10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 2024

OR

☐ 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: 001-38130

Aileron Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	13-4196017
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12407 N. Mopac Expy. Suite 250 #390 Austin, TX	78758
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (737) 802-1989

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value per share	ALRN	The Nasdaq Capital Market

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 ☒ No ☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. ☐

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

As of May 13, 2024, the registrant had 21,589,576 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION		4
Item 1.	Financial Statements (Unaudited)		4
	Condensed Consolidated Balance Sheets		4
	Condensed Consolidated Statements of Operations and Comprehensive Loss		5
	Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity		6
	Condensed Consolidated Statements of Cash Flows		7
	Notes to Condensed Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
Item 4.	Controls and Procedures		27
PART II.	OTHER INFORMATION		29
Item 1.	Legal Proceedings		29
Item 1A.	Risk Factors		29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 3.	Defaults Upon Senior Securities		29
Item 4.	Mine Safety Disclosures		29
Item 5.	Other Information		29
Item 6.	Exhibits		29
	Signatures		31

1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q of Aileron Therapeutics, Inc. (“Aileron,” “we,” “us,” “our,” or the “Company”) contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

•our plans to develop and commercialize LTI-03 and LTI-01, including the potential benefits thereof;

•the timing and expectation of the results from Cohort 2 of the Phase 1b study of LTI-03;

•our unproven approach to drug research and development in the area of fibrotic diseases, with a focus on Caveolin-1, or Cav1, -related peptides, and our ability to develop marketable products;

•our ongoing and future clinical trials for LTI-03 and LTI-01, whether conducted by us or by any future collaborators, including our ability to enroll patients in our clinical trials, the timing of initiation of these trials and of the anticipated results;

•the possibility that we may be adversely affected by economic, business, and/or competitive factors, including risks inherent in pharmaceutical research and development, such as: adverse results in our drug discovery, preclinical and clinical development activities, the risk that the results of our preclinical studies and early clinical trials may not be replicated in later clinical trials or that partial results of a trial, such as the Cohort 1 results from the Company’s ongoing Phase 1b trial, may not be indicative of the full results of the trial, and the risk that any of our clinical trials may not commence, continue or be completed on time, or at all;

•our ability to recognize the anticipated benefits of the Lung Acquisition (as defined herein);

•our expectations regarding our ability to fund our operating expenses, our planned activities, and capital expenditure requirements with our cash, cash equivalents and investments;

•the success of our remediation efforts related to the material weaknesses identified in our internal controls over financial reporting and disclosure controls and procedures;

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

•the timing of and our ability to obtain and maintain marketing approvals for LTI-03 and LTI-01;

•the rate and degree of market acceptance and clinical utility of any products for which we receive marketing approval;

•our commercialization, marketing and manufacturing capabilities and strategy;

•our intellectual property position and strategy, and our ability to obtain, maintain and enforce intellectual property rights for our platform and development candidates;

•our ability to identify additional product candidates with significant commercial potential;

•our plans to enter into collaborations for the development and commercialization of LTI-03, LTI-01 and any additional product candidates;

•our reliance on third-party manufacturing and supply vendors;

•potential benefits of any future collaboration;

•developments relating to our competitors and our industry;

•the impact of government laws and regulations;

•the impact of affiliated stockholders choosing to act together; and

•our ability to maintain our listing on the Nasdaq Capital Market.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions

2

and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included, or incorporated by reference in our Annual Report on Form 10-K, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This Quarterly Report on Form 10-Q includes or incorporates by reference statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AILERON THERAPEUTICS, INC.

Condensed Consolidated BALANCE SHEETS

(UNAUDITED)

(In thousands, except share and per share data)

	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	12,042		$	17,313
Prepaid expenses and other current assets		697			882
Restricted cash		25			25
Operating lease, right-of-use asset, current portion		—			46
Total current assets		12,764			18,266
Property and equipment, net		6			19
Goodwill		6,330			6,330
Intangible assets		79,200			79,200
Other non-current assets		892			2,193
Total assets	$	99,192		$	106,008
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,156		$	1,190
Accrued expenses and other current liabilities		2,376			3,147
Operating lease liabilities, current portion		—			48
Total current liabilities		4,532			4,385
Deferred tax liability		3,326			3,326
Total liabilities		7,858			7,711
Commitments and contingencies (Note 15)
Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized at March 31, 2024 and at December 31, 2023; 24,610 shares issued and 12,653 shares outstanding at March 31, 2024 and 24,610 shares issued and outstanding at December 31, 2023		46,584			91,410
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at March 31, 2024 and 45,000,000 at December 31, 2023; 16,842,512 shares and 4,885,512 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		103			91
Additional paid-in capital	$	340,340		$	295,376
Accumulated other comprehensive loss		(63	)		(63	)
Accumulated deficit		(295,630	)		(288,517	)
Total liabilities, convertible preferred stock and stockholders’ equity	$	99,192		$	106,008

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

4

AILERON THERAPEUTICS, INC.

Condensed Consolidated STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands, except share and per share data)

	Three Months Ended March 31,
	2024			2023
Revenue	$	—		$	—
Operating expenses:
Research and development		3,463			1,810
General and administrative		3,742			2,179
Restructuring and other costs		—			1,022
Total operating expenses		7,205			5,011
Loss from operations		(7,205	)		(5,011	)
Other income, net		92			232
Net loss	$	(7,113	)	$	(4,779	)
Net loss per share—basic and diluted	$	(0.86	)	$	(1.05	)
Weighted average common shares outstanding—basic and diluted		8,301,798			4,541,167
Comprehensive loss:
Net loss	$	(7,113	)	$	(4,779	)
Other comprehensive gain:
Unrealized gain on investments, net of tax of $0		—			38
Total other comprehensive gain		—			38
Total comprehensive loss	$	(7,113	)	$	(4,741	)

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

5

AILERON THERAPEUTICS, INC.

Condensed Consolidated STATEMENT OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except share data)

	Convertible Series X Preferred Stock						Common Stock												Total
	Shares			Amount			Shares		Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Convertible Preferred Stock and Stockholders’ Equity
Balances at December 31, 2023		24,610		$	91,410			4,885,512	$	91	$	295,376	$	(63	)	$	(288,517	)	$	98,297
Issuance of common stock in connection with conversion of Series X preferred stock		(11,957	)		(44,826	)		11,957,000		12		44,814		—			—			—
Stock-based compensation expense		—			—			—		—		150		—			—			150
Net loss		—			—			—		—		—		—			(7,113	)		(7,113	)
Balances at March 31, 2024		12,653		$	46,584			16,842,512	$	103	$	340,340	$	(63	)	$	(295,630	)	$	91,334
Balances at December 31, 2022		—		$	—			4,541,167	$	91	$	291,365	$	(48	)	$	(272,785	)	$	18,623
Stock-based compensation expense		—			—			—		—		391		—			—			391
Unrealized loss on investments		—			—			—		—		—		38			—			38
Net loss		—			—			—		—		—		—			(4,779	)		(4,779	)
Balances at March 31, 2023		—		$	—			4,541,167	$	91	$	291,756	$	(10	)	$	(277,564	)	$	14,273

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

6

AILERON THERAPEUTICS, INC.

Condensed Consolidated STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Three Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(7,113	)	$	(4,779	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		59			43
Net amortization of premiums and discounts on investments		—			(103	)
Stock-based compensation expense		150			391
Loss on disposition of property and equipment		—			16
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		185			247
Other assets		1,301			24
Accounts payable		966			(1,262	)
Operating lease liabilities		(48	)		(33	)
Accrued expenses and other current liabilities		(771	)		795
Net cash used in operating activities		(5,271	)		(4,661	)
Cash flows from investing activities:
Proceeds from sales or maturities of investments		—			7,250
Net cash provided by investing activities		—			7,250
Net (decrease) increase in cash, cash equivalents and restricted cash		(5,271	)		2,589
Cash, cash equivalents and restricted cash at beginning of period		17,338			5,219
Cash, cash equivalents and restricted cash at end of period	$	12,067		$	7,808
Cash and cash equivalents at end of period	$	12,042		$	7,783
Restricted cash at end of period		25			25
Cash, cash equivalents and restricted cash at end of period	$	12,067		$	7,808
Supplemental disclosure of non-cash investing and financing activities:
Conversion of Series X preferred stock into common stock shares	$	44,826			—

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

7

AILERON THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except share and per share data)

1. Nature of the Business

Aileron Therapeutics, Inc. (“Aileron” or the “Company”) is a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. The Company currently has two product candidates in clinical development, LTI-03 and LTI-01, and multiple candidates in preclinical development focused on fibrosis indications.

On October 31, 2023, Aileron acquired Lung Therapeutics, Inc. (“Lung Therapeutics” or “Lung”) pursuant to an Agreement and Plan of Merger, dated October 31, 2023 (the “Lung Acquisition Agreement”), by and among the Company, AT Merger Sub I, Inc., a Delaware corporation and its wholly owned subsidiary (“First Merger Sub”), AT Merger Sub II, LLC, a Delaware limited liability company and its wholly owned subsidiary (“Second Merger Sub”) and Lung. Pursuant to the Lung Acquisition Agreement, First Merger Sub merged with and into Lung, pursuant to which Lung was the surviving entity and became its wholly owned subsidiary (the “First Merger”). Immediately following the First Merger, Lung merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity (such merger, together with the First Merger, the “Lung Acquisition”). Lung was incorporated on November 13, 2012 under the laws of the state of Texas. Following the Lung Acquisition, the Company shifted its operating disease focus to advancing a pipeline of first-in-class medicines to address significant unmet medical needs in orphan pulmonary and fibrosis indications with the potential to greatly improve patient outcomes over currently available treatments. Following expiration of the operating lease agreement to rent an office space for its corporate headquarters in Austin, Texas, on March 31, 2024, the Company expects to operate virtually for the foreseeable future (see Note 15 for further details).

The Company is subject to risks and uncertainties common to clinical-stage companies in the biotechnology industry, including, but not limited to the risk that the Company never achieves profitability, the need for substantial additional financing, the risk of relying on third parties, risks of clinical trial failures, dependence on key personnel, protection of proprietary technology, and compliance with government regulations. The Company’s lead product candidate, LTI-03, is being developed for the treatment of Idiopathic Pulmonary Fibrosis (“IPF”) and has completed a healthy volunteer Phase 1a clinical trial. LTI-03 is currently in a Phase 1b clinical trial in IPF patients. The Company’s second product candidate, LTI-01, is in development for loculated pleural effusion (“LPE”). The Company has completed Phase 1b and Phase 2a clinical trials in LPE patients.

Liquidity and Going Concern

In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying consolidated financial statements were issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the condensed consolidated financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the consolidated financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the consolidated financial statements are issued.

The Company’s condensed consolidated financial statements have been prepared assuming that the Company will continue to operate as a going concern, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. Through March 31, 2024, the Company has financed its operations primarily through $145,467 in net proceeds from sales of common stock and warrants, $131,211 from sales of preferred stock prior to its initial public offering (“IPO”), and $34,910 from a collaboration agreement in 2010, and $18,429 in gross proceeds, less issuance costs of $893, in connection with the financing following the Lung Acquisition. As of March 31, 2024, the Company had $12,042 in cash and cash equivalents.

On May 1, 2024, Aileron entered into an underwriting agreement (the “Underwriting Agreement”) with Titan Partners Group LLC, a division of American Capital Partners, LLC, as underwriter, relating to an underwritten offering (the “Offering”) of 4,273,505 shares of the Company’s common stock, par value $0.001 per share (the “Offering Shares”) and accompanying warrants (the “Offering Warrants”) to purchase 4,273,505 shares of common stock (the “Offering Warrant Shares”). All of the Offering Shares and Offering Warrants were sold by the Company by May 3, 2024 for the net proceeds from the Offering of approximately $17,945, after deducting underwriting discounts and commissions and estimated offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants (see Note 16 for further details). The Company expects to use the net proceeds from the Offering, together with its existing cash and cash equivalents, to fund the development and commercialization of its product candidates, including its ongoing Phase 1b clinical trial of LTI-03; and for working capital and other general corporate purposes.

8

After the Offering, management considers that, based on the Company’s current operating plan, the Company’s cash and cash equivalents of $27,496 as of May 3, 2024 will enable the Company to fund its operating expenses and capital expenditure requirements into the second half of 2025. Since its inception, the Company has not generated any revenue from product sales and has never generated an operating profit. The Company has incurred significant losses on an aggregate basis. The Company’s net losses were $7,113 and $4,779 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the Company had an accumulated deficit of $295,630. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment and general and administrative costs associated with the Company’s operations. Management expects to continue to incur operating losses for the foreseeable future until the Company completes development and approval of its product candidates. The Company will continue to fund its operations primarily through utilization of its current financial resources and additional raises of capital.

These conditions support the Company’s ability to continue as a going concern for at least one year from the date those condensed consolidated financial statements are issued. However, the Company could use its available capital resources sooner than it currently expects. The Company’s future viability is dependent on its ability to raise additional capital, enter into a financing, consummate a successful acquisition, merger, business combination, or a sale of assets or other transaction. If the Company becomes unable to continue as a going concern, it may have to liquidate its assets and the values it receives for its assets in liquidation or dissolution could be significantly lower than the values reflected in its consolidated financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by ASUs of the Financial Accounting Standards Board (“FASB”).

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lung Therapeutics, LLC, Lung Therapeutics Australia Pty Ltd, and Lung Therapeutics Limited. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual for research and development expenses, the prepaid research and development expenses, and the value of stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months then ended have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on April 15, 2024.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2024, the results of its operations for the three months ended March 31, 2024 and 2023 and its cash flows for the three months ended March 31, 2024 and 2023. The financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are unaudited. The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. The accompanying balance sheet as of December 31, 2023 has been derived from the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K that was filed with the SEC on April 15, 2024.

The Company’s significant accounting policies are described in Note 2 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on April 15, 2024.

9

Concentration of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Periodically, the Company maintains balances in operating accounts above federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents.

The Company is dependent on third-party manufacturers to supply products for research and development activities of its programs, including preclinical and clinical testing. In particular, the Company relied on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could have been adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

Accounting Pronouncements Not Yet Adopted

In March 2024, the FASB issued ASU 2024-02—Codification Improvements—Amendments to Remove References to the Concepts Statements, that contains amendments to the Codification that remove references to various FASB Concepts Statements. This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements. The amendments are effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted. Early application of the amendments in this ASU is permitted for all entities, for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01—Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, to improve GAAP by adding an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes that interim period. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

3. Business Acquisition

On October 31, 2023, Aileron acquired 100% of Lung, pursuant to the Lung Acquisition Agreement. At the closing of the Lung Acquisition, Aileron issued to the stockholders of Lung 344,345 shares of its common stock (excluding 221 fractional shares from the total 344,566 shares pursuant to the Lung Acquisition Agreement) and 19,903 shares of its newly designated Series X Preferred Stock (excluding 238 fractional shares from the total 20,141 shares pursuant to the Lung Acquisition Agreement). Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock. The Company paid $290 cash in lieu of fractional shares of both common stock and Series X Preferred Stock. In addition, Aileron assumed all Lung’s stock options (1,780,459) and all warrants (726,437) exercisable for Lung common stock immediately outstanding prior to the closing of the Lung Acquisition, each subject to adjustment pursuant to the terms of the Lung Acquisition Agreement.

Immediately following the closing of the Lung Acquisition, on October 31, 2023, Aileron entered into a Stock and Warrant Purchase Agreement (the “Purchase Agreement”) with a group of accredited investors, pursuant to which Aileron issued and sold (i) an aggregate of 4,707 shares of Series X Preferred Stock, and (ii) warrants (the “PIPE Warrants”) to purchase up to an aggregate of 2,353,500 shares of Aileron common stock (the “PIPE Warrant Shares”), for an aggregate purchase price of approximately $18,429, which included the conversion of certain convertible promissory notes in the aggregate principal amount of $1,553 issued by Lung to Bios Partners, the majority stockholder of Lung prior to the closing of the Lung Acquisition, at a 10% discount to the per share price of the Series X Preferred Stock (the “PIPE Financing”). The PIPE Financing closed on November 2, 2023. Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock.

The net proceeds from the PIPE Financing of approximately $17,536 are expected to be used to advance Aileron’s clinical development pipeline, business development activities, working capital and other general corporate purposes.

The Lung Acquisition was accounted for under the acquisition method of accounting under ASC 805, Business Combinations. Under the acquisition method, the total purchase price of the acquisition is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on the fair values as of the date of the acquisition. Consideration transferred is the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred by the acquirer to the former owners of the acquiree, and the equity interests issued by the acquirer to the former owners of the acquiree (except for the measurement of share-based payment awards). The Company recorded the assets acquired and liabilities assumed as of the date of the Lung Acquisition based on the information available at that date.

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4. Fair Value of Financial Assets

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

	March 31, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	10,954	$	—	$	—	$	10,954
	$	10,954	$	—	$	—	$	10,954

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	10,322	$	—	$	—	$	10,322
	$	10,322	$	—	$	—	$	10,322

During the three months ended March 31, 2024 and the year ended December 31, 2023, there were no transfers between levels.

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	March 31, 2024		December 31, 2023
Prepaid research and development	$	150	$	207
Other current assets		547		675
Total prepaid expenses and other current assets	$	697	$	882

6. Goodwill and Indefinite-Lived Intangible Assets

$6,330 of goodwill and $79,200 of indefinite-lived intangible assets acquired in the Lung Acquisition were recorded at fair value on the Lung Acquisition date. The Company performed a qualitative assessment of goodwill and indefinite-lived intangible assets for potential impairment as of March 31, 2024, and concluded that there was no goodwill or intangible assets impairment as of March 31, 2024.

7. Other Assets

Other assets consisted of the following:

	March 31, 2024		December 31, 2023
Non-current prepaid research and development	$	839	$	2,140
Other assets		53		53
Total other non-current assets	$	892	$	2,193

8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	March 31, 2024		December 31, 2023
External research and development services	$	913	$	1,110
Payroll and payroll-related costs		420		1,178
Professional fees		763		653
Other		280		206
Total accrued expenses and other current liabilities	$	2,376	$	3,147

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9. Preferred Stock

The Company is authorized to issue 5,000,000 shares of preferred stock, par value $0.001 per share. As of March 31, 2024, the Company had issued 24,610 shares of Series X Preferred Stock, of which 12,653 shares of Series X Preferred Stock remained outstanding. As of December 31, 2023, 24,610 shares of Series X Preferred Stock were issued and outstanding.

On March 5, 2024, based upon existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock and 12,653 shares of Series X Preferred Stock (which are convertible into 12,653,000 shares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations (see below).

On October 31, 2023, Aileron acquired Lung. Under the terms of the Lung Acquisition Agreement, at the closing of the Lung Acquisition, Aileron issued to the stockholders of Lung 344,345 shares of the common stock of Aileron, par value $0.001 per share, and 19,903 shares of Series X Preferred Stock.

Immediately following the closing of the Lung Acquisition, on October 31, 2023, Aileron entered into the Purchase Agreement with a group of accredited investors, pursuant to which Aileron issued and sold 4,707 shares of Series X Preferred Stock and Warrants to purchase up to an aggregate of 2,353,500 shares of Aileron common stock. Refer to Note 3 for more details on the PIPE Financing in connection with the Purchase Agreement. Since the Series X Preferred Stock was sold as a unit with the PIPE Warrants according to the Purchase Agreement, the proceeds received were allocated to each instrument on a relative fair value basis. Total gross proceeds of $18,429 reduced by $893 of the issuance costs were allocated as follows: $16,795 to the Series X Preferred Stock and $741 to the PIPE Warrants. The Series X Preferred Stock and the PIPE Warrants issued in the PIPE Financing were recorded at par value of $0.001.

The Company evaluated the Series X Preferred Stock for liability classification in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity ("ASC 480"), and determined that equity treatment was appropriate because the Series X Preferred Stock did not meet the definition of the liability instruments. Specifically, the Series X Preferred Stock is not mandatorily redeemable and does not embody an obligation to buy back the shares outside of the Company’s control in a manner that could require the transfer of assets. The Company determined that the Series X Preferred Stock would be recorded as temporary equity, based on the guidance of ASC 480, given that it is contingently redeemable.

Each share of Series X Preferred Stock is convertible into 1,000 shares of Common Stock. The preferences, rights, and limitations initially applicable to the Series X Preferred Stock are set forth in the Certificate of Designation.

The Series X Preferred Stock has the following characteristics:

Voting

Except as otherwise required by law, the Series X Preferred Stock does not have voting rights. However, as long as any shares of Series X Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series X Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series X Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or by-laws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series X Preferred Stock, (ii) issue further shares of Series X Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series X Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing.

Dividends

Holders of Series X Preferred Stock are entitled to receive dividends on shares of Series X Preferred Stock equal, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the common stock. Such dividends are not cumulative. Since the Company’s inception, no dividends have been declared or paid.

Liquidation, dissolution or winding up

The Series X Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.

Upon liquidation, dissolution or winding up of the Company, the Series X preferred stockholders shall be entitled to receive an equivalent amount of distributions as would be paid on the common stock underlying the Series X Preferred Stock, determined on an as-converted basis, pari passu with any distributions to the common stock shareholders.

Conversion

The Series X Preferred Stock is convertible into common stock at a rate of 1,000 shares of common stock for every one share of Series X Preferred Stock that is converted. The Series X Preferred Stock is subject to certain beneficial ownership limitations, including

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that a holder of Series X Preferred Stock is prohibited from converting shares of Series X Preferred Stock into shares of common stock if, as a result of such conversion, such holder (together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates) would beneficially own more than a specified percentage (to be initially set at 19.99% and thereafter adjusted by the holder to a number not to exceed 19.99%) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion.

