7. Stockholders’ Equity

Class A and Class B Common Stock

Holders of Class A common stock generally have rights identical to holders of Class B common stock, except that holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to five (5) votes per share. The holders of Class B common stock may convert each share of Class B common stock into one share of Class A common stock at any time at the holder’s option. Class B common stock is not publicly tradable.

Series A Non-Voting Convertible Preferred Stock

The Certificate of Incorporation of the Company, as amended, provides for a class of its authorized stock known as Preferred Stock, consisting of 5,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series.

On March 10, 2026, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock with the Secretary of State of the State of Delaware (the “Certificate of Designation”) in connection with the Private Placement. The Certificate of Designation provides for the issuance of up to 26,975 authorized shares of the Company’s Series A Preferred Stock.

In connection with an initial closing of the Private Placement pursuant to a March 10, 2026 Purchase Agreement entered into by and among the Company and certain institutional and accredited investors, on March 11, 2026, the Company issued and sold an aggregate of 11,873.04 shares of Series A Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series A preferred stock”) at a purchase price of $1,000.00 per share. Each share of Series A preferred stock is convertible, at the option of the holder and

without the payment of additional consideration, into shares of Class A common stock at a conversion price equal to $0.52 per share. The number of shares of Common Stock issuable upon conversion of each share of Series A Preferred Stock shall be determined by dividing the stated value of $1,000 per share by the conversion price of $0.52 (subject to adjustment as set forth in the Certificate of Designation). The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series A preferred stock are set forth in the Certificate of Designation.

Pursuant to the Certificate of Designation, each share of Series A preferred stock is convertible into Class A common stock at a conversion price equal to $0.52 per share. Holders of shares of Series A Preferred Stock are entitled to receive dividends on shares of Series A Preferred Stock equal to, on an as-if-converted-to-Common Stock basis, and in the same form as dividends actually paid on shares of the Common Stock. Except as otherwise required by law, the Series A Preferred Stock does not have voting rights. However, as long as any shares of Series A 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 A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend the Certificate of Designation, (c) amend its certificate of incorporation or other governing documents in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (d) issue further shares of Series A Preferred Stock or increase or decrease the number of authorized shares of Series A Preferred Stock, subject to certain exceptions, or (e) consummate any Fundamental Transaction (as defined in the Certificate of Designation), certain change of control transactions or enter into any agreements with respect to the same. The Series A Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company. Issuances of securities pursuant to the Purchase Agreement, however, will not be deemed a “Fundamental Transaction.”

Upon the issuance of the Series A preferred stock, the Company assessed the embedded conversion feature and contingent redemption feature of the securities as described below and determined that such features did not require the Company to separately account for the features as bifurcated embedded derivatives.

In connection with the Private Placement, the Company agreed to issue and sell to the investors in a second closing, subject to certain conditions, additional shares of Class A common stock and Series A Preferred Stock for aggregate additional gross proceeds of approximately $15.0 million, before deducting placement agent fees and other expenses. The purchase price per share of the Class A common stock and Series A Preferred Stock that may be sold in the second closing (if it occurs) is the same price as offered to investors in the initial closing of the Private Placement. Among other customary conditions, the occurrence of the second closing is contingent upon the Company’s achievement of (i) the announcement of Phase 2b study results for HLHS demonstrating statistical significance of the primary endpoint(s) as agreed between the Company and the U.S. FDA (the "Milestone") and (ii) a volume weighted average price per share of Class A common stock equal or greater to $1.85 with aggregate trading volume of at least 25,000,000 shares (subject to adjustment) (the "Price Threshold") during any ten consecutive trading days prior to expiration of the 30 trading days following the date of the Company's first announcement via press release or a Current Report on Form 8-K of the occurrence of the Milestone (the "Measurement Period"). For a waiver of the achievement of the Milestone and the Price Threshold prior to the expiration of the Measurement Period to be waived for purposes of the second closing, the Company must receive a written waiver approved by investors holding at least a majority in interest of the securities then held by the investors (determined as if all of the shares of Series A Preferred Stock then outstanding have been converted without regard to any limitations on the conversion of such shares of Series A Preferred Stock). The Company determined the tranche right associated with the second closing is equity classified.

The Company also issued to designees of the placement agent (or their assignees) unregistered warrants in connection with the Private Placement to purchase up to 2,019,231 shares of Class A common stock with an exercise price of $0.65 per share. The warrants are exercisable immediately upon issuance and have a term of five years from the date of issuance. The Company determined the warrants are equity classified.

Additionally, the Company sold to the investors in the Private Placement an interest in 50% of the proceeds to be received (after deducting necessary, documented third-party fees or charges) from the potential future sale of a Rare Pediatric Disease Priority Review Voucher (the “PRV”) to the extent received from the U.S. FDA in connection with the Company's laromestrocel program HLHS for approximately $0.9 million in cash. The Company determined the cash received for the PRV interest is treated as debt as a result of the Company’s significant continuing involvement in the generation of the cash flows due to the investors. The liability associated with the PRV interest is classified as a long-term liability on the condensed balance sheet as of March 31, 2026. The Company did not accrue any interest expense associated with the PRV interest during the three months ended March 31, 2026.

The Company allocated the aggregate proceeds received in the Private Placement on a relative fair value basis among the instruments, including Class A common stock, Series A Preferred Stock, the tranche right associated with the second closing, the placement agent warrants, and the PRV interest, as none of the instruments are measured at fair value on a recurring basis.

Warrants

Summary of Warrants Outstanding

In March 2026, certain holders of warrants issued in August 2025 exercised warrants to purchase an aggregate of 1,499,253 shares of Class A common stock for approximately $1.3 million in cash.

As of March 31, 2026, warrants exercisable for an aggregate of up to 22,434,760 shares of the Company’s Class A common stock remain outstanding. This includes: