# BioAge Labs, Inc. (BIOA) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from BioAge Labs, Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1709941/000095017025042759/bioa-20241231.htm
Accession: 0000950170-25-042759
Filing date: 2025-03-20
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/BIOA/
All MD&A years: /company/BIOA/mda/
Next year: /company/BIOA/mda/fy2025/ (FY 2025)

Item 7. 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 in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report and with our audited financial statements and the notes thereto for the year ended December 31, 2023 included in a final prospectus dated September 25, 2024 filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended. This discussion and analysis and other parts of this Annual Report contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” and elsewhere in this Annual Report. You should carefully read the section titled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Overview

We are a biopharmaceutical company developing therapeutic product candidates for metabolic diseases, such as obesity, by targeting the biology of human aging. Our technology platform and differentiated human datasets enable us to identify promising targets based on insights into molecular changes that drive aging. Our primary focus is metabolic disease, one of the greatest global healthcare challenges.

In January 2025, we terminated development of azelaprag, an orally available small molecule agonist of APJ, for obesity and other chronic diseases. The decision followed observations of liver transaminitis without clinically significant symptoms, and without clear dose dependence, in some patients in the azelaprag arms of the STRIDES Phase 2 clinical trial for obesity. However, we believe the results of the azelaprag Phase 1 trials demonstrate the potential of apelin receptor APJ agonists; therefore we are advancing structurally distinct, orally available apelin receptor APJ agonists as a novel exercise mimetic approach for the treatment of obesity.

Following that announcement, our lead program is now BGE-102, a structurally novel, orally available small molecule NLRP3 inhibitor with high potency and brain penetration. In preclinical models, NLRP3 inhibition has demonstrated weight loss both as a monotherapy and in combination with a GLP-1R agonist. We are initially developing BGE-102 for obesity since NLRP3-driven inflammation in the brain has been shown to dyregulate energy intake. We intend to submit an IND in mid-2025 and, if cleared, initiate a Phase 1 SAD / MAD clinical trial in the second half of 2025. Phase 1 Single Ascending Dose (SAD)/ Multiple Ascending Dose (MAD) data are anticipated in the second half of 2025 and first half of 2026, respectively. We intend to initiate an obesity proof-of-concept clinical trial in the first half of 2026, with data anticipated in the second half of 2026. We are also developing novel apelin receptor APJ agonists for obesity. In preclinical obesity models, APJ agonism has demonstrated the ability to more than double the weight loss induced by a GLP-1R agonist while also restoring healthy body composition and improving muscle function. We believe these programs support our therapeutic goal of developing an all-oral combination product for obesity.

We are advancing several additional platform targets, currently in molecule discovery stage in collaboration with Lilly, which we believe have the potential to transform treatment of metabolic disease. We plan to expand this pipeline over time, both internally and through our target discovery collaboration with Novartis, and potentially through additional partnerships with pharmaceutical companies.

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Our portfolio of product candidates and ongoing collaborations are summarized in the figure below:

Since our inception in 2015, we have devoted substantially all of our efforts to organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, acquiring or discovering product candidates, research and development activities for our product candidates, establishing arrangements with third parties for the manufacture of our product candidates and component materials, and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales. To date, we have financed our operations primarily with proceeds from sales of shares of our redeemable convertible preferred stock. From inception, through December 31, 2024, we have raised aggregate gross proceeds of approximately $559.2 million through the sale and issuance of our common stock, redeemable convertible preferred stock and convertible promissory notes. Our primary uses of capital are, and we expect will continue to be, research and development services, compensation and related expenses, and general overhead costs.

