CTNM 10-Q
Contineum Therapeutics, Inc. (CTNM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission File Number:
Contineum Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer |
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| (Address of principal executive offices) | (Zip Code) |
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(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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| The (Nasdaq Global Select Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 31, 2025, the registrant had
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions are intended to identify forward looking statements. Forward-looking statements contained in this report include, but are not limited to, statements about:
• the likelihood of our clinical trials demonstrating the safety and efficacy of our drug candidates;
• the timing and progress of our current clinical trials, the expected results of these clinical trials and the timing of initiation of our planned and future clinical trials;
• our plans relating to the clinical development of our current and future drug candidates, including the size, number and disease indications to be evaluated;
• Janssen Pharmaceutica NV, a Johnson & Johnson (“J&J”) company’s, plans related to the clinical development of PIPE-307;
• our clinical translational approach, and our ability to identify and develop drug candidates that can potentially treat neuroscience, inflammation and immunology (“NI&I”) diseases by targeting biological pathways associated with specific clinical impairment to alter the course of disease;
• the size of the market opportunities for our drug candidates;
• the rate and degree of market acceptance and clinical utility of our drug candidates;
• our plans relating to commercializing our drug candidates, if approved;
• the success of competing therapies and technologies that are or may become available;
• the beneficial characteristics, safety, efficacy, therapeutic effects and potential advantages of our drug candidates;
• the timing or likelihood of regulatory filings and approval for our drug candidates;
• our ability to obtain and maintain regulatory approval of our drug candidates and our drug candidates to meet existing or future regulatory standards;
• our plans relating to the further development and manufacturing of our drug candidates, including additional indications for which we may pursue;
• our ability to successfully identify and complete transactions to in-license or otherwise acquire additional drug candidates, technologies, products or businesses;
• our ability to attract and to enter into commercial arrangements with third parties who have development, regulatory, manufacturing and commercialization expertise;
• our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available, as well as our ability to secure and maintain intellectual property regulatory rights and regulatory protections;
• our ability to retain our senior management;
• the need to hire additional personnel and our ability to attract and retain such personnel;
• the accuracy of our estimates regarding our operating runway, expenses, capital requirements and needs for additional financing;
• the sufficiency of our existing capital resources to fund our future operating expenses and capital expenditure requirements;
• the period during which we expect we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”) or a smaller reporting company;
• our anticipated use of our existing cash, cash equivalents and short-term investments; and
• other risks and uncertainties, including those described under Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.
Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements or rely on forward-looking statements as predictions of future events. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms, “Contineum,” the “Company,” “we,” “our,” and “us” refer to Contineum Therapeutics, Inc. and references to our “common stock” refer to our voting Class A common stock.
TABLE OF CONTENTS
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| PART I. |
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| Item 1. |
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| Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
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| Item 4. |
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| PART II. |
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| Item 1. |
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| Item 1A. |
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| Item 2. |
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| Item 3. |
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| Item 4. |
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| Item 5. |
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| Item 6. |
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PART I — FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
(unaudited)
(in thousands, except share and par value data)
| June 30, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Other long-term assets | ||||||||
| Operating lease right-of-use assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Stockholders' equity: | ||||||||
| Class A common stock, $ par value; authorized shares— at June 30, 2025 and December 31, 2024; issued and outstanding shares— and at June 30, 2025 and December 31, 2024, respectively. | ||||||||
| Class B common stock, $ par value; authorized shares— at June 30, 2025 and December 31, 2024; issued and outstanding shares— at June 30, 2025 and December 31, 2024. | ||||||||
| Preferred stock, $ par value; authorized shares— at June 30, 2025 and December 31, 2024; shares issued or outstanding at June 30, 2025 and December 31, 2024. | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share and per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Change in fair value of warrant liability | ( | ) | ||||||||||||||
| Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income, net | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||||||||||
| Unrealized gain (loss) on marketable securities | ( | ) | ( | ) | ( | ) | ||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted (a) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average shares of common stock outstanding, basic and diluted | ||||||||||||||||
_____________
| (a) | Basic and diluted per share amounts are the same for Class A and Class B shares. |
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
(in thousands, except share data)
| Class A and Class B | Additional | Accumulated Other | Total | |||||||||||||||||||||
| Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders' | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Unrealized gain on marketable securities | — | |||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Shares purchased through employee stock purchase plan | ||||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Unrealized loss on marketable securities | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Convertible | Class A and Class B | Additional | Accumulated Other | Total | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders' | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Equity (Deficit) | |||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Unrealized loss on marketable securities | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Issuance of common stock in connection with initial public offering, net of issuance costs of $ | ||||||||||||||||||||||||||||||||
| Conversion of convertible preferred stock to common stock upon initial public offering | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Reclassification of warrant from liability to equity | — | — | ||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Unrealized loss on marketable securities | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash operating lease expense | ||||||||
| Stock-based compensation | ||||||||
| Accretion of premiums/discounts on marketable securities, net | ( | ) | ( | ) | ||||
| Change in fair value of warrant liability | ||||||||
| Loss on disposal of property and equipment | ||||||||
| Gain on marketable securities | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Other long-term assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Purchases of marketable securities | ( | ) | ( | ) | ||||
| Sales and maturities of marketable securities | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Financing activities | ||||||||
| Payments of deferred offering costs | ( | ) | ||||||
| Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Proceeds from employee stock purchase plan | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of noncash investing and financing activities | ||||||||
| Conversion of convertible preferred stock to common stock upon initial public offering | $ | $ | ||||||
| Reclassification of warrant from liability to equity | $ | $ | ||||||
| Reclassification of deferred offering costs paid in prior year to equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Organization and Nature of Operations
Contineum Therapeutics, Inc. (the “Company”), is a clinical-stage biopharmaceutical company pioneering differentiated therapies for the treatment of neuroscience, inflammation and immunology (“NI&I”) indications with significant unmet need. The Company was incorporated in the state of Delaware in 2009, and in November 2023 changed its name from Pipeline Therapeutics, Inc. to Contineum Therapeutics, Inc.
Reverse Stock Split
On April 1, 2024, the Company filed an amendment to its fourth amended and restated certificate of incorporation as amended and effected a 1-for-
Initial Public Offering
On April 9, 2024, the Company closed its initial public offering (the “IPO”), pursuant to which it issued and sold an aggregate of
In connection with the closing of the IPO, on April 9, 2024, the Company’s certificate of incorporation was amended and restated to (i) authorize
Liquidity and Capital Resources
Since its inception, the Company has devoted substantially all its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital to support and expand such activities and providing general and administrative support for these operations. The Company incurred a net loss of $
As of June 30, 2025, the Company had cash, cash equivalents and marketable securities of $
As the Company continues to pursue its business plan, it expects to finance its operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it may need to delay, reduce or eliminate its product development or future commercialization efforts, which could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. Further, if the Company raises funds through licensing or other similar arrangements with third parties, it may be required to relinquish valuable rights to its technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to it and/or may reduce the value of its common stock.
