PLYX 10-Q
Polaryx Therapeutics, Inc. (PLYX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark one)
For the quarterly period ended
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Polaryx Therapeutics, Inc.
Form 10-Q
For the Fiscal Quarter Ended March 31, 2026
TABLE OF CONTENTS
i
Part I. FINANCIAL INFORMATION
As used in this Quarterly Report, unless the context otherwise requires, references to “we,” “us,” “our,” the “Company,” “Polaryx” and similar references refer to Polaryx Therapeutics, Inc. Additionally, references to our “Board” refer to the board of directors of Polaryx Therapeutics, Inc.
Item 1. Financial Statements
POLARYX THERAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands, except per share and share amounts)
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Due to related party | ||||||||
| Accrued expenses – related party | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock: $ | ||||||||
| Common stock: $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
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POLARYX THERAPEUTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited, in thousands, except per share and share amounts)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses | $ | $ | ||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other expense – direct listing offering costs | ( | ) | ||||||
| Net loss and comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
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POLARYX THERAPEUTICS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except share amounts)
| Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | | $ | $ | ( | ) | $ | | |||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balances at December 31, 2025 | $ | $ | | $ | $ | ( | ) | $ | | |||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
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POLARYX THERAPEUTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Changes in assets and liabilities which provided (used) cash: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Due to related party | ||||||||
| Accrued expenses – related party | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Net cash flows provided by financing activities | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning | ||||||||
| Cash and cash equivalents, ending | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
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POLARYX THERAPEUTICS, INC.
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Nature of the Business and Basis of Presentation
Polaryx Therapeutics, Inc. (the “Company”) is a clinical-stage biotechnology company committed to the discovery, development, and commercialization of novel, disease-modifying therapies for rare, pediatric lysosomal storage disorders. On October 24, 2025, the Company completed the redomestication to convert into a Nevada corporation from a Wyoming corporation.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). There is no difference between net loss and comprehensive loss in these financial statements.
The condensed financial statements for the three month period ended March 31, 2026 are unaudited, and in
the opinion of management, contain all adjustments necessary for a fair presentation of the condensed financial statements. Such adjustments consist solely of normal recurring items. Interim results are not necessarily indicative of results for a full year or any subsequent interim period. The condensed financial statements and notes are prepared in accordance with U.S. GAAP and do not contain certain information included in the annual financial statements and accompanying notes of the Company. These interim condensed financial statements should be read in conjunction with the financial statements and accompanying notes for the year ended December 31, 2025.
Reverse Stock Split
Effective on January 12, 2026, the Company effected a
Liquidity and Going Concern
The Company has no products approved for sale and has sustained recurring net losses and negative cash flows from operations since inception. For the three months ended March 31, 2026 and 2025, the Company had a net loss of $
There can be no assurance that the Company’s research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. Further, there is no assurance that profitable operations will ever be achieved, and if achieved, could be sustained on a continuing basis. The Company is subject to certain risks associated with any clinical stage pharmaceutical company that has substantial expenditures for research and development. These matters, along with the conditions described above, raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these financial statements were available to be issued.
The financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The financial statements do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the uncertainty related to the Company’s ability to continue as a going concern.
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Risks and Uncertainties
The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with governmental regulations, dependency on key suppliers (including for certain active pharmaceutical ingredients) and the ability to secure additional capital to fund operations. Product candidates currently under development will require extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel, infrastructure and extensive compliance and reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents consist principally of cash held in commercial bank accounts and money market funds. The Company considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents.
Concentration of Credit Risk
Financial investments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. The Company places its cash and cash equivalents with high credit quality U.S. financial institutions. At various times throughout the period, the Company’s cash deposits with any one financial institution may exceed the amount insured by the Federal Deposit Insurance Corporation. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. The Company has not experienced any losses of such amounts and management believes it is not exposed to any significant credit risk on its cash and cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of expenses during the reporting period. Estimates are based on several factors, including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends and the assessment of the probable future outcome. Actual results could differ from those estimates and changes in estimates may occur. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in the statements of operations and comprehensive loss in the period that they are determined. The most significant matters involving management’s estimates include accrued research and development expenses, and stock-based compensation expense.
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Property and Equipment, Net
Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for repairs and maintenance are expensed as incurred.
| Estimated Useful Life | ||
| Computer equipment | ||
| Office equipment | ||
| Lab equipment | ||
| Leasehold improvements |
There were property and equipment, net as of March 31, 2026 and December 31, 2025.
