Financial Analysis

"7. COMMITMENTS AND CONTINGENCIES BWH License Agreement The Company signed an Exclusive Patent License Agreement with the Brigham and Womans Hospital, Inc. (BWH), now a subsidiary of Mass General Brigham, Inc., on June 19, 2018 (as amended and restated on December 29, 2020 and further amended on July 27, 2023, the BWH License). Under the BWH License, the Company is required to make milestone payments up to $ 8.6 million upon achievement of certain development, regulatory and commercial milestones across three different products including Oxnimbi. Subject to an annual minimum royalty amount that is creditable against royalties earned in the same calendar year for which the minimum royalty is paid, the Company agreed to pay BWH royalties equal to a low single digit percentage of net sales of the products covered by the BWH License and a tiered low double-digit percentage of revenue that the Company receives from sublicensing. If the Company undergoes a change of control, the Company will be required to pay BWH at least $ 0.3 million and as much as $ 0.5 million, depending on the patents and patent applications that remain licensed to the Company on the effective date of the change of control. No fees associated with the agreement with BWH were paid during the six months ended June 30, 2026 and 2025. Desitin APA In April 2025, the Company entered into the Desitin APA with Desiti n and Cereus, pursuant to which it purchased the Purchased Sulthiame IP and obtained a perpetual, irr …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"16. Credit AgreEment On April 2, 2026, the Company entered into a term loan facility (the ""Credit Agreement"") with HCRx Investments HoldCo, L.P., HCR Stafford Fund II, L.P. and HCR Potomac Fund II, L.P (collectively, the ""Lenders"") and HCR OSA SPV, LLC, as administrative agent and collateral agent (the ""Agent""). The Credit Agreement provides for up to $ 150.0 million of term loans (the Term Loans), available to us in multiple tranches. On April 2, 2026, the Lenders advanced $ 50.0 million of term loans (the ""Tranche A Term Loan"") to the Company. The maturity date of the Tranche A Term Loan is April 1, 2031. Additionally, the Company will be entitled to receive an advance of $ 50.0 million (the ""Tranche B Term Loan"") upon receipt of regulatory authorization from the FDA for Oxnimbi with a labeled indication for the treatment of OSA in any adult population (the ""Tranche B Milestone Event"") and an additional advance of $ 50.0 million (the ""Tranche C Term Loan"") if, on or prior to June 30, 2028, the trailing twelve-month net sales of the products covered by the BWH License equals or exceeds $ 175.0 million (the ""Tranche C Milestone Event""), both upon agreement between the Company and the Lenders. Outstanding Term Loans accrue interest at an annual rate equal to Three-Month Term SOFR (as defined in the Credit Agreement) plus 5.75 %, subject to potential reductions of up to one percent upon completion of certain events specified in the Credit Agreement (the ""Credi …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

13. STOCK-BASED COMPENSATION In July 2017, the Board of Directors adopted the 2017 Stock Incentive Plan (2017 Plan), which provides for the issuance of incentive awards and restricted share awards to employees, officers, directors, advisors, and outside consultants for the purchase of up to 600,000 shares of common stock. The 2017 Plan was further amended in March 2020, May 2021, April 2022, October 2022, December 2022, December 2023, March 2024, June 2024, September 2024, December 2024, March 2025, June 2025, September 2025, November 2025, June 2026 to increase the availability for the issuance of awards up to 12,774,442 shares of Class A common stock. The options granted generally vest over 48 months. Certain stock options and restricted stock awards provide for accelerated vesting on a change in control, as defined in the respective agreement. As of June 30, 2026 , no shares were available for issuance under the 2017 Plan. The following table summarizes the stock option activity during the six months ended June 30, 2026: Weighted- Weighted- Average Aggregate Options and Average Contractual Intrinsic Awards Exercise Term Value Outstanding Price (In years) (In thousands) Outstanding at January 1, 2026 6,820,263 $ 3.85 6.14 $ 63,652 Granted 2,714,139 8.15 Exercised ( 20,567 ) 2.96 182 Expired ( 278,856 ) 3.55 Forfeited ( 23,723 ) 8.85 Outstanding at June 30, 2026 9,211,256 $ 5.10 6.84 $ 28,147 Options exercisable at June 30, 2026 5,124,825 $ 2.87 4.93 $ 27,096 Vested and expe …

