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

third-party actions claiming infringement by our product candidates in clinical trials outside the United States and obtaining injunctions interfering with our progress; and business interruptions resulting from geo-politicalgeopolitical actions, including war and terrorism, natural disasters including earthquakes, typhoons, floods, and wildfires, or disease.

As an organization, we have never completed late-stage clinical trials or submitted aan NDA, and may be unable to do so for any of our product candidates.

We will need to successfully complete clinical development, including late-stage clinical trials, in order to obtain FDA or comparable regulatory authority approval to market ribupatide injection or any future product candidates. Carrying out late-stage clinical trials and the submission of a successful NDA is a complicated process. As an organization, we are in the process of conducting Phase 3 clinical trials for ribupatide injection and have not yet completed any late-stage clinical trials for ribupatide injection or any other current and future product candidates. We have limited experience as a company in preparing, submitting and prosecuting regulatory filings and have not previously submitted aan NDA or other comparable foreign regulatory submission for any product candidate. We also plan to conduct a number of clinical trials for multiple product candidates in parallel over the next several years. This may be a difficult process to manage with our limited resources. In addition, we have had limited interactions with the FDA and cannot be certain how the FDA or comparable foreign regulatory authorities will require such trials to be designed. Consequently, we may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that supports a successful regulatory submission and approval of any of our product candidates. We may require more time and incur greater costs than our competitors and may not succeed in obtaining regulatory approvals of product candidates that we develop. Failure to commence or complete, or delays in, our planned clinical trials, could prevent us from or delay us in submitting NDAs for and commercializing our product candidates.

The U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies, including imposing several rounds of tariffs and export control restrictions affecting certain products manufactured in China, and most recently, proposing legislation that, if enacted would restrict trade with certain Chinese companies that provide biopharmaceutical research, development, and manufacturing services. Recently both China and the United States have each imposed tariffs indicating the potential for further trade barriers. In addition, in the past the U.S. Commerce Department has implemented export controls adding numerous Chinese entities to its “unverified list,” which requires U.S. exporters to go through more procedures before exporting goods to such entities. It is unknown whether and to what extent new tariffs, export controls, trade restrictions, or other new laws or regulations will be adopted, or the effect that any such actions would have on us or our industry. Sustained uncertainty about, or the further escalation of, trade and political tensions between the United States and China could result in a disadvantageous research and manufacturing environment in China, particularly for U.S. based companies, including retaliatory restrictions that hinder or potentially inhibit our ability to rely on manufacturing partners and other service providers that operate in China. For example, proposed legislation has been introduced in Congress that could prohibit, among other things, the use of U.S. government executive agency contract, grant, or loan funding to procure or obtain, or enter into, extend or renew contracts involving the use of certain equipment or services produced or provided by certain Chinese companies which could cause us to reevaluate our relationship with our certain of our existing manufacturing partners, including Hengrui.

We expect our current injectable product candidates will be regulated as combination products, as our therapeutic candidates will be administered by the patient using a disposable injector device (pre-filled syringe, autoinjector and/or multi-use pen) marketed together with the therapeutic candidate, if approved. Development of a product candidate as a combination product candidate requires close coordination within the FDA and within comparable regulatory agencies for review of each of the drug and device components that comprise the product and would typically be reviewed by different centers within the FDA if offered for use as standalone products. For example, the FDA’s review of a marketing application for a drug-device combination that has a primary mode of action as a drug would likely be subject to aan NDA with the Center for Drug Evaluation and Research as the lead center, with coordination with the Center for Devices and Radiological Health for the review of the device component. Although the FDA and comparable foreign agencies have or may have systems in place for the review and approval of such combination products, we may experience additional delays in the development and commercialization of such product candidates due to regulatory timing constraints and uncertainties in the product development and approval process. Furthermore, regulatory bodies like the FDA may require a human factors study, also sometimes referred to as a usability study, to evaluate how people interact with drug-device combination products in real-world settings to ensure they can be used safely and effectively, and the requirement to conduct a human factors study may delay or prevent approval of a drug-device combination product. Moreover, although we anticipate that the device component of any combination product candidates we develop will be reviewed within the usual time frames expected for the marketing authorization application for underlying therapeutic candidate, and that no separate marketing application for the device components of such product candidates will be required in the United States, the FDA or comparable regulatory authorities may delay approval or require us to conduct additional studies with the device, which may delay the approval of the combination product.

The development and commercialization of therapies for the treatment of obesity is highly competitive. Our product candidates, if approved, will face significant competition, including from well-established, currently marketed therapies that have been developed by large, well-known pharmaceutical companies, and our failure to demonstrate a meaningful improvement to the existing standard of care may prevent us from achieving significant market penetration. In particular, there is intense competition in the obesity field, especially with the advent of GLP-1 weight management medications, such as Wegovy, marketed by Novo Nordisk, and Zepbound, marketed by Eli Lilly. There are numerous other companies that have commercialized or are developing treatments for obesity that we will compete with, including Amgen, AstraZeneca, Boehringer Ingelheim, Merck, Pfizer, QL Biopharma, Roche, Structure Therapeutics, Viking Therapeutics and Zealand Pharma. We face competition from these companies and other major pharmaceutical and biotechnology companies, including specialty pharmaceutical companies, and academic institutions, governmental agencies and public and private research institutions, among others.

The issuance of a patent is not conclusive as to its inventorship, ownership, scope, validity, or enforceability, and our patent rights may be challenged in the courts or patent offices in the United States and abroad. We may be subject to post-grant proceedings at the USPTO challenging the validity of one or more claims of our owned and in-licensed patents. Third-party submissions may also be made prior to a patent’s issuance, precluding the granting of a patent based on our pending patent application. A third party may also claim that our owned and in-licensed patent rights are invalid or unenforceable in a litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. In addition, we may become involved in opposition, derivation, revocation, reexamination, reissue, interference, inter partes review, post-grant review proceedings or other similar proceedings in the United States and/or foreign jurisdictions challenging our patent rights.rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, our patent rights, and may allow third parties, including generic drug companies, to commercialize any of our current or future product candidates and use any other proprietary technologies we may develop to compete directly with us.

Many countries have compulsory licensing laws under which a patent owner or exclusive licensee may be compelled to grant licenses to third parties, including governmental agencies. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner or exclusive licensee may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected. In addition, geo-politicalgeopolitical actions in the United States and in foreign countries (such as the Russia and Ukraine conflict) could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents which could impair our competitive intellectual property position.

Numerous U.S. and foreign-issued patents and pending patent applications owned by third parties exist in the fields in which we plan to commercialize our programs (including obesity, weight loss and maintenance programs) and in which we are developing other proprietary technologies. As the biotechnology and pharmaceutical industries expand and more patents are issued, and as we gain greater visibility and market exposure as a public company, the risk increases that our programs and commercializing activities may give rise to claims of infringement of the patent rights of others. We cannot guarantee that our programs and other proprietary technologies we develop will not infringe existing or future patents owned by third parties. We may not be aware of patents that have already been issued for which a third party, such as a competitor in the fields in which we are developing our programs, might assert as infringed by us. It is also possible that patents owned by third parties of which we are aware, but which we do not believe we infringe or that we believe we have valid defenses to any claims of patent infringement, could be found to be infringed by us. For example, we are aware of certain patent applications and patents in the United States and abroad owned by third parties with patent claims thatthat, if valid and enforceable, may be relevant to KAI-7535 in the future. We are currently challenging one such granted patent by filing an opposition in the European Patent Office. Our opposition sets forth the grounds for invalidity of the current claims of the granted patent, although the ultimate outcome of the opposition remains uncertain. We may in the future challenge this and other patents or patent applications owned by third parties, including through opposition or other proceedings in the United States and abroad. It is not unusual that corresponding patents issued in different countries have different scopes of coverage, such that in one country a third-party patent does not pose a material risk, but in another country, the corresponding third-party patent may pose a material risk to any of our current or future product candidates. In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that we may infringe. For example, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover any of our current or future product candidates or the use of any of our current or future product candidates.

If any third-party claims that we infringe their patents or that we are otherwise employing their proprietary technology without authorization and initiates litigation against us, even if we believe such claims are without merit, a court could hold that such patents are valid, enforceable and infringed by us. Defense of infringement claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, and may impact our reputation. In the event of a successful claim of infringement against us, we may be enjoined from further developing or commercializing the infringing products or technologies. In addition, we may be required to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties and/or redesign our infringing products or technologies, which may be impossible or require substantial time and monetary expenditure. Such licenses may not be available on commercially reasonable terms or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms or at all, we may be unable to commercialize the infringing products or technologies or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business. In addition, we have and may in the future pursue patent challenges with respect to third-party patents, including as a defense against the foregoing infringement claims. The outcome of such challenges is unpredictable.

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited financial statements and 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 included in our final prospectus filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”) on April 17, 2026 (the “Prospectus”) that forms a part of our Registration Statement on Form S-1 (File No. 333-294690). This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. See also the section titled "Special Note Regarding Forward-Looking Statements." Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period. Unless the context otherwise requires, all references in this section to the “Company”, “Kailera”, “we”, “our” or “us” refers to the business of Kailera Therapeutics, Inc. and its subsidiaries.

Since our inception in May 2024, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, acquiring intellectual property rights, and conducting research and development activities for our product candidates. We do not have any products approved for sale and have not generated any revenue from any sources, including product sales. Through the issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we have funded our operations primarily with proceeds from the sale and issuance of shares of our convertible preferred stock, the issuance of convertible promissory notes, which converted into shares of convertible preferred stock, and proceeds from the sale and issuance of our common stock as part of our initial public offering.

Since our inception, we have incurred significant operating losses. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. Our net loss was $78.9 million and $18.0$190.2 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.2026. As of MarchJune 31,30, 2026, we had an accumulated deficit of $447.5$558.8 million. We expect to continue to incur significant expenses and recognize operating losses for at least the next several years as we advance our product candidates through later stage clinical development and seek regulatory approval of our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We may also incur expenses in connection with the in-licensing or acquisition of additional product candidates.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such timetime, asif ever, that we can generate significantproduct revenue fromsufficient productto sales,achieve if ever,profitability, we expect to finance our operations with proceeds from outside sources, with a majority of such proceeds to be derived from sales of equity securities. As we continue to pursue our business plan, we expect to finance our operations through a combination of equity offerings, debt financings, royalty financings or other capital sources, including current or potential future collaborations, licenses, and other similar arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of MarchJune 31,30, 2026, we had cash, cash equivalents and marketable securities of $581.9$1,171.8 million. We believe that the cash, cash equivalents and marketable securities on hand as of MarchJune 31,30, 2026, together with the $718.8 million of gross proceeds raised in our initial public offering subsequent to March 31, 2026,2026 will be sufficient to fund our operations into mid-2028. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and capital resources.”

Through MarchJune 31,30, 2026, we have not generated revenue from any sources, including product sales, and do not expect to generate any revenue from the sale of products in the near future. If development efforts for our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales.

The following table summarizes our results of operations for the periodthree frommonths Threeended MonthsJune Ended March 31,30, 2026 and 2025 (in thousands):

The following table summarizes our research and development expenses by program for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Research and development expenses increased by $60.7 million from $10.1$81.5 million for the three months ended MarchJune 31,30, 20252026, compared to $70.9 million for the three months ended MarchJune 31,30, 2026.2025. The increase was primarily driven by product candidate development and the related nonclinical, clinical, and contract manufacturing costs associated with our portfolio of injectable and oral development programs, as well as an increase in headcount, resulting in an increase in personnel-related expenses, including stock-based compensation,compensation expense, to support our ongoing research and development activities.

General and administrative expenses increased $3.5by million from $10.3$9.2 million for the three months ended MarchJune 31,30, 20252026, compared to $13.8 million for the three months ended MarchJune 31,30, 2026.2025. The increase was primarily driven primarily by anthe increaseexpansion inof headcount,our operations, resulting in increases in personnel-related expenses of $1.0 million, stock-based compensation expenses of $1.7 million, and increases in professional service costs asand wepersonnel-related continueexpenses, toincluding expandan ourincrease operations.of $4.6 million in stock-based compensation expenses.

Interest income increased by $7.9 million for the three months ended MarchJune 31,30, 20262026, and 2025 was $5.7 million and $1.7 million, respectively, which relatedcompared to interestthe earnedthree frommonths ourended cashJune equivalents30, and marketable securities balances.2025. The increase in interest income was primarily driven by higher cash equivalents and marketable securities balances.

Other income, net increased by $0.5 million for the three months ended MarchJune 31,30, 20262026, andcompared 2025to wasthe $0.1three millionmonths andended $0.8June million,30, respectively.2025. Other income, net for the three months ended MarchJune 31,30, 2026 primarily consisted primarily of miscellaneous income unrelated to our core operations. Other income, net for the three months ended MarchJune 31,30, 2025 primarily consisted primarilyof expense due to the change in fair value of our convertible promissory notes issued in May 2025, partially offset by income due to the change in fair value of the preferred stock tranche right liability.

Since our inception, we have not generated revenue from any sources, including from product sales, and have incurred significant operating losses and negative cash flows from our operations. As of MarchJune 31,30, 2026, we had cash, cash equivalents and marketable securities of $581.9$1,171.8 million and an accumulated deficit of $447.5$558.8 million. Through MarchJune 31,30, 2026, we have funded our operations primarily with proceeds from the sale and issuance of shares of our convertible preferred stock andstock, the issuance of convertible promissory notes, which converted into shares of convertible preferred stock.stock Subsequentand tothe Marchsale 31,and 2026, we received $718.8 millionissuance of grosscommon proceedsstock raisedas inpart of our initial public offering.