Impairment of Long-Lived Assets
The Company regularly reviews the carrying values and estimated lives of its long-lived assets, including property and equipment, to determine whether indicators of impairment exist that warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective. Should an impairment occur, the impairment loss would be measured based on the excess of the carrying amount over the asset’s fair value. impairment charge was recorded during the three months ended March 31, 2026 and 2025. There were long-lived assets as of March 31, 2026 and December 31, 2025.
Leases
The Company has adopted FASB ASU No. 2016-02, Leases (Topic 842), as subsequently amended. Per FASB Accounting Standards Codification (“ASC”) Topic 842, the leases standard requires lessees to record a right-of-use asset and a lease liability for all leases other than those that, at lease commencement, have a lease term of
Fair Value Measurements
FASB ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company used various valuation approaches. A fair value hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels, based on the inputs, as follows:
| ● | Level 1 — Valuations based on quoted prices for identical instruments in active markets. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. |
| ● | Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar instruments in active markets, identical or similar instruments in markets that are not active, or model-derived valuations whose inputs or significant value drivers are observable or can be corroborated by observable market data. |
| ● | Level 3 — Valuations based on inputs that are unobservable. These valuations require significant judgment. |
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The Company’s Level 1 assets consist of cash and cash equivalents in the accompanying balance sheets. In addition, the value of prepaid expenses, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these assets and liabilities. Related party liabilities are not presumed to be at fair value. As of March 31, 2026 and December 31, 2025, the Company did have any assets or liabilities measured at fair value classified as Level 2 or Level 3.
Accrued/Prepaid Research and Development Expenses
As part of the process of preparing its financial statements, the Company is required to estimate its accrued expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced. Most of the Company’s service providers invoice monthly in arrears for services performed or when contractual milestones are met. Estimates of accrued expenses as of each balance sheet date in the financial statements are based on facts and circumstances known at that time. The Company periodically confirms the accuracy of estimates with the service providers and adjusts if necessary. The significant estimates in accrued research and development expenses are related to expenses incurred with respect to contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”) and other vendors in connection with research and development and manufacturing activities.
The Company bases its expenses related to CROs and CMOs on estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on the Company’s behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, the Company estimates the time over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from estimates, the accrual or prepaid expense is adjusted accordingly. Although estimates are not expected to be materially different from amounts actually incurred, the Company’s understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented.
Research and Development Expenses
Research and development expenses primarily consist of costs associated with the preclinical and clinical development of the Company’s product candidates, including the following:
| ● | external research and development expenses incurred under arrangements with third parties, such as CROs and other vendors and CMOs to produce drug substance and drug product; | |
| ● | estimated research and development consulting costs related to the Mstone Partners Healthcare Limited (“Mstone”) Services Agreement (“Service Agreement”); and |
| ● | employee-related expenses, including salaries and benefits. |
All research and development expenses are charged to operations as incurred in accordance with FASB ASC Topic 730, Research and Development.
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Prepaid Expenses
Advance payments made for goods or services to be received in the future for use in research and development as well as general and administrative activities are recorded as prepaid expenses until the service has been performed or the goods have been received. The prepaid amounts are expensed as the benefits are consumed.
Stock-Based Compensation Expense
The Company follows the provisions of FASB ASC Topic 718, Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and non-employee directors, including employee stock options. Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC Topic 718 and is recognized as an expense over the requisite service period. For grants containing performance-based vesting provisions, the grant-date fair value of milestone-based stock-based payment awards is recognized as compensation expense once it is probable that the condition will be achieved. The Company accounts for actual forfeitures in the period the forfeitures occur.
The Company complies with ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payments arrangements related to the acquisition of goods and services from both employees and non-employees. The measurement date for non-employee awards is the date of grant. Compensation expense for nonemployees is recognized, without changes to the fair value of the equity classified award, over the requisite service period, which is the vesting period of the respective award.
Collaborative Arrangements
The Company analyzes its licensing and collaborative arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards, and therefore are within the scope of FASB ASC Topic 808, Collaborative Arrangements. For licensing and collaborative arrangements that contain multiple elements, the Company determines which units of account are deemed to be within the scope of ASC Topic 808 and which units of account are more reflective of a vendor-customer relationship and therefore are within the scope of ASC Topic 606. For units of account that are accounted for pursuant to ASC Topic 808, an appropriate recognition method is determined and applied consistently, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election.
For licensing and collaborative arrangements that are within the scope of ASC Topic 808, the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature of each activity. Payments or reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development and co-commercialization activities, are recorded as increases or decreases to research and development expenses or general and administrative expenses, as appropriate. Milestone payments are considered contingent liabilities and are recognized when the Company deems the milestone event to be probable.