Redemption

Shares of the Series X Preferred Stock are not redeemable at the election of the holder.

Maturity

The Series X Preferred Stock shall be perpetual unless converted.

10. Common Stock

On February 28, 2024, the Company held its 2023 annual meeting of stockholders (the “2023 Annual Meeting”), at which the Company’s stockholders approved an amendment to the Company’s Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of common stock of the Company from 45,000,000 to 100,000,000 shares. The Company filed the Certificate of Amendment to implement the increase in the number of authorized shares, which was effective upon filing, with the Secretary of State of the State of Delaware on February 28, 2024. The additional shares of common stock authorized by the Certificate of Amendment have rights identical to the Company’s currently outstanding common stock. As of March 31, 2024 and December 31, 2023, the Company was authorized to issue 100,000,000 and 45,000,000 shares of common stock, respectively, par value $0.001 per share.

As of March 31, 2024, the Company had 16,842,512 shares of common stock issued and outstanding. As of December 31, 2023, the Company had 4,885,512 shares of common stock issued and outstanding.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the Company’s board of directors, if any. As of March 31, 2024 and December 31, 2023, no dividends had been declared.

In the event of liquidation or dissolution, the holders of the common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.

Issuance of Common Stock

At the 2023 Annual Meeting, the Company’s stockholders also approved the issuance, in accordance with Nasdaq Listing Rule 5635(a), of shares of common stock, upon conversion of the Company’s outstanding Series X Preferred Stock. On March 5, 2024, based upon existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock and approximately 12,653 shares of Series X Preferred Stock (which are convertible into 12,653,000 shares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations.

On October 31, 2023, Aileron acquired Lung. Under the terms of the Lung Acquisition Agreement, at the closing of the Lung Acquisition, Aileron issued to the stockholders of Lung 344,345 shares of the common stock of Aileron, par value $0.001 per share, and 19,903 shares of Series X Preferred Stock.

Immediately following the closing of the Lung Acquisition, on October 31, 2023, Aileron entered into the Purchase Agreement with a group of accredited investors, pursuant to which Aileron issued and sold 4,707 shares of Series X Preferred Stock and PIPE Warrants to purchase up to an aggregate of 2,353,500 shares of Aileron common stock. Refer to Note 3 for more details on the PIPE Financing in connection with the Purchase Agreement. The exercise price of the PIPE Warrants is $4.89 per share, subject to certain price and share adjustments, including for stock splits, stock dividends, recapitalizations, subdivisions, combinations, reclassifications, noncash distributions, and cash dividends. The PIPE Warrants will be exercisable any time after May 2, 2024 and on or prior to May 2, 2027. Payment for the PIPE Warrant Shares upon exercise of the PIPE Warrants may be (i) in cash or (ii) in the event that there is no registration statement available for the resale of the PIPE Warrant Shares, by cashless exercise.

Under the terms of the PIPE Warrants, the Company shall not effect the exercise of any portion of any PIPE Warrant, and a holder shall not have the right to exercise any portion of any PIPE Warrant, to the extent that after giving effect to such exercise, the holder (together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates), would beneficially own in excess of a percentage elected by the holder up to 19.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise, as such percentage ownership is determined in accordance with the terms of the PIPE Warrants. However, any holder may, upon written notice to the Company, increase or decrease such percentage to any other percentage not in

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excess of 19.99%; provided that any increase or decrease in such percentage will not be effective until 61 days after such notice is delivered to the Company.

The Company has assessed the PIPE Warrants for appropriate equity or liability classification and determined the PIPE Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815, Derivatives and Hedging (“ASC 815”). The PIPE Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the PIPE Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The PIPE Warrants were initially recognized at their relative fair value in the amount of $741 at the time of issuance determined using Black-Scholes option-pricing model and will not be remeasured.

As of March 31, 2024, 16,842,512 shares of common stock were issued and outstanding, no shares were held in treasury, and 24,610 shares of Series X Preferred Stock had been issued, of which 12,653 shares of Series X Preferred Stock remained outstanding. In addition, as of March 31, 2024, there were:

•12,890,000 shares of common stock reserved for issuance upon conversion of the Series X Preferred Stock;

•2,126,972 shares of common stock issuable upon the exercise of options under existing equity incentive plans;

•3,412,623 and 7,500 shares of common stock reserved for issuance under the 2021 Plan (as defined below) and 2017 Employee Stock Purchase Plan, respectively, as well as any automatic increases in the number of shares of the common stock reserved under these plans; and

•3,726,696 shares of common stock reserved for issuance upon exercise of outstanding warrants. The warrants consist of (i) warrants to purchase 646,759 shares of the Company’s common stock, with an exercise price of $40.00 per share, which were issued in a private placement in April 2019, which expire on April 2, 2024; (ii) warrants to purchase 726,437 shares of the Company’s common stock, with an exercise price of $5.66, which expire on May 20, 2029, which were assumed in connection with the Lung Acquisition, and (iii) warrants to purchase 2,353,500 shares of the Company’s common stock, with an exercise price of $4.89 per share, which were issued and sold in the PIPE Financing as described above and expire on May 2, 2027.

Accordingly, as of March 31, 2024, out of the 100,000,000 shares of common stock presently authorized, 39,006,303 shares are issued and outstanding or reserved for issuance and 60,993,697 shares of common stock remain available for future issuance.

11. Stock-Based Awards

As of March 31, 2024, the Company had five equity compensation plans, each of which was approved by its stockholders: 2006 Equity Incentive Plan, as amended (the “2006 Plan”), 2016 Stock Incentive Plan (the “2016 Plan”), 2017 Stock Incentive Plan (the “2017 Plan”), 2021 Stock Incentive Plan (the “2021 Plan”), and 2017 Employee Stock Purchase Plan (the “2017 ESPP”). The Company also assumed Lung’s 2013 Long-Term Incentive Plan (the “2013 Plan”) as a result of the Lung Acquisition.

As of March 31, 2024, the Company had 6,693 shares to be issued upon exercise of outstanding options under the 2006 Plan; 8,404 shares to be issued upon exercise of outstanding options under the 2016 Plan, and 98,528 shares to be issued upon exercise of outstanding options under the 2017 Plan. No shares remained available for future issuance under the 2006 Plan, the 2016 Plan, or the 2017 Plan as of March 31, 2024.

Under the 2021 Plan, shares that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards.

The exercise price for stock options granted may not be less than the fair market value of the common stock as of the date of grant.

2021 Stock Incentive Plan

The Company’s 2021 Plan was approved by the Company’s stockholders on June 15, 2021 and became effective on June 16, 2021. At the 2023 Annual Meeting, the stockholders of the Company approved an amendment (the “Plan Amendment”) to the 2021 Plan to increase the number of shares of common stock issuable under the 2021 Plan by 3,000,000 shares to 3,840,254. On January 17, 2024, upon the recommendation of the compensation committee and subject to stockholder approval, the Company’s Board of Directors adopted the Plan Amendment. Other than increasing the number of shares issuable under the 2021 Plan, the Plan Amendment does not make any changes to the 2021 Plan.

Under the 2021 Plan, the Company may grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, awards of restricted stock units and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2021 Plan; however, incentive stock options may only be granted to employees. The 2021 Plan is administered by the Company’s Board of Directors (the “Board”) or, at the discretion of the Board, by a committee of the Board. The number of shares of common stock covered by options and the date those options become exercisable, type

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of options to be granted, exercise prices, vesting and other restrictions are determined at the discretion of the Board, or its committee if so delegated.

Stock options granted under the 2021 Plan with service-based vesting conditions generally vest over four years and may not have a duration in excess of ten years, although options have been granted with vesting terms of less than four years.

The total number of shares of common stock that may be issued under the 2021 Plan was 3,841,710 as of March 31, 2024, of which 3,412,623 shares remained available for grant. The Company initially reserved 625,000 shares of common stock, plus the number of shares of common stock subject to outstanding awards under the 2017 Plan, the 2016 Plan and the 2006 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right up to 314,006 shares.

2017 Stock Incentive Plan

The 2017 Plan was approved by the Company’s stockholders on June 16, 2017, and became effective on June 28, 2017. Under the 2017 Plan, the Company could grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, awards of restricted stock units and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors were eligible to receive awards under the 2017 Plan; however, incentive stock options could only be granted to employees. The 2017 Plan is administered by the Board or, at the discretion of the Board, by a committee of the Board. The number of shares of common stock covered by options and the date those options become exercisable, type of options granted, exercise prices, vesting and other restrictions were determined at the discretion of the Board, or its committee if so delegated.

Stock options granted under the 2017 Plan with service-based vesting conditions generally vest over four years and may not have a duration in excess of ten years, although options have been granted with vesting terms of less than four years. The exercise price for stock options granted may not be less than the fair market value of the common stock as of the date of grant.

As of the effective date of the 2021 Plan, the Board determined to grant no further awards under the 2017 Plan.

Shares that are expired, terminated, surrendered or canceled without having been fully exercised under the 2017 Plan will be available for future awards under the 2021 Plan. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards under the 2021 Plan.

2017 Employee Stock Purchase Plan

On June 16, 2017, the Company’s stockholders approved the 2017 ESPP, which became effective on June 28, 2017. Under the 2017 ESPP, the number of shares of common stock that may be issued under the 2017 ESPP will automatically increase on each January 1, beginning with the fiscal year ended December 31, 2018 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2027, equal to the least of (i) 31,120 shares, (ii) 1% of the outstanding shares of common stock on such date and (iii) an amount determined by the Company’s Board. On January 1, 2023 and January 1, 2024, no additional shares were reserved for issuance under the 2017 ESPP pursuant to this provision. 7,500 shares remained available for future issuance under the 2017 ESPP as of March 31, 2024.

2013 Stock Incentive Plan

The Company assumed the 2013 Plan as a result of the Lung Acquisition. In October 2013, Lung’s Board of Directors (“Lung Board”) approved the 2013 Plan to provide long-term incentives for its employees, non-employee directors and certain consultants. As of March 31, 2024, 1,780,459 shares were reserved to be issued upon exercise of options outstanding under the 2013 Plan. These options were assumed by the Company in connection with the Lung Acquisition.

Before the Lung Acquisition, the 2013 Plan was administered by the Lung Board or, at the discretion of the Lung Board, by a committee of the Lung Board. The exercise prices, vesting and other restrictions were determined at the discretion of the Lung Board, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the share of common stock on the date of grant and the term of stock option may not be greater than ten years. The contractual term for stock option awards is ten years. The vesting periods for equity awards were determined by the Lung Board, but generally were four years. The contractual term for stock option awards is ten years. Following the closing of the Lung Acquisition on October 31, 2023, no further awards can be granted under the 2013 Plan.

Stock Option Valuation

The assumptions that the Company used to determine the grant-date fair value of the stock options granted to employees and directors during the three months ended March 31, 2024 and 2023 were as follows, presented on a weighted average basis:

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	Three Months Ended March 31,
	2024			2023
Risk-free interest rate		4.26	%		2.33	%
Expected term (in years)		5.5			6.1
Expected volatility		105.7	%		94.4	%
Expected dividend yield		0	%		0	%

Stock Options

The following table summarizes the Company’s stock option activity since January 1, 2023:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2023		2,212,102		$	7.42		6.0	$	2,905
Granted		5,450			4.72		—
Exercised		—			—		—		—
Forfeited/Canceled		(26,297	)		4.07		—		—
Expired		(64,283	)		37.56		—
Outstanding at March 31, 2024		2,126,972			6.54		5.8		8,895
Options exercisable at March 31, 2024		1,882,612		$	6.38		5.6	$	8,193
Options vested and expected to vest at March 31, 2024		2,118,381		$	6.55		5.8	$	8,861
Options exercisable at December 31, 2023		1,882,191		$	7.46		5.8	$	2,631
Options vested and expected to vest at December 31, 2023		2,209,420		$	7.41		6.0	$	2,904

The weighted average grant-date fair value of stock options granted during the three months ended March 31, 2024 was $3.82. There were no options granted to employees or directors during the three months ended March 31, 2023. The aggregate fair value of stock options that vested during the three months ended March 31, 2024 and 2023, was $228 and $405, respectively.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. There were no stock options exercised during the three months ended March 31, 2024 and 2023.

Stock-Based Compensation

The Company recorded stock-based compensation expense related to stock options in the following expense categories of its statements of operations and comprehensive loss:

	Three Months Ended March 31,
	2024		2023
Research and development expenses	$	39	$	119
General and administrative expenses		111		272
	$	150	$	391

As of March 31, 2024, the Company had an aggregate of $525 of unrecognized stock-based compensation expense, which it expects to recognize over a weighted average period of 1.65 years.

On March 11, 2024, the Company and Manuel C. Alves-Aivado, M.D., Ph.D., agreed that his employment with the Company would cease and he would resign from his position as Chief Executive Officer ("CEO") of the Company, effective as of March 11, 2024. Dr. Aivado remains a member of the Company’s Board. Dr. Aivado’s resignation from the Company was not the result of any disagreement with the Company on any matter relating to its operations, policies or practices. As a non-employee director, following the separation date, Dr. Aivado will be compensated in accordance with the terms of the Company’s non-employee director compensation program. In addition, Dr. Aivado will continue to vest in all unvested stock option awards pursuant to the original vesting terms. The resignation of Dr. Aivado as CEO was considered a significant reduction in service and his original awards were deemed to have been modified and accounted for as a Type III modification with no material effect on these condensed consolidated financial statements.

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12. Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows:

	Three Months Ended March 31,
	2024			2023
Numerator:
Net loss	$	(7,113	)	$	(4,779	)
Denominator:
Weighted average common shares outstanding—basic and diluted		8,301,798			4,541,167
Net loss per share attributable to common stockholders—basic and diluted	$	(0.86	)	$	(1.05	)

The Company’s potential dilutive securities, which include stock options as of March 31, 2024 and 2023, have been excluded from the computation of diluted net loss per share attributable to common stockholders whenever the effect of including them would be to reduce the net loss per share. In periods where there is a net loss, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	Three Months Ended March 31,
	2024		2023
Options to purchase common stock		2,126,972		506,986
Warrants to issue shares of common stock		3,726,696		646,759
Series X Preferred Stock issued and outstanding, as converted		12,653,000		—
Total		18,506,668		1,153,745

13. Income Taxes

As of March 31, 2024, the Company has not recorded any U.S. federal or state income tax benefits for either the net losses it has incurred or its earned research and orphan drug credits, due to the uncertainty of realizing a benefit from those items in the future.

14. Related Party Transactions

On March 5, 2024, entities and individuals affiliated with Bios Partners (collectively, the “Bios Entities”) converted 1,476 shares of the Company’s Series X Preferred Stock into 1,476,000 shares of common stock. After the conversion, as of March 31, 2024, the Bios Entities owned 1,673,305 shares of the Company’s common stock resulting in a beneficial ownership of 9.9% of the Company’s outstanding common stock.

On March 5, 2024, the Board of Regents of the University of Texas System, or UT System, on behalf of University of Texas Health Science Center at Tyler, or UTHSCT, converted 503 shares of the Company’s Series X Preferred Stock into 503,000 shares of the Company's common stock. On the same date, UT System, on behalf of University of Texas in Austin, or UT Austin, converted 1,277 shares of the Company’s Series X Preferred Stock into 1,277,000 shares of the Company's common stock. Given the effect of the conversion, as of March 31, 2024, UT System and its affiliates beneficially owned 1,812,627 shares of the Company’s common stock resulting in a beneficial ownership of 10.8% of the Company’s outstanding common stock. The Company also has several license agreements with UT System and its affiliates, as disclosed in Note 15.

15. Commitments and Contingencies

Operating Leases

On August 16, 2021, Lung entered into an operating lease agreement to rent approximately 6,455 square feet of office space for its corporate headquarters in Austin, Texas, beginning on October 1, 2021. The lease expired March 31, 2024, and the Company did not renew the lease. Following expiration of the lease, the Company is operating virtually, and expects to do so for the foreseeable future.

Legal Proceedings

The Company may from time to time be party to litigation arising in the ordinary course of business. As of March 31, 2024, the Company was not party to any legal proceedings and no material legal proceedings are currently pending or, to the best of the Company’s knowledge, threatened.

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Intellectual Property Licenses

Harvard and Dana-Farber Agreement

In August 2006, the Company entered into an exclusive license agreement with President and Fellows of Harvard College (“Harvard”) and Dana-Farber Cancer Institute (“DFCI”). The agreement granted the Company an exclusive worldwide license, with the right to sublicense, under specified patents and patent applications to develop, obtain regulatory approval for and commercialize specified product candidates based on cell-permeating peptides. Under the agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize one or more licensed products and to achieve specified milestone events by specified dates. In connection with entering into the agreement, the Company paid an upfront license fee and issued to Harvard and DFCI shares of its common stock.

In February 2010, the agreement was amended and restated (the “Harvard/DFCI agreement”) under which additional patent rights were added to the scope of the license agreement and the annual license maintenance fees were increased. Under the Harvard/DFCI agreement, the Company is obligated to make aggregate milestones payments of up to $7,700 per licensed therapeutic product upon the Company’s achievement of specified clinical, regulatory and sales milestones with respect to such product and up to $700 per licensed diagnostic product upon the Company’s achievement of specified regulatory and sales milestones with respect to such product. In addition, the Company is obligated to pay royalties of low single-digit percentages on annual net sales of licensed products sold by the Company, its affiliates or its sublicensees. The royalties are payable on a product-by-product and country-by-country basis and may be reduced in specified circumstances. In addition, the agreement obligates the Company to pay a percentage, up to the mid-twenties, of fees received by the Company in connection with its sublicense of the licensed products. In accordance with the terms of the agreement, the Company’s sublicense payment obligations may be subject to specified reductions.

The Harvard/DFCI agreement requires the Company to pay annual license maintenance fees of $110 each year, which was reduced to $35 starting in 2023. Any payments made in connection with the annual license maintenance fees will be credited against any royalties due.

As of March 31, 2024, the Company had not developed a commercial product using the licensed technologies and no royalties under the agreement had been paid or were due.

Under the Harvard/DFCI agreement, the Company is responsible for all patent expenses related to the prosecution and maintenance of the licensed patents and applications in-licensed under the agreement as well as cost reimbursement of amounts incurred for all documented patent-related expenses. The agreement will expire on a product-by-product and country-by-country basis upon the last to expire of any valid patent claim pertaining to licensed products covered under the agreement. The Company incurred $9 and $nil license maintenance fees in the three months ended March 31, 2024 and 2023, respectively.

Agreement with the University of Texas Health Science Center at Tyler

In June 2013, Lung entered into a patent and technology license agreement with UT System, on behalf of UTHSCT. The patent and technology license agreement with UT System (the “UTHSCT Agreement”) provides Lung access to patents and technology related to the development of LTI-01 and LTI-03. As part of the UTHSCT Agreement, Lung has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell certain intellectual property; (ii) a non-exclusive license under the technology rights to manufacture, distribute and sell the licensed product; and (iii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the UTHSCT Agreement. In December 2013, the UTHSCT Agreement was amended and restated to include certain patents in all fields worldwide. In May 2017, the UTHSCT Agreement was amended and restated to modify the specific milestone criteria.

In consideration of the UTHSCT Agreement, Lung granted UT System (via UTHSCT and UT Horizon Fund affiliates) (i) 2,000,000 shares of Lung common stock and (ii) 400,000 shares of Lung non-convertible preferred stock. On February 6, 2015, UT System exchanged the 400,000 shares of Lung non-convertible preferred stock for 4,000,000 shares of Lung common stock. In addition, Lung agreed to pay past and ongoing patent expenses, and Lung owes UTHSCT sublicensing fees, assignment fees, and single digit royalties on worldwide net product sales, with fixed minimum royalty payments that started in 2015.

Pursuant to the UTHSCT Agreement, Lung is required to use diligent efforts to commercialize the licensed technology as soon as commercially practicable, including maintaining active research and development, regulatory, marketing and sales program, all as commercially reasonable.

The Company may terminate the UTHSCT Agreement for convenience with 90 days’ notice. UTHSCT may also terminate the UTHSCT Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense in the three months ended March 31, 2024 and 2023.

Agreement with the University of Texas at Austin

In May 2015, Lung entered into a patent license agreement with UT Austin on behalf of UT System. This license agreement with UT Austin (the “UT Austin 6607 Agreement”) relates to the patent rights to polypeptide therapeutics and uses thereof. Pursuant to the

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UT Austin 6607 Agreement Lung has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell the licensed product; and (ii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. The UT Austin 6607 Agreement was amended and restated in January 2017, November 2018, and June 2019. The amendments related to extension of milestone payment dates and specific terminology around the milestone achievement criteria.

In consideration of the UT Austin 6607 Agreement, Lung agreed to pay past and ongoing patent expenses, milestone fees upon certain development and regulatory milestone events, annual license fees, tiered sublicense fees, assignment fees, low single digit royalties on net sales and a Food and Drug Administration (“FDA”) Priority Review Voucher fee if Lung sells or transfers this voucher.

Pursuant to the UT Austin 6607 Agreement, Lung is required to use diligent efforts to commercialize the licensed products, including maintaining active research and development, regulatory, marketing and sales program. Moreover, Lung is required to meet certain development and regulatory milestones by specific dates.

The Company may terminate the UT Austin 6607 Agreement for convenience with 90 days’ notice. UT Austin may also terminate the UT Austin 6607 Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense in the three months ended March 31, 2024 and 2023.

Agreement with Medical University of South Carolina

In March 2016, Lung entered into a license agreement with Medical University of South Carolina Foundation for Research Development, or MUSC. Pursuant to this license agreement with MUSC (the “MUSC Agreement”) Lung has patent rights related to protecting against lung fibrosis by up regulating Cav1. The MUSC Agreement granted (i) a royalty-bearing, exclusive license under the patent rights to make, use and sell the license product; and (ii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. In September 2018, the agreement was amended and restated to include definitions of related methods, related products and related rights.

In consideration of the MUSC Agreement, Lung agreed to pay a non-refundable license fee, patent expenses, milestone fees upon certain development, regulatory and commercial milestone events, sublicense fees, assignment fees and low single digit royalties on net sales, with a fixed minimum royalty payment starting in 2019 and a transaction fee upon Lung’s liquidation.

Pursuant to the MUSC Agreement, Lung is required to use diligent efforts to develop, manufacture and sell the licensed products.

The Company may terminate the MUSC Agreement for convenience by providing a written notice to MUSC effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company incurred $25 and $nil license fee in the three months ended March 31, 2024 and 2023, respectively.

Agreement with Vivarta Therapeutics LLC

In March 2018, Lung entered into a license agreement with Vivarta Therapeutics, LLC, or Vivarta. This license agreement with Vivarta (the “Vivarta Agreement”) relates to intellectual property relating to epithelial sodium channel inhibitors and methods to treat pulmonary disease. Pursuant to the Vivarta Agreement Lung has (i) a royalty-bearing, exclusive license under the intellectual property rights to make, use and sell the licensed product, and (ii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement.

In consideration for the Vivarta Agreement, Lung agreed to grant Vivarta a warrant to purchase an aggregate of 75,000 shares of Lung common stock for $0.12 per share, to pay a license fee of $10,000 upon the Vivarta Agreement effective date and $40,000 within 30 days of the receipt of a positive freedom to operate analysis from legal counsel. Lung also agreed to pay patent expenses, milestone fees upon certain development and regulatory milestone events, sublicense fees, assignment fees and low single digit royalties on net sales.

Pursuant to the Vivarta Agreement, Lung is required to use diligent efforts to develop, manufacture and sell the licensed products.

The Company may terminate the Vivarta Agreement for convenience by providing a written notice to Vivarta effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company did not incur any expense in the three months ended March 31, 2024 and 2023.

Manufacturing Commitments

As of March 31, 2024, the Company has non-cancellable purchase obligations and a prepaid balance with its contract manufacturer in the amount of $2,339 and $131, respectively.

Aggregate future service and purchase commitments with manufacturer as of March 31, 2024 are as follows:

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	March 31, 2024
2024	$	-
2025 and thereafter		2,339
Total purchase commitments		2,339

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it had not accrued any liabilities related to such obligations in its consolidated financial statements as of March 31, 2024 or December 31, 2023.

16. Subsequent Event

As discussed in Note 1 – Nature of the Business – Liquidity and Going Concern, on May 1, 2024, the Company entered into the Underwriting Agreement and sold 4,273,505 Offering Shares and 4,273,505 Offering Warrants to purchase 4,273,505 shares of the Company’s common stock to several investors for the net proceeds from the Offering of approximately $17,945, after deducting underwriting discounts and commissions and estimated offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants. The Offering closed on May 3, 2024.

Each Offering Share was offered and sold together with an accompanying Offering Warrant at a combined offering price of $4.68. Each Offering Warrant has an exercise price per share of common stock equal to $4.68. Each Offering Warrant is immediately exercisable and may be exercised until the third anniversary of the issuance date. Each Offering Warrant is exercisable solely by means of a cash exercise, except that an Offering Warrant is exercisable via cashless exercise if at the time of exercise, a registration statement registering the issuance of Offering Warrant Shares is not then effective or the prospectus is not available for the issuance of Offering Warrant Shares.

Each Offering Warrant is callable by the Company during the ten trading day period after the date that is 30 days following the public announcement by the Company of the top-line results from the Phase 1b clinical trial of LTI-03 in patients with IPF, including a statement that there were no drug-related adverse events that resulted in a discontinuation of the trial (the “Trigger Date”). Subject to certain exceptions, in the event that the Offering Warrants are outstanding, if, after the Trigger Date, then the Company may, within ten trading days of the Trigger Date, upon notice (a “Call Notice”), call for cancellation of the Offering Warrants for which a notice of exercise has not yet been delivered for consideration equal to $0.001 per Offering Warrant Share; provided that the Company may only deliver such Call Notice if the volume-weighted average price of its shares of common stock exceeds the exercise price of the Offering Warrants on the trading day immediately prior to the date the Company delivers the Call Notice. Any Offering Warrant subject to such Call Notice for which a notice of exercise shall not have been received by the Call Date (as hereinafter defined) will be cancelled at 6:30 p.m. (New York City time) on the tenth trading day after the date the Company sends the Call Notice.

On May 8, 2024, the Bios Entities provided notice to the Company and converted 421 shares of the Company’s Series X Preferred Stock into 421,000 shares of common stock.

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

The following discussion and analysis are meant to provide material information relevant to an assessment of the financial condition and results of operations of our Company, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, so as to allow investors to better view our Company from management’s perspective. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements for the three months ended March 31, 2024, included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”).

Overview and Recent Developments

We are a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. We currently have two product candidates in clinical development, LTI-03 and LTI-01, and multiple candidates in preclinical development focused on fibrosis indications. Our pipeline includes:

•LTI-03, a peptide, for which we are currently recruiting patients for a Phase 1b dose-ranging, placebo-controlled safety, tolerability, and pharmacodynamic biomarker activity trial in development for the treatment of IPF, that has demonstrated the ability to protect healthy lung epithelial cells and reduce pro-fibrotic signaling;

•LTI-01, a proenzyme that completed a Phase 2a dose-ranging, placebo-controlled trial and a Phase 1b safety, tolerability and proof of mechanism trial in LPE patients, an indication that has no approved drug treatment; and

•preclinical programs targeting cystic fibrosis and a peptide program focused on the Cav1 protein for systemic fibrosis indications.

On May 1, 2024, we announced positive data from Cohort 1 of the ongoing Phase 1b clinical trial evaluating the safety and tolerability of inhaled LTI-03 in patients diagnosed with IPF.

The Phase 1b trial of LTI-03 is a randomized, double-blind, placebo-controlled, Phase 1b clinical trial of LTI-03 in IPF patients, which is being conducted at 11 centers in the United States, the United Kingdom, Belgium, Germany and Australia. We plan to enroll a total of 24 patients. In the trial, these patients have a bronchoscopy at a baseline screening followed by either LTI-03 or placebo twice a day for 14 days. On day 14, shortly after the final dose, patients receive a second bronchoscopy and are monitored thereafter for seven days. In cohort 1, patients in the active arm inhaled a single 2.5 mg capsule of LTI-03 twice daily. In Cohort 2, patients will receive two 2.5 mg capsules of LTI-03 for inhalation twice daily.

Of the 12 patients enrolled in Cohort 1 of the trial, three were randomized to the placebo arm and nine to the active arm. In addition to the safety and tolerability of LTI-03, in the trial, various biomarkers relating to epithelial damage, fibrosis and inflammation in blood cells were assessed. The eight biomarkers that the Company evaluated in Cohort 1 included: thymic stromal lymphopoietin (TSLP), galectin-7 (GAL-7), interleukin-11 (IL-11), collagen 1 alpha chain (Col-1α1), phosphorylated SMAD2/3 (pSMAD2/3/tSMAD2/3), phosphorylated AKT kinase (pAKT), soluble (sol) receptor for advanced glycation end-products (solRAGE), and CXC chemokine 7 (CXCL7).

In Cohort 1, a positive trend was observed in seven out of the eight biomarkers with data from three biomarkers being statistically significant (based on a one-tailed t-test). The findings from Cohort 1 include:

•LTI-03 reduced expression of multiple profibrotic proteins in both pathologic basal-like cells and fibroblasts, with statistically significant decreases observed in three biomarkers - GAL-7 (p=0.0014, SEM 0.901), TSLP (p=0.0223, SEM 5.163) and Col-1α1 (p=0.0489, SEM 0.7102) - supporting the potential of LTI-03 to reduce fibrosis, inflammation and associated changes in the lung.

•LTI-03 stimulated production of solRAGE (p=0.1407, SEM 0.3269), a factor indicative of type I epithelial cell health that is a critically important aspect of IPF and has gone largely unaddressed.

•LTI-03 did not induce inflammation in peripheral blood mononuclear cells as measured by pAKT (p=0.358, SEM 11.32).

•LTI-03 was generally well-tolerated with no serious adverse events reported.

•The Phase 1b trial is ongoing, with topline results from the high-dose Cohort 2 expected in the third quarter of 2024.

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Announcement of Exploration of Strategic Alternatives

Prior to the termination of development of our main product candidate in February 2023 and the Lung Acquisition (as described below), our focus was the development of our main product candidate, ALRN-6924, a MDM2/MDMX dual inhibitor that leveraged our proprietary peptide drug technology. Since our inception, we have devoted a substantial portion of our resources to developing our product candidates, including ALRN-6924, developing our proprietary stabilized cell-permeating peptide platform, building our intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations.

In February 2023, we announced a review of initial data from our Phase 1b chemoprotection trial of ALRN-6924 in patients with p53-mutated breast cancer. Based on these findings, we decided to terminate the Phase 1b breast cancer trial and further development of ALRN-6924. We also announced that we were exploring a range of strategic alternatives to maximize shareholder value. We engaged Ladenburg Thalmann & Co., Inc. to act as a strategic advisor for this process. Strategic alternatives that were being evaluated included, but were not limited to, an acquisition, a merger, a business combination, a sale of assets or other transactions. In addition, in February 2023, we determined to reduce our workforce from nine to three full-time employees, which we completed in the second quarter of 2023.

The Lung Acquisition

On October 31, 2023, we acquired Lung Therapeutics, Inc., or Lung, pursuant to an Agreement and Plan of Merger (the “Lung Acquisition Agreement”). Following our acquisition of Lung (the “Lung Acquisition”) the business conducted by Lung became the business primarily conducted by the Company and we shifted our operating disease focus to advancing a pipeline of first-in-class medicines to address significant unmet medical needs in orphan pulmonary and fibrosis indications.

Under the terms of the Lung Acquisition Agreement, at the closing of the Lung Acquisition, we issued to the stockholders of Lung 344,345 shares of our common stock and 19,903 shares of our newly designated Series X Preferred Stock. Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock. In addition, we assumed all Lung stock options and all warrants exercisable for Lung common stock immediately outstanding prior to the closing of the Lung Acquisition, each subject to adjustment pursuant to the terms of the Lung Acquisition Agreement.

Immediately following the closing of the Lung Acquisition, we entered into a Stock and Warrant Purchase Agreement (the “Purchase Agreement”) with a group of accredited investors led by Bios Partners, the majority stockholder of Lung prior to the closing of the Lung Acquisition, and including Nantahala Capital, as well as additional undisclosed investors, pursuant to which we issued and sold (i) an aggregate of 4,707 shares of Series X Preferred Stock, and (ii) warrants to purchase up to an aggregate of 2,353,500 shares of common stock (the “PIPE Warrant Shares”) for an aggregate purchase price of approximately $18.4 million, which included the conversion of certain convertible promissory notes in the aggregate principal amount of approximately $1.6 million issued by Lung to Bios Partners prior to the closing of the Lung Acquisition at a 10% discount to the per share price of the Series X Preferred Stock (the “PIPE Financing”). The PIPE Financing closed on November 2, 2023.

On February 28, 2024, we held our 2023 annual meeting of stockholders in which our stockholders approved the issuance, in accordance with Nasdaq Listing Rule 5635(a), of shares of common stock, upon conversion of our outstanding Series X Preferred Stock. Following approval of the conversion of outstanding Series X Preferred Stock, the Company had approximately 29,495,512 shares of common stock issued and outstanding on a pro forma basis, which gives effect to the full conversion of the Series X Preferred Stock as of the date of our 2023 annual meeting of stockholders, without regard to beneficial ownership limitations that may limit the ability of certain holders of Series X Preferred Stock to convert such shares to common stock as such time. On March 5, 2024, based upon existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock and approximately 12,653 shares of Series X Preferred Stock (which are convertible into 12,653,000 shares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations.

Components of our Results of Operations

Revenue

We have not generated any revenue from product sales and we do not expect to generate any revenue from the sale of products in the foreseeable future.

Operating Expenses

Our expenses since inception have consisted solely of research and development costs, general and administrative, and restructuring costs.

Research and Development Expenses

For the periods presented in this Quarterly Report on Form 10-Q, research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:

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•salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;

•expenses incurred in connection with the clinical development of its product candidates, including under agreements with third parties, such as consultants and contract research organizations, or CROs;

•the cost of manufacturing product candidates for use in its clinical trials and preclinical studies, including under agreements with third parties, such as consultants and contract manufacturing organizations, or CMOs;

•expenses incurred in connection with the preclinical development of its product candidates, including outsourced professional scientific development services, consulting research fees and payments made under sponsored research arrangements with third parties;

•the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

•third-party license fees;

•costs related to compliance with regulatory requirements; and

•facility-related expenses, which included direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We expense research and development costs as incurred. We recognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors and our clinical investigative sites. Payments for these 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 or accrued research and development expenses.

In addition, we typically used our employee and infrastructure resources across our development programs. We tracked outsourced development costs and milestone payments made under our licensing arrangements by product candidate or development program, but we did not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates because these costs are deployed across multiple programs and, as such, are not separately classified.

Research and development activities are central to our business model. The duration, costs and timing of clinical trials and development of a product candidate will depend on a variety of factors, including:

•the scope, rate of progress, expense and results of clinical trials of the product candidate that we are developing and other research and development activities that we have conducted;

•uncertainties in clinical trial design and patient enrollment rates;

•significant and changing government regulation and regulatory guidance;

•the timing and receipt of any marketing approvals; and

•the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, or another regulatory authority were to have required us to conduct clinical trials beyond those that we anticipated would be required for the completion of clinical development of a product candidate, or if we experienced significant trial delays due to patient enrollment or other reasons, we would have been required to expend significant additional financial resources and time on the completion of clinical development.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance and corporate and administrative functions. General and administrative expenses are comprised of professional fees associated with being a public company including costs of accounting, auditing, legal, regulatory, tax and consulting services associated with maintaining compliance with exchange listing and the SEC requirements, director and officer insurance costs; and both public and investor relations costs. General and administrative expenses also include legal fees relating to patent and corporate matters; legal and other professional fees relating to our strategic process; other insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

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Restructuring Costs

Restructuring-related charges are comprised of one-time termination costs in connection with the reduction-in-workforce, including severance, benefits, and related costs.

Other Income, net

Interest and Other Income

Interest income consists of interest income earned on our cash and cash equivalents. Historically, our interest income had not been significant due to low investment balances and low interest earned on those balances. We anticipate that our interest income will fluctuate in the future in response to our cash and cash equivalents and the interest rate environment.

Other income, net consists of gains or losses recognized from non-routine items such as accretion on short-term investments, and gains or losses recognized from foreign currency transactions, and the disposal of fixed assets.

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,						Increase
	2024			2023			(Decrease)
	(in thousands)
Revenue	$	—		$	—		$	—
Operating expenses:
Research and development		3,463			1,810			1,653
General and administrative		3,742			2,179			1,563
Restructuring and Other Costs		—			1,022			(1,022	)
Total operating expenses		7,205			5,011			2,194
Loss from operations		(7,205	)		(5,011	)		(2,194	)
Other income (expense), net		92			232			(140	)
Net loss	$	(7,113	)	$	(4,779	)	$	(2,334	)

Research and Development Expenses

Research and development expenses for the three months ended March 31, 2024 were $3.5 million, compared to $1.8 million for the three months ended March 31, 2023. The increase of $1.7 million was primarily a result of the Lung Acquisition in October 2023. During the three months ended March 31, 2024, Aileron spent $1.1 million on clinical trials, $1.6 million on manufacturing, and $0.2 million on regulatory and development consulting as well as $0.6 million on employee and related expenses associated with clinical programs acquired in the Lung Acquisition. These programs and related activities did not exist during the three months ended March 31, 2023 and were offset by the termination of ALRN-6924 activities during the three months ended March 31, 2023.

General and Administrative Expenses

General and administrative expenses were $3.7 million for the three months ended March 31, 2024, compared to $2.2 million for the three months ended March 31, 2023. The increase of $1.5 million was primarily due to increased professional fees of $1.0 million and increased employee and related expenses of $0.3 million as a result of the Lung Acquisition, and increased facilities and other expenses of $0.2 million in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Restructuring and Other Costs

There were no restructuring-related expenses incurred in the three months ended March 31, 2024. On February 16, 2023, our Board of Directors determined to reduce the Company’s remaining workforce from nine to three full-time employees. As a result, we incurred restructuring-related charges of $1.0 million for the three months ended March 31, 2023. Restructuring-related charges were comprised of one-time termination costs in connection with the reduction-in-workforce, including severance, benefits, and related costs. All restructuring-related expenses incurred and were paid in 2023.

Other Income, net

Other income, net for the three months ended March 31, 2024 was less than $0.1 million. Other income, net, in the three months ended March 31, 2024 was primarily driven by fluctuations in foreign currency exchange rates and interest of our money market funds.

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Liquidity and Capital Resources

Since inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our lead candidates, LTI-03 and LTI-01, or any future product candidates. We expect that our research and development and general and administrative costs will continue to increase significantly, including in connection with conducting clinical trials and manufacturing for our lead product candidates or any future product candidates to support potential future commercialization and providing general and administrative support for our operations, including the costs associated with operating as a public company. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources. See the section titled “Risk Factors” found elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024 for additional risks associated with our substantial capital requirements.

To date, we have funded our operations through sales of common stock in our initial public offering and follow-on public offerings, sales of common stock and warrants in a private placement, sales of common stock in “at-the-market” offerings, sales of common stock under our equity line with Lincoln Park Capital LLC, sales of preferred stock prior to our initial public offering, payments received under a collaboration agreement and sales of common stock, preferred stock and warrants in connection with the Lung Acquisition and the Financing. As of March 31, 2024, we had cash and cash equivalents of $12.0 million.

On May 1, 2024, we entered into an underwriting agreement with Titan Partners Group LLC, a division of American Capital Partners, LLC, as underwriter, relating to an underwritten offering (the “Offering”) of 4,273,505 shares of our common stock, par value $0.001 per share and accompanying warrants to purchase 4,273,505 shares of our common stock. All of the shares and warrants were sold by May 3, 2024 for the net proceeds from the Offering of approximately $17.9 million, after deducting underwriting discounts and commissions and estimated offering expenses, and excluding any proceeds that may be received from exercise of the warrants. We expect to use the net proceeds from the Offering, together with our existing cash and cash equivalents, to fund the development and commercialization of our product candidates, including an ongoing Phase 1b clinical trial of LTI-03; and for working capital and other general corporate purposes.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented:

	Three Months Ended March 31,
	2024			2023
	(in thousands)
Cash used in operating activities	$	(5,271	)	$	(4,661	)
Cash provided by investing activities		—			7,250
Cash provided by financing activities		—			—
Net increase in cash, cash equivalents and restricted cash	$	(5,271	)	$	2,589

Operating Activities.

During the three months ended March 31, 2024, net cash used in operating activities was $5.3 million primarily due to our net loss of $7.1 million, offset by cash provided by the change in operating assets and liabilities of $1.6 million and non-cash charges of $0.2 million. Non-cash charges resulted primarily from stock-based compensation expense of $0.2 million. Changes in our operating assets and liabilities during the three months ended March 31, 2024 consisted primarily of a decrease of $1.3 million in other assets due to the recognition of a prepaid expense, and an increase of $1.0 million in accounts payable, offset by a decrease of $0.8 million in accrued expenses and other current liabilities. During the three months ended March 31, 2023, net cash used in operating activities was $4.7 million primarily due to our net loss of $4.8 million.

Investing Activities.

During the three months ended March 31, 2024, net cash provided by investing activities was $0 million. During the three months ended March 31, 2023, net cash provided by investing activities was $7.3 million primarily resulting from proceeds from the sale of investments.

Financing Activities.

During the three months ended March 31, 2024 and 2023, net cash provided by financing activities was $0 million.

Funding Requirements

Our plan of operation is to continue implementing our business strategy, continue research and development of LTI-03 and LTI-01 and any other product candidates we may acquire or develop and continue to expand our research pipeline and our internal research and development capabilities. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our current and future product candidates. In addition, we expect to incur

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additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or terminate our research and development programs or future commercialization efforts. Our future capital requirements will depend on many factors, including:

•the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current and future product candidates;

•the number of clinical trials required for regulatory approval of our current and future product candidates;

•the costs, timing, and outcome of regulatory review of any of our current and future product candidates;

•the cost of manufacturing clinical and commercial supplies of our current and future product candidates;

•the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval;

•the costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights;

•our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty, or other payments due under any such agreement;

•the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

•expenses to attract, hire and retain, skilled personnel;

•the costs of operating as a public company;

•if our product candidates are approved, our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payors;

•the effect of competing technological and market developments;

•the extent to which we acquire or invest in businesses, products, and technologies; and

•unfavorable global economic conditions, which may exacerbate the magnitude of the factors discussed above.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of the product candidates. As of March 31, 2024, we had cash and cash equivalents of $12.0 million. Based on our research and development plans, and using the proceeds from the Offering, we believe that our existing cash and cash equivalents, will be sufficient to fund our operations into the second half of 2025. 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.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations from the sale of additional equity or debt financings, or other capital which comes in the form of strategic collaborations, licensing, or other arrangements. In the event that additional financing is required, we may not be able to raise it on terms acceptable to us, or at all. If we raise additional funds through the issuance of equity or convertible preferred stock, it may result in dilution to our existing stockholders. Debt financing or preferred equity financing, if available, may result in increased fixed payment obligations, and the existence of securities with rights that may be senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations.

