The following discussion and analysis and the unaudited interim condensed consolidated financial statements included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2025 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 17, 2026. Forward-Looking Statements This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Section 27A of the Securities Act of 1933, as amended, or the Securities Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our future results of operations and financial position, business strategies and plans, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and planned clinical trials for seralutinib, the timing and likelihood of regulatory filings and approvals for seralutinib, including the timing and potential submission, and potential acceptance for filing and approval, of an NDA for seralutinib in PAH, timing and likelihood of success, plans and objectives of management for future operations, the anticipated benefits of the termination of the Company’s Collaboration and License Agreement with Chiesi, the anticipated benefits of any reverse stock split, and the timing of the completion of any such reverse stock split, the potential impact of U.S. trade policy, including tariffs, and future results of seralutinib, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important 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 the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this quarterly report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, “Risk Factors” of this report, Part I, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC on March 17, 2026, and Part II, Item 1A, “Risk Factors” of our subsequently filed quarterly reports. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of PH, including PAH and PH-ILD. Our goal is to be an industry leader in, and to enhance the lives of patients living with PH. In July 2026, we entered into the Rights Reacquisition Agreement with Chiesi, pursuant to which we reacquired worldwide development and commercial rights to seralutinib. In December 2022, we announced positive topline results from the Phase 2 TORREY Study in PAH patients. In February 2026, we announced topline results from the Phase 3 PROSERA Study in PAH patients. Seralutinib demonstrated a placebo-adjusted improvement in the primary endpoint, 6MWD at Week 24, of 13.3 meters (p = 0.0320), missing the prespecified alpha threshold of 0.025. Following a Pre-NDA Type B meeting with the FDA held in mid-June 2026 and receipt of the official meeting minutes, we plan to proceed with an NDA submission for seralutinib for the treatment of PAH in September 2026. The Company intends to submit an NDA supported by one adequate and well-controlled study (Phase 3 PROSERA) plus confirmatory evidence (Phase 2 TORREY and supportive analyses). If the NDA is accepted for filing, seralutinib could be eligible for an FDA approval decision in the third quarter of 2027. In addition to PAH, we believe that seralutinib holds potential as a therapeutic for the treatment of PH-ILD, and this indication remains an area of focus for us. We have assembled a deeply experienced and highly skilled group of industry veterans, scientists, clinicians and key opinion leaders from leading biotechnology and pharmaceutical companies, as well as leading academic centers from around the world. Our employees are a team of highly dedicated, passionate individuals who pride themselves on a 35 Table of Contents culture of respect, humility, transparency, inclusion, dedication, collaboration and fun. Our ultimate goal is to enhance and extend the lives of patients. We were incorporated in October 2015 and commenced operations in 2017. To date, we have focused primarily on organizing and staffing our company, business planning, raising capital, identifying, acquiring and in-licensing our product candidates and conducting preclinical studies and clinical trials. We have funded our operations primarily through equity and debt financings and the Chiesi Collaboration Agreement. As of June 30, 2026, we had $57.0 million in cash, cash equivalents and marketable securities. We have incurred significant operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future. For the three months ended June 30, 2026 and 2025, our net gain was $16.9 million and net loss of $38.3 million, respectively. For the six months ended June 30, 2026 and 2025, our net loss was $29.8 million and $74.9 million, respectively. As of June 30, 2026, we had an accumulated deficit of $1,468.7 million. We expect to incur expenses and operating losses for the foreseeable future as we continue our development of and seek regulatory approvals for seralutinib, including the conduct of ongoing and planned clinical trials and other research and development activities; and as we hire additional personnel, protect our intellectual property and incur costs associated with being a public company. In addition, as seralutinib progresses through development and toward commercialization, we will need to make milestone payments to Pulmokine from whom we have in-licensed seralutinib. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending in particular on the timing of our clinical trials and preclinical studies and our expenditures on other research and development activities. On May 3, 2024, we announced a strategic global partnership with Chiesi. Under the terms of the Chiesi Collaboration Agreement, we granted Chiesi exclusive licenses for the worldwide development, manufacture and commercialization of seralutinib and licensed products and an Equity Option to purchase our common stock, which expired in November 2025. On July 23, 2026, we entered into the Rights Reacquisition Agreement, under which we and Chiesi have agreed (a) to terminate the Chiesi Collaboration Agreement, subject to survival of certain provisions, and provide for assistance and cooperation in connection with certain wind-down activities conducted by or on behalf of Chiesi; (b) to provide for the reacquisition by us of seralutinib assets (including by termination of licenses granted under the Chiesi Collaboration Agreement by us to Chiesi and assignment or transfer or license of related assets, including regulatory filings and certain intellectual property rights related to seralutinib, by Chiesi to us) and worldwide development and commercial rights to seralutinib, including control of PAH, PH-ILD and potential future indications, and (c) to provide for certain post-termination payments and related obligations in consideration of the rights granted under the Rights Reacquisition Agreement. We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for seralutinib, which we expect will take a number of years, if at all. If we obtain regulatory approval for seralutinib, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate seralutinib development or future commercialization efforts or grant additional rights to develop and market seralutinib even if we would otherwise prefer to retain such right. Components of Results of Operations Revenue To date, we have generated all of our revenue from the Chiesi Collaboration Agreement. Our revenue consists of a one-time development cost reimbursement payment for licenses and ongoing cost-sharing payments for performance of research and development services classified as revenue from contracts with collaborators. In the future, we may generate revenue from a combination of license fees and other upfront payments, other funded research and development agreements, milestone payments, product sales, other third-party funding, U.S. profit/loss share and royalties in connection with strategic alliances. We expect that any revenue we generate will fluctuate from quarter-to-quarter as a result of the timing of performance of research and development services, the timing of our achievement of regulatory and commercialization milestones, the timing and amount of payments relating to such milestones and the extent to which any of our products are approved and successfully commercialized. If we are unable to fund our development costs or we are unable to 36 Table of Contents develop product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenues and our results of operations and financial position would be adversely affected. Operating expenses Research and development Research and development expenses relate primarily to preclinical and clinical development of seralutinib, as well as our discontinued clinical product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Research and development expenses include or could include: •salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts; •external research and development expenses incurred under agreements with contract research organizations, or CROs, investigative sites and consultants to conduct our clinical trials and preclinical and non-clinical studies; •laboratory supplies; •costs related to manufacturing our product candidates for clinical trials and preclinical studies, including fees paid to third-party manufacturers; •costs related to compliance with regulatory requirements; and •facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, insurance, equipment and other supplies. Our direct research and development expenses consist principally of external costs, such as fees paid to CROs, investigative sites and consultants in connection with our clinical trials, preclinical and non-clinical studies, and costs related to manufacturing clinical trial materials. We deploy our personnel and facility related resources across all of our research and development activities. We track external costs and personnel expense on a program-by-program basis and allocate common expenses, such as facility related resources, to each program based on the personnel resources allocated to such program. Stock-based compensation and personnel and common expenses not attributable to a specific program are considered unallocated research and development expenses. We categorize Terminated Programs as any research and development expenses attributable to our clinical stage product candidates that were terminated prior to December 31, 2023 or any research and development expenses that are not directly allocated to seralutinib. We expect to incur research and development expenses for the foreseeable future as we continue the development of seralutinib. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of seralutinib due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to how much funding to direct to seralutinib on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments and our ongoing assessments as to seralutinib's commercial potential. We will need to raise substantial additional capital in the future. Our clinical development costs may vary significantly based on factors such as: •per patient trial costs; •the number of trials required for approval; •the number of sites included in the trials; •the countries in which the trials are conducted; •the length of time required to enroll eligible patients; •the number of patients that participate in the trials; 37 Table of Contents •the number of doses that patients receive; •the drop-out or discontinuation rates of patients; •potential additional safety monitoring requested by regulatory agencies; •the duration of patient participation in the trials and follow-up; •the cost and timing of manufacturing seralutinib; •the costs incurred as a result of health epidemics and pandemics and clinical site staff shortages, including clinical trial delays; •the phase 3 stage of development for seralutinib; and •the efficacy and safety profile of seralutinib. In process research and development In process research and development, or IPR&D, expenses include IPR&D acquired as part of an asset acquisition or in-license, for which there is no alternative future use, and the value of the right to acquire Respira Therapeutics via a merger, or the Respira Merger Option, with Prana Bio, the 100% owner of Respira Therapeutics, and are expensed as incurred. 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 facility-related costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services, insurance costs and commercial planning expenses. Subject to obtaining clarity on potential regulatory paths forward, we anticipate that our general and administrative expenses may increase in the future to support our continued research and development and commercial planning activities and, if seralutinib receives marketing approval, commercialization activities. We expect to incur general and administrative expenses for the foreseeable future to support our current infrastructure and continued costs of operating as a public company. These expenses will likely include audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, as well as commercial preparedness, corporate strategy, business development, corporate communications and investor relations costs associated with operating as a public company. Other income (expense), net Other income (expense), net consists of (1) interest income on our cash, cash equivalents and marketable securities, (2) investment accretion, (3) research and development tax credit, (4) other miscellaneous income (expense) and (5) interest expense. Provision for income taxes Our tax provision from income taxes is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. 38 Table of Contents Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenue, expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. During the six months ended June 30, 2026, there have been no significant changes in our critical accounting policies and estimates as discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 17, 2026. See Note 2, Summary of Significant Accounting Policies, for information about these critical accounting policies. 39 Table of Contents Results of Operations – Comparison of the Three and Six Months Ended June 30, 2026 and 2025 The following table sets forth our selected statements of operations data for the three months ended June 30, 2026 and 2025 (in thousands): Three months ended June 30, 2026 vs 2025 2026 2025 Change Revenue: Revenue from contracts with collaborators $ 9,238 $ 11,489 $ (2,251) Total revenue 9,238 11,489 (2,251) Operating expenses: Research and development 26,412 41,575 (15,163) General and administrative 8,900 8,679 221 Total operating expenses 35,312 50,254 (14,942) Loss from operations (26,074) (38,765) 12,691 Other income (expense) Interest income 268 542 (274) Interest expense (2,705) (2,744) 39 Remeasurement of warrant liability 1,602 — 1,602 Remeasurement of derivative liability 4,113 — 4,113 Gain on debt extinguishment 43,846 — 43,846 Other income (expense), net (4,150) 2,694 (6,844) Total other income, net 42,974 492 42,482 Net income (loss) $ 16,900 $ (38,273) $ 55,173 The following table sets forth our selected statements of operations data for the six months ended June 30, 2026 and 2025 (in thousands): Six months ended June 30, 2026 vs 2025 2026 2025 Change Revenue: Revenue from contracts with collaborators $ 26,193 $ 21,378 $ 4,815 Total revenue 26,193 21,378 4,815 Operating expenses: Research and development 69,487 79,616 (10,129) General and administrative 27,646 17,337 10,309 Total operating expenses 97,133 96,953 180 Loss from operations (70,940) (75,575) 4,635 Other income (expense) Interest income 622 836 (214) Interest expense (5,460) (5,490) 30 Remeasurement of warrant liability 1,602 — 1,602 Remeasurement of derivative liability 4,113 — 4,113 Gain on debt extinguishment 43,846 — 43,846 Other income (expense), net (3,547) 5,318 (8,865) Total other income, net 41,176 664 40,512 Net loss $ (29,764) $ (74,911) $ 45,147 40 Table of Contents Revenue Our revenue is generated from our ongoing collaboration with Chiesi and consists of ongoing research and development service performance and cost-sharing payments for performance of research and development and pre-commercial services. For the three months ended June 30, 2026 and 2025, our revenue was $9.2 million and $11.5 million, respectively, for a decrease of $2.3 million, which was primarily attributable to the decrease in research and development services and costs subject to reimbursement. For the six months ended June 30, 2026 and 2025, our revenue was $26.2 million and $21.4 million, respectively, for an increase of $4.8 million, which was primarily attributable to an increase in research and development and pre-commercial services. Research and development expenses Research and development expenses were $26.4 million for the three months ended June 30, 2026, compared to $41.6 million for the three months ended June 30, 2025, for a decrease of $15.2 million, which was primarily attributable to a decrease of $15.7 million of costs associated with clinical trials for seralutinib, offset by an increase of $0.5 million of costs associated with Respira. Research and development expenses were $69.5 million for the six months ended June 30, 2026, compared to $79.6 million for the six months ended June 30, 2025, for a decrease of $10.1 million, which was primarily attributable to a decrease of $11.4 million of costs associated with clinical trials for seralutinib and an increase of $1.2 million of costs associated with Respira. The following table shows our research and development expenses by program for the three and six months ended June 30, 2026 and 2025: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 (in thousands) Seralutinib $ 25,914 $ 41,575 $ 68,264 $ 79,616 Other programs 498 — 1,223 — Total research and development $ 26,412 $ 41,575 $ 69,487 $ 79,616 General and administrative expenses General and administrative expenses were $8.9 million for the three months ended June 30, 2026, compared to $8.7 million for the three months ended June 30, 2025, for an increase of $0.2 million, which was primarily attributable to a $0.2 million increase in legal expense, a $0.6 million increase in stock-based compensation expense and a $0.4 million increase in personnel expense due to severance, offset by a $1.0 million decrease in commercial costs. General and administrative expenses were $27.6 million for the six months ended June 30, 2026, compared to $17.3 million for the six months ended June 30, 2025, for an increase of $10.3 million, which was primarily attributable to a $0.7 million increase in commercial expenses, a $4.4 million increase in personnel expense due to severance, a $2.8 million increase in stock-based compensation expense and a $1.1 million increase in professional services expense. Other income (loss), net Other income, net was $43.0 million for the three months ended June 30, 2026, compared to the other income, net of $0.5 million for the three months ended June 30, 2025, for an increase of $42.5 million, which was primarily attributable to a $43.9 million gain on the debt extinguishment, $4.1 million gain on the derivative liability remeasurement and $1.6 million gain on the warrant liability remeasurement, offset by the $1.6 million decrease in investment accretion and $4.4 million issuance costs attributable to the embedded derivative and purchase warrants.. Other income, net was $41.2 million for the six months ended June 30, 2026, compared to the other income, net of $0.7 million for the six months ended June 30, 2025, for an increase of $40.5 million, which was primarily attributable to a $43.9 million gain on the debt extinguishment, $4.1 million gain on the derivative liability remeasurement and $1.6 million gain on the warrant liability remeasurement, offset by the $3.6 million decrease in investment accretion and $4.4 million issuance costs attributable to the embedded derivative and purchase warrants. 41 Table of Contents Liquidity and Capital Resources We have incurred substantial operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of June 30, 2026, we had an accumulated deficit of $1,468.7 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures, including commercial planning expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. We may also use cash on hand to repurchase 2027 Notes and 2030 Notes through open-market transactions, including through a Rule 10b5-1 trading plan to facilitate open-market repurchases, or otherwise, from time to time. Under our license agreement with Pulmokine, we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under the agreement. As of June 30, 2026, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales. Other contractual obligations include future payments under the 2027 Notes and 2030 Notes and existing operating leases. From our inception through June 30, 2026, our operations have been financed primarily by proceeds of $1,396.9 million from the sale of Series A and Series B convertible preferred stock, proceeds from our IPO, proceeds from the 2027 Notes and 2030 Notes, proceeds from issuance of common