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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 September 30, 2025


☐	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: 001-41942

Fractyl Health, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	27-3553477
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3 Van de Graaff Drive, Suite 200 Burlington, MA	01803
(Address of principal executive offices)	(Zip Code)

(781) 902-8800

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value per share	GUTS	The Nasdaq Global 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, a 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 October 31, 2025, the number of shares of the registrant’s common stock outstanding was approximately 137,044,440.

BASIS OF PRESENTATION

Except where the context otherwise requires or where otherwise indicated, the terms “Fractyl,” “Fractyl Health,” “we,” “us,” “our,” “our company,” “Company” and “our business” refer to Fractyl Health, Inc. and its subsidiaries.

The unaudited condensed consolidated financial statements include the accounts of Fractyl Health, Inc. Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States. Our fiscal year ends on December 31 of each year. Our most recent fiscal year ended on December 31, 2024.

Certain monetary amounts, percentages and other figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to rounding.

TRADEMARKS AND TRADENAMES

This Quarterly Report on Form 10-Q includes our trademarks and trade names, including, without limitation, REVITA, REJUVA and our logo, which are our property and are protected under applicable intellectual property laws. This Quarterly Report on Form 10-Q also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this Quarterly Report on Form 10-Q may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we or the applicable owner will not assert, to the fullest extent permitted under applicable law, our or its rights or the right of any applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that can 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 future results of operations and financial position, business strategy (including our Strategic Reprioritization, as defined herein), prospective products or product candidates, plans regarding or status of clinical trials or studies and their design, our plans for readouts of interim or final results, product approvals, communications with or submissions to the U.S. Food and Drug Administration (the “FDA”), research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management, the anticipated use of or impact of the net proceeds from the August 2025 Offering and the September 2025 Offering, and the timing of any of the foregoing are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

the timing, progress and results of preclinical and clinical studies for our current and future product candidates, including statements regarding the timing of initiation and completion of studies and related preparatory work, the period during which the results of the studies will become available and our research and development programs;

•

the timing, scope or likelihood of regulatory submissions, filings, clearances, certifications and approvals, including final regulatory approval certifications or clearance of our product candidates;

•

our ability to develop and advance product candidates into, and successfully complete, clinical studies;

•

our expectations regarding the size of the patient populations for our product candidates, if approved, certified or cleared for commercial use;

•

the implementation of our business model and our strategic plans for our business, product candidates and technology;

•

our commercialization, marketing and manufacturing capabilities and strategy, as well as our product development strategy;

•

the pricing and reimbursement of our product candidates, if approved or cleared;

•

the scalability and commercial viability of our manufacturing methods and processes, including our plans to maintain our in-house manufacturing facility, even after commercialization of any of our product candidates;

•

the rate and degree of market acceptance and clinical utility of our product candidates;

•

our ability to establish or maintain collaborations or strategic relationships or obtain additional funding;

•

our competitive position;

•

the scope of protection we and/or any future licensors are able to establish and maintain for intellectual property rights covering our product candidates;

•

the status, breadth and strength of our intellectual property portfolio and its ability to protect our innovations;

•

our ability to obtain patent coverage for our products;

•

our ability to successfully defend litigation and other similar complaints and to establish and maintain intellectual property rights covering our products;

•

developments and projections relating to our competitors and our industry;

•

our expectations related to the use of proceeds from our financing activities;

•

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

•

our ability to continue as a going concern;

•

the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements;

•

the impact of laws and regulations;

•

our expectations regarding the time during which we will be an emerging growth company and smaller reporting company under the JOBS Act; and

•

the impact of adverse macroeconomic conditions, geopolitical events, and potential future public health crises, including epidemics and pandemics.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions, described in Part II. Item 1A. Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. Risk Factors. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:

•

We have a limited operating history in developing medical devices and biopharmaceutical products, have not completed any pivotal clinical studies and have no products approved from commercial sale in the United States, which may make it difficult for you to evaluate our current business and predict our future success and viability;

•

We have incurred significant net losses since inception and we expect to continue to incur significant net losses for the foreseeable future and may never achieve or sustain profitability;

•

We require substantial additional capital or must implement other business strategies to execute our operating plan and continue to operate as a going concern. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts;

•

The regulatory approval process of the FDA, comparable foreign regulatory authorities and notified bodies, are lengthy, time-consuming and inherently unpredictable, and even if we complete the necessary clinical studies, we cannot predict when, or if, we will obtain regulatory approval or certification for any of our product candidates, and any such regulatory approval or certification may be for a more narrow indication than we seek;

•

Clinical studies are expensive, time-consuming, difficult to design and implement, and have an uncertain outcome. Further, we may encounter substantial delays in our clinical studies;

•

We currently conduct and may in the future conduct clinical studies for our product candidates outside the United States, and the FDA or comparable foreign regulatory authorities may not accept data from such studies;

•

We may not be able to submit investigational device exemptions (“IDEs”) or IDE supplements or comparable documents in foreign jurisdictions to commence additional clinical studies on the timelines we expect, and even if we are able to, the FDA or comparable foreign regulatory authorities may not permit us to proceed;

•

We may experience delays, interruptions or additional costs in obtaining and maintaining government regulatory approvals, licenses, certifications or reimbursements as a result of federal government shutdowns, reduced staffing or funding lapses. Such delays or disruptions could adversely affect our ability to develop, commercialize or market our product candidates, or to receive payments or reimbursements in a timely manner.

•

We may not be able to submit investigational new drug applications (“INDs”) or IND amendments with the FDA, clinical trial applications (“CTAs”) or comparable documents with regulatory bodies in foreign jurisdictions to commence additional clinical studies on the timelines we expect, and even if we are able to, the FDA or comparable foreign regulatory authorities may not permit us to proceed;

•

We are substantially dependent on the success of our lead product candidate, Revita®, and our lead product candidate RJVA-001 in the Rejuva® platform. If we are unable to obtain marketing approval or certification for and commercialize any of our current or future product candidates in a timely manner, our business will be harmed;

•

Our long-term prospects depend in part upon discovering, developing and commercializing product candidates, which may fail in development or suffer delays that adversely affect their commercial viability. We intend to identify and develop novel product candidates, which makes it difficult to predict the time, cost and potential success of our current product candidates, and other product candidates we may develop in the future;

•

Additional time may be required to develop and obtain regulatory approval or certification for our Rejuva gene therapy candidates because we expect them to be regulated as a combination product;

•

We cannot be certain that our Rejuva gene therapy candidates will successfully complete preclinical and clinical studies, or that they will not cause significant adverse events or toxicities. There can be no assurance that any development problems we experience in the future related to our Rejuva gene therapy candidates or any of our research programs will not cause significant delays or unanticipated costs, or that such development problems can be solved;

•

We may not be able to gain the support of leading hospitals and key thought leaders, or to publish the results of our clinical studies in peer-reviewed journals, which may make it difficult to establish the Revita DMR procedure and/or our Rejuva gene therapy candidates as a standard of care, if approved, and may limit our revenue growth and ability to achieve profitability;

•

We have not yet studied the ability of Revita to be used in repeated procedures. If we are unable to demonstrate the safety and efficacy of Revita for repeat use, it could have a material adverse effect on the clinical utility and commercial adoption of the device;

•

We have never obtained marketing approval for a product candidate in the United States and we may be unable to obtain, or may be delayed in obtaining, marketing approval for any product candidate in the United States;

•

We substantially rely, and expect to continue to rely, on third parties, including independent clinical investigators and contract research organizations (“CROs”), to conduct certain aspects of our preclinical studies, and clinical studies. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, we may not be able to obtain marketing authorization of or commercialize our product candidates and our business could be substantially harmed;

•

If we decide to establish new collaborations in the future, but are not able to establish those collaborations on commercially reasonable terms, we may have to alter our development and commercialization plans;

•

We contract with third parties for the manufacture and supply of sub-assembly components for Revita and for the materials for our Rejuva gene therapy platform for preclinical studies and our ongoing clinical studies, and expect to continue to do so for additional clinical studies and ultimately for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts;

•

If we or our suppliers fail to comply with the FDA’s quality system and/or good manufacturing practice regulations, this could impair our ability to market our products in a cost-effective and timely manner;

•

We face the risk of product liability claims that could be expensive, divert management’s attention and harm our reputation and business. We may not be able to maintain adequate product liability insurance;

•

We rely on a variety of intellectual property rights, and if we are unable to obtain, maintain or protect our intellectual property, our business, financial situation, results of operations, and prospects will be harmed. If we are unable to obtain and maintain patent protection for our current product candidate, any future product candidates we may develop and our technology, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our current product candidate, any future product candidates we may develop and our technology may be adversely affected; and

•

If we are unable to establish sales or marketing capabilities or enter into agreements with third parties to sell or market our product candidates, we may not be able to successfully sell or market our product candidates that obtain regulatory approval.


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	8
	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	8
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024	9
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) for the three and nine months ended September 30, 2025 and 2024	10
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	12
	Notes to Condensed Consolidated Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	105
Item 3.	Defaults Upon Senior Securities	105
Item 4.	Mine Safety Disclosures	106
Item 5.	Other Information	106
Item 6.	Exhibits	106
	Signatures	108

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Fractyl Health, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share information)

(unaudited)


	September 30,			December 31,
	2025			2024
Assets
Current assets:
Cash and cash equivalents	$	77,657		$	67,464
Inventory		—			73
Prepaid expenses and other current assets		2,046			4,226
Total current assets		79,703			71,763
Restricted cash, long-term		4,255			4,255
Property and equipment, net		2,683			2,979
Right-of-use lease assets, operating		27,239			28,414
Other long-term assets		392			666
Total assets	$	114,272		$	108,077
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	1,261		$	3,240
Accrued expenses and other current liabilities		12,354			11,579
Operating lease liabilities, current		5,067			4,956
Total current liabilities		18,682			19,775
Notes payable, long-term		30,770			30,162
Operating lease liabilities, long-term		26,347			27,382
Warrant liabilities, long-term		40,898			1,336
Other long-term liabilities		753			998
Total liabilities		117,450			79,653
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.00001 par value; 10,000,000 shares authorized, no shares issued or outstanding at September 30, 2025 and December 31, 2024		—			—
Common stock, $0.00001 par value; 300,000,000 shares authorized as of September 30, 2025 and December 31, 2024, 132,216,275 shares issued and outstanding at September 30, 2025; 48,755,451 shares issued and outstanding at December 31, 2024		1			—
Additional paid-in capital		509,358			443,734
Accumulated deficit		(512,537	)		(415,310	)
Total stockholders’ equity (deficit)		(3,178	)		28,424
Total liabilities and stockholders’ equity (deficit)	$	114,272		$	108,077

See accompanying notes to condensed consolidated financial statements (unaudited).

Fractyl Health, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except for share and per share information)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue	$	—		$	14		$	—		$	90
Cost of goods sold		—			7			—			50
Gross profit		—			7			—			40
Operating expenses:
Research and development		17,457			19,004			58,043			50,190
Selling, general and administrative		5,237			4,797			15,489			18,171
Total operating expenses		22,694			23,801			73,532			68,361
Loss from operations		(22,694	)		(23,794	)		(73,532	)		(68,321	)
Other income (expense), net:
Interest income, net		166			947			895			3,420
Change in fair value of notes payable		(1,868	)		(2,610	)		(3,824	)		3,772
Change in fair value of warrant liabilities		(21,201	)		2,293			(20,724	)		17,442
Other expense, net		(6	)		(9	)		(42	)		(37	)
Total other income (expense), net		(22,909	)		621			(23,695	)		24,597
Net loss and comprehensive loss		(45,603	)		(23,173	)		(97,227	)		(43,724	)
Accretion of dividends on convertible preferred stock		—			—			—			(1,737	)
Net loss attributable to common stockholders	$	(45,603	)	$	(23,173	)	$	(97,227	)	$	(45,461	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.71	)	$	(0.48	)	$	(1.79	)	$	(1.09	)
Weighted-average number of common shares outstanding, basic and diluted		64,652,953			47,973,951			54,243,512			41,892,347

See accompanying notes to condensed consolidated financial statements (unaudited).

Fractyl Health, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except for share information)

(Unaudited)


	Series A, B, C-1, C-2, D, E and F Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity (Deficit)
Balance at December 31, 2024		—	$	—		48,755,451	$	—	$	443,734	$	(415,310	)	$	28,424
Exercise of common stock options		—		—		164,770		—		280		—			280
Share-based compensation expense		—		—		—		—		1,406		—			1,406
Net loss		—		—		—		—		—		(23,735	)		(23,735	)
Balance at March 31, 2025		—	$	—		48,920,221	$	—	$	445,420	$	(439,045	)	$	6,375
Issuance of common stock in connection with at-the-market offering, net of issuance costs of $188		—		—		997,404		—		1,517		—			1,517
Exercise of common stock options		—		—		166		—		—		—			—
Share-based compensation expense		—		—		—		—		1,785		—			1,785
Net loss		—		—		—		—		—		(27,889	)		(27,889	)
Balance at June 30, 2025		—	$	—		49,917,791	$	—	$	448,722	$	(466,934	)	$	(18,212	)
Issuance of common stock from RSU vesting		—		—		22,500		—		—		—			—
Issuance of common stock in connection with at-the-market offering, net of issuance costs of $17		—		—		371,223		—		552		—			552
Issuance of common stock in August 2025 public offering, net of underwriting discounts, commissions and offering costs of $1,731		—		—		21,904,761		—		2,431		—			2,431
Issuance of common stock in September 2025 offering, net of underwriting discounts, commissions and offering costs of $3,984		—		—		60,000,000		1		56,015		—			56,016
Share-based compensation expense		—		—		—		—		1,638		—			1,638
Net loss		—		—		—		—		—		(45,603	)		(45,603	)
Balance at September 30, 2025		—	$	—		132,216,275	$	1	$	509,358	$	(512,537	)	$	(3,178	)


	Series A, B, C-1, C-2, D, E and F Convertible Preferred Stock						Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares			Amount			Shares		Amount		Capital		Deficit			Equity (Deficit)
Balance at December 31, 2023		77,994,156		$	287,330			2,105,815	$	—	$	21,554	$	(346,616	)	$	(325,062	)
Issuance of common stock in initial public offering, net of underwriting discounts, commissions and offering costs of $11,223		—			—			7,433,332		—		100,277		—			100,277
Conversion of convertible preferred stock into common stock upon initial public offering		(77,994,156	)		(287,330	)		36,343,909		—		287,330		—			287,330
Conversion of 2022 Convertible Notes into common stock upon initial public offering		—			—			1,841,321		—		19,150		—			19,150
Reclassification of warrant liability to equity upon initial public offering		—			—			—		—		425		—			425
Exercise of common stock warrants		—			—			38,544		—		—		—			—
Exercise of common stock options		—			—			133,987		—		163		—			163
Share-based compensation expense		—			—			—		—		5,217		—			5,217
Net loss		—			—			—		—		—		(3,322	)		(3,322	)
Balance at March 31, 2024		—		$	—			47,896,908	$	—	$	434,116	$	(349,938	)	$	84,178
Exercise of common stock options		—			—			16,327		—		16		—			16
Share-based compensation expense		—			—			—		—		3,790		—			3,790
Net loss		—			—			—		—		—		(17,229	)		(17,229	)
Balance at June 30, 2024		—		$	—			47,913,235	$	—	$	437,922	$	(367,167	)	$	70,755
Exercise of common stock options		—			—			135,561		—		220		—			220
Issuance of common stock from restricted stock units vesting		—			—			40,829		—		—		—			—
Stock-based compensation expense		—			—			—		—		2,520		—			2,520
Net loss		—			—			—		—		—		(23,173	)		(23,173	)
Balance at September 30, 2024		—		$	—			48,089,625	$	—	$	440,662	$	(390,340	)	$	50,322

See accompanying notes to condensed consolidated financial statements (unaudited).

Fractyl Health, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(97,227	)	$	(43,724	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		850			454
Non-cash interest expense		227			275
Non-cash operating lease expense		1,174			1,496
Loss on disposal of fixed assets		—			1
Stock-based compensation expense		4,829			11,527
Change in fair value of warrant liabilities		20,724			(17,442	)
Change in fair value of notes payable, non-cash		608			(5,685	)
Changes in operating assets and liabilities:
Accounts receivable		—			22
Inventory		73			—
Prepaid expenses and other current assets		2,180			(885	)
Accounts payable		(1,984	)		1,181
Accrued expenses and other current liabilities		583			3,036
Operating lease liabilities		(923	)		1,374
Other long-term assets and liabilities		(106	)		(117	)
Net cash used in operating activities		(68,992	)		(48,487	)
Cash flows from investing activities:
Purchases of property and equipment		(554	)		(1,532	)
Net cash used in investing activities		(554	)		(1,532	)
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts and commissions		—			103,695
Payments related to initial public offering costs		—			(2,854	)
Issuance of common stock in connection with at-the-market offering, net of issuance costs		2,069			—
Issuance of common stock and warrants in the August 2025 public offering, net of underwriting commissions and offering costs		21,328			—
Issuance of common stock in the September 2025 offering, net of underwriting commissions and offering costs		56,400			—
Proceeds from exercise of stock options		280			399
Principal payments on finance lease obligations		(338	)		(81	)
Net cash provided by financing activities		79,739			101,159
Net increase in cash, cash equivalents and restricted cash		10,193			51,140
Cash, cash equivalents and restricted cash at beginning of period		71,719			37,779
Cash, cash equivalents and restricted cash at end of period	$	81,912		$	88,919
Supplemental disclosure of cash flow information:
Interest paid	$	3,216		$	1,992
Payment for operating leases within operating activities	$	3,917		$	1,749
Non-cash investing and financing activities:
Fair value of warrant liabilities recognized in connection with August 2025 public offering	$	18,838		$	—
Offering costs included in accounts payable and accrued expenses	$	444		$	—
Conversion of convertible preferred stock into common stock upon initial public offering	$	—		$	287,330
Conversion of 2022 Convertible Notes into common stock upon initial public offering	$	—		$	19,150
Reclassification of warrant liability to equity upon initial public offering	$	—		$	425
Finance lease right-of-use asset obtained in exchange for lease liability	$	—		$	1,401
Reclassification of deferred offering costs to additional paid-in capital	$	—		$	3,418
Purchases of property and equipment included in accounts payable	$	—		$	32

See accompanying notes to condensed consolidated financial statements (unaudited).

Fractyl Health, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of the Business

Fractyl Health, Inc. (the “Company” or “Fractyl”) was incorporated on August 30, 2010 under the name MedCatalyst, Inc. The Company then changed its name to Fractyl Laboratories Inc. on January 10, 2012 and subsequently to Fractyl Health, Inc. on June 9, 2021. The Company is a metabolic therapeutics company pioneering pattern-breaking treatments for metabolic diseases, including obesity and type 2 diabetes (“T2D”). Despite advances in treatment over the last 50 years, obesity and T2D continue to be principal and rapidly growing drivers of morbidity and mortality in the 21st century. The Company believes the unmet need has shifted from short term weight loss and glucose control to durable metabolic health solutions without daily or weekly pharmacotherapy. The Company’s goal is to transform metabolic disease treatment from chronic symptomatic management to durable disease-modifying therapies that target the organ-level root causes of disease.