If we raise funds through strategic collaboration, licensing or other arrangements, we may relinquish significant rights or grant licenses on terms that are not favorable to us. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide. 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 products or product candidates that we would otherwise prefer to develop and market ourselves.

Critical Accounting Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements to this Report on Form 10-Q, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends

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and events and various other factors that we believe are 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. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2024, there were no material changes to the items that we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on April 15, 2024.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements to this Report on Form 10-Q for a discussion of recent accounting pronouncements.

Emerging Growth Company Status

We ceased to qualify as an emerging growth company as of December 31, 2022, and became subject to Section 14A(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), beginning with our fiscal year that started January 1, 2023. However, notwithstanding the loss of our status as an emerging growth company, we will continue to be exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 for so long as we are neither a “large accelerated filer” nor an “accelerated filer” as those terms are defined in Rule 12b-2 under the Exchange Act.

We are a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700.0 million. For so long as we continue to be a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

Limitations on Effectiveness of Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and our principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2024, because of the identified material weaknesses in our internal control over financial reporting described below.

Material Weaknesses

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. In the year ended December 31, 2023, management identified material weaknesses primarily related to the accounting for the business combination with Lung Therapeutics, Inc., specifically the (i) lack of sufficient accounting and supervisory personnel to maintain appropriate segregation of duties relating to user access of the financial accounting system and who have the appropriate level of technical accounting

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experience and training, (ii) lack of evidence over reviews of account reconciliations and supporting schedules, and (iii) lack of adequate procedures and controls to ensure that accurate financial statements could have been prepared and reviewed on a timely basis for annual reporting purposes. In the year ended December 31, 2023, management identified material weaknesses related to the accounting for our acquisition of Lung, including a lack of sufficient precision in the performance of reviews supporting the purchase price allocation accounting, and a lack of timely oversight over third-party specialists and the reports they produced to support the accounting for the Lung Acquisition.

Management’s Plan to Remediate the Material Weaknesses

We have implemented and are continuing to implement procedures to remediate these material weaknesses, including the hiring of a Controller with the requisite supervisory background and knowledge in financial reporting, integration into one accounting system, engaging third party accounting specialists and building a more streamlined process in order to prepare and review financial information, however, our control environment needs improvement, and as a result we may be exposed to errors. Our remediation plan also includes the hiring of additional accounting employees and/or consultants with the specific technical accounting experience necessary to assist with complex, non-routine transactions and to support the timely completion of financial close procedures, the implementation of robust processes, and to assist with the preparation of financial statements and our compliance with SEC reporting obligations. Management has engaged an external advisor to assist in evaluating and documenting the design and operating effectiveness of our internal control over financial reporting, and their work is ongoing. With the help of third-party consultants, we have nearly completed the integration of the acquired systems from the Lung Acquisition into our financial and accounting systems. Additionally, we intend to develop and implement consistent accounting policies and internal control procedures and provide additional training to our accounting and financial reporting personnel.

We continue to take actions to remediate the deficiencies in our internal control over financial reporting and are implementing additional processes and controls designed to address the underlying causes associated with the above-mentioned material weaknesses. Our internal control remediation efforts include the following:

•Enhanced the execution of our risk assessment activities by evaluating whether the design of our internal controls appropriately addresses changes in the business (including changes to people, processes and systems) that could impact our system of internal controls.

•Substantially completed the integration of the acquired systems from the Lung Acquisition into our financial and accounting systems to allow for systematic segregation of duties, and to enhance the accurate and timely preparation and review of financial statements and supporting schedules.

In addition to implementing and executing the aforementioned activities, the following activities are expected to be completed in fiscal year 2024:

•Continue to reassess staffing and add additional resources, as required, with the requisite technical accounting experience and training, to further allow for segregation of duties and to support our system of internal control.

•As needed, we will also supplement our internal resources with third-party resources and enhance our corporate oversight and monitoring over these resources, process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, and accountability.

•Engage a third-party to assist in redesigning, documenting, and testing the internal control activities that support the Company’s timely preparation and review of account reconciliations, financial statements and supporting schedules.

•Continue to report regularly to the audit committee on the progress and results of the remediation plan, including the identification, status and resolution of internal control deficiencies.

The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. Management believes that the remediation measures described above will be implemented in a manner such that the controls can be tested, and the identified material weaknesses can be determined to be remediated, however, no assurance can be made that such remediation will occur or that additional material weaknesses will not be identified.

Changes in Internal Control Over Financial Reporting

Except for the above noted and previously reported material weaknesses and the related ongoing remediation activities described above, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) has occurred during the quarter ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently a party to any material legal proceedings. From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Regardless of the outcome, litigation can have a material adverse impact on us because of defense and settlement, costs, diversion of management resources, and other factors.

Item 1A. Risk Factors.

Other than as described below, there have been no material changes to our risk factors discussed in “Part I, Item 1A-Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

You should carefully consider the risks included in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, together with all of the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. 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.

We may not achieve our publicly announced milestones according to schedule, or at all.

From time to time, we may announce the timing of certain events that we expect to occur, such as the anticipated timing of results from our clinical trials. These statements are forward-looking and are based on the best estimates of management at the time relating to the occurrence of such events. However, the actual timing of such events may differ from what has been publicly disclosed. The timing of events such as initiation or completion of a clinical trial, the announcement of the results of a clinical trial, or the filing of an application to obtain regulatory approval may ultimately vary from what is publicly disclosed. These variations in timing may occur as a result of different events, including the nature of the results obtained during a clinical trial or during a research phase, timing of the completion of clinical trials, or any other event having the effect of delaying the publicly announced timeline. We undertake no obligation to update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. Any variation in the timing of previously announced milestones could have a material adverse effect on our business plan, financial condition or operating results and the trading price of our common stock.

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

The Company made no unregistered sales of equity securities during the quarter covered by this report.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

The exhibits listed on the Exhibit Index immediately preceding such exhibits, which is incorporated herein by reference, are filed or furnished as part of this Quarterly Report on Form 10-Q.

Exhibit Number	Description
4.1	Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 1, 2024.)
10.1*+#	Employment Agreement, dated as of December 13, 2018, by and between Lung Therapeutics, Inc. and Charles T. Garner.
10.2*+	Letter Agreement, dated as of October 30, 2023, by and between Lung Therapeutics, Inc. and Charles T. Garner.
10.3*#	Retention Agreement, dated as of March 23, 2024, by and between Aileron Therapeutics, Inc. and Charles T. Garner.

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10.4+#	Exclusive License Agreement, dated as of November 12, 2020, by and between Lung Therapeutics, Inc. and Taiho Pharmaceutical Co. Ltd. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2024.)
10.5+	Amended and Restated Patent and Technology License Agreement, effective as of December 19, 2013, by and between Lung Therapeutics, Inc. and the Board of Regents of The University of Texas System, on behalf of The University of Texas Health Science Center at Tyler, as amended by First Amendment, effective as of May 4, 2017 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2024.)
10.6+	Patent License Agreement, effective as of May 21, 2015, by and between Lung Therapeutics, Inc. and the University of Texas at Austin, on behalf of The University of Texas System, as amended by Amendment #1, dated as of January 26, 2017, Amendment #2, dated as of November 19, 2018, Amendment #3, effective as of June 20, 2019, and Amendment #4, dated as of April 28, 2023 (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2024.)
10.7+	Amended and Restated License Agreement, effective as of September 1, 2018, by and between Lung Therapeutics, Inc. and Medical University of South Carolina Foundation for Research Development (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2024.)
10.8+	License Agreement, effective as of March 8, 2018, by and between Lung Therapeutics, Inc. and Vivarta Therapeutics, L.L.C. (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2024.)
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer Pursuant to 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 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 – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Indicates management contract or compensatory plan.
+	In accordance with Item 601(b)(10)(iv) of Regulation S-K, certain information (indicated by “[**]”) has been excluded from this exhibit because it is both not material and private or confidential. A copy of the omitted portion will be furnished to the SEC upon request.
#	Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

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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.

	Aileron Therapeutics, Inc.
Date: May 15, 2024	By:	/s/ Brian Windsor, Ph.D.
		Brian Windsor, Ph.D.
		President and Chief Executive Officer (principal executive officer)
Date: May 15, 2024	By:	/s/ Charles T. Garner
		Charles T. Garner
		Senior Vice President, Finance (principal financial officer and principal accounting officer)

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement’) is made and entered into as of December 13, 2018 (the “Effective Date”) by and between Lung Therapeutics, Inc. (the “Company”), and Charles T. Garner, an individual (“Executive”).

RECITALS

WHEREAS, the Company and Executive are currently parties to a Consulting Agreement dated October 1, 2018 (the “Consulting Agreement”);

WHEREAS, the Company now desires to hire Executive as its Chief Financial Officer and Executive desires to become so employed by the Company; and

WHEREAS, the Company and Executive have determined that it is in their respective best interests to enter into this Agreement on the terms and conditions as set forth herein.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

AGREEMENT

1.EMPLOYMENT TERMS AND DUTIES

1.1 Employment. The Company hereby employs Executive, and Executive hereby accepts employment by the Company, upon the terms and conditions set forth in this Agreement.

1.2 Duties and Reporting. Executive shall serve as Chief Financial Officer of the Company, reporting to the Chief Executive Officer. Executive shall perform all reasonable duties and have such authority as assigned by the Chief Executive Officer.

1.2.1 Full Working Time. Executive shall devote his full working time and efforts to the performance of his duties and the furtherance of the interests of the Company and shall not engage in any other business activity or serve in any industry, trade, professional, governmental or academic position during the term of this Agreement, except as may be expressly approved in advance by the Company’s Board of Directors (the “Board’) in writing, provided that Executive may (i) engage in activities that involve a de minimis amount of time or that are conducted on non-business time, in each case, without the prior written approval of the Board, (ii) make and manage personal investments of his choice without the prior written approval of the Board, and (iii) serve on the board of directors of one (1) for profit enterprise with the prior written approval of the Board, which approval shall not be unreasonably withheld, so long as such activities listed in clauses (i), (ii), and (iii), either separately or collectively, do not materially interfere with Executive’s duties and responsibilities hereunder and are not inconsistent with the terms of any conflict of interest, securities trading or similar material written policies of the Company applicable to Executive.

1.2.2 Position Location. Executive shall work a minimum average of 8 workdays per month within the Company’s Austin, Texas office (the “in-person work requirement”). Executive’s in-person work requirement shall be reduced by any partial or full days of work­ related travel on behalf of Company, as directed by Company, or as approved by the CEO (the “travel reduction”). So long as this minimum amount is met, and in addition Executive is available to travel as requested by the Company, Executive shall be permitted to work remotely from his home office in New York (“Executive’s Office”) for the balance of Executive’s work time.

1.2.3 Compliance with Policies. Executive shall comply with all policies, practices and procedures, and all codes of ethics or business conduct of the Company applicable to Executive’s position, as in effect from time to time.

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1.2.4 Duty of Loyalty. Executive acknowledges that Executive owes a duty of care and loyalty to the Company, as well as a duty to perform Executive’s duties in a manner that is in the best interests of the Company. Executive owes such duties to the Company in addition to duties imposed upon Executive under applicable law.

1.3 Term. This Agreement and Executive’s employment hereunder shall begin on the Effective Date and shall last until terminated as set forth in Section 1.6 below. The period of Executive’s employment from the Effective Date until terminated pursuant to Section it is hereafter referred to as the “Employment Term.”

1.4 Compensation and Benefits.

1.4.1 Base Salary. In consideration of the services rendered to the Company hereunder by Executive and Executive’s covenants hereunder and in the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), the Company shall, during the Employment Term, pay Executive a base salary (the “Base Salary”), less statutory deductions and withholdings, payable in accordance with the Company’s regular payroll practices, as set forth below:

i. Pre-Series C Funding. From the Effective Date through the closing of the anticipated “Series C Funding”, defined below, or if the Company completes a strategic transaction (“Strategic Transaction”) prior to the Series C Funding that brings in gross proceeds to the Company equaling or exceeding $15 million dollars, the Company shall pay Executive a Base Salary of Sixteen Thousand Six Hundred and Sixty-Six Dollars and 67 cents ($16,666.67) per month (the “Pre-Series C Salary”), less statutory deductions and withholdings, payable in accordance with the Company’s regular payroll practices. For the purposes of this Agreement, the “Series C Funding” shall mean the next issuance and sale, or related issuance and sales, of shares of any equity securities, including common or preferred stock, member interests, or shares of any security convertible into an equity security at a fixed conversion price in which the gross proceeds to the Company equal or exceed $15 million dollars.

ii. Post-Series C Funding. Following the close of the Series C Funding or a Strategic Transaction, the Company shall, during the Employment Term, pay Executive a Base Salary of Twenty-Five Thousand Dollars ($25,000) per month (the “Post­ Series C Salary”), less statutory deductions and withholdings, payable in accordance with the Company’s regular payroll practices. The Company agrees that following the close of the Series C Funding, the Company will pay Executive an amount that equals the difference between Executive’s Pre-Series C Salary and Executive’s Post-Series C Salary, less statutory deductions and withholdings, that would have been earned by Executive had Executive been paid the Post­ Series C Salary since the Effective Date. It should be noted that while the Company expects to close the Series C Funding, it shall not constitute a breach of this Agreement if the Company does not do so.

1.4.2 Annual Bonus. For each full fiscal year completed during the Employment Term, Executive shall be eligible to earn a discretionary annual bonus (the “Annual Bonus”). The target for the Annual Bonus awarded to Executive will be 35% of the base salary in effect for the applicable year, and if Executive’s salary varies during a fiscal year, the applicable base salary shall be the average base salary during that year. The Annual Bonus shall be based upon Executive’s individual performance and the performance of the Company, with reference to performance goals to be provided at the beginning of each fiscal year by the Company’s Chief Executive Officer or the Board, as the case may be. In order to earn the Annual Bonus under this Section for any fiscal year, Executive must be employed by the Company, and not have provided notice of resignation, as of the date payment of the Annual Bonus is made. Any Annual Bonus due to Executive hereunder will be payable at the time bonuses, if any, are paid to other executives, but in all events not later than the March 15th following the end of the fiscal year for which any such Annual Bonus is awarded.

1.4.3 Employee Benefits. During the Employment Term, Executive will be entitled to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.

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1.4.4 Vacation. Executive shall be entitled to four (4) weeks of paid vacation to be utilized in accordance with the Company’s vacation policy, with the timing and duration of specific vacations mutually and reasonably agreed to by Executive and the Company.

1.4.5 Business Expenses. During the Employment Term, the Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time. For the purposes of this Agreement, Business Expenses shall include any and all reasonable expenses associated with Executive’s travel to and from Company to fulfill his in­ person work requirement.

1.5 Stock Options. Subject to approval of the Board, on the earlier to occur of the closing of the Series C Funding, a Strategic Transaction and the first anniversary of the Effective Date, Executive will be granted an incentive stock option to purchase shares of the common stock of the Company representing approximately 2.0% of the shares of the Company’s common stock on a fully diluted basis as of such date, in consideration of his continued services to the Company under this Agreement. The stock option will be granted under and is subject to the terms of, the Company’s 2013 Long-Term Incentive Plan and a stock option agreement between Executive and the Company. The stock option will become exercisable as to 25% of the shares on the first anniversary of the Effective Date, with the remaining 75% becoming exercisable in 36 equal monthly installments thereafter. Executive will be eligible to participate in and receive stock option or equity award grants under the Company’s equity incentive plans from time to time in the discretion of the Board, and in accordance with the terms and conditions of such plans.

1.6 Termination. Executive’s employment and this Agreement (except as otherwise provided hereunder) shall terminate upon the occurrence of any of the following, at the time set forth therefor (the “Termination Date”):

1.6.1 Death or Disability. Immediately upon the death of Executive or a determination by the Company that Executive has ceased to be able to perform the essential functions of his duties, with or without reasonable accommodation, for a period of not less than one hundred and twenty (120) days in the aggregate within a one-year period, due to a mental or physical illness or incapacity (“Disability”) (termination pursuant to this Section 1.6.1 being referred to herein as termination for “Death or Disability”); or

1.6.2 Voluntary Termination. Ninety (90) days following Executive’s written notice to the Company of termination of employment; provided, however, that the Company may waive all or a portion of the ninety (90) days’ notice and accelerate the effective date of such termination (and the Termination Date) (termination pursuant to this Section 1.6.2 being referred to herein as “Voluntary Termination”); or

1.6.3 Termination For Cause. Immediately following notice of termination for “Cause” (as defined below), specifying such Cause, given by the Company (termination pursuant to this Section 1.6.3 being referred to herein as “Termination for Cause”). As used herein, “Cause” means (i) termination based on Executive’s conviction or plea of “guilty” or “no contest” to any crime constituting a felony in the jurisdiction in which committed, any crime involving moral turpitude (whether or not a felony), or any other violation of criminal law involving dishonesty or willful misconduct that injures the Company’s interests or reputation (whether or not a felony); (ii) Executive’s substance abuse that in any manner interferes with the performance of his duties; (iii) Executive’s failure or refusal to perform his duties at all or in an acceptable manner in the reasonable judgment of the Board of Directors or to follow the lawful and proper directives of the Board of Directors that are within the scope of Executive’s duties, which is not cured within fifteen (15) days after receipt of written notice of such perceived inaction or unacceptable conduct; (iv) Executive’s material breach of this Agreement which, if curable, is not cured within fifteen (15) days after receipt of written notice of such material breach; (v) Executive’s material breach of the PIIA; (vi) gross misconduct unrelated to the reasonable exercise of business judgment, from an objective standard, by Executive; (vii) Executive’s indictment for a felony violation of the federal securities laws or (viii) Executive’s excessive, chronic absence from work for reasons other than illness or time off that has been approved by the CEO.

1.6.4 Termination Without Cause. Notwithstanding any other provisions contained herein, the Company may terminate Executive’s employment thirty (30) days following notice of termination without

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Cause given by the Company; provided, however, that during any such thirty (30) day notice period, the Company may suspend, with no reduction in pay or benefits, Executive from his duties as set forth herein (including, without limitation, Executive’s position as a representative and agent of the Company) (termination pursuant to this Section 1.6.4 being referred to herein as “Termination Without Cause”).

1.6.5 Resignation for “Good Reason”. Notwithstanding any other provisions contained herein, Executive may resign his position for good reason if any one of the following occurs, without Executive’s consent: (i) material diminution of Executive’s role and/or responsibilities, (ii) a reduction in Executive’s Base Salary greater than 10% and material or significant reduction in benefits from those in effect at the time the change is indicated, other than reductions in salary and/or benefits that are applied to all executive officers of the Company, (iii) relocation of Executive’s office farther than 50 miles from Executive’s office location at the commencement of this Agreement or for any non-consensual increase in Executive’s in-person work requirement, or (iv) Executive is materially limited or inhibited from carrying out his duties and responsibilities resulting from unlawful or statutorily prohibited directives by his management or Company’s Board; provided, however, that with respect to any of the foregoing clauses (i) - (iv), Executive has provided written notice to the Company of the existence of the condition or conditions constituting Good Reason within ninety (90) days of the condition or conditions first occurring, and the Company has failed to cure the condition or conditions specified in such notice despite having been given at least thirty (30) days after receipt of such notice to cure such condition or conditions (termination pursuant to this Section 1.6.5 being referred herein to “Resignation for Good Reason”).

1.6.6 Other Remedies. Termination pursuant to this Section shall be in addition to and without prejudice to any other right or remedy to which the Company may be entitled at law, in equity, or under this Agreement.

1.7 Severance and Termination.

1.7.1 Voluntary Termination, Termination for Cause, Termination for Death or Disability. In the case of a termination of Executive’s employment hereunder for Death or Disability in accordance with Section 1.6.1 above, or Executive’s Voluntary Termination in accordance with Section 1.6.2 above, or a termination of Executive’s employment hereunder for Cause in accordance with Section 1.6.3above, (i) Executive shall not be entitled to receive payment of, and the Company shall have no obligation to pay, any severance or similar compensation attributable to such termination other than base salary earned but unpaid, vested benefits under any employee benefit plan, and any unreimbursed expenses pursuant to Section 1.5.5 hereof incurred by Executive as of the termination date, and (ii) the Company’s obligations under this Agreement shall immediately cease.

1.7.2 Termination Without Cause and Resignation for Good Reason. Subject to the provisions set forth in this Agreement, in the case of a Termination Without Cause of Executive’s employment hereunder in accordance with Section 1.6.4 or Resignation for Good Reason in accordance with Section 1.6.5 above, the Company shall pay Executive twelve (12) months’ base salary then in effect (hereinafter the “Severance Payments”), less statutory deductions and withholdings, payable in the form of salary continuation and pursuant to the Company’s normal payroll cycle. The Company’s obligation to make Severance Payments is conditioned upon Executive timely signing and returning to the Company (and not revoking) a release agreement in a form satisfactory to the Company (which shall include, but not be limited to, a full release of claims) and on Executive’s continued compliance with Executive’s obligations to the Company that survive termination of his employment in this Agreement in and in the PUA. Should any severance payments provision herein he triggered, Company shall provide Executive with a release agreement within no less than ten (10) days from Executive’s termination of employment; if Executive is given a release agreement wherein the consideration/revocation period allows Executive to begin receiving payment in either of two calendar years, regardless of the timing of Executive’s execution of the release agreement, Executive shall not begin to receive payment until the second calendar year.