stock in May 2020 and July 2022, proceeds from issuance of common stock and accompanying warrants in July 2023 and the Chiesi Collaboration Agreement. In addition, we have received $57.9 million as of June 30, 2026 through reimbursement related to the Chiesi Collaboration Agreement. As of June 30, 2026 we had cash, cash equivalents and marketable securities of $57.0 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to capital preservation and liquidity. On April 10, 2020, we filed a registration statement on Form S-3, or the 2020 Shelf Registration Statement, covering the offering from time to time of common stock, preferred stock, debt securities, warrants and units, which registration statement became automatically effective on April 10, 2020. On May 21, 2020, we issued $200.0 million aggregate principal amount 5.00% convertible senior notes due 2027 in a registered public offering, or the 2027 Notes. The interest rate on the 2027 Notes is fixed at 5.00% per annum. Interest is payable semi-annually in arrears on June 1 and December 1 of each year commencing on December 1, 2020. The total net proceeds from the 2027 Notes, after deducting the underwriting discounts and commissions and other offering costs, were approximately $193.6 million. Concurrent with the registered underwritten public offering of the 2027 Notes, we completed an underwritten public offering of 9,433,963 shares of our common stock. We received net proceeds of $117.1 million, after deducting underwriting discounts and commissions and other offering costs. Our concurrent offerings of 2027 Notes and common stock were registered pursuant to the 2020 Shelf Registration Statement. On July 15, 2022, we completed a private placement of 16,649,365 shares of our common stock. The aggregate gross proceeds for the private placement were approximately $120.1 million, before deducting offering expenses. On August 9, 2022, we filed a registration statement on Form S-3 registering the resale of the shares of common stock issued in the private placement, which became automatically effective on August 9, 2022. On July 24, 2023, we completed a private placement of 129,869,440 shares of our common stock and 32,467,360 accompanying warrants. The aggregate gross proceeds for the private placement were $212.1 million, before deducting offering expenses. On August 18, 2023, we filed a registration statement on Form S-3 registering the resale of the shares of common stock and shares of common stock issuable upon the exercise of warrants issued in the private placement, which was declared effective on August 28, 2023. On May 3, 2024, we entered into the Chiesi Collaboration Agreement. In consideration and as reimbursement for our development costs, Chiesi paid us an up-front, nonrefundable payment of $160.0 million. In addition, we and Chiesi share equally in the costs of ongoing global seralutinib clinical development, with the exception of the PROSERA Phase 3 study, and the costs of commercialization in the U.S. Territory. For the six months ended June 30, 2026, we received cost-sharing payments from Chiesi in the amount of $21.5 million. On January 28, 2026, we filed a registration statement on Form S-3 ASR, or the 2026 Shelf Registration Statement, covering the offering from time to time of common stock, preferred stock, debt securities, warrants and units, which registration statement became automatically effective upon filing. On March 17, 2026, we filed Post-Effective Amendment No. 1 and Post- 42 Table of Contents Effective Amendment No. 2 to the 2026 Shelf Registration Statement, which became effective on March 18, 2026, to convert the registration statement to a non-automatic shelf registration statement as we were no longer a “well-known seasoned issuer.” On June 4, 2026, we completed the early settlement of the exchange of the 2027 Notes in the Exchange Offer, pursuant to which, $181,052,000 in aggregate principal amount of the 2027 Notes were validly tendered, accepted for exchange by us and subsequently cancelled. Following such cancellation, $18,948,000 in aggregate principal amount of the 2027 Notes remain outstanding. On the Early Settlement Date, we issued (i) $65,174,000 in aggregate principal amount of 2030 Notes, (ii) 254,150,441 New Shares, (iii) 33,402,727 Prefunded Warrants and (iv) 135,789,000 Purchase Warrants, in exchange for the validly tendered and accepted Early Tendered Notes. Because no additional 2027 Notes were validly tendered in the Exchange Offer following the Early Settlement Date and prior to the expiration of the Exchange Offer, $18,948,000 in aggregate principal amount of 2027 Notes remain outstanding following the Exchange Offer. Additional information about our long-term borrowings is presented in Note 5 “Indebtedness” and operating leases is presented in Note 9 "Commitments and Contingencies" to the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q. For additional information regarding our collaboration with Chiesi, see Note 10 “Significant Agreements and Contracts” to the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q. The opinion of our independent registered public accounting firm on our audited financial statements as of and for the years ended