Revita

The Revita DMR System (“Revita”) is based on the Company’s insights surrounding the potential role of the gut in obesity. Revita is designed to remodel the duodenal lining via hydrothermal ablation (i.e. duodenal mucosal resurfacing) to reverse damage to intestinal nutrient sensing and signaling mechanisms caused by chronic high-fat and high-sugar diets that are a root cause of metabolic disease. In the U.S., Revita is for investigational use only. Revita has U.S. FDA Breakthrough Device designation in weight maintenance for people with obesity who discontinue glucagon-like peptide-1 (“GLP-1”) based drugs. The Company is evaluating Revita in the REMAIN-1 weight maintenance program, which is designed to evaluate Revita’s potential to sustain weight loss following GLP-1 discontinuation. The REMAIN program includes three distinct patient cohorts that are conducted under a single IDE: the REVEAL-1 Cohort, the REMAIN-1 Midpoint Cohort, and the REMAIN-1 Pivotal Cohort, designed to collectively establish the clinical and regulatory foundation for Revita in weight maintenance.

•

REVEAL-1 Cohort (n=22) is an open-label study in individuals with obesity who have lost at least 15% of their total body weight on a GLP-1 medication and who either need or choose to discontinue GLP-1 therapy.

•

REMAIN-1 Midpoint Cohort (n=45) is a randomized, double-blind, sham-controlled pilot study to assess the potential of Revita to maintain weight loss after GLP-1 discontinuation.

•

REMAIN-1 Pivotal Cohort (n=315) is a randomized, double-blind, sham-controlled pivotal study to evaluate the safety and efficacy of Revita in maintaining weight loss.

Pursuant to the Company's Strategic Reprioritization, Fractyl has paused additional investment in the REVITALIZE-1 clinical study of Revita for T2D and the Germany Real-World Registry study. The Company continues to follow existing participants in both studies per protocol and will report clinical, health economic, and patient-relevant outcomes from the Germany Real-World Registry study on an ongoing basis.

Rejuva

Rejuva is the Company's novel, locally administered, adeno-associated virus (“AAV”) delivered pancreatic gene therapy platform. Rejuva leverages advanced delivery systems and proprietary screening methods to identify and develop metabolically active gene therapy candidates targeting the pancreas. Rejuva is designed to enable long term remission of T2D and obesity by durably reprogramming pancreatic islet cells to endogenously produce metabolic hormones. The Company has a key near-term goal of advancing the lead product candidate in the platform, RJVA-001, which is targeting patients with inadequately controlled T2D, into first-in-human studies, subject to regulatory approval. RJVA-001 targets GLP-1 biology with the goal of achieving durable, well-tolerated, glycemic improvements from a single intervention.

The Company’s second candidate from the Rejuva platform, RJVA-002, is a dual GIP/GLP-1 gene therapy and is currently in preclinical development. RJVA-002 expands the Rejuva platform into obesity, targeting dual incretin biology with the goal of achieving durable, well-tolerated, weight loss from a single intervention.

The Company believes Revita and Rejuva, if approved by relevant regulatory bodies, have the potential to revolutionize treatment across the spectrum of obesity and T2D, align the clinical and economic interest of key stakeholders

around the long-term regression of metabolic disease, and, at their fullest potential, significantly reduce the burden of metabolic disease globally.

Initial Public Offering

On February 6, 2024, the Company completed its IPO, pursuant to which it issued and sold 7,333,333 shares of its common stock at a price to the public of $15.00 per share, resulting in net proceeds of approximately $98.9 million, after deducting underwriting discounts and commissions as well as related offering expenses.

On March 5, 2024, the Company issued an additional 99,999 shares of its common stock pursuant to the partial exercise of the underwriters’ option to purchase additional shares at the IPO public price of $15.00 per share, resulting in additional net proceeds of approximately $1.4 million, after deducting underwriting discounts and commissions.

S-3 Registration Statement

On March 3, 2025, the Company filed a Registration Statement on Form S-3 with the U.S. Securities and Exchange Commission (“SEC”), which was subsequently amended on March 13, 2025 (as amended, the “S-3 Registration Statement”). The S-3 Registration Statement became effective on March 18, 2025. It contains a base prospectus, which covers the offering, issuance and sale of up to $300.0 million in the aggregate of the securities from time to time in one or more offerings.

At-The-Market Offering

Concurrently with the filing of the S-3 Registration Statement, the Company filed a sales agreement prospectus supplement under an at-the-market offering (the “ATM Offering”) covering the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $100.0 million of the Company's common stock that may be offered, issued and sold from time to time. During the nine months ended September 30, 2025, the Company issued and sold 1,368,627 shares of its common stock under the ATM Offering at a weighted average price of $1.66 per share, resulting in net proceeds of approximately $2.1 million, after deducting underwriting discounts and commissions as well as related offering expenses. In October 2025, the Company issued and sold an additional 3,333,333 shares of its common stock under the ATM Offering at a weighted average price of $1.47 per share, resulting in net proceeds of approximately $4.8 million, after deducting underwriting discounts and commissions.

August 2025 Offering

On August 6, 2025, the Company entered into an underwriting agreement with Ladenburg Thalmann & Co. Inc. (“Ladenburg”), pursuant to which it issued and sold 19,047,619 shares of its common stock, accompanied by warrants to purchase up to 19,047,619 shares of our common stock (the “Tranche A Warrants”) and warrants to purchase 19,047,619 shares of our common stock (the “Tranche B Warrants”), at a combined offering price of $1.05 per share. As part of the underwriting agreement, the Company also granted Ladenburg a 30-day option to purchase up to an additional 2,857,142 shares of the Company’s common stock, along with associated Tranche A Warrants and Tranche B Warrants, at the combined public offering price of $1.05 per share. On August 6, 2025, Ladenburg exercised the option to purchase additional shares of the Company’s common stock, along with associated Tranche A Warrants and Tranche B Warrants, in full. The securities were issued pursuant to the S-3 Registration Statement and a related prospectus supplement filed with the SEC (the “August 2025 Offering”).

The August 2025 Offering closed on August 7, 2025, from which the Company received approximately $20.7 million of net proceeds, after deducting underwriting discounts and commissions as well as estimated offering expenses, excluding any potential future proceeds from the exercise of the Tranche A Warrants and Tranche B Warrants. See Note 6—“Warrant Liabilities” for more details on the Tranche A Warrants and Tranche B Warrants.

September 2025 Offering

On September 26, 2025, the Company entered into an underwriting agreement with BofA Securities, Inc. and Evercore Group L.L.C., as representatives of several underwriters, pursuant to which it issued and sold 60,000,000 shares

of its common stock, at a price to the public of $1.00 per share. The securities were issued pursuant to the S-3 Registration Statement and a related prospectus supplement filed with the SEC (the “September 2025 Offering”).

The September 2025 Offering closed on September 29, 2025, from which the Company received approximately $56.0 million, after deducting underwriting discounts and commissions as well as estimated offering expenses.

Liquidity

Under ASC 205-40, Going Concern, management must evaluate whether there are conditions or 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 that the financial statements are 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 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 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 by the Company’s Board of Directors (the “Board”) before the date that the financial statements are issued.

The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain profitable operations. The Company is subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful discovery and development of its product candidates, raising additional capital with favorable terms, development by its competitors of new technological innovations, protection of proprietary technology and market acceptance of the Company’s products. The successful discovery and development of product candidates requires substantial working capital which may not be available to the Company on favorable terms or not at all.

The Company has a history of operating losses and had an accumulated deficit of $512.5 million as of September 30, 2025. Management expects continuing operating losses in the future. The Company has financed its operations to date primarily through its equity and debt financings. Based on its current business plans, the Company believes that its available cash and cash equivalents of $77.7 million as of September 30, 2025, combined with subsequent proceeds received to date from common stock issued under the ATM Offering and warrant exercises (see Note 6—“Warrant Liabilities”), will be sufficient to fund the Company’s operating plan into early 2027. The Company’s forecast of its cash needs is subject to significant assumptions, which could change, and management could use its available capital resources sooner than it currently anticipates. In addition, without additional financing, management projects that it may not be able to comply with the minimum liquidity covenant related to the Company’s 2023 Notes by the end of 2026. Given the inherent risk and uncertainty of future cash flow estimates as well as the minimum liquidity covenant requirement, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for at least one year after the date that these financial statements are issued. The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

The Company plans to alleviate the substantial doubt about its ability to continue as a going concern by seeking additional funds through equity or debt financings or through collaboration or licensing transactions or other sources. The Company may be unable to obtain equity or debt financings or enter into collaboration or licensing transactions and, if necessary, the Company will be required to implement cost reduction strategies which could curtail or delay its current operating plans.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), for interim

financial reporting and as required by Regulation S-X, Rule 10-01. The unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiary. All intercompany balances and transactions have been eliminated. These interim financial statements, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations for the three and nine months ended September 30, 2025 and 2024. The results of operations for the interim periods are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2024 and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 3, 2025. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements.

Use of Estimates

The preparation of 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 condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates relied upon in preparing these condensed consolidated financial statements include, but are not limited to, the fair value of common stock warrants, the fair value of notes payable, the fair value of stock-based awards, the incremental borrowing rate for lease accounting, estimates of future cash flows used in the assessment of our ability to continue as a going concern, and the accrual of research and development expenses. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ materially from those estimates.