1.8 Timing of Payments and Section 409A.

1.8.1 Notwithstanding anything to the contrary in this Agreement, if at the time of Executive’s termination of employment, Executive is a “specified employee,” as defined below, any and all amounts payable under this Section 1 on account of such separation from service, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code (“Section 409A”) that constitute deferred

4

compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon Executive’s death.

1.8.2 For purposes of this Agreement, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section l.409A-l(h) of the Treasury regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Company to be a specified employee under Treasury regulation Section l.409A-l(i).

1.8.3 Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.

1.8.4 Any reimbursement for expenses or provision of in-kind benefits that would constitute nonqualified deferred compensation subject to Section 409A shall be subject to the following additional rules: (i) the amount of expenses eligible for reimbursement, or the in­ kind benefits to be provided, during any taxable year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; (ii) reimbursement of the expense shall he made, if at all, promptly, but not later than the end of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement or to in-kind benefits shall not be subject to liquidation or exchange for any other benefit.

1.8.5 The parties hereto agree that their intent is that payments and benefits under this Agreement comply with or be exempt from Section 409A to the extent applicable. This Agreement shall be interpreted to comply with or be exempt from Section 409A, and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

2.PROTECTION OF COMPANY’S PROPRIBTARY INFORMATION AND INVENTIONS

This Agreement, and Executive’s employment hereunder, is contingent upon Executive’s execution of the PIIA, attached hereto as Exhibit 1 and incorporated herein by this reference, before Executive begins working for the Company. The PIIA survives the termination of this Agreement, the Employment Tenn and/or Executive’s employment with the Company.

3.REPRESENTATIONS AND WARRANTIES BY EXECUTIVE

3.1 No Contrary Agreements or Claims. Executive represents and warrants to the Company that (i) unless otherwise provided in writing prior to signing this Agreement, Executive is not bound by or subject to any contractual or other obligation that would be violated by his execution or performance of this Agreement, including, but not limited to, any non-competition or non-solicitation agreement presently in effect, and (ii) Executive is not subject to any pending or, to Executive’s knowledge, threatened claim, action, judgment, order, or investigation that could adversely affect his ability to perform his obligations under this Agreement or the business reputation of the Company. Executive has not entered into, and agrees that he will not enter into, any agreement either written or oral in conflict herewith.

3.2 Cooperation. Executive agrees to cooperate with the Company and its related companies in connection with matters arising out of Executive’s service to the Company and its related companies and assist the Company and its attorneys in the prosecution or defense of any litigation or similar proceedings to which the Company or its related companies are parties, or matters concerning which litigation or similar proceedings subsequently arise, relating to any matter falling within Executive’s knowledge or former area of responsibility. Executive agrees to provide reasonable assistance and completely truthful testimony in such matters, including, without limitation, consulting on matters relating to Executive’s service to the Company and its related companies, facilitating and assisting in the preparation of any underlying defense, responding to discovery requests, preparing for and attending deposition(s), as well as appearing in court to provide truthful testimony. The Company shall reimburse

5

Executive any reasonable out-of-pocket expenses necessary for Executive to comply with the obligations under this Section 3.2 (including, without limitation, reasonable travel expenses, lodging and meals) in accordance with the Company’s expense reimbursement policies and, if such policies only permit reimbursement of expenses for active employees, to the same extent Executive would have been reimbursed if he were an active employee at the time such expenses were incurred.

4.MISCELLANEOUS

4.1 Notices. Any and all notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed given (a) upon actual receipt by the party to which such notice shall be directed if delivered by hand or electronic mail; (b) three (3) business days after the date of deposit in the U.S. mail, postage prepaid, registered or certified; or (c) on the next business day, if sent by prepaid reputable national overnight courier service, in each case addressed to Executive at his last known address on the books of the Company or, in the case of the Company, as provided below, or to such other address as either party hereto may specify by notice to the other in the manner set forth above:

If to the Company, to:

Brian Windsor, CEO
Lung Therapeutics, Inc.
[***]
[***]
Email: [***]

4.2 Authorization to be Employed. This Agreement, and Executive’s employment hereunder, is subject to Executive providing the Company with legally required proof of Executive’s authorization to be employed in the United States of America within three days of the commencement of Executive’s employment.

4.3 Consulting Agreement Terminated. Upon the Effective Date, the Consulting Agreement is hereby terminated, with the post-termination provisions expressly surviving as set forth in Section l(c) therein.

4.4 Entire Agreement. This Agreement, and the attached Exhibit 1, the post- termination provisions set forth in the Consulting Agreement, together with any equity-based written agreements between Executive and the Company, supersede all prior discussions and agreements among the parties with respect to the subject matter hereof and contain the sole and entire agreement between the parties hereto with respect thereto.

4.5 Survival. The respective rights and obligations of the parties in this Agreement and Exhibit 1 that are designed to last beyond the employment relationship hereto shall survive the termination of this Agreement, the Employment Term and/or Executive’s employment with the Company.

4.6 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by law or otherwise afforded, will be cumulative and not alternative.

4.7 Amendment. This Agreement may be amended, supplemented, or modified only by a written instrument duly executed by or on behalf of each party hereto.

4.8 Recovery of Attorney’s Fees. In the event of any litigation arising from or relating to this Agreement, the prevailing party in such litigation proceedings shall be entitled to recover, from the non-prevailing party, the prevailing party’s reasonable costs and attorney’s fees, in addition to all other legal or equitable remedies to which it may otherwise be entitled.

6

4.9 No Assignment; Binding Effect. This Agreement shall inure to the benefit of any successors or assigns of the Company. Executive shall not be entitled to assign his obligations under this Agreement. The Company shall have the right at any time to assign this Agreement to its successors and assigns; provided, however, that the assignee or transferee is the successor to all or substantially all of the business assets of the Company and such assignee or transferee expressly assumes all of the obligations, duties, and liabilities of the company set forth in this Agreement.

4.10 Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

4.11 Severability. The Company and Executive intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. Accordingly, if a court of competent jurisdiction determines that the scope and/or operation of any provision of this Agreement is too broad to be enforced as written, the Company and Executive intend that the court should reform such provision to such narrower scope and/or operation as it determines to be enforceable. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, and not subject to reformation, then (i) such provision shall be fully severable, (ii) this Agreement shall be construed and enforced as if such provision was never a part of this Agreement, and (iii) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by illegal, invalid, or unenforceable provisions or by their severance.

4.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.

4.13 Jurisdiction and Venue. With respect to any suit, action, or other proceeding arising from (or relating to) this Agreement, the Company and Executive hereby irrevocably agree to the exclusive personal jurisdiction and venue of the United States District Court for the Western District of Texas, Austin Division (and any Texas State Court within Travis County, Texas).

4.14 JURY WAIVER. Both the Company and Executive agree that in any dispute arising under this Agreement or in connection with Executive’s employment with or separation of employment from the Company, they will resolve such disputes without the use of a jury. The parties therefore acknowledge and agree that they are hereby waiving any rights to trial by jury in any action or proceeding brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with this Agreement or Executive’s employment with or separation of employment from the Company.

4.15 Counterparts. This Agreement may be executed in any number of counterparts and by facsimile, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

4.16 Construction. The parties acknowledge that this Agreement is the result of arm’s length negotiations between sophisticated parties each afforded representation by legal counsel. Each and every provision of this Agreement shall be construed as though both parties participated equally in the drafting of same, and any rule of construction that a document shall be construed against the drafting party shall not be applicable to this Agreement.

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT FOLLOWS]

7

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above.

“COMPANY”

LUNG THERAPEUTICS, INC.

/s/ Brian Windsor
Signature

Brian Windsor
Printed Name

CEO
Title

“EXECUTIVE”

CHARLES T. GARNER

/s/ Charles T. Garner
Executive’s Signature

[***]
Address

[***]
Address

[***]
Email

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

8

EX-10.2

Exhibit 10.2

LUNG THERAPEUTICS, INC.

October 30, 2023

Charles Garner
[***]
[***]

Dear Mr. Garner:

As you know, Lung Therapeutics, Inc. (the “Company”) previously entered into an Employment Agreement with you dated December 13, 2018 (the “Agreement”). The Company desires to modify the Agreement effective October 30, 2023, as follows:

•Section 1.4.1 of the Agreement shall be modified to increase your Base Salary to $37,500 per month, annualized to $450,000, less required withholdings. There would not be a compensation change for 2023 performance during the next compensation cycle on or around March, 2024.

•Section 1.4.2 of the Agreement shall be modified to provide that in the next compensation reward cycle, on or around March, 2024, you may be considered for an award based on a bonus target of 45% of your Base Salary, based on performance against goals.

In addition, you agree that any change in your title, duties, responsibilities or position that are effectuated at the closing of the merger under which the Company (or a successor thereof) becomes a wholly-owned subsidiary of Aileron Therapeutics, Inc. (“ALRN”), in and of itself, does not fall within the definition of “Good Reason” as set forth in Section 1.6.5 of the Agreement. You further acknowledge and agree that, following the merger, you will cease to hold the office of Chief Financial Officer of the Company, and will report to Brian Windsor, President and Chief Operating Officer of ALRN. You are not waiving any other rights you may have as it relates to Sections 1.6, 1.7, and 1.8 of the Agreement.

If you wish to accept this amendment, please sign and date a copy of this letter and return it to the Company.

1

Very truly yours,

LUNG THERAPEUTICS, INC.

By: /s/ Aaron Fletcher
Name: Aaron Fletcher
Title: Director

ACCEPTED AND AGREED:

Charles Garner

/s/ Charles Garner
Signature

October 30, 2023
Date

2

EX-10.3

Exhibit 10.3

AILERON THERAPEUTICS, INC.

VIA ELECTRONIC DELIVERY

March 23, 2024

Charles T. Gamer

Re: Retention Agreement

Dear Chuck:

As we discussed, your employment with Aileron Therapeutics, Inc. (the “Company”) will terminate effective May 15, 2024 (the “Separation Date”).Through the Separation Date, you will continue to serve as the principal financial officer and principal accounting officer of the Company and lead the activities set forth on Exhibit A (the “Activities”) and assist with a cooperative transition of your job duties. The Company acknowledges its obligation and agrees to pay you the Severance Payments set forth in Section 1.7.2 of the Employment Agreement between you and Lung Therapeutics, Inc. dated December 13, 2018, as amended October 30, 2023 (together, the “Employment Agreement”), subject to the conditions set forth in Section 1.7.2, including your entering into a release agreement (the “Severance Conditions”). In addition, the Company agrees to pay for any accrued unused paid time off.

The Company acknowledges that if the Company were to terminate your employment without Cause or if you were to resign with Good Reason prior to the Separation Date, you would remain eligible to receive, subject to your satisfaction of the Severance Conditions, the Severance Payments. However, if the Company were to terminate your employment for Cause prior to the Separation Date or you were to choose to cease your employment prior to the Separation Date, you would not be eligible to receive the Severance Payments.

This letter shall not be construed as an agreement, either express or implied, to employ you for any stated term, and shall in no way alter the Company’s policy of employment at-will. This letter shall supplement the terms and conditions of your employment with the Company and shall not supersede any prior written agreement between you and the Company, including the Employment Agreement.

Please sign where indicated below to acknowledge your receipt of this letter and your acceptance of its terms and conditions.

1

Sincerely,


/s/ Brian Windsor
Brian Windsor
President and Chief Executive Officer

I acknowledge that I have read, understand and agree with the terms set forth herein:

/s/ Charles T. Garner March 24, 2024
Charles T. Garner Date

2

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Brian Windsor, Ph.D., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Aileron Therapeutics, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report), that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Aileron Therapeutics, Inc.
dated: May 15, 2024	/s/ Brian Windsor, Ph.D.
	Brian Windsor, Ph.D.
	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Charles T. Garner, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Aileron Therapeutics, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report), that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Aileron Therapeutics, Inc.
dated: May 15, 2024	/s/ Charles T. Garner
	Charles T. Garner
	Senior Vice President, Finance (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Aileron Therapeutics, Inc. (the “Company”) for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Windsor, Ph.D., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	Aileron Therapeutics, Inc.
dated: May 15, 2024	/s/ Brian Windsor, Ph.D.
	Brian Windsor, Ph.D.
	President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Aileron Therapeutics, Inc. (the “Company”) for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles T. Garner, Senior Vice President, Finance of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	Aileron Therapeutics, Inc.
dated: May 15, 2024	/s/ Charles T. Garner
	Charles T. Garner
	Senior Vice President, Finance (Principal Financial Officer and Principal Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2024	May 13, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Trading Symbol	ALRN
Entity Registrant Name	Aileron Therapeutics, Inc.
Entity Central Index Key	0001420565
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		21,589,576
Entity File Number	001-38130
Entity Tax Identification Number	13-4196017
Entity Address, Address Line One	12407 N. Mopac Expy.
Entity Address, Address Line Two	Suite 250
Entity Address, Address Line Three	#390
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78758
City Area Code	737
Local Phone Number	802-1989
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	DE
Title of 12(b) Security	Common Stock, $0.001 par value per share
Security Exchange Name	NASDAQ

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 12,042	$ 17,313
Prepaid expenses and other current assets	697	882
Restricted cash	25	25
Operating lease, right-of-use asset, current portion		46
Total current assets	12,764	18,266
Property and equipment, net	6	19
Goodwill	6,330	6,330
Intangible assets	79,200	79,200
Other non-current assets	892	2,193
Total assets	99,192	106,008
Current liabilities:
Accounts payable	2,156	1,190
Accrued expenses and other current liabilities	2,376	3,147
Operating lease liabilities, current portion		48
Total current liabilities	4,532	4,385
Deferred tax liability	3,326	3,326
Total liabilities	7,858	7,711
Commitments and contingencies (Note 15)
Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized at March 31, 2024 and at December 31, 2023; 24,610 shares issued and 12,653 shares outstanding at March 31, 2024 and 24,610 shares issued and outstanding at December 31, 2023	46,584	91,410
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at March 31, 2024 and 45,000,000 at December 31, 2023; 16,842,512 shares and 4,885,512 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	103	91
Additional paid-in capital	340,340	295,376
Accumulated other comprehensive loss	(63)	(63)
Accumulated deficit	(295,630)	(288,517)
Total liabilities, convertible preferred stock and stockholders' equity	$ 99,192	$ 106,008

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Convertible preferred stock, par value	$ 0.001	$ 0.001
Convertible preferred stock, shares authorized	5,000,000	5,000,000
Convertible preferred stock, shares issued	24,610	24,610
Convertible preferred stock, shares outstanding	12,653	24,610
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	45,000,000
Common stock, shares issued	16,842,512	4,885,512
Common stock, shares outstanding	16,842,512	4,885,512

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Revenue	$ 0	$ 0
Operating expenses:
Research and development	3,463	1,810
General and administrative	3,742	2,179
Restructuring and other costs	0	1,022
Total operating expenses	7,205	5,011
Loss from operations	(7,205)	(5,011)
Other income, net	92	232
Net loss	$ (7,113)	$ (4,779)
Net loss per share - basic	$ (0.86)	$ (1.05)
Net loss per share - diluted	$ (0.86)	$ (1.05)
Weighted average common shares outstanding - basic	8,301,798	4,541,167
Weighted average common shares outstanding - diluted	8,301,798	4,541,167
Comprehensive loss:
Net loss	$ (7,113)	$ (4,779)
Other comprehensive gain:
Unrealized gain on investments, net of tax of $0	0	38
Total other comprehensive gain	0	38
Total comprehensive loss	$ (7,113)	$ (4,741)

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Unrealized gain on investments, tax	$ 0	$ 0

XML

Condensed Consolidated Statement of Changes in Convertible Preferred Stock and Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Convertible Series X Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]
Beginning balance, shares at Dec. 31, 2022			4,541,167
Beginning balance at Dec. 31, 2022	$ 18,623		$ 91	$ 291,365	$ (48)	$ (272,785)
Stock-based compensation expense	391			391
Unrealized loss on investments	38				38
Net loss	(4,779)					(4,779)
Ending balance, shares at Mar. 31, 2023			4,541,167
Ending balance at Mar. 31, 2023	$ 14,273		$ 91	291,756	(10)	(277,564)
Beginning balance, shares at Dec. 31, 2023	4,885,512		4,885,512
Beginning balance at Dec. 31, 2023	$ 98,297	$ 91,410	$ 91	295,376	(63)	(288,517)
Beginning balance, shares at Dec. 31, 2023		24,610
Issuance of common stock in connection with conversion of Series X preferred stock, value		$ (44,826)
Issuance of common stock in connection with conversion of Series X preferred stock, shares		(11,957)
Issuance of common stock in connection with conversion of Series X preferred stock			$ 12	44,814
Issuance of common stock in connection with conversion of Series X preferred stock, shares			11,957,000
Stock-based compensation expense	150			150
Unrealized loss on investments	0
Net loss	$ (7,113)					(7,113)
Ending balance, shares at Mar. 31, 2024	16,842,512		16,842,512
Ending balance at Mar. 31, 2024	$ 91,334	$ 46,584	$ 103	$ 340,340	$ (63)	$ (295,630)
Ending balance, shares at Mar. 31, 2024		12,653

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (7,113)	$ (4,779)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	59	43
Net amortization of premiums and discounts on investments	0	(103)
Stock-based compensation expense	150	391
Loss on disposition of property and equipment	0	16
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	185	247
Other assets	1,301	24
Accounts payable	966	(1,262)
Operating lease liabilities	(48)	(33)
Accrued expenses and other current liabilities	(771)	795
Net cash used in operating activities	(5,271)	(4,661)
Cash flows from investing activities:
Proceeds from sales or maturities of investments	0	7,250
Net cash provided by investing activities	0	7,250
Cash flows from financing activities:
Net (decrease) increase in cash, cash equivalents and restricted cash	(5,271)	2,589
Cash, cash equivalents and restricted cash at beginning of period	17,338	5,219
Cash, cash equivalents and restricted cash at end of period	12,067	7,808
Cash and cash equivalents at end of period	12,042	7,783
Restricted cash at end of period	25	25
Cash, cash equivalents and restricted cash at end of period	12,067	$ 7,808
Supplemental disclosure of non-cash investing and financing activities:
Conversion of Series X preferred stock into common stock shares	$ 44,826

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (7,113)	$ (4,779)

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Insider Trading Arrangements	3 Months Ended
	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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Nature of the Business

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Nature of the Business

1. Nature of the Business

Aileron Therapeutics, Inc. (“Aileron” or the “Company”) is a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. The Company currently has two product candidates in clinical development, LTI-03 and LTI-01, and multiple candidates in preclinical development focused on fibrosis indications.

On October 31, 2023, Aileron acquired Lung Therapeutics, Inc. (“Lung Therapeutics” or “Lung”) pursuant to an Agreement and Plan of Merger, dated October 31, 2023 (the “Lung Acquisition Agreement”), by and among the Company, AT Merger Sub I, Inc., a Delaware corporation and its wholly owned subsidiary (“First Merger Sub”), AT Merger Sub II, LLC, a Delaware limited liability company and its wholly owned subsidiary (“Second Merger Sub”) and Lung. Pursuant to the Lung Acquisition Agreement, First Merger Sub merged with and into Lung, pursuant to which Lung was the surviving entity and became its wholly owned subsidiary (the “First Merger”). Immediately following the First Merger, Lung merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity (such merger, together with the First Merger, the “Lung Acquisition”). Lung was incorporated on November 13, 2012 under the laws of the state of Texas. Following the Lung Acquisition, the Company shifted its operating disease focus to advancing a pipeline of first-in-class medicines to address significant unmet medical needs in orphan pulmonary and fibrosis indications with the potential to greatly improve patient outcomes over currently available treatments. Following expiration of the operating lease agreement to rent an office space for its corporate headquarters in Austin, Texas, on March 31, 2024, the Company expects to operate virtually for the foreseeable future (see Note 15 for further details).

The Company is subject to risks and uncertainties common to clinical-stage companies in the biotechnology industry, including, but not limited to the risk that the Company never achieves profitability, the need for substantial additional financing, the risk of relying on third parties, risks of clinical trial failures, dependence on key personnel, protection of proprietary technology, and compliance with government regulations. The Company’s lead product candidate, LTI-03, is being developed for the treatment of Idiopathic Pulmonary Fibrosis (“IPF”) and has completed a healthy volunteer Phase 1a clinical trial. LTI-03 is currently in a Phase 1b clinical trial in IPF patients. The Company’s second product candidate, LTI-01, is in development for loculated pleural effusion (“LPE”). The Company has completed Phase 1b and Phase 2a clinical trials in LPE patients.

Liquidity and Going Concern

In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying consolidated financial statements were issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the condensed consolidated financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the consolidated financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the consolidated financial statements are issued.

The Company’s condensed consolidated financial statements have been prepared assuming that the Company will continue to operate as a going concern, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. Through March 31, 2024, the Company has financed its operations primarily through $145,467 in net proceeds from sales of common stock and warrants, $131,211 from sales of preferred stock prior to its initial public offering (“IPO”), and $34,910 from a collaboration agreement in 2010, and $18,429 in gross proceeds, less issuance costs of $893, in connection with the financing following the Lung Acquisition. As of March 31, 2024, the Company had $12,042 in cash and cash equivalents.