Unaudited Interim Condensed Financial Statements
The condensed balance sheet as of June 30, 2025, condensed statements of operations and comprehensive loss and condensed statements of convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2025 and 2024, and condensed statements of cash flows for the six months ended June 30, 2025 and 2024, and related notes to condensed financial statements are unaudited. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the periods presented. The condensed results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The condensed balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date. These interim unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 6, 2025.
2. Summary of Significant Accounting Policies
During the six months ended June 30, 2025, there were no significant changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 6, 2025.
Basis of Presentation
The Company has prepared the accompanying condensed financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. The financial statements are presented in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Accounting estimates and management judgments reflected in the financial statements include: the accrual of research and development expenses; the incremental borrowing rate used to recognize the right-of-use assets and lease liabilities, the fair value of common stock and convertible preferred stock; and stock-based compensation. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions.
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This standard requires a public entity to disclose significant segment expenses and other segment items on an interim and annual basis. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company adopted ASU 2023-07 for the fiscal year ended December 31, 2024 and interim financial statements thereafter, on a retrospective basis for all prior periods presented in the financial statements. The adoption of ASU 2023-07 did not change the way that the Company identifies its reportable segments and, as a result, did not have a material impact on the Company’s financial position or results of operations. See Note 10 - Segment Reporting for further information.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). This standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This standard requires a public entity to disaggregate certain income statement expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements.
3. Marketable Securities
The Company invests its excess cash in marketable securities, including debt securities, commercial paper, asset-backed securities, yankee debt, certificate of deposit, and U.S. Government agency securities.
The following table summarizes the amortized cost and fair value of the Company’s marketable securities by major investment category (in thousands):
| June 30, 2025 | |||||||||||||||||
| Unrealized | |||||||||||||||||
| Maturity in Years | Amortized Cost | Gains | Losses | Fair Value | |||||||||||||
| U.S. Government agency securities | 3 years or less | $ | $ | $ | ( | ) | $ | ||||||||||
| Certificate of deposit | Less than 1 | ( | ) | ||||||||||||||
| Corporate debt securities | 2 years or less | ( | ) | ||||||||||||||
| Commercial paper | Less than 1 | ( | ) | ||||||||||||||
| Yankee debt | Less than 1 | ( | ) | ||||||||||||||
| Asset-backed securities | 3 years or less | ||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | |||||||||||
| December 31, 2024 | |||||||||||||||||
| Unrealized | |||||||||||||||||
| Maturity in Years | Amortized Cost | Gains | Losses | Fair Value | |||||||||||||
| U.S. Government agency securities | 3 years or less | $ | $ | $ | ( | ) | $ | ||||||||||
| Certificate of deposit | Less than 1 | ( | ) | ||||||||||||||
| Corporate debt securities | 2 years or less | ( | ) | ||||||||||||||
| Commercial paper | Less than 1 | ( | ) | ||||||||||||||
| Yankee debt | Less than 1 | ||||||||||||||||
| Asset-backed securities | 2 years or less | ||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | |||||||||||
The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, current and expected future economic conditions. The Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. As of June 30, 2025 and December 31, 2024, the Company did not record an allowance for credit loss related to its investment portfolio. As of June 30, 2025,
The following tables summarize our available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by major security type (in thousands):
| June 30, 2025 | ||||||||
| Fair Value | Unrealized Losses | |||||||
| U.S. Government agency securities | $ | $ | ( | ) | ||||
| Certificate of deposit | ( | ) | ||||||
| Corporate debt securities | ( | ) | ||||||
| Commercial paper | ( | ) | ||||||
| Yankee debt | ( | ) | ||||||
| Total | $ | $ | ( | ) | ||||
| December 31, 2024 | ||||||||
| Fair Value | Unrealized Losses | |||||||
| U.S. Government agency securities | $ | $ | ( | ) | ||||
| Certificate of deposit | ( | ) | ||||||
| Corporate debt securities | ( | ) | ||||||
| Commercial paper | ( | ) | ||||||
| Total | $ | $ | ( | ) | ||||
4. Fair Value Measurements
The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).
Assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):
| Fair Value Measurements Using | ||||||||||||||||
| Quoted Prices in | Significant Other | Significant | ||||||||||||||
| Active Markets | Observable | Unobservable | ||||||||||||||
| for Identical | Inputs | Inputs | ||||||||||||||
| Total | Assets (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| As of June 30, 2025: | ||||||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||||
| U.S. Government agency securities | ||||||||||||||||
| Certificates of deposits | ||||||||||||||||
| Corporate debt securities | ||||||||||||||||
| Commercial paper | ||||||||||||||||
| Yankee debt | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ||||||||||||
| As of December 31, 2024: | ||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||||
| U.S. Government agency securities | ||||||||||||||||
| Certificates of deposits | ||||||||||||||||
| Corporate debt securities | ||||||||||||||||
| Commercial paper | ||||||||||||||||
| Yankee debt | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ||||||||||||
The carrying amounts of the Company’s financial instruments, including cash, cash equivalents and marketable securities, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. Included in cash and cash equivalents at June 30, 2025 and December 31, 2024 are money market funds with a carrying value and fair value of $
5. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accrued compensation expenses | $ | $ | ||||||
| Accrued research and development expenses | ||||||||
| Accrued professional and consulting expenses | ||||||||
| Other accrued expenses | ||||||||
| Total accrued expenses | $ | $ | ||||||
6. Stockholders’ Equity (Deficit)
Sales Agreement
In May 2025, the Company entered into a Sales Agreement (the “Agreement”) with Leerink Partners LLC (“Leerink Partners”) relating to the offer and sale of up to $
Common Stock
The Company has two classes of common stock: Class A common stock and Class B common stock. Class A common stock has
Class A common stock reserved for future issuance consisted of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Common stock options granted and outstanding | ||||||||
| Shares available for issuance under the 2024 Equity Incentive Plan | ||||||||
| Common stock warrant | ||||||||
| Common stock reserved under the 2024 Employee Stock Purchase Plan | ||||||||
| Total common stock reserved for future issuance | ||||||||
There are shares of Class B common stock reserved for future issuance as of June 30, 2025 and December 31, 2024.
Stock Options
In March 2024, the Company's board of directors and its stockholders adopted and approved the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan is the successor of the Company's 2012 Equity Incentive Plan (the “2012 Plan”). However, awards outstanding under the 2012 Plan will continue to be governed by their existing terms. The 2024 Plan allowed for the issuance of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, restricted stock units, and other stock awards to the Company's employees, members of its board of directors, and consultants.
