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

seek regulatory approval for QTORIN rapamycin for the treatment of microcystic LMLM, cutaneous VMs, and/or clinically significant angiokeratomas, QTORIN pitavastatin for the treatment DSAP and any other product candidates that successfully complete clinical trials; continue clinical development of our product candidates, including our ongoingplanned Phase 3 clinicalpivotal trial for QTORIN rapamycin in patients with microcystic LM, and ongoing Phase 2 clinical trialstudy for QTORIN rapamycin in patients with cutaneous VMs;VMs, continueplanned preclinicalPhase development2 ofstudy our product candidates, includingfor QTORIN rapamycin for otherclinically mTOR-drivensignificant skinangiokeratomas, diseasesand planned Phase 2 study for QTORIN pitavastatin for DSAP which we plan to begin in the second half of 2026; continue IND-enabling development for QTORIN pitavastatin for the treatment of DSAP; establish a specialized commercial organization in the United States to commercialize any product candidate for which we obtain marketing approval; initiate and continue relationships with suppliers and manufacturers and have clinical and commercial quantities of our product candidates manufactured at acceptable cost and quality levels and in compliance with the FDA and other regulatory requirements; initiate additional clinical trials and preclinical studies for our other product candidates; seek to identify and develop or in-license additional product candidates; incur additional costs associated with operating as a public company, which will require us to add operational, financial, and management information systems and personnel, including personnel to support product development, any future commercialization efforts, and our transition to a public company; expand our infrastructure and facilities to accommodate our growing employee base, including adding equipment and physical infrastructure to support our research and development; and maintain, expand and protect our intellectual property portfolio.

To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining regulatory approval, procuring commercial-scale manufacturing, and marketing and selling any products for which we obtain regulatory approval. We have never obtained regulatory approval, procured commercial-scale manufacturing or marketed any product, and we may never succeed in these activities. Even if we do obtain regulatory approval for and begin commercializing QTORIN rapamycin for microcystic LM, cutaneous VMs, clinically significant angiokeratomas or any other indication, QTORIN pitavastatin for DSAP or any other indication or any future product candidates, our ability to become profitable will be dependent upon, in part and among other things, the size of the markets in the territories for which we gain regulatory approval, the number of competitors in such markets, the accepted price for any such product candidate and the degree of market acceptance we achieve.

We are a late clinical-stage biopharmaceutical company with a limited operating history. We have no products approved for commercial sale and have not generated any revenue from product sales. As an organization, we have limited experience successfully completing pivotal clinical trials, and have not yet demonstrated an ability to prepare and submit an NDA, obtain marketing approval, manufacture a commercial-scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, we have little or no meaningful operations upon which to evaluate our business, and predictions about our future success or viability may not be as accurate as it could be if we had a longer operating history or a history of successfully developing and commercializing pharmaceutical products.

As of December 31, 2024,2025, we had cash and cash equivalents of $83.6$58.0 million.million, Basedwhich, together with the $215.8 million in net proceeds from our recently completed public offering of common stock, and based upon our current operating plan, we believe that our cash and cash equivalents will be sufficient to fund our planned operations intofor at least the secondnext halftwelve months from the date of 2027.this Annual Report on Form 10-K. 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. To finance our operations beyond that point we may need to raise additional capital, which cannot be assured. Our operating plans may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. To the extent that we raise additional capital by issuing equity securities, our existing stockholders may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that could harm the rights of a common stockholder. Any agreements for future debt or preferred equity financings, if available, may involve covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, 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. 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.

As of December 31, 2024,2025, we had German corporate income tax and trade tax net operating loss carryforwards of approximately $210.3$219.4 million and $205.9$215.1 millionmillion, respectively. Under current German laws, tax loss carryforwards may only be used to offset any relevant later assessment period (calendar year) of $1.2 million plus 60% of the exceeding taxable income and trade profit of such period and do not expire. In addition, certain transactions, including transfers of shares or interest in the loss holding entity, may result in the partial or total forfeiture of tax losses existing at that date. Partial or total forfeiture of tax losses may further occur in corporate reorganizations of the loss holding entity.

Our lead product candidate, QTORIN rapamycin, is in clinical development and the risk of failure is high. It is impossible to predict when or if any of our product candidates will prove effective and safe in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. Clinical trial failure may result from a multitude of factors includingincluding, but not limited to, flaws in trial design, carryover effect, dose selection, placebo effect, patient enrollment criteria and failure to demonstrate favorable safety or efficacy, and failure in clinical trials can occur at any stage. For example, our Phase 2b clinical trial of QTORIN rapamycin in patients with Gorlin Syndrome and Phase 3 clinical trials of QTORIN rapamycin in patients with pachyonychia congenita failed to meet their respective primary endpoints.

WeIn arethe currentlyfirst conductingquarter of 2026, we reported topline data from our Phase 3 clinical trial of QTORIN rapamycin for the treatment of microcystic LM, and are planning for whicha wepotential expectNDA submission to reportthe top-line dataFDA in the firstsecond quarterhalf of 2026. We areintend alsoto conductingcommence a Phase 23 clinicalpivotal trial of QTORIN rapamycin for the treatment of cutaneous VMs, for which we expect to report top-line dataVMs in the fourthsecond half of 2026 and a Phase 2 trial of QTORIN rapamycin for the treatment of clinically significant angiokeratomas in the second quarter of 2025.2026. Additionally, we received written feedback from the FDA in the first quarter of 2026 on the proposed design of a Phase 2 study to evaluate QTORIN pitavastatin in subjects with DSAP, with trial initiation anticipated in the second half of 2026. Our other programs under evaluation for the treatment of other serious, rare genetic skin diseasesdiseases, vascular malformations and other genetic diseases are in early-stage preclinical development, or in the case of QTORIN pitavastatin, are in IND-enabling development.

regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site, or may halt or suspend an ongoing trial; clinical trials of our product candidates may fail to show safety, efficacy or an acceptable benefit-risk profile, produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical studies or clinical trials or abandon drug development programs; the design of any of our clinical trials may be flawed, and those flaws may not become apparent until such clinical trial is well advanced or completed; regulators may not agree with our selection of novel endpoints or other key clinical trial design features, such as choice of control, used in our clinical evaluation of our rare disease product candidates; for example, the FDA has commented that a placebo-controlled trial or additional trials assessing different clinical endpoints may be required to assess the efficacy of QTORIN rapamycin for the treatment of microcystic LMs; our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

We currently have no products that are approved for commercial sale. We are developing our lead product candidate, QTORIN rapamycin, for the treatment of twothree serious, rare genetic skin diseases. We arecompleted currentlyour Phase 3 clinical trial evaluating QTORIN rapamycin in patients with microcystic LM and are planning for a potential NDA submission in ourthe ongoingsecond half of 2026. We intend to commence a Phase 3 clinicalpivotal trial andevaluating QTORIN rapamycin in patients with cutaneous VMs in ourthe ongoingsecond Phasehalf 2of 2026. We are working on preclinical development of QTORIN rapamycin for the treatment of clinically significant angiokeratomas and plan to initiate a clinical trial. Additionally, we are developing other research-stage product candidates, but these product candidates arestudy in earlierthe stagessecond quarter of development.2026. We expect that a substantial portion of our efforts and expenditures over the next few years will be devoted to the continued clinical evaluation of QTORIN rapamycin and the commercialization of this product candidate for the treatment of microcystic LM, following regulatory approval, if received.approved. Accordingly, the success of our business, including our ability to finance our company and generate any revenue in the future, will primarily depend on the successful development, regulatory approval and commercialization of QTORIN rapamycin.

The clinical and commercial success of QTORIN rapamycin and any future product candidates will depend on many factors, including the following:

the ability to raise any additional required capital on acceptable terms, or at all; timely completion of our preclinical studies and clinical trials, which may be significantly slower or cost more than we currently anticipate and may depend substantially upon the performance of certain third-party contractors; the ability to demonstrate the safety, efficacy and acceptable benefit-risk profile of ourQTORIN product candidatesrapamycin to the satisfaction of the FDA and equivalent foreign regulatory authorities; delays in developing and testing, or inability to develop and test, any clinical outcome assessments to the extent necessary for the FDA and equivalent foreign regulatory authorities to agree to their use as endpoints utilized in a clinical trial to support labeling claims;

the prevalence, duration and severity of potential side effects or other safety issues experienced with ourQTORIN product candidates,rapamycin, if any, or experienced by competitors who are developing topical rapamycin (also known as sirolimus) products or who are targeting the same indications in the rare genetic skin diseases space; the timely receipt of necessary marketing approvals from the FDA and equivalent foreign regulatory authorities and, if granted, completion of any required post-marketing studies or trials and available funding to perform any such studies or trials; the ability of any CMO, upon which we rely to manufacture clinical and commercial supplies of our product candidates or any future product candidates to remain in good standing with relevant regulatory authorities and to develop, validate and maintain commercially viable manufacturing processes that are compliant with current good manufacturing practices (“cGMP”)cGMPs; our ability to successfully develop a targeted rare disease commercial strategy and thereafter establish sales, marketing and distribution capabilities to launch and commercialize ourQTORIN product candidatesrapamycin in the United States and internationally, if approved for marketing, reimbursement, sale and distribution in such countries and territories; acceptance by physicians, payors and patients of the benefits, safety and efficacy of ourQTORIN product candidates or any future product candidates,rapamycin, if approved; obtainment and maintenance of coverage, adequate pricing and adequate reimbursement from third-party payors, including government payors; our ability to retain subjects who have enrolled in a clinical study but may be prone to withdraw due to the rigors of the clinical trial, lack of efficacy, side effects, personal issues or loss of interest; the size of the potential markets for ourQTORIN rare disease product candidates,rapamycin, if approved; and our ability to establish and enforce intellectual property rights to ourQTORIN product candidates, any future product candidates, and commercial products,rapamycin, if any.