On May 1, 2024, Aileron entered into an underwriting agreement (the “Underwriting Agreement”) with Titan Partners Group LLC, a division of American Capital Partners, LLC, as underwriter, relating to an underwritten offering (the “Offering”) of 4,273,505 shares of the Company’s common stock, par value $0.001 per share (the “Offering Shares”) and accompanying warrants (the “Offering Warrants”) to purchase 4,273,505 shares of common stock (the “Offering Warrant Shares”). All of the Offering Shares and Offering Warrants were sold by the Company by May 3, 2024 for the net proceeds from the Offering of approximately $17,945, after deducting underwriting discounts and commissions and estimated offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants (see Note 16 for further details). The Company expects to use the net proceeds from the Offering, together with its existing cash and cash equivalents, to fund the development and commercialization of its product candidates, including its ongoing Phase 1b clinical trial of LTI-03; and for working capital and other general corporate purposes.

After the Offering, management considers that, based on the Company’s current operating plan, the Company’s cash and cash equivalents of $27,496 as of May 3, 2024 will enable the Company to fund its operating expenses and capital expenditure requirements into the second half of 2025. Since its inception, the Company has not generated any revenue from product sales and has never generated an operating profit. The Company has incurred significant losses on an aggregate basis. The Company’s net losses were $7,113 and $4,779 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the Company had an accumulated deficit of $295,630. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment and general and administrative costs associated with the Company’s operations. Management expects to continue to incur operating losses for the foreseeable future until the Company completes development and approval of its product candidates. The Company will continue to fund its operations primarily through utilization of its current financial resources and additional raises of capital.

These conditions support the Company’s ability to continue as a going concern for at least one year from the date those condensed consolidated financial statements are issued. However, the Company could use its available capital resources sooner than it currently expects. The Company’s future viability is dependent on its ability to raise additional capital, enter into a financing, consummate a successful acquisition, merger, business combination, or a sale of assets or other transaction. If the Company becomes unable to continue as a going concern, it may have to liquidate its assets and the values it receives for its assets in liquidation or dissolution could be significantly lower than the values reflected in its consolidated financial statements.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by ASUs of the Financial Accounting Standards Board (“FASB”).

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lung Therapeutics, LLC, Lung Therapeutics Australia Pty Ltd, and Lung Therapeutics Limited. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual for research and development expenses, the prepaid research and development expenses, and the value of stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months then ended have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on April 15, 2024.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2024, the results of its operations for the three months ended March 31, 2024 and 2023 and its cash flows for the three months ended March 31, 2024 and 2023. The financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are unaudited. The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. The accompanying balance sheet as of December 31, 2023 has been derived from the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K that was filed with the SEC on April 15, 2024.

The Company’s significant accounting policies are described in Note 2 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on April 15, 2024.

Concentration of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Periodically, the Company maintains balances in operating accounts above federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents.

The Company is dependent on third-party manufacturers to supply products for research and development activities of its programs, including preclinical and clinical testing. In particular, the Company relied on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could have been adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

Accounting Pronouncements Not Yet Adopted

In March 2024, the FASB issued ASU 2024-02—Codification Improvements—Amendments to Remove References to the Concepts Statements, that contains amendments to the Codification that remove references to various FASB Concepts Statements. This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements. The amendments are effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted. Early application of the amendments in this ASU is permitted for all entities, for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01—Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, to improve GAAP by adding an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes that interim period. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

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Business Acquisition

3 Months Ended

Mar. 31, 2024

Business Combination and Asset Acquisition [Abstract]

Business Acquisition

3. Business Acquisition

On October 31, 2023, Aileron acquired 100% of Lung, pursuant to the Lung Acquisition Agreement. At the closing of the Lung Acquisition, Aileron issued to the stockholders of Lung 344,345 shares of its common stock (excluding 221 fractional shares from the total 344,566 shares pursuant to the Lung Acquisition Agreement) and 19,903 shares of its newly designated Series X Preferred Stock (excluding 238 fractional shares from the total 20,141 shares pursuant to the Lung Acquisition Agreement). Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock. The Company paid $290 cash in lieu of fractional shares of both common stock and Series X Preferred Stock. In addition, Aileron assumed all Lung’s stock options (1,780,459) and all warrants (726,437) exercisable for Lung common stock immediately outstanding prior to the closing of the Lung Acquisition, each subject to adjustment pursuant to the terms of the Lung Acquisition Agreement.

Immediately following the closing of the Lung Acquisition, on October 31, 2023, Aileron entered into a Stock and Warrant Purchase Agreement (the “Purchase Agreement”) with a group of accredited investors, pursuant to which Aileron issued and sold (i) an aggregate of 4,707 shares of Series X Preferred Stock, and (ii) warrants (the “PIPE Warrants”) to purchase up to an aggregate of 2,353,500 shares of Aileron common stock (the “PIPE Warrant Shares”), for an aggregate purchase price of approximately $18,429, which included the conversion of certain convertible promissory notes in the aggregate principal amount of $1,553 issued by Lung to Bios Partners, the majority stockholder of Lung prior to the closing of the Lung Acquisition, at a 10% discount to the per share price of the Series X Preferred Stock (the “PIPE Financing”). The PIPE Financing closed on November 2, 2023. Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock.

The net proceeds from the PIPE Financing of approximately $17,536 are expected to be used to advance Aileron’s clinical development pipeline, business development activities, working capital and other general corporate purposes.

The Lung Acquisition was accounted for under the acquisition method of accounting under ASC 805, Business Combinations. Under the acquisition method, the total purchase price of the acquisition is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on the fair values as of the date of the acquisition. Consideration transferred is the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred by the acquirer to the former owners of the acquiree, and the equity interests issued by the acquirer to the former owners of the acquiree (except for the measurement of share-based payment awards). The Company recorded the assets acquired and liabilities assumed as of the date of the Lung Acquisition based on the information available at that date.

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Fair Value of Financial Assets

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets

4. Fair Value of Financial Assets

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

	March 31, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	10,954	$	—	$	—	$	10,954
	$	10,954	$	—	$	—	$	10,954

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	10,322	$	—	$	—	$	10,322
	$	10,322	$	—	$	—	$	10,322

During the three months ended March 31, 2024 and the year ended December 31, 2023, there were no transfers between levels.

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Prepaid Expenses and Other Current Assets

3 Months Ended

Mar. 31, 2024

Prepaid Expense and Other Assets, Current [Abstract]

Prepaid Expenses and Other Current Assets

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	March 31, 2024		December 31, 2023
Prepaid research and development	$	150	$	207
Other current assets		547		675
Total prepaid expenses and other current assets	$	697	$	882

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Goodwill and Indefinite-Lived Intangible Assets

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Indefinite-Lived Intangible Assets

6. Goodwill and Indefinite-Lived Intangible Assets

$6,330 of goodwill and $79,200 of indefinite-lived intangible assets acquired in the Lung Acquisition were recorded at fair value on the Lung Acquisition date. The Company performed a qualitative assessment of goodwill and indefinite-lived intangible assets for potential impairment as of March 31, 2024, and concluded that there was no goodwill or intangible assets impairment as of March 31, 2024.

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Other Assets

3 Months Ended

Mar. 31, 2024

Prepaid Expense and Other Assets [Abstract]

Other Assets

7. Other Assets

Other assets consisted of the following:

	March 31, 2024		December 31, 2023
Non-current prepaid research and development	$	839	$	2,140
Other assets		53		53
Total other non-current assets	$	892	$	2,193

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Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2024

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	March 31, 2024		December 31, 2023
External research and development services	$	913	$	1,110
Payroll and payroll-related costs		420		1,178
Professional fees		763		653
Other		280		206
Total accrued expenses and other current liabilities	$	2,376	$	3,147

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Preferred Stock

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Preferred Stock

9. Preferred Stock

The Company is authorized to issue 5,000,000 shares of preferred stock, par value $0.001 per share. As of March 31, 2024, the Company had issued 24,610 shares of Series X Preferred Stock, of which 12,653 shares of Series X Preferred Stock remained outstanding. As of December 31, 2023, 24,610 shares of Series X Preferred Stock were issued and outstanding.

On March 5, 2024, based upon existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock and 12,653 shares of Series X Preferred Stock (which are convertible into 12,653,000 shares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations (see below).

On October 31, 2023, Aileron acquired Lung. Under the terms of the Lung Acquisition Agreement, at the closing of the Lung Acquisition, Aileron issued to the stockholders of Lung 344,345 shares of the common stock of Aileron, par value $0.001 per share, and 19,903 shares of Series X Preferred Stock.

Immediately following the closing of the Lung Acquisition, on October 31, 2023, Aileron entered into the Purchase Agreement with a group of accredited investors, pursuant to which Aileron issued and sold 4,707 shares of Series X Preferred Stock and Warrants to purchase up to an aggregate of 2,353,500 shares of Aileron common stock. Refer to Note 3 for more details on the PIPE Financing in connection with the Purchase Agreement. Since the Series X Preferred Stock was sold as a unit with the PIPE Warrants according to the Purchase Agreement, the proceeds received were allocated to each instrument on a relative fair value basis. Total gross proceeds of $18,429 reduced by $893 of the issuance costs were allocated as follows: $16,795 to the Series X Preferred Stock and $741 to the PIPE Warrants. The Series X Preferred Stock and the PIPE Warrants issued in the PIPE Financing were recorded at par value of $0.001.

The Company evaluated the Series X Preferred Stock for liability classification in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity ("ASC 480"), and determined that equity treatment was appropriate because the Series X Preferred Stock did not meet the definition of the liability instruments. Specifically, the Series X Preferred Stock is not mandatorily redeemable and does not embody an obligation to buy back the shares outside of the Company’s control in a manner that could require the transfer of assets. The Company determined that the Series X Preferred Stock would be recorded as temporary equity, based on the guidance of ASC 480, given that it is contingently redeemable.

Each share of Series X Preferred Stock is convertible into 1,000 shares of Common Stock. The preferences, rights, and limitations initially applicable to the Series X Preferred Stock are set forth in the Certificate of Designation.

The Series X Preferred Stock has the following characteristics:

Voting

Except as otherwise required by law, the Series X Preferred Stock does not have voting rights. However, as long as any shares of Series X Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series X Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series X Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or by-laws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series X Preferred Stock, (ii) issue further shares of Series X Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series X Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing.

Dividends

Holders of Series X Preferred Stock are entitled to receive dividends on shares of Series X Preferred Stock equal, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the common stock. Such dividends are not cumulative. Since the Company’s inception, no dividends have been declared or paid.

Liquidation, dissolution or winding up

The Series X Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.

Upon liquidation, dissolution or winding up of the Company, the Series X preferred stockholders shall be entitled to receive an equivalent amount of distributions as would be paid on the common stock underlying the Series X Preferred Stock, determined on an as-converted basis, pari passu with any distributions to the common stock shareholders.

Conversion

The Series X Preferred Stock is convertible into common stock at a rate of 1,000 shares of common stock for every one share of Series X Preferred Stock that is converted. The Series X Preferred Stock is subject to certain beneficial ownership limitations, including

that a holder of Series X Preferred Stock is prohibited from converting shares of Series X Preferred Stock into shares of common stock if, as a result of such conversion, such holder (together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates) would beneficially own more than a specified percentage (to be initially set at 19.99% and thereafter adjusted by the holder to a number not to exceed 19.99%) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion.

Redemption

Shares of the Series X Preferred Stock are not redeemable at the election of the holder.

Maturity

The Series X Preferred Stock shall be perpetual unless converted.

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Common Stock

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Common Stock

10. Common Stock

On February 28, 2024, the Company held its 2023 annual meeting of stockholders (the “2023 Annual Meeting”), at which the Company’s stockholders approved an amendment to the Company’s Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of common stock of the Company from 45,000,000 to 100,000,000 shares. The Company filed the Certificate of Amendment to implement the increase in the number of authorized shares, which was effective upon filing, with the Secretary of State of the State of Delaware on February 28, 2024. The additional shares of common stock authorized by the Certificate of Amendment have rights identical to the Company’s currently outstanding common stock. As of March 31, 2024 and December 31, 2023, the Company was authorized to issue 100,000,000 and 45,000,000 shares of common stock, respectively, par value $0.001 per share.

As of March 31, 2024, the Company had 16,842,512 shares of common stock issued and outstanding. As of December 31, 2023, the Company had 4,885,512 shares of common stock issued and outstanding.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the Company’s board of directors, if any. As of March 31, 2024 and December 31, 2023, no dividends had been declared.

In the event of liquidation or dissolution, the holders of the common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.

Issuance of Common Stock

At the 2023 Annual Meeting, the Company’s stockholders also approved the issuance, in accordance with Nasdaq Listing Rule 5635(a), of shares of common stock, upon conversion of the Company’s outstanding Series X Preferred Stock. On March 5, 2024, based upon existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock and approximately 12,653 shares of Series X Preferred Stock (which are convertible into 12,653,000 shares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations.

On October 31, 2023, Aileron acquired Lung. Under the terms of the Lung Acquisition Agreement, at the closing of the Lung Acquisition, Aileron issued to the stockholders of Lung 344,345 shares of the common stock of Aileron, par value $0.001 per share, and 19,903 shares of Series X Preferred Stock.

Immediately following the closing of the Lung Acquisition, on October 31, 2023, Aileron entered into the Purchase Agreement with a group of accredited investors, pursuant to which Aileron issued and sold 4,707 shares of Series X Preferred Stock and PIPE Warrants to purchase up to an aggregate of 2,353,500 shares of Aileron common stock. Refer to Note 3 for more details on the PIPE Financing in connection with the Purchase Agreement. The exercise price of the PIPE Warrants is $4.89 per share, subject to certain price and share adjustments, including for stock splits, stock dividends, recapitalizations, subdivisions, combinations, reclassifications, noncash distributions, and cash dividends. The PIPE Warrants will be exercisable any time after May 2, 2024 and on or prior to May 2, 2027. Payment for the PIPE Warrant Shares upon exercise of the PIPE Warrants may be (i) in cash or (ii) in the event that there is no registration statement available for the resale of the PIPE Warrant Shares, by cashless exercise.

Under the terms of the PIPE Warrants, the Company shall not effect the exercise of any portion of any PIPE Warrant, and a holder shall not have the right to exercise any portion of any PIPE Warrant, to the extent that after giving effect to such exercise, the holder (together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates), would beneficially own in excess of a percentage elected by the holder up to 19.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise, as such percentage ownership is determined in accordance with the terms of the PIPE Warrants. However, any holder may, upon written notice to the Company, increase or decrease such percentage to any other percentage not in

excess of 19.99%; provided that any increase or decrease in such percentage will not be effective until 61 days after such notice is delivered to the Company.

The Company has assessed the PIPE Warrants for appropriate equity or liability classification and determined the PIPE Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815, Derivatives and Hedging (“ASC 815”). The PIPE Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the PIPE Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The PIPE Warrants were initially recognized at their relative fair value in the amount of $741 at the time of issuance determined using Black-Scholes option-pricing model and will not be remeasured.

As of March 31, 2024, 16,842,512 shares of common stock were issued and outstanding, no shares were held in treasury, and 24,610 shares of Series X Preferred Stock had been issued, of which 12,653 shares of Series X Preferred Stock remained outstanding. In addition, as of March 31, 2024, there were:

•12,890,000 shares of common stock reserved for issuance upon conversion of the Series X Preferred Stock;

•2,126,972 shares of common stock issuable upon the exercise of options under existing equity incentive plans;

•3,412,623 and 7,500 shares of common stock reserved for issuance under the 2021 Plan (as defined below) and 2017 Employee Stock Purchase Plan, respectively, as well as any automatic increases in the number of shares of the common stock reserved under these plans; and

•3,726,696 shares of common stock reserved for issuance upon exercise of outstanding warrants. The warrants consist of (i) warrants to purchase 646,759 shares of the Company’s common stock, with an exercise price of $40.00 per share, which were issued in a private placement in April 2019, which expire on April 2, 2024; (ii) warrants to purchase 726,437 shares of the Company’s common stock, with an exercise price of $5.66, which expire on May 20, 2029, which were assumed in connection with the Lung Acquisition, and (iii) warrants to purchase 2,353,500 shares of the Company’s common stock, with an exercise price of $4.89 per share, which were issued and sold in the PIPE Financing as described above and expire on May 2, 2027.

Accordingly, as of March 31, 2024, out of the 100,000,000 shares of common stock presently authorized, 39,006,303 shares are issued and outstanding or reserved for issuance and 60,993,697 shares of common stock remain available for future issuance.

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Stock-Based Awards

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Awards

11. Stock-Based Awards

As of March 31, 2024, the Company had five equity compensation plans, each of which was approved by its stockholders: 2006 Equity Incentive Plan, as amended (the “2006 Plan”), 2016 Stock Incentive Plan (the “2016 Plan”), 2017 Stock Incentive Plan (the “2017 Plan”), 2021 Stock Incentive Plan (the “2021 Plan”), and 2017 Employee Stock Purchase Plan (the “2017 ESPP”). The Company also assumed Lung’s 2013 Long-Term Incentive Plan (the “2013 Plan”) as a result of the Lung Acquisition.

As of March 31, 2024, the Company had 6,693 shares to be issued upon exercise of outstanding options under the 2006 Plan; 8,404 shares to be issued upon exercise of outstanding options under the 2016 Plan, and 98,528 shares to be issued upon exercise of outstanding options under the 2017 Plan. No shares remained available for future issuance under the 2006 Plan, the 2016 Plan, or the 2017 Plan as of March 31, 2024.

Under the 2021 Plan, shares that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards.

The exercise price for stock options granted may not be less than the fair market value of the common stock as of the date of grant.

2021 Stock Incentive Plan

The Company’s 2021 Plan was approved by the Company’s stockholders on June 15, 2021 and became effective on June 16, 2021. At the 2023 Annual Meeting, the stockholders of the Company approved an amendment (the “Plan Amendment”) to the 2021 Plan to increase the number of shares of common stock issuable under the 2021 Plan by 3,000,000 shares to 3,840,254. On January 17, 2024, upon the recommendation of the compensation committee and subject to stockholder approval, the Company’s Board of Directors adopted the Plan Amendment. Other than increasing the number of shares issuable under the 2021 Plan, the Plan Amendment does not make any changes to the 2021 Plan.

Under the 2021 Plan, the Company may grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, awards of restricted stock units and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2021 Plan; however, incentive stock options may only be granted to employees. The 2021 Plan is administered by the Company’s Board of Directors (the “Board”) or, at the discretion of the Board, by a committee of the Board. The number of shares of common stock covered by options and the date those options become exercisable, type

of options to be granted, exercise prices, vesting and other restrictions are determined at the discretion of the Board, or its committee if so delegated.

Stock options granted under the 2021 Plan with service-based vesting conditions generally vest over four years and may not have a duration in excess of ten years, although options have been granted with vesting terms of less than four years.

The total number of shares of common stock that may be issued under the 2021 Plan was 3,841,710 as of March 31, 2024, of which 3,412,623 shares remained available for grant. The Company initially reserved 625,000 shares of common stock, plus the number of shares of common stock subject to outstanding awards under the 2017 Plan, the 2016 Plan and the 2006 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right up to 314,006 shares.

2017 Stock Incentive Plan

The 2017 Plan was approved by the Company’s stockholders on June 16, 2017, and became effective on June 28, 2017. Under the 2017 Plan, the Company could grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, awards of restricted stock units and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors were eligible to receive awards under the 2017 Plan; however, incentive stock options could only be granted to employees. The 2017 Plan is administered by the Board or, at the discretion of the Board, by a committee of the Board. The number of shares of common stock covered by options and the date those options become exercisable, type of options granted, exercise prices, vesting and other restrictions were determined at the discretion of the Board, or its committee if so delegated.

Stock options granted under the 2017 Plan with service-based vesting conditions generally vest over four years and may not have a duration in excess of ten years, although options have been granted with vesting terms of less than four years. The exercise price for stock options granted may not be less than the fair market value of the common stock as of the date of grant.

As of the effective date of the 2021 Plan, the Board determined to grant no further awards under the 2017 Plan.

Shares that are expired, terminated, surrendered or canceled without having been fully exercised under the 2017 Plan will be available for future awards under the 2021 Plan. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards under the 2021 Plan.

2017 Employee Stock Purchase Plan

On June 16, 2017, the Company’s stockholders approved the 2017 ESPP, which became effective on June 28, 2017. Under the 2017 ESPP, the number of shares of common stock that may be issued under the 2017 ESPP will automatically increase on each January 1, beginning with the fiscal year ended December 31, 2018 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2027, equal to the least of (i) 31,120 shares, (ii) 1% of the outstanding shares of common stock on such date and (iii) an amount determined by the Company’s Board. On January 1, 2023 and January 1, 2024, no additional shares were reserved for issuance under the 2017 ESPP pursuant to this provision. 7,500 shares remained available for future issuance under the 2017 ESPP as of March 31, 2024.

2013 Stock Incentive Plan

The Company assumed the 2013 Plan as a result of the Lung Acquisition. In October 2013, Lung’s Board of Directors (“Lung Board”) approved the 2013 Plan to provide long-term incentives for its employees, non-employee directors and certain consultants. As of March 31, 2024, 1,780,459 shares were reserved to be issued upon exercise of options outstanding under the 2013 Plan. These options were assumed by the Company in connection with the Lung Acquisition.

Before the Lung Acquisition, the 2013 Plan was administered by the Lung Board or, at the discretion of the Lung Board, by a committee of the Lung Board. The exercise prices, vesting and other restrictions were determined at the discretion of the Lung Board, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the share of common stock on the date of grant and the term of stock option may not be greater than ten years. The contractual term for stock option awards is ten years. The vesting periods for equity awards were determined by the Lung Board, but generally were four years. The contractual term for stock option awards is ten years. Following the closing of the Lung Acquisition on October 31, 2023, no further awards can be granted under the 2013 Plan.

