The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results could differ materially from those described in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Quarterly Report on Form 10-Q. Unless otherwise indicated or the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to “Legacy Q32” refers to the business and operations of Q32 Bio Operations Inc. (previously Q32 Bio Inc.) and its consolidated subsidiaries prior to the Merger, and references to “the Company,” “we,” “us,” “our” and other similar terms refer to the business and operations of Q32 Bio Inc. (previously Homology Medicines, Inc., or Homology) and its consolidated subsidiary following the Merger. Overview We are a clinical stage biotechnology company focused on developing innovative therapies for alopecia areata (“AA”) and other autoimmune and inflammatory diseases. Bempikibart (ADX-914) Bempikibart (ADX-914), our most advanced product candidate, is a fully human anti–interleukin-7 receptor alpha (“IL-7Rα”), antagonist monoclonal antibody designed to re-regulate adaptive immune function by potently blocking signaling mediated by interleukin-7 (“IL-7”), and thymic stromal lymphopoietin (“TSLP”). We have completed two Phase 2a clinical trials evaluating bempikibart, SIGNAL-AA Part A, for the treatment of AA, and SIGNAL-AD, for the treatment of atopic dermatitis (“AD”). In December 2024, we announced topline results from both of these trials, as well as our intention to advance bempikibart for the treatment of AA. SIGNAL-AA Part A and SIGNAL-AD In the SIGNAL-AA Part A clinical trial, patients with severe or very severe AA were dosed with 200mg subcutaneous (“SC”) bempikibart every two weeks for 24 weeks and followed for an additional 12 weeks following the end of treatment. At the 24-week endpoint, we observed more hair regrowth compared to placebo and evidence of durable responses in patients. The average hair regrowth across patients in the trial continued to improve from week 24 to week 36 despite patients being off therapy during the 12-week follow-up period. Across the SIGNAL-AA and SIGNAL-AD trials, at the 200mg Phase 2a dose, we achieved our desired receptor occupancy (“RO”) and observed favorable pharmacokinetics (“PK”) / pharmacodynamic (“PD”) properties, consistent with those from the Phase 1 clinical trial. Minimal anti-drug antibodies (“ADAs”) were observed in the trials. In addition, across the two trials, we observed changes in biomarkers consistent with the IL-7Rα mechanism and activity mediated by both the TSLP and IL-7 receptors. In the SIGNAL-AD trial, we observed meaningful decreases in key Th2 biomarkers of TARC, IgE, and eosinophils, each of which were statistically significant at multiple timepoints suggestive of potent TSLP inhibition. In the SIGNAL-AA trial, we observed a CD3+ T cell decrease, which was also statistically significant at multiple timepoints, suggestive of potent IL-7 inhibition. These findings were consistent with expected target engagement and IL-7Rα blockade. Across all clinical trials, bempikibart has been dosed in over 150 participants to-date and has demonstrated a favorable safety and tolerability profile, with no Grade 3 or higher related adverse events. SIGNAL-AA Part B In April 2025, we announced dosing of the first patient in Part B of the SIGNAL-AA Phase 2a clinical trial. The Part B portion of SIGNAL-AA is an open-label clinical trial that enrolled 33 patients with severe or very severe AA (baseline Severity of Alopecia Tool (“SALT”) scores of 50-100), with a maximum duration of current episode of four years. Enrollment amongst patients with prior exposure to JAK inhibitor therapy was allowed; amongst the 33 enrolled patients, 36.4% had previously been treated with oral JAK inhibitors. Total enrollment exceeded the initial target due to patient demand. Patients are treated with bempikibart for 36 weeks, with off-drug follow-up through Week 52 before optional enrollment in an open-label extension (“OLE”). Dosing includes an initial loading regimen of 200mg of bempikibart dosed weekly for four doses, followed by a maintenance dose of 200mg every-other-week over a 32-week period for a total dosing period of 36 weeks. Across both regimens, bempikibart was administered subcutaneously. 22 Efficacy is evaluated on the basis of mean percentage change from baseline in SALT scores as well as the proportion of subjects achieving various relative and absolute SALT score improvements at week 36, with off-drug follow-up through week 52. The trial is intended to support advancement into pivotal trials upon completion, pending review of the results. We announced completion of enrollment in the SIGNAL-AA Part B clinical trial in October 2025. In May 2026, we announced that the first patient had been dosed in the OLE portion of Part B. In July 2026, we announced 36-week topline results from the SIGNAL-AA Part B trial. The prespecified primary efficacy analysis was evaluated on the basis of mean percentage change from baseline in SALT scores in the modified intent-to-treat (“mITT”) population at Week 36. Additional prespecified 36-week efficacy analyses included the proportion of patients achieving various relative and absolute SALT improvements including SALT-20 (80% of scalp hair coverage), SALT30 (30% improvement in SALT score from baseline), and SALT50 (50% improvement in SALT score from baseline) responses at Week 36, with off-drug follow-up through Week 52. Key topline efficacy results from Part B of SIGNAL-AA at Week 36 include: •Mean percent reduction in SALT score from baseline of 35.3% in the mITT analysis. •40.0% (10/25) of patients in the mITT analysis and 30.3% (10/33) of patients in the intent-to-treat (“ITT”) analysis of all enrolled patients achieved a SALT20 response. Achievement of a SALT20 response was observed in patients with both severe and very severe disease. •44.0% (11/25) of patients in the mITT analysis and 33.3% (11/33) of patients in the ITT analysis achieved SALT30 response. •44.0% (11/25) of patients in the mITT and 33.3% (11/33) of patients in the ITT analysis achieved SALT50 response. •Early signs of durability in the off-drug period include maintenance or deepening of response in multiple patients including one who achieved complete hair growth (SALT = 0). Bempikibart was observed to have a generally well-tolerated safety profile in SIGNAL-AA Part B, consistent with prior studies. No new safety signals were observed. There were no serious adverse