Even if we complete clinical testing and receive approval from the FDA or applicable equivalent foreign regulatory authorities for QTORIN rapamycin, the FDA or the equivalent foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post- market clinical trials, or impose restrictions on the product’s distribution in the form of a REMS. The FDA or the equivalent foreign regulatory authority may also approve QTORIN rapamycinrapamycin, for a more limited indication or a narrower patient population than we originally requested. In addition, the FDA or the equivalent foreign regulatory authorities may not approve QTORIN rapamycin with the labeling that we believe is necessary or desirable, or may approve it with labeling that includes warnings or precautions or limitations of use that may not be desirable for the successful commercialization of QTORIN rapamycin.

The factors outlined above, many of which are beyond our control, could cause us to experience significant delays or affect our ability to obtain regulatory approvals or commercialize QTORIN rapamycin. If we are unable to obtain regulatory approval and successfully commercialize ourQTORIN product candidates,rapamycin, our financial position will be materially adversely affected, and we may not be able to generate sufficient revenue to continue our business.

We expectreported to report top-linetopline data from our Phase 3 trial of QTORIN rapamycin for the treatment of microcystic LM in the first quarter of 2026 and are planning for a potential NDA submission in the second half of 2026. We reported topline data from our Phase 2 trial of QTORIN rapamycin for the treatment of cutaneous VMs in the fourth quarter of 2025.2025 and intend to commence a Phase 3 pivotal trial evaluating QTORIN rapamycin in patients with cutaneous VMs in the second half of 2026. Data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval of their drugs.

The FDA or any foreign regulatory authorities can delay, limit or deny approval of QTORIN rapamycin for the treatment of microcystic LMLM, cutaneous VMs, or clinically significant angiokeratomas, QTORIN pitavastatin for the treatment of DSAP or any future product candidates for many additional reasons, including:

the FDA or other equivalent foreign regulatory authorities may disagree with the number, design, size, conduct or implementation of our clinical trials; we may be unable to demonstrate to the satisfaction of the FDA or equivalent foreign regulatory authorities that any of our product candidates are safe and effective for the requested indication(s); the results of our clinical trials may not meet the level of statistical significance or clinical meaningfulness or establish an acceptable benefit-risk profile required by the FDA or other equivalent non-U.S.foreign regulatory authorities for marketing approval; the FDA or other equivalent non-U.S.foreign regulatory authorities may not accept data generated from our clinical trial sites; the FDA or other equivalent non-U.S.foreign regulatory authorities may find the chemistry, manufacturing and controls, or “CMC”, data insufficient to support the quality of our product candidates; the FDA or other equivalent non-U.S.foreign regulatory authorities may identify deficiencies in the manufacturing processes or facilities of our CMOs; the FDA or other equivalent non-U.S.foreign regulatory authorities may disagree with our assessment that the delivery device component associated with our QTORIN platform is a Class I device exempt from premarket notification requirements as well as Quality System Regulation; the FDA or equivalent non-U.S.foreign regulatory authorities may not approve the formulation, dosing, labeling or specifications; or the potential for approval policies or regulations of the FDA or theother equivalent non-U.S.foreign regulatory authorities to significantly change in a manner rendering our data insufficient for approval or invalidated.

Results from preclinical studies or early clinical trials are not necessarily predictive of future clinical trial results and are not necessarily indicative of final results. Our product candidates may fail to show the desired characteristics in clinical development sufficient to obtain regulatory approval, despite positive results in preclinical studies or having successfully advanced through earlier clinical trials. The results of past and future nonclinical studies and early clinical trials of QTORIN rapamycinrapamycin, QTORIN pitavastatin or any future product candidates may not be predictive of the results of later-stage clinical trials. Differences in trial design between early-stage clinical trials and later-stage clinical trials may make it difficult to extrapolate the results of earlier clinical trials to later clinical trials. For example, we announced topline results fromin our Phase 2 study of QTORIN rapamycin in patients with microcystic LM where, as is common in Phase 2 studies,LM, efficacy was evaluated as secondary endpoints without multiplicity adjustment or statistical analyses, and the results from this study may not be predictive of resultsbut in our ongoing Phase 3 study in microcystic LM whereLM, a single efficacy hypothesis will bewas tested as the primary endpoint. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Moreover, even though we are using and plan to use the same formulation of QTORIN rapamycin to support multiple investigational development programs in multiple product candidates, we cannot be certain that any success we have or may in the future have with respect to the development of QTORIN rapamycin for the treatment of microcystic LMsLMs, cutaneous VMs, or clinically significant angiokeratomas or QTORIN pitavastatin for the treatment of cutaneous VMsDSAP will lead to the successful development of QTORIN rapamycin or QTORIN pitavastatin for additional indications or additional product candidates.

In addition, the design of a pivotal clinical trial can determine whether our results will support approval of a product candidate and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced or completed. We have limited experience in designing and conducting pivotal clinical trials and we may be unable to successfully design and execute apivotal clinical trialtrials of our product candidates to support regulatory approval.

We arereported currentlytopline conductingdata afrom our Phase 32 clinical trial of QTORIN rapamycin for the treatment of microcysticcutaneous LM,venous for which we expect to report top-line datamalformations in the firstfourth quarter of 2026.2025. Even if the Phase 3 clinical trial of QTORIN rapamycin for the treatment of microcystic LM proves successful,However, we may be unable to duplicate these results in other clinical trials we may conduct. Additionally, even if the FDA or other regulatory authorities accept the novel clinical endpoints we establish in connection with our Phase 32 trial in microcysticcutaneous LM,venous malformations, there are no assurances that the FDA or other regulatory authorities will find the efficacy endpoints we propose in our future pivotal clinical trials to be sufficiently developed and tested and clinically meaningful, or that our product candidates will achieve the pre-specified endpoints in future pivotal clinical trials to a degree of statistical significance. For example, the FDA has commented that a placebo-controlled trial or additional trials assessing different clinical endpoints may be required to assess the efficacy of QTORIN rapamycin for the treatment of microcystic LM.

The rare genetic skin diseases and vascular malformations we are currently targeting have no FDA-approved therapies, which subjects the design and execution of our clinical development programs to complexities and known as well as unknown risks, including those related to novel and/or subjective clinical endpoints and varying patient population characteristics.

There are currently no FDA-approved therapies indicated for the treatment of microcystic LMsLMs, cutaneous VMs, clinically significant angiokeratomas or cutaneous VMs.DSAP. We have concentrated our current research and development efforts on developing effective therapies for these indications, in addition to other rare genetic skin diseasesdiseases, vascular malformations and rare genetic conditions in other disease areas, and our future success depends on the success of this approach. The clinical trial requirements of the FDA and other comparable regulatory agencies and the criteria these regulators use to determine the safety and efficacy of any product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential product. Given the nature of the genetic skin diseases we are targeting, the design and execution of our clinical development program is subject to both known and unknown risks.

As with QTORIN rapamycin for the treatment microcystic LMs or cutaneous VMs or clinically significant angiokeratomas, QTORIN pitavastatin for the treatment of DSAP, and any other indications or future product candidates that may require us to use new or novel endpoints or methodologies, the FDA or other regulatory authorities may not consider the endpoints of our clinical trials or the magnitude of treatment effect observed in our clinical trials to provide clinically meaningful results. Even if applicable regulatory authorities do not object to our proposed endpoints in an earlier-stage clinical trial, such regulatory authorities may require evaluation of additional or different clinical endpoints in later-stage clinical trials or may not accept the clinical endpoints evaluated in later-stage clinical trials. For example, while the primary endpoint in the Phase 3 clinical trial of QTORIN rapamycin for the treatment of microcystic LM employsemployed a dynamic assessment that usesused a comparative rating scale, which was also assessed as one of several efficacy endpoints in the Phase 2 study in microcystic LM, the FDA has recommended that primary efficacy in the treatment of microcystic LM to be evaluated on a static multicomponent assessment scale but also recommended that we provide a rationale for selecting the comparative rating scale should we proceed with a comparative rating scale. If the FDA does not agree with our primary endpoint, the FDA may instead consider the Phase 3 clinical trial’s key secondary endpoint, which is a static multicomponent assessment scale, as pivotal to assessing efficacy, if alpha-protected. Alternatively, the FDA may consider the study to not be adequate and well-controlled and could request additional clinical trials to assess a static multicomponent assessment scale as the primary endpoint. As a result, the design and conduct of our ongoing and future clinical trials andof any futureour product trialscandidates may take longer, be more costly or be less definitive.