Leases

The Company has entered into operating leases for office and laboratory spaces and finance leases for certain laboratory equipment, which are accounted for in accordance with ASC 842, Leases.

The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement at inception. Operating leases are included in right-of-use lease assets (“ROU assets”) and current and long-term lease liabilities on the Company’s condensed consolidated balance sheets. Lease expenses for operating leases are recognized on a straight-line basis over the lease term as an operating expense. Assets subject to finance leases are included in property and equipment, net, on the Company’s condensed consolidated balance sheets. Current and long-term portion of the related lease liabilities of the finance leases are included in accrued expenses and other current liabilities and other long-term liabilities, respectively, on the Company’s condensed consolidated balance sheets. Lease expenses for finance leases consist of depreciation of the assets, which is recognized on a straight-line basis over the useful life of the assets as an operating expense, and interest expense using the effective interest method over the lease term.

Warrant Liabilities

The Company classifies warrants to purchase shares of its common stock as liabilities on its consolidated balance sheets as such warrants may result in delivery of a variable number of shares or delivery of a settlement amount that is not solely indexed to the Company’s own stock. These warrants were initially recorded at fair value on the grant date, and are subsequently remeasured to fair value at the end of each reporting period with changes in fair value recognized as a component of other income (expense) in the consolidated statements of operations and comprehensive loss. The Company will continue to adjust the liabilities until the earlier of exercise or expiration of the warrant.

The fair values of these warrant liabilities are determined using either a Black-Scholes option-pricing model or a Monte Carlo simulation model, depending on the nature of the warrants. The valuation model used incorporates assumptions and estimates, which the Company assesses at each financial reporting period as additional information impacting the assumptions is obtained. Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying shares, the remaining contractual term of the warrants, risk-free interest rate, expected dividend yield and expected volatility of the price of the underlying shares. The expected volatility assumption is based on a blend of historical volatilities of the Company’s share price and those of its publicly traded peer companies. The risk-free

interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrant. The expected dividend yield for the common stock warrants is 0% based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends on common stock in the foreseeable future.

This fair value measurement of the warrant liabilities is based on significant inputs that are not observable in the market and represent a Level 3 measurement. See Note 6—“Warrant Liabilities”.

Stock-Based Compensation

The Company measures all stock options and other stock-based awards based on their fair value on the date of the grant. Those awards typically have a graded vesting schedule and compensation expense for awards with only service conditions is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. Compensation costs recognized for performance-based awards reflect the number of awards that are expected to vest during the requisite service period and are recognized using an accelerated attribution method. Upon final determination of the performance conditions achieved, the compensation costs are adjusted to reflect those awards that ultimately vest. Historical performance patterns, to the extent that they are indicative to the performance conditions to be achieved, are used in developing estimates for the probability of attaining these performance conditions.

The Company classifies stock-based compensation expense in its condensed consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

The Company uses the Black-Scholes option pricing model, which incorporates assumptions and estimates, to measure the fair value of its option awards on the date of grant of each stock option award. The Company considers the fair value of its common stock to be equal to the closing price of its common stock traded on the Nasdaq Global Market. Due to the limited company-specific historical and implied volatility information available to the Company, the expected stock volatility used in the option pricing model was based on an analysis of reported data for a publicly traded peer group of companies that granted options with substantially similar terms and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term assumption for employee grants is determined by using the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is based on the rate of the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Forfeitures are accounted for as they occur.

Recently Adopted Accounting Pronouncements

The Company has not adopted any accounting pronouncements during the nine months ended September 30, 2025.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The ASU focuses on the rate reconciliation and income taxes paid. ASU 2023-09 requires the Company to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the potential impact of adopting this ASU on its consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), which is intended to provide more detailed and disaggregated information about significant expense categories, such as purchases of inventory, employee compensation, depreciation and amortization and selling expenses. This new standard, including related updates, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently assessing the impact ASU 2024-03 will have on its consolidated financial statements, including its footnote disclosures.

3. Fair Value Measurements

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


	Fair Value measurements as of September 30, 2025
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents—money market funds	$	7,701	$	—	$	—	$	7,701
	$	7,701	$	—	$	—	$	7,701
Liabilities:
Warrant liabilities, long-term	$	—	$	—	$	40,898	$	40,898
Notes payable, long-term		—		—		30,770		30,770
	$	—	$	—	$	71,668	$	71,668


	Fair Value measurements as of December 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents—money market funds	$	38,295	$	—	$	—	$	38,295
	$	38,295	$	—	$	—	$	38,295
Liabilities:
Warrant liabilities, long-term	$	—	$	—	$	1,336	$	1,336
Notes payable, long-term		—		—		30,162		30,162
	$	—	$	—	$	31,498	$	31,498

During the nine months ended September 30, 2025 and 2024, there were no transfers between Level 1, Level 2 and Level 3 measurements.

See Note 5—“Notes Payable” for the discussion of the fair value methodology of the notes payable and a rollforward of the fair value. See Note 6—“Warrant Liabilities” for the discussion of the fair value methodology of the stock warrants and a rollforward of the fair value.

4. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	September 30,		December 31,
(in thousands)	2025		2024
Payroll and payroll-related expenses	$	4,384	$	4,184
Research and development expenses		5,919		5,750
Professional fees and consulting services		1,544		814
Other current liabilities		507		831
	$	12,354	$	11,579

5. Notes Payable

2022 Convertible Notes

On January 11, 2022, the Company entered into a financing arrangement with certain lenders (the “2022 Lenders”) in which the Company issued convertible promissory notes in exchange for an aggregate principal amount of $20.1 million (the “2022 Convertible Notes”). On July 11, 2023, the Company issued amended and restated convertible promissory notes to certain of the lenders (the “Continuing 2022 Lenders”) in replacement of, but not in payment of, the remainder of the 2022 Convertible Notes. Following these amendments, $20.9 million in aggregate principal under the 2022 Convertible Notes remained outstanding and accrued interest at the rate of 10% per year until they were paid or converted in full.

In connection with entering into these amendments, the Company issued to the Continuing 2022 Lenders warrants to purchase shares of the Company’s common stock with par value of $0.00001 per share. The warrants were recorded as part of the warrant liabilities on the condensed consolidated balance sheet.

Upon the closing of the IPO on February 6, 2024, all of the outstanding principal plus accrued interest under the 2022 Convertible Notes were converted into 1,841,321 shares of the Company’s common stock at a conversion price of $12.00 per share. The 2022 Convertible Notes were marked to market to its fair value as of the time of the conversion before being reclassified to equity.

2023 Notes

On September 7, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with certain lenders (the “2023 Lenders”) that provided for term loans up to aggregate principal amount of $45.0 million (the “Applicable Commitments”) in two tranches (the “2023 Notes”). The first tranche with a principal amount of $30.0 million was extended on September 7, 2023. The second tranche with a principal amount of $15.0 million would have been extended upon the Company’s achievement of certain operating and funding milestones as defined in the Credit Agreement, by July 31, 2024. Under the Credit Agreement, a further principal amount of $20.0 million may be extended to the Company, subject to the 2023 Lenders’ prior written consent in their sole discretion. Due to a shift in business strategy to include the weight maintenance study, the Company decided not to pursue the milestones required to access the second tranche. As a result, the second tranche was not extended.

The outstanding balances of the 2023 Notes bear interest at a floating annual rate equal to the greater of 5.5% above the Wall Street Journal prime rate or 13.25%. On and prior to September 30, 2024, 6.0% of the interest was payable in kind (the “PIK interest”) and added to the outstanding principal amount of the loans. Beginning September 30, 2026, the Company is required to make principal payments in the amount of 1.5% of the aggregate principal amount outstanding, including accrued PIK interest, each month. Under the terms of the Credit Agreement, the first principal payment date may be extended to September 30, 2027, at the Company's option, if certain financing milestones as defined in the Credit Agreement are achieved on or prior to September 30, 2026. During 2024, the Company achieved the defined milestones and elected to extend the first principal payment date to September 30, 2027. In addition, upon any principal payment, the Company is required to make an additional payment to the 2023 Lenders of a 6.0% fee (the “Exit Fee”) over the principal and accrued PIK interest paid. The aggregate Exit Fee of the 2023 Notes should be equal to 6.0% of the total Applicable Commitments of $45.0 million plus all accrued PIK interest. All remaining outstanding principal balance, accrued interest and Exit Fee on the 2023 Notes shall be due and payable on the maturity date of September 7, 2028.

In connection with the issuance of the first tranche of the 2023 Notes, the Company issued to the 2023 Lenders warrants to purchase, at the holders’ choice, shares of the Company’s Series F Convertible Preferred Stock, the most senior series of Preferred Stock of the Company that is then authorized, or the Company’s common stock. The warrants were recorded as part of the warrant liabilities on the condensed consolidated balance sheet.

The Company elected to apply the fair value option to the 2023 Notes in accordance with ASC 825, Financial Instruments. Accordingly, the 2023 Notes are marked to market at the end of each reporting period, with changes in fair value recognized as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss. The fair value was estimated using a discounted cash flow model by discounting projected future cash flows associated with the 2023 Notes to their present value. The discount rate used in the model is based on observable market yields for similarly rated instruments, adjusted for any specific risks inherent in the 2023 Notes. Accrued interest on the 2023 Notes is incorporated into the determination of the fair value of the 2023 Notes.

This fair value measurement is based on significant inputs that are not observable in the market and represent a Level 3 measurement. The following table provides a rollforward of the fair value of the 2023 Notes:


(in thousands)	Fair Value
Balance as of December 31, 2024	$	30,162
Increase in fair value		3,824
Payment of interest		(3,216	)
Balance as of September 30, 2025	$	30,770

The Credit Agreement contains a minimum liquidity covenant that requires the Company to maintain a minimum $10.0 million balance in cash and/or certain permitted cash equivalent investments, subject to certain exceptions. In

addition, the Credit Agreement contains a customary events of default, subject to rights and remedies generally applicable to federal law or the laws of the State of Delaware. As of September 30, 2025, the Company was in compliance with the financial covenants and other terms of the arrangement.

6. Warrant Liabilities

2014 Warrant

In January 2014, the Company issued a fully vested warrant to purchase 118,483 shares of the Company’s Series B Convertible Preferred Stock (the “2014 Warrant”) in connection with a loan and security agreement entered into in January 2014. The 2014 Warrant was immediately exercisable at an exercise price of $1.266 per share and has a contractual term of ten years from issuance. In January 2024, the 2014 Warrant was amended to extend the expiration date to the earlier of (i) the date that is 30 calendar days after the closing of the Company’s IPO and (ii) July 31, 2024. Upon the closing of the Company's IPO on February 6, 2024, the amended expiration date of the 2014 Warrant was determined to be March 7, 2024.

The Company remeasures the fair value of the 2014 Warrant at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss. Upon the closing of the IPO on February 6, 2024, the warrant to purchase 118,483 shares of the Company's Series B Convertible Preferred Stock was converted to a warrant to purchase 55,211 shares of the Company's common stock. Accordingly, the 2014 Warrant was remeasured upon the closing of the IPO and marked to market to its fair value before being reclassified to equity.

The 2014 Warrant was fully cashless exercised on the amended expiration date of March 7, 2024, as a result of which a total of 38,544 shares of common stock were issued to the warrant holder.

July 2023 Warrants

In July 2023, the Company issued fully vested warrants to purchase shares of the Company’s common stock in connection with the issuance of the amended and restated 2022 Convertible Notes (the “July 2023 Warrants”). The July 2023 Warrants were immediately exercisable for a variable number of shares based on the principal amount of the 2022 Convertible Notes, as amended, of $20.9 million, and an exercise price, at the holders’ choice, of (a) $17.9927 per share, (b) the lowest original issue price of shares of Preferred Stock of the Company issued in the Company’s next bona fide private preferred equity financing round, (c) in the event of any convertible note or similar convertible security financing, the conversion price contemplated by such convertible security, or (d) in the event of an IPO, the per share offering price to the public in such IPO. The July 2023 Warrants have a contractual term of ten years from issuance. They were not exercised from their inception through September 30, 2025.

The fair value of the July 2023 Warrants at issuance was $9.9 million and was recorded as part of the warrant liabilities on the condensed consolidated balance sheet. The Company remeasures the fair value at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Prior to the Company's IPO in February 2024, the fair value was determined using the Monte-Carlo simulation model, which was based on significant inputs that are not observable in the market and represented a Level 3 measurement. After the completion of its IPO, the fair value of the July 2023 Warrants was determined using the Black-Scholes valuation model with the following assumptions:


		September 30,
		2025
Risk-free interest rate		4.0%
Expected term (in years)		7.8
Expected volatility		61%
Expected dividend yield		0%

The following table provides a rollforward of the fair value of the July 2023 Warrants:


(in thousands)	Fair Value
Balance as of December 31, 2024	$	1,169
Decrease in fair value		(457	)
Balance as of September 30, 2025	$	712

September 2023 Warrants

In September 2023, in connection with the issuance of the 2023 Notes, the Company issued fully vested warrants to purchase, at the holders’ choice, shares of the Company’s Series F Convertible Preferred Stock, the most senior series of Preferred Stock of the Company that is then authorized, or the Company’s common stock (the “September 2023 Warrants”). The September 2023 Warrants are immediately exercisable for a variable number of shares based on a total fixed dollar value of $4.2 million, and an exercise price, at the holders’ choice, of (a) $17.9927 per share of common stock or $8.3843 per share of Series F Convertible Preferred Stock, (b) the lowest original issue price of any series of Preferred Stock issued by the Company after the issuance date of the September 2023 Warrants, (c) the conversion or exercise price of any convertible debt security, option, or warrant issued by the Company after the issuance date of the September 2023 Warrants, or (d) the price at which the Company’s common equity was first sold to the public by the Company in a firm-commitment underwritten offering or otherwise. The September 2023 Warrants have a contractual term of ten years from issuance. They were not exercised from their inception through September 30, 2025.

The fair value of the September 2023 Warrants at issuance was $2.6 million and was recorded as part of the warrant liabilities on the condensed consolidated balance sheet. The Company remeasures the fair value at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Prior to the Company's IPO in February 2024, the fair value was determined using the Monte-Carlo simulation model, which was based on significant inputs that are not observable in the market and represented a Level 3 measurement. After the completion of its IPO, the fair value of the September 2023 Warrants was determined using the Black-Scholes valuation model with the following assumptions:


		September 30,
		2025
Risk-free interest rate		4.0%
Expected term (in years)		7.9
Expected volatility		60%
Expected dividend yield		0%

The following table provides a rollforward of the fair value of the September 2023 Warrants:


(in thousands)	Fair Value
Balance as of December 31, 2024	$	167
Decrease in fair value		(66	)
Balance as of September 30, 2025	$	101

August 2025 Warrants

On August 7, 2025, the Company issued Tranche A Warrants and Tranche B Warrants to purchase 21,904,761 shares of the Company’s common stock, respectively, in connection with the August 2025 Offering (see Note 1—“Nature of the Business”). The Tranche A Warrants were immediately exercisable and the Tranche B Warrants were only exercisable upon receipt of required stockholder approval, which approval was received on October 3, 2025. See details of each set of warrants below.

August 2025 Tranche A Warrants (“Tranche A Warrants”)

Each Tranche A Warrant has an exercise price of $1.05 per share, subject to certain adjustments. The Tranche A Warrants are exercisable at any time on or after August 7, 2025 and will expire on August 7, 2027. The Tranche A

Warrants are callable at the Company's option following the release of 3-month randomized midpoint clinical data from the ongoing REMAIN-1 study, which data was published on September 26, 2025, subject to satisfaction of certain conditions including that the average trading price of the stock exceeds $1.37 per share for 15 consecutive trading days and a minimum daily trading volume threshold.

The fair value of the Tranche A Warrants at issuance was $7.9 million and was recorded as part of the warrant liabilities on the condensed consolidated balance sheet. The Company will remeasure the fair value at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Tranche A Warrants fair value was determined using the Monte-Carlo simulation model with the following key assumptions, which was based on significant inputs that are not observable in the market and represented a Level 3 measurement. See Note 2—“Summary of Significant Accounting Policies” for a discussion of the assumptions and estimates used in the fair value measurement.


	August 7,	September 30,
	2025	2025
Risk-free interest rate	3.7%	3.6%
Expected term (in years)	2.0	1.9
Expected volatility	110%	105%
Expected dividend yield	0%	0%

The following table provides a rollforward of the fair value of the Tranche A Warrants:


	Fair Value
Fair value at issuance date of August 7, 2025	$	7,886
Increase in fair value		6,571
Balance as of September 30, 2025	$	14,457

Subsequent to September 30, 2025, certain holders exercised Tranche A Warrants at an exercise price of $1.05 per share resulting in the issuance of 1,290,618 shares of the company’s common stock for net proceeds of $1.3 million, after deducting underwriting discounts and commissions.

August 2025 Tranche B Warrants (“Tranche B Warrants”)

Each Tranche B Warrant has an exercise price per share of our common stock equal to $1.05, subject to certain adjustments. The Tranche B Warrants are exercisable upon receipt of stockholder approval as may be required by the applicable rules and regulations of The Nasdaq Global Market which approval was obtained at the Special Meeting of Stockholders and the Tranche B Warrants became exercisable on October 3, 2025. The Tranche B Warrants will expire on October 3, 2030, which is the date that is five years from the date that stockholder approval (the “Tranche B Warrant Stockholder Approval”) was received.

The fair value of the Tranche B Warrants at issuance was $11.0 million and was recorded as part of the warrant liabilities on the condensed consolidated balance sheet. The Company will remeasure the fair value at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

Tranche B Warrants fair value was determined using the Black-Scholes valuation model with the following key assumptions, which was based on significant inputs that are not observable in the market and represented a Level 3 measurement. See Note 2—“Summary of Significant Accounting Policies” for a discussion of the assumptions and estimates used in the fair value measurement.


	August 7,	September 30,
	2025	2025
Risk-free interest rate	3.8%	3.7%
Expected term (in years)	5.2	5.0
Expected volatility	85%	80%
Expected dividend yield	0%	0%

The following table provides a rollforward of the fair value of the Tranche B Warrants:


	Fair Value
Fair value at issuance date of August 7, 2025	$	10,952
Increase in fair value		14,676
Balance as of September 30, 2025	$	25,628

Subsequent to September 30, 2025, certain holders exercised Tranche B Warrants at an exercise price of $1.05 per share resulting in the issuance of 204,214 shares of the company’s common stock for net proceeds of $0.2 million, after deducting underwriting discounts and commissions.

7. Commitments and Contingencies

Leases

The following table summarizes the future minimum lease payments for operating and finance leases as of September 30, 2025:


(in thousands)
2025 (Remaining)	$	1,475
2026		5,979
2027		5,817
2028		5,735
2029		5,907
Thereafter		28,860
Total future minimum lease payments		53,773

Please see Note 7—“Leases” in the Notes to Consolidated Financial Statements included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion of the Company's material lease agreements.