Stock Option Valuation

The assumptions that the Company used to determine the grant-date fair value of the stock options granted to employees and directors during the three months ended March 31, 2024 and 2023 were as follows, presented on a weighted average basis:

	Three Months Ended March 31,
	2024			2023
Risk-free interest rate		4.26	%		2.33	%
Expected term (in years)		5.5			6.1
Expected volatility		105.7	%		94.4	%
Expected dividend yield		0	%		0	%

Stock Options

The following table summarizes the Company’s stock option activity since January 1, 2023:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2023		2,212,102		$	7.42		6.0	$	2,905
Granted		5,450			4.72		—
Exercised		—			—		—		—
Forfeited/Canceled		(26,297	)		4.07		—		—
Expired		(64,283	)		37.56		—
Outstanding at March 31, 2024		2,126,972			6.54		5.8		8,895
Options exercisable at March 31, 2024		1,882,612		$	6.38		5.6	$	8,193
Options vested and expected to vest at March 31, 2024		2,118,381		$	6.55		5.8	$	8,861
Options exercisable at December 31, 2023		1,882,191		$	7.46		5.8	$	2,631
Options vested and expected to vest at December 31, 2023		2,209,420		$	7.41		6.0	$	2,904

The weighted average grant-date fair value of stock options granted during the three months ended March 31, 2024 was $3.82. There were no options granted to employees or directors during the three months ended March 31, 2023. The aggregate fair value of stock options that vested during the three months ended March 31, 2024 and 2023, was $228 and $405, respectively.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. There were no stock options exercised during the three months ended March 31, 2024 and 2023.

Stock-Based Compensation

The Company recorded stock-based compensation expense related to stock options in the following expense categories of its statements of operations and comprehensive loss:

	Three Months Ended March 31,
	2024		2023
Research and development expenses	$	39	$	119
General and administrative expenses		111		272
	$	150	$	391

As of March 31, 2024, the Company had an aggregate of $525 of unrecognized stock-based compensation expense, which it expects to recognize over a weighted average period of 1.65 years.

On March 11, 2024, the Company and Manuel C. Alves-Aivado, M.D., Ph.D., agreed that his employment with the Company would cease and he would resign from his position as Chief Executive Officer ("CEO") of the Company, effective as of March 11, 2024. Dr. Aivado remains a member of the Company’s Board. Dr. Aivado’s resignation from the Company was not the result of any disagreement with the Company on any matter relating to its operations, policies or practices. As a non-employee director, following the separation date, Dr. Aivado will be compensated in accordance with the terms of the Company’s non-employee director compensation program. In addition, Dr. Aivado will continue to vest in all unvested stock option awards pursuant to the original vesting terms. The resignation of Dr. Aivado as CEO was considered a significant reduction in service and his original awards were deemed to have been modified and accounted for as a Type III modification with no material effect on these condensed consolidated financial statements.

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Net Loss per Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Net Loss per Share

12. Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows:

	Three Months Ended March 31,
	2024			2023
Numerator:
Net loss	$	(7,113	)	$	(4,779	)
Denominator:
Weighted average common shares outstanding—basic and diluted		8,301,798			4,541,167
Net loss per share attributable to common stockholders—basic and diluted	$	(0.86	)	$	(1.05	)

The Company’s potential dilutive securities, which include stock options as of March 31, 2024 and 2023, have been excluded from the computation of diluted net loss per share attributable to common stockholders whenever the effect of including them would be to reduce the net loss per share. In periods where there is a net loss, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	Three Months Ended March 31,
	2024		2023
Options to purchase common stock		2,126,972		506,986
Warrants to issue shares of common stock		3,726,696		646,759
Series X Preferred Stock issued and outstanding, as converted		12,653,000		—
Total		18,506,668		1,153,745

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Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

As of March 31, 2024, the Company has not recorded any U.S. federal or state income tax benefits for either the net losses it has incurred or its earned research and orphan drug credits, due to the uncertainty of realizing a benefit from those items in the future.

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Related Party Transactions

3 Months Ended

Mar. 31, 2024

Related Party Transactions [Abstract]

Related Party Transactions

14. Related Party Transactions

On March 5, 2024, entities and individuals affiliated with Bios Partners (collectively, the “Bios Entities”) converted 1,476 shares of the Company’s Series X Preferred Stock into 1,476,000 shares of common stock. After the conversion, as of March 31, 2024, the Bios Entities owned 1,673,305 shares of the Company’s common stock resulting in a beneficial ownership of 9.9% of the Company’s outstanding common stock.

On March 5, 2024, the Board of Regents of the University of Texas System, or UT System, on behalf of University of Texas Health Science Center at Tyler, or UTHSCT, converted 503 shares of the Company’s Series X Preferred Stock into 503,000 shares of the Company's common stock. On the same date, UT System, on behalf of University of Texas in Austin, or UT Austin, converted 1,277 shares of the Company’s Series X Preferred Stock into 1,277,000 shares of the Company's common stock. Given the effect of the conversion, as of March 31, 2024, UT System and its affiliates beneficially owned 1,812,627 shares of the Company’s common stock resulting in a beneficial ownership of 10.8% of the Company’s outstanding common stock. The Company also has several license agreements with UT System and its affiliates, as disclosed in Note 15.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

Operating Leases

On August 16, 2021, Lung entered into an operating lease agreement to rent approximately 6,455 square feet of office space for its corporate headquarters in Austin, Texas, beginning on October 1, 2021. The lease expired March 31, 2024, and the Company did not renew the lease. Following expiration of the lease, the Company is operating virtually, and expects to do so for the foreseeable future.

Legal Proceedings

The Company may from time to time be party to litigation arising in the ordinary course of business. As of March 31, 2024, the Company was not party to any legal proceedings and no material legal proceedings are currently pending or, to the best of the Company’s knowledge, threatened.

Intellectual Property Licenses

Harvard and Dana-Farber Agreement

In August 2006, the Company entered into an exclusive license agreement with President and Fellows of Harvard College (“Harvard”) and Dana-Farber Cancer Institute (“DFCI”). The agreement granted the Company an exclusive worldwide license, with the right to sublicense, under specified patents and patent applications to develop, obtain regulatory approval for and commercialize specified product candidates based on cell-permeating peptides. Under the agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize one or more licensed products and to achieve specified milestone events by specified dates. In connection with entering into the agreement, the Company paid an upfront license fee and issued to Harvard and DFCI shares of its common stock.

In February 2010, the agreement was amended and restated (the “Harvard/DFCI agreement”) under which additional patent rights were added to the scope of the license agreement and the annual license maintenance fees were increased. Under the Harvard/DFCI agreement, the Company is obligated to make aggregate milestones payments of up to $7,700 per licensed therapeutic product upon the Company’s achievement of specified clinical, regulatory and sales milestones with respect to such product and up to $700 per licensed diagnostic product upon the Company’s achievement of specified regulatory and sales milestones with respect to such product. In addition, the Company is obligated to pay royalties of low single-digit percentages on annual net sales of licensed products sold by the Company, its affiliates or its sublicensees. The royalties are payable on a product-by-product and country-by-country basis and may be reduced in specified circumstances. In addition, the agreement obligates the Company to pay a percentage, up to the mid-twenties, of fees received by the Company in connection with its sublicense of the licensed products. In accordance with the terms of the agreement, the Company’s sublicense payment obligations may be subject to specified reductions.

The Harvard/DFCI agreement requires the Company to pay annual license maintenance fees of $110 each year, which was reduced to $35 starting in 2023. Any payments made in connection with the annual license maintenance fees will be credited against any royalties due.

As of March 31, 2024, the Company had not developed a commercial product using the licensed technologies and no royalties under the agreement had been paid or were due.

Under the Harvard/DFCI agreement, the Company is responsible for all patent expenses related to the prosecution and maintenance of the licensed patents and applications in-licensed under the agreement as well as cost reimbursement of amounts incurred for all documented patent-related expenses. The agreement will expire on a product-by-product and country-by-country basis upon the last to expire of any valid patent claim pertaining to licensed products covered under the agreement. The Company incurred $9 and $nil license maintenance fees in the three months ended March 31, 2024 and 2023, respectively.

Agreement with the University of Texas Health Science Center at Tyler

In June 2013, Lung entered into a patent and technology license agreement with UT System, on behalf of UTHSCT. The patent and technology license agreement with UT System (the “UTHSCT Agreement”) provides Lung access to patents and technology related to the development of LTI-01 and LTI-03. As part of the UTHSCT Agreement, Lung has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell certain intellectual property; (ii) a non-exclusive license under the technology rights to manufacture, distribute and sell the licensed product; and (iii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the UTHSCT Agreement. In December 2013, the UTHSCT Agreement was amended and restated to include certain patents in all fields worldwide. In May 2017, the UTHSCT Agreement was amended and restated to modify the specific milestone criteria.

In consideration of the UTHSCT Agreement, Lung granted UT System (via UTHSCT and UT Horizon Fund affiliates) (i) 2,000,000 shares of Lung common stock and (ii) 400,000 shares of Lung non-convertible preferred stock. On February 6, 2015, UT System exchanged the 400,000 shares of Lung non-convertible preferred stock for 4,000,000 shares of Lung common stock. In addition, Lung agreed to pay past and ongoing patent expenses, and Lung owes UTHSCT sublicensing fees, assignment fees, and single digit royalties on worldwide net product sales, with fixed minimum royalty payments that started in 2015.

Pursuant to the UTHSCT Agreement, Lung is required to use diligent efforts to commercialize the licensed technology as soon as commercially practicable, including maintaining active research and development, regulatory, marketing and sales program, all as commercially reasonable.

The Company may terminate the UTHSCT Agreement for convenience with 90 days’ notice. UTHSCT may also terminate the UTHSCT Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense in the three months ended March 31, 2024 and 2023.

Agreement with the University of Texas at Austin

In May 2015, Lung entered into a patent license agreement with UT Austin on behalf of UT System. This license agreement with UT Austin (the “UT Austin 6607 Agreement”) relates to the patent rights to polypeptide therapeutics and uses thereof. Pursuant to the

UT Austin 6607 Agreement Lung has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell the licensed product; and (ii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. The UT Austin 6607 Agreement was amended and restated in January 2017, November 2018, and June 2019. The amendments related to extension of milestone payment dates and specific terminology around the milestone achievement criteria.

In consideration of the UT Austin 6607 Agreement, Lung agreed to pay past and ongoing patent expenses, milestone fees upon certain development and regulatory milestone events, annual license fees, tiered sublicense fees, assignment fees, low single digit royalties on net sales and a Food and Drug Administration (“FDA”) Priority Review Voucher fee if Lung sells or transfers this voucher.

Pursuant to the UT Austin 6607 Agreement, Lung is required to use diligent efforts to commercialize the licensed products, including maintaining active research and development, regulatory, marketing and sales program. Moreover, Lung is required to meet certain development and regulatory milestones by specific dates.

The Company may terminate the UT Austin 6607 Agreement for convenience with 90 days’ notice. UT Austin may also terminate the UT Austin 6607 Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense in the three months ended March 31, 2024 and 2023.

Agreement with Medical University of South Carolina

In March 2016, Lung entered into a license agreement with Medical University of South Carolina Foundation for Research Development, or MUSC. Pursuant to this license agreement with MUSC (the “MUSC Agreement”) Lung has patent rights related to protecting against lung fibrosis by up regulating Cav1. The MUSC Agreement granted (i) a royalty-bearing, exclusive license under the patent rights to make, use and sell the license product; and (ii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. In September 2018, the agreement was amended and restated to include definitions of related methods, related products and related rights.

In consideration of the MUSC Agreement, Lung agreed to pay a non-refundable license fee, patent expenses, milestone fees upon certain development, regulatory and commercial milestone events, sublicense fees, assignment fees and low single digit royalties on net sales, with a fixed minimum royalty payment starting in 2019 and a transaction fee upon Lung’s liquidation.

Pursuant to the MUSC Agreement, Lung is required to use diligent efforts to develop, manufacture and sell the licensed products.

The Company may terminate the MUSC Agreement for convenience by providing a written notice to MUSC effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company incurred $25 and $nil license fee in the three months ended March 31, 2024 and 2023, respectively.

Agreement with Vivarta Therapeutics LLC

In March 2018, Lung entered into a license agreement with Vivarta Therapeutics, LLC, or Vivarta. This license agreement with Vivarta (the “Vivarta Agreement”) relates to intellectual property relating to epithelial sodium channel inhibitors and methods to treat pulmonary disease. Pursuant to the Vivarta Agreement Lung has (i) a royalty-bearing, exclusive license under the intellectual property rights to make, use and sell the licensed product, and (ii) a sublicensing right that allows Lung to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement.

In consideration for the Vivarta Agreement, Lung agreed to grant Vivarta a warrant to purchase an aggregate of 75,000 shares of Lung common stock for $0.12 per share, to pay a license fee of $10,000 upon the Vivarta Agreement effective date and $40,000 within 30 days of the receipt of a positive freedom to operate analysis from legal counsel. Lung also agreed to pay patent expenses, milestone fees upon certain development and regulatory milestone events, sublicense fees, assignment fees and low single digit royalties on net sales.

Pursuant to the Vivarta Agreement, Lung is required to use diligent efforts to develop, manufacture and sell the licensed products.

The Company may terminate the Vivarta Agreement for convenience by providing a written notice to Vivarta effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company did not incur any expense in the three months ended March 31, 2024 and 2023.

Manufacturing Commitments

As of March 31, 2024, the Company has non-cancellable purchase obligations and a prepaid balance with its contract manufacturer in the amount of $2,339 and $131, respectively.

Aggregate future service and purchase commitments with manufacturer as of March 31, 2024 are as follows:

	March 31, 2024
2024	$	-
2025 and thereafter		2,339
Total purchase commitments		2,339

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it had not accrued any liabilities related to such obligations in its consolidated financial statements as of March 31, 2024 or December 31, 2023.

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Subsequent Event

3 Months Ended

Mar. 31, 2024

Subsequent Events [Abstract]

Subsequent Event

16. Subsequent Event

As discussed in Note 1 – Nature of the Business – Liquidity and Going Concern, on May 1, 2024, the Company entered into the Underwriting Agreement and sold 4,273,505 Offering Shares and 4,273,505 Offering Warrants to purchase 4,273,505 shares of the Company’s common stock to several investors for the net proceeds from the Offering of approximately $17,945, after deducting underwriting discounts and commissions and estimated offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants. The Offering closed on May 3, 2024.

Each Offering Share was offered and sold together with an accompanying Offering Warrant at a combined offering price of $4.68. Each Offering Warrant has an exercise price per share of common stock equal to $4.68. Each Offering Warrant is immediately exercisable and may be exercised until the third anniversary of the issuance date. Each Offering Warrant is exercisable solely by means of a cash exercise, except that an Offering Warrant is exercisable via cashless exercise if at the time of exercise, a registration statement registering the issuance of Offering Warrant Shares is not then effective or the prospectus is not available for the issuance of Offering Warrant Shares.

Each Offering Warrant is callable by the Company during the ten trading day period after the date that is 30 days following the public announcement by the Company of the top-line results from the Phase 1b clinical trial of LTI-03 in patients with IPF, including a statement that there were no drug-related adverse events that resulted in a discontinuation of the trial (the “Trigger Date”). Subject to certain exceptions, in the event that the Offering Warrants are outstanding, if, after the Trigger Date, then the Company may, within ten trading days of the Trigger Date, upon notice (a “Call Notice”), call for cancellation of the Offering Warrants for which a notice of exercise has not yet been delivered for consideration equal to $0.001 per Offering Warrant Share; provided that the Company may only deliver such Call Notice if the volume-weighted average price of its shares of common stock exceeds the exercise price of the Offering Warrants on the trading day immediately prior to the date the Company delivers the Call Notice. Any Offering Warrant subject to such Call Notice for which a notice of exercise shall not have been received by the Call Date (as hereinafter defined) will be cancelled at 6:30 p.m. (New York City time) on the tenth trading day after the date the Company sends the Call Notice.

On May 8, 2024, the Bios Entities provided notice to the Company and converted 421 shares of the Company’s Series X Preferred Stock into 421,000 shares of common stock.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by ASUs of the Financial Accounting Standards Board (“FASB”).

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months then ended have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on April 15, 2024.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2024, the results of its operations for the three months ended March 31, 2024 and 2023 and its cash flows for the three months ended March 31, 2024 and 2023. The financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are unaudited. The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. The accompanying balance sheet as of December 31, 2023 has been derived from the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K that was filed with the SEC on April 15, 2024.

The Company’s significant accounting policies are described in Note 2 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on April 15, 2024.

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lung Therapeutics, LLC, Lung Therapeutics Australia Pty Ltd, and Lung Therapeutics Limited. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual for research and development expenses, the prepaid research and development expenses, and the value of stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Concentration of Credit Risk and of Significant Suppliers

Concentration of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Periodically, the Company maintains balances in operating accounts above federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents.

The Company is dependent on third-party manufacturers to supply products for research and development activities of its programs, including preclinical and clinical testing. In particular, the Company relied on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could have been adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In March 2024, the FASB issued ASU 2024-02—Codification Improvements—Amendments to Remove References to the Concepts Statements, that contains amendments to the Codification that remove references to various FASB Concepts Statements. This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements. The amendments are effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted. Early application of the amendments in this ASU is permitted for all entities, for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01—Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, to improve GAAP by adding an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes that interim period. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures.

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Fair Value of Financial Assets (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Summary of Assets Measured at Fair Value on Recurring Basis

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

	March 31, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	10,954	$	—	$	—	$	10,954
	$	10,954	$	—	$	—	$	10,954

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	10,322	$	—	$	—	$	10,322
	$	10,322	$	—	$	—	$	10,322

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Prepaid Expenses and Other Current Assets (Tables)

3 Months Ended

Mar. 31, 2024

Prepaid Expense and Other Assets, Current [Abstract]

Schedule of Prepaid and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	March 31, 2024		December 31, 2023
Prepaid research and development	$	150	$	207
Other current assets		547		675
Total prepaid expenses and other current assets	$	697	$	882

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Other Assets (Tables)

3 Months Ended

Mar. 31, 2024

Prepaid Expense and Other Assets [Abstract]

Schedule of Other Assets

Other assets consisted of the following:

	March 31, 2024		December 31, 2023
Non-current prepaid research and development	$	839	$	2,140
Other assets		53		53
Total other non-current assets	$	892	$	2,193

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2024

Payables and Accruals [Abstract]

Summary of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	March 31, 2024		December 31, 2023
External research and development services	$	913	$	1,110
Payroll and payroll-related costs		420		1,178
Professional fees		763		653
Other		280		206
Total accrued expenses and other current liabilities	$	2,376	$	3,147

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Stock-Based Awards (Tables)

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Valuation Assumptions of Stock Options Granted

The assumptions that the Company used to determine the grant-date fair value of the stock options granted to employees and directors during the three months ended March 31, 2024 and 2023 were as follows, presented on a weighted average basis:

	Three Months Ended March 31,
	2024			2023
Risk-free interest rate		4.26	%		2.33	%
Expected term (in years)		5.5			6.1
Expected volatility		105.7	%		94.4	%
Expected dividend yield		0	%		0	%

Summary of Stock Option Activity

The following table summarizes the Company’s stock option activity since January 1, 2023:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2023		2,212,102		$	7.42		6.0	$	2,905
Granted		5,450			4.72		—
Exercised		—			—		—		—
Forfeited/Canceled		(26,297	)		4.07		—		—
Expired		(64,283	)		37.56		—
Outstanding at March 31, 2024		2,126,972			6.54		5.8		8,895
Options exercisable at March 31, 2024		1,882,612		$	6.38		5.6	$	8,193
Options vested and expected to vest at March 31, 2024		2,118,381		$	6.55		5.8	$	8,861
Options exercisable at December 31, 2023		1,882,191		$	7.46		5.8	$	2,631
Options vested and expected to vest at December 31, 2023		2,209,420		$	7.41		6.0	$	2,904

Summary of Stock Based Compensation Expense

The Company recorded stock-based compensation expense related to stock options in the following expense categories of its statements of operations and comprehensive loss:

	Three Months Ended March 31,
	2024		2023
Research and development expenses	$	39	$	119
General and administrative expenses		111		272
	$	150	$	391

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Net Loss per Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Basic and Diluted Net Loss per Share Attributable to Common Stockholders

Basic and diluted net loss per share attributable to common stockholders was calculated as follows:

	Three Months Ended March 31,
	2024			2023
Numerator:
Net loss	$	(7,113	)	$	(4,779	)
Denominator:
Weighted average common shares outstanding—basic and diluted		8,301,798			4,541,167
Net loss per share attributable to common stockholders—basic and diluted	$	(0.86	)	$	(1.05	)

Summary of Potential Common Shares Excluded from Calculation of Diluted Net Loss per Share

The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	Three Months Ended March 31,
	2024		2023
Options to purchase common stock		2,126,972		506,986
Warrants to issue shares of common stock		3,726,696		646,759
Series X Preferred Stock issued and outstanding, as converted		12,653,000		—
Total		18,506,668		1,153,745

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Schedule of Aggregate Future Service and Purchase Commitments with Manufacturer

Aggregate future service and purchase commitments with manufacturer as of March 31, 2024 are as follows:

	March 31, 2024
2024	$	-
2025 and thereafter		2,339
Total purchase commitments		2,339

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Nature of the Business - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended
	May 03, 2024	May 01, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Oct. 31, 2023
Class of Stock [Line Items]
Proceeds from collaboration agreement			$ 34,910
Cash and cash equivalents			$ 12,042	$ 7,783	$ 17,313
Number of stock sold			2,353,500
Common stock, par value			$ 0.001		$ 0.001
Net loss			$ (7,113)	$ (4,779)
Accumulated deficit			(295,630)		$ (288,517)
Subsequent Event [Member]
Class of Stock [Line Items]
Cash and cash equivalents	$ 27,496
Underwriting Agreement [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Net proceeds from offering	$ 17,945	$ 17,945
Common stock, par value		$ 0.001
Lung Acquisition [Member]
Class of Stock [Line Items]
Proceeds from sales of stock			18,429
Cash and cash equivalents			$ 12,042
Number of stock sold			726,437
Common stock, par value						$ 0.001
Issuance costs			$ 893
Offering Shares [Member]
Class of Stock [Line Items]
Proceeds from sales of stock			145,467
Offering Shares [Member] | Underwriting Agreement [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Number of stock sold		4,273,505
Warrants to purchase shares of common stock		4,273,505
Offering Shares [Member] | Offering Warrant Shares [Member] | Underwriting Agreement [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Warrants to purchase shares of common stock		4,273,505
Preferred Stock [Member]
Class of Stock [Line Items]
Proceeds from sales of stock			$ 131,211

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Business Acquisition - Additional Information (Detail) - Lung Acquisition [Member] $ in Thousands	Oct. 31, 2023 USD ($) shares
Business Acquisition [Line Items]
Business acquisition, percentage of voting interests acquired	100.00%
Purchase Agreement [Member]
Business Acquisition [Line Items]
Net proceeds from the Financing expected to be used to advance | $	$ 17,536
Convertible Promissory Notes [Member] | Purchase Agreement [Member]
Business Acquisition [Line Items]
Debt Conversion, Converted Instrument, Amount | $	$ 1,553
Common Stock [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	344,566
Common Stock [Member] | Whole Share [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	344,345
Common Stock [Member] | Fractional Share [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	221
Series X Preferred Stock [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	20,141
Convertible Preferred Stock, Shares Issued upon Conversion	1,000
Series X Preferred Stock [Member] | Purchase Agreement [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	4,707
Percentage of discount to per share price	10.00%
Convertible Preferred Stock, Shares Issued upon Conversion	1,000
Series X Preferred Stock [Member] | Whole Share [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	19,903
Series X Preferred Stock [Member] | Fractional Share [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	238
Warrants [Member]
Business Acquisition [Line Items]
Business acquisition number of shares exercisable	(726,437)
PIPE Warrants [Member] | Purchase Agreement [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	2,353,500
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $	$ 18,429
Stock Options [Member]
Business Acquisition [Line Items]
Business acquisition number of shares exercisable	(1,780,459)
Common Stock and Series X Preferred Stock [Member]
Business Acquisition [Line Items]
Business acquisition cash in lieu of fractional shares | $	$ 290

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Fair Value of Financial Assets - Summary of Assets Measured at Fair Value on Recurring Basis (Detail) - Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total Fair Value of Financial Instruments	$ 10,954	$ 10,322
Level 1 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total Fair Value of Financial Instruments	10,954	10,322
Money Market Funds [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash equivalents	10,954	10,322
Money Market Funds [Member] | Level 1 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash equivalents	$ 10,954	$ 10,322

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Fair Value of Financial Assets - Additional Information (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Fair Value Disclosures [Abstract]
Fair Value, assets transfers into (out of) Level 3	$ 0	$ 0

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Prepaid Expenses and Other Current Assets - Schedule of Prepaid and Other Current Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Prepaid Expense and Other Assets, Current [Abstract]
Prepaid research and development	$ 150	$ 207
Other current assets	547	675
Total prepaid expenses and other current assets	$ 697	$ 882

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Property and Equipment, Net - Summary of Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Property Plant And Equipment [Line Items]
Property and equipment, net	$ 6	$ 19

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Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 6		$ 19
Gain (loss) on sale of property and equipment	$ 0	$ (16)

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Goodwill and Indefinite-Lived Intangible Assets - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Indefinite-Lived Intangible Assets [Line Items]
Goodwill	$ 6,330,000	$ 6,330,000
Indefinite-lived intangible assets acquired	79,200,000
Impairment of goodwill	0
Impairment of indefinite-lived intangible assets	$ 0

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Other Assets - Schedule of Other Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Prepaid Expense and Other Assets [Abstract]
Non-current prepaid research and development	$ 839	$ 2,140
Other assets	53	53
Total other non-current assets	$ 892	$ 2,193

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Accrued Expenses and Other Current Liabilities - Summary of Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
External research and development services	$ 913	$ 1,110
Payroll and payroll-related costs	420	1,178
Professional fees	763	653
Other	280	206
Total accrued expenses and other current liabilities	$ 2,376	$ 3,147

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Preferred Stock - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended
	Mar. 05, 2024	Oct. 31, 2023	Mar. 31, 2024	Dec. 31, 2023
Class of Stock [Line Items]
Common stock, shares issued			16,842,512	4,885,512
Common stock, par value			$ 0.001	$ 0.001
Issuance costs			$ 893
Proceeds from the PIPE transaction			$ 741
Common Stock [Member]
Class of Stock [Line Items]
Preferred Stock is automatically convertible into common stock	11,957,000
Preferred Stock is convertible into common stock			12,653,000
PIPE Warrants [Member]
Class of Stock [Line Items]
Preferred stock, par value			$ 0.001
Lung Acquisition [Member]
Class of Stock [Line Items]
Common stock, shares issued		344,345
Common stock, par value		$ 0.001
Lung Acquisition [Member] | Maximum [Member] | Common Warrants [Member]
Class of Stock [Line Items]
Aggregate number of shares issued and sold		2,353,500
Series X Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized			5,000,000
Preferred stock, par value			$ 0.001
Preferred stock, shares issued			24,610	24,610
Preferred stock, shares outstanding			12,653	24,610
Conversion of stock shares converted	11,957
Conversion of stock shares issued			12,653
Preferred Stock is convertible into common stock			1,000
Gross proceeds from issuance of preferred stock			$ 18,429
Proceeds from issuance of preferred stock			$ 16,795
Preferred stock, dividends declared			$ 0
Preferred stock, dividends paid			$ 0
Preferred stock, convertible, shares issuable beneficial ownership as a percentage			19.99%
Series X Preferred Stock [Member] | Lung Acquisition [Member]
Class of Stock [Line Items]
Preferred stock, shares issued		19,903
Series X Preferred Stock [Member] | Lung Acquisition [Member] | Purchase Agreement [Member]
Class of Stock [Line Items]
Aggregate number of shares issued and sold		4,707

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Common Stock - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended	12 Months Ended
	Mar. 05, 2024	Oct. 31, 2023	Mar. 31, 2024	Dec. 31, 2023	Feb. 28, 2024	Jan. 01, 2024	Mar. 31, 2023	Jan. 01, 2023	Dec. 31, 2022
Class of Stock [Line Items]
Common stock, shares authorized			100,000,000	45,000,000	100,000,000
Common stock, par value			$ 0.001	$ 0.001
Common stock, shares issued			16,842,512	4,885,512
Common stock, shares outstanding			16,842,512	4,885,512
Common stock voting rights			Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.
Common stock, dividends declared			$ 0	$ 0
Aggregate number of common stock shares issued and sold			2,353,500
Treasury stock			0
Shares issued, outstanding and reserved for issuance			39,006,303
Series X Preferred Stock [Member]
Class of Stock [Line Items]
Conversion of stock shares converted	11,957
Preferred stock, shares issued			24,610	24,610
Conversion of stock shares issued			12,653
Preferred Stock is convertible into common stock			1,000
Preferred stock, shares outstanding			12,653	24,610
Common stock reserved for issuance			12,890,000
Warrants and Rights Outstanding, Maturity Date			May 02, 2027
Warrants exercise price			$ 4.89
Common Stock [Member]
Class of Stock [Line Items]
Common stock, shares outstanding			16,842,512	4,885,512			4,541,167		4,541,167
Preferred Stock is automatically convertible into common stock	11,957,000
Preferred Stock is convertible into common stock			12,653,000
Stock remained available for future issuance			60,993,697
Common Warrants [Member]
Class of Stock [Line Items]
Warrants exercise price		$ 4.89
Warrants [Member]
Class of Stock [Line Items]
Common stock reserved for issuance			3,726,696
PIPE Warrants [Member]
Class of Stock [Line Items]
Issuance of warrants			$ 741
PIPE Warrants [Member] | Maximum [Member]
Class of Stock [Line Items]
Percentage of common stock share outstanding			19.99%
Existing Equity Incentive Plans [Member]
Class of Stock [Line Items]
Common stock reserved for issuance			2,126,972
2021 Stock Incentive Plan [Member]
Class of Stock [Line Items]
Common stock reserved for issuance			3,412,623
Stock remained available for future issuance			3,841,710
2017 Employee Stock Purchase Plan [Member]
Class of Stock [Line Items]
Common stock reserved for issuance			7,500			0		0
Stock remained available for future issuance			7,500
Lung Acquisition [Member]
Class of Stock [Line Items]
Common stock, par value		$ 0.001
Common stock, shares issued		344,345
Aggregate number of common stock shares issued and sold			726,437
Warrants and Rights Outstanding, Maturity Date			May 20, 2029
Warrants exercise price			$ 5.66
Lung Acquisition [Member] | Series X Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares issued		19,903
Aggregate number of common stock shares issued and sold		4,707
Lung Acquisition [Member] | PIPE Warrants [Member] | Maximum [Member]
Class of Stock [Line Items]
Aggregate number of common stock shares issued and sold		2,353,500
Private Placement [Member]
Class of Stock [Line Items]
Aggregate number of common stock shares issued and sold			646,759
Warrants and Rights Outstanding, Maturity Date			Apr. 02, 2024
Warrants exercise price			$ 40

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Restructuring and Other Costs - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Restructuring and Related Activities [Abstract]
Restructuring charges	$ 0	$ 1,022

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Stock-Based Awards - Additional Information (Detail) $ / shares in Units, $ in Thousands			3 Months Ended
	Oct. 31, 2023 shares	Jun. 16, 2017 shares	Mar. 31, 2024 USD ($) Plan $ / shares shares	Mar. 31, 2023 USD ($) shares	Feb. 28, 2024 shares	Jan. 01, 2024 shares	Dec. 31, 2023 shares	Jan. 01, 2023 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average grant-date fair value of stock options | $ / shares			$ 3.82
Number of options granted to employees or directors			5,450	0
Aggregate fair value of stock options vested | $			$ 228	$ 405
Aggregate unrecognized stock-based compensation expense | $			$ 525
Unrecognized stock-based compensation expense, weighted average period expects for recognition			1 year 7 months 24 days
Number of stock options exercised			0	0
Number of equity compensation plans | Plan			5
Number of shares, issued upon exercise of outstanding options			2,126,972				2,212,102
2021 Stock Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option granted vesting period			4 years
Number of shares, available for grant			3,841,710
Number of shares remained available for grant			3,412,623
Stock reserved for future issuance			3,412,623
Increase in common stock			3,840,254		3,000,000
2021 Stock Incentive Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option granted vesting period			4 years
Stock option expiration period			10 years
2017 Stock Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option granted vesting period			4 years
Stock reserved for future issuance			625,000
Number of shares, issued upon exercise of outstanding options			98,528
Number of shares remained available for future issuance			0
2017 Stock Incentive Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option expiration period			10 years
2006 Stock Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Contractual repurchase right, shares			314,006
Number of shares, issued upon exercise of outstanding options			6,693
Number of shares remained available for future issuance			0
2016 Stock Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, issued upon exercise of outstanding options			8,404
Number of shares remained available for future issuance			0
2017 Employee Stock Purchase Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, available for grant			7,500
Stock reserved for future issuance			7,500			0		0
Percentage of common stock shares outstanding		1.00%
Stock incentive plan description			On June 16, 2017, the Company’s stockholders approved the 2017 ESPP, which became effective on June 28, 2017. Under the 2017 ESPP, the number of shares of common stock that may be issued under the 2017 ESPP will automatically increase on each January 1, beginning with the fiscal year ended December 31, 2018 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2027, equal to the least of (i) 31,120 shares, (ii) 1% of the outstanding shares of common stock on such date and (iii) an amount determined by the Company’s Board. On January 1, 2023 and January 1, 2024, no additional shares were reserved for issuance under the 2017 ESPP pursuant to this provision. 7,500 shares remained available for future issuance under the 2017 ESPP as of March 31, 2024.
Maximum annual increase in common stock reserved for future issuance		31,120
2013 Stock Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options granted to employees or directors	0
2013 Stock Incentive Plan [Member] | Lung Acquisition [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option granted vesting period			4 years
2013 Stock Incentive Plan [Member] | Options Outstanding [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, available for grant			1,780,459
Contractual terms of stock option awards			10 years
2013 Stock Incentive Plan [Member] | Options Outstanding [Member] | Lung Acquisition [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Contractual terms of stock option awards			10 years
2013 Stock Incentive Plan [Member] | Maximum [Member] | Options Outstanding [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Contractual terms of stock option awards			10 years
2013 Stock Incentive Plan [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of fair market value of common stock			100.00%

XML

Stock-Based Awards - Valuation Assumptions of Stock Options Granted (Detail)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Risk-free interest rate	4.26%	2.33%
Expected term (in years)	5 years 6 months	6 years 1 month 6 days
Expected volatility	105.70%	94.40%
Expected dividend yield	0.00%	0.00%

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Stock-Based Awards - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]
Number of Shares, Beginning balance	2,212,102
Number of Shares, Granted	5,450	0
Number of Shares, Forfeited/Canceled	(26,297)
Number of Shares, Expired	(64,283)
Number of Shares, Ending balance	2,126,972		2,212,102
Number of Shares, Options exercisable	1,882,612		1,882,191
Number of Shares, Options vested and expected to vest	2,118,381		2,209,420
Weighted Average Exercise Price, Beginning balance	$ 7.42
Weighted Average Exercise Price, Granted	4.72
Weighted Average Exercise Price, Forfeited/Canceled	4.07
Weighted Average Exercise Price, Expired	37.56
Weighted Average Exercise Price, Ending balance	6.54		$ 7.42
Weighted Average Exercise Price, Options exercisable	6.38		7.46
Weighted Average Exercise Price, Options vested and expected to vest	$ 6.55		$ 7.41
Weighted Average Remaining Contractual Term, Outstanding	5 years 9 months 18 days		6 years
Weighted Average Remaining Contractual Term, Options exercisable	5 years 7 months 6 days		5 years 9 months 18 days
Weighted Average Remaining Contractual Term, Options vested and expected to vest	5 years 9 months 18 days		6 years
Aggregate Intrinsic Value, Beginning balance	$ 2,905
Aggregate Intrinsic Value, Ending balance	8,895		$ 2,905
Aggregate Intrinsic Value, Options exercisable	8,193		2,631
Aggregate Intrinsic Value, Options vested and expected to vest	$ 8,861		$ 2,904

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Stock-Based Awards - Summary of Stock Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 150	$ 391
Research and Development [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	39	119
General and Administrative [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 111	$ 272

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Net Loss per Share - Basic and Diluted Net Loss per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Numerator:
Net loss	$ (7,113)	$ (4,779)
Denominator:
Weighted average common shares outstanding - basic	8,301,798	4,541,167
Weighted average common shares outstanding - diluted	8,301,798	4,541,167
Net loss per share - basic	$ (0.86)	$ (1.05)
Net loss per share - diluted	$ (0.86)	$ (1.05)

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Net Loss per Share - Summary of Potential Common Shares Excluded from Calculation of Diluted Net Loss per Share (Detail) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from calculation of diluted net loss per share	18,506,668	1,153,745
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from calculation of diluted net loss per share	2,126,972	506,986
Warrants To Issue Shares Of Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from calculation of diluted net loss per share	3,726,696	646,759
Series X Preferred Stock Issued And Outstanding, As Converted [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from calculation of diluted net loss per share	12,653,000

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Related Party Transactions - Additional Information (Details) - shares	Mar. 05, 2024	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Number of shares owned		16,842,512	4,885,512
Common Stock [Member]
Related Party Transaction [Line Items]
Preferred Stock is automatically convertible into common stock	11,957,000
Number of shares owned		16,842,512	4,885,512	4,541,167	4,541,167
Bios Entities [Member]
Related Party Transaction [Line Items]
Number of shares owned		1,673,305
Percentage of beneficial ownership		9.90%
Bios Entities [Member] | Common Stock [Member]
Related Party Transaction [Line Items]
Preferred Stock is automatically convertible into common stock	1,476,000
UTHSCT [Member] | Common Stock [Member]
Related Party Transaction [Line Items]
Preferred Stock is automatically convertible into common stock	503,000
UT Austin [Member] | Common Stock [Member]
Related Party Transaction [Line Items]
Preferred Stock is automatically convertible into common stock	1,277,000
UT System and Its Affiliates [Member]
Related Party Transaction [Line Items]
Number of shares owned		1,812,627
Percentage of beneficial ownership		10.80%
Series X Preferred Stock [Member]
Related Party Transaction [Line Items]
Conversion of stock shares converted	11,957
Series X Preferred Stock [Member] | Bios Entities [Member]
Related Party Transaction [Line Items]
Conversion of stock shares converted	1,476
Series X Preferred Stock [Member] | UTHSCT [Member]
Related Party Transaction [Line Items]
Conversion of stock shares converted	503
Series X Preferred Stock [Member] | UT Austin [Member]
Related Party Transaction [Line Items]
Conversion of stock shares converted	1,277

XML

Commitments and Contingencies - Additional Information (Detail) $ / shares in Units, $ in Thousands			1 Months Ended		3 Months Ended		12 Months Ended
	Aug. 16, 2021 ft²	Feb. 06, 2015 shares	Mar. 31, 2018 USD ($) $ / shares shares	Jun. 30, 2013 shares	Mar. 31, 2024 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)	Feb. 28, 2010 USD ($)
Other Commitments [Line Items]
Non-cancellable purchase obligations					$ 2,339
Contract obligation, prepaid amount					131
Harvard and Dana-Farber Agreement [Member] | Therapeutic Product [Member]
Other Commitments [Line Items]
Aggregate milestones payments								$ 7,700
Harvard and Dana-Farber Agreement [Member] | Diagnostic Product [Member]
Other Commitments [Line Items]
Aggregate milestones payments								$ 700
Harvard and Dana-Farber Agreement [Member] | License [Member]
Other Commitments [Line Items]
Annual license maintenance fees							$ 35
Harvard and Dana-Farber Agreement [Member] | License and Maintenance [Member]
Other Commitments [Line Items]
Annual license maintenance fees					9	$ 0	$ 110
Operating Lease Agreement [Member]
Other Commitments [Line Items]
Area of land | ft²	6,455
Lease expiration date	Mar. 31, 2024
UTHSCT Agreement [Member] | Common Stock [Member]
Other Commitments [Line Items]
Shares granted in consideration | shares		4,000,000		2,000,000
UTHSCT Agreement [Member] | Non-convertible preferred stock [Member]
Other Commitments [Line Items]
Shares granted in consideration | shares		400,000		400,000
MUSC Agreement [Member] | License [Member]
Other Commitments [Line Items]
Annual license maintenance fees					$ 25	$ 0
Vivarta Therapeutics LLC [Member]
Other Commitments [Line Items]
License fee on agreement effective date			$ 10,000
License fee on receipt of positive freedom to operate analysis from legal counsel			$ 40,000
Vivarta Therapeutics LLC [Member] | Common Stock [Member]
Other Commitments [Line Items]
Issuance of common stock warrant | shares			75,000
Warrant per share | $ / shares			$ 0.12

XML

Commitments and Contingencies - Schedule of Aggregate Future Service and Purchase Commitments with Manufacturer (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2025 and thereafter	$ 2,339
Total purchase commitments	$ 2,339

XML

Subsequent Event - Additional Information (Details) $ / shares in Units, $ in Thousands					3 Months Ended
	May 08, 2024 shares	May 03, 2024 USD ($)	May 01, 2024 USD ($) Days $ / shares shares	Mar. 05, 2024 shares	Mar. 31, 2024 $ / shares shares
Subsequent Event [Line Items]
Number of stock sold					2,353,500
Series X Preferred Stock [Member]
Subsequent Event [Line Items]
Warrants exercise price | $ / shares					$ 4.89
Conversion of stock shares converted				11,957
Common Stock [Member]
Subsequent Event [Line Items]
Preferred stock convertible into common stock				11,957,000
Subsequent Event [Member] | Series X Preferred Stock [Member]
Subsequent Event [Line Items]
Conversion of stock shares converted	421
Subsequent Event [Member] | Common Stock [Member]
Subsequent Event [Line Items]
Offering price | $ / shares			$ 4.68
Warrants exercise price | $ / shares			$ 4.68
Preferred stock convertible into common stock	421,000
Subsequent Event [Member] | Underwriting Agreement [Member]
Subsequent Event [Line Items]
Net proceeds from offering | $		$ 17,945	$ 17,945
Number of trading days | Days			10
Notice period			30 days
Warrants exercise price | $ / shares			$ 0.001
Subsequent Event [Member] | Underwriting Agreement [Member] | Common Stock [Member]
Subsequent Event [Line Items]
Number of stock sold			4,273,505
Warrants issued			4,273,505
Warrants to purchase shares of common stock			4,273,505