Any delays in, or the denial of, approval of any of our product candidates resulting from our inability to establish effective trial designs for serious, rare genetic skin diseases or vascular malformations could materially adversely affect our business, financial condition, results of operations and prospects.

Our proprietary QTORIN platform is novel and was developed over several years of research to overcome inherent challenges, including chemical stability, skin penetration and skin distribution, with topical delivery of mTOR inhibitors, such as rapamycin and other therapeutic agents. QTORIN is an anhydrous gel comprising excipients intentionally selected in a ratio designed to achieve drug stability at room temperature and enable cutaneous distribution of therapeutics levels of cargoes into the target cells in the basal layer of the epidermis and to the dermis. Our product candidate for the treatment of microcystic LMsLMs, cutaneous VMs, and theclinically treatmentsignificant of cutaneous VMsangiokeratomas leverages QTORIN as a mechanism of delivery of a 3.9% concentration of rapamycin to treat the applicable disease. Our product candidate for the treatment of DSAP leverages QTORIN as a mechanism of delivery of pitavastatin. The QTORIN platform has only generated onetwo program candidatecandidates, QTORIN rapamycin for twothree indications to date,date and QTORIN rapamycin,pitavastatin for one indication to date, and clinical evidence to support thisthese candidatecandidates is preliminary and limited at this time.time by their respective stages of development.

QTORIN is the platform for our current clinical-stage product candidates and for other research-stage product candidates in our pipeline, and accordingly, our future success depends in significant part on the successful development of this novel technology. Negative results in the development of QTORIN rapamycin for either the treatment of microcystic LMsLMs, cutaneous VMs, or cutaneousclinically VMssignificant angiokeratomas, or of QTORIN pitavastatin for the treatment of DSAP, may affect our ability to become the standard of care. In addition, negative results may impact our ability to obtain regulatory approval for other product candidates which we expect to develop based on our QTORIN platform, either at all or within anticipated timeframes because, although we may be targeting different indications, the underlying technology platform is the same for each product candidate and there may be commonalities in the manufacturing and development processes. Accordingly, a failure in any one QTORIN-based program may decrease confidence in our technology and affect our ability to conduct clinical programs for, and ultimately obtain regulatory approval for, other QTORIN-based product candidates.

We have not yet succeeded and may not succeed in completing clinical development of or obtaining regulatory approval for any of our product candidates using QTORIN.our QTORIN platform. As a result, it is more difficult for us to predict whether the application of our QTORIN platform, or any similar or competitive platforms, will result in the development and marketing approval of any products. Any developmental problems we experience in the future related to our QTORIN platform or any of our research programs may cause significant delays or unanticipated costs or may prevent the development of a commercially viable product. Any of these factors may prevent us from completing our preclinical studies or clinical trials or commercializing any product candidates we may develop on a timely or profitable basis, if at all, which could materially adversely affect our business, financial condition, results of operations and prospects.

Identifying and qualifying a sufficient number of eligible subjects to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends on our ability to recruit subjects to participate, as well as the completion of required follow-up periods. Patients may be unwilling to participate in our clinical trials because of negative publicity from adverse events related to the biotechnology or pharmaceutical fields, competitive clinical trials for similar patient populations, the existence of current treatments or for other reasons outside of our control. The timeline for recruiting subjects, conducting studies and obtaining regulatory approval of our product candidates may be delayed, which could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness of our product candidates or termination of the clinical trials altogether.

Importantly, the indications that we are currently targeting and may in the future target are serious, rare diseases,diseases and vascular malformations, which may limit the pool of subjects that may be enrolled in our ongoing or planned clinical trials. To the extent our clinical trials are limited to specific genotypes, the population of eligible trial participants is even further limited. Microcystic LMs affect an estimated greater than 30,000 diagnosed patients in the United States. Cutaneous VMs affect an estimated greater than 75,000 people in the United States. Clinically significant angiokeratomas and DSAP affect an estimated greater than 50,000 patients in the United States. Some of the other diseases we intend to target have similarly limited patient populations. We expect to rely in part on our relationships with patient advocacy groups to assist in identifying eligible patients, and any deterioration of those relationships could impede our ability to successfully enroll patients in our clinical trials. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible subjects to participate in these trials as required by the FDA or similar regulatory authorities outside of the United States.

WeOrphan Drug Designation has been granted for QTORIN rapamycin for the treatment of LM, but we may be unable to obtain Orphansuch Drug Designationdesignation for certainother ofdiseases ouror conditions or product candidates and, even if we obtain such designation, we may not be ableor to realize the benefits of suchOrphan designation,Drug Designation, including potential marketing exclusivityexclusivity, of our product candidates,even if approved.such designation is obtained.

Generally, if a product candidate with an Orphan Drug Designation receives the first marketing approval for the indicationdisease or condition for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or foreign regulatory authorities (as applicable) from approving another marketing application for a product that constitutes the same drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If another sponsor receives such approval before we do (regardless of our Orphan Drug Designation), we will be precluded from receiving marketing approval for our product for the applicable exclusivity period unless FDA concludes that our drug is not the same drug or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. The applicable exclusivity period is 7 years in the United States and 10 years in the European Union. The exclusivity period in the European Union can be reduced to six years if a product no longer meets the criteria for orphan designation or if the product is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be revoked if any regulatory agency determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition.

Even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product candidate from competition because different drugs can be approved for the same condition in the United States.States and the same drug may be approved for different conditions. Even after an orphan drug is approved, the FDA may subsequently approve another drug for the same disease if the FDA concludes that the latter drug is not the same drug or is clinically superior. In the European Union, marketing authorization may be granted to a similar medicinal product for the same orphan indication as an authorized orphan product if the second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; if the holder of the marketing authorization for the original medicinal product consents to a second orphan medicinal product application; or if the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal product.

We are targeting serious, rare genetic skin diseases,diseases and vascular malformations, and the small patient populations associated with such diseases and malformations present additional risks with respect to clinical development, regulatory approvals and commercialization of product candidates.

Our approach of targeting geneticrare skin diseases presentand vascular malformations presents risks related to the clinical development, regulatory approval and commercialization of our product candidates, including the following:

we may have difficulty establishing safety and efficacy in these types of patient populations given there is less known about the natural history of the disease; we expect to face challenges with respect to patient enrollment in our clinical trials, as described above; small sample sizes in our clinical trials suggest that we face the risk of substantial variability in the results of our trials, and so the outcome of nonclinical testing and early clinical trials is less likely to be predictive of the success of later-stage clinical trials; following approval of our product candidates, if any, pricing and level of reimbursement may not be sufficient to offset costs of development, manufacturing, marketing, and commercialization; and market size is a significant variable in disease indications classified as rare. Our projections of both the number of people who have these diseases,diseases and malformations, as well as the subset of people with these diseases or malformations who have the potential to benefit from treatment with product candidates we may develop, are based on estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient advocacy groups or market research. These estimates may prove to be incorrect and new studies may change the estimated incidence or prevalence of these diseases. The number of patients in the United States, Europe and elsewhere may turn out to be lower than expected, and patients may not be amenable to treatment with our product candidates we may develop or may become increasingly difficult to identify or gain access to. Accordingly, even if we obtain significant market share for our product candidates, because the potential target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications.

Our development and commercialization strategy for our product candidates depends, in part, on published scientific literature and the FDA’s prior findings regarding the safety and efficacy of rapamycin.rapamycin, pitavastatin and other planned or future product candidates. If we are not able to pursue this strategy, we may be delayed in receiving regulatory authority approval.

The Hatch-Waxman Amendments added Section 505(b)(2) to the U.S. Federal Food, Drug, and Cosmetic Act, or FDCA. Section 505(b)(2) permits the submission of an NDA,NDA where at least some of the information required for approval comes from investigations that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. The FDA interprets Section 505(b)(2) of the FDCA, for purposes of approving an NDA, to permit the applicant to rely, in part, upon published literature and/or the FDA’s previous findings of safety and efficacy for an approved product. The FDA also requires companies to perform additional clinical trials or measurements to support any deviation from the previously approved product and to justify that it is scientifically appropriate to rely on the applicable published literature or referenced product, referred to as bridging. The FDA may then approve the new product candidate for all or some of the indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant, if such approval is supported by study data. The labeling, however, may be required to include all or some of the limitations, contraindications, warnings or precautions or restrictions on use included in the reference product’s labeling, including a boxed warning, or may require additional limitations, contraindications, warnings or precautions or restrictions on use.