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"3. FAIR VALUE MEASUREMENT The following table sets forth the recurring fair value of the Companys financial assets, allocated into the Level 1, Level 2 and Level 3 hierarchy that were measured at fair value on a recurring basis (in thousands): Fair Value Measurements as of June 30, 2026 Level 1 Level 2 Level 3 Total Assets: Money market funds (1) $ 36,476 $ $ $ 36,476 Contingent asset 9,893 9,893 Total financial assets $ 36,476 $ $ 9,893 $ 46,369 Liabilities: Long-term debt $ $ $ 40,267 $ 40,267 Revenue interest liability 10,037 10,037 Convertible notes 39,331 39,331 Total financial liabilities $ $ $ 89,635 $ 89,635 Fair Value Measurements as of December 31, 2025 Level 1 Level 2 Level 3 Total Assets: Money market funds (1) $ 37,492 $ $ $ 37,492 Total financial assets $ 37,492 $ $ $ 37,492 Liabilities: Convertible notes $ $ $ 40,646 $ 40,646 Total financial liabilities $ $ $ 40,646 $ 40,646 (1) Included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets. There were no net unrealized gains or losses on investments as of June 30, 2026 or December 31, 2025. The carrying value of accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities. In September 2025, the Company issued convertible notes (the ""Convertible Notes"") with a principal amount of $ 35.0 million (see Note 9). The Company concluded that the Convertib …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Recently Issued Accounting Pronouncements Not Yet Adopted In December 2025, the Financial Accounting Standards Board (the ""FASB"") issued Accounting Standards Update (""ASU"") 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (""ASU 2025-11""). The amendments clarify the scope of interim reporting guidance in U.S. GAAP, consolidate interim disclosure requirements from other codification topics, and introduce a disclosure principle requiring entities to describe events occurring after the end of the most recent annual period that have a material effect on the entity. The ASU is effective for annual periods beginning after December 15, 2027 and for interim periods within fiscal years beginning after December 15, 2028. Early adoption is permitted. The Company is currently evaluating the effect of this update; however, because the amendments primarily clarify existing interim reporting requirements and do not significantly expand disclosure obligations, the Company does not expect the ASU to have a material impact on its condensed consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses (""ASU 2024-03""). The ASU requires, among other items, additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the unaudited condensed …

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10. REVENUE - RELATED PARTY As discussed in Note 4, upon formation of the joint venture, the Company entered into multiple agreements with SASS. Based on the nature of these agreements, the Company concluded that SASS represented a customer and analyzed the agreements between Apnimed and SASS in accordance with ASC 606. The Company entered into a limited liability agreement with SASS upon formation of the joint venture, granted SASS an exclusive license for intellectual property and know-how related to certain of the Companys sleep breathing disorder programs, excluding any rights to the Companys Oxnimbi and AD504 programs, and executed an MSA with SASS. The Company has combined these contracts for the purpose of identifying the underlying obligations as they were negotiated together with a single commercial objective, the purpose of conducting research and development activities to treat, prevent and mitigate OSA and other sleep breathing disorders, the amount of consideration to be paid in one contract depends on the performance of the other contract, the license and option for future services promised in the contracts are a single performance obligation. The Company evaluated the promised goods and services under the agreements and determined that the agreements included one performance obligation: a combined performance obligation including the exclusive license, know-how and services to be performed under the MSA in accordance with SASSs research and development plan. Th …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