Segment Information
Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and assess performance. The Company determined its operating segment after considering the Company’s organizational structure and the information regularly reviewed and evaluated by the Company’s CODM. The Company has determined that its CODM is its Chief Executive Officer. The CODM reviews financial information on an aggregate basis for the purposes of allocating resources and evaluating financial performance. On the basis of these factors, the Company determined that it operates and manages its business as
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Income Taxes
FASB ASC Topic 740, Income Taxes, sets forth standards for financial presentation and disclosure of income tax liabilities and expense. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The Company records uncertain tax positions in accordance with ASC Topic 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than
The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying statements of operations and comprehensive loss. As of March 31, 2026 and December 31, 2025, there were accrued interest or penalties recorded on the balance sheets.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. In January 2025, the FASB issued ASU 2025-01, Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which provides changes to the disclosure requirements and provides a delayed implementation timeline to give issuers additional time to prepare for the impacts of adoption. ASU 2025-01 is effective for the Company prospectively for all annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (“PBE”) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least
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3. Accrued Expenses
The following table presents the components of accrued expenses as of March 31, 2026 and December 31, 2025:
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| (In thousands) | ||||||||
| Accrued employee-related expenses | $ | $ | ||||||
| Accrued expenses | $ | $ | ||||||
4. Stockholders’ Equity
The Company’s common stock began trading on The Nasdaq Capital Market (“Nasdaq”) under the symbol “PLYX” on February 2, 2026.
Common Stock
In October 2024, the Company and Maxim Group LLC (the “Advisor”) entered into an engagement letter (the “Engagement Letter”), pursuant to which the Company issued
In January 2025, the Company issued an aggregate of
In July 2025 and through August 29, 2025, the Company issued
On September 3, 2025, the Company filed a Form C with the Securities and Exchange Commission (the “SEC”) to raise up to $
In September 2025, the Company issued an aggregate of
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From October 2025 through November 3, 2025, the Company issued an aggregate of
Holders of common stock are entitled to one vote per share, to receive dividends (on and if declared by the Board of Directors of the Company (the “Board”)) and, upon liquidation or dissolution, to receive all assets available for distribution to stockholders, subordinate to the rights, preferences and privileges of any outstanding shares of preferred stock with respect to dividends and in connection with liquidation, winding up and dissolution of the Company. The holders of common stock have no preemptive or other subscription rights.
As of March 31, 2026 and December 31, 2025, cash dividends have been declared or paid.
5. Stock-Based Compensation
The Company and the Advisor entered into the Engagement Letter on October 18, 2024. The Company agreed to issue
2022 Equity Incentive Plan
In March 2022, the Board approved the Company’s 2022 Equity Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the grant of options, stock appreciation rights, restricted stock units, restricted stock, and other stock-based awards and for incentive bonuses, which may be paid in cash, shares of common stock, or a combination thereof. The aggregate number of shares of common stock issuable under the Incentive Plan initially is
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2025 Equity Incentive Plan
In December 2025, the Company adopted the 2025 Plan. The 2025 Plan allows for the grant of stock options, both incentive stock options and “non-qualified” stock options; stock appreciation rights, alone or in conjunction with other awards; restricted stock and restricted stock units; incentive bonuses, which may be paid in cash, stock, or a combination thereof; and other stock-based awards. We refer to these collectively herein as “Awards.”
The 2025 Plan provides that the maximum number of shares of common stock that may be issued under the 2025 Plan will not exceed
Fair Value Inputs
The calculation of the fair value of Awards requires an estimate of the Company’s equity value. As the Company historically has been a privately held company with no trading history for its common stock until February 2, 2026, the estimated fair value of the Company’s common stock has been determined by management and approved by the Board. To determine the fair value, management considered the price per share from recent stock issuances to certain investors at that time and an assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. Additional factors include, among others, the nature and history of the Company’s business; the Company’s stage of development and commercialization; external market conditions; valuations of the Company’s industry peers; and the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company.
Restricted Stock Units
As of March 31, 2026, there were
The Company measures restricted stock compensation costs based on the stock price at the grant date less forfeitures as incurred.
| Number of Awards | Weighted Average Grant date Fair Value (per share) | |||||||
| Non-vested at December 31, 2024 | ||||||||
| Granted | $ | |||||||
| Vested | ||||||||
| Forfeited or exercised | ( | ) | ||||||
| Non-vested at December 31, 2025 | ||||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited or exercised | ||||||||
| Non-vested at March 31, 2026 | ||||||||
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As of March 31, 2026, there was $
The Company recognized a total of $
6. Segment Information
The Company has
The accounting policies of the lysosomal storage disorders segment are consistent with those described in Note 2, Summary of Significant Accounting Policies, and the measure of segment assets is reported on the balance sheets as total assets.
The following table summarized significant segment expenses for the three months ended March 31, 2026 and 2025:
| Lysosomal Storage Disorders Segment | ||||||||
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| (In thousands) | ||||||||
| Research and development expenses (excluding stock compensation) | $ | ( | ) | $ | ( | ) | ||
| General and administrative expenses (excluding stock compensation) | ( | ) | ( | ) | ||||
| Stock-based compensation | ( | ) | ( | ) | ||||
| Other expense – direct listing offering costs | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
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7. Net Loss Per Share
Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per unit is computed using the weighted-average number of shares of common stock and, if dilutive, common stock equivalents outstanding during the period.
The following table presents the calculation of basic and diluted net loss per share:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| (In thousands, except unit amounts and per unit data) | ||||||||
| Net loss per share | ||||||||
| Numerator | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Numerator for basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | ||
| Denominator | ||||||||
| Weighted average common shares outstanding | ||||||||
| Denominator for basic and diluted net loss per share | ||||||||
| Net loss per share: | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
The following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Performance-based awards | ||||||||
| Non-vested restricted stock units | ||||||||
| Total potentially dilutive securities | ||||||||
8. Income Taxes
The Company did record any tax provision or benefit for the three months ended March 31, 2026 and 2025, including the impact of the One Big Beautiful Bill Act enacted in July 2025, which has a provision restoring the immediate deductibility of domestic research and development expenditures. There was no material impact to the Company’s expected tax rate as a result of this legislation. Management has evaluated the positive and negative evidence bearing upon the realizability of the Company’s net deferred tax assets and has determined that it is more likely than not that the Company will not recognize the benefits of the net deferred tax assets. As a result, the Company has recorded a full valuation allowance at March 31, 2026 and December 31, 2025.
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9. Commitments and Contingencies
License Agreements
On April 8, 2016, the Company entered into a license agreement with the Rush University Medical Center (“Rush”) pursuant to which Rush granted the Company an exclusive license, with sublicensing rights, for the use of an invention/drug, made in the course of research at Rush, in the treatment of lysosomal storage diseases. Under this agreement, the Company is responsible for obtaining and maintaining all regulatory approvals for the drug, as well as for all clinical trials and commercialization activities relating to the drug. As part of the agreement, the Company agreed to issue
The licenses agreement was further amended in July 2019, September 2019, and December 2021 for definition changes. There was no change to the milestone payments or terms of the agreement.
In January 2025, the Company issued
Master Services Agreement with Rush University Medical Center
In June 2016, the Company entered into a Master Services Agreement with Rush (the “Rush MSA”), pursuant to which Rush provides services regarding the development and regulatory approval process for products currently under development by the Company, under statements of work for such services agreed to by the parties from time to time (see Note 10).
Contingencies
The Company is not aware of any matters that the Company believes will have a material effect on the Company’s results of operations, financial condition, or cash flows.
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10. Related Parties
Mstone is a controlling shareholder of the Company. In November 2021, the Company and Mstone entered a Service Agreement, pursuant to which Mstone provides certain support and business development-related services to the Company. In March 2026, the Company amended the Service Agreement with Mstone to provide for a fixed fee of $
In January 2025, the Company entered into a Share Placement Agreement with Rush and Mstone, pursuant to which the Company issued
In April 2025, the Company paid $
11. Subsequent Events
The Company has evaluated all events subsequent to March 31, 2026 through May 14, 2026, which represents the date these financial statements were available to be issued. The Company is not aware of any subsequent event that would require recognition or disclosure in the financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto and other financial information included elsewhere in this Quarterly Report. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our actual results and the timing of events could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in our most recent Annual Report on Form 10-K, specifically under Item 1A, “Risk Factors” and the “Special Note Regarding Forward-Looking Statements.”