Guarantees and Indemnification Obligations

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses and costs incurred by the indemnified party in connection with any patent, copyright, trade secret or other intellectual property or personal right infringement claim by any third party with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual after execution of the agreement. In addition, the Company has entered into indemnification agreements with members of its Board that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of its 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 unlimited. To date, the Company has not incurred any losses or any material costs related to this indemnification obligation

and no claims with respect thereto were outstanding. 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 and cash flows, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2025 and December 31, 2024.

8. Preferred and Common Stock

Preferred Stock

On January 26, 2024, the Company's Board approved an Amended and Restated Certificate of Incorporation, authorizing the Company to issue 10,000,000 shares of undesignated preferred stock at $0.00001 par value per share. There were no shares of such preferred stock outstanding as of September 30, 2025.

Common Stock

As of December 31, 2023, the Company’s then effective certificate of incorporation, as amended and restated, authorized the Company to issue 107,000,000 shares of $0.00001 par value common stock. On January 26, 2024, the Company's Board approved an Amended and Restated Certificate of Incorporation, authorizing the Company to issue 300,000,000 shares of common stock at $0.00001 par value per share.

9. Stock-Based Compensation

2011 Stock Incentive Plan

The Company’s 2011 Stock Incentive Plan, as amended, (the “2011 Plan”) provided for the Company to grant restricted stock, restricted stock units, incentive stock options and nonqualified stock options with respect to shares of common stock to employees, officers, directors, consultants and advisors of the Company. Incentive stock options could only be granted to employees. The 2011 Plan is administered by the Board, or at the discretion of the Board, by a committee of the Board. The exercise prices, vesting schedules and other restrictions of awards were determined at the discretion of the Board or by a committee of the Board if so delegated, except that the exercise price per share of stock options could not be less than 100% of the fair market value of a share of common stock on the date of grant and the term of stock option could not be greater than ten years. Upon the effective date of the 2024 Incentive Award Plan, as discussed below, the Company ceased granting equity awards under the 2011 Plan.

2024 Incentive Award Plan

On January 26, 2024, the Company's Board adopted the 2024 Incentive Award Plan (the “2024 Plan”), which became effective on February 1, 2024. The 2024 Plan provides for the grant of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, stock appreciation rights and other stock or cash-based awards with respect to shares of common stock to employees, officers, directors, consultants and advisors of the Company. The 2024 Plan is administered by the Board, or at the discretion of the Board, by a committee of the Board. The exercise prices, vesting schedules and other restrictions on awards are determined at the discretion of the Board or by a committee of the Board if so delegated, except that the term of any stock option may not be greater than ten years. The number of shares of the Company's common stock initially reserved for issuance under the 2024 Plan was 4,298,825 shares plus the number of shares subject to awards outstanding under the 2011 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company on or after the effective date of the 2024 Plan. In addition, the number of shares of common stock available for issuance under the 2024 Plan is subject to an annual increase on the first day of each calendar year beginning on January 1, 2025 and ending on and including January 1, 2034 equal to the lesser of (i) 5% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Common Stock as determined by the Board. There were 3,703,185 and 2,275,046 shares available for future grant under the 2024 Plan as of September 30, 2025 and December 31, 2024, respectively.

2024 Employee Stock Purchase Plan

On January 26, 2024, the Company's Board adopted the 2024 Employee Stock Purchase Plan (the “2024 ESPP Plan”), which became effective on February 1, 2024. The number of shares of the Company's common stock initially reserved for issuance under the 2024 ESPP Plan was 487,070 shares, which is eligible for an annual increase on the first day of each calendar year beginning on January 1, 2025 and ending on and including January 1, 2034 equal to the lesser of

(i) 1% of the shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Common Stock as determined by the Board. The Company has not issued any shares under the 2024 ESPP Plan since it became effective. There were 974,624 and 487,070 shares available for future grant under the 2024 ESPP Plan as of September 30, 2025 and December 31, 2024, respectively.

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense related to ESPP, stock options and restricted stock units in the following expense categories within its condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Research and development	$	855	$	1,716	$	2,283	$	5,271
Selling, general and administrative		783		804		2,546		6,256
	$	1,638	$	2,520	$	4,829	$	11,527

During the nine months ended September 30, 2025, the Company granted to its employees, directors and consultants stock options to purchase a total of 2,401,486 shares of common stock.

10. Net Loss Per Share

The following securities that could potentially dilute basic net loss per share in the future were not included in the computation of diluted net loss per share for the periods presented, because to do so would have been antidilutive:


	Three And Nine Months Ended September 30,
	2025		2024
Outstanding stock options		11,170,521		10,727,247
Outstanding restricted stock units		—		586,180
Common stock warrants		43,971,138		161,616
Total		55,141,659		11,475,043

The table presented above does not include the number of shares that may be issued upon exercises of the common stock warrants issued in connection with the 2022 Convertible Notes and the 2023 Notes because the number of shares to be issued under these warrants are variable based on a variable exercise price at the warrant holders' option.

11. Segment Information

The Company has identified one operating and reportable segment. The Company defines its operating segments based on internally reported financial information that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) to analyze financial performance, make decisions, and allocate resources. The Company's Chief Executive Officer is the CODM.

The Company's CODM views specific categories within research and development expenses and selling, general and administrative expenses in total as significant given the direct correlation between cash burn and profitability as a pre-commercial company. The following table reconciles reported revenues to net loss under the significant expense principle for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,						Nine months ended September 30,
(in thousands)	2025			2024			2025			2024
Revenue	$	—		$	14		$	—		$	90
Less:
Cost of goods sold		—			7			—			50
Research and development:
Revita direct program expenses		7,183			7,770			22,118			18,282
Rejuva direct program expenses		2,315			2,272			10,193			4,507
Indirect expenses		1,826			1,780			5,679			6,239
Personnel-related expenses		6,133			7,182			20,053			21,162
Total research and development expenses		17,457			19,004			58,043			50,190
Selling, general and administrative		5,237			4,797			15,489			18,171
Total other income (expense), net		(22,909	)		621			(23,695	)		24,597
Segment net loss	$	(45,603	)	$	(23,173	)	$	(97,227	)	$	(43,724	)

12. Subsequent Event

In October 2025, the Company issued and sold 3,333,333 shares of its common stock at a weighted average price of $1.47 per share under the ATM Offering, as further described in Note 1—“Nature of the Business”, for aggregate net proceeds of approximately $4.8 million after sales agent’s commission and other expenses.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties, assumptions, and other important factors. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q and the section titled “Forward-Looking Statements” included elsewhere herein. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “will,” “would,” and similar expressions to identify forward-looking statements.

Business Overview

We are a metabolic therapeutics company pioneering pattern-breaking treatments for metabolic diseases, including obesity and type 2 diabetes (“T2D”). We are focused on developing durable disease-modifying therapies that are designed to provide long-term maintenance of metabolic health without requiring lifetime treatment. Our therapeutic approach targets the organ-level root causes of obesity and T2D and is intended to move beyond chronic, symptom-focused disease management.

Since our formation in 2010, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, acquiring or discovering product candidates, securing related intellectual property rights and conducting discovery, research and development activities for our product candidates.

Revita

The Revita DMR System (“Revita”) is approved in Europe under a Conformitè Europëenne (“CE mark”) and has received reimbursement authorization through NUB in Germany for the treatment of T2D. In the first half of 2023, we initiated a limited commercial pilot in a single center in Dusseldorf, Germany. This pilot has since been paused, pursuant to the strategic reprioritization we announced on January 31, 2025 (“Strategic Reprioritization”).

We have also paused additional investment in the REVITALIZE-1 clinical study of Revita in T2D and the Germany Real-World Registry study. We are continuing to follow existing participants in both studies per protocol and will report clinical, health economic, and patient-relevant outcomes from the Germany Real-World Registry study on an ongoing basis.

We are evaluating Revita in the REMAIN weight maintenance program, which is designed to include three distinct patient cohorts:

REVEAL-1 Cohort (n=22): an open-label study in individuals with obesity who have lost at least 15% of their total body weight on a GLP-1 medication and who either need or choose to discontinue GLP-1 therapy. After stopping the GLP-1 drug, participants receive Revita treatment in an open-label setting and take part in a structured diet and lifestyle program. REVEAL-1 is designed to provide early, real-world insights on how Revita performs after GLP-1 discontinuation.

REMAIN-1 Midpoint Cohort (n=45): a randomized, double-blind, sham-controlled pilot study to assess the potential of Revita to maintain weight loss after GLP-1 discontinuation. Participants are individuals with obesity who have not yet taken GLP-1 drugs, are initiated on tirzepatide at the time of enrollment, and treated with the drug to achieve at least 15% total body weight loss. Participants then discontinue tirzepatide and are randomized to undergo either Revita or a sham procedure with a 2:1 treatment allocation. The key efficacy endpoint is total body weight change in Revita versus sham at 3 months. The randomized Midpoint Cohort serves as an important early randomized readout to assess Revita’s potential to maintain weight loss after GLP-1 discontinuation.