We currently plan to pursue marketing approval for QTORIN rapamycin for several indications and QTORIN pitavastatin for one indication in the United States through Section 505(b)(2) NDAs and will be completing bridging analyses comparing our QTORIN rapamycinprograms to the approved oral rapamycin product, a previously approved organ rejection prophylactic, prior to NDA submission. If the FDA disagrees with our conclusions regarding the appropriateness of our reliance on the FDA’s prior findings of safety and efficacy for the approved oral rapamycin product or on published literature, or if we are not otherwise able to bridge to the listed drug or published literature to demonstrate that our reliance is scientifically appropriate, we could be required to conduct additional nonclinical toxicology, clinical safety or efficacy trials, or other studies to support our NDA, which could lead to unanticipated costs and delays or to the termination of our development programs. For example, while we plan to bridge QTORIN rapamycin and the approved oral rapamycin product based on cross-study comparison between pharmacokinetic data from the prescribing information for the approved product, the FDA recommends that bridging to support an NDA for the treatment of microcystic LM be done in a relative bioavailability study comparing the pharmacokinetics of a topical product applied under maximal use conditions and the approved oral drug. The planned cross-study analysis allows for comparison of systemic pharmacokinetic parameters, key criteria for assessing the applicability of safety findings from the listed drug, which are a result of systemic exposure from the oral formulation. If the FDA does not agree with our pharmacokinetic approach, we may need to conduct a relative bioavailability study, which compares direct assessment of pharmacokinetics of both products administered under similar conditions. For example, FDA may request different specific criteria for comparisons that cannot be evaluated based on limitations in the pharmacokinetic data available in the prescribing information of the approved drug. If we are unable to obtain approval for our product candidates through the Section 505(b)(2) NDA process, we may be required to pursue the more expensive and time consuming Section 505(b)(1) approval process, which consists of full reports of investigations of safety and effectiveness conducted by or for the applicant. Even if we are allowed to pursue the Section 505(b)(2) regulatory pathway for FDA approval, we cannot assure you that our product candidates will receive the requisite approvals for commercialization.

The validity, scope and enforceability of any patents that we may list in the Orange Book that cover QTORIN rapamycin,rapamycin or QTORIN pitavastatin, if approved by the FDA for any indication, can be challenged by competitors.

If QTORIN rapamycin or QTORIN pitavastatin is approved by the FDA for any indication, one or more third parties may challenge the patents covering QTORIN rapamycin or QTORIN pitavastatin with respect to such indication, which could result in the invalidation of, or render unenforceable, some or all of the relevant patent claims or could result in a finding of non-infringement. For example, if a third party files an Abbreviated New Drug Application, or ANDA, for a generic drug bioequivalent to our QTORIN rapamycin,rapamycin or QTORIN pitavastatin, and relies in whole or in part on studies conducted by or for us, the third party will be required to certify to the FDA that either: (1) there is no patent information listed in the FDA’s Orange Book with respect to our NDA for the applicable approved drug candidate; (2) the patents listed in the Orange Book have expired; (3) the listed patents have not expired, but will expire on a particular date and approval is sought after patent expiration; or (4) the listed patents are invalid or will not be infringed by the manufacture, use or sale of the third party’s generic drug. Alternatively, a third party that files an ANDA for a generic drug bioequivalent to QTORIN rapamycin or QTORIN pitavastatin may elect to submit a “section viii” statement certifyingstating that our proposed label does not contain (any language regarding the patented method of use or carves out) any language regarding the patented method of use rather than certify to a listed method of use patent. This section viii statement does not require notice to the patent holder or NDA owner. A certification that the new drug will not infringe the Orange Book-listed patents for the applicable approved drug candidate, or that such patents are invalid, is called a Paragraph IV certification. If the third party submits a Paragraph IV certification to the FDA, a notice of the Paragraph IV certification must also be sent to us once the third party’s ANDA is accepted for filing by the FDA. We may then initiate a lawsuit to defend the patents identified in the notice. The filing of a patent infringement lawsuit within 45 days of receipt of the notice automatically prevents the FDA from approving the third party’s ANDA until the earliest of 30 months or the date on which the patent expires, the lawsuit is settled, or the court reaches a decision in the infringement lawsuit in favor of the third party. If we do not file a patent infringement lawsuit within the required 45-day period, the third party’s ANDA will not be subject to the 30-month stay of FDA approval. Litigation or other proceedings to enforce or defend intellectual property rights are often very complex in nature, may be very expensive and time-consuming, may divert our management’s attention from our core business, and may result in unfavorable results that could limit our ability to prevent third parties from competing with our product candidates.

Other companies could receive FDA approval for a topical rapamycin or pitavastatin product before we receive FDA approval for QTORINour rapamycinproduct candidates for microcystic LMs orLMs, cutaneous VMs, clinically significant angiokeratomas or DSAP and thus could be granted regulatory exclusivity that could significantly delay our ability to receive approval for and commercialize our QTORINproduct rapamycincandidates and therefore dramatically reduce our market potential.

Other companies may submit a Section 505(b)(2) NDA and receive approval for a topical rapamycin or pitavastatin product candidate prior to the approval of ourany NDAfuture NDAs we submit for QTORINthese rapamycin for the treatment of microcystic LM or for other indications we are pursuingcandidates or may pursue in the future. The first approved Section 505(b)(2) product for a particular condition of use or change to a marketed product, such as a new formulation for a previously approved product, may be granted three-year exclusivity if one or more clinical studies, other than bioavailability or bioequivalence studies, was essential to the approval of the application and was conducted/sponsored by the applicant. The grant of three-year exclusivity can delay the FDA’s approval of other Section 505(b)(2) applications for the same condition of use or change to the drug product, such as the first approval of a topical formulation of rapamycin, that was granted exclusivity, regardless of the date of submission of each NDA.

We believe that other companies are developing topical rapamycin products. In order to obtain regulatory approval with a Section 505(b)(2) NDA, other companies would have to sponsor or conduct new clinical investigations (other than bioavailability studies) that are essential to approval of the application, as well as conduct the required bridging studies. IfFor example, if the FDA approves another company’s Section 505(b)(2) NDA for a topical rapamycin product, even for another indication, and grants the other company three-year exclusivity before we receive approval for QTORIN rapamycin for the treatment of microcystic LM, the FDA may be precluded from approving any Section 505(b)(2) NDA we may submit with respect to QTORIN rapamycin until after that three-year exclusivity period has expired unless we pursue the more expensive and time consuming Section 505(b)(1) approval process, which would likely require that we sponsor or conduct additional nonclinical and/or clinical studies. For example, upon approval in March 2022 of a Section 505(b)(2) NDA for the treatment of facial angiofibroma associated with tuberous sclerosis, Hyftor, a topical gel product containing sirolimus (also known as rapamycin), received three years of new product exclusivity. If another rapamycin topical product were to receive three-year exclusivity for a condition of use that overlaps with QTORIN rapamycin, approval of QTORIN rapamycin would be delayed until the expiration of such exclusivity.

As we continue our development of our product candidates and initiate additional preclinical studies or clinical trials of these or future product candidates, if any, serious adverse events, unacceptable levels of toxicity, undesirable side effects or unexpected characteristics may emerge. Although we have designed QTORIN rapamycin for topical application and in a manner that we believe will not result in systematicsystemic absorption, systematicsystemic exposure to rapamycin, the active ingredient in our lead product candidate, at levels consistent with the approved oral dosage form, is known to result in significant adverse reactions, including peripheral edema, hypertriglyceridemia, hypertension, hypercholesterolemia, creatinine increases, abdominal pain, diarrhea, headache, fever, urinary tract infection, anemia, nausea, arthralgia, pain and thrombocytopenia. Investigators may attribute infectious diseases occurring during clinical trials of QTORIN rapamycin to suspected or possible immunosuppression, based on the systematic mechanism of action of rapamycin. Further, we have conducted and continue to conduct open-label studies of QTORIN rapamycin and, without a concurrent control arm, adverse events may be attributed to QTORIN rapamycin that may be a result of background disease or other external factors. Other APIs we select for our product candidates may have similar adverse event profiles. The emergence of any such serious adverse events, unacceptable levels of toxicity, undesirable side effects or unexpected characteristics could cause difficulty recruiting and retaining participants for our trials or we may abandon these product candidates, institute burdensome monitoring programs or limit their development to more narrow uses, less frequent dosing, lower potency levels or subpopulations in which the serious adverse events, unacceptable levels of toxicity, undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk/benefit perspective. The FDA, an IRB, or equivalent foreign regulatory authorities, may also require that we suspend, discontinue, or limit our clinical trials based on safety information or that there is inadequate prospect of treatment benefit. Such findings could further result in regulatory authorities failing to provide marketing authorization for our product candidates. Many product candidates that initially showed promise in early-stage testing have later been found to cause side effects that prevented further development of the product candidate.

regulatory authorities may suspend, withdraw or limit their approvals of such productproducts; regulatory authorities may require additional warnings, precautions, modification or limitations of use in the labeling; we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; we may be required to implement a REMS; we may be requireddecide to conduct additional clinical trials as post-marketing requirements; we could be sued and held liable for harm caused to patients; and our reputation and physicianrecall or patientremove acceptance of oursuch products mayfrom suffer.the marketplace;

Fast Track Designation has been granted for QTORIN rapamycin for the treatment of microcystic LMLM, the treatment of cutaneous VMs and the treatment of VMsangiokeratomas, and,but we may never be able to realize the benefits of such designation for QTORIN rapamycin or any other indications or future product candidates, if grantedgranted, byand thesuch FDA, for any of our other product candidatesdesignation may not lead to a faster development ordevelopment, regulatory review orreview, approval process and does notor increase the likelihood that our product candidates will receive marketing approval.