The number of shares initially reserved for issuance under the 2024 Plan was
Under the 2024 Plan, the exercise price for options granted under the 2024 Plan may not be less than
The Company's board of directors (or a committee thereof to which the Company's board of directors has delegated authority) may amend or terminate the 2024 Plan at any time. If the Company's board of directors amends the 2024 Plan, it does not need stockholder approval of the amendment unless required by applicable law, regulation or rules. The 2024 Plan will terminate automatically years after the date when the Company's board of directors adopted the 2024 Plan.
In April 2025, the Company granted inducement awards outside of the 2024 Plan to the Company's Chief Medical Officer and Head of Development in the form of an option to purchase
Stock option activity is as follows:
| Options Outstanding | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Balance at December 31, 2024 | $ | $ | ||||||||||||||
| Options granted | — | — | ||||||||||||||
| Options exercised | ( | ) | — | — | ||||||||||||
| Options cancelled and forfeited | ( | ) | — | — | ||||||||||||
| Options expired | ( | ) | — | — | ||||||||||||
| Balance at June 30, 2025 | $ | $ | ||||||||||||||
| Options vested and expected to vest as of June 30, 2025 | $ | $ | ||||||||||||||
| Options exercisable as of June 30, 2025 | $ | $ | ||||||||||||||
The aggregate intrinsic value of options exercised during the six months ended June 30, 2025 and 2024 was $
Options exercisable include options which are not vested but are available to be early exercised. As of June 30, 2025, there were options available to be early exercised. As of December 31, 2024, of the
The Company estimated the fair value of stock options using the Black-Scholes valuation model. The Company accounts for any forfeitures of options when they occur. Previously recognized compensation expense for an award is reversed in the period that the award is forfeited. The fair value of stock options expected to vest was estimated using the following weighted-average assumptions:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Assumptions: | ||||||||||||||||
| Expected term (in years) | ||||||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Risk free interest rate | % | % | % | % | ||||||||||||
| Dividend yield | ||||||||||||||||
The weighted-average grant-date fair value per share of stock options granted and expected to vest as of their grant date during the three months ended June 30, 2025 and 2024 was $
The Company recorded $
The Company recorded $
As of June 30, 2025, there was approximately $
Employee Stock Purchase Plan
In March 2024, the Company's board of directors and its stockholders adopted and approved the 2024 Employee Stock Purchase Plan (the “2024 ESPP”). The 2024 ESPP became effective as of April 9, 2024. The purpose of the 2024 ESPP is to provide eligible employees with an opportunity to increase their interest in the success of the Company by purchasing shares of Class A common stock from the Company on favorable terms and to pay for such purchases through payroll deductions or other approved contributions. The new payroll deduction rate may be any whole percentage of the participant’s compensation, but not less than
The number of shares initially reserved for issuance under the 2024 ESPP was
During the six months ended June 30, 2025, there were
7. License Agreement
In February 2023, the Company entered into the J&J License Agreement, pursuant to which the Company granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE-307 in all indications. The J&J License Agreement allows the Company to elect, at its sole discretion and cost, to conduct a Phase 2 trial of PIPE-307 for patients with multiple sclerosis. After such trial, J&J may, at its sole discretion, further develop PIPE-307 for patients with multiple sclerosis. Additionally, upon J&J deciding to conduct a first Phase 3 clinical trial for a product using PIPE-307, the J&J License Agreement allows the Company the option to co-fund a portion of all Phase 3 and subsequent development costs for PIPE-307, with such costs capped annually. If the Company opts to fund such development costs, then the royalties the Company is eligible to receive will increase. Pursuant to the terms of the J&J License Agreement, the Company received an upfront, non-refundable and non-creditable payment of $
The Company sold approximately
The Company concluded that J&J represented a customer and applied relevant guidance from ASC 606 to evaluate the appropriate accounting for the J&J License Agreement. The Company evaluated the J&J License Agreement and concluded that it had promises to transfer a license of functional intellectual property, know-how, existing inventory and manufacturing technology (each of which was determined to be a distinct performance obligation). Control of the promised goods was transferred to J&J in the second quarter of 2023, and the $
In August 2023, the Company elected to conduct a Phase 2 trial using PIPE-307 for patients with multiple sclerosis, which was considered a contract modification under the accounting guidance that added promised goods or services that are distinct at a price that is below the standalone selling price. Therefore, the Company accounted for the modification as a termination of the existing contract and creation of a new contract. Accordingly, the amount of consideration to be allocated to the remaining performance obligations consists of future contingent milestone-based payments and sales-based royalties, all of which were constrained. The only remaining performance obligation is the promise to conduct the Phase 2 trial, as the other performance obligations had been satisfied prior to the modification date. Accordingly, the variable consideration allocated to the Phase 2 trial will be recognized as the study is completed using a cost-based measure of progress and when the amounts are no longer probable of a significant reversal. As of June 30, 2025, no amounts had been recognized related to the Phase 2 trial as no additional variable consideration has been received subsequent to the contract modification.
8. Commitments and Contingencies
Operating Lease
The Company leases office and lab space in San Diego, California under a non-cancelable operating lease (“Science Center Drive Lease”). The lease commenced in March 2018 and has a
In October 2023, the Company executed a noncancelable operating lease for new premises to be used for office, research and development and laboratory purposes (“General Atomics Court Lease”), with the same landlord as the Science Center Drive Lease. The General Atomics Court Lease commenced for accounting purposes in October 2024 when the Company took control of the premises and has a
As a result of the new lease, the Company received rent abatement from January to October 2024 on the Science Center Drive Lease. This resulted in a modification of the Science Center Drive Lease and a remeasurement of the existing lease liability and the associated right-of-use asset in October 2023. As a result, $
The Company’s operating lease ROU asset and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. Upon commencement of the new lease, in October 2024, the Company recorded an ROU asset and lease liability of approximately $
Below is a summary of the Company’s operating lease right-of-use assets and lease liabilities (in thousands, except for years and %):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liability obligations, current | $ | $ | ||||||
| Operating lease liability obligations, less current portion | ||||||||
| Total lease liability obligations | $ | $ | ||||||
| Weighted-average remaining lease term | ||||||||
| Weighted-average discount rate | % | % | ||||||
During the three months ended June 30, 2025 and 2024, the Company recognized $
Supplemental cash flow information related to operating leases are as follows (in thousands):
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | $ | ||||||
Future minimum lease payments for the Company’s operating lease liabilities as of June 30, 2025 are as follows (in thousands):
| 2025 | $ | ||
| 2026 | |||
| 2027 | |||
| 2028 | |||
| 2029 | |||
| Total minimum lease payments | |||
| Less: Amount representing interest | |||
| Total lease liability obligations | |||
| Less: Current portion of operating lease liabilities | |||
| Operating lease liabilities, net of current portion | $ |
Litigation
From time to time, the Company may become involved in various legal proceedings and claims that arise in the ordinary course of our business activities. As of June 30, 2025, the Company was not currently a party to any material legal proceedings.