"14. SEGMENT DATA The Company defines its segments on the basis of the way in which internally reported financial information is regularly reviewed by the chief operating decision maker (""CODM""), to analyze financial performance, make decisions, and allocate resources. The Companys CODM is its Chief Executive Officer. The Company manages its operations as a single operating and reportable segment dedicated to the discovery, development and commercialization of novel oral therapies that address the neurobiology of sleep-related breathing diseases. The CODM uses net loss to monitor budget versus actual results and to analyze cash flows in assessing performance of the segment and allocating resources. All business activities are managed on a consolidated basis. As discussed further in Note 10, all revenue - related party recognized during the period has been generated from the SASS joint venture with Shionogi, which includes a combined performance obligation including the exclusive license under the Company's license agreement with SASS, which the Company entered in November 2023, and services to be performed under the MSA in accordance with SASS's research and development plan. The internal reporting of significant segment expenses is based on functional classification. The measure of the operating segment assets is reported on the consolidated balance sheet as total assets. All tangible assets and operations of the Company's sole operating segment are located in the United S …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Companys significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the audited consolidated financial statements for the years ended December 31, 2025 and 2024 and notes thereto, included in the Companys final prospectus for its IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the Securities Act) on July 31, 2026 (the IPO Prospectus). Since the date of those financial statements, there have been no changes to the Companys significant accounting policies. Basis of Presentation The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Unaudited interim financial information The accompanying condensed consolidated balance sheet as of June 30, 2026, and the condensed consolidated statements of operations, condensed consolidated statements of convertible preferred stock and stockholders' deficit, and condensed consolidated statements of cash flows for the three and six months ended June 30, 2026 and 2025 are unaudited. The condensed consolidated interim financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (""SEC""). Accordingly, they do not include all information and dis …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

12. COMMON STOCK On October 31, 2023, the Company filed the Sixth Amended and Restated Certificate of Incorporation of the Company (the Amended and Restated Certificate of Incorporation), which authorized three separate classes of Common Stock, each with a par value of $ 0.00001 per share (collectively the Common Stock). Pursuant to the Amended and Restated Certificate of Incorporation, each previous outstanding share of common stock was converted into and became one share of Class A Common Stock. In addition, the Amended and Restated Certificate of Incorporation authorized Class B Common Stock and Class C Common Stock. As referenced in Note 8, on November 1, 2023, the Company entered into a Common Stock Purchase Agreement with Shionogi for the sale of 2,752,091 and 196,577 shares of Class B Common Stock and Class C Common Stock, respectively, resulting in gross proceeds received of $ 9.9 million and $ 0.7 million, respectively, all of which remain issued and outstanding as of June 30, 2026 . Aggregate net proceeds allocated to all classes of Common Stock issued, after deducting certain expenses incurred of $ 27 thousand related to the issuance of the shares, were $ 10.6 million. On April 23, 2025, the Company filed the Seventh Amended and Restated Certificate of Incorporation of the Company (the 2025 Amendment), which increased the total authorized number of shares of Class A Common Stock. Pursuant to the 2025 Amendment, the total number of shares of all classes of Common St …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

"17. SUBSEQUENT EVENTS The Company has evaluated subsequent events through September 8, 2026, which is the date of the unaudited condensed consolidated financial statements were available to be issued. Initial Public Offering On August 3, 2026, the Company completed its IPO in which the Company sold an aggregate of 13,800,000 shares of its common stock at a public offering price of $ 16.00 per share, which included 1,800,000 sha res of its common stock sold to the underwriters pursuant to the full exercise of their option to purchase additional shares, resulting in aggregate net proceeds of approximately $ 200.4 million after deducting underwriter discounts and commissions. Immediately prior to the closing of the IPO: all of the Company's outstanding convertible preferred stock automatically converted into 21,143,116 shares of common stock. all of the Company's outstanding shares of Class B common stock automatically converted into 2,040,097 shares of common stock. all of the Company's outstanding Class C common stock automatically converted into 145,720 shares of common stock. all of the Company's outstanding Class A common stock was reclassified and renamed into shares of common stock. all of the Company's outstanding Convertible Notes automatically converted into 2,646,838 shares of common stock. In connection with the closing of the IPO, the Company's certificate of incorporation was amended and restated to authorize 500,000,000 shares of common stock, par value $ 0.00001 …

SubsequentEventsTextBlock · excerpt; the full note is in the filing