We have incurred significant operating losses and negative cash flows since inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of any future product candidates. Our net losses were $71.1 million and $63.9 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $252.8 million. We expect to continue to incur net operating losses for the foreseeable future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will increase substantially in connection with our ongoing activities, particularly if, and as, we:

•
continue to progress the development of BGE-102;

•
discover and develop any future product candidates;

•
obtain, expand, maintain, defend and enforce our intellectual property portfolio;

•
manufacture, or have manufactured, preclinical, clinical and potentially commercial supplies of any future product candidates;

•
seek regulatory approvals for any future product candidates that successfully complete clinical trials, if any;

•
establish a sales, marketing and distribution infrastructure to commercialize BGE-102 or any future product candidates, if approved;

•
seek to identify, evaluate and establish licenses, collaborations or other strategic partnerships;

•
hire additional clinical, scientific and management personnel, as well as administrative staff to support the growth of our business;

•
add operational, financial and management information systems and personnel; and

•
incur additional legal, accounting and other costs associated with operating as a public company.

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Our net losses may fluctuate significantly from period to period, depending on the timing of factors above.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for BGE-102 or a future product candidate. In addition, if we obtain regulatory approval for BGE-102 or a future product candidate and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, which could include licenses, collaborations, or other strategic partnerships. Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such stockholders. Debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business. If we raise additional funds through licenses, collaborations, or other strategic partnerships with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. There is no assurance that we will ever be profitable or generate positive cash flow from operating activities. Our ability to raise additional funds may also be adversely impacted by potential worsening global macroeconomic, industry and market conditions in either domestic or international markets, as well as economic conditions specifically affecting industries in which we operate, including but not limited to, actual or perceived instability in the banking industry, potential uncertainty with respect to the U.S. federal debt ceiling and budget and potential government shutdowns related thereto, labor shortages, supply chain disruptions, potential recession, inflation and changing interest rates and political instability and military hostilities in multiple geographies, such as the conflicts in Ukraine, the Middle East and tensions between China and Taiwan.

Because of the numerous risks and uncertainties associated with development of product candidates, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

We oversee and manage third party Contract Development and Manufacturing Organizations (CDMOs) to support development and manufacture of our future product candidates. We expect to enter into commercial supply agreements with commercial manufacturers prior to any potential regulatory approval of any future product candidates. We believe our current manufacturers are able to supply the upcoming preclinical and clinical trials of future product candidates. Additional CDMOs may be on-boarded at later stages of clinical and commercial development for future product candidates.

As of December 31, 2024, we had $354.3 million in cash and cash equivalents. Based on our current operating plan, we estimate that our existing cash and cash equivalents as of the date of this Annual Report will be sufficient to fund our operations and capital expenses through 2029. However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See the section titled "Liquidity and Capital Resources" included elsewhere in this Annual Report.

Collaboration Agreement with Novartis Pharma AG

On December 16, 2024 we entered into a collaboration agreement with Novartis to identify and validate novel therapeutic drug targets by investigating the biological mechanisms that drive diseases related to aging and mediate the beneficial effects of physical exercise (the “Novartis Agreement”).

Under the terms of the Novartis Agreement, we are obligated to perform additional analyses on our longitudinal human aging cohort datasets to expand data included in our discovery platform, and perform other activities to enable the identification and validation of novel therapeutic drug targets.

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In consideration for the rights granted under the Novartis Agreement, we will receive upfront payments and research funding of up to $20.0 million, and up to $530.0 million in future long-term research, development, and commercial milestones. We and Novartis each have the right to advance novel targets discovered under the Novartis Agreement and are each eligible to receive reciprocal success milestones and receive tiered royalties on net sales of licensed products.

No revenue was recognized under the Novartis Agreement in the years ended December 31, 2024 or 2023. Deferred revenue related to the Novartis Agreement amounted to $12.5 million as of December 31, 2024, of which $7.8 million was included in current liabilities within the consolidated balance sheets.

Components of Our Results of Operations

Revenue

We have not generated any product revenue since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all. If our development efforts for BGE-102 or other product candidates that we may develop in the future are successful and result in marketing approval, we may generate revenue from product sales.

We expect to recognize revenue in the future from the Novartis Agreement, which may include amounts related to upfront payments, milestone payments, and research and development funding.

Operating Expenses

Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.