Other Commitments
The Company has various manufacturing, clinical, research and other contracts with vendors in the conduct of the normal course of its business. Such contracts are generally terminable with advanced written notice and payment for any products or services received by the Company through the effective time of termination and any non-cancelable and non-refundable obligations incurred by the vendor at the effective time of the termination. In the case of terminating a clinical trial agreement at a particular site, the Company would also be obligated to provide continued support for appropriate medical procedures at that site until completion or termination.
9. Net Loss Per Share
The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2025 |
2024 |
2025 |
2024 |
|||||||||||||
| Numerator: |
||||||||||||||||
| Net loss applicable to common stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Denominator: |
||||||||||||||||
| Weighted average shares used to compute net loss per common share, basic and diluted |
||||||||||||||||
| Net loss per share: |
||||||||||||||||
| Basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
For the three and six months ended June 30, 2025 and 2024, net loss is attributable equally to each share of Class A common stock and Class B common stock and is determined based on the weighted-average number of the respective class of common stock outstanding. Weighted-average common shares include shares of the Company's Class A common stock and Class B common stock. The basic and diluted net loss per share amounts are the same for Class A common stock and Class B common stock.
The Company’s potentially dilutive securities, which include common stock options and a common stock warrant have been excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2025 and 2024, as the effect would reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.
The following potentially dilutive securities have been excluded from the diluted per share calculation for the periods presented as they would be anti-dilutive:
| June 30, |
June 30, |
|||||||
| 2025 |
2024 |
|||||||
| Common stock options |
||||||||
| Common stock warrant |
||||||||
| Total potentially dilutive securities |
||||||||
10. Segment Reporting
The Company operates in reportable segment, pioneering differentiated therapies for the treatment of NI&I indications with significant unmet need.
Our chief operating decision maker (“CODM”) is our President and Chief Executive Officer, Carmine Stengone. The CODM uses operating expenses, as reported on our statements of operations and comprehensive loss. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results of the Company as a whole using operating expenses. Net loss is also a measure that is considered in monitoring budget versus actual results. The CODM does not review assets in evaluating the results of the Company, and therefore, such information is not presented.
Significant segment expenses within net loss include research and development related to PIPE-791, PIPE-307, CTX-343, discovery programs and unallocated internal costs, general and administrative and interest income.
The following table provides the operating financial results of our single reportable segment (in thousands):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Significant and other segment expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| PIPE-791 | $ | $ | $ | $ | ||||||||||||
| PIPE-307 | ||||||||||||||||
| CTX-343 | ||||||||||||||||
| Discovery programs | ||||||||||||||||
| Unallocated internal costs(1) | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other segment items(2) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
______________________
| (1) |
Unallocated internal research and development costs include employee-related expenses that cannot be directly attributable to a specific research project, stock-based compensation for employees engaged in research and development functions, facilities, depreciation and other related expenses. |
| (2) |
Other segment items primarily include change in fair value of warrant liability and other expense, net. |
11. Subsequent Events
In July 2025, the Company closed an at-the-market (“ATM”) offering of
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto as of and for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 6, 2025.
This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements, which represent our intent, belief, or current expectations, involve risks and uncertainties. We use words such as “may,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “predict,” “potential,” “believe,” “should” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements may include, but are not limited to, statements concerning projections about our accounting and finances, our clinical trial and product development plans and timelines, the indications, anticipated benefits of, and market opportunities for our drug candidates, our operating runway, our business strategies and plans, and other statements regarding future performance. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. As a result of many factors, including without limitation those set forth under “Risk Factors” under Item 1A of Part II below, and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes.
Overview
We are a clinical-stage biopharmaceutical company pioneering differentiated therapies for the treatment of NI&I indications with significant unmet need. We target biological pathways associated with specific clinical impairments that we believe, once modulated, will demonstrably alter the course of disease.
We have focused our efforts on developing selective compounds targeting challenging molecular pathways and have built a portfolio of small molecule drug candidates. We believe our two clinical stage, internally-discovered drug candidates, PIPE-791 and PIPE-307, will have broad applicability across multiple NI&I indications. We are developing PIPE-307 in collaboration with J&J.
Our wholly-owned lead asset, PIPE-791, is a novel, brain penetrant, small molecule inhibitor of the lysophosphatidic acid 1 receptor (“LPA1R”) in development for idiopathic pulmonary fibrosis (“IPF”), progressive multiple sclerosis (“PrMS”), and chronic pain. LPA1R antagonism is a clinically validated mechanism in IPF, and we believe that our preclinical studies and Phase 1 healthy volunteer data support the development of PIPE-791 for IPF, as well as PrMS and chronic pain. Specifically, based on its high bioavailability, low plasma protein binding, and long receptor occupancy time in our preclinical studies compared to the preclinical data of other LPA1R antagonists, we believe PIPE-791 has the potential to be a differentiated LPA1R therapy. We have completed a Phase 1 clinical trial of PIPE-791 in healthy volunteers in support of clinical development in IPF, PrMS and chronic pain. In December 2024, we commenced a Phase 1b open-label trial to measure the relationship of pharmacokinetics to lung and brain receptor occupancy by positron emission tomography (“PET”) imaging. We expect the topline data from this trial will be available in the third quarter of 2025. This Phase 1b PET trial, along with our preclinical studies data, will inform dose selection in our future Phase 2 trials of PIPE-791. We plan to initiate a Phase 2 global proof-of-concept clinical trial in IPF in the fourth quarter of 2025. In March 2025, we announced the initiation of patient dosing in an exploratory PIPE-791 Phase 1b, randomized, double-blind, placebo-controlled, crossover, chronic pain trial for the treatment of chronic pain associated with two separate indications, chronic osteoarthritis and chronic low back pain. We expect to enroll approximately 40 patients at up to five sites in the U.S., and a treatment duration of 28 days. We anticipate topline data from this trial in the first half of 2026.
Our second drug candidate, PIPE-307, is a novel, small molecule selective inhibitor of the muscarinic type 1 receptor (“M1R”), in development for depression and relapse-remitting multiple sclerosis (“RRMS”). We have completed two Phase 1 trials of PIPE-307 in healthy volunteers. In 2023, we initiated a Phase 2 VISTA trial of PIPE-307 for the potential treatment of RRMS. In January 2025, we announced that we have fully enrolled our Phase 2 VISTA trial. We expect the topline data from this trial will be available in the fourth quarter of 2025. In December 2024, J&J began recruiting an estimated 124 adult participants for a Phase 2 trial of PIPE-307/JNJ-89495120 for the potential treatment of major depressive disorder (“MDD”). This trial is a randomized, double-blind, multi-center, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety and tolerability of PIPE-307/JNJ-89495120 as monotherapy in adult participants with MDD. We believe PIPE-307 is the most advanced selective M1R antagonist in clinical development.
