Azora Therapeutics — Third Quarter 2026 Earnings Summary

Financial Performance:

• Cash and cash equivalents were $22.0 million as of September 30, 2026, down from $28.7 million as of June 30, 2026.
• Research and development expenses increased to $1.8 million for the three months ended September 30, 2026, compared to $0.5 million in the same period in 2025.
• General and administrative expenses increased to $5.8 million for the three months ended September 30, 2026, compared to $1.2 million in the same period in 2025.
• Net loss was $64.6 million ($4.52 per share) for the three months ended September 30, 2026, compared to a net loss of $1.8 million ($2.02 per share) in the same period in 2025.
• The third quarter net loss includes a non-cash charge of $57.1 million for the change in fair value of the milestone warrant rights liability.
• Stockholders' equity was a deficit of $21.1 million as of September 30, 2026.
• For the nine months ended September 30, 2026, net loss was $118.6 million ($17.41 per share), compared to $6.0 million ($11.35 per share) in the same period in 2025.
• Total operating expenses for the nine months ended September 30, 2026, were $61.6 million, compared to $5.9 million in the same period in 2025.
• Stock-based compensation expense was $958,000 for the three months ended September 30, 2026, compared to $147,000 in the same period in 2025.

Guidance and Future Outlook:

• The company remains on track to submit an Investigational New Drug (IND) application for AT177 and initiate a Phase 1a trial in the first half of 2027.
• Existing cash and cash equivalents are anticipated to fund the current operating plan, including the completion of IND-enabling studies and the Phase 1a trial, excluding any proceeds from the sale of milestone warrants.
• The company expects to reclassify the $38.5 million carrying value of Series A convertible preferred stock into stockholders' equity in the fourth quarter of 2026.
• Up to approximately $32.4 million in gross proceeds could be received if investors elect to purchase milestone warrants under amended agreements.

Business Segments and Product Lines:

• AT177 is a proprietary, oral, colon-targeted aryl-hydrocarbon receptor (AhR) agonist designed to restore mucosal immune homeostasis for ulcerative colitis.
• IND-enabling studies for AT177 continued, building on completed GLP toxicology studies and pre-IND feedback from the FDA.
• GMP manufacturing was initiated to support the clinical development of AT177.
• The company is developing treatments for serious immune-mediated and inflammatory diseases.

Market and Competitive Landscape:

• AT177 is designed to deliver therapeutic AhR engagement directly to the colonic mucosa with minimal systemic exposure, addressing limitations of earlier AhR agonists.
• The company owns worldwide royalty-free rights to its technology based on oral agonists of the aryl hydrocarbon receptor.
• The lead program AT177 is a prodrug of indirubin, derived from indigo naturalis, which has been evaluated in clinical studies but is not FDA-approved.

Risks and Challenges:

• The company has identified a material weakness in internal control over financial reporting.
• Risks include the ability to continue as a going concern and raise additional capital on acceptable terms.
• There is no guarantee of submitting an IND or initiating a Phase 1a trial in the first half of 2027.
• Clinical trial results may not be reproducible, and regulatory approvals for commercialization are not assured.
• The company faces risks related to maintaining patent estate, retaining key employees, and obtaining necessary capital or grants.

Management Commentary and Tone:

• Matt Davidson, Ph.D., President and CEO, stated the company is "well positioned for success" following its transition to Nasdaq and emphasized a focus on "execution excellence."
• The company appointed a new executive team effective October 28, 2026, including CFO Celia Economides, Chief Strategy Officer Julie Saiki, Ph.D., and Chief Scientist David Rubenstein, M.D., Ph.D.
• The Board of Directors was expanded with three independent directors: Aida Habtezion, M.D., Paul Hastings, and Thomas Soloway.

Other Key Points:

• The company changed its name from Adial Pharmaceuticals, Inc. to Azora Therapeutics, Inc., and began trading on the Nasdaq Capital Market under the symbol "AZR" effective October 29, 2026.
• Stockholders approved the conversion of Series A preferred stock on October 28, 2026; 9,924,260 shares converted to common stock on November 2, 2026.
• The $80.9 million milestone warrant rights liability was reclassified to equity following September amendments, removing the requirement for remeasurement.
• The company amended securities purchase and note exchange agreements in September 2026 to remove provisions reducing investors' milestone warrant purchase rights.
• The company was launched out of Stanford University after being incubated in the translational medicine SPARK program.