Overview
We are a clinical-stage biotechnology company committed to the discovery, development, and commercialization of novel, disease-modifying therapies for rare, pediatric LSDs. Our therapeutic philosophy is centered on delivering safe, effective, and patient-friendly treatments that address the underlying pathophysiology of these catastrophic diseases and their significant unmet need. Our multi-modal approach integrates small molecule therapies, including a combination therapy, and a gene therapy, positioning us to potentially address both the genetic and downstream pathological features of LSDs. Our small molecule product candidates share target indications as well as similar mechanisms that have been demonstrated to address lysosomal dysfunction, neuroinflammation, and neuronal loss in our validated animal models that closely mimic human clinical phenotypes. Our most advanced product candidate, PLX-200, targets several LSDs and we intend to launch a Phase 2 proof-of-concept basket trial which may enhance PLX-200’s potential to become the standard of care across multiple LSDs.
Our product candidate pipeline includes:
| ● | PLX-200, our most advanced, clinical-stage product candidate, is an oral, repurposed small molecule. |
| ● | PLX-300 is a novel, oral small molecule therapy in IND application-enabling studies in treatment of lysosomal storage disorders. |
| ● | PLX-100 is a preclinical stage orally administrable combination therapy comprised of our PPARα agonist, PLX-200, and vitamin A, a retinoid X receptor alpha (“RXRα”) agonist. PLX-100 is being developed for the treatment of LSDs. |
| ● | PLX-400 is a preclinical stage novel gene therapy in treatment of lysosomal storage disorders. |
We focus our clinical development program on specific LSDs that are typically treated by symptom and palliative care and, with the exception of CLN2, lack approved disease-modifying therapies. We have accumulated an expansive base of preclinical data and knowledge on CLN2 and CLN3, Sandhoff disease, and Krabbe. Our drug candidates have been validated in gold standard preclinical animal models. With similar broad disease pathology shared across multiple LSDs in terms of substrate accumulation, neuroinflammation and neuronal loss, we believe our small molecule drug candidates have the potential to demonstrate high therapeutic potential in other targeted indications. Our development program of focus includes NCLs, Krabbe disease, Tay-Sachs and Sandhoff Diseases.
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We are advancing PLX-200, our most advanced product candidate, through a Phase 2 proof-of-concept basket trial which we refer to as SOTERIA (PLX-200-600). We expect to initiate this trial in the second half of 2026. SOTERIA is an open-label, multi-indication, master study for the treatment of certain LSDs which we believe represent approximately one quarter of our addressable LSD population, including CLN2, CLN3, Krabbe disease, and Sandhoff disease. We held a pre-IND submission meeting in April 2025. We submitted an IND application to the FDA for the SOTERIA trial in August 2025 and received a safe to proceed letter in October 2025. Data readouts from SOTERIA are expected to provide guidance and a clear pathway for each of the four indications towards potentially registrable trials. Further, with the precedent approval of Brineura, a drug approved to treat CLN2 on the basis of a single-arm, natural history comparator, open-label trial, we believe there may be an opportunity in CLN2 and CLN3 for us to seek expedited approval from the FDA for PLX-200 based on precedent approval for a third-party drug with a similar trial design. Should PLX-200 evidence overwhelming efficacy from the CLN2 and CLN3 cohorts in the SOTERIA trial, we believe there may be a case to seek expedited approval. Products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive expedited approval upon a determination that the product has demonstrated a clinically meaningful treatment effect. The precedent case of cerliponase alfa, a drug approved by FDA in treatment of CLN2, provides a benchmark for expedited approval based on results generated from an open-label, single arm trial comparing to natural history data studying Batten disease. SOTERIA’s current trial design for the CLN2 and CLN3 cohorts share the same open-label, single-arm design using natural history.
PLX-200 has already received authorization under two separate IND applications to initiate potentially single pivotal trials in CLN2 and CLN3, the most prevalent subtypes of NCLs. The IND for CLN2 was filed in December 2019 by Polaryx, with CRO support from Premier Research. A Study May Proceed letter was received in January 2020. The IND for CLN3 was filed in March 2020 by Polaryx, with CRO support from Premier Research. A Study May Proceed letter was received in April 2020.
Since our inception in August 2014, we have devoted substantially all of our resources to raising capital, organizing and staffing our company, business and scientific planning, conducting discovery and research activities, acquiring product programs, establishing and protecting our intellectual property portfolio, developing and progressing our pipeline, establishing arrangements with third parties for the manufacture of our programs and component materials, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue from product sales. Since our inception through the filing date of this Quarterly Report, we have funded our operations primarily through the issuance of approximately $21.7 million of common stock and preferred stock.
We have incurred significant operating losses since inception and expect to incur losses in the future as we continue our research and development activities. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of any product candidates we may develop. We incurred net losses of approximately $2.5 million and $5.1 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of approximately $102.2 million.