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

During the threesix months ended MarchJune 31,30, 2026, operating activities used $68.3$145.8 million of cash, cash equivalents and restricted cash, primarily due to our net loss of $78.9$190.2 million, offset by a $7.5$34.2 million net decrease in our operating assets and liabilities and non-cash charges of $3.1$10.1 million. The changes in operating assets and liabilities primarily related to a net increase in accrued expenses and other current liabilities of $9.4$24.4 million, a net increase in accounts payable of $11.8 million and a net decrease in other non-current assets of $2.3 million, partially offset by a net increase in non-current clinical deposits of $1.1$2.5 million and a net increase in prepaid expenses and other current assets of $1.2 million. Non-cash changes primarily consisted primarily of $3.9$12.3 million in stock-based compensation expense, partially offset by $1.2$2.9 million in net accretion of discounts on our investment portfolio.

During the threesix months ended MarchJune 31,30, 2025, operating activities used $18.2$44.4 million of cash, cash equivalents and restricted cash, primarily due to our net loss of $18.0$46.9 million, andoffset by a net increasedecrease of $1.0$0.4 million in our operating assets and liabilities,liabilities partially offset byand non-cash charges of $0.8$2.1 million. The changes in operating assets and liabilities primarily related to a net increase in accrued expenses and other current liabilities of $7.2 million and a net increase in prepaid expenses and other current assets of $2.7 million, partially offset by a net increase in accounts payable and accrued expenses of $1.7$6.2 million. Non-cash changes primarily consisted primarily of $1.5$3.2 million in stock-based compensation expense,expense and $1.0 million in changes in the fair value of the convertible promissory notes, partially offset by $0.8$1.4 million in changes in the fair value of the preferred stock tranche right liability.liability and by $1.0 million in net accretion of discounts on our investment portfolio.

During the threesix months ended MarchJune 31,30, 2026, investing activities providedused $22.8$548.2 million in cash, cash equivalents and restricted cash consisting of maturitiespurchases of investments of $71.3$738.3 million, partially offset by purchasesmaturities of investments of $48.4$190.1 million.

During the threesix months ended MarchJune 31,30, 2025, investing activities used $54.4$128.6 million in cash, cash equivalents and restricted cash consisting of purchases of investments of $54.4$136.6 million, partially offset by maturities of investments of $8.0 million.

During the threesix months ended MarchJune 31,30, 2026, financing activities usedprovided $3.0$664.0 million in cash, cash equivalents and restricted cash consisting of $3.0$668.4 million in net proceeds received from the initial public offering after deducting commissions and underwriting discounts, $0.5 million in proceeds from the exercise of stock options, offset by $4.9 million in payments of deferred offering costs related to our initial public offering, partially offset by $0.1 million in proceeds from the exercise of stock options.offering.

We believe that the cash, cash equivalents and marketable securities on hand as of MarchJune 31,30, 2026, together with the $718.8 million of gross proceeds raised in our initial public offering subsequent to March 31, 2026,2026 will be sufficient to fund our operations into mid-2028. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

The following table summarizes our contractual obligations as of MarchJune 31,30, 2026, and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:

In March 2025, we executed a new, seven-year, non-cancellable operating lease agreement for approximately 39,500 square feet of office space in Waltham, Massachusetts for our corporate headquarters. The lease commenced in October 2025 following completion of construction to prepare the premises for our intended use. The lease provides for base rent of $2.2 million for the first year, which will increase by approximately 2% each year. Our lease payments also include real estate taxes and other operating expenses allocable to the leased premises, which exceed base year amounts. Upon commencement of the lease, future minimum lease payments for the corporate headquarters were $15.9 million. We have the option to extend the lease for one additional five-year term with base rent calculated on the then-market rate. In accordance with the lease agreement, we maintained a letter of credit of $0.8 million, which is refundable at the end of the lease term. As of MarchJune 31,30, 2026, the underlying cash balance collateralizing this letter of credit was classified as restricted cash (non-current) on our condensed consolidated balance sheets based on the release date of the restrictions of this cash. In connection with the new lease agreement, we amended our existing lease in Waltham, Massachusetts to extend the lease term to end shortly after the lease commencement date of our new lease agreement, which occurred in the fourth quarter of 2025.

During the threesix months ended MarchJune 31,30, 2026, there were no material changes to our critical accounting estimates or in the methodology used for estimates from those described in “Management’s discussion and analysis of financial condition and results of operations” for the year ended December 31, 2025 included in the Prospectus.Prospectus, except as noted below.