events or Grade 3 or higher adverse events related to treatment. The most common treatment-emergent adverse event was injection site reaction (“ISR”) (36.3%) which were primarily singular events, with ISR incidence of 4% across all Part B dose administrations. All ISRs reported were mild and resolved with no intervention, with the majority resolving within a day. Bempikibart demonstrated a favorable PK, pharmacodynamic and ADA profile in Part B. PK data from Part B support the loading dose regimen had its intended effect, achieving steady state concentrations approximately 10 weeks earlier than in Part A. Negligible ADA was observed in Part B. The Part B off-drug follow-up period through Week 52 remains ongoing. We plan to report additional details from the Week 36 results as well as initial findings from Week 52 at a future medical meeting. Additionally, enrollment of eligible patients into the OLE remains ongoing. We expect to report completed OLE results in the second half of 2027. We intend to advance bempikibart into a registration-directed program in the first half of 2027 following planned regulatory discussions later this year. SIGNAL-AA Part A OLE Following the emergence of Part A data suggesting durability of response in the off-drug follow-up from SIGNAL-AA Part A and given patient demand for continued dosing, we announced the initiation of an OLE in April 2025. The Part A OLE has been completed. Eight patients enrolled in the Part A OLE, spanning responders, non-responders, and placebo patients from the Part A treatment portion. Patients were off-drug for various time periods ranging from 26 to 55 weeks prior to re-dosing. In the Part A OLE, bempikibart continued to demonstrate a generally well-tolerated safety profile with longer-term dosing and no new safety issues. Patients who maintained hair at entry to the OLE were observed to have durable or further hair growth. In totality, the Part A OLE dataset supports the importance of a maintenance dosing regimen. ADX-914-XL In addition to bempikibart, we are also advancing ADX-914-XL, which is a half-life extended fully human anti-IL-7Rα antibody designed to re-regulate adaptive immune function by blocking IL-7 and TSLP signaling. Developed using half-life extension 23 technology, ADX-914-XL is designed to provide the clinical activity and safety profile observed to date with bempikibart while offering an extended dosing schedule. ADX-914-XL is advancing in pre-clinical development. ADX-097 ADX-097, a Phase 2 asset from our proprietary tissue-targeted complement inhibitor platform, is a humanized anti-C3d monoclonal antibody (“mAb”) fusion protein that completed Phase 1 clinical trials. In February 2025, we announced a corporate restructuring to focus on the advancement of bempikibart for the treatment of patients with AA. In November 2025, we sold to Akebia Therapeutics, Inc. (“Akebia”) substantially all of our assets related to the research, development, manufacture and commercialization of ADX-097 (the “ADX-097 Asset Sale”). Following the ADX-097 Asset Sale, Akebia is now responsible for any future development and commercialization of ADX-097. As consideration for the ADX-097 Asset Sale, we received an upfront payment of $7.0 million and a payment of $3.0 million on the six-month anniversary of the transaction. We will also receive a near-term milestone payment of $2.0 million upon the earlier of achievement of the first milestone under the Asset Purchase Agreement or December 31, 2026. In addition to these payments, we are eligible to receive up to $580 million upon the achievement of specified milestones, including up to $92.5 million related to development and regulatory milestones and up to $487.5 million related to commercial milestones. We are also eligible to receive tiered royalties on potential future sales of ADX-097 ranging from low single-digit to mid-teen percentages of annual net sales. The royalties will expire on a country-by-country basis on the later to occur of (a) the date of expiration of the last-to-expire valid claim of any transferred patent right that covers such product in such country, and (b) the tenth anniversary of the first commercial sale of such product. ADX-096/Complement Inhibitor Platform In addition to ADX-097, we developed a proprietary tissue-targeted complement platform, which is designed to inhibit complement activation in the tissue while minimizing systemic complement blockade, a key differentiator versus current complement therapeutics. Other assets developed from our proprietary platform include ADX-096, a C3d mAb – CR11-10 fusion protein with preclinical data supportive of its use in ophthalmologic indications as well as potential utility in a broad range of other indications, and C3d mAb fusions and nanobodies designed for tissue-targeted complement inhibition. We retain the rights to our wholly owned tissue-targeted complement inhibitor platform, including ADX-096 and other remaining early-stage assets, and are continuing to evaluate strategic options for these programs. Corporate Updates On July 16, 2026, pursuant to a shelf registration statement on Form S-3 (File No. 333-297027), we completed a public offering (the “Follow-On Financing”) wherein we sold 6,027,399 shares of our common stock, par value $0.0001 per share (the “common stock”), at a public offering price of $18.25 per share and pre-funded warrants to purchase up to 4,931,506 shares of our common stock at a public offering price of $18.2499 per pre-funded warrant. We received net proceeds of $187.6 million from the Follow-On Financing, after deducting underwriting discounts and commissions and offering expenses. In addition, we granted the underwriters a 30-day option to purchase up to an additional 1,643,835 shares of our common stock at the public offering price of $18.25 per share, less underwriting discounts and commissions. On June 24, 2026, we paid off the remaining balance in the amount of approximately $6.8 million under our Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“SVB”), pursuant to a Pay-Off Letter between us and SVB dated June 24, 2026. Accordingly, the Loan Agreement has been terminated. On May 28, 2026, we completed a private placement (the “Private Placement”) of our common stock and pre-funded warrants to purchase shares of our common stock. We sold 6,725,000 shares of our common stock at a price of $8.00 per share and pre-funded warrants to purchase up to 150,000 shares of our common stock at a price of $7.9999 per pre-funded warrant and received net proceeds of $53.4 million, after deducting placement agent fees and other offering expenses. On March 27, 2026, we entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (the “Sales Agent”), with respect to an at-the-market (“ATM”) offering program pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock through the Sales Agent. The shares offered and sold under the Sales Agreement are offered and sold pursuant to our shelf registration statement on Form S-3 (File No. 333-286491), which was filed with the SEC on April 11, 2025 and declared effective by the SEC on April 21, 2025. We filed a prospectus supplement with the SEC on March 27, 2026, pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $14.2 million pursuant to the Sales Agreement. During the six months ended June 30, 2026, we sold 2,326,952 shares of our common stock and received gross proceeds of $14.2 million pursuant to the ATM. On April 24, 2026, we filed an additional prospectus supplement with the SEC, pursuant to which we may offer and sell additional shares having an aggregate offering price of up to $75 24 million pursuant to the Sales Agreement. As of June 30, 2026, there have been no shares sold under this additional prospectus supplement. Rights to Bempikibart From August 2022 until November 2023, Legacy Q32 was a party to the Collaboration and Option Agreement (the “Horizon Collaboration Agreement”) and the Asset Purchase Agreement (the “Purchase Agreement”, and together with the Horizon Collaboration Agreement, the “Horizon Agreements”), each between Legacy Q32 and Horizon Therapeutics Ireland DAC (“Horizon”), pursuant to which Legacy Q32 received $55.0 million in initial consideration and staged development funding to complete two ongoing Phase 2 trials for bempikibart, and granted Horizon an option to acquire the bempikibart program at a prespecified price, subject to certain adjustments. In October 2023, Amgen Inc. (“Amgen”) completed the acquisition of Horizon Therapeutics public limited company (“Horizon plc”). Following the acquisition, Legacy Q32 agreed with Amgen to mutually terminate the Horizon Agreements. In November 2023, Legacy Q32 entered into a termination agreement with Horizon (the “Horizon Termination Agreement”), pursuant to which Horizon’s option to acquire the bempikibart program was terminated. As a result, Legacy Q32 retained the initial consideration and development funding received under the Horizon Collaboration Agreement and regained full development and commercial rights to bempikibart. In consideration for the Horizon Termination Agreement, Legacy Q32 agreed to pay Horizon regulatory and sales milestone payments upon the first achievement of certain regulatory and sales milestones with respect to bempikibart. All amounts previously recognized were reversed in the fourth quarter of 2023 and a refund liability was established for the $55.0 million cash received during the term of the Horizon Collaboration Agreement. On November 7, 2025, we entered into an amendment to the Horizon Termination Agreement (the “Amgen Amendment”) with Amgen pursuant to which we issued Horizon a one-time equity grant of 553,695 shares of our common stock as full consideration of the milestone payments under the Horizon Termination Agreement. Following the transactions contemplated by the Amgen Amendment, we have no remaining obligations to Amgen, including with respect to the regulatory and sales-based milestone payments set forth in the Horizon Collaboration Agreement. Therefore, we derecognized the refund liability previously recorded for the $55.0 million of cash received under the Horizon Collaboration Agreement and recognized collaboration arrangement revenue for the difference between the equity issuance, and the refund liability as the consideration was no longer constrained. Financial Overview As of June 30, 2026, we had cash and cash equivalents of $106.3 million. We expect that our cash and cash equivalents as of June 30, 2026, combined with proceeds received from the Follow-On Financing subsequent to June 30, 2026, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through topline Phase 3 results of bempikibart from our planned registration-directed program. This estimate is based on assumptions that may prove to be wrong, and we could use our capital resources sooner than currently anticipated. We do not expect our existing cash and cash equivalents will be sufficient for us to advance any of our programs through regulatory approval, and we will need to raise additional capital to complete the development and potential commercialization of any of our programs. We may also use a portion of our cash and cash equivalents to acquire, in-license or invest in products, technologies or businesses that are complementary to our business. The amounts and timing of actual expenditures will depend on numerous factors, including the progress of development efforts, operating costs and other factors described under “Risk Factors” in this Quarterly Report on Form 10-Q. The expected use of proceeds represents current intentions based upon present plans and business conditions. As of the date of this Quarterly Report on Form 10-Q, we cannot predict with complete certainty all of the particular uses for our current cash and cash equivalents or the actual amounts that we will spend on the uses set forth above. Components of Results of Operations Revenue Since inception, we have not generated any revenue from product sales, and our management does not expect to generate any revenue from the sale of products in the foreseeable future. We have recognized collaboration arrangement revenue in prior years as a result of the Horizon Agreements and later, the Horizon Termination Agreement and Amgen Amendment. Refer to Note 14 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for details. 