Research and Development Expense

Research and development expenses account for a significant portion of our operating expenses and consist primarily of costs incurred in connection with the discovery, preclinical development, clinical development and manufacturing of azelaprag and potential future product candidates, and include:

Direct Costs:

•
expenses incurred under agreements with contract research organizations (CROs) that are primarily engaged in the oversight and conduct of our clinical trials; CDMOs that are primarily engaged to provide drug substance and product for our clinical trials and preclinical studies, research and development programs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;

•
the cost of acquiring and manufacturing preclinical and clinical trial materials, including manufacturing registration and validation batches;

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costs of outside consultants, including their fees and related travel expenses;

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costs related to compliance with quality and regulatory requirements; and

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payments made under third-party licensing agreements.

Indirect Costs:

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personnel-related expenses including, salaries, bonuses, benefits, stock-based compensation expenses and other related costs for individuals involved in research and development activities; and

•
allocated facilities and other expenses not directly tied to a program.

We expense research and development costs as incurred. We recognize direct development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors or our estimate of the level of service that has been performed at each reporting date. Payments for these development activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid expenses or accrued expenses.

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A significant portion of our research and development costs to date have been third-party direct costs, which we track on an individual product candidate basis after a product candidate progresses to the clinic. However, our indirect costs are not directly tied to any one program and are deployed across our programs. As such, we do not track these costs on a specific program basis. We utilize third party contractors for our research and development activities and CDMOs for our manufacturing activities and we do not have our own manufacturing facilities.

Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase substantially for the foreseeable future as we progress BGE-102 or other NLRP3 inhibitors that we are developing for the treatment of obesity toward the submission of an IND application and into a Phase 1 clinical trial, continue to discover and develop additional product candidates, expand our headcount and costs related to our existing and potential future intellectual property licenses. Later stages of clinical development generally have higher development costs than those in earlier stages, primarily due to the increased size and duration of later-stage clinical trials. There are numerous factors associated with the successful development and commercialization of any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.

Our research and development expenses may vary significantly in the future based on factors, such as:

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the number and scope of preclinical and IND-enabling studies;

•
per patient trial costs;

•
the number of trials required for approval;

•
the number of sites included in the trials;

•
the countries in which the trials are conducted;

•
the length of time required to enroll eligible patients;

•
the number of patients that participate in the trials;

•
the drop-out or discontinuation rates of patients;

•
potential additional safety monitoring requested by regulatory agencies;

•
the duration of patient participation in the trials and follow-up;

•
the cost and timing of manufacturing our product candidates;

•
the phase of development of our product candidates;

•
the efficacy and safety profile of our product candidates;

•
the extent to which we establish additional collaboration or license agreements; and

•
whether we choose to partner any of our product candidates and the terms of such partnership.

Changes in the outcome of any of these variables with respect to the development of any future product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the U.S. Food and Drug Administration, European Medicines Agency or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any clinical trials following the applicable regulatory authority’s acceptance and clearance, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect. We may never obtain regulatory approval for any product candidates that we develop.

The successful development of any product candidates we may develop in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of any future product candidates we may develop. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of any future product candidate, if approved. This is due to the numerous risks and uncertainties associated with product development.

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General and Administrative Expense

General and administrative expenses consist primarily of personnel-related expenses, including salaries, bonuses, benefits, and stock-based compensation expenses for individuals in executive, finance, corporate, business development, and administrative functions. Other significant general and administrative expenses include legal fees relating to patent, intellectual property and corporate matters, and fees paid for accounting, consulting and other professional services, and allocated expenses for rent, insurance and other operating costs.

We expect that our general and administrative expenses will continue to increase in the foreseeable future as our business expands to support our continued research and development activities, including any future clinical trials. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses. We also anticipate increased expenses associated with being a public company, including costs for audit, legal, regulatory and tax-related services related to compliance with the rules and regulations of the SEC, listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums and investor relations costs. In addition, if we obtain regulatory approval for any product candidates we may develop in the future and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.

Other (Income) Expense, Net

Interest Expense

Interest expense consists of interest incurred on both our convertible promissory notes and term loan.

Interest and Other Income (Expense), Net

Interest and other income (expense), net primarily consist of interest income generated from interest bearing cash and cash equivalents.

Gain (Loss) from Changes in Fair Value of Warrants and Derivative Liabilities

Gain (loss) on changes in fair value consists of assessed changes in fair value of liabilities carried at fair value, including warrants to purchase our common stock and the embedded derivative liability associated with our convertible promissory notes.

Loss on Extinguishment of Convertible Promissory Notes

Loss on extinguishment of convertible promissory notes consists of the difference between the carrying value of our convertible promissory notes (including accrued interest) and related embedded derivative liability and the fair value of shares issued upon conversion of our convertible promissory notes into our Series D-1 Redeemable Convertible Preferred Stock in February 2024.

Income Taxes

Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each period or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized. As of December 31, 2024, we had U.S. federal and state net operating loss carryforwards of $104.4 million and $13.7 million, respectively, which expire at various dates beginning in 2035. These attributes may be subject to Section 382 limitation and we have not performed a formal assessment. As of December 31, 2024 and December 31, 2023, we have recorded a full valuation allowance against our deferred tax assets.

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Results of Operations

Comparison of the Years Ended December 31, 2024 and 2023

The following table summarizes our results of operations for each of the periods presented (in thousands, except percentages):

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2024","","","2023","","","$ Change","","","% Change"],["","","(unaudited)"],["Operating expenses:"],["Research and development","","$","59,036","","","$","33,886","","","$","25,150","","","","74","%"],["General and administrative","","","19,158","","","","14,514","","","","4,644","","","","32","%"],["Total operating expenses","","","78,194","","","","48,400","","","","29,794","","","","62","%"],["Loss from operations","","$","(78,194",")","","$","(48,400",")","","$","(29,794",")","","","62","%"],["Other income (expense), net:"],["Interest expense","","","(2,367",")","","","(7,794",")","","","5,427","","","","(70",")%"],["Interest and other income (expense), net","","","9,629","","","","2,431","","","","7,198","","","","296","%"],["Change in fair value of derivative liability and warrants","","","73","","","","(10,091",")","","","10,164","","","","(101",")%"],["Loss on extinguishment of convertible promissory notes","","","(250",")","","","\u2014","","","","(250",")","","","(100",")%"],["Total other income (expense), net","","","7,085","","","","(15,454",")","","","22,539","","","","(146",")%"],["Net loss","","$","(71,109",")","","$","(63,854",")","","$","(7,255",")","","","11","%"]]
[[/GREPCENT_TABLE]]

Research and Development Expenses

The following table summarizes our research and development expenses for each of the periods presented (in thousands, except percentages):

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2024","","","2023","","","$ Change","","","% Change"],["","","(unaudited)"],["Direct costs:"],["azelaprag","","$","29,265","","","$","6,443","","","$","22,822","","","","354","%"],["Other programs","","","7,867","","","","9,450","","","","(1,583",")","","","(17",")%"],["Indirect costs:"],["Personnel-related expenses (including stock-based compensation expense)","","","16,204","","","","13,726","","","","2,478","","","","18","%"],["Allocated facility and other expenses","","","5,700","","","","4,267","","","","1,433","","","","34","%"],["Total research and development expenses","","$","59,036","","","$","33,886","","","$","25,150","","","","74","%"]]
[[/GREPCENT_TABLE]]

Research and development expenses increased by $25.1 million from $33.9 million for the year ended December 31, 2023 to $59.0 million for the year ended December 31, 2024. The increase was primarily attributable to a $22.8 million increase in costs related to the clinical development of azelaprag as it progressed into Phase 2 trials, a $2.5 million increase in personnel-related expenses primarily associated with an increase in stock-based compensation expense from option grants issued in 2024 to employees as well as an increase in recruiting fees associated with research and development personnel, and a $1.4 million increase in allocated facility and other expenses primarily related to lab services; partially offset by a $1.6 million decrease in direct costs related to other programs as we focused our development spend primarily on azelaprag in 2024.

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General and Administrative Expenses

General and administrative expenses increased by $4.7 million from $14.5 million for the year ended December 31, 2023 to $19.2 million for the year ended December 31, 2024. This increase in general and administrative expenses was primarily driven by higher stock-based compensation expenses related to option grants issued in 2024 to employees, officers, and directors. Additionally, incremental costs associated with operating as a public company resulted in increased general and administrative expenses, including director and officer insurance premiums and increased legal, audit, and accounting expenses related to SEC compliance and NASDAQ Listing.

