SEC Form 10-Q filed by Quince Therapeutics Inc.

5/13/25 8:40:57 AM ET

$QNCX

Biotechnology: Biological Products (No Diagnostic Substances)

Health Care

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 001-38890

________________________________________________________

Quince Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

________________________________________________________


Delaware			90-1024039
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
611 Gateway Boulevard, Suite 273 South San Francisco, California			94080
(Address of principal executive offices)			(Zip Code)
Registrant’s telephone number, including area code: (415) 910-5717

________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

QNCX

The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 6, 2025, the registrant had 45,468,782 shares of common stock, $0.001 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, drug candidates, planned preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (the "SEC"). It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our ability to successfully execute on our current strategic direction;

•future research and development activities, including the scope, success, cost and timing of any future development activities, preclinical studies and clinical trials, including clinical trials of eDSP or other pipeline compounds we advance through the drug development process;

•the timing and focus of any potential future clinical trials, and the reporting of data from those trials;

•our ability and timing of seeking and obtaining FDA and any other regulatory approvals for our drug candidates;

•the willingness of the FDA or other regulatory authorities to accept any future completed or planned clinical and preclinical studies and other work, as the basis for review and approval of our drug candidates for their respective indications;

•whether regulatory authorities determine that additional trials or data are necessary in order to accept a new drug application for review and/or approval;

•the ability of any future clinical trials to demonstrate safety and efficacy of eDSP and other drug candidates, and other positive results;

•our financial performance;

•our ability to continue as a going concern, the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;

•the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;

•our expectations related to the use of our available cash;

•our ability to service our debt obligations and maintain compliance with associated covenants;

•our ability to obtain funding for our operations, including funding necessary to develop and commercialize our drug candidates;

•our expectations regarding the potential market size and the size of the patient populations for our drug candidates, if approved for commercial use, and the potential market opportunities for commercializing our drug candidates;

•our plans relating to commercializing our drug candidates, if approved;

•our plans and ability to establish sales, marketing and distribution infrastructure to commercialize any drug candidates for which we obtain approval;

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•our ability to attract and retain key scientific and clinical personnel;

•our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•our reliance on third parties to conduct clinical trials of our drug candidates, and for the manufacture of our drug candidates for preclinical studies and clinical trials;

•dependence upon the integrity of our supply chain, including multiple single-source suppliers;

•our reliance on third-party suppliers for certain of our raw materials and components;

•our ability to expand our drug candidates into additional indications and patient populations;

•the success of competing therapies that are or may become available;

•the beneficial characteristics, safety and efficacy of our drug candidates;

•governmental or regulatory delays, information requests, clinical holds, and regulatory developments in the United States and other jurisdictions;

•our ability to obtain and maintain regulatory approval of our drug candidates, and any related restrictions, limitations and/or warnings in the label of any approved drug candidate;

•our ability to obtain and maintain CE Certificates of conformity for the medical device components of our eDSP System in accordance with applicable legislation governing medical devices;

•our ability to transition CE Certifications under the previous Medical Device Directive, to a regulatory framework under MDR;

•our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

•the scope of protection we are able to establish and maintain for intellectual property rights covering our drug candidates and technology;

•potential claims relating to our intellectual property;

•our ability to grow our organization and increase the size of our facilities to meet our anticipated growth; and

•our ability to maintain compliance with Nasdaq listing requirements.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.

You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

This Quarterly Report on Form 10-Q contains estimates, projections and other information concerning our industry, our business and the markets for our drug candidates. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from academic and industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable, we have not separately verified these data. Further, while we believe our internal research is reliable, such research has not been verified by any third party. You are cautioned not to give undue weight to any such information, projections and estimates.

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DEFINED TERMS

Unless the context requires otherwise, references to “Quince,” “the Company,” “we,” “us,” or “our” in this Quarterly Report on Form 10-Q refer to Quince Therapeutics, Inc. and its consolidated subsidiaries. We also have used several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below.


Abbreviated Term			Defined Term

AIDE			Autologous Intracellular Drug Encapsulation
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
A-T			Ataxia-Telangiectasia
ATTeST			Ataxia Telangiectasia Trial with the eDSP System
the Code			Internal Revenue Code of 1986, as amended
CODM			Chief Operating Decision Maker
COVID-19			Coronavirus disease
Credits			Tax credits
CRO			Contract Research Organization
CTR			European Union pharmaceutical legislation known as the Clinical Trials Regulation
Debt Agreement			Unsecured line of credit agreement between EryDel and the European Investment Bank, which the Company guaranteed on October 20, 2023 in connection with the EryDel Acquisition
DMD			Duchenne muscular dystrophy
DSP			Dexamethasone Sodium Phosphate
EC			European Commission
EryDel			Quince Therapeutics, S.p.A (previously named EryDel S.p.A.)
eDSP			Encapsulated dexamethasone sodium phosphate encapsulated in patient's own red blood cells (previously referred to as EryDex)
eDSP System			Automated combination product to encapsulate dexamethasone sodium phosphate in red blood cells
EIB			European Investment Bank
EU			European Union
EIB Loan			Unsecured line of credit between EryDel and the European Investment Bank
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FDA			United States Food and Drug Administration
GAAP			generally accepted accounting principles in the United States
GMP			Good Manufacturing Practice
HHS			United States Department of Health and Human Services
ICARS			International Cooperative Ataxia Rating Scale
IPR&D			In-process Research and Development
IRA			Inflation Reduction Act of 2022
Lighthouse			Lighthouse Pharmaceuticals, Inc.
MAA			Marketing Authorization Application
MDR			Medical Devices Regulation 2017/745
MPEEM			Multi-Period Excess Earnings Method
Nasdaq			The Nasdaq Stock Market LLC
NDA			New Drug Application

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NEAT			eDSP Phase 3 Clinical Trial (Neurological Effects of eDSP on Subjects with A-T)
Novosteo			Novosteo, Inc.
OLE			Open-Label Extension Clinical Trial
PD			Pharmacodynamic
PK			Pharmacokinetic
PRF			Purdue Research Foundation
R&D			Research and Development
RBC			Red Blood Cell
RSA			Restricted Stock Awards
RSU			Restricted Stock Units
SAE			Serious Adverse Event
Sarbanes-Oxley Act			The Sarbanes-Oxley Act of 2002
SEC			United States Securities and Exchange Commission
Securities Act			Securities Act of 1933
SPA			Special Protocol Assessment

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands except share amounts)



	March 31, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	7,771	$	6,212
Short-term investments	23,828		34,572
Prepaid expenses and other current assets	2,230		3,252
Total current assets	33,829		44,036
Property and equipment, net	448		315
Operating lease right-of-use assets	493		498
Intangible assets	62,365		60,045
Other assets	9,954		9,584
Total assets	$	107,089	$	114,478

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,008	$	2,903
Accrued expenses and other current liabilities	5,348		4,375
Total current liabilities	8,356		7,278
Long-term debt	15,266		14,321
Long-term operating lease liabilities	383		394
Long-term contingent consideration	58,615		56,691
Deferred tax liabilities	5,172		4,963
Other long-term liabilities	716		685
Total liabilities	88,508		84,332
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.	—		—
Common stock, $0.001 par value, 100,000,000 shares authorized, 44,089,142 and 44,001,643 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.	44		44
Additional paid in capital	408,082		406,609
Accumulated other comprehensive income (loss)	1,957		(35)
Accumulated deficit	(391,502)		(376,472)
Total stockholders’ equity	18,581		30,146
Total liabilities and stockholders’ equity	$	107,089	$	114,478

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended March 31,
		2025		2024
Operating expenses:
Research and development		$	8,145	$	3,702
General and administrative		4,789		4,971
Fair value adjustment for contingent consideration		1,924		2,545
Total operating expenses		14,858		11,218
Loss from operations		(14,858)		(11,218)
Fair value adjustment for long-term debt		(444)		(388)
Interest income		406		887
Other expense, net		(87)		(399)
Net loss before provision for income taxes		(14,983)		(11,118)
Income tax expense		(47)		(31)
Net loss		(15,030)		(11,149)
Other comprehensive loss:
Foreign currency translation adjustments		2,045		(1,229)
Unrealized gain (loss) on available-for-sale securities		(53)		7
Total comprehensive loss		$	(13,038)	$	(12,371)
Net loss per share - basic and diluted		$	(0.34)	$	(0.26)
Weighted average shares of common stock outstanding - basic and diluted		43,941,185		43,010,212

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands, except share and per share amounts)


For the three months ended March 31, 2025 and 2024
	Common Stock			Additional Paid in		Accumulated Other Comprehensive Income / (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance as of December 31, 2024	44,001,643	$	44	$	406,609	$	(35)	$	(376,472)	$	30,146
Issuance of common stock on exercise of stock options	87,499	—		87		—		—		87
Stock based compensation	—	—		1,386		—		—		1,386
Foreign currency translation adjustment	—	—		—		2,045		—		2,045
Unrealized gain (loss) on available for sale investments	—	—		—		(53)		—		(53)
Net loss	—	—		—		—		(15,030)		(15,030)
Balance as of March 31, 2025	44,089,142	$	44	$	408,082	$	1,957	$	(391,502)	$	18,581