25 Operating Expenses Operating expenses since inception have consisted solely of research and development costs and general and administrative costs. Research and Development Expenses Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal expenses incurred in connection with the discovery and development of our product candidates. External expenses include: •expenses incurred in connection with our research and development activities, including costs related to agreements with third parties such as consultants, contractors and clinical research organizations (“CROs”); •costs related to contract development and manufacturing organizations (“CDMOs”), that are primarily engaged to provide drug substance and product for our preclinical studies, clinical trials and research and development programs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services; •costs related to compliance with quality and regulatory requirements; •employee-related expenses, including salaries, benefits, and stock-based compensation expense, for personnel engaged in research and development functions; •facilities-related expenses, depreciation, supplies, travel expenses and other allocated expenses; and •payments made under third-party licensing agreements. We expense research and development costs as incurred. Costs are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers or our estimate of the level of service that has been performed at each reporting date. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and may be reflected in our condensed consolidated financial statements as prepaid or accrued expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed or when it is no longer expected that the goods will be delivered or the services rendered. We do not allocate direct external research and development costs to specific programs or product candidates until there is an internally designated development candidate. We typically use our employee and infrastructure resources across our product candidates and development programs. We do not allocate personnel costs or other internal costs to research and development programs and product candidates. We expect that future changes to our research and development expenses will depend significantly on the success of our clinical data. We expect that research and development expenses will increase substantially as we continue to advance our programs into and through clinical development. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any product candidates. A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any product candidates we may develop. The successful development of any product candidate is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following: •the timing and progress of preclinical and clinical development activities; •the number and scope of preclinical and clinical programs we decide to pursue; •the ability to raise additional funds necessary to complete clinical development of and commercialize our product candidates; •the successful initiation, enrollment and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; •the receipt and related terms of regulatory approvals from applicable regulatory authorities for any product candidates; 26 •the availability of raw materials for use in production of our product candidates; •establishing agreements with third-party manufacturers for supply of product candidate components for our clinical trials; •our ability to maintain our current research and development programs and to establish new programs; •significant and changing government regulations; •our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both in the United States and internationally; •our ability to protect our other rights in our intellectual property portfolio; •commercializing product candidates, if and when approved, whether alone or in collaboration with others; and •obtaining and maintaining third-party insurance coverage and adequate reimbursement for any approved products. General and Administrative Expenses General and administrative expenses primarily consist of salaries, bonuses, related benefits, and stock-based compensation expense for personnel in executive, finance, and administrative functions; professional fees for corporate legal and patent matters, consulting, accounting, and audit services; and travel expenses, insurance, technology costs and other allocated expenses. General and administrative expenses also include corporate facility costs, including rent, utilities, depreciation, and maintenance, not otherwise included in research and development expense. We recognize general and administrative expenses in the periods in which they are incurred. General and administrative expenses are expected to increase as we continue to operate as a public company. Other Income Other income consists of interest income primarily earned on money market fund accounts and interest expense related to our debt obligations. Results of Operations Comparison of the three months ended June 30, 2026 and 2025 The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025: Three Months Ended June 30, 2026 2025 Change (in thousands) Operating expenses: Research and development $ 4,259 $ 5,161 $ (902 ) General and administrative 4,859 4,010 849 Total operating expenses 9,118 9,171 (53 ) Loss from operations (9,118 ) (9,171 ) 53 Loss on extinguishment of debt (147 ) — (147 ) Other income (expense), net 319 (318 ) 637 Total other income (expense), net 172 (318 ) 490 Net loss and comprehensive loss $ (8,946 ) $ (9,489 ) $ 543 27 Research and Development Expenses The following table summarizes our research and development expenses for the three months ended June 30, 2026 and 2025: Three Months Ended June 30, 2026 2025 Change (in thousands) Direct research and development expense by program: Bempikibart $ 2,408 $ 1,807 $ 601 ADX-097 — 914 (914 ) Discovery and other 12 46 (34 ) Unallocated expenses: Personnel-related and consulting (including stock-based compensation) 1,293 1,790 (497 ) Indirect research and development expense 546 604 (58 ) Total research and development expenses $ 4,259 $ 5,161 $ (902 ) Research and development expenses were $4.3 million for the three months ended June 30, 2026, compared to $5.2 million for the three months ended June 30, 2025. The decrease in direct research and development expenses was primarily due to a decrease of $0.9 million in ADX-097 expenses due to the sale of ADX-097 to Akebia in November 2025, partially offset by an increase of $0.6 million in spend related to our bempikibart program due to increased manufacturing costs and nonclinical activities. The decrease in personnel-related and consulting costs was primarily related to lower headcount as compared to the prior year resulting from the corporate restructuring in February 2025. Personnel-related and consulting costs for the three months ended June 30, 2026 and 2025 included stock-based compensation expense of $0.2 million and $0.3 million, respectively. General and Administrative Expenses General and administrative expenses were $4.9 million for the three months ended June 30, 2026, compared to $4.0 million for the three months ended June 30, 2025. The increase of $0.9 million was primarily due to higher stock-based compensation expense and other operating expenses in the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. Loss on Extinguishment of Debt On June 24, 2026, we paid off the remaining balance of our venture debt in the amount of approximately $6.8 million and recognized a loss on extinguishment of debt of $0.1 million in the three months ended June 30, 2026. Other Income (Expense), Net Other income was $0.3 million for the three months ended June 30, 2026, compared to other expense of $0.3 million for the three months ended June 30, 2025. The change of $0.6 million was primarily related to a loss recorded in the prior year for the change in fair value of the CVR liability. 28 Comparison of the six months ended June 30, 2026 and 2025 The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 2025 Change (in thousands) Operating expenses: Research and development $ 7,477 $ 12,286 $ (4,809 ) General and administrative 9,363 9,114 249 Total operating expenses 16,840 21,400 (4,560 ) Loss from operations (16,840 ) (21,400 ) 4,560 Loss on extinguishment of debt (147 ) — (147 ) Other income 432 880 (448 ) Total other income 285 880 (595 ) Net loss and comprehensive loss $ (16,555 ) $ (20,520 ) $ 3,965 Research and Development Expenses The following table summarizes our research and development expenses for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 2025 Change (in thousands) Direct research and development expense by program: Bempikibart $ 3,718 $ 4,571 $ (853 ) ADX-097 — 1,483 (1,483 ) Discovery and other 15 89 (74 ) Unallocated expenses: Personnel-related and consulting (including stock-based compensation) 2,640 4,776 (2,136 ) Indirect research and development expense 1,104 1,367 (263 ) Total research and development expenses $ 7,477 $ 12,286 $ (4,809 ) Research and development expenses were $7.5 million for the six months ended June 30, 2026, compared to $12.3 million for the six months ended June 30, 2025. The decrease in direct research and development expenses was primarily due to a decrease of $1.5 million in ADX-097 expenses due to the sale of ADX-097 to Akebia in November 2025, as well as a decrease of $0.9 million in bempikibart development costs. The decrease in personnel-related and consulting costs was primarily related to lower headcount in the six months ended June 30, 2026 as compared to the prior year associated with the Restructuring Plan in February 2025. Personnel-related and consulting costs for the six months ended June 30, 2026 and 2025 included stock-based compensation expense of $0.4 million and $0.5 million, respectively. General and Administrative Expenses General and administrative expenses were $9.4 million for the six months ended June 30, 2026, compared to $9.1 million for the six months ended June 30, 2025. The increase of $0.3 million was primarily due to higher stock-based compensation expense and other operating expenses in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, partially offset by lower corporate legal and audit fees. Loss on Extinguishment of Debt On June 24, 2026, we paid off the remaining balance of our venture debt in the amount of approximately $6.8 million and recognized a loss on extinguishment of debt of $0.1 million in the six months ended June 30, 2026. 29 Other Income Other income was $0.4 million for the six months ended June 30, 2026, compared to $0.9 million for the six months ended June 30, 2025. Other income for the six months ended June 30, 2026 included interest income of $1.0 million, partially offset by interest expense related to our venture debt of $0.4 million, whereas other income for the six months ended June 30, 2025 included interest income of $1.3 million as well as a gain recorded for the change in fair value of the CVR liability of $0.4 million, partially offset by interest expense related to our venture debt of $0.6 million. The overall decrease in other income of $0.4 million was primarily related to higher interest income in the prior year due to higher interest rates as well as the gain recorded in the prior year for the change in fair value of the CVR liability. Liquidity and Capital Resources Sources of Liquidity Since inception, we have incurred significant operating losses and negative cash flows from operations. We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all. To date, we have funded our operations primarily from proceeds from the sales of our convertible preferred stock and convertible notes, as well as proceeds from our venture debt, the ADX-097 Asset Sale, the Horizon Collaboration Agreement, the Merger with Homology and accompanying Pre-Closing Financing and the issuance of common stock and pre-funded warrants. From inception through June 30, 2026, we raised $136.0 million in aggregate cash proceeds, net of issuance costs, from the sales of our convertible preferred stock and convertible notes. In addition, we received $55.0 million in payments under the Horizon Collaboration Agreement, $12.5 million in proceeds from our venture debt, $61.3 million, net of issuance costs, in connection with the Merger with Homology, $42.0 million pursuant to the Pre-Closing Financing, $10.0 million pursuant to the ADX-097 Asset Sale, $10.4 million, net of issuance costs, from the issuance of common stock and pre-funded warrants in a Registered Direct Offering, $13.5 million, net of issuance costs, from the issuance of common stock pursuant to the ATM and $53.4 million, net of issuance costs, from the issuance of common stock and pre-funded warrants in the Private Placement. As of June 30, 2026, we had cash and cash equivalents of $106.3 million. Going Concern We have incurred significant operating losses since inception and, as of June 30, 2026, had an accumulated deficit of $221.5 million. We expect negative cash flows from operations and net losses for the foreseeable future as we continue to invest significantly in research and development of our product candidates and platform. We have not yet commercialized any product and do not expect to generate revenue from sales of any products for several years, if at all. As of June 30, 2026, we had cash and cash equivalents of $106.3 million. We expect that our cash and cash equivalents as of June 30, 