We expect to continue to incur significantly increased expenses for the foreseeable future if and as we:
| ● | advance the development of our lead product candidates through clinical development, and, if approved by the FDA, commercialization; |
| ● | advance our preclinical development programs into clinical development; |
| ● | incur manufacturing costs to supply our product candidates; |
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| ● | seek regulatory approvals for any of our product candidates that successfully complete clinical trials; |
| ● | increase our research and development activities to identify and develop new product candidates; |
| ● | hire additional personnel; |
| ● | expand our operational, financial and management systems; |
| ● | meet the requirements and demands of operating as a public company; |
| ● | invest in further development to protect and expand our intellectual property; |
| ● | ultimately establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize; and |
| ● | expand our manufacturing and develop our commercialization efforts. |
Due to the numerous risks and uncertainties associated with biopharmaceutical product development and the economic and developmental uncertainty, we may be unable to accurately predict the timing or magnitude of all expenses. Our ability to ultimately generate revenue to achieve profitability will depend heavily on the development, approval, and subsequent commercialization of our product candidates. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As a result, we will need substantial additional funding to support our long-term continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. We may not be able to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we will have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.
As of March 31, 2026, we had cash and cash equivalents of approximately $3.1 million. Based on our current operating plan, we estimate that our existing cash and cash equivalents as of the filing date of this Quarterly Report, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the third quarter of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Financial Overview
Revenue
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for any of our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales. We cannot predict if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.
Operating Expenses
Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.
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Research and Development Expenses
Research and development expenses consist of costs associated with the preclinical and clinical development of our product candidates, which include:
| ● | personnel-related expenses, including salaries and benefits for employees engaged in research and development functions; |
| ● | expenses incurred in connection with the clinical development and regulatory approval of our product candidates, including under agreements with third parties, such as consultants, contractors and CROs; and |
| ● | other expenses related to research and development. |
We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.
Research and development activities are central to our business model. We expect that our research and development expenses will increase substantially for the foreseeable future in connection with our planned clinical development activities.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation and benefits for our personnel and advisors. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, direct and allocated facility related expenses and other operating costs.
We anticipate that our general and administrative expenses will increase substantially for the foreseeable future as we increase our administrative headcount to operate as a public company and as we advance our product candidates through clinical development. We also will incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq listing rules, additional insurance expenses, investor relations activities and other administrative and professional services. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur expenses associated with building a sales and marketing team if we choose to commercialize such product candidates on our own.
Other Expense — Direct Listing Offering Costs
Other expense — direct listing offering costs primarily consists of costs related to the direct listing public offering completed on February 2, 2026 (the “Direct Listing”), including legal, accounting, and other expenses.
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Statements of Operations
Results of Operations
Comparison of the Three Months Ended March 31, 2026 and 2025
The following table summarizes our statements of operations for the periods presented.
| Three Months Ended March 31, | ||||||||||||
| 2026 | 2025 | $ Change | ||||||||||
| (in thousands) | ||||||||||||
| Operating expenses: | ||||||||||||
| Research and development expenses | $ | 679 | $ | 4,716 | $ | (4,037 | ) | |||||
| General and administrative expenses | 1,279 | 336 | 943 | |||||||||
| Total operating expenses | 1,958 | 5,052 | (3,094 | ) | ||||||||
| Operating loss | (1,958 | ) | (5,052 | ) | 3,094 | |||||||
| Other expense – direct listing offering costs | (586 | ) | — | (586 | ) | |||||||
| Net loss and comprehensive loss | $ | (2,544 | ) | $ | (5,052 | ) | $ | 2,508 | ||||
Research and development expenses
Research and development expenses decreased by $4.0 million to $679 thousand for the three months ended March 31, 2026, as compared to $4.7 million for the three months ended March 31, 2025. The reduction in research and development expenses was primarily due to stock-based compensation of approximately $4.3 million related to the issuance of 3,704,307 shares of common stock in March of 2025 to two existing stockholders in return for an exclusive gene therapy patent license totaling $4.3 million, which was not repeated in 2026. Of the total 3,704,307 shares issued, 277,823 shares were issued to Rush and 3,426,484 shares were issued to Mstone. The decrease in stock-based compensation expense was partially offset by expenses incurred for the three months ended March 31, 2026 under three statements of work pursuant to the Rush MSA that increased by $92 thousand. CRO formulation services increased by $139 thousand. Research and development expenses were substantially related to PLX-200 except for the stock-based compensation expense in 2025.