Balance as of December 31, 2023	42,973,215	$	43	$	401,638	$	3,047	$	(319,644)	$	85,084
Issuance of common stock on exercise of stock options	242,018	—		190		—		—		190
Stock based compensation	—	—		1,274		—		—		1,274
Foreign currency translation adjustment	—	—		—		(1,229)		—		(1,229)
Unrealized gain (loss) on available for sale investments	—	—		—		7		—		7
Net loss	—	—		—		—		(11,149)		(11,149)
Balance as of March 31, 2024	43,215,233	$	43	$	403,102	$	1,825	$	(330,793)	$	74,177

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities
Net Loss	$	(15,030)	$	(11,149)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation	1,386		1,274
Depreciation and amortization	32		40
Change in the fair value of contingent consideration liabilities	1,924		2,545
Change in fair value of long-term debt	391		388

Amortization of discount on available-for-sale investments	(355)		(646)
Changes in operating assets and liabilities, net of acquisitions:
Prepaid expenses and other current assets	944		(440)
Right of use assets, operating leases and operating lease liabilities	24		(35)
Other assets	163		(8)
Accounts payable	22		59
Accrued expenses and other current liabilities	898		(381)
Net cash used in operating activities	(9,601)		(8,353)
Cash flow from investing activities:
Purchase of investments	(1,954)		(39,292)
Proceeds from maturities of investments	13,000		48,245

Purchase of property and equipment	(148)		(39)
Net cash provided by investing activities	10,898		8,914
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options	87		190
Net cash provided by financing activities	87		190
Effect of exchange rate changes on cash	175		310
Net increase in cash and cash equivalents	1,559		1,061
Cash and cash equivalents at beginning of period	6,212		20,752
Cash and cash equivalents at end of period	$	7,771	$	21,813

Supplemental disclosures of cash flow information:
Cash interest payment on long-term debt	(53)		—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	227

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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QUINCE THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Organization

Description of Business

Quince Therapeutics, Inc. is a late-stage biotechnology company dedicated to unlocking the power of a patient’s own biology for the treatment of rare diseases.

The Company's proprietary AIDE technology is an innovative drug/device combination platform that uses an automated process to encapsulate a drug into a patient’s own red blood cells. Our Phase 3 lead asset, eDSP, leverages the AIDE technology to encapsulate DSP into a patient’s own red blood cells, and is targeted to treat a rare pediatric neurodegenerative disease, A-T.

Liquidity and Capital Resources

The Company has incurred losses and negative cash flows from operations since inception and expects to continue to generate operating losses for the foreseeable future. As of March 31, 2025, the Company had an accumulated deficit of $391.5 million. Since inception through March 31, 2025, the Company has funded operations primarily with the net proceeds from the issuance of convertible promissory notes, from the issuance of redeemable convertible preferred stock, from the net proceeds from the Company’s initial public offering (the “IPO”) and from the net proceeds of the private investment in public equity transaction (“PIPE Financing”). As of March 31, 2025, the Company had cash, cash equivalents, and short-term investments of $31.6 million.

The Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued. The transition to profitability is dependent upon the successful development, approval and commercialization of our product candidate, and the achievement of a level of revenues adequate to support our cost structure. Based on its current operating plan, the Company believes that its cash and cash equivalents balance as of March 31, 2025 will not be sufficient to fund operations and capital expenditures for at least the twelve months following the issuance of these unaudited condensed consolidated financial statements, and the Company will need to obtain additional funding. The Company intends to obtain additional funding through available financing sources which may include additional public offerings of common stock, private financing of debt or equity, and/or the pursuit of strategic partnerships, licensing arrangements or collaborations. Management’s belief with respect to the Company's ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding sooner than would otherwise be expected. There can be no assurance that the Company will be able to obtain additional funding on acceptable terms, if at all. If the Company is unable to obtain sufficient funding, it may be required to delay development efforts, limit activities and reduce research and development costs, which could adversely affect its business prospects. Because of the uncertainty in securing additional funding and the insufficient amount of cash and cash equivalent resources as of March 31, 2025, management concluded that substantial doubt exists with respect to the Company's ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

In connection with the acquisition of EryDel on October 20, 2023 (the “EryDel Acquisition”), the Company became a guarantor in respect of an unsecured line of credit between EryDel and the European Investment Bank (the “EIB Loan” or “Debt Agreement” ). As of March 31, 2025, the Company had 10.0 million euros ($10.8 million) outstanding on the EIB Loan, with an original requirement to maintain a minimum cash balance of 14.65 million euros ($15.8 million) until full repayment (the “Minimum Cash Covenant”). The Company could voluntarily prepay, and in cases of default or change in control, EIB could accelerate the debt. In November 2024, the Company amended the Debt Agreement (the “Amendment”), waiving the Minimum Cash Covenant from January 1, 2025, to December 31, 2025, or until its restoration. As of March 31, 2025, the Minimum Cash Covenant had not been restored. Under the terms of the Amendment, the

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Company agreed to amendments requiring monthly cash balance reporting, restrictions on acquisitions, quarterly payments of 2% out of the total 9% deferred interest during the waiver period, and a one-time fee of 20 thousand euros ($22 thousand).

Management expects to incur additional losses in the future to fund the Company's operations and conduct product research and development and may need to raise additional capital to fully implement its business plan. The Company may raise additional capital through the issuance of equity securities, debt financings or other sources including out-licensing or partnerships, in order to further implement its business plan. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of product candidates.

Note 2. Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Quince Therapeutics, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

The condensed consolidated balance sheet as of March 31, 2025, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2025 and 2024, the condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2024 included in the Company’s Form 10-K filed with the SEC on March 24, 2025. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other future annual or interim period.

Risks and Uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential drug candidates, uncertainty of market acceptance of the Company’s drug candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals and sole source suppliers. The Company’s drug candidates will require approvals from the FDA and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any drug candidate will receive the necessary approvals.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosure of contingent assets and liabilities. The most significant estimates used in the Company’s consolidated financial statements relate to the determination of the fair value of identifiable assets and liabilities in connection with business combinations including associated intangible assets and goodwill, contingent consideration, accruals for research and development costs, useful lives of long-lived assets, stock-based compensation and related assumptions, the incremental borrowing rate for leases and income tax uncertainties, including a valuation allowance for deferred tax assets, eligibility of expenses for the Australia research and development refundable tax credits, impairment of intangible assets, including

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goodwill; and contingencies. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from the Company’s estimates.

Foreign Currency Translation and Transactions

The functional currency of the Company’s wholly-owned subsidiaries are the Euro and Australian Dollar. The Company's financial results and financial position are translated into U.S. dollars using exchange rates at balance sheet dates for assets and liabilities and using average exchange rates for income and expenses. The resulting translation differences are presented as a separate component of accumulated other comprehensive income (loss), as a separate component of equity.

Foreign currency transactions are translated into the functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses, resulting from the settlement of such transactions and from the re-measurement of monetary assets and liabilities denominated in foreign currencies using exchange rates at balance sheet date and non-monetary assets and liabilities using historical exchange rates, are recognized in the condensed consolidated statements of operations and comprehensive loss.

Segment Information

The Company manages its business activities on a consolidated basis and operates as one operating and reportable segment, which is the business of developing and commercializing the Company's proprietary AIDE technology platform. The key factors used to identify the reportable segments are the organization of its business and alignment of the Company's internal operations and the nature of its AIDE technology. Operating segments are defined as components of an enterprise for which discrete financial information is available and is evaluated regularly by the CODM, in deciding how to allocate resources and assess performance.

Intangible Assets

Definite lived Intangible Assets

Intangible assets with a definite useful life are amortized on a straight-line basis over the estimated useful life of the related assets. The Company regularly reviews whether current conditions or events suggest that the carrying values of its acquired definite lived intangible assets might not be recoverable. When such conditions are identified, an estimate of the undiscounted future cash flows from these assets, or relevant asset groupings, is compared to their carrying value to determine if an impairment exists. If an impairment is identified, the loss is calculated as the difference between the carrying value of the intangible asset and its fair value, which is based on the net present value of the estimated future cash flows.

Indefinite lived Intangible Assets

Intangible assets with an indefinite useful life are not amortized. Intangible assets acquired in a business combination or an acquisition that are used in research and development activities (regardless of whether they have an alternative future use) shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts. Intangible assets acquired in a business combination are initially recorded at fair value. During the period that those assets are considered indefinite lived, they shall not be amortized but shall be tested for impairment. Once the research and development efforts are completed or abandoned, the entity shall determine the useful life of the assets. An indefinite lived intangible asset shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If that is the case, the Company performs a quantitative impairment test, and, if the carrying amount of the Company exceeds its fair value, then

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the Company will recognize an impairment charge for the amount by which its carrying amount exceeds its fair value, not to exceed the carrying amount of the intangible asset. Qualitative factors to be considered include but are not limited to:

•Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on future expected earnings and cash flows

•Legal/regulatory factors or progress and results of clinical trials

•Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset

•Industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment

•Macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset.

Contingent Consideration

The Company determines the acquisition date fair value of contingent consideration using a probability-weighted discounted cash flow method, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC Topic 820, Fair Value Measurement. The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to the Company's acquisition of EryDel in October 2023, during the contingent consideration period, appropriately discounted considering the uncertainties associated with the earnout obligation, and calculated in accordance with the terms of the definitive agreement. The liabilities for the contingent consideration are established at the time of the acquisition and will be evaluated on a quarterly basis based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period. During the three months ended March 31, 2025, the Company recorded an adjustment of $1.9 million to increase the fair value of its contingent consideration related to the acquisition of EryDel. The adjustment is reflected within operating loss on the consolidated statement of operations and comprehensive loss. Changes in the fair value of the contingent consideration obligations may result from changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations. Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement.

Cash, Cash Equivalents and Investments

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash equivalents include marketable securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and at the end of each reporting period. Investments with maturities beyond three months at the date of purchase and which mature at, or less than twelve months from the balance sheet date are classified as short-term investments. Collectively, cash equivalents, short-term investments and long-term investments are considered available-for-sale and are recorded at fair value. Unrealized gains and losses are recorded as a component of other comprehensive income (loss) in the consolidated statements of operations and included as a separate component of consolidated statements of stockholders’ equity. Realized gains and losses are included in interest income in the consolidated statements of operations and comprehensive loss.

Premiums (discounts) are amortized (accreted) over the life of the related investment as an adjustment to yield using the straight-line interest method. Dividend and interest income are recognized when earned. These amounts are recorded in “interest income” in the consolidated statements of operations and comprehensive loss.

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Recently Adopted Accounting Pronouncements

There were no new accounting standards adopted during the three months ended March 31, 2025.

Recent Accounting Pronouncements Not Yet Adopted

The following are new accounting pronouncements that the Company is evaluating for future impacts on its financial statements:

ASU 2023-09, Improvements to Income Tax Disclosures (ASC 740). In December 2024, the FASB issued this ASU to establish new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under this ASU, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The ASU is effective beginning after December 2025 under a prospective approach. Early adoption is permitted. The Company is evaluating the disclosure requirements related to the new standard.

ASU 2024-03, Disaggregation of Income Statement Expenses (“DISE”). In November 2024, the FASB issued a new accounting standard to improve the disclosures about an entity’s expenses and address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application permitted. The Company is evaluating the disclosure requirements related to the new standard.

All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

Note 3. Fair Value Measurements

The fair value of the Company's financial instruments reflects the amounts that the Company estimates that it would receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company discloses and recognizes the fair value of the assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active.

Level 3 - Inputs that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company's financial instruments are carried in the accompanying consolidated balance sheets at amounts that approximate fair value.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the three months ended March 31, 2025 and year ended December 31, 2024.

The Company elected the fair value option for the EIB Loan guaranteed by the Company in connection with the EryDel Acquisition. The Company adjusted the EIB Loan to fair value through the change in fair value of debt in the accompanying consolidated statements of operations and comprehensive loss. Subsequent unrealized gains and losses on items for which the fair value option is elected are reported in earnings. The Company will breakout any change in value

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due to credit loss in accumulated other comprehensive loss. For the three months ended March 31, 2025 and year ended December 31, 2024, there was no change in value due to credit loss.

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of March 31, 2025 and December 31, 2024 are presented in the following tables (in thousands):


	Fair Value Measurements as of March 31, 2025
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	5,685	$	5,685	$	—	$	—

Government and agency notes	23,828		—		23,828		—
Total Assets	$	29,513	$	5,685	$	23,828	$	—
Liabilities:
Contingent consideration	58,615		—		—		58,615
Long-term debt	15,266		—		—		15,266
Total	$	73,881	$	—	$	—	$	73,881


	Fair Value Measurements as of December 31, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	3,702	$	3,702	$	—	$	—

Government and agency notes	34,572		—		34,572		—
Total Assets	$	38,274	$	3,702	$	34,572	$	—
Liabilities:
Contingent consideration	56,691		—		—		56,691
Long-term debt	14,321		—		—		14,321
Total	$	71,012	$	—	$	—	$	71,012

The Company classifies government and agency notes as Level 2 investments as the Company uses quoted prices for similar assets sourced from certain third-party pricing services. The third-party pricing services generally utilize industry standard valuation models for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair value of the securities. The primary input generally includes reported trades of or quotes on the same or similar securities. The Company does not make additional judgments or assumptions made to the pricing data sourced from the third-party pricing services.

Level 3 Assets and Liabilities

Contingent Consideration

The following table reflects the changes in present value of acquisition related accrued earnouts of contingent consideration liability using significant unobservable inputs (Level 3) for the three months ended March 31, 2025 and 2024:


	2025		2024



Beginning contingent consideration balance, December 31	$	56,691	$	57,706
Change in fair value of contingent consideration	1,924		2,545
Ending contingent consideration balance, March 31	$	58,615	$	60,251

To estimate the fair value of the contingent consideration, the Company used a probability-weighted discounted cash flow model with an expected present value valuation technique with significant unobservable fair value inputs and is therefore classified as a Level 3 measurement. The estimates of fair value are uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of the expected timing of milestone

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completion dates, probability of achievement, and discount rate. The change in the fair value of the contingent consideration is primarily driven by the passage of time related to the contingent consideration earnout.

The following table summarizes the assumptions used in the valuation of the contingent consideration (in thousands except for percentages):


	March 31, 2025	December 31, 2024
Expected timing of milestones completion dates	2026 - 2038	2026 - 2038
Discount rate	14.5%	14.5%
Probability of achievement	1% - 56.5%	1% - 56.5%

Long-term Debt

The following table presents the changes in the fair value of the Level 3 EIB Loan for the three months ended March 31, 2025:


	(in thousands)



Balance as of December 31, 2024	$	14,321
Change in fair value	444
Interest payment	(54)
Due to foreign currency translation	555
Balance as of March 31, 2025	$	15,266

To estimate the fair value of the EIB Loan, the Company used an expected present value valuation technique with significant unobservable inputs resulting in classification as a Level 3 measurement. The estimate of fair value is uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of discount rate which includes the credit quality of the Company and credit spreads for comparable debt.

The following table summarizes the assumptions including the unobservable inputs related to the Company's long-term debt (in thousands except for percentages):


	March 31, 2025	December 31, 2024
Discount rate	13%	13%

Note 4. Cash, Cash Equivalents and Investments

The following tables categorize the fair values of cash, cash equivalents and investments measured at fair value on a recurring basis on our balance sheets (in thousands):


	March 31, 2025		December 31, 2024
Cash and cash equivalents:
Cash	$	2,086	$	2,510
Money market funds	5,685		3,702

Total cash and cash equivalents	$	7,771	$	6,212

Short-term investments:

Government and agency notes	23,828		34,572
Total short-term investments	$	23,828	$	34,572

The Company's investments are classified as available-for-sale securities. As of March 31, 2025, the weighted average remaining contractual maturities of available-for-sale securities was approximately 2 months. The unrealized gain (loss) activity related to the Company’s available-for-sale securities is included in the Company’s accumulated other

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comprehensive income. There were no significant realized gains or losses recognized on the sale or maturity of available-for-sale securities for the three months ended March 31, 2025 and 2024, and as a result, the Company did not reclassify any amounts out of accumulated other comprehensive income. Based on the Company’s review of its available-for-sale securities, the Company has no available-for-sale securities in loss positions as of March 31, 2025. No other-than-temporary impairments on these securities were recognized for the three months ended March 31, 2025 and 2024.

The Company periodically assesses its investment in available-for-sale securities for impairment losses and credit losses. The amount of credit losses is determined by comparing the difference between the present value of future cash flows expected to be collected on these securities and the amortized cost. Factors considered in assessing credit losses include the position in the capital structure, vintage and amount of collateral, delinquency rates, current credit support, and geographic concentration. There have been no impairment and credit losses related to available-for-sale securities for the three months ended March 31, 2025 and 2024.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in interest and other income, net in the statement of operations and comprehensive loss. If neither criteria is met, the Company evaluates whether the decline in fair value is related to credit-related factors or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. Credit-related impairment losses, limited by the amount that the fair value is less than the amortized cost basis, are recorded through an allowance for credit losses in interest and other income, net.

Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit factors are recognized in accumulated other comprehensive income, net of tax as a separate component of stockholders’ equity, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in interest and other income, net in the statement of operations and comprehensive loss.

For purposes of identifying and measuring credit-related impairments, the Company’s policy is to exclude applicable accrued interest from both the fair value and amortized cost basis of the related security. The Company has elected to write-off uncollectible accrued interest receivable balances in a timely manner, which is defined by the Company as when interest due becomes 90 days delinquent. The accrued interest write-off will be recorded by reversing interest income. Accrued interest receivable is recorded in other current assets on the balance sheets.

The following table summarizes the available-for-sale securities (in thousands):


	Fair Value Measurements as of March 31, 2025
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Money market funds	$	5,685	$	—	$	—	$	5,685

Government and agency notes	23,812		16		—		23,828
Total cash equivalents and investments	$	29,497	$	16	$	—	$	29,513

Classified as:
Cash equivalents (original maturities within 90 days)							$	5,685
Short-term investments (maturities within one year)							23,828
Total cash equivalents and investments							$	29,513

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	Fair Value Measurements as of December 31, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Money market funds	$	3,702	$	—	$	—	$	3,702
Government and agency notes	34,503		69		—		34,572
Total cash equivalents and investments	$	38,205	$	69	$	—	$	38,274

Classified as:
Cash equivalents (original maturities within 90 days)							$	3,702
Short-term investments (maturities within one year)							34,572
Total							$	38,274

Note 5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	March 31, 2025		December 31, 2024
Prepaid research and development expenses	$	524	$	1,300
Short-term Italian research and development refundable tax credit	916		882
Prepaid insurance	440		629
Prepaid expenses	318		357
Other current assets	32		84
Total prepaid expenses and other current assets	$	2,230	$	3,252

The Company is eligible to obtain an R&D tax credit as companies in Italy that invest in eligible research and development activities, regardless of the legal form and economic sector in which they operate, can benefit from a R&D tax credit. Such tax credits can only be used to offset payments of certain taxes and contributions (e.g., social contributions, VAT payables, registration fees, income and withholding taxes and other tax-related items that companies usually pay monthly). The Company recognized reductions to R&D expense of $0.3 million for the three months ended March 31, 2025, and $0.4 million reductions for the three months ended March 31, 2024.

Other Assets

Other assets consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Long-term Italian research and development refundable tax credit	$	4,376	$	4,053
VAT receivable	5,500		5,453
Equity investments in Lighthouse Pharmaceuticals, Inc.	78		78
Total other assets	$	9,954	$	9,584

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Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):


	March 31, 2025		December 31, 2024
Computer equipment	$	60	$	55
Computer software	29		28
Lab equipment	805		635
Leasehold improvement	35		34
Office furniture	210		202
Less: accumulated amortization and depreciation	(691)		(639)
Property and equipment, net	$	448	$	315

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	March 31, 2025		December 31, 2024
Personnel expenses	$	1,873	$	2,482
Research and development expenses	2,495		1,029
Professional fees	645		460
Current portion of operating lease liabilities	102		96
Other	233		308
Total accrued expenses and other current liabilities	$	5,348	$	4,375

For the three months ended March 31, 2025 and 2024, the severance accrual activity was as follows (in thousands):


	March 31, 2025		March 31, 2024
Beginning accrued severance	—		341
Incurred during the period	413		—
Severance paid during the period	(66)		(128)
Ending accrued severance	$	347	$	213

During the three months ended March 31, 2025 and 2024, the Company incurred severance costs related to personnel separation, reflecting payments made and accrued to departing employees.

Note 6. Leases

In January 2024, the Medolla Lease Agreement for the office space was renegotiated. The new Medolla Lease Agreement includes an additional space and commenced on February 1, 2024, and will end on January 31, 2030, substituting the Medolla Lease Agreement commenced in June 2018.

The Company recognizes lease expense on a straight-line basis over the term of its operating lease. During the three months ended March 31, 2025 and 2024, the Company recorded lease expense of $35 thousand and $22 thousand, respectively.

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Supplemental balance sheet information related to leases as follows (in thousands except lease terms and discount rates):


	March 31, 2025			December 31, 2024
Assets:
Operating lease right of use asset, net	$	493		$	498
Liabilities:
Short-term operating lease liability	102			96
Long-term operating lease liability	383			394
Total lease liabilities	$	485		$	490

Other information:
Weighted average remaining lease term	4.4 years			4.6 years
Weighted average discount rate	9.11		%	9.11		%

Future minimum lease payments under lease agreements as of March 31, 2025, were as follows (in thousands):


Fiscal Year
2025 (remainder of the year)	$	140
2026	137
2027	131
2028	118
2029	93
Total lease payments	619
Less: imputed interest	(134)
Total remaining lease liability	$	485

Note 7. Long-term Debt

In connection with the acquisition of EryDel on October 20, 2023, the Company became a guarantor in respect of the EIB Loan. The EIB Loan was amended and restated as of the acquisition date. The EIB Loan provides for maximum borrowings of 30.0 million euro through four tranches; tranche A, 3.0 million euro; tranche B, 7.0 million euro; tranche C, 10.0 million euro; and tranche D, 10.0 million euro. Each tranche is subject to conditions precedent related to the Company’s business and capitalization. As of March 31, 2025, only tranches A and B have been drawn. All amounts due under tranche A and B are payable on their maturity date of August 2026. Tranche C and D are payable in equal installments of principal together with all amounts outstanding under the tranches on the repayment date. The first repayment date of tranche C shall fall not earlier than twelve months from the disbursement date of such tranche. The last repayment date of tranche C and tranche D shall fall not later than 5 years from the disbursement date of tranche C and tranche D, respectively. The EIB Loan bears interest at fixed rates for each tranche and is payable on the maturity date for each Tranche (with the exception of 2% cash interest which shall accrue and be payable quarterly during fiscal year 2025 pursuant to the terms of the Amendment, which shall correspondingly reduce the deferred interest rate accruing during such period). The fixed rates range from 7.0% to 9.0% per annum. As of March 31, 2025, principal of 10.0 million euros ($10.8 million) was outstanding on the EIB Loan and it is recorded as Long-term debt on the consolidated balance sheet at fair value with imputed interest of 9.0% included.

The original Debt Agreement requires the Company to maintain the Minimum Cash Covenant of 14.65 million euros ($15.8 million) until the outstanding obligations under the Debt Agreement, together with accrued interest and all other amounts accrued or outstanding under the agreement, is repaid in full. Furthermore, the Company may at any time voluntarily prepay, in whole or in part, together with certain fees as set forth in the Debt Agreement, the outstanding obligations under the Debt Agreement. In the event of a default or a change in control, as specified in the Debt Agreement, EIB may, subject to certain grace periods, accelerate the outstanding obligations under the EIB Loan.

In November 2024, the Company entered into the Amendment of the Debt Agreement with EIB which waives the Minimum Cash Covenant from January 1, 2025 and up to the earlier of December 31, 2025, or the date the Minimum Cash

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Covenant is restored. As of March 31, 2025, the Minimum Cash Covenant had not been restored. Under the terms of the Amendment, the Company agreed to amendments requiring monthly reporting of cash balances and additional limitations on certain permitted acquisitions. Additionally, during the waiver period, the Company agreed to convert 2% out of the total 9% deferred interest on Tranches A and B to be payable quarterly, with the first payment made on March 31, 2025, and a one-time fee of 20 thousand euros $22 thousand in connection with the Amendment.

For the three months ended March 31, 2025, the Company paid $53,000 in interest payments related to the Amendment.

The Debt Agreement includes a provision for additional remuneration to be paid in addition to interest. The amount of additional remuneration to be paid is equal to 2.5% of revenue up to 125.0 million euros, plus 1.85% of revenue between 125.0 and 250.0 million euros, plus 1.0% of revenue in excess of 250.0 million euros, multiplied by a varying percentage based on how many tranches have been drawn. The varying percentage is equal to 30.0% in the event tranche A has been drawn, 50.0% in the event tranche A and B have been drawn, 80.0% in the event tranche A, B and C have been drawn, and 100.0% in the event all four tranches have been drawn. The additional remuneration is payable for seven years, during the period January 1, 2026, through December 31, 2032. In the event of an occurrence of an event of default or prepayment, the Company may be required to pay an additional remuneration buyout fee.

The Company elected to account for the EIB Loan at fair value, which requires the EIB Loan to be recorded at fair value at issuance and at the end of each reporting period. Gains or losses upon remeasurement are to be recorded in other expense, net in the consolidated statements of operations and comprehensive income. The Company presents separately in other comprehensive income the portion of the total change in the fair value of the EIB Loan that results from a change in instrument-specific credit risk. The EIB Loan’s fair value at the date it was assumed adjusted its carrying value based on using a discounted cash flow analysis with a discount rate based on a yield curve that was adjusted for credit rating. The change in fair value as of March 31, 2025 was determined using a discounted cash flow analysis discounted at the market yield. The significant inputs used to measure the market yield as of March 31, 2025 relative to the date the EIB Loan was assumed was the change in credit quality of the Company, the change in credit spreads for comparable debt instruments, and the change in the risk-free rate. As of March 31, 2025, the fair value of the EIB Loan is $15.3 million, which includes a fair value adjustment of $0.4 million and foreign currency translation of $0.6 million during the three months ended March 31, 2025.