December 31, 2025 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Future reports on our financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. Our consolidated condensed financial statements as of and for the three and six months ended June 30, 2026 and 2025 included in this Form 10-Q do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue our operations. The following table shows a summary of our cash flows for each of the six months ended June 30, 2026 and 2025, respectively: Six months ended June 30, 2026 2025 (in thousands) Net cash used in operating activities $ (78,145) $ (86,785) Net cash provided by investing activities 84,306 66,188 Net cash provided (used in) by financing activities (2,632) 598 Effect of exchange rate changes on cash and cash equivalents (113) 234 Net increase (decrease) in cash and cash equivalents $ 3,416 $ (19,765) Operating activities During the six months ended June 30, 2026, operating activities used approximately $78.1 million of cash, primarily resulting from a net loss of $29.8 million and changes in contract liabilities of $12.4 million, changes in accrued research and development expenses of $12.0 million and gain on debt extinguishment of $43.8 million, reduced by changes in stock-based compensation expense of $8.8 million and changes in prepaid expenses and other current assets of $8.9 million. During the six months ended June 30, 2025, operating activities used approximately $86.8 million of cash, primarily resulting from the net loss of $74.9 million and changes in accounts payable of $6.8 million, changes in prepaid expenses and other current assets of $5.4 million and changes in amortization of premium on investments of $4.6 million, reduced by changes in stock-based compensation expense of $5.0 million. Investing activities During the six months ended June 30, 2026, investing activities provided approximately $84.3 million of cash, primarily resulting from the maturities of marketable securities of $109.3 million, offset by the purchases of marketable securities of $25.0 million. 43 Table of Contents During the six months ended June 30, 2025, investing activities provided approximately $66.2 million of cash, primarily resulting from the maturities of marketable securities of $242.8 million, offset by the purchases of marketable securities of $176.5 million. Financing activities During the six months ended June 30, 2026, financing activities used approximately $2.6 million of cash, primarily resulting from the payment of debt and equity issuance costs in connection with the exchange of the 2027 Notes of $3.1 million, reduced by the proceeds from issuance of common stock pursuant to the ESPP of $0.3 million and the proceeds from the exercise of stock options of $0.2 million. During the six months ended June 30, 2025, financing activities provided approximately $0.6 million of cash, primarily resulting from the proceeds from issuance of common stock pursuant to the ESPP of $0.4 million and the proceeds from the exercise of stock options of $0.2 million. Funding requirements Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities, will be sufficient to fund our operations into the first quarter of 2027. 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 actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of testing seralutinib in clinical trials and seeking regulatory approval is costly, and the timing of progress and expenses in these trials is uncertain. We also expect that the level of spending for our ongoing and planned commercial planning activities for seralutinib may increase. Our future capital requirements will depend on many factors, including: •the costs, timing and outcome of regulatory review of seralutinib; •the type, number, scope, progress, enrollment pace, expansions, results, costs and timing of, our preclinical studies and clinical trials of seralutinib which we are pursuing or may choose to pursue in the future; •the costs and timing of manufacturing for seralutinib; •the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; •our efforts to enhance 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 to continue the development and potential commercialization of seralutinib; •the timing and amount of the milestone or other payments we must make to Pulmokine from whom we have in-licensed seralutinib; •the costs and timing of establishing or securing sales and marketing capabilities if seralutinib is approved; •our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; •the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; •costs associated with any products or technologies that we may in-license or acquire; and •any delays and cost increases that result from epidemic diseases. Until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other 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 44 Table of Contents 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 preferred 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, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate seralutinib development or future commercialization efforts or grant rights to develop and market seralutinib even if we would otherwise prefer to develop and market seralutinib ourselves.