2026, combined with proceeds received from the Follow-On Financing subsequent to June 30, 2026, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through topline Phase 3 results of bempikibart from our planned registration-directed program. Management based its projections of operating capital requirements on our current operating plan, which includes several assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than management expects. We expect to seek to raise additional capital through private or public equity or debt financings, loans or other capital sources, which could include collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants, and may be required to seek additional capital sooner than planned. However, there can be no assurances that we will be able to raise additional capital from these sources on favorable terms, or at all. Cash Flows The following table summarizes our cash flows for the periods indicated: Six Months Ended June 30, 2026 2025 (in thousands) Net cash used in operating activities $ (9,418 ) $ (23,133 ) Net cash provided by investing activities — — Net cash provided by financing activities 67,391 — Increase/(decrease) in cash, cash equivalents and restricted cash $ 57,973 $ (23,133 ) 30 Operating Activities Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support our business. We have historically experienced negative cash flows from operating activities as we invested in developing clinical programs, drug discovery efforts and related infrastructure. For the six months ended June 30, 2026, net cash used in operating activities was $9.4 million, which was primarily utilized for the funding of our operating expenses of $16.8 million as we incurred expenses associated with research and development activities including clinical trial activities associated with our bempikibart program. Non-cash expenses include stock-based compensation expense of $3.2 million, non-cash lease expenses of $0.3 million and depreciation expense of $0.2 million. The change in net operating assets and liabilities was primarily attributable to a decrease in prepaid expenses and other current assets of $3.4 million and an increase in accounts payable of $0.7 million, partially offset by a decrease in accrued expenses and other current liabilities of $0.4 million and a decrease in the operating lease liability of $0.3 million. For the six months ended June 30, 2025, net cash used in operating activities was $23.1 million, which was primarily utilized for the funding of our operating expenses of $21.4 million as we incurred expenses associated with research and development activities including clinical trial activities associated with our bempikibart program. Non-cash expenses include stock-based compensation expense of $2.6 million, non-cash lease expenses of $0.3 million and depreciation expense of $0.2 million, partially offset by a gain of $0.4 million recognized on the change in fair value of the CVR liability. The change in net operating assets and liabilities was primarily attributable to a decrease in accrued expenses and other current liabilities of $3.1 million, a decrease in accounts payable of $2.1 million, an increase in other noncurrent assets of $0.5 million and a decrease in our operating lease liability of $0.3 million, partially offset by a decrease in prepaid expenses and other current assets of $0.4 million. Investing Activities There was no net cash used in or provided by investing activities for the six months ended June 30, 2026 and 2025. Financing Activities For the six months ended June 30, 2026, net cash provided by financing activities consisted of $53.4 million of proceeds from the issuance of common stock and pre-funded warrants in the Private Placement, net of issuance costs, $13.5 million of proceeds from issuance of common stock pursuant to ATM, net of discounts and issuance costs, $10.4 million of proceeds from the issuance of common stock and pre-funded warrants in the Registered Direct Offering, slightly offset by $6.7 million for the payoff of the remaining balance on our venture debt and payments of $3.1 million of principal payments made pursuant to our venture debt. For the six months ended June 30, 2025, there was no net cash used in or provided by financing activities. Funding Requirements We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. In addition, we expect to continue to incur additional costs associated with operating as a public company. Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount and timing of our capital requirements. Our future funding requirements will depend on many factors, including: •the scope, timing, progress, results, and costs of researching and developing bempikibart and conducting larger and later-stage clinical trials; •the scope, timing, progress, results, and costs of researching and developing other product candidates that we may pursue; •the costs, timing, and outcome of regulatory review of our product candidates; •the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution, for any of our product candidates for which we receive marketing approval; •the costs of manufacturing commercial-grade products and sufficient inventory to support commercial launch; •the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; 31 •the cost and timing of attracting, hiring, and retaining skilled personnel to support our operations and continued growth; •the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; •our ability to establish, maintain, and derive value from collaborations, partnerships or other marketing, distribution, licensing, or other strategic arrangements with third parties on favorable terms, if at all; and •the extent to which we acquire or in-license other product candidates and technologies, if any. A change in the outcome of any of these or other factors with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional capital to meet the capital requirements associated with such operating plans. We believe that, based on our current operating plan, our cash and cash equivalents as of June 30, 2026, combined with proceeds received from the Follow-On Financing subsequent to June 30, 2026, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through topline Phase 3 results of bempikibart from our planned registration-directed program. Management based its projections of operating capital requirements on our current operating plan, which includes several assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect. To complete the development of our product candidates and to build the sales, marketing and distribution infrastructure that management believes will be necessary to commercialize our product candidates, if approved, we will require substantial additional capital. Accordingly, until such time that we can generate sufficient revenue from product sales or other sources, if ever, management expects to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. To the extent that we raise additional capital through equity financings or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our own common stock, make certain investments or engage in merger, consolidation, licensing, or asset sale transactions. If we raise capital through collaborations, partnerships, and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. We may be unable to raise additional capital from these sources on favorable terms, or at all. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from recent bank failures. The failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to delay, reduce or curtail our research, product development or future commercialization efforts. We may also be required to license rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. Management cannot provide assurance that we will ever generate positive cash flow from operating activities. Contractual Obligations and Commitments Lease Obligations We lease space under an operating lease for administrative offices and lab space in Waltham, Massachusetts, which expires in December 2031. The following table summarizes our contractual obligations and commitments as of June 30, 2026 (in thousands): Payments Due by Period Total 1 to 3 years 3 to 5 years More than 5 years Operating lease obligation $ 6,516 $ 3,425 $ 2,458 $ 633 We have agreements with certain vendors for various services, including services related to preclinical and clinical operations and support, for which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors. Our most significant contracts relate to agreements with CROs for clinical trials and preclinical studies and CDMOs, which we enter into in the normal course of business. Certain agreements provide for termination rights subject to termination fees or wind down costs. Under such agreements, we are contractually obligated to make certain payments to vendors to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination 32 and the exact terms of the relevant agreement and cannot be reasonably estimated. We do not include these payments in the table above as they are not fixed and estimable. In addition, we enter into standard indemnification agreements and/or indemnification sections in other agreements in the ordinary course of business. Pursuant to these agreements, we agree to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our business partners. The term of these indemnification agreements is generally perpetual upon execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification agreements cannot be reasonably estimated and therefore is not included in the table above. Collaboration and License Agreements Bempikibart—License Agreement – Bristol-Myers Squibb Company In September 2019, Legacy Q32 entered into a license agreement, as amended in August 2021 and July 2022 (the “BMS License Agreement”) with Bristol-Myers Squibb Company (“BMS”), pursuant to which we obtained sublicensable licenses from BMS to research, develop and commercialize licensed products, including bempikibart, for any and all uses worldwide. The licenses granted to us are exclusive with respect to BMS’s patent rights and know-how relating to certain antibody fragments (including certain fragments of bempikibart) and non-exclusive with respect to BMS’s patent rights and know-how relating to the composition of matter and use of a specific region of bempikibart. BMS retained the right for it and its affiliates to use the exclusively licensed patents and know-how for internal, preclinical research purposes. Under the BMS License Agreement, we are prohibited from engaging in certain clinical development or commercialization of any antibody other than a licensed compound with the same mechanism of action until the earlier of the expiration of our obligation to pay BMS royalties or September 2029. In consideration for the license, we made an upfront payment to BMS of $8 million, issued 318,278 Series A preferred shares to BMS and agreed to use commercially reasonable efforts to develop and commercialize at least one licensed product in key geographic markets. In addition, we agreed to pay BMS (i) development and regulatory milestone payments in aggregate amounts ranging from $32 million to $49 million per indication for the first three indications and commercial milestone payments in an aggregate amount of up to $215 million on net sales of licensed products, (ii) tiered royalties ranging from rates in the mid-single digit percentages to up to 10% of net sales, with increasing rates depending on the cumulative net sales, (iii) up to 60% of sublicense income, which percentage decreases based on the development stage of bempikibart at the time of the sublicensing event, and (iv) ongoing fees associated with the prosecution, maintenance, or filing of the licensed patents. Our obligation to pay BMS royalties under subsection (ii) above commences, on a licensed product-by-licensed product and country-by-country basis, on the first commercial sale of a licensed product in a country and expires on the later of (x) 12 years from the first commercial sale of such licensed product in such country, (y) the last to expire licensed patent right covering bempikibart or such licensed product in such country, and (z) the expiration or regulatory or marketing exclusivity for such licensed product in such country (the “Royalty Term”). If we undergo a change of control prior to certain specified phase of development, the development and milestone payments are subject to increase by a low double digit percentage and the royalty rates are subject to increase by a low sub-single digit percentage. Unless terminated earlier by either party pursuant to its terms, the BMS License Agreement will expire on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last to expire Royalty Term with respect to such licensed product in such country. Either party may terminate the BMS License Agreement for the other party’s material breach, subject to a