Future minimum principal payments, as of March 31, 2025 are as follows (in thousands):


Quarter Ended March 31, 2025	Amount
2025	$	—
2026	10,816
2027 and thereafter	—
Total future payments	10,816
Imputed interest and fair value adjustments	4,450
Total Debt as of March 31, 2025	$	15,266

Note 8. Common Stock

Equity Transactions

On December 18, 2024, the Company entered into a Controlled Equity OfferingSM Sales Agreement, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC, or the Agents, relating to the sale of shares of the Company's common stock, par value $0.001 per share. In accordance with the terms of this agreement, the Company may offer and sell up to $21.9 million of shares of common stock.

During the three months ended March 31, 2025, the Company sold zero shares of common stock.

Note 9. Stock-Based Compensation

The Company operates three stock-based compensation plans as of March 31, 2025:

•2019 Equity Incentive Plan (Quince)

•2019 Equity Incentive Plan (Novosteo)

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•2022 Inducement Plan (Quince)

2019 Equity Incentive Plan (Quince)

On December 4, 2014, the Company’s stockholders approved the 2014 Stock Plan (“2014 Plan”), and on April 25, 2019 amended, restated and re-named the 2014 Plan as the 2019 Equity Incentive Plan (the “Quince 2019 Plan”), which became effective as of May 7, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. The remaining shares available for issuance under the 2014 Plan were added to the shares reserved for issuance under the Quince 2019 Plan.

The Quince 2019 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Company’s employees, directors, and consultants. As of March 31, 2025, the maximum aggregate number of shares that may be issued under the Quince 2019 Plan is 13,515,484 shares of the Company’s common stock. In addition, the number of shares available for issuance under the Quince 2019 Plan will be annually increased on the first day of each fiscal years beginning with fiscal 2020, by an amount equal to the least of (i) 2,146,354 shares of common stock; (ii) 4% of the outstanding shares of its common stock as of the last day of its immediately preceding fiscal year; and (iii) such other amount as the Board of Directors may determine.

The Quince 2019 Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the Quince 2019 Plan as required by applicable law or listing requirements. Unless sooner terminated by the Company's Board of Directors, the Quince 2019 Plan will automatically terminate on April 23, 2029.

As of March 31, 2025, the Company had 1,169,969 shares available for future issuance under the Quince 2019 Plan.

Stock Options

Stock options under the Quince 2019 Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10% of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110% of the fair value of the underlying common stock. Stock options granted to employees and non-employees generally have a maximum term of ten years and vest over four years from the vesting commencement date, of which 25% vest on the one-year anniversary of the vesting commencement date, and 75% vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the termination date or expiration of the option, whichever is earlier.

Activity for service-based stock options under the Quince 2019 Plan is as follows:


	Number of Options and Unvested Shares	Weighted Average Exercise Price		Weighted average remaining contractual life (years)	Aggregate intrinsic value
					(In thousands)
Balance as of December 31, 2024	7,408,005	$	3.16	8.37	$	4,285
Options granted	3,028,256	1.61		—	—
Options exercised	(87,499)	1.00		—	32
Options cancelled / forfeited	(9,584)	1.60		—	—
Balance as of March 31, 2025	10,339,178	$	2.72	8.49	$	946
Options vested and expected to vest as of March 31, 2025	10,339,178			8.49
Options exercisable as of March 31, 2025	3,237,847	$	5.60	7.36	$	317

For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $0.9 million and $0.8 million, respectively, related to options granted to employees and non-employees. The compensation

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expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the consolidated statement of operations and comprehensive loss for stock-based compensation arrangements. As of March 31, 2025, total unamortized employee stock-based compensation was $7.9 million, which is expected to be recognized over the remaining estimated vesting period of 3.01 years.

2019 Equity Incentive Plan (Novosteo)

On May 19, 2022, in accordance with the terms of Agreement and Plan of Merger and Reorganization between the Company, Novosteo, Inc., and the other parties thereto, the Company assumed the 2019 Novosteo, Inc. Equity Incentive Plan (the "2019 Novosteo Plan"). The 2019 Novosteo Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Novosteo legacy employees. On the closing date, each outstanding Novosteo stock option granted under Novosteo’s equity compensation plans was converted into a corresponding stock option with the number of shares underlying such option and the applicable exercise price adjusted based on the exchange ratio of 0.0911. Each such converted stock option continues to be subject to substantially the same terms and conditions as applied to the corresponding Novosteo stock option prior to the Acquisition. The maximum aggregate number of shares that may be issued under the 2019 Novosteo Plan is 544,985 shares of the Company’s common stock.

The 2019 Novosteo Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the 2019 Novosteo Plan as required by applicable law or listing requirements. Unless sooner terminated by the Board of Directors, the 2019 Novosteo Plan will automatically terminate on May 20, 2029.

Stock options under the 2019 Novosteo Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10% of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110% of the fair value of the underlying common stock. Stock options granted to employees and non-employees generally have a maximum term of ten years and vest over four years from the vesting commencement date, of which 25% vest on the one-year anniversary of the vesting commencement date, and 75% vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the termination date or expiration of the option, whichever is earlier.

As of March 31, 2025, the Company had 246,797 shares available for future issuance under the 2019 Novosteo Plan.

Activity for service-based stock options under the 2019 Novosteo Plan is as follows:


	Number of Options and Unvested Shares	Weighted Average Exercise Price		Weighted average remaining contractual life (years)	Aggregate intrinsic value
					(In thousands)
Balance as of December 31, 2024	163,839	$	0.55	7.23	$	216
Options granted	—	—		—	—
Options exercised	—	—		—	—
Options cancelled / forfeited	—	—		—	—
Balance as of March 31, 2025	163,839	$	0.55	6.98	$	128
Options vested and expected to vest as of March 31, 2025	163,839	0.55		6.98	128
Options exercisable as of March 31, 2025	86,229	$	0.55	6.98	$	67

For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $49 thousand and $49 thousand, respectively, related to options granted to employees and non-employees for the 2019 Novosteo Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and

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comprehensive loss for stock-based compensation arrangements. As of March 31, 2025, total unamortized employee stock-based compensation was $0.2 million, which is expected to be recognized over the remaining estimated vesting period of 0.98 years.

Restricted Stock Awards


	Restricted Stock Awards Outstanding
	Number of Shares	Weighted Average Grant Date Fair Value
Unvested - December 31, 2024	78,417	$	3.30
RSAs granted	—	—
RSAs vested	(24,336)	3.30
RSAs cancelled	—	—
Unvested - March 31, 2025	54,081	$	3.30

For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $79 thousands and $80 thousands, respectively, related to restricted stock awards. The compensation expense is allocated on a departmental basis, based on the classification of the award holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive loss for stock-based compensation arrangements. The fair value of vested restricted stock awards was $0.1 million and $0.1 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, total unamortized employee stock-based compensation was $0.2 million, which is expected to be recognized over the remaining estimated vesting period of 0.50 years.

2022 Inducement Plan

On May 9, 2022, the Company's Board of Directors approved 4,000,000 shares of common stock that may be offered or issued under the Quince Therapeutics, Inc. 2022 Inducement Plan (the "2022 Inducement Plan"). The 2022 Inducement Plan was adopted by the independent members of the Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules (“Nasdaq Rule 5635(c)(4)”). In accordance with Nasdaq Rule 5635(c)(4), awards under those plans may only be made to an employee who has not previously been an employee or member of the Board of Directors or of any board of directors of any parent or subsidiary of the Company, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The terms and conditions of the 2022 Inducement Plan are substantially similar to those of the Quince 2019 Plan.

Options under the 2022 Inducement Plan may be granted for periods of up to 10 years at prices no less than 100% of the fair market value of the shares on the date of grant. Options granted to employees may have different performance goals or other vesting provisions (including continued employment) in accordance with the applicable award agreement. Unless an employee's termination service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the date of termination or expiration of the option, whichever is earlier.

As of March 31, 2025, the Company had 1,666,694 shares available for future issuance under the 2022 Inducement Plan.

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Activity for service-based stock options under the 2022 Inducement Plan is as follows:


	Number of Options and Unvested Shares	Weighted Average Exercise Price		Weighted average remaining contractual life (years)	Aggregate intrinsic value
					(In thousands)
Balance as of December 31, 2024	2,333,306	$	2.98	7.39	—
Options granted	—	—		—	—
Options exercised	—	—		—	—
Options cancelled / forfeited	—	—		—	—
Balance as of March 31, 2025	2,333,306	$	2.98	7.15	—
Options vested and expected to vest as of March 31, 2025	2,333,306	2.98		7.15	—
Options exercisable as of March 31, 2025	1,652,758	$	2.98	7.15	—

For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $0.3 million and $0.3 million, respectively, related to options granted to employees for the 2022 Inducement Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive for stock-based compensation arrangements. As of March 31, 2025, total unamortized employee stock-based compensation was $1.5 million, which is expected to be recognized over the remaining estimated vesting period of 1.14 years.