We were granted Fast Track Designation by the FDA for QTORIN rapamycin for the treatment of microcystic LMLM, the treatment of cutaneous VMs and the treatment of VMsangiokeratomas and may seek such designation for QTORIN rapamycin for other indications, and for anycertain other product candidates. If a drug is intended for the treatment of a serious or life-threatening disease and thepreclinical drugor clinical data demonstrates the potential of the new drug to address unmet medical needs for thissuch diseasedisease, the drugdrug’s sponsor may apply for Fast Track Designation. The FDA has broad discretion whether or not to grant this designation. Even if we believe a particular product candidate is eligible for this designation, we cannot be assured that the FDA would decide to grant it. Even if we do receive Fast Track Designation, as we have for QTORIN rapamycin for the treatment of microcystic LMLM, the treatment of cutaneous VMs and the treatment of VMs,angiokeratomas, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development programs. Many drugs that have received Fast Track Designation have failed to obtain approval.

Breakthrough Therapy Designation has been granted for QTORIN rapamycin for the treatment of microcystic LM and,but we may never be able to realize the benefits of such designation for QTORIN rapamycin or any other indications or future product candidates, if granted, forand anysuch of our other product candidates by the FDAdesignation may not lead to a faster development ordevelopment, regulatory review or approval process and does notor increase the likelihood that our product candidates will receive marketing approval.

We were granted Breakthrough Therapy Designation by the FDA for QTORIN rapamycin for the treatment of microcystic LM and may seek such designation for QTORIN rapamycin for other indications, and for anycertain other product candidates. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the NDA.

Interim, top-linetopline or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish interim, top-linetopline or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or top-linetopline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary or top-linetopline data we previously published. For example, we expectreported to report top-linetopline data from our Phase 3 clinical trial of QTORIN rapamycin for the treatment of microcystic LM in the first quarter of 2026 and we reported topline data from our Phase 2 clinical trial of QTORIN rapamycin for the treatment of cutaneous VMs in the fourth quarter of 2025, but any such topline or preliminary data may change following further auditing. As a result, preliminary and top-linetopline data should be viewed with caution until the final data are available. If the interim, top-line,topline, or preliminary data that we reportsreport differdiffers from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our product candidates, our business, operating results, prospects or financial condition may be harmed. In addition, the information we choose to publicly disclose regarding a particular clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.

At any time, we may decide to discontinue the development or commercialization of any of our product candidates during or after approval, if granted, for a variety of reasons, includingincluding, but not limited to, the appearance of new technologies that render our product obsolete, competition from a competing product or changes in or inability to comply with applicable regulatory requirements. If we terminate a program in which we have invested significant resources, we will not receive any return on our investment and we will have missed the opportunity to allocate those resources to potentially more productive uses.

Additionally, although our trials are currently being conducted in the U.S., we may in the future choose to conduct one or more of our clinical trials at clinical trial sites outside the United States, including in Canada and Europe. Although the FDA or equivalent foreign regulatory authority may accept data from clinical trial sites conducted outside the United States or the applicable jurisdiction, acceptance of such study data by the FDA or equivalent foreign regulatory authority may be subject to certain conditions. Where data from foreign clinical trial sites are intended to serve as the basis for marketing approval in the United States, the FDA will not approve the application on the basis of foreign data alone unless those data are applicable to the U.S. population and U.S. medical practice; the site study conduct was performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. Many foreign regulatory authorities have similar requirements. In addition, such foreign studies would be subject to the applicable local laws of the foreign jurisdictions where the studies are conducted. Additionally, recent policy proposals in the United States may make acceptance by the FDA or inclusion of foreign clinical trial data in a marketing application more difficult. There can be no assurance the FDA or equivalent foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction. If the FDA or equivalent foreign regulatory authority does not accept such data, it would likely result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan.

Even if QTORIN rapamycinrapamycin, QTORIN pitavastatin or any future product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.

Even if QTORIN rapamycin for the treatment of microcystic LMs orLMs, for the treatment of cutaneous VMs or the treatment of clinically significant angiokeratomas or QTORIN pitavastatin for the treatment of DSAP or any future product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, patient advocacy groups, third-party payors and others in the medical community. If our product candidates do not achieve an adequate level of acceptance, we may never be able to generate adequate product revenue or become profitable. The degree of market acceptance of a product candidate, if approved for commercial sale, will depend on a number of factors, including but not limited to:

the safety, efficacy, risk-benefit profile and potential advantages compared to alternative or existing treatments, which include, with respect to microcystic LM, surgery, sclerotherapy, laserlaser, and,and cryotherapy, any alternative treatment options of which physicians may perceive to be adequately effective or to present less risk for some or all patients; the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies over existing treatment alternatives; support from patient advocacy groups; side effects that may be attributable to our product candidates and the difficulty of or costs associated with resolving such side effects; the timing of market introduction of our product candidates as well as competitive products; the clinical indications for which a product candidate is approved; restrictions on the use of our product candidates in the labeling approved by regulatory authorities, including boxed warnings, contraindications, or a REMS, which may not be required of alternative treatments and competitors’ products; the potential and perceived advantages of our product candidates over alternative treatments; the effectiveness of our sales, marketing and market access efforts; the cost of treatment in relation to alternative treatments or methods of symptom management; our ability to offer our products, if approved, for sale at competitive prices; the convenience and ease of administration compared to alternative treatments; publicity relating to our product candidates or those of our competitors; the availability of third-party coverage and adequate reimbursement at any given price level of each of our product candidates and patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement; and utilization controls imposed by third-party payors, such as prior authorizations and step edits.

We currently have no marketing and sales organization and have no experience as a company in commercializing products, and we may have to invest significant resources to develop these capabilities. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, if approved, we may not be able to generate product revenue.

We are a clinical-stage biopharmaceutical company whose vision is to become the leading rare disease biopharmaceutical company focused on developing and, if approved, commercializing novel therapies to treat patients suffering from serious, rare genetic skin diseases and vascular malformations for which there are no FDA-approved therapies. We envision a future treatment paradigm in which individuals suffering from serious, rare skin diseases and vascular malformations, and the physicians treating those diseases, have significantly improved treatment options which address the underlying causes of those diseases. We intend to leverage our versatile QTORIN platform to treatminimize thesethe patients.challenges and timelines typically associated with generating novel topical product candidates. The QTORIN platform is specifically designed to reproducibly generate potentialnovel newtopical therapiesproduct candidates that penetrate the deep layers of the skin to locally treat a broad spectrum of rare genetic skin diseases.diseases and vascular malformations. Our lead product candidate, QTORIN 3.9% rapamycin anhydrous gel (“QTORIN rapamycin”), is currently in clinical development for microcystic lymphatic malformations (“microcystic LMs”) and cutaneous venous malformations (“cutaneous VMs”). QTORIN rapamycin contains the active pharmaceutical ingredient (“API”) rapamycin, also known as sirolimus, which is an inhibitor of mTOR, a kinase that has been known to play a key role in cell growth and proliferation.

ThereWe are nodeveloping FDA-approvedQTORIN therapiesrapamycin, currentlya indicatednovel, for3.9% eitheranhydrous microcystictopical LMsgel orformulation cutaneouscontaining VMs. If approvedrapamycin, for the treatment of microcystic LMs orLMs, cutaneous VMs, clinically significant angiokeratomas and other mTOR-driven skin diseases. If approved, we believe QTORIN rapamycin has the potential to become the standard of care forin each of these disease indications.diseases.

