Note 11. Warrants

Acquisition and Financing Warrants

On May 18, 2026, under the Merger Agreement, the Company issued Acquisition Warrants to holders of Orphai warrants to purchase up to an aggregate of 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations), at an exercise price of $996.90 per share of Series C Preferred Stock (or $19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). In addition, on May 18, 2026, concurrent with the Orphai Acquisition, in connection with the May 2026 Financing, the Company issued Financing Warrants to investors in the May 2026 Financing to purchase up to an aggregate of 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations), at an exercise price of $996.90 per share of Series C Preferred Stock (or $19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split).

In the aggregate, the Company issued warrants to purchase up to 83,064.827 shares of Series C Preferred Stock (or 4,319,400 shares on an as-converted-to-common basis).

The Acquisition and Financing Warrants do not become exercisable until the trading day following the earlier of the Company's public announcement of (a) top line data from the LAM-001 Trial or (b) the termination or suspension of the LAM-001 Trial, and remain exercisable only through the 30th day following such announcement. Prior to the Company's receipt of stockholder approval for the conversion of the Series C Preferred Stock issued in the Orphai Acquisition in accordance with Nasdaq Listing Rules, the Acquisition and Financing Warrants are exercisable only into shares of Series C Preferred Stock, which is itself subject to certain beneficial ownership limitations established by each holder. As a result of these provisions, the warrants fail the indexation guidance under ASC 815 and are classified as liabilities. The Acquisition and Financing Warrant liability was recorded at fair value as of the issuance date and is subject to remeasurement to estimated fair value at each balance sheet date until the warrants are exercised or expire, with changes in fair value recognized in the condensed consolidated statements of operations.

The proceeds from the May 2026 Financing were first allocated to the full fair value of the Financing Warrants due to the liability classification. The fair value of the Financing Warrants at issuance was $11.5 million. The remaining proceeds of $103.5 million, before issuance costs, were allocated to the Series C Preferred Stock.

As of June 30, 2026, none of the Acquisition and Financing Warrants had been exercised, and 83,064.827 shares underlying the Acquisition and Financing Warrants remained outstanding. The following table is a summary of the Company's Acquisition and Financing Warrants outstanding as of June 30, 2026:

Common and Pre-Funded Warrants

On June 12, 2025, in connection with the sale and issuance of common stock as part of the June 2025 Private Placement, the Company issued Pre-Funded Warrants to purchase up to an aggregate of 10,000 shares of common stock at an exercise price of $0.20 per share and Common Warrants to purchase up to an aggregate of 43,360 shares of common stock at an exercise price of $240.00 per share. Each Share and each Pre-Funded Warrant sold pursuant to the June 2025 Securities Purchase Agreement was accompanied by one Common Warrant. The combined purchase price of each Share and accompanying Common Warrant was $265.00 (which included $25.00 per Common Warrant in accordance with the rules and regulations of Nasdaq). The combined purchase price of each Pre-Funded Warrant and accompanying Common Warrant was $264.80 (equal to the combined purchase price per Share and accompanying Common Warrant, minus $0.20).

The Common Warrants can be exercised into either common stock or Pre-Funded Warrants at the holders' option, and both Common Warrants and Pre-Funded Warrants contain purchase rights that could result in holders receiving securities that more than offsets or neutralizes the effect of a distribution event. As a result of the aforementioned provisions, both Common Warrants and Pre-Funded Warrants fail the indexation guidance under ASC 815 and are classified as liabilities. The Pre-Funded Warrants and Common Warrants liabilities were recorded at fair value as of the issuance date and June 30, 2026, and subject to adjustment to estimated fair value at each balance sheet date until the warrants are settled.

The proceeds from June 2025 Private Placement were first allocated to the full fair value of the Pre-Funded Warrants and Common Warrants due to the liability classification. The fair value of the Pre-Funded Warrants and Common Warrants at issuance was $10.7 million. The remaining proceeds of $0.8 million, before issuance costs, were allocated to the common stock.

During the three and six months ended June 30, 2026, the Company recognized a fair value gain of $4.5 million and $35.6 million, respectively, related to the total warrants.

On January 29, 2026, all 10,000 shares of the Pre-Funded Warrants were exercised through a cashless exercise into 9,989 shares of the Company's common stock. In May 2026, all of the Common Warrants issued in connection with the June 2025 Private Placement were terminated in connection with the consummation of the Orphai Acquisition.