Septerna, Inc.

Septerna, Inc. 10-K Summary (Fiscal Year Ended December 31, 2025)

1. Business Overview Septerna, Inc. (Nasdaq: SEPN) is an early-stage biotechnology company pioneering the discovery and development of novel medicines. The company focuses on targeting G protein-coupled receptors (GPCRs), a critical class of cell surface receptors involved in numerous biological processes. Septerna leverages its proprietary Native Complex Platform® to identify and develop new drug candidates, primarily addressing significant health challenges like obesity and type 2 diabetes, with additional exploration in endocrinology, immunology, and inflammation. This specialized platform aims to overcome traditional challenges in GPCR drug discovery, enabling the development of more potent and selective therapies by precisely targeting these receptors.

Septerna successfully completed its Initial Public Offering (IPO) on October 28, 2024, selling 18.4 million shares at $18.00 per share. This generated $331.2 million in gross proceeds and $302.8 million in net proceeds. Earlier in 2024, the company raised an additional $75 million through a Series B convertible preferred stock offering. As of December 31, 2025, Septerna had approximately 44.8 million shares of common stock issued and outstanding. The company operates as an "Emerging Growth Company" and a "Smaller Reporting Company," benefiting from reduced reporting requirements and disclosures.

The company's pipeline features promising preclinical drug candidates:

• SEP-479 and SEP-631: These candidates are currently in the preclinical stage. Septerna aims to advance them into clinical development, with specific timelines for filing Investigational New Drug (IND) applications and initiating Phase 1 clinical trials representing critical next steps for investors to monitor.
• Strategic Shift: Septerna discontinued the development of its prior lead product candidate, SEP-786, to fully concentrate resources on SEP-479, SEP-631, and other pipeline programs.

A significant strategic highlight is Septerna's collaboration with Novo Nordisk A/S. This partnership focuses on developing new oral medicines for metabolic diseases, leveraging Septerna's GPCR expertise. The collaboration is a major source of potential future funding, including upfront payments, substantial milestone payments as research progresses, and royalties from future product sales if drugs reach the market.

2. Financial Performance (Full Year 2025 vs. 2024) As an early-stage biotech, Septerna is in a significant investment phase, which its financial results reflect.

• Revenue: The company reported a substantial increase in revenue, soaring from $1.1 million in 2024 to $46.0 million in 2025. This dramatic growth primarily stemmed from upfront and milestone payments received through the Novo Nordisk partnership.
• Net Loss: Septerna continues to operate at a loss, typical for companies in the research and development phase. However, the net loss improved significantly, decreasing from $71.8 million in 2024 to $48.9 million in 2025. This indicates more efficient capital use relative to revenue growth.
• Loss Per Share: Reflecting the improved net loss and increased share count post-IPO, loss per share decreased from $7.26 in 2024 to $1.10 in 2025.
• Operating Expenses:
  • Research and Development (R&D) costs increased from $65.3 million in 2024 to $97.6 million in 2025, demonstrating increased investment in advancing its drug pipeline.
  • General and Administrative (G&A) costs also rose from $16.6 million in 2024 to $29.2 million in 2025, primarily due to costs associated with operating as a public company and general corporate growth.
  • The company recorded a $12.5 million "gain on sale of non-financial asset" in 2025. This one-time gain, likely from the sale of intellectual property or other non-core assets, helped offset operating expenses.
• Interest Income: Septerna earned $19.5 million in interest income in 2025, up from $8.6 million in 2024, reflecting its larger investment portfolio and higher interest rates.
• Deferred Revenue: A new and significant item in 2025 was $168.2 million in deferred revenue, compared to none in 2024. This represents cash received, primarily from the Novo Nordisk partnership, for which Septerna still needs to perform services or achieve specific milestones before recognizing it as earned revenue. This indicates a strong pipeline of future revenue.

3. Financial Health Septerna maintains a strong financial position, significantly bolstered by its recent financing activities. While cash and cash equivalents decreased from $238.2 million in 2024 to $120.7 million in 2025, the company strategically increased its marketable securities from $182.6 million to $427.9 million. This investment of IPO proceeds resulted in total combined cash and investments increasing from $420.8 million at the end of 2024 to $548.6 million at the end of 2025. This substantial cash reserve, combined with an annual net loss of approximately $48.9 million, provides Septerna with a significant cash runway, estimated to fund operations for several years. As of December 31, 2025, Septerna did not report any significant long-term debt obligations. The $168.2 million in deferred revenue at year-end 2025 represents future revenue streams from collaboration agreements, primarily with Novo Nordisk, which Septerna expects to recognize as services are performed or milestones achieved, further contributing to the company's financial flexibility.

