potential revenue may be adversely affected and our business may suffer.*

We do not own or operate, and currently have no plans to establish, any manufacturing facilities. We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for clinical testing, as well as for manufacture of any products that we may commercialize, if approved. Currently, many of our suppliers are located outside of the United States, and our principal suppliers of critical raw materials and active pharmaceutical ingredients, or APIs, are located in the U.S., Europe and China, consistent with broader industry practices. We also rely on specialized laboratory equipment, supplies, materials, and precursor compounds, all or part of which we believe may be ultimately sourced from multiple countries outside the United States, to advance our research and development efforts. Contract manufacturing organizations may become subject to legislation, trade restrictions, sanctions, tariffs and other regulatory requirements by the U.S. government, which could restrict or even prohibit our ability to work with such entities or otherwise substantially increase our manufacturing costs, thereby potentially disrupting the supply of material to us or requiring us to scale back our manufacturing activities. For example, the United States has recently passed legislation, namely the BIOSECURE Act, to prohibit U.S. federal executive agencies from procuring or obtaining any biotechnology equipment or service produced or provided by a “biotechnology company of concern” or entering into or renewing a contract, loan, or grant with an entity that uses such biotechnology equipment or equipment. Specifically, on December 18, 2025, the President signed the National Defense Authorization Act, or NDAA, for fiscal year 2026 into law, which includes the BIOSECURE Act. The BIOSECURE Act prohibits the U.S. government from procuring or obtaining biotechnology equipment or services produced or provided by a “biotechnology company of concern,” or BCC; entering into, extending, or renewing government contracts with an entity that directly or indirectly uses biotechnology equipment or services from a BCC in performance of that federal contract; and/or issuing grants or loans to purchase, obtain, or use biotechnology equipment or services produced by a BCC. The BIOSECURE Act also prohibits U.S. government loan and grant recipients from using federal loan or grant money to enter into contracts with entities that use equipment from BCCs in the performance of any federal prime contract or subcontract. Companies designated as a BCC include those that are identified on the U.S. Department of Defense’s annual List of Chinese Military Companies, also known as the 1260H List, and the U.S. Government also has the ability to designate entities as BCCs through a separate designation process. Given the BIOSECURE Act, we may be restricted in our ability to work with certain Chinese biotechnology companies to the extent we would contract with, or otherwise receive funding from, the U.S. government.

As a result, we and the third parties upon which we rely face a variety of evolving threats that could cause security incidents. Cyberattacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive data and information technology systems, and those of the third parties upon which we rely. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors.

Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, potential customers, regulators, and investors of security incidents. Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences. If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including the delay of development and commercialization of our product candidates); financial loss; and other similar harms. Security incidents and attendant consequences that we or our third-party providers could experience may negatively impact our ability to grow and operate our business.

Changes in healthcare law and implementing regulations, as well as changes in healthcare policy, may impact our business in ways that we cannot currently predict and may have a significant adverse effect on our business and results of operations.*

Also, there has been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which have resulted in several Congressional inquiries and proposed and enacted federal legislation, as well as state efforts, designed to, among other things, bring more transparency to product pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. For example, the IRA, among other things, (1) directs HHS to negotiate the price of certain high-expenditure, single-source drugs that have been on the market for at least seven years and biologics that have been on the market for at least eleven years covered under Medicare, or the Medicare Drug Price Negotiation Program, and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions began to take effect progressively in fiscal year 2023. On August 15, 2024, HHS announced the agreed-upon reimbursement prices of the first ten drugs that were subject to price negotiations, which took effect in January 2026. On January 17, 2025, HHS selected fifteen additional products covered under Part D for price negotiation in 2025, although the Medicare Drug Price Negotiation Program is currently subject to legal challenges. Each year thereafter more Part B and Part D products will become subject to the Medicare Drug Price Negotiation Program. The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented. On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework. At the state level, individual states in the United States are increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. For example, on June 15, 2026, the FDA approved Colorado’s Section 804 Importation Program, or SIP, proposal to import certain drugs from Canada for specific state healthcare programs. It is unclear how this and Florida’s similar program, approved by the FDA in 2024, will be implemented and whether they will overcome potential legal, regulatory, or industry challenges in the United States and/or Canada. The IRA’s drug pricing reforms have the potential to adversely impact our ability to successfully commercialize our product candidates and could lessen the real or perceived value of our product candidates, which would negatively impact our business.

state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers; and state and and foreign laws that require pharmaceutical companies to implement compliance programs and comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; track and report gifts, compensation and other remuneration provided to physicians, other health care providers, and certain health care entities; report information related to drug pricing; and/or ensure the registration and compliance of sales personnel. Additionally, some state and local laws require certain regulatory licenses to manufacture or distribute our products commercially and/or the registration of pharmaceutical sales representatives in the jurisdiction. Further, we may be subject to federal, state and foreign laws that govern the privacy and security of health information or personally identifiable information in certain circumstances, including state health information privacy and data breach notification laws which govern the collection, use, disclosure, and protection of health-related and other personal information, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.

regulatory or legal developments ofaffecting ours,us or our competitors’competitors;

In addition, the stock markets have experienced extreme price and volume fluctuations, including as a result of global pandemics, bank failures, tariffs, the conflict between Russia and Ukraine, and the conflictconflicts in the Middle East, that have affected and may continue to affect the market prices of equity securities of many life sciences companies. Stock prices of many biopharmaceutical companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business.