In addition, we are leveraging our drug discovery capabilities to expand our clinical portfolio. In January 2024, we nominated and commenced preclinical studies for CTX-343, a peripherally-restricted (unable to access the central nervous system) LPA1R antagonist. In parallel, we are actively conducting preclinical and discovery-phase experiments targeting other NI&I indications where our internally-discovered molecules may have therapeutic potential.
We have a portfolio of novel and proprietary small molecule programs that we believe can modulate innate pathways to restore function in NI&I indications. We retain worldwide rights to our LPA1R programs and discovery portfolio, and we have partnered with J&J for the development and potential commercialization efforts of PIPE-307.
We expect our operating expenses to significantly increase as we continue to develop, conduct clinical trials, and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand the indications for our existing drug candidates and develop a pipeline of additional drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. We also expect to incur additional operating expenses as we continue operating as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing and scope of our clinical trials and our expenditures on other research and development activities.
As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.
Collaboration
In February 2023, we entered into a license agreement with J&J (the “J&J License Agreement”), pursuant to which we granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE-307 in all indications.
J&J is generally responsible for all development, manufacturing and commercialization activities for PIPE-307. Upon J&J conducting a first Phase 3 clinical trial for a product using PIPE-307, we have an opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307. If we opt to fund such development costs, then the royalties we are eligible to receive will increase by one to two percentage points.
We are conducting, at our own expense, a Phase 2 clinical trial of PIPE-307 in patients with RRMS. We completed enrollment of our Phase 2 clinical trial in December 2024, and expect the topline data from this trial will be available in the third quarter of 2025. J&J has the right to discontinue our clinical trial if it has good faith concerns that this trial presents safety risks or could have a material adverse effect on its development or commercialization of PIPE-307. In addition, J&J has the right, in its sole discretion, to further develop or to elect not to develop PIPE-307 for this indication. In December 2024, J&J began recruiting an estimated 124 adult participants for a Phase 2 trial of PIPE-307/JNJ-89495120 for the potential treatment of MDD. This trial is a randomized, double-blind, multi-center, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety and tolerability of PIPE-307/JNJ-89495120 as monotherapy in adult participants with MDD.
The J&J License Agreement expires on a licensed product-by-product and country-by-country basis upon the last to occur of: (i) the expiration of the last-to-expire licensed patent claim covering the composition of matter of the licensed compound in such licensed product in such country; (ii) the expiration of exclusive marketing rights conferred by a regulatory authority or applicable law (other than patent exclusivity) for such licensed product in such country; or (iii) ten years after the first commercial sale of such licensed product in such country. Either party may terminate the J&J License Agreement in the event of an uncured material breach by the other party or a bankruptcy or insolvency of the other party. J&J may terminate the J&J License Agreement without cause upon prior written notice to us. Upon any termination, all license rights granted to J&J terminate.
Financial Operations Overview
Revenue
We recognize license revenues as identified performance obligations are satisfied or other events occur, specifically related to our J&J License Agreement. Pursuant to the terms of the J&J License Agreement, we received an upfront payment of $50.0 million in May 2023. We are also eligible to receive approximately $1.0 billion in non-refundable, non-creditable milestone payments, pursuant to the terms of the J&J License Agreement. Additionally, we are eligible to receive tiered royalties in the low-double digit to high-teen percent range on net sales of products containing PIPE-307. We do not have any products approved for sale and we have not yet generated any revenue from product sales. We did not recognize any revenue for the three and six months ended June 30, 2025 or 2024.
Operating Expenses
Research and Development
Research and development expenses consist primarily of costs incurred for our internal research and development activities.
Direct costs include:
| • |
employee-related expenses, including salaries, related benefits, and travel that can be directly attributable to each research project; |
| • |
expenses incurred in connection with research, laboratory consumables and preclinical studies; |
| • |
expenses incurred in connection with conducting clinical trials, including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations (“CROs”), other vendors or central laboratories and service providers engaged to conduct our trials; |
| • |
the cost of consultants engaged in research and development related services; |
| • |
the cost to manufacture drug products for use in our preclinical studies and clinical trials; and |
| • |
costs related to regulatory compliance. |
Unallocated internal research and development costs include:
| • |
employee-related expenses, including salaries, related benefits, and travel that cannot be directly attributable to a specific research project; |
| • |
stock-based compensation for employees engaged in research and development functions; and |
| • |
facilities, depreciation and other related expenses. |
We expense our research and development costs as they are incurred. We record advance payments for goods or services to be received in the future for use in research and development as prepaid expenses. We then expense the prepaid amounts as the related goods are delivered or the services are performed.
We track outsourced development costs, consultant costs and other external research and development costs such as third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities to specific programs. We allocate employee related costs including salaries and related benefits based upon the level of effort for each specific project.
Certain employee activities that cannot be allocated to any one specific project or management related activities are considered indirect costs. The following tables summarize our research and development expenses for the three and six months ended June 30, 2025 and 2024. The direct external development program expenses reflect external costs attributable to our clinical development and preclinical programs and personnel costs that can be directly attributed to a development program. The unallocated internal research and development costs include unallocated personnel costs, facility costs, stock-based compensation, laboratory consumables and discovery and research related activities.
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2025 |
2024 |
2025 |
2024 |
|||||||||||||
| (in thousands) |
(in thousands) |
|||||||||||||||
| Direct external development program expense |
||||||||||||||||
| PIPE-791 |
$ | 6,178 | $ | 2,028 | $ | 11,732 | $ | 4,889 | ||||||||
| PIPE-307 |
2,160 | 2,258 | 4,775 | 4,333 | ||||||||||||
| CTX-343 |
1,059 | 574 | 2,437 | 886 | ||||||||||||
| Discovery programs |
1,328 | 1,244 | 2,710 | 2,348 | ||||||||||||
| Unallocated internal research and development costs |
||||||||||||||||
| Personnel related |
1,207 | 484 | 1,835 | 852 | ||||||||||||
| Stock-based compensation |
1,094 | 620 | 2,177 | 1,009 | ||||||||||||
| Facilities costs |
482 | 236 | 986 | 455 | ||||||||||||
| Others |
555 | 457 | 1,123 | 907 | ||||||||||||
| Total research and development costs |
$ | 14,063 | $ | 7,901 | $ | 27,775 | $ | 15,679 | ||||||||
Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our drug candidates, including future clinical trial design and various regulatory requirements, many of which we cannot determine with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our drug candidates and our costs may increase if we exercise our opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307 pursuant to the J&J License Agreement. However, we expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and for the foreseeable future.