On December 13, 2024, immediately prior to closing of the Merger, we entered into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent, pursuant to which our pre-Merger capital stockholders received one contingent value right (each, a “CVR”) for each outstanding share of our commonCommon stockStock held by such stockholder, or share of commonCommon stockStock underlying preferred stock held by such stockholder, on such date. Each CVR represents the contractual right to receive payments upon the receipt of payments by us or any of its affiliates under certain strategic partner agreements, including existing collaboration agreements pursuant to which we may be entitled to milestones and royalties in the future and other out-licensing agreements for certain of Pieris’ legacy assets, and upon the receipt of certain research and development tax credits in favor of us or any of its affiliates, in each case as set forth in, and subject to and in accordance with the terms and conditions of, the CVR Agreement. ThereIn canJanuary be2026, nothe assuranceCompany thatpaid out approximately $2.0 million to holders of CVRs willrelated receiveto anyreceipt amountsof withcertain respectresearch thereto.and development tax credits.

InWe are party to a Development Funding and Royalties Agreement with Ligand Pharmaceuticals, Inc. (“Ligand”), dated December 13, 2018, Legacyas Palvellaamended enteredMay into22, 2020 and November 28, 2023 (the “Ligand Agreement”). Under the Original Ligand Agreement, wherebyLigand Ligandhas made apayments one-timetotaling payment of $10.0$15.0 million to fund the development of QTORIN rapamycin. InAs Novemberpartial 2023,consideration pursuant tofor the Amendedfunding received, we granted Ligand Agreement, Ligand made an additional one-time payment of $5.0 million to fund the development of QTORIN rapamycin. Under the Amended Ligand Agreement, Ligand is entitledright to receive up to $8.0 million in milestone payments upon the achievement of certain corporate, financing and regulatory milestones by us related to QTORIN rapamycin for the treatment of any and all indications, of which $5.0 million of potential future milestone payments remain under the arrangement. In addition, we agreed to pay to Ligand tiered royalties ranging from 8.0% to 9.8% based onof any aggregate annual worldwide net product sales of any products based on QTORIN rapamycin. The Amended Ligand Agreement includes an option for Ligand to purchase additional product revenue participation rights from us over a certain period of time (as set forth in the Amended Ligand Agreement). The option allows Ligand, for each product developed on the QTORIN platform that completes the first human clinical trial in the United States, the opportunity to make an upfront payment (as set forth in the Amended Ligand Agreement) to us in return for a royalty rate (as set forth in the Amended Ligand Agreement). See Note 5 of the accompanying notes to the consolidated financial statements contained elsewhere in this Annual Report on Form 10-K.

Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including increases in inflation and geopolitical factors, including increases in inflation, increased U.S. trade tariffs and retaliatory tariffs, interest rate and currency rate fluctuations, new laws and regulations enacted by the Trump administration, including, but not limited to, the One Big Beautiful Bill Act, economic slowdown or recession, banking instability, monetary policy changes, and geopolitical factors, including the ongoing conflict between Russia and UkraineUkraine, the current conflicts in Venezuela and the responsesMiddle thereto,East (including any escalation or expansion) and increasing tensions between China and Taiwan, rapid changes in our regulatory landscape in the United States, including significant staffing reductions and unexpected shifts in leadership of certain federal agencies, and an uncertain legislative environment and supply chain disruptions. While our management is closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, including the impacts on its participants in its Phase 3 clinical trials, employees, suppliers, vendors and business partners, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside our control and could exist for an extended period of time. Management will continue to evaluate the nature and extent of the potential impacts to our business, results of operations, liquidity and capital resources. For additional information, see Part I, Item 1A “Risk FactorsFactors.”.

We expect to continue to incur significant operating losses for the foreseeable future and to incur increased expenses as we continue to advance our product candidates through clinical trials and regulatory submissions. We may also incur expenses in connection with the in-licensing or acquisition of additional product candidates. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that Legacy Palvella did not incur as a private company. If we receive regulatory approval for QTORIN rapamycin for treatment of Microcysticmicrocystic LM, venouscutaneous malformationsVM, clinically significant angiokeratomas, QTORIN pitavastatin for the treatment of disseminated superficial actinic porokeratosis or any future product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Our losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

Our research and development expenses consist primarily of costs incurred for the development of itsour product candidates, which include:

Research and development activities account for a significant portion of our operating expenses. We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, including investments in advancing our programs and conducting clinical trials. In particular, we expect to incur substantial research and development expenses to continue late-stage clinical development and pursue regulatory approvals of QTORIN rapamycin for the treatment of microcystic LM,LM venous malformations and the development of our preclinical programs. Product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect our research and development expenses to increase as our product candidates advance into later stages of clinical development.

the prevalence, duration and severity of potential side effects or other safety issues experienced with our product candidates, if any, or experienced by competitors who are developing topical rapamycin products or who are targeting the same indications in the rare genetic skin diseases space;

Our other (expense) income for the years ended December 31, 20242025 and 20232024 primarily consists of: (i) non-cash interest (expense) income related to our obligation to make future royalty payments pursuant to the Amended Ligand Agreements,Agreement, which was determined to be a debt instrument; (ii) interest expense related to the Convertible Notes; (iii) fair value adjustments related to our obligation to make future milestone payments under the Amended Ligand Agreement, which was determined to be a derivative liability; (iv) fair value adjustments related to the Convertible Notes, which were accounted for at fair value; (v) fair value adjustments related to the CVRs, which met the definition of a derivative, (vi) a non-cash gain on the extinguishment of the Original Ligand Agreement, and (vii) income related to a German R&D tax credit receivable.receivable, and (vii) interest income, net.

As of December 31, 2024,2025, we had German corporate income tax and trade tax net operating loss carryforwards of approximately $210.3$219.4 million and $205.9$215.1 millionmillion, respectively. Under current German laws, tax loss carryforwards may only be used to offset any relevant later assessment period (calendar year) of $1.2 million plus 60% of the exceeding taxable income and trade profit of such period and do not expire. In addition, certain transactions, including transfers of shares or interest in the loss holding entity, may result in the partial or total forfeiture of tax losses existing at that date. Partial or total forfeiture of tax losses may further occur in corporate reorganizations of the loss holding entity.

Research and development expenses for the year ended December 31, 20242025 were $8.2$22.8 millionmillion, as compared to $8.8$8.2 million for the year ended December 31, 2023.2024. The decreaseincrease in research and development expenses during the year ended December 31, 20242025 was primarily due to decreased expenses incurred related to the clinical development of QTORIN rapamycin for the treatment of Pachyonychia Congenita (“PC”) and for the prevention of Basal Cell Carcinomas in Gorlin Syndrome (“GS”) following the discontinuation of these programs in 2023, offset partially by increased spending on the clinical development of QTORIN rapamycin for the treatment of microcystic LMs,LMs and cutaneous venous malformations, including the planning and initiation ofconducting our Phase 3 trial, SELVA (PALV-09)and Phase 2 TOIVA trials, which waswere initiated in the2024. thirdAdditional quarterincreases of 2024, as well as increasedinclude CMC costs acrossfor all programs.programs and costs as a result of increased headcount in 2025.

ForGeneral and administrative expenses for the year ended December 31, 2024, general and administrative expenses2025 were $5.9$15.8 million, as compared to $3.1$5.9 million for the year ended December 31, 2023.2024. The increase in general and administrative expenses during the year ended December 31, 2024,2025, as compared to the year ended December 31, 20232024 iswas attributableprimarily due to increased employeeheadcount compensationin expense due to headcount,2025, as well as increased professional services asrelated a result of the Merger andto operating as a publicly-traded company.

Total other (expense) income, net for the year ended December 31, 20242025 was $3.3$3.1 million of expense, as compared to $30.6$3.3 million of incomeexpense for the year ended December 31, 2023.2024. The significant components of other (expense) income are more fully described below.

During the year ended December 31, 2024,2025, we recorded interest expense of approximately $3.9$5.8 million, as compared to interest incomeexpense of approximately $6.3$3.9 million for the year ended December 31, 2023,2024, related to the change in fair value of our royalty agreement liability. During 2023, the Company received data from certain of its clinical trials that reduced the projected net product sales related to QTORIN rapamycin and the corresponding probabilities of successful commercialization, resulting in a significant reduction in the expected future royalty payments and a corresponding reduction in the royalty agreement liability.

During the year ended December 31, 2024,2025, we recorded a non-cash loss of approximately $0.6$0.4 million, as compared to a non-cash gainloss of approximately $0.5$0.6 million for the year ended December 31, 2023,2024. The non-cash loss related to the change in fair value of our obligation to make future milestone payments under the Amended Ligand Agreement, which was determined to be a derivative liability. During 2023, the Company received data from certain of its clinical trials that reduced the probabilities of successful commercialization and a corresponding reduction in the derivative liability.