specified notice and cure period. BMS may terminate the BMS License Agreement if we fail to meet our diligence obligations under the BMS License Agreement, for our insolvency, or if we or our affiliates challenges the validity, scope, enforceability, or patentability of any of the licensed patents. We may terminate the BMS License Agreement for any reason upon prior written notice to BMS, with a longer notice period if a licensed product has received regulatory approval. If the BMS Agreement is terminated for our material breach, BMS will regain rights to bempikibart and we must grant BMS an exclusive license under our patent rights covering bempikibart, subject to a low single digit percentage royalty on net sales of bempikibart payable to us by BMS. We have the right to terminate the agreement for any reason upon written notice, and therefore, this agreement has not been included in the discussion above. In July 2024, we made a $4.0 million development milestone payment to BMS. Bempikibart – Collaboration and Option Agreement, Asset Purchase Agreement and Termination Agreement – Horizon Therapeutics Ireland DAC From August 2022 until November 2023, Legacy Q32 was a party to the Horizon Agreements, pursuant to which Legacy Q32 received $55.0 million in initial consideration and staged development funding to complete two ongoing Phase 2 trials for bempikibart, and granted Horizon an option to acquire the bempikibart program at a prespecified price, subject to certain adjustments. 33 In October 2023, Amgen completed the acquisition of Horizon plc. Following its acquisition of Horizon plc, Legacy Q32 agreed with Amgen to mutually terminate the Horizon Agreements and in November 2023, Legacy Q32 and Horizon entered into the Horizon Termination Agreement, pursuant to which Horizon’s option to acquire the bempikibart program was terminated. As a result, Legacy Q32 retained all initial consideration and development funding received under the Horizon Collaboration Agreement and regained full development and commercial rights to bempikibart. In consideration for the Horizon Termination Agreement, Legacy Q32 agreed to pay Horizon regulatory and sales milestones payments of up to an aggregate amount of $75.1 million upon the first achievement of certain regulatory and sales milestones with respect to bempikibart. On November 7, 2025, we entered into the Amgen Amendment pursuant to which we issued Horizon a one-time equity grant of 553,695 shares of our common stock as full consideration of the milestone payments outlined in the Horizon Termination Agreement. Following the transactions contemplated by the Amgen Amendment, we have no remaining obligations to Amgen, including with respect to the $75.1 million in regulatory and sales-based milestone payments set forth in the Horizon Collaboration Agreement. Therefore, we derecognized the refund liability previously recorded for the $55.0 million of cash received under the Horizon Collaboration Agreement and recognized collaboration arrangement revenue for the difference between the equity issuance, and the refund liability as the consideration was no longer constrained. ADX-097—License Agreement – The Regents of the University of Colorado In August 2017, Legacy Q32 entered into an exclusive license agreement, as amended in February 2018, September 2018, and April 2019 (the “Colorado License Agreement”) with The Regents of the University of Colorado (“Colorado”), pursuant to which we obtained worldwide, royalty-bearing, sublicensable licenses under certain patents and know-how owned by Colorado and Medical University of South Carolina (“MUSC”), relating to the research, development and commercialization of ADX-097. The licenses granted to us were exclusive with respect to certain patent families and know-how and non-exclusive with certain other patent families and know-how. The licenses granted to us were also subject to certain customary retained rights of Colorado and MUSC and rights of the United States government owing to federal funding giving rise to inventions covered by the licensed patents. We agreed to use commercially reasonable efforts to develop, manufacture and commercialize ADX-097, including by using commercially reasonable efforts to achieve specified development and regulatory milestones by specified dates. In addition, we agreed to pay Colorado (i) development and sales milestone payments in an aggregate amount of up to $2.2 million per licensed product for the first three products, (ii) tiered royalty rates on cumulative net sales of licensed products in the low single digit percentages, (iii) 15% of sublicense income and (iv) ongoing fees associated with the prosecution, maintenance, or filing of the licensed patents. Our obligation to pay royalties to Colorado would commence, on a licensed product-by-licensed product and country-by-country basis, from the first commercial sale of a licensed product in any country and expires on the later of (i) the last to expire valid claim within the licensed patents covering such licensed product in such country, and (ii) 20 years following the effective date of the Colorado License Agreement, or April 2037, or the Royalty Term. On November 28, 2025, in connection with the ADX-097 Asset Sale, the Colorado License Agreement was amended and restated and all of our rights and obligations thereunder were transferred to Akebia. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. We consider many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. We must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and we must select an amount that falls within that range of reasonable estimates. Actual results could materially differ from those estimates. Our critical accounting policies are described under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2025. There were no material changes to our critical accounting policies during the three months ended June 30, 2026 from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025. 34 Recently Issued and Adopted Accounting Pronouncements A description of recently issued and certain recently adopted accounting pronouncements that have or may potentially impact our financial position and results of operations is included in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. We have determined that the effects of any such pronouncements will not have a material impact on our condensed consolidated financial position and results of operations. 35