In October 2023, we entered into the 2023 ATM Facility with Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $21.95 million from time to time through Jefferies acting as our sales agent. On August 3, 2025, we entered into Amendment No. 1 to the 2023 ATM Facility pursuant to which Jefferies LLC was replaced by LifeSci Capital LLC as the sales agent under the 2023 ATM Facility. On September 19, 2025, we filed a prospectus supplemental with the SEC under which we may offer and sell shares of our common stock having an aggregate offering price of up to $75.0 million, pursuant to the 2023 ATM Facility, as amended. ForSince theJune inception-to-date period ended March 31, 2026, we sold 1,719,485 shares under the 2023 ATM Facility, as amended, for gross proceeds of approximately $1.0 million. As of March 31,30, 2026 and through the date of the filing of this Quarterly Report on Form 10-Q, we have not sold any additional shares under the 2023 ATM Facility,Facility. asWe amended.have $75.0 million available to sell under the 2023 ATM Facility.

As of MayAugust 8,7, 2026, we had 63,226,55663,408,082 shares of common stock outstanding, which excludes the pre-funded warrant shares totaling 30,816,705 related to the August 2025 Private Placement and 17,698,593 related to the March 2026 Private Placement until they are exercised. The sale of our shares of common stock and pre-funded warrants has significantly diluted the ownership interest of our stockholders from their ownership interest before such sales, and the potential sale of additional shares of common stock and pre-funded warrants if the second closing occurs will continue to significantly dilute their ownership interest. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will continue to be diluted and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.

The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of cryptocurrency or the ability of individuals or institutions such as us to own or transfer cryptocurrency. For example, in July 2025 the United States enacted the Guiding and Establishing National Innovation for U.S. Stablecoins Ac,Act, or the GENIUS Act, the first federal statute establishing prudential requirements for the issuance, reserve backing and supervision of U.S.-dollar-pegged stablecoins. In the same week, the House of Representatives passed the Digital Asset Market CLARITY Act of 2025, or the CLARITY Act, which—if ultimately enacted—would allocate jurisdiction between the SEC and Commodity Futures Trading Commission and create a market-structure framework for digital commodities; the bill now awaits Senate action. International laws, including the European Union’s Markets in Crypto Assets Regulation and the U.K.’s Financial Services and Markets Act 2023 have also recently taken effect.

We are a clinical-stage biotechnology innovator developingwith novela mission to develop highly impactful therapies to treat severe autoimmune and inflammatory disorders with the mission to develop life-changing therapeutics for patients.disorders. Our primary goal is to advance EQ504, our novel aryl hydrocarbon receptor, or AhR, modulator, into and through clinical development.

As of MarchJune 31,30, 2026, we had $61.3$57.2 million in cash and cash equivalents. From inception through MarchJune 31,30, 2026, substantially all of our efforts have been focused on research, development and the advancement of our clinical and preclinical product candidates. We have not yet generated product sales and as a result have incurred significant operating losses and negative cash flows from operations. As a result, we had an accumulated deficit of $221.5$226.2 million as of MarchJune 31,30, 2026. We expect to incur additional losses in the future to conduct research and development for which we will need to raise additional capital to implement.

We intend to commenceinitiate a Phase 1 placebo-controlled proof-of-mechanism study for EQ504, a preclinical stage, novel AhR modulator, in mid-2026,the fourth quarter of 2026, with data expected to follow approximately six months thereafter; provided, however, we cannot provide any assurances that we will be able to obtain data within those time frames or that the data which may be obtained will be favorable to the further clinical development of EQ504. Modulation of AhR, in multiple translational models, has been shown to have a therapeutically beneficial impact inducing anti-inflammatory cells and cytokines while reducing proinflammatory cells and cytokines and improving intestinal barrier function and repair. We initially intend to develop EQ504 for the treatment of ulcerative colitis, or UC, and other gastrointestinal, or GI, diseasesdiseases. withIn addition, we initiated IND-enabling development activities for EQ504 as a potential indicationinhaled expansiontherapy opportunitiesto for the treatment oftreat inflammatory lung diseases. We acquired the exclusive worldwide rights to EQ504 through the acquisition of Ariagen, Inc., or Ariagen, in October 2024.