Other Income (Expense), Net

Other income (expense), net increased by approximately $22.6 million from $15.5 million of other expense for the year ended December 31, 2023 to $7.1 million of other income for the year ended December 31, 2024. This increase in other income was primarily attributable to a $7.2 million increase in interest income driven by our higher cash and cash equivalents balance, a $10.2 million decrease in losses from changes in fair value primarily related to the embedded derivative liability associated with our convertible promissory notes as these notes converted into Series D-1 redeemable convertible preferred stock in February 2024, and a $5.4 million decrease in interest expense as our convertible promissory notes converted into Series D-1 redeemable convertible preferred stock in February 2024. These increases were partially offset by a $0.3 million loss on extinguishment of convertible promissory notes associated with conversion of the convertible promissory notes into Series D-1 redeemable convertible preferred stock in February 2024.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have incurred significant losses in each period and on an aggregate basis. We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates for the foreseeable future, if at all. As of December 31, 2024, we had $354.3 million in cash and cash equivalents, and we had an accumulated deficit of $252.8 million. From inception through December 31, 2024, we have raised aggregate gross proceeds of approximately $559.2 million through the sale and issuance of our common stock, redeemable convertible preferred stock and convertible promissory notes.

In May 2022, we entered into a loan and security agreement (the Loan Agreement) with SVB Innovative Credit Growth Fund IX, LP and Innovative Credit Growth Fund VIII-A, LP pursuant to which we were able to borrow up to an aggregate of $25.0 million across two potential tranches until December 31, 2023 (the Term Loan). The Loan Agreement has a floating interest rate of the higher of the Wall Street Journal Prime rate plus 4.00% or 7.5%. The amounts borrowed under the Loan Agreement are scheduled to mature on April 1, 2026 and commencing on November 1, 2023 we are required to make monthly principal payments. In addition, we will also be required to pay a final payment fee equal to 4.4% of the total amount borrowed. As of December 31, 2024, we had $8.0 million outstanding under the Loan Agreement. See Note 5 to our consolidated financial statements included elsewhere in this Annual Report for further discussion of the Loan Agreement.

Cash Flows

The following table provides information regarding our cash flows for each of the periods presented (in thousands):

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2024","","","2023"],["","","(unaudited)"],["Net cash used in operating activities","","$","(51,522",")","","$","(37,362",")"],["Net cash used in investing activities","","","(366",")","","","(266",")"],["Net cash provided by financing activities","","","381,199","","","","34,941"],["Effects of exchange rate changes on cash, cash equivalents, and restricted cash","","","81","","","","\u2014"],["Net increase (decrease) in cash, cash equivalents, and restricted cash","","$","329,392","","","$","(2,687",")"]]
[[/GREPCENT_TABLE]]

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Net Cash Used in Operating Activities

Net cash used in operating activities for the year ended December 31, 2024 was $51.5 million, and was primarily due to our net loss of $71.1 million, which included non-cash charges of $7.0 million related to stock-based compensation expense, $1.0 million related to non-cash interest expense, and a $0.3 million loss on extinguishment of convertible promissory notes. Also contributing to net cash used in operating activities for the year ended December 31, 2024 was a a $3.3 million decrease in deferred grant income, partially offset by a $12.5 million increase in deferred revenue related to the Novartis Agreement.

Net cash used in operating activities for the year ended December 31, 2023 was $37.4 million, and was primarily due to our net loss of $63.9 million, which included non-cash charges of $10.1 million related to losses from changes in fair value on warrants and derivative liabilities, $6.5 million of non-cash interest expense, and $3.0 million related to stock-based compensation expense.

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 was $0.4 million, resulting from $0.4 million in purchases of property and equipment.

Net cash used in investing activities for the year ended December 31, 2023 was $0.3 million, resulting from $0.2 million in purchases of property and equipment and $0.1 million in purchases of investments.