REMAIN-1 Pivotal Cohort (n=315): a randomized, double-blind, sham-controlled pivotal study to evaluate the safety and efficacy of Revita in maintaining weight loss. The first co-primary endpoint is defined as the percent of total body weight regain from the time of tirzepatide discontinuation in Revita versus sham patients through 6-month follow up. The primary objective is to demonstrate a benefit of Revita versus sham for weight maintenance after GLP-1

discontinuation. The second co-primary endpoint evaluates a responder rate among the Revita treated participants at 1 year to demonstrate the durability of the Revita procedure for weight maintenance after discontinuation of a GLP-1 based therapy. The responder rate is defined as the percentage of participants who received the Revita procedure who maintain at least 5% total body weight loss from pre‑tirzepatide (week -21) to week 52.

We have completed enrollment of the REVEAL-1 Cohort, REMAIN-1 Midpoint Cohort and REMAIN-1 Pivotal Cohort.

Rejuva

We are also developing Rejuva, a gene therapy platform which is designed to enable long-term remission of T2D and obesity by durably reprogramming pancreatic islet cells to endogenously produce metabolic hormones.

The lead product candidate from this platform, RJVA-001, is being advanced for patients with inadequately controlled T2D. RJVA-001 is designed to express GLP-1 locally in pancreatic beta cells using nutrient-responsive control, in a single intervention, potentially enabling physiologic hormone secretion without the high circulating levels that contribute to side effects seen with systemic GLP-1 drugs. We have submitted the first Clinical Trial Application (“CTA”) module for RJVA-001 in T2D to regulators, and if the CTA is authorized, the Company expects to dose the first patients with RJVA-001 and report preliminary data in 2026.

We do not have any products approved for sale in the United States. To date, we have financed our operations primarily through the proceeds from sales of our equity and debt financings.

We have incurred significant operating losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and commercialization of one or more of our current or future product candidates in the United States. For the nine months ended September 30, 2025 and 2024, we incurred net losses of $97.2 million and $43.7 million, respectively. As of September 30, 2025, we had an accumulated deficit of $512.5 million. As discussed further in Liquidity and Capital Resources—Funding Requirements and Going Concern, substantial doubt exists about our ability to continue as a going concern. We expect to continue to incur significant losses for the foreseeable future and we expect these losses to increase substantially if and as we:

•

advance the development of Revita and Rejuva through preclinical and clinical development, and, if approved by the FDA or other comparable foreign regulatory authorities, commercialization;

•

incur manufacturing costs for our product candidates;

•

increase our manufacturing capacity;

•

seek regulatory approvals for any of our product candidates that successfully complete clinical studies;

•

increase our research and development activities to identify and develop new product candidates;

•

hire additional personnel;

•

expand our operational, financial and management systems;

•

invest in measures to protect and expand our intellectual property;

•

establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize;

•

expand our manufacturing and develop our commercialization efforts; and

•

operate as a public company.

We do not anticipate generating revenue from product sales in the United States unless and until we successfully complete clinical development and obtain marketing approvals for one or more of our product candidates, if ever. We are currently establishing our commercial infrastructure to support the anticipated marketing and distribution of our product candidates. Subject to receiving marketing approval, we may need to enter into arrangements with third parties for the sale,

marketing and distribution of our product candidates. Accordingly, if we obtain marketing approval for any of our product candidates, we will incur significant additional commercialization expenses related to product manufacturing, marketing, sales and distribution.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations with other companies and strategic alliances. We may not be able to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we would have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

Recent Developments

Revita - Ongoing REMAIN Weight Maintenance Program

REVEAL-1 Cohort: we anticipate presenting 6-month data for the REVEAL-1 Cohort in the fourth quarter of 2025, and 1-year data in the second quarter of 2026.

REMAIN-1 Midpoint Cohort: on September 26, 2025, we announced positive results from the randomized REMAIN‑1 Midpoint Cohort (n=45), demonstrating Revita’s potential to sustain weight loss after discontinuation of GLP-1 treatment. Enrollment for this cohort had been previously completed, and as of September 26, 2025, all participants had been treated. The study met its 3-month efficacy endpoint with strong statistical significance (p=0.014), delivering 2.5% further weight loss with Revita (n=29) even after stopping tirzepatide, versus 10% weight regain in sham-treated patients (n=16) (Figure 1). These results are clinically and statistically significant and provide randomized, blinded evidence that drug-free, durable weight maintenance is possible. No Revita-related SAEs or Grade II+ AEs were observed. Side effects were infrequent, mild, and transient, consistent with prior Revita clinical study experience. We anticipate presenting 6-month randomized data from this cohort in the first quarter of 2026.

3-Month Post-Procedure Total Body Weight Change from Baseline (%)

REMAIN-1 Pivotal Cohort: we have completed enrollment of the REMAIN-1 Pivotal Cohort. As of October 31, 2025, randomization was complete in 194 participants and the procedure was well-tolerated, with no unanticipated or device/procedure related serious adverse effects reported. No new safety concerns were observed. We expect to complete randomization of 315 participants to Revita versus sham in early 2026, with 6-month topline primary

endpoint data anticipated in the second half of 2026. We anticipate potentially submitting a Premarket Approval (“PMA”) application with the FDA in the second half of 2026.

Rejuva

RJVA-001: in the first quarter of 2025, we achieved alignment with European authorities on a patient population and study design for our lead candidate RJVA-001 first-in-human study. In June 2025, we announced the submission of the first module of the CTA in Europe for RJVA-001. In early November 2025, the Company completed preclinical chemistry, manufacturing, and controls activities and lot release for its RJVA-001 drug product.

Pending regulatory authorization, we expect to dose the first patients with RJVA‑001 and report preliminary data in 2026. We believe Rejuva could be a potentially first-in-class, smart, durable gene therapy designed to reprogram the pancreas to provide improved metabolic control.

The upcoming Phase 1/2 first in human study is designed to be an open-label, multicenter, single ascending dose study evaluating the safety, tolerability, and preliminary efficacy of RJVA-001 in adults with inadequately controlled T2D despite use of multiple glucose-lowering agents, including GLP-1 receptor agonists. Participants will undergo a standardized medication run-in and GLP-1 washout before receiving RJVA-001 delivered via endoscopic ultrasound-guided intrapancreatic infusion. The preliminary study design comprises three escalating dose cohorts (up to 3 participants each) which will be followed by an optional expansion cohort of up to 10 additional participants treated at the selected optimal dose. Participants will be monitored for 12 months for safety, glucose control, immune response, and GLP-1 expression, and enrolled in a long-term follow-up study for up to 5 years. Primary endpoints include safety and tolerability. Secondary endpoints include change in HbA1c, fasting plasma glucose, and time-in-range as measured by continuous glucose monitoring. Exploratory endpoints assess beta-cell function, metabolic biomarkers, cardiovascular risk markers, and transgene expression.

RJVA-002: on October 7, 2025, we announced potent new preclinical data from RJVA-002, the second candidate from our Rejuva platform, at the 2025 Cell & Gene Meeting on the Mesa. The new data expand the potential of the Rejuva platform from the durable treatment of T2D to obesity. In this ongoing preclinical study, male mice engineered to express a humanized GIP receptor (Biocytogen) were fed a 60% high-fat diet (“HFD”) to induce obesity and were then randomized into one of four treatment cohorts: vehicle control, RJVA-001 mid-dose, RJVA-002 mid-dose, and RJVA-002 high-dose (n=7 per group). All mice were continued on HFD for the duration of the study. Treatment with RJVA-002 resulted in a robust, dose‑dependent reduction in body weight compared to vehicle control (Figure 2). By day 35, mice in mid- and high-dose cohorts had lost a mean of 18% (p<0.01) and 29% (p<0.0001) of their body weight after a single dose of RJVA-002, respectively (Figure 2). Results from this ongoing study at longer time points and with associated metabolic measurements will be presented at an upcoming scientific congress.

Board of Directors Update

On August 29, 2025 and effective as of September 2, 2025 (the “Effective Date”), the Board appointed Christopher Thompson, M.D. as a Class I director, with a term expiring at our 2028 annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier resignation or removal. Additionally on August 29, 2025 and effective as of the Effective Date, the Board appointed Ian Sheffield as a Class II director, with a term expiring at our 2026 annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier resignation or removal. Mr. Sheffield was also appointed to the audit committee of the Board, effective as of the Effective Date.

Additionally, on August 31, 2025, Amy W. Schulman tendered her resignation as a Class I director and as a member of the Board’s Nominating and Corporate Governance Committee, effective as of the Effective Date. Ms. Schulman’s resignation was not the result of any dispute or disagreement with the Company or the Board on any matter relating to the Company’s operations, policies or practices.

Intellectual Property Update

As of September 30, 2025, we have built a patent portfolio that includes 33 issued U.S. patents and approximately 45 pending U.S. applications, together with numerous foreign counterparts. We intend to continue seeking patent protection in the United States and internationally for our technologies.

Germany Real-World Registry Study

In 2023, we initiated the Germany Real-World Registry study, a prospective, post-market, clinical follow-up study to evaluate the Revita procedure in patients with inadequately controlled T2D. Participants’ per-protocol target entry criteria included a baseline Hemoglobin A1c (“HbA1c”) between 7–10% (inclusive), BMI ≤45 kg/m2, and treatment with at least one glucose-lowering agent (“GLA”).

As of October 31, 2025, the first 30 participants with 1 year of follow-up had, at baseline, a mean age of 60 years, a mean weight of 102 kg (225 lbs; BMI 33 kg/m²), and a mean HbA1c of 8.8%, despite being on up to three GLAs.