General and administrative expenses
General and administrative expenses increased by $943 thousand to $1,279 thousand for the three months ended March 31, 2026, as compared to $336 thousand for the three months ended March 31, 2025, primarily due to increased public company related expenses incurred in connection with the direct listing in January 2026 and due to an increase in stock-based compensation. Public company related expenses including legal, audit, investor relations, board compensation, and directors and officers insurance expenses increased by $435 thousand. Stock-based compensation increased by $359 thousand due to shares that were issued to a financial advisor in October of 2024. Of the total shares issued, 50% was fully vested upon issuance as compensation for advisory services and concluded in October of 2025 which decreased stock-based compensation by $108 thousand in the first quarter of 2026. The remaining 50% vested upon a public listing of the Company’s common stock. As of March 31, 2026, the remaining 50% was fully vested as our common stock began trading on Nasdaq on February 2, 2026. As such, the Company recorded $467 thousand to stock-based compensation.
Other expense — direct listing offering costs
Other expense — direct listing offering costs was $586 thousand for the three months ended March 31, 2026, as compared to zero for the three months ended March 31, 2025 due to legal, accounting, and advisory expenses related to the preparation of the direct listing offering.
Income taxes
The effective income tax rate was 0.0% for all periods. Currently, we have recorded a full valuation allowance against our net deferred tax assets.
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Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our programs. From our inception through the filing date of this Quarterly Report, we have funded our operations primarily with proceeds from the sales of our equity securities totaling approximately $21.7 million. As of March 31, 2026, we have no outstanding debt.
The following table presents the Company’s cash and cash equivalents as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | |||||||
| Cash and cash equivalents | $ | 3,080 | $ | 5,143 | ||||
Cash Flows
The following table presents cash provided by (used in) operating and financing activities during the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| (in thousands) | ||||||||
| Net cash flows (used in) operating activities | $ | (2,063 | ) | $ | (709 | ) | ||
| Net cash flows provided by financing activities | — | 250 | ||||||
| Net change in cash and cash equivalents | $ | (2,063 | ) | $ | (459 | ) | ||
Operating Activities
Net cash used in operating activities was $2.1 million for the three months ended March 31, 2026 and was primarily due to a net loss of $2.5 million, offset by an increase in stock-based compensation of $467 thousand and an increase in working capital changes of $14 thousand.
Net cash used in operating activities was $709 thousand for the three months ended March 31, 2025 and was primarily due to a net loss of $5.1 million and working capital decreases of $108 thousand related to accounts payable and accrued expenses, offset by stock-based compensation of $4.5 million.
Financing Activities
Net cash provided by financing activities was $250 thousand for the three months ended March 31, 2025 and was due to proceeds from the issuance of common stock. We had no cash provided by or used in financing activities for the three months ended March 31, 2026.
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Future Funding Requirements
We do not have any products approved for sale, and we have never generated any revenue from product sales. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current or future product candidates and we do not know when, or if, that will occur. We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our current and future product candidates, and begin to commercialize any approved products. We are subject to all the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. Moreover, we expect to incur additional costs associated with operating as a public company.
The financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred operating losses and negative cash flows from operations since inception. As of March 31, 2026, we had an accumulated deficit of approximately $102.2 million. Management expects to continue to incur operating losses and negative cash flows.
We will need to raise additional capital to continue to fund our operations. We believe we will be able to obtain additional capital through equity financings or other arrangements to fund operations; however, there can be no assurance that such additional financing, if available, can be obtained on acceptable terms. If we are unable to obtain such additional financing, future operations would need to be scaled back or discontinued.
We believe that our existing capital will enable us to fund our operations through the third quarter of 2026. We will need to raise additional capital in connection with our cash needs for capital expenditures and working capital beyond the third quarter of 2026. We have based the foregoing estimate on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect.
Our future funding requirements will depend on many factors, including, but not limited to:
| ● | the initiation, progress, timeline, cost and results of our clinical trials for our product candidates; |
| ● | the initiation, progress, timeline, cost and results of additional research and preclinical studies related to pipeline development and other research programs we initiate in the future; |
| ● | the cost and timing of manufacturing activities, including our planned manufacturing scale-up activities associated with our product candidates and other programs as we advance them through preclinical and clinical development through commercialization; |
| ● | the potential expansion of our current development programs to seek new indications; |
| ● | the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities; |
| ● | the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, in-licensed or otherwise; |
| ● | the effect of competing technological and market developments; |
| ● | the payment of licensing fees, potential royalty payments and potential milestone payments; |
| ● | the cost of general operating expenses; |
| ● | the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; and |
| ● | the costs of operating as a public company. |
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Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.