Net Cash Provided by Financing Activities

Net cash provided by financing activities during the year ended December 31, 2024 was $381.2 million, resulting from $207.2 million in net proceeds from our IPO, $9.9 million in net proceeds from the sale of our common stock through private a private placement transaction, $169.5 million in net proceeds from the issuance and sale of our Series D redeemable convertible preferred stock and $0.6 million in proceeds from stock option exercises partially offset by $6.0 million in principal payments on our Term Loan.

Net cash provided by financing activities during the year ended December 31, 2023 was $34.9 million, resulting from proceeds of $23.5 million received from the issuance and sale of convertible promissory notes and $12.5 million in proceeds from the Term Loan partially offset by $1.0 million in principal payments on our Term Loan.

Funding Requirements

Our primary uses of capital are, and we expect will continue to be, research and development services, compensation and related expenses and general overhead costs. We expect to continue to incur significant expenses and operating losses for the foreseeable future. In addition, we expect to incur additional costs associated with operating as a public company. We anticipate that our expenses will increase significantly in connection with our ongoing activities.

Based on our current operating plan, we estimate that our existing cash and cash equivalents as of the date of this Annual Report will be sufficient to fund our operations and capital expenses through 2029. However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:

•
the timing, cost and progress of preclinical and clinical development activities;

•
the cost of regulatory submissions and timing of regulatory approvals;

•
the number and scope of preclinical and clinical programs we decide to pursue;

•
the progress of the development efforts of parties with whom we may in the future enter into licenses, collaborations or other strategic partnerships;

•
the cash requirements of any future acquisitions or discovery of product candidates;

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•
our ability to establish and maintain licenses, collaborations or other strategic partnerships with third parties on favorable terms, if at all;

•
the costs involved in prosecuting and enforcing patent and other intellectual property claims;

•
the costs of manufacturing our product candidates by third parties;

•
the cost of commercialization activities of any future product candidates are approved for sale, including marketing, sales and distribution costs;

•
our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates; and

•
our need to implement additional internal systems and infrastructure, including financial and reporting systems to satisfy our obligations as a public company.

A change in the outcome of any of these or other variables with respect to the development of BGE-102 or any product or development candidate we may develop in the future could significantly change the costs and timing associated with our development plans. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, which could include licenses, collaborations, or other strategic partnerships. We currently have no credit facility or committed sources of capital. Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such stockholders. Debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise additional funds through licenses, collaborations, or other strategic partnerships with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. There is no assurance that we will ever be profitable or generate positive cash flow from operating activities.

Contractual Obligations and Other Commitments

Lease Obligations

We lease office and lab space at our corporate headquarters in Richmond, California (the Headquarters Lease). The Headquarters lease is accounted for as an operating lease and expires on August 31, 2025. As of December 31, 2024, our non-cancellable base rent lease obligations related to the Headquarters Lease were $0.2 million all of which is due within the next 12 months.

The Company executed a lease for office and lab space in Emeryville, California on September 4, 2024 (the Emeryville Lease). The lease commencement date for the Emeryville Lease was not reached as of December 31, 2024, for accounting purposes, and therefore is not capitalized in the consolidated balance sheet as of December 31, 2024. The Emeryville Lease commenced in February 2025. Non-cancellable base rent lease obligations as of December 31, 2024 were $4.4 million of which $0.5 million is due within the next 12 months.

Purchase and Other Obligations

We enter into contracts in the normal course of business with CROs, CDMOs and other third-party vendors for preclinical research studies and testing, clinical trials and testing and manufacturing services. Most contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including non-cancelable obligations of our service provided up to one year after the date of cancellation.

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Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP). The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting period. We continually evaluate our estimates and judgments used in preparing our consolidated financial statements and related disclosures. All estimates affect reported amounts of assets, liabilities, income and expenses. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known.

While our significant accounting policies are more fully described in "Notes to the Consolidated Financial Statements - Note 2" appearing elsewhere in this Annual Report, we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.

Accrued and Prepaid Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued and prepaid third-party research and development expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued and prepaid expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued and prepaid research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced.

We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts incurred.