Stock-Based Compensation Expense

The following table summarizes employee and non-employee stock-based compensation expense for the three months ended March 31, 2025 and 2024 and the allocation within the consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
		2025		2024
General and administrative expense		$	951	$	1,168
Research and development expense		435		106
Total stock-based compensation		$	1,386	$	1,274

Note 10. Income Taxes

The Company has a history of losses and expects to incur a loss for 2025. The Company maintains a full valuation allowance against its net deferred tax assets as the Company believes it is not more likely than not that the benefit will be realized. The primary difference between the effective tax rate and the statutory tax rate relates to the change in valuation allowance.

The Company recorded $47 thousand of tax expense for the three months ended March 31, 2025 primarily related to foreign withholding tax and interest on the uncertain tax position liability.

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Note 11. Net Loss Per Share

Basic and diluted net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period, as follows (net loss in thousands):


	Three Months Ended March 31,
		2025		2024
Numerator:
Net loss		$	(15,030)	$	(11,149)
Denominator:
Weighted average common shares outstanding		43,941,185		43,010,212
Net loss per share, basic and diluted		$	(0.34)	$	(0.26)

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive:


	March 31,
	2025	2024
Stock options issued and outstanding	12,836,323	9,912,385

Restricted stock awards	54,081	151,426
Total	12,890,404	10,063,811

Note 12. Intangible Assets

EryDel Intangible Assets

The following table provides details of the carrying amount of the Company's indefinite-lived intangible asset (in thousands):


	(in thousands)
In-process research and development:


Balance as of December 31, 2024	$	59,619

Foreign currency translation adjustments	2,309
Balance as of March 31, 2025	$	61,928

The following table provides details of the carrying amount of the Company's finite-lived intangible asset (in thousands, except useful life):


		As of March 31, 2025						As of December 31, 2024
	Useful life	Cost		Accumulated Amortization		Net Carrying Value		Cost		Accumulated Amortization		Net Carrying Value
Finite life intangible assets:
Trade name	21 years	$	460	$	(32)	$	428	$	460	$	(26)	$	434

Foreign currency translation adjustments						9						(8)
Total						$	437					$	426

The Company performs annual impairment reviews of its intangible assets during the fourth fiscal quarter or more frequently if appropriate. As of March 31, 2025, the Company did not incur any impairment losses related to its EryDel intangible assets. The remaining amortization period for the trade name is 19.6 years as of March 31, 2025.

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Note 13. Segment Information

The Company manages its business activities on a consolidated basis and operates as one operating and reportable segment, which is the business of developing and commercializing the Company's proprietary AIDE technology platform. The key factors used to identify the reportable segments are the organization of its business and alignment of the Company's internal operations and the nature of our AIDE technology. Operating segments are defined as components of an enterprise for which discrete financial information is available and is evaluated regularly by the CODM, in deciding how to allocate resources and assess performance.

The Company’s Chief Executive Officer, who is the CODM, reviews financial information on a consolidated basis for purposes of allocating and evaluating financial performance. The CODM evaluates the Company’s performance and resource allocation by analyzing consolidated net loss, as reported on the consolidated statement of operations. This assessment involves comparing net loss across prior periods, the Company's forecast, and total expenditures related to eDSP product development and the ongoing Phase 3 NEAT clinical trial.

The measure of segment assets reviewed by the CODM is the consolidated total assets, as reported on the consolidated balance sheet. The following table presents the measure of segment assets regularly provided to the CODM (in thousands):


	March 31, 2025	December 31, 2024
Cash, cash equivalents and short-term investments	31,599	40,784

The following table presents financial information, including significant segment expenses, which are regularly provided to the CODM and included within consolidated net loss (in thousands):


	Three Months Ended March 31,
	2025		2024
Research and development:
Personnel	$	1,320	$	787
Stock-based compensation	435		106
Clinical and contract manufacturing	6,727		3,322
Other	(337)		(513)
General and administrative:
Personnel	1,727		1,426
Stock-based compensation	951		1,168
Consulting and professional costs	1,466		1,598
Other	645		779
Fair value adjustment for contingent consideration	1,924		2,545
Total operating expenses	14,858		11,218
Loss from operations	(14,858)		(11,218)
Other segment items	(172)		69
Net loss	$	(15,030)	$	(11,149)

Other segment items within net loss include fair value adjustment for long-term debt, interest income, other expense, net, and income tax (expense) benefit.

The Company’s long-lived assets consist primarily of property, plant and equipment, net, and operating lease right-of-use assets are maintained in Italy. As of March 31, 2025 and December 31, 2024, no individual country other than the U.S. accounted for 10% or more of these assets.

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Note 14. Subsequent Events.

During April and through May 12, 2025, the Company utilized its ATM program to raise net proceeds of approximately $2.9 million by issuing 2,766,549 shares of common stock. The Controlled Equity OfferingSM Sales Agreement was entered into on December 18, 2024, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC, or the Agents, relating to the sale of shares of the Company's common stock, par value $0.001 per share. In accordance with the terms of this agreement, the Company may offer and sell up to $21.9 million of shares of common stock.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes, included in “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions, that are based on the beliefs of our management. Our actual results could differ materially from those discussed in 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 and our Annual Report on Form 10-K. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “Quince,” “we,” “us,” and “our” refer to Quince Therapeutics, Inc. and its consolidated subsidiaries.

Overview

We are a late-stage biotechnology company dedicated to unlocking the power of a patient’s own biology for the treatment of rare diseases. Our proprietary AIDE technology is an innovative drug/device combination platform that uses an automated process to encapsulate a drug into a patient’s own red blood cells. Red blood cells have several characteristics that make them an excellent vehicle for drug delivery potential including better safety and tolerability, enhanced tissue distribution, reduced immunogenicity, and prolongation of circulating half-life. Our AIDE technology is designed to harness many of these benefits to allow for new and improved therapeutic options for patients living with high unmet medical needs. eDSP is the first product in development that leverages our AIDE technology and is composed of DSP encapsulated in autologous red blood cells targeted to treat a rare pediatric neurodegenerative disease, A-T. DSP is a corticosteroid well-described for its anti-inflammatory properties, but is also coupled with serious adverse events, including adrenal suppression. eDSP is designed to maintain the well-described efficacy of DSP while reducing or eliminating the significant adverse events that accompany chronic corticosteroid treatment. The altered biodistribution, pharmacokinetics, and pharmacodynamics of eDSP enabled by autologous red blood cells may, therefore, improve the safety profile, and maintain or increase the desired therapeutic effect of DSP.

Currently, there are no approved treatments for A-T and the global market, based on our internal estimates and assumptions, represents a more than $1 billion peak commercial opportunity. We believe this makes eDSP an ideal lead asset to demonstrate the clinical and commercial potential of our AIDE technology.

We intend to focus our development expertise and financial resources toward advancing a Phase 3 NEAT clinical trial, which is an international multicenter, randomized, double-blind, placebo-controlled study to evaluate the neurological effects of eDSP on patients with A-T. As of May 13, 2025, 63 participants have been enrolled in the Phase 3 NEAT clinical trial of eDSP, including 56 participants in the six to nine year-old primary analysis population and seven participants aged 10 years or older. 30 participants have entered the OLE study.

Absent additional funding to extend our cash runway beyond the first quarter of 2026, we are contemplating an early conclusion of enrollment for our pivotal Phase 3 NEAT clinical trial by the end of June 2025 to align the reporting of topline results with the our existing cash runway in early 2026. Several factors contribute to this potential shift in strategy, including slower than anticipated enrollment, uncertain macroeconomic environment, challenging academic site environment, and an operationally well-executed study with limited withdrawals and low rates of missing data and procedural deviations. The combination of these factors leads us to now consider concluding enrollment prior to reaching the pre-specified target of 86 patients in the primary analysis population. The potential to conclude enrollment at the end of June 2025 is expected to provide an approximate 80% power to determine a statistically significant difference in the primary endpoint. Additionally, this timeline would allow the company to report topline results by early 2026 while maintaining a positive cash balance. If additional funding is secured in the near term, we intend to continue enrollment as previously planned targeting 86 patients with A-T ages six to nine years old in the primary analysis population. Assuming positive results from the NEAT study, we plan to submit applications for approval in the U.S. and Europe in the second half of 2026.

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Financial Overview

Our strategic focus is to apply our resources and capital toward the advancement of our proprietary AIDE technology platform and Phase 3 lead asset, eDSP, targeted to treat A-T.