EQ302 is a preclinical-stage, first-in-class, selective, bi-specific inhibitor of IL-15 and IL-21 formulated for oral delivery. Inhibiting IL-15 and IL-21 is believed to be an effective treatment approach for certain GI indications, including celiac disease. Preclinical and translational data has shown that EQ302 is a potent inhibitor of those two cytokines and is stable and permeable in the gut. Based on the unique mechanism of action of EQ302 and its product profile, including the advantage of oral delivery, we believe that EQ302 has the potential to be an attractive therapeutic option for GI diseases, such as celiac disease. We areinitiated evaluatingIND-enabling furtherdevelopment advancementactivities offor EQ302, including product manufacturing and toxicology studies capable of supporting a potential IND filing and a first-in-human clinical study.EQ302.

We have incurred losses since our inception. For the threesix months ended MarchJune 31,30, 2026 and 2025, our net losses were $5.3$10.0 million and $8.7$14.4 million, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $221.5$226.2 million. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development activities, preclinical and clinical activities and general and administrative costs associated with our operations.

We expect to continue to incur significant expenses and operating losses into the foreseeable future. We anticipate our expenses will increase substantially as we advance our research and development activities for EQ504,EQ504 potentially pursue any future development ofand EQ302, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new product candidates, including preclinical drug candidates identified through our multi-cytokine targeting drug discovery platform, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property, and incur general corporate costs. We expect that our existing cash and cash equivalents as of MarchJune 31,30, 2026 will enable us to fund our operations into 2029.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for EQ504, EQ302, or any future product candidate, which is unlikely to happen within the next 12 months, if ever. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. However, we may not be able to secure additional financing or enter into such other arrangements in a timely manner or on favorable terms, if at all. As a result of the conflict between Russia and Ukraine, the conflictconflicts in the Middle East, government shutdowns, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including from diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

external research and development expenses related to nonclinical pharmacology and toxicology studies:;

We plan to continue to incur substantial research and development expenses for the foreseeable future as we advance the development of EQ504,EQ504 and potentially EQ302, potentially expand the number of indications for which we are developing those product candidates, and potentially acquire or develop new product candidates. The successful development of EQ504 and EQ302 is highly uncertain. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of our product candidates or the period, if any, in which material net cash inflows from the sales from our product candidates may commence. Clinical development timelines, the probability of success, and development costs can differ materially from expectations.

Interest income consists primarily of interest income earned on cash,cash and cash equivalents and short-term investments, and is recognized when earned.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

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

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We separate our research and development costs into two broad categories: direct and indirect. Additionally, with respect to direct research and development expenses, we further divide expenses into the following product candidate categories: EQ504, EQ302, Itolizumab (EQ001), EQ101- EQUATOR and EQ102.other Itolizumabassets. (EQ001)Research includesand sub-categoriesdevelopment for the clinical studiesexpenses associated with itolizumabthe (EQ001)other includingassets ourcategory EQUATOR,were EQUALISEimmaterial andin ulcerativeall colitisperiods study.presented. For direct research and development expenses, we track specific project research and development expenses that are directly attributable to our preclinical and clinical development product candidates that have been selected for further development. Such direct research and development expenses include nonclinical and clinical trial activities, external expenses related to CMC and supply of drug product and consulting expenses.

Research and development expenses decreased by $2.9$1.3 million and $4.3 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively, compared to the same periods in 2025. Direct external expenses decreased significantly for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025 primarily due to the wind down of our clinicalEQUATOR studiesstudy in 2025 including lower clinical development and CMC expenses as well as lower consulting expenses primarily related to the wind down of our EQUATOR study.expenses. Indirect expenses decreased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025 driven by lower employee compensation and benefits due primarily to lower headcount caused by the wind down of our clinicalEQUATOR studies.study.

Interest income was $0.3$0.5 million and $0.2$0.8 million for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to $0.1 million and $0.3 million for the three and six months ended June 30, 2025, respectively. The increase in interest income was primarily due to higher average cash and cash equivalents balances during the three and six months ended MarchJune 31,30, 2026 compared to the threesame monthsperiods ended March 31,in 2025.

Other (expense) income, net was other expense of $10,000$47,000 and $57,000 for the three and six months ended MarchJune 31,30, 2026, respectively, compared to other income of $43,000$0.4 million for each of the three and six months ended MarchJune 31,30, 2025.2025, respectively. The change relates primarily to an increase in net foreign currency transaction unrealized losses during the three and six months ended MarchJune 31,30, 2026 compared to the threesame monthsperiods ended March 31,in 2025.