The successful development of our drug candidates is highly uncertain. This is due to numerous risks and uncertainties, including the following:
| • |
successful completion of preclinical studies and clinical trials; |
| • |
delays in regulators or institutional review boards authorizing us or our investigators to commence or continue our clinical trials; |
| • |
our ability to negotiate agreements with clinical trial sites or CROs; |
| • |
the number of clinical sites included in our clinical trials; |
| • |
raising additional funds necessary to complete clinical development of our drug candidates; |
| • |
obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our drug candidates; |
| • |
establishing and qualifying manufacturing capabilities for clinical supplies of our drug candidates, whether directly or through qualified third party manufacturers; |
| • |
our ability to receive necessary regulatory approvals from the U.S. Food and Drug Administration and comparable governmental bodies outside the United States; |
| • |
our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307; |
| • |
coverage for our products by governmental and third party payors; |
| • |
protecting and enforcing our rights in our intellectual property portfolio; |
| • |
our ability to successfully compete with our competitors and their product offerings; and |
| • |
maintaining a continued acceptable safety profile of the products following approval. |
A change in the outcome of any of these variables with respect to the development of our drug candidates may significantly impact the costs and timing associated with the development of our drug candidates. We may never succeed in obtaining regulatory approval for any of our drug candidates or successfully commercialize our products, even if approved.
General and Administrative
General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions. Other significant costs include legal fees relating to intellectual property, patent applications, and corporate matters, professional fees for accounting and consulting services and facility-related costs.
We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development activities, the growth of our business operations and headcount and to reflect increased operating expenses as we continue operating as a public company. These increased costs will likely include increased expenses related to audit, legal, regulatory services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs.
Other Income (Expense)
Interest Income
Interest income consists of interest earned on our cash, cash equivalents and marketable securities.
Results of Operations
Comparison of the Three Months Ended June 30, 2025 and 2024
The following table summarizes our results of operations (in thousands) for the periods indicated:
| Three Months Ended | ||||||||||||
| June 30, |
||||||||||||
| 2025 |
2024 |
Change |
||||||||||
| Operating expenses: |
||||||||||||
| Research and development |
$ | 14,063 | $ | 7,901 | $ | 6,162 | ||||||
| General and administrative |
3,839 | 3,043 | 796 | |||||||||
| Total operating expenses |
17,902 | 10,944 | 6,958 | |||||||||
| Loss from operations |
(17,902 | ) | (10,944 | ) | (6,958 | ) | ||||||
| Other income (expense): |
||||||||||||
| Interest income |
2,029 | 2,001 | 28 | |||||||||
| Change in fair value of warrant liability |
— | 11 | (11 | ) | ||||||||
| Other expense, net |
(167 | ) | (77 | ) | (90 | ) | ||||||
| Total other income, net |
1,862 | 1,935 | (73 | ) | ||||||||
| Net loss |
$ | (16,040 | ) | $ | (9,009 | ) | $ | (7,031 | ) | |||
Research and development expenses. Research and development expenses were $14.1 million and $7.9 million for the three months ended June 30, 2025 and 2024, respectively. The increase of $6.1 million from period to period was due to the following:
| • |
$4.3 million increase in contract research organization costs due to a $2.6 million increase in startup costs related to the Phase 2 trial for PIPE-791 for the treatment of IPF, a $1.0 million increase in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, and a $0.7 million increase in costs related to the Phase 1b PET trial for PIPE-791; |
| • |
$1.5 million increase in personnel-related expense related to an overall increase in personnel from period to period; |
| • |
$0.5 million increase in non-cash stock-based compensation; and |
| • |
$0.2 million increase in facilities costs. |
Partially offsetting these increases was a $0.3 million decrease in manufacturing expenses for PIPE-791 and CTX-343.
General and administrative expenses. General and administrative expenses were $3.8 million and $3.0 million for the three months ended June 30, 2025 and 2024, respectively. The increase of $0.8 million was due to a $0.5 million increase in non-cash stock-based compensation, a $0.5 million increase in personnel-related expenses related to an overall increase in personnel from period to period, and a $0.1 million increase in facilities costs. Partially offsetting these increases was a $0.3 million decrease in market research costs.
Comparison of the Six Months Ended June 30, 2025 and 2024
The following table summarizes our results of operations (in thousands) for the periods indicated:
| Six Months Ended | ||||||||||||
| June 30, |
||||||||||||
| 2025 |
2024 |
Change |
||||||||||
| Operating expenses: |
||||||||||||
| Research and development |
$ | 27,775 | $ | 15,679 | $ | 12,096 | ||||||
| General and administrative |
8,237 | 5,195 | 3,042 | |||||||||
| Total operating expenses |
36,012 | 20,874 | 15,138 | |||||||||
| Loss from operations |
(36,012 | ) | (20,874 | ) | (15,138 | ) | ||||||
| Other income (expense): |
||||||||||||
| Interest income |
4,279 | 3,637 | 642 | |||||||||
| Change in fair value of warrant liability |
— | (107 | ) | 107 | ||||||||
| Other expense, net |
(297 | ) | (82 | ) | (215 | ) | ||||||
| Total other income, net |
3,982 | 3,448 | 534 | |||||||||
| Net loss |
$ | (32,030 | ) | $ | (17,426 | ) | $ | (14,604 | ) | |||
Research and development expenses. Research and development expenses were $27.8 million and $15.7 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $12.1 million from period to period was due to the following:
| • |
$8.1 million increase in contract research organization costs due to a $3.7 million increase in startup costs related to the Phase 2 trial for PIPE-791 for the treatment of IPF, a $2.1 million increase in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, a $1.5 million increase in costs related to the Phase 1b PET trial for PIPE-791, and a $0.8 million increase in costs related to the VISTA Phase 2 clinical trial for PIPE-307 for the potential treatment of RRMS; |
| • |
$2.3 million increase in personnel-related expense related to an overall increase in personnel from period to period; |
| • |
$1.2 million increase in non-cash stock-based compensation; and |
| • |
$0.5 million increase in facilities costs. |
General and administrative expenses. General and administrative expenses were $8.2 million and $5.2 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $3.0 million was primarily due to a $1.6 million increase in non-cash stock-based compensation, a $1.2 million increase in personnel-related expenses, and a $0.2 million increase in facilities costs.
Interest income. Interest income was $4.3 million and $3.6 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $0.6 million was due to an increase in funds invested in marketable securities and an increase in the yields earned on our marketable securities from the six months ended June 30, 2024 to the six months ended June 30, 2025.
Liquidity and Capital Resources
Sources of Liquidity
We have incurred net losses and negative cash flows from operations in nearly every reporting period since our inception and anticipate that we will continue to incur net losses for the foreseeable future. We expect to incur substantial expenditures as we advance our drug candidates through clinical development, undergo the regulatory approval process, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio and, if we obtain approval for one or more of our drug candidates, launch commercial activities.