Components of Results of Operations

Operating Expenses

Our operating expenses since inception have consisted primarily of R&D activities and G&A costs.

Research and Development Expenses

Our research and development expenses consist of expenses incurred in connection with the research and development of our research programs. These expenses include payroll and personnel expenses, including stock-based compensation, for our research and product development employees, laboratory supplies, product licenses, consulting costs, contract research, regulatory, quality assurance, preclinical and clinical expenses, allocated rent, facilities costs and depreciation. We expense both internal and external research and development costs as they are incurred. Non-refundable advance payments and deposits for services that will be used or rendered for future research and development activities are recorded as prepaid expenses and recognized as an expense as the related services are performed.

We expect our research and development expenses to remain in the current levels as we continue our Phase 3 NEAT clinical trial and expand into new indications, including Phase 2 study in DMD.

General and Administrative

General and administrative expenses consist principally of personnel-related costs, including payroll and stock-based compensation, for personnel in executive, finance, human resources, business and corporate development, and other administrative functions, professional fees for legal, consulting, insurance and accounting services, allocated rent and other facilities costs, depreciation, and other general operating expenses not otherwise classified as research and development expenses.

Fair Value Adjustment for Contingent Consideration

We record fair value adjustment for contingent consideration primarily due to the expected timing of achieving various milestones, and the passage of time related to the contingent consideration earnout resulting from the EryDel Acquisition. Changes in the fair value of the contingent consideration obligations may result from changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations.

Fair Value Adjustment for Long-term Debt

We record fair value adjustment for long-term debt primarily due to the passage of time and the interest accrued for the loan with the EIB.

Interest Income

Interest income consists primarily of interest earned on our short-term and long-term investments portfolio.

Other Expense, net

Other income (expense), net consists primarily of the effects of foreign currency exchange rates.

Critical Accounting Estimates

For a description of our significant accounting policies, see Note 2 to our consolidated financial statements.

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Of our policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of subjective and complex judgment, involving critical accounting estimates and assumptions impacting our consolidated financial statements:

•Research and Development Expenses

•Identifiable Intangible Assets

•Contingent Consideration

•Long-term Debt

For a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements, see the Critical Accounting Estimates section within MD&A of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 24, 2025.

Results of Operations

Comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024

The following sets forth our results of operations for the three months ended March 31, 2025 and 2024 (in thousands, except for percentages):


	Three Months Ended March 31,				Change
	2025		2024		$		%
Operating expenses:
Research and development	$	8,145	$	3,702	$	4,443	120	%
General and administrative	4,789		4,971		(182)		(4)	%

Fair value adjustment for contingent consideration	1,924		2,545		(621)		(24)	%
Total operating expenses	14,858		11,218		3,640		32	%
Loss from operations	(14,858)		(11,218)		(3,640)		32	%
Fair value adjustment for long-term debt	(444)		(388)		(56)		14	%
Interest income	406		887		(481)		(54)	%
Other expense, net	(87)		(399)		312		(78)	%
Net loss before provision for income taxes	(14,983)		(11,118)		(3,865)		35	%
Income tax expense	(47)		(31)		(16)		52	%
Net loss	$	(15,030)	$	(11,149)	$	(3,881)	35	%

Research and Development Expenses (in thousands, except for percentages):


	Three Months Ended March 31,				Change
	2025		2024		$		%
Direct research and development expenses:
eDSP	$	6,228	$	2,797	$	3,431	123	%
Other direct research costs	79		(110)		189		(172)	%
Indirect research and development expenses:
Personnel related (including stock-based compensation)	1,755		893		862		97	%
Facilities and other research and development expenses	83		122		(39)		(32)	%
Total research and development expenses	$	8,145	$	3,702	$	4,443	120	%

Research and development expenses were $8.1 million for the three months ended March 31, 2025, compared to $3.7 million for the three months ended March 31, 2024, an increase of $4.4 million.

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The costs for eDSP development increased by $3.4 million compared to the same period from the prior year due to the ramping up and continuation costs related to our Phase 3 NEAT clinical trial and OLE. This increase was primarily due to clinical trial costs of $6.2 million and $0.1 million in manufacturing costs.

Our personnel related costs increased by $0.9 million during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, mainly as a result of incurring a $0.4 million severance costs and $0.3 million in allocated stock-based compensation costs.

Facilities and other research and development expenses decreased by $39 thousand for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 primarily due to a decrease in storage and facilities expenses.

General and Administrative Expenses

General and administrative expenses decreased by $0.2 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The change in general and administrative expenses is primarily due to a decrease of $0.1 million in consulting and professional expenses and $0.2 million in other professional and administrative expenses. These decreases were partially offset by an increase of $0.1 million in personnel-related expenses.

Fair Value Adjustment for Contingent Consideration

For the three months ended March 31, 2025, we recorded a fair value adjustment for contingent consideration which resulted in a $1.9 million increase primarily due to the passage of time. We owe no further payments to EryDel shareholders for development-related milestones.

Fair Value Adjustment for Long-term Debt

For the three months ended March 31, 2025, we recorded a fair value adjustment for long-term debt which resulted in a $0.4 million charge primarily due to the passage of time and the interest accrued and paid for the loan with the EIB.

Interest Income

Interest income decreased by $0.5 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The change was due to decreased yields on our investment portfolio and decreased average balances.

Other Expense, net

Other expense, net decreased by $0.3 million for the three months ended March 31, 2025 primarily due to the effects resulting from changes in foreign exchange rates.

Income Tax

We recorded tax expense of $47 thousand for the three months ended March 31, 2025 and $31 thousand for the three months ended March 31, 2024. Tax expense is primarily driven by foreign withholding tax, interest on uncertain tax position liability and net of tax benefit from decrease in EryDel's deferred tax liabilities.

Liquidity and Capital Resources

We have not generated any revenue and we have never been profitable. To date, we have financed our operations primarily through the issuance and sale of convertible promissory notes and redeemable convertible preferred stock and common stock. From inception through March 31, 2025, we received net proceeds of approximately $304.2 million from the issuance of redeemable convertible preferred stock, convertible promissory notes and common stock.

We have incurred net losses since the commencement of our operations. As of March 31, 2025, we had an accumulated deficit of $391.5 million. We incurred a net loss of $15.0 million in the three months ended March 31, 2025. We do not expect to generate product revenue unless and until we obtain marketing approval for and commercialize a drug candidate, and we cannot assure you that we will ever generate significant revenue or profits.

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We evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. We have incurred losses and generated negative operating cash flows since our inception and anticipate that we will continue to incur losses for at least the next several years. The transition to profitability is dependent upon the successful development, approval and commercialization of our product candidate, and the achievement of a level of revenues adequate to support our cost structure. As of March 31, 2025, we had cash, cash equivalents and short-term investments of $31.6 million. Based on our current operating plan, we believe that our cash and cash equivalents balance as of March 31, 2025 will not be sufficient to fund operations and capital expenditures for the twelve months following the filing of this Quarterly Report on Form 10-Q, and we will need to obtain additional funding. We intend to obtain additional funding through available financing sources which may include additional public offerings of common stock, private financing of debt or equity, and/or the pursuit of strategic partnerships, licensing arrangements or collaborations. Management’s belief with respect to our ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, we may need to seek additional funding sooner than would otherwise be expected. There can be no assurance that we will be able to obtain additional funding on acceptable terms, if at all. If we are unable to obtain sufficient funding, we may be required to delay development efforts, limit activities and reduce research and development costs, which could adversely affect our business prospects. Because of the uncertainty in securing additional funding and the insufficient amount of cash and cash equivalent resources as of March 31, 2025, we concluded that substantial doubt exists with respect to our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.

Our cash, cash equivalents, and marketable debt securities are held in a variety of deposit accounts, interest-bearing accounts, U.S government securities, debt securities in government-sponsored entities, and money market funds. Cash in excess of immediate requirements is invested with a view toward liquidity and capital preservation, and we seek to minimize the potential effects of concentration and credit risk. Our cash equivalents and short-term investments are held in money market funds, certificate of deposits, and government agency obligations.

While we currently believe that our existing cash, cash equivalents and investments will be sufficient to fund our planned operations through Phase 3 NEAT topline results expected in early 2026, that assumption does not include any costs or cash expenditures associated with initiating additional programs.

Capital Resources

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to eDSP, the initiation and continuation of the Phase 3 NEAT clinical trial and OLE, and general and administrative 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 expect that we will require additional capital to develop our drug candidates and fund operations for the foreseeable future. We may seek to raise capital through private or public equity or debt financings, collaborative or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:

•the progress, costs, trial design, results of and timing of our Phase 3 NEAT clinical trial and any potential future trials;

•the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals;

•payment of future milestones to EryDel shareholders and payments to the EIB in respect of obligations under the EIB Loan;

•the number and characteristics of drug candidates that we pursue;

•our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

•our need and ability to retain management and hire scientific and clinical personnel;

•the effect of competing drugs and drug candidates and other market developments;

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•our need to implement additional internal systems and infrastructure, including financial and reporting systems; and

•the economic and other terms, timing of and success of any collaboration, licensing or other arrangements into which we may enter in the future.