Stock-Based Compensation

Compensation cost for our stock-based payments to employees, non-employees and directors, are based on estimated fair value of the awards on the date of grant. Our stock-based compensation awards are generally subject to service-based vesting conditions. Compensation expense related to awards to employees, directors and non-employees with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. The fair value of each stock option is estimated on the grant date using the Black-Scholes option pricing model, which requires inputs based on certain subjective assumptions, including:

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Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

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Expected Term—The expected term of options represents the average period the stock options are expected to remain outstanding. As we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, the expected term of options granted

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is derived from the average midpoint between the weighted average vesting and the contractual term, also known as the simplified method.

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Expected Volatility—Since we do not have sufficient history to estimate the expected volatility of our common stock price, expected volatility is estimated based on the average historical volatility of similar entities with publicly traded shares. When selecting comparable publicly traded biopharmaceutical companies on which we have based our expected stock price volatility, we selected companies with comparable characteristics, including enterprise value, risk profiles, development stage, and with historical share price information sufficient to meet the expected term of the stock-based awards.

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Expected Dividend Yield—We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.

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Estimated Fair Value of Common Stock—Prior to our IPO, the fair value of the underlying common stock at the date of grant was determined based on a valuation of our common stock. Subsequent to our IPO, the fair value of the underlying common stock is determined based on the quoted market price of our common stock on the NASDAQ.

See Note 7 of our audited consolidated financial statements included elsewhere in this Annual Report for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted in the twelve months ended December 31, 2024 and 2023.

We recorded stock-based compensation expense of $7.0 million and $3.0 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, there was $26.4 million of unrecognized stock-based compensation expense related to unvested stock options, to be recognized over a weighted-average period of 2.8 years. In future periods, we expect our stock-based compensation expense to increase, due in part to our existing unrecognized stock-based compensation expense and as we grant additional stock-based awards to continue to attract and retain our employees.

Common Stock Valuations

As there was no public market for our common stock prior to our IPO, the estimated fair value of our common stock underlying our stock-based awards has been determined by our board of directors as of each option grant date with input from management, considering our most recently available third-party valuations of common stock and our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in ASC 718, Compensation, and the guidance provided by the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the Practice Aid).

For valuations performed prior to January 21, 2022, in accordance with the Practice Aid, we determined the Option Pricing Method (OPM) was the most appropriate method for determining the fair value of our common stock based on our stage of development and other relevant factors. Within the OPM framework, the backsolve method for inferring the total equity value implied by a recent financing transaction involves the construction of an allocation model that takes into account our capital structure and the rights, preferences and privileges of each class of stock, then assumes reasonable inputs for the other OPM variables (expected time to liquidity, volatility and risk-free rate). The total equity value is then iterated in the model until the model output value for the equity class sold in a recent financing round equals the price paid in that round. In determining the estimated fair value of the common stock, our board of directors also considered the fact that the stockholders could not freely trade the common stock in the public markets. Accordingly, we applied discounts to reflect the lack of marketability of our common stock based on the weighted-average expected time to liquidity.

For valuations performed after January 21, 2022 until we became a public company, in accordance with the Practice Aid, we determined the hybrid method was the most appropriate method for determining the fair value of our common stock based on our stage of development and other relevant factors. The hybrid method is a probability-weighted expected return method (PWERM), where the equity value in one or more scenarios is calculated using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and

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probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock.

Given the absence of a public trading market prior to our IPO, our board of directors, with input from management, considered numerous objective and subjective factors to determine the fair value of common stock. The factors included, but were not limited to:

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contemporaneous valuations performed by an independent third-party valuation firm;

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our stage of development and material risks related to our business;

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the progress of our research and development programs, including the status and results of preclinical studies and clinical trials;

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our business conditions and projections;

•
recent sales of our redeemable convertible preferred stock;

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the rights, preferences and privileges of our redeemable convertible preferred stock relative to those of our common stock;

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lack of marketability of our common and redeemable convertible preferred stock as a private company;

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our operating results and financial performance;

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the likelihood of achieving a liquidity event, such as an initial public offering or sale of our company, in light of prevailing market conditions;

•
the trends, developments and conditions in the life sciences and biopharmaceutical industry sectors;

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analysis of initial public offerings and the market performance and stock price volatility of similar public companies in the life sciences and biopharmaceutical sectors; and

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the economy in general.