Through June 30, 2025, we have funded our operations primarily through the issuance of convertible promissory notes, private placements of our convertible preferred stock, the J&J License Agreement, and net proceeds from the IPO. Through June 30, 2025, we have raised gross proceeds of approximately $312.8 million from the issuance of our convertible preferred stock, promissory notes, and Class A common stock in our IPO. In addition, we received an upfront payment from the J&J License Agreement of $50.0 million and borrowed $5.0 million at the inception of the loan and security agreement with First Citizens Bank. Upon the closing of the IPO, our outstanding convertible preferred stock automatically converted into Class A common stock or Class B common stock, as applicable. In April 2024, we raised approximately $107.9 million in net proceeds from the IPO. As of June 30, 2025, we had an accumulated deficit of $149.4 million.
As of June 30, 2025, we had cash, cash equivalents and marketable securities of $175.5 million. Based on our current operating plan, we believe that our existing cash and cash equivalents and short-term investments, will be sufficient to meet our anticipated operating expenses and capital expenditure requirements through at least the next 12 months, following the date of this Quarterly Report on Form 10-Q.
In May 2025, we entered into a Sales Agreement (the “Agreement”) with Leerink Partners LLC (“Leerink Partners”) relating to the offer and sale of up to $75.0 million in shares of our Class A common stock, par value $0.001 per share (the “Shares”). We are not obligated to make any sales of Shares under the Agreement. Any sales under the Agreement will be made pursuant to an “at-the-market offering” (the “ATM Program”) in accordance with Rule 415(a)(4) under the Securities Act of 1933, as amended. We did not sell any shares of our Class A common stock under the Agreement during the three months ended June 30, 2025.
In July 2025, the Company closed an ATM offering of 2,122,000 shares of its Class A common stock. The shares of Class A common stock were sold at a weighted average price of $4.03 per share, resulting in gross proceeds of $8.6 million. The Company raised $8.4 million in net proceeds after deducting sales agent commissions of $0.2 million.
As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include milestone payments from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated (in thousands):
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2025 |
2024 |
|||||||
| Net cash used in operating activities |
$ | (30,073 | ) | $ | (16,474 | ) | ||
| Net cash provided by (used in) investing activities |
28,799 | (30,168 | ) | |||||
| Net cash provided by financing activities |
115 | 108,346 | ||||||
| Net increase (decrease) in cash and cash equivalents |
$ | (1,159 | ) | $ | 61,704 | |||
Operating Activities
Net cash used in operating activities was $30.1 million for the six months ended June 30, 2025, which related to our net loss of $32.0 million and a $3.0 million change in operating assets and liabilities, partially offset by $4.9 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense. Net cash used in operating activities was $16.5 million for the six months ended June 30, 2024, which primarily related to our net loss of $17.4 million, partially offset by $0.8 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense, and $0.1 million change in operating assets and liabilities.
Investing Activities
Net cash provided by investing activities was $28.8 million for the six months ended June 30, 2025, which related to $88.0 million of sales and maturities of marketable securities, partially offset by $59.1 million of purchases of marketable securities and $0.1 million or purchases of property and equipment. Net cash used in investing activities was $30.2 million for the six months ended June 30, 2024, which primarily related to $99.6 million of purchases of marketable securities and $0.3 million of purchases of property and equipment, partially offset by $69.7 million of sales and maturities of marketable securities.
Financing Activities
Net cash provided by financing activities was approximately $0.1 million for the six months ended June 30, 2025, which was primarily related to $0.3 million of proceeds from employee stock purchase plan, partially offset by $0.2 million in payments of deferred offering costs. Net cash provided by financing activities was $108.3 million for the six months ended June 30, 2024, which primarily related to $108.2 million of net proceeds from the issuance of common stock in the Company's IPO and $0.1 million of proceeds from the exercise of stock options.
Funding Requirements
We expect our operating expenses to significantly increase as we continue to develop and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and our actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing our drug candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.
Our future capital requirements will depend on many factors, including:
| • |
the type, number, scope, progress, expansions, results, costs and timing of, our clinical trials and preclinical studies for our drug candidates or other potential drug candidates or indications which we are pursuing or may choose to pursue in the future; |
| • |
the outcome, timing and costs of regulatory review of our drug candidates; |
| • |
the costs and timing of manufacturing for our drug candidates; |
| • |
our efforts to enhance our operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; |
| • |
the costs associated with hiring additional personnel and consultants as our preclinical and clinical activities expand; |
| • |
the costs and timing of establishing or securing manufacturing facilities for our drug candidates; |
| • |
the costs and timing of establishing sales and marketing capabilities if any of our drug candidates are approved; |
| • |
our ability to establish and maintain strategic collaborations, licensing or other arrangements; |
| • |
the financial terms of any such agreements that we may enter into; |
| • |
our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307; |
| • |
the costs of obtaining, maintaining and enforcing our patent and other intellectual property rights; and |
| • |
costs associated with any drug candidates, products or technologies that we may in-license or acquire. |
Until such time as we can generate significant revenue from sales of our drug candidates, if ever, we expect to finance our cash needs through public or private equity or debt financings or other commercial arrangements, including collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. We may be unable to raise additional funds or enter into such commercial arrangements when needed, on favorable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may be required to relinquish valuable rights to our drug candidates, future revenue streams or research programs or may be required to grant licenses on terms that may not be favorable to us and may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings or through commercial arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves.
Contractual Obligations and Commitments
Our contractual obligations and commitments relate to our operating leases that relate primarily to our leases of office and laboratory space in San Diego, California. Our total contractual commitments for our lease agreements amount to approximately $6.9 million as of June 30, 2025.
We enter into contracts in the normal course of business for contract research services, contract manufacturing services, professional services and other services and products for operating purposes. These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts and not included in the table above.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of the SEC.
Critical Accounting Policies and Significant Judgments and Estimates
Management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments, including those related to the accrual of research and development expenses; the incremental borrowing rate used to recognize the right-of-use assets and lease liabilities, the fair value of common stock and convertible preferred stock; and stock-based compensation We base our estimates and assumptions on historical experience, known trends and events, and various other factors that we believe are reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting estimates from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgements and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2024.
Emerging growth company and smaller reporting company status
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. We will remain an emerging growth company until the earlier of (i) December 31, 2029, the last day of the fiscal year following the fifth anniversary of the completion of the IPO, (ii) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.235 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our voting and non-voting common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on this evaluation of our disclosure controls and procedures as of June 30, 2025, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date were effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2025, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
From time to time, we may become involved in various legal proceedings and claims that arise in the ordinary course of our business activities. We are not currently a party to any material legal proceedings. Regardless of the outcome, litigation could have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
Investing in our common stock involves a high degree of risk. In addition to the information set forth in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed financial statements and related notes, you should consider carefully the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K, filed with the SEC on March 6, 2025. The occurrence of any of the risks and uncertainties described in such Annual Report could materially and adversely affect our business, financial condition, results of operations and prospects. In that event, the price of our common stock could decline and you could lose part or all of your investment. Furthermore, such risks are not the only ones we face; additional risks and uncertainties not currently known or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or results of operations. Except as set forth below, there have been no material changes from the risk factors set forth in Part I, Item 1A of the Company’s Annual Report on Form 10-K.