If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to others rights to our drug candidates in certain territories or indications that we would prefer to develop and commercialize ourselves.

Financing

Equity Financing

On December 18, 2024, the Company entered into a Controlled Equity OfferingSM Sales Agreement, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC, or the Agents, relating to the sale of shares of our common stock, par value $0.001 per share. In accordance with the terms of this agreement, the Company may offer and sell up to $21.9 million of shares of common stock.

During the three months ended March 31, 2025, we did not sell any shares of common stock pursuant to the Sales Agreement. During April and through May 12, 2025, the Company utilized its ATM program to raise net proceeds of approximately $2.9 million by issuing 2,766,549 shares of common stock.

In connection with the acquisition of EryDel on October 20, 2023, we guaranteed the EIB Loan. The EIB Loan was amended and restated as of the acquisition date. The EIB Loan provides for maximum borrowings of 30.0 million euro through four tranches; tranche A, 3.0 million euro; tranche B, 7.0 million euro; tranche C, 10.0 million euro; and tranche D, 10.0 million euro. Each tranche is subject to conditions precedent related to our business and capitalization. As of March 31, 2025, only tranches A and B have been drawn. All amounts due under tranche A and B are payable on their maturity date of August 2026. Tranche C and D are payable in equal installments of principal together with all amounts outstanding under the tranches on the repayment dates specified in the relevant disbursement offer. The first repayment date of tranche C shall fall not earlier than twelve months from the disbursement date of such tranche. The last repayment date of tranche C and tranche D shall fall not later than 5 years from the disbursement date of tranche C and tranche D, respectively. The EIB Loan bears interest at fixed rates for each tranche and both principal and interest are payable on the maturity date for each tranche (with the exception of 2% cash interest which shall accrue and be payable quarterly during fiscal year 2025 pursuant to the terms of the Amendment, which shall correspondingly reduce the deferred interest rate accruing during such period). The fixed rates range from 7.0% to 9.0% per annum. As of March 31, 2025, principal of 10.0 million euros ($10.8 million) was outstanding on the EIB Loan and it is recorded as Long-term debt on the consolidated balance sheet at fair value with imputed interest of 9.0% included.

We may voluntarily prepay, in whole or in part with a prepayment premium. In the event of an occurrence of an event of default, a change in control and certain other prepayment events, as specified in the Debt Agreement, we will be required to prepay the outstanding EIB Loan together with an additional remuneration buyout fee, as specified in the Debt Agreement. The Debt Agreement includes a provision for additional remuneration to be paid in addition to interest. The amount of additional remuneration to be paid is equal to 2.5% of revenue up to 125.0 million euros, plus 1.85% of revenue between 125.0 and 250.0 million euros, plus 1.0% of revenue in excess of 250.0 million euros, multiplied by a varying percentage based on how many tranches have been drawn. The varying percentage is equal to 30.0% in the event tranche A has been drawn, 50.0% in the event tranche A and B have been drawn, 80.0% in the event tranche A, B and C have been drawn, and 100.0% in the event all four tranches have been drawn. The additional remuneration is payable for seven years, during the period January 1, 2026, through December 31, 2032. In the event of an occurrence of an event of default or prepayment, we may be required to pay an additional remuneration buyout fee.

The Debt Agreement requires us to maintain a minimum cash balance of 14.65 million euros ($15.8 million) until the outstanding obligations under the Debt Agreement, together with accrued interest and all other amounts accrued or outstanding under the agreement, is repaid in full (the “Minimum Cash Covenant”). In November 2024, we entered into an

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amendment (the “Amendment”) of the Debt Agreement with EIB which waives the Minimum Cash Covenant from January 1, 2025, and up to the earlier of December 31, 2025, or the date the Minimum Cash Covenant is restored (such period, the “Waiver Period”). Under the terms of the Amendment, we agreed to amendments requiring monthly reporting of cash balances and additional limitations on certain permitted acquisitions. Additionally, solely during the waiver period, 2% cash interest on the outstanding principal amounts of tranches A and B are payable on March 31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025, reducing the total deferred interest on tranches A and B to 7% for the duration of the Waiver Period, and a one-time fee of 20,000 euros in connection with the Amendment. As of March 31, 2025, we have been in compliance with all covenants under the Debt Agreement.

Cash Flows

The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands):


	Three Months Ended March 31,
	2025		2024
Net cash (used in) provided by:
Operating activities	$	(9,601)	$	(8,353)
Investing activities	10,898		8,914
Financing activities	87		190
Effect of exchange rate changes on cash	175		310
Net increase in cash and cash equivalents	$	1,559	$	1,061

Operating Activities

Net cash used in operating activities was $9.6 million for the three months ended March 31, 2025. Cash used in operating activities was primarily due to our net loss of $15.0 million for the period, adjusted for $3.4 million of non-cash items, including $1.9 million change in the fair value of contingent consideration liabilities, $1.4 million in stock-based compensation, $0.4 million change in the fair value of the EIB Loan and a net decrease in our operating assets of $1.1 million, offset by a net increase in our accounts payable, and accrued expenses and other current liabilities of $0.9 million.

Net cash used in operating activities was $8.4 million for the three months ended March 31, 2024. Cash used in operating activities was primarily due to our net loss of $11.1 million for the period, adjusted for $3.6 million of non-cash items, including $2.5 million change in the fair value of contingent consideration liabilities, $1.3 million in stock-based compensation, and a net decrease in accounts payable, accrued expenses and other current liabilities of $0.3 million, partially offset by increases in our current assets of $0.5 million.

Investing Activities

Cash provided by investing activities was $10.9 million for the three months ended March 31, 2025, primarily related to the maturities of short-term investments of $13.0 million, and the purchase of investments of $2.0 million.

Cash provided by investing activities was $8.9 million in the three months ended March 31, 2024, primarily related to the maturities of short-term investments of $48.2 million, and the purchase of investments of $39.3 million.

Financing Activities

Cash used in financing activities was $0.1 million for the three months ended March 31, 2025, which consisted of net proceeds from the exercise of stock options in the period.

Cash provided by financing activities was $0.2 million in the three months ended March 31, 2024, which consisted of net proceeds from the exercise of stock options in the period.

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Contractual Obligations and Commitments

Our contractual obligations primarily consist of our obligations under non-cancellable operating leases and other purchase obligations.

We enter into contracts in the normal course of business with third party contract organizations for clinical trials, non-clinical studies and testing, manufacturing, and other services and products for operating purposes. The amount and timing of the payments under these contracts varies based upon the timing of the services. We have recorded accrued expense of approximately $5.3 million in our condensed consolidated balance sheet for expenditures incurred by these vendors as of March 31, 2025. We have approximately $22.8 million in cancellable future operating expense commitments based on existing contracts as of March 31, 2025. These obligations will be satisfied in the normal course of business, but generally no longer than 12 months. As of March 31, 2025, the fair value of the EIB Loan is $15.3 million and it is recorded as long-term debt on the condensed consolidated balance sheet at fair value. As of March 31, 2025, the fair value of long-term contingent consideration on our books for the earnout related to the EryDel Acquisition is $58.6 million, refer to Note 3 to the condensed consolidated financial statements for further details.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, communicated to our management to allow timely decisions regarding required disclosure, summarized and reported within the time periods specified in the SEC's rules and forms. Any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including the Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2025. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of business. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition or future results. We may be unable for many reasons, including those that are beyond our control, to implement our business strategy successfully. The occurrence of any single risk or any combination of risks could materially and adversely affect our business, financial condition, results of operations, cash flows and the trading price of our common stock. As of the date of this report there has been no material change in any of the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits.

The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, timely and successful completion which Exhibit Index is incorporated herein by reference.

Exhibit

Number

Description

Incorporated by Reference

Form

Filing Date

Number

Filed

Herewith

3.1

Amended and Restated Certificate of Incorporation

8-K

5/13/2019

001-38890

3.2

Certificate of Amendment to the registrant’s Certificate of Incorporation, effective August 1, 2022

8-K

8/1/2022

001-38890

3.3

Amended and Restated Bylaws

8-K

8/1/2022

001-38890

31.1

Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Exchange Act

31.2

Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Exchange Act

32.1#

Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2#

Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101)

# In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Quince Therapeutics, Inc.

Date: May 13, 2025	By:	/s/ Dirk Thye
		Dirk Thye
		Chief Executive Officer and Chief Medical Officer
		(Principal Executive Officer)

Date: May 13, 2025	By:	/s/ Brendan Hannah
		Brendan Hannah
		Chief Business Officer, Chief Operating Officer, and Chief Compliance Officer
		(Principal Financial Officer)

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SEC Form 10-Q filed by Quince Therapeutics Inc.

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