As a public trading market for our common stock has been established in connection with our initial public offering, it is no longer necessary for our board of directors to estimate the fair value of our common stock in connection with our accounting for granted stock options and other such awards we may grant, as the fair value of our common stock is now determined based on the quoted market price of our common stock.

Convertible Promissory Notes and Embedded Derivative Liability

In February 2023, we issued four convertible promissory notes with an aggregate principal amount of $23.5 million (the Convertible Promissory Notes). The Convertible Promissory Notes contained equity conversion options and certain repayment features, that were identified as a single compound embedded derivative requiring bifurcation from the Convertible Promissory Notes. The Convertible Promissory Note embedded derivative liability was initially measured at fair value on issuance and was subject to remeasurement at each reporting period with changes in fair value recognized in the change in fair value of warrants and derivative liabilities caption of the consolidated statements of operations and comprehensive loss. Upon the closing of the Series D redeemable convertible preferred stock financing in February 2024 (the Series D Financing), the Convertible Promissory Notes (including accrued interest) and the related embedded derivative liability converted into 11,887,535 shares of our Series D-1 redeemable convertible preferred stock, resulting in an extinguishment of the Convertible Promissory Notes and settlement of the embedded derivative liability.

We estimated the fair value of the embedded derivative liability related to the Convertible Promissory Notes on issuance and at each reporting period using a with-and-without scenario analysis. The estimated probability and timing of underlying events triggering the conversion and liquidity repayment features as well as discount rates, volatility and share prices were inputs used to determine the estimated fair value of the embedded derivative.

The estimate for the embedded derivative liability was based, in part, on subjective assumptions. Changes to these assumptions could have had a significant impact on the fair value, and the change in fair value, of the derivative liability as well as interest expense.

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See Note 2 of our audited consolidated financial statements included elsewhere in this Annual Report for information concerning the accounting treatment of the Convertible Promissory Notes.

Internal Controls Over Financial Reporting

A company’s internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that it is reasonably possible that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with our preparation and the audit of our consolidated financial statements as of and for the year ended December 31, 2023, management identified material weaknesses, as defined under the Exchange Act and by the Public Company Accounting Oversight Board (United States), in our internal control over financial reporting. The material weaknesses we identified related to the overall control environment as we had insufficient internal resources with appropriate accounting and finance knowledge and expertise to design, implement, document and operate effective internal controls around our financial reporting process and the lack of effective information technology general controls.

As of December 31, 2024 we have remediated these material weaknesses by implementing measures including (1) formalizing our processes and internal control documentation and strengthening supervisory reviews by our financial management; (2) hiring additional qualified accounting and finance personnel with technical accounting and financial reporting experience in the application of complex areas of GAAP, (3) engaging financial consultants and collaborating with our internal audit consultants to enable the implementation of internal control over financial reporting, and (4) improving segregation of duties among accounting and finance personnel in the preparation and review of account reconciliations and journal entries. We have also improved the design of our general information technology controls including managing user access and privileged access, managing changes in the information system and segregation of duties with the systems supporting our accounting and reporting processes.

While we believe that these material weaknesses have now been remediated, we cannot assure you that these efforts will prevent misstatements of our financial statements in the future. If we are unable to successfully identify any future material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, and the market price of our common stock may decline as a result.

Emerging Growth Company and Smaller Reporting Company Status

Under Section 107(b) of the JOBS Act an “emerging growth company” can delay the adoption of new or revised accounting standards until such time as those standards would apply to private companies. We have elected this exemption to delay adopting new or revised accounting standards until such time as those standards apply to private companies. Where allowable we have early adopted certain standards as described in Note 2 of our consolidated financial statements included elsewhere in this Annual Report As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We will continue to remain an “emerging growth company” until the earliest of the following: (i) the last day of the fiscal year following the fifth anniversary of the date of the completion of our IPO; (ii) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We will continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual

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Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.