Changes in tax laws and the implementation of tax laws could adversely affect us.
The tax regimes we are subject to or operate under, including with respect to income and non-income taxes, are unsettled and may be subject to significant change. Changes in tax laws, regulations, or rulings, or changes in interpretations of existing laws and regulations, could materially adversely affect our company. For example, the TCJA, the CARES Act, and the IRA enacted many significant changes to the U.S. tax laws. Future guidance from the IRS and other tax authorities with respect to such legislation may affect us, and certain aspects thereof could be repealed or modified in future legislation. For example, the Internal Revenue Code tax capitalization rules enacted in 2022 required research and development expenses to be capitalized and amortized over a 5-year period for tax purposes. However, The One Big Beautiful Bill Act (the “OBBB Act”) features several tax reforms, including permitting taxpayers to permanently deduct domestic research and development expenses for amounts paid or incurred in tax years beginning after December 31, 2024. We are continuing to analyze the potential impact of the OBBB Act on our operations and financial condition, but we do not expect the OBBB Act to materially impact our effective tax rate or cash flows in the current fiscal year.
We use our best judgment in attempting to quantify and reserve for these tax obligations. However, a challenge by the IRS or another taxing authority, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions could have a material adverse effect on our business, results of operations or financial condition. In addition, new legislation or regulations which could affect our tax burden could be enacted by Congress or another governmental authority. We cannot predict the timing or extent of such tax-related developments which could have a negative impact on our financial position and results of operation.
Unstable or unfavorable global economic conditions and an uncertain geopolitical environment could have an adverse effect on our business, financial condition, results of operations and prospects.
Our business, financial condition and results of operations as well as our ability to advance our drug candidates could be adversely affected by general conditions in the global economy or disruption of global financial markets, including the impacts of domestic and global monetary and fiscal policy, trade regulations, including changes in trade policies, tariffs or other trade restrictions or the threat of such actions, geopolitical instability, including ongoing military conflicts between Russia and Ukraine and in the Middle East, rising tensions between China and Taiwan, and high interest rates. For example, the U.S. government has recently implemented or announced substantial new tariffs affecting a wide range of products and jurisdictions and has indicated an intention to continue developing new trade policies, including with respect to the biopharmaceutical industry. In response, certain foreign governments have announced or implemented retaliatory tariffs and other protectionist measures. These developments have created a dynamic and unpredictable trade landscape, increased trade and political tensions and caused widespread uncertainty in the financial markets. Shifts in trade policies, whether through legislation, executive action, or international negotiation, could alter the global trade landscape and affect supply chains, pricing, and demand for goods and services. These developments, or the perception that such changes may occur, have and could continue to have a material adverse effect on global economic conditions, contribute to volatility in financial markets, and disrupt international trade, including trade between the U.S. and its key partners. We cannot anticipate all of the ways in which the foregoing, and the current macroeconomic and geopolitical climate and financial market conditions generally, could adversely impact our business and any of these factors could result in a material adverse effect on our business, financial condition, results of operations, and prospects. If the current life science equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) Recent Sales of Unregistered Equity Securities.
None.
(b) Use of Proceeds from Initial Public Offering of Common Stock.
On April 4, 2024, our registration statement on Form S-1 (333-278003) relating to the initial public offering of our common stock was declared effective by the SEC (the "Registration Statement"). Pursuant to such Registration Statement, we issued and sold an aggregate of 7,423,682 shares of our common stock, which includes 548,682 shares sold pursuant to the underwriters’ partial exercise of their option to purchase additional shares, at the public offering price of $16.00 per share. On April 9, 2024, we closed the sale of 6,875,000 shares and on April 19, 2024, we closed the sale of the 548,682 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares. The aggregate offering price for shares sold in the IPO was approximately $118.8 million, resulting in aggregate net proceeds of approximately $107.9 million, after deducting the underwriting discounts, commissions and offering expenses paid or payable by us. No offering expenses were paid or payable, directly or indirectly, to our directors, officers, persons owning 10% or more of any class of our equity securities, or to any of our affiliates. Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Stifel Nicolaus & Company, Incorporated and RBC Capital Markets, LLC acted as joint book-running managers for the IPO.
There has been no material change in the planned use of proceeds from the IPO from those described in the final Prospectus, dated April 4, 2024, filed with the SEC on April 8, 2024, pursuant to Rule 424(b) of the Securities Act.
(c) Issuer Purchases of Equity Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Trading Arrangements
During the quarter ended June 30, 2025, of our directors or officers adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement (as such terms are defined pursuant to Item 408(a) of Regulation S-K).
| Exhibit | Incorporated by Reference |
Filed |
|||||
| Number |
Description |
Form |
File No. |
Exhibit |
Filing Date |
Herewith | |
| 3.1 |
Amended and Restated Certificate of Incorporation of the Registrant. |
8-K |
001-42001 |
3.1 |
04/09/2024 |
||
| 3.2 |
8-K |
001-42001 |
3.2 |
04/09/2024 |
|||
| 10.1+ ^ | Offer Letter, dated as of April 3, 2025, by and between the Registrant and Tim Watkins. | X | |||||
| 10.2+ | Amendment to Offer Letter, dated as of April 18, 2025, by and between the Registrant and Tim Watkins. | X | |||||
| 10.3 | Sales Agreement, dated May 14, 2025, by and between Contineum Therapeutics, Inc. and Leerink Partners. | S-3 | 333-287275 | 1.2 | 05/14/2025 | ||
| 31.1 |
X |
||||||
| 31.2 |
X |
||||||
| 32.1* |
X |
||||||
| 32.2* |
X |
||||||
| 101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
X |
|||||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
X |
|||||
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
X |
_________________________________________
+ Indicates management contract or compensatory plan.
^ Pursuant to Item 601(a)(5) of Regulation S-K, certain exhibits and schedules have been omitted. The Registrant hereby undertakes to furnish supplementally a copy of any omitted exhibit or schedule upon request by the SEC.
* The certifications furnished in Exhibit 32.1 and 32.2 hereto are deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates them by reference.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Contineum Therapeutics, Inc. |
|||
| August 5, 2025 |
By: |
/s/ Carmine Stengone |
|
| Carmine Stengone |
|||
| President, Chief Executive Officer and Director |
|||
| (Principal Executive Officer) | |||
|
|
|||
| August 5, 2025 | By: |
/s/ Peter Slover |
|
| Peter Slover |
|||
| Chief Financial Officer |
|||
| (Principal Financial Officer and Principal Accounting Officer) | |||