After a single Revita procedure, these 30 participants achieved a mean total body weight loss of 8.0% with weight decreasing from 102 kg to 94 kg at 3 months, a result that was sustained throughout 1 year post-procedure (94 kg) (Table 1, Figure 3). Notably, 28 of 30 participants lost weight, 20 of 30 participants experienced at least a 5% weight reduction, and 12 of 30 participants saw weight reductions of 10% or more. In parallel, mean HbA1c decreased by 1.0% at 3 months, from 8.8% at baseline to 7.7%, and this improvement was sustained throughout 1 year post-procedure (7.9%) (Table 1) with 83% (25/30) of participants on stable or reduced GLAs. In this cohort, weight loss and glucose improvements began as early as one month after the Revita procedure and were sustained through 1 year of follow-up (Table 1).

Table 1. Germany Real-World Registry Study Weight and Blood Sugar Data Post-Revita Procedure (n=30)


Endpoint	Baseline	3 Months	6 Months	1 Year
Weight (kg)	102 ± 3.4	94 ± 3.3	94 ± 3.3	94 ± 3.3
HbA1c (%)	8.8 ± 0.2	7.7 ± 0.4	7.9 ± 0.3	7.9 ± 0.2

Mean ± standard error of the mean (“SEM”) values shown. Fractyl Health internal data.

Of these 30 participants, 14 have now been followed for 2 years post-procedure. These 14 participants had a mean age of 62 years, mean weight of 104 kg (229 lbs; BMI 34 kg/m²), and a mean HbA1c of 9.1%, despite being on up to three GLAs. These 14 participants achieved a mean weight loss of 7.9% at 1 year with weight decreasing from 104 kg to 95 kg, an improvement that was maintained through 2 years post-procedure (94 kg) (Table 2). Mean HbA1c reduced by 1.2% at 1 year, from 9.1% at baseline to 7.8%, and this improvement was sustained throughout 2 years post procedure (7.4%) (Table 2), with 86% (12/14) of participants on stable or reduced GLAs.

Table 2. Germany Real-World Registry Study Weight and Blood Sugar Data Post-Revita Procedure (n=14)


Endpoint	Baseline	3 Months	6 Months	1 Year	2 Years
Weight (kg)	104 ± 5.7	96 ± 5.5	96 ± 5.3	95 ± 5.3	94 ± 5.3
HbA1c (%)	9.1 ± 0.4	8.1 ± 0.7	8.2 ± 0.5	7.8 ± 0.3	7.4 ± 0.3

Mean ± SEM values shown. Fractyl Health internal data.

Figure 3. Germany Real-World Registry Study: Total Body Weight Change from Baseline

Medication use was recorded at baseline and each follow-up visit. Changes were categorized as initiation or discontinuation of any GLA or anti-obesity medication class. In this Germany Real-World Registry study, treatment adjustments reflected routine clinical management and were not protocol-mandated. At baseline, patients were on up to 3 GLAs prior to treatment with Revita with inadequately controlled T2D.40% of participants were already receiving a glucagon‑like peptide-1 receptor agonist (“GLP-1RA”) for glucose control and remained inadequately controlled despite treatment. During follow-up, 14 of 30 (47%) participants remained on stable GLAs through their last follow-up period, 11 of 30 (37%) participants decreased the number of GLAs from baseline, and only 5 of 30 (17%) participants increased the number of GLAs from baseline. Analyses of weight and HbA1c were stratified by the change in the number of GLAs from baseline to account for the potential confounding effects of concomitant pharmacotherapy.

When stratifying for medication adjustments post-baseline, participants who were on either stable or reduced medications (n=25) had similar effects on weight and HbA1c at 1 year and 2 years post-procedure compared to the entire cohort. Those participants on stable or reduced medications had a mean weight reduction of 8.4±1.3% and 8.8±2.2% compared to 8.0±1.2% and 8.9±1.9% for the entire cohort (Figure 3) at 1 year and 2 years post-procedure, respectively. Likewise, participants on stable or reduced medications had a mean HbA1c reduction of 0.9±0.3% and 1.7±0.4% compared to 0.8±0.3% and 1.7±0.4% for the entire cohort at 1 year and 2 years post-procedure, respectively. Thus, the sustained improvement in weight and HbA1c observed after Revita occurred despite a substantial reduction in average GLA use and cannot be attributed to new medication use during the Germany Real-World Registry study follow up period.

Patient-reported outcomes (“PROs”) revealed that Revita was valued by patients and improved T2D management. At 1 year and 2 years post-procedure, 97% and 93% of participants, respectively, reported that they would undergo the

Revita procedure again, and 100% and 93% of participants, respectively, would recommend the procedure to a family member or friend (n=30 at 1 year; n=14 at 2 years post-procedure). Revita received a mean score of 9.8±0.1 and 10±0.0 (1-10 scale, 10 highest) for its ability to improve T2D management. Revita’s ability to improve quality of life was scored a mean of 9.6±0.2 and 10±0.0 by Germany Real-World Registry study participants at 1 and 2 years post-procedure, respectively.

No device- or procedure-related serious adverse events have been reported to date.

Collectively, these findings highlight the potential of a single Revita treatment to deliver durable weight maintenance, glucose improvement, and reduction in medication utilization without significant adverse events in a real-world setting out to 2 years post-procedure. Parallel PROs demonstrate durable patient-perceived value and improvement in T2D management.

Components of our Condensed Consolidated Results of Operations

There have been no material changes to the components of our results of operations described in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 3, 2025 (our “Annual Report”), except as stated below.

The following table reflects our research and development expense, including direct program-specific expense summarized by program, indirect expenses, and personnel-related expenses recognized during each period presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Direct program-specific expenses:
Revita	$	7,183	$	7,770	$	22,118	$	18,282
Rejuva		2,315		2,272		10,193		4,507
Total direct program-specific expenses		9,498		10,042		32,311		22,789
Indirect expenses		1,826		1,780		5,679		6,239
Personnel-related expenses (including stock-based compensation)		6,133		7,182		20,053		21,162
Total research and development expenses	$	17,457	$	19,004	$	58,043	$	50,190

Critical Accounting Policies and Significant Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience, known trends 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 value of assets and liabilities and recorded amounts of expenses 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.

Our significant accounting policies are described in more detail in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q as well as Note 2 to our audited financial statements as of and for the year ended December 31, 2024 included in our Annual Report. Our critical accounting estimates related to warrant liabilities, as described below, have been updated from what we disclosed in the “Critical Accounting Policies and Significant Estimates” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report. For a complete discussion of our updated critical accounting estimates related to warrant liabilities, see Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations

Comparison of three months ended September 30, 2025 and 2024

The following table summarizes our condensed consolidated results of operations for the three months ended September 30, 2025 and 2024.


	Three Months Ended September 30,						Change
(in thousands)	2025			2024			Amount			%
Revenue	$	—		$	14		$	(14	)		(100.0	%)
Cost of goods sold		—			7			(7	)		(100.0	%)
Gross profit		—			7			(7	)		(100.0	%)
Operating expenses:
Research and development		17,457			19,004			(1,547	)		(8.1	%)
Selling, general and administrative		5,237			4,797			440			9.2	%
Total operating expenses		22,694			23,801			(1,107	)		(4.7	%)
Loss from operations		(22,694	)		(23,794	)		1,100			(4.6	%)
Other income (expense), net		(22,909	)		621			(23,530	)		(3,789.0	%)
Net loss and comprehensive loss	$	(45,603	)	$	(23,173	)	$	(22,430	)		96.8	%

Revenue and Cost of Goods Sold

Revenue and cost of goods sold during the three months ended September 30, 2024 was related to our pilot commercial launch in Germany. As part of the Strategic Reprioritization, we paused our commercial efforts in Germany in the first quarter of 2025.

Research and Development Expenses

Research and development expenses decreased by $1.5 million, or 8.1%, during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to reduced spending on the REVITALIZE-1 study as a result of our Strategic Reprioritization and a decrease in stock-based compensation expense.

Revita-related expenses decreased by $0.6 million primarily due to a $0.1 million decrease in clinical related expenses and a $0.5 million decrease in collaborative medical research expenditures. Decreases in clinical related expenses were primarily driven by reduced expenses from the REVITALIZE-1 study as a result of our Strategic Reprioritization, partially offset by the positive progress made in our REMAIN-1 study. Rejuva-related expenditures were comparable to those incurred in the same period in 2024. In addition, stock-based compensation expenses decreased by $0.9 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $0.4 million, or 9.2%, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily attributable to professional service fees incurred related to the issuance of the warrants in connection with the August 2025 Offering. See the “Liquidity and Capital Resources” section below for details about the August 2025 Offering and its associated warrants.

Other Income (Expense), Net

Other expense, net, of $22.9 million during the three months ended September 30, 2025 was primarily attributable to a $21.2 million loss from the change in fair value of warrant liabilities and a $1.9 million loss from the change in fair value of the 2023 Notes, partially offset by $0.2 million of net interest income. Other income, net, of $0.6 million during the three months ended September 30, 2024 was primarily attributable to a $2.3 million gain from the change in fair value of warrant liabilities and $0.9 million of net interest income, partially offset by a $2.6 million loss from the change in fair value of the 2023 Notes.

Change in fair value of warrant liabilities was mainly a result of the fluctuation of the value of the underlying shares of our common stock. Change in fair value of the 2023 Notes were primarily driven by a combination of interest on the notes payable and the fluctuation of market interest rates.

Comparison of nine months ended September 30, 2025 and 2024

The following table summarizes our condensed consolidated results of operations for the nine months ended September 30, 2025 and 2024.

      
     Nine Months Ended
September 30,

     Change

BASIS OF PRESENTATION

TRADEMARKS AND TRADENAMES

FORWARD-LOOKING STATEMENTS

SUMMARY RISK FACTORS

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FRACTYL HEALTH, INC. 10-Q