During the year ended December 31, 2024,2025, we recorded a non-cash expense of approximately $0.2 million as compared to a non-cash expense of approximately $2.0 million offrom non-cashthe expenseyear ended December 31, 2024, related to fair value adjustments related to the CVRs which were issued in 2024 in connection with the Business Combination and determined to be derivative liabilities. On the Closing Date, management concluded that there was no value associated with the CVRs as the likelihood of any payments received in connection with Pieris’ legacy assets was remote. Subsequent to the Closing Date and as of December 31, 2024, a $2.0 million German research and development tax credit receivable was recorded by Pieris Pharmaceuticals GmbH resulting in a corresponding increase to the contingent value rights liability.

As a result of the factors discussed above, our net loss applicable to common stockholders for the years ended December 31, 20242025 and 20232024 was $17.4$41.7 million and $17.9$17.4 million, respectively.

Since inception, we have incurred substantial losses, and have primarily funded our operations with proceeds from the Amended Ligand AgreementsAgreement and the sale of debt and equity securities, including common stock, convertible preferred stock and convertible notes. During the year ended December 31, 2024,2025, we incurred a net loss of $17.4$41.7 million and reported net cash used in operating activities of $10.8$25.0 million. As of December 31, 2024,2025, we had an accumulated deficit of $93.7$135.5 million and cash and cash equivalents of $83.6$58.0 million. As discussed below, in February 2026, we completed an underwritten public offering of common stock resulting in net proceeds of approximately $215.8 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and, to a lesser extent, general and administrative expenditures.

We do not expect to generate commercial revenue or operating cash flows forin atthe leastnear-term, including the next severaltwo years. Our ability to continue as a going concern in the near term is largely dependent on our existing cash balance and our ability to obtain additional sources of financing in order to fund operating expenses, complete development of our product candidates, obtain regulatory approvals, launch, and commercialize our product candidates, and continue research and development programs.

Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties discussed within “Item 1A. Risk Factors” of our 2025 Form 10-K, together with all of the other information in this AnnualQuarterly Report on Form 10-Q, including the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and related notes, before deciding whether to purchase any of our securities.

We are a clinical-stage biopharmaceutical company whose vision is to become the leading rare disease biopharmaceutical company focused on developing and, if approved, commercializing novel therapies to treat patients suffering from serious, rare skin diseases and vascular malformations for which there are no FDA-approved therapies. We envision a future treatment paradigm in which individuals suffering from serious, rare skin diseases and vascular malformations, and the physicians treating those diseases, have significantly improved treatment options which address the underlying causes of those diseases. We intend to leverage our versatile QTORIN platform to minimize the challenges and timelines typically associated with generating novel topical product candidates that penetrate the deep layers of the skin to locally treat a broad spectrum of rare skin diseases and vascular malformations. Our lead product candidate, QTORIN 3.9% rapamycin anhydrous gel (“QTORIN rapamycin”), is currently in clinical development for microcystic lymphatic malformations (“microcystic LMs”) and, cutaneous venous malformations (“cutaneous VMs”)., We are also expanding our QTORIN rapamycin development program intoand clinically significant angiokeratomas. QTORIN rapamycin contains the active pharmaceutical ingredient (“API”) rapamycin, also known as sirolimus, which is an inhibitor of mTOR, a kinase that has been known to play a key role in cell growth and proliferation. We introduced a new QTORIN product candidate, QTORIN pitavastatin, for the treatment of disseminated superficial actinic porokeratosis (“DSAP”), which leverages our proprietary QTORIN platform and is designed to be the first pathogenesis-directed therapy for DSAP.

In February 2026, we received written feedback from the FDA on the proposed design of a Phase 2 study of approximately 10-20 patients to evaluate QTORIN rapamycin for the treatment of clinically significant angiokeratomas. In April 2026, we dosed our first patients in the Phase 2 LOTU trial, a baseline-controlled clinical study of QTORIN rapamycin administered topically once daily for the treatment of clinically significant angiokeratomas. Topline results are expected in the second half of 2027.

The primary endpoint, the mLM-IGA,microcystic lymphatic malformation Investigator Global Assessment (“mLM-IGA”), is a 7-point clinician-assessed dynamic scale measuring change in disease severity from baseline ranging from “Very Much Worse” (-3) to “Very Much Improved” (+3). On the mLM-IGA in the ITT population (n=49), QTORIN rapamycin demonstrated a mean improvement of +2.13 points, meeting the study’s primary endpoint (p<0.001). Of the participants aged ≥ 6 who completed the efficacy evaluation period, 95% (41/43) demonstrated at least a 1-point improvement, and 86% (37/43) were either “Much Improved” (+2) or “Very Much Improved” (+3). In the 3- to 5-year-old cohort, one participant enrolled and was “Very Much Improved” (+3) on the mLM-IGA at Week 24.

In March 2026, we submitted a pre-NDA meeting request to the FDA, which was subsequently granted. We anticipate the meeting to occur during the second quarter of 2026. We have received Breakthrough Therapy Designation, Fast Track Designation, and Orphan Drug Designation from the FDA for QTORIN rapamycin for the treatment of microcystic LMs. Orphan Drug Designation has also been granted by the European Medicines Agency. In addition, we have been awarded an FDA Products Clinical Trials Grant for up to $2.6 million supporting the SELVA Phase 3 study and have received $1.1 million to date.

In December 2025, we announced positive topline efficacy results from TOIVA, a multicenter, single-arm, open-label, baseline-controlled, Phase 2 clinical trial designed to evaluate the safety and efficacy of QTORIN rapamycin for the treatment of cutaneous VMs. The study enrolled 16 participants, ages six and older, at leading vascular anomaly centers across the U.S. Key findings from among the study’s pre-specified efficacy endpoints at Week 12 demonstrated nominally statistically significant (p<0.001) improvements at Week 12 on several of the clinically relevant and important efficacy endpoints evaluated when compared to pre-treatment (baseline), including many of the static and impression of change global instruments evaluated, including the Overall Cutaneous VM Investigator Global Assessment (“Overall cVM-IGA”) (Table 5). The Overall cVM-IGA is a 7-point, clinician-assessed, single-item efficacy endpoint measuring change in severity from baseline, with the numeric rating scale ranging from “Very Much Worse” (-3) to “Very Much Improved” (+3). On the Overall cVM-IGA at Week 12, 73% (11/15) participants improved, with 67% (10/15) either “Much Improved” (+2) or “Very Much Improved” (+3). No trial participants (0/15) were “Minimally Worse” (-1), “Much Worse” (-2), or “Very Much Worse” (-3).

InAfter Januarycompleting 2026, we completed aour Preliminary Breakthrough Therapy Designation Advice meeting with the FDA. Based on that meeting,FDA, we submitted an applicationapplied to the FDA for Breakthrough Therapy Designation in the second quarter of 2026. WeFollowing planthe FDA’s decision in July 2026 to commencenot grant the designation at this time, we are currently planning a Phaseresubmission 3incorporating pivotalTOIVA studypatient ininterviews theand secondnew half24-week of 2026.data.

Clinically significant angiokeratomas are superficial vascular malformations of lymphatic origin which can cause bleeding, pain, functional impairment, and risk of infection, with no tendency for spontaneous regression. Angiokeratomas were recently classified as an isolated lymphatic malformation in 2025 by the International Society for the Study of Vascular Anomalies (“ISSVA”).ISSVA. Current treatment options include potentially destructive procedural interventions that carry significant risks of pain, scarring, and recurrence. Despite the substantial disease burden, there are currently no FDA-approved treatments available for clinically significant angiokeratomas.

In November 2025, we announced a new product candidate, QTORIN pitavastatin, for the treatment of disseminated superficial actinic porokeratosis (DSAP).DSAP. QTORIN pitavastatin was developed leveraging our QTORIN platform.

Our other (expense) income for the three and six months ended MarchJune 31,30, 2026 and 2025 primarily consists of: (i) non-cash interest (expense) income related to our obligation to make future royalty payments pursuant to the Amended Ligand Agreement, which was determined to be a debt instrument; (ii) fair value adjustments related to our obligation to make future milestone payments under the Amended Ligand Agreement, which was determined to be a derivative liability; (iii) fair value adjustments related to the CVRs, which met the definition of a derivative; and (iv) interest income, net.

Since May 2018, we have not recorded any income tax benefits for NOLs.net operating losses (“NOLs”). We believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized. Accordingly, we have established a valuation allowance against such deferred tax assets for all periods since inception.

We had no provision for income taxes for the three and six months ended MarchJune 31,30, 2026 and 2025.