From inception through MarchJune 31,30, 2026, we have financed our operations primarily through the sale of equity and debt securities and income generated from an asset purchase agreement that terminated in 2024. As of MarchJune 31,30, 2026, we had an accumulated deficit of $221.5$226.2 million and anticipate that we will continue to incur net losses for the foreseeable future. As of MarchJune 31,30, 2026, we had $61.3$57.2 million in cash and cash equivalents.

Since MarchJune 31,30, 2026 and through the date of the filing of this Quarterly Report on Form 10-Q, there have been no sales of our stock under the 2023 ATM Facility. We have $75.0 million available to sell under the 2023 ATM Facility.

We expect our expenses to increase substantially as we advance our research and development activities, including continued development of our clinical and preclinical asset,assets, EQ504,EQ504 and EQ302, including potential expansion into additional indications and potentially resuming development of EQ302.indications. We expect that our primary uses of capital will be for nonclinical research, clinical development, formulation development, CMC activities, product supply, potential acquisition of new products, legal and other regulatory compliance expenses, employee compensation and related expenses, insurance premiums, working capital and other general overhead costs.

We believe that our cash and cash equivalents as of MarchJune 31,30, 2026 can fund operations into 2029. We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Furthermore, our operating plans may change, and we may need additional funds sooner than planned. Additionally, the process of testing product candidates in clinical studies is costly, and the timing of progress in these studies is uncertain. Because the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of EQ504 and EQ302, or any of our other product candidates or whether, or when, we may achieve profitability.

the initiation, progress, timing, costs and results of our planned or future nonclinical and clinical studies of EQ504 and EQ302 and other future product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks, the evolving conflict between Russia and Ukraine, the conflictconflicts in the Middle East, bank failures, tariffs and inflationary pressures on the economy;

the cost, timing and outcome ofwith respect to any regulatory reviewfiling ofor submission including any New Drug Application, or NDA, that we may submitmake for our product candidates;

the costs and timing of manufacturing EQ504EQ504, EQ302 and other product candidates;

the legal and other transactional costs associated with our business development activities; and the cost associated with commercializing EQ504EQ504, EQ302 or any of our other product candidates, if approved for commercial sale.

Until such time as we can generate product revenues, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. The sale of additional equity or convertible debt could result in additional dilution to our stockholders and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. The incurrence of debt financing would result in debt service obligations and the governing documents would likely include operating and financing covenants that would restrict our operations. As a result of the conflict between Russia and Ukraine, the conflictconflicts in the Middle East, government shutdowns, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we raise additional funds through collaboration or license agreements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our common stock. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or other operations. Any of these actions could have a material effect on our business, financial condition and results of operations. We have experienced net losses and negative cash flows from operating activities since our inception and expect to continue to incur net losses into the foreseeable future. We had an accumulated deficit of $221.5$226.2 million as of MarchJune 31,30, 2026. We expect operating losses and negative cash flows to continue for at least the next several years as we incur costs related to the development of EQ504, EQ302 and any of our other product candidates.

During the threesix months ended MarchJune 31,30, 2026, cash used in operating activities was $4.3$8.4 million compared to $8.2$11.2 million during the threesix months ended MarchJune 31,30, 2025. Cash used in operating activities during the threesix months ended MarchJune 31,30, 2026 primarily related to our net loss of $5.3$10.0 million, adjusted for non-cash items of $1.0 million, primarily consisting of non-cash stock-based compensation expenses. Cash used in operating activities during three months ended March 31, 2025 primarily related to our net loss of $8.7 million, adjusted for non-cash items of $0.6$2.1 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in other operating assets and liabilities of $0.1$0.5 million. Cash used in operating activities during the six months ended June 30, 2025 primarily related to our net loss of $14.4 million, adjusted for non-cash items of $0.8 million, primarily consisting of non-cash stock-based compensation expenses, and net cash inflows from changes in other operating assets and liabilities of $2.4 million.

Net cash used in investing activities was approximately $3,000$0.1 million during the threesix months ended MarchJune 31,30, 2026 related to purchases of property and equipment.

Net cash provided by investing activities was $4.5 million during the threesix months ended MarchJune 31,30, 2025 and primarily consisted of maturities of our short-term investments.

Net cash provided by financing activities totaled $35.3$35.4 million during the threesix months ended MarchJune 31,30, 2026 and primarily consisted of net proceeds from the sale of shares under the March 2026 Private Placement transaction totaling $34.9$34.8 million and net proceeds totaling $0.4$0.6 million from the exercise of stock options.

Net cash provided by financing activities totaled $0.1 million during the threesix months ended MarchJune 31,30, 2025. We received net proceeds from the sale of shares under our 2023 ATM Facility totaling approximately $53,000. There were no sales of shares under the 2023 ATM Facility until March 2025.$37,000. During the threesix months ended MarchJune 31,30, 2025, we received proceeds totaling $38,000 from the exercise of stock options.