If we need to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our preclinical studies, clinical trials, research and development programs or commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations and other licensing arrangements. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends and the assessment of the probable future outcome. Subjective and significant estimates include, but are not limited to, research and development accruals as well as stock-based compensation expense. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in the statements of operations in the period that they are determined.
We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. For further information, refer to Note 2 “Summary of Significant Accounting Policies” to our financial statements included elsewhere in this Quarterly Report.
Research and Development Expenses and Accruals
All research and development expenses are charged to operations as incurred. Research and development expenses primarily consist of costs associated with the preclinical and clinical development of the Company’s product candidates, including the following:
| ● | external research and development expenses incurred under arrangements with third parties, such as CROs and other vendors and CMOs to produce drug substance and drug product; and |
| ● | employee-related expenses, including salaries and benefits. |
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As part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced. Most of our service providers invoice monthly in arrears for services performed or when contractual milestones are met. Estimates of accrued expenses as of each balance sheet date in our financial statements are based on facts and circumstances known at that time. We periodically confirm the accuracy of estimates with the service providers and adjust if necessary. The significant estimates in accrued research and development expenses are related to expenses incurred with respect to CROs, contract manufacturing organizations (“CMOs”) and other vendors in connection with research and development and manufacturing activities.
We base our expenses related to CROs and CMOs on estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, we estimate the time over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from estimates, the accrual or prepaid expense is adjusted accordingly. Although estimates are not expected to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented.
Stock-Based Compensation Expense and Common Stock Valuations
We recognize compensation costs related to stock-based awards to employees and non-employees based on the estimated fair value of the awards on the date of grant and it is recognized as an expense over the requisite service period. For grants containing performance-based vesting provisions, the grant-date fair value of the milestone-based stock-based payment awards is recognized as compensation expense once it is probable that the condition will be achieved. We account for actual forfeitures in the period the forfeitures occur.
We will continue to use judgment in evaluating the assumptions utilized for our stock-based compensation expense calculations on a prospective basis. Such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expenses could be materially different.
The calculation of the fair value of awards requires an estimate of the Company’s equity value. As the Company historically has been a privately held company with no trading history for its common stock until February 2, 2026, the estimated fair value of the Company’s common stock has been approved by the Board, with input from management, valuations by third-party specialists, as well as upon the price per share from recent stock issuances to certain investors at that time. To determine the fair value, management considered the price per share from recent stock issuances to certain investors at that time, most recently available third-party valuations of its common stock and an assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. Additional factors include, among others, the nature and history of the Company’s business; the Company’s stage of development and commercialization; external market conditions; valuations of the Company’s industry peers; and the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company. These third-party valuations are performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The third-party common stock valuations are prepared using the market approach (guideline public company method) to estimate the Company’s enterprise value.
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Recent Accounting Pronouncements
See Note 2 “Summary of Significant Accounting Policies” to our financial statements included elsewhere in this Quarterly Report for a discussion of accounting pronouncements recently issued but not yet adopted and their potential impact to our financial statements.
Emerging Growth Company Status and Smaller Reporting Company Status
We are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (1) no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company, as defined in 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 the effectiveness of our disclosure controls and procedures as of March 31, 2026. Based on the foregoing evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2026. 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 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Internal Control over Financial Reporting
This Quarterly Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies. Additionally, for as long as we remain an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, we intend to take advantage of the exemption permitting us not to comply with the requirement that our independent registered public accounting firm provide an attestation on the effectiveness of our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
We are not party to any material legal proceedings at this time. From time to time, we may become involved in various legal proceedings that arise in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained.
Item 1A. Risk Factors
In addition to the other information included in this report, you should carefully consider the discussion of risk factors affecting the Company as set forth in Part I, Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition or future results. The risks described in these reports are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, and operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
None.
Issuer Repurchases of Equity Securities
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Trading Plans
During the quarter ended March 31, 2026, no director or Section 16 officer
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Item 6. Exhibits
| * | Filed herewith. |
| # | Indicates management contract or compensatory plan or arrangement. |
| (1) | Furnished herewith and not to be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise subject to the liability of such section, and not to be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act. |
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SIGNATURES
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.
| Polaryx Therapeutics, Inc. | ||
| Date: May 14, 2026 | ||
| By: | /s/ Alex Yang | |
| Alex Yang | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: May 14, 2026 | ||
| By: | /s/ G. Michael Landis | |
| G. Michael Landis | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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