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

Research and development expenses for the three months ended MarchJune 31,30, 2026 were $9.3$12.5 million, as compared to $4.1$5.1 million for the three months ended MarchJune 31,30, 2025. Research and development expenses for the six months ended June 30, 2026 were $21.8 million, as compared to $9.2 million for the three months ended June 30, 2025. The increase in research and development expenses was primarily due to increased spending foron clinical, manufacturing and controls (“CMC”) activitiesactivities, the clinical development of QTORIN rapamycin for the treatment of angiokeratomas, costs associated with the submission of the first module of our rolling NDA, and costs resulting from increased headcount and consulting services in 2026.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 were $5.5$8.9 million, as compared to $3.8$4.1 million for the three months ended MarchJune 31,30, 2025. General and administrative expenses for the six months ended June 30, 2026 were $14.5 million, as compared to $7.9 million for the six months ended June 30, 2025. The increase in general and administrative expenses was primarily due to increased headcount in 2026, as well as increased professional services related to operating as a publicly-traded company.

Total other (expense) income, net for the three months ended MarchJune 31,30, 2026 was $0.9$0.5 million, as compared to $0.3$0.2 million of expense for the three months ended MarchJune 31,30, 2025. Total other (expense) income, net for the six months ended June 30, 2026 was $1.4 million, as compared to $0.5 million of expense for the six months ended June 30, 2025. The significant components of other (expense) income are more fully described below.

During the three months ended MarchJune 31,30, 2026, we recorded interest expense of approximately $2.0$2.3 million, as compared to approximately $1.2$1.4 million for the three months ended MarchJune 31,30, 2025. During the six months ended June 30, 2026, we recorded interest expense of approximately $4.3 million, as compared to approximately $2.6 million for the six months ended June 30, 2025. Interest expense recorded in all periods related to the change in fair value of our royalty agreement liability associated with the payout of $2.0 million to holders of CVRs in January 2026.liability.

During the three months ended MarchJune 31,30, 2026,2026 and 2025, we recorded a non-cash loss on derivative liabilities of approximately $0.1 million,million. as compared to approximately $0.1 million forDuring the threesix months ended MarchJune 31,30, 2025.2026 and 2025, we recorded a non-cash loss on derivative liabilities of approximately $0.2 million. The non-cash loss recorded in all periods related to the change in fair value of our obligation to make future milestone payments under the Amended Ligand Agreement, which was determined to be a derivative liability.

During the threesix months ended MarchJune 31,30, 2026, we recorded non-cash income of approximately $0.2 million related to fair value adjustments related to the CVRs which were issued in 2024 in connection with the Business Combination and determined to be derivative liabilities.

During the three months ended MarchJune 31,30, 2026, we recorded interest incomeincome, $1.1net of $2.0 million, as compared to $0.8$0.7 million for the three months ended MarchJune 31,30, 2025. During the six months ended June 30, 2026, we recorded interest income, net of $3.0 million, as compared to $1.4 million for the six months ended June 30, 2025. The increase during each of the three and six months ended June 30, 2026, as compared to the corresponding periods in 2025, was primarily due to increases in the average balances held in interest-bearing cash and money market funds.

As a result of the factors discussed above, our net loss applicable to common stockholders for the three months ended MarchJune 31,30, 2026 and 2025 was $15.8$21.9 million and $8.2$9.5 million, respectively, and our net loss applicable to common stockholders for the six months ended June 30, 2026 and 2025 was $37.6 million and $17.7 million, respectively.

Since inception, we have incurred substantial losses, and have primarily funded our operations with proceeds from the Amended Ligand Agreement and the sale of debt and equity securities, including common stock, convertible preferred stock and convertible notes. During the threesix months ended MarchJune 31,30, 2026, we incurred a net loss of $15.8$37.6 million and reported net cash used in operating activities of $10.9$23.7 million. As of MarchJune 31,30, 2026, we had an accumulated deficit of $151.2$173.1 million and cash and cash equivalents and short-term investments of $261.9$250.6 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and, to a lesser extent, general and administrative expenditures.

Concurrently with the execution of the Merger Agreement on July 23, 2024, Pieris entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors, including BVF Partners, L.P., an existing stockholder of Pieris (the “PIPE Investors”), pursuant to which, among other things, on the Closing Date and immediately following the consummation of the Merger, the PIPE Investors purchased (either for cash or in exchange for the termination and cancellation of outstanding convertible promissory notes issued by Legacy Palvella), and the Company issued and sold to the PIPE Investors, (i) 3,168,048 shares of Common Stock and (ii) Pre-Funded Warrants, exercisable for 2,466,456 shares of Common Stock, at a purchase price of $13.9965 per share or $13.9955 per Pre-Funded Warrant, which represents the per share purchase price of Common Stock less the $0.001 per share exercise price for each Pre-Funded Warrant, for an aggregate purchase price of approximately $78.9 million, consisting of approximately $60.0 million in cash and the conversion of approximately $18.9 million of principal and interest under outstanding convertible notes issued by Legacy Palvella (the “PIPE Financing”). As of MarchJune 31,30, 2026, the Company has pre-funded warrants outstanding to purchase an aggregate of 1,394,780 shares of Common Stock.

On June 6, 2024, Legacy Palvella initiated a sequence of convertible notes with certain investors via a Convertible Note Purchase Agreement, pursuant to which the Company issued convertible notes in the aggregate principal amount of approximately $18.4 million (the “Convertible Notes”) between June 2024 and December 2024. Simple interest accrued on the outstanding principal amount of the Convertible Notes at an annual rate of SOFR plus 2.0% per annum. Unless earlier converted, the maturity date of the Convertible Notes was the earliest to occur of (i) the date that Legacy Palvella received approval of an NDA by the FDA of QTORIN rapamycin in the United States, or (ii) June 3, 2027. Upon the closing of the PIPE Financing, the entire outstanding principal amount and unpaid accrued interest on the convertible notes automatically converted into an aggregate of 1,179,163 shares of Common Stock and 168,503 pre-funded warrants with all such pre-funded warrants remaining outstanding as of MarchJune 31,30, 2026.

We have not generated product revenue or achieved profitability since our inception and expect to continue to incur net losses for the foreseeable future. As of MarchJune 31,30, 2026, we had approximately $261.9$250.6 million in cash and cash equivalents and short-term investments. Based on our current business plans, we believe that our existing cash and cash equivalents will be sufficient to fund our planned operations for at least the one year period following the date of the filing of this Quarterly Report on Form 10-Q. Moreover, we expect our losses to increase as we continue to advance our product candidates through clinical trials and regulatory submissions. We may also incur expenses in connection with the in-licensing or acquisition of additional product candidates,candidates and to build our commercial organization in preparation for the launch of our lead product candidate, QTORIN rapamycin for the treatment of microcystic LM, which is currently under review at the FDA, which may not be currently contemplated in our planned operations. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company. Our primary uses of capital have been, and we expect will continue to be, compensation and related expenses, third-party clinical research, manufacturing and development services, license payments or milestone obligations that may arise, manufacturing costs, legal and other regulatory expenses and general overhead costs.

Based upon our current operating plan, we believe that our cash and cash equivalents and short-term investments on hand as of MarchJune 31,30, 2026 will be sufficient to fund our operating expenses for at least the next twelve months from the date of this Quarterly Report on Form 10-Q. To continue to finance our operations beyond that point, we may need to raise additional capital, the success of which cannot be assured. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we currently expect. If we receive regulatory approval for QTORIN rapamycin for the treatment of microcystic LM, cutaneous VMs, clinically significant angiokeratomas, QTORIN pitavastatin for the treatment of disseminated superficial actinic porokeratosis, or any of our future product candidates, we expect to incur significant commercialization expenses related to manufacturing, sales, marketing, and distribution, or from any out-licensing of the product. We are also responsible for up to $5.0 million in milestone payments to Ligand under the Amended Ligand Agreement upon the achievement of certain regulatory milestones by us related to QTORIN rapamycin, which may be triggered prior to the commercialization of any of our product candidates and ability to generate revenue.

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

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 and 2025 consisted of net loss for the period adjusted for non-cash items and changes in components of operating assets and liabilities. The primary use of cash was to fund our operations related to the development of our product candidates, including general and administrative support, which increased due to greater research and development efforts in 2026, increased costs to operate as a public company, as well as the timing of payments and increase in accounts payable.

For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $55.4$62.5 million, consisting of the purchase and maturities of marketable securities.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $214.7$216.0 million, consisting of proceeds from the issuance of common stock in connection with the equity financing in February 2026, the payment to holders of CVRs in accordance with the CVR Agreement entered into immediately prior to closing of the Merger on December 13, 2024, and proceeds from the exercise of stock options.

For the threesix months ended MarchJune 31,30, 2025, net cash providedused byin financing activities was $1.2$0.9 million, consisting primarily of payments of transaction costs incurred in connection with the Business Combination and proceeds from the exercise of stock options.

During the threesix months ended MarchJune 31,30, 2026, there were no material changes outside the ordinary course of our business to our contractual obligations and cash requirements, as disclosed in our 2025 Form 10-K.

During the threesix months ended MarchJune 31,30, 2026, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Form 10-K.