4. Management Discussion & Analysis (MD&A) Highlights Management highlighted that the significant increase in revenue from $1.1 million in 2024 to $46.0 million in 2025 primarily stemmed from recognizing upfront and milestone payments from the strategic collaboration with Novo Nordisk A/S. This partnership remains central to the company's strategy, providing both non-dilutive funding and validation of its Native Complex Platform®. Despite increased operating expenses, the net loss decreased from $71.8 million in 2024 to $48.9 million in 2025, reflecting the substantial revenue growth.

The increase in Research and Development (R&D) expenses from $65.3 million to $97.6 million primarily resulted from increased investment in advancing the preclinical candidates SEP-479 and SEP-631, as well as other pipeline programs, following the strategic decision to discontinue SEP-786. General and Administrative (G&A) expenses rose from $16.6 million to $29.2 million, largely attributable to costs associated with operating as a newly public company, including increased legal, accounting, and compliance fees, as well as personnel expansion to support corporate growth. The $12.5 million gain on sale of a non-financial asset in 2025 provided a one-time offset to operating expenses.

The company's liquidity position significantly strengthened from the net proceeds of $302.8 million from its IPO in October 2024, as well as the $75 million from the Series B offering. This capital infusion, combined with the strategic investment of funds into marketable securities, resulted in a robust cash and investments balance of $548.6 million at the end of 2025. Management believes this capital, along with potential future milestone payments from the Novo Nordisk collaboration, provides a substantial cash runway to fund planned operations for several years, including the advancement of its preclinical pipeline into clinical development.

Critical accounting policies, particularly revenue recognition for collaboration agreements and the capitalization of research and development costs, represent key areas of management judgment given the nature of the company's business. The deferred revenue balance of $168.2 million at year-end 2025 represents future obligations under collaboration agreements, primarily with Novo Nordisk, which Septerna will recognize as revenue upon achieving specified milestones or performing services. The company operates as an "Emerging Growth Company" and a "Smaller Reporting Company," which impacts its reporting requirements and disclosures.

5. Competitive Position Septerna operates in highly competitive and rapidly evolving therapeutic areas, including obesity, type 2 diabetes, and the broader field of G protein-coupled receptor (GPCR) drug discovery. Key competitors include large pharmaceutical companies with significant resources and established pipelines, as well as other biotechnology companies developing novel therapies for similar indications or utilizing GPCR-targeting approaches.

Septerna's primary competitive advantage lies in its proprietary Native Complex Platform®. This platform is designed to overcome traditional challenges in GPCR drug discovery by enabling the identification of novel small molecule modulators that precisely target GPCRs in their native, functional state. This approach aims to yield more potent, selective, and safer drug candidates compared to conventional methods. The company's ability to compete effectively will depend on its success in advancing its product candidates through clinical development, obtaining regulatory approvals, and ultimately commercializing its products. Intellectual property protection, particularly patents covering its platform technology and drug candidates, is crucial for maintaining a competitive edge. The strategic collaboration with Novo Nordisk also enhances Septerna's competitive standing by providing significant resources and validation for its platform.

Barriers to entry in this industry are high, including the substantial capital investment required for drug discovery and clinical development, the lengthy and complex regulatory approval process, and the need for specialized scientific expertise and intellectual property.

6. Risk Factors Investing in an early-stage biotechnology company like Septerna carries significant risks:

• Clinical Trial Success: Septerna's business hinges on the successful development, regulatory approval, and commercialization of its product candidates. Drug development is a high-risk endeavor, with a high rate of clinical trial failures. The discontinuation of SEP-786 underscores this inherent risk.
• Regulatory Approval: Even with successful clinical trials, obtaining regulatory approvals (e.g., from the FDA) is a lengthy, complex, and uncertain process.
• Competition: The fields of obesity, type 2 diabetes, and GPCR drug discovery are highly competitive, with many established pharmaceutical companies and other biotechs.
• Funding and Cash Burn: While Septerna currently has a strong cash position, it operates at a loss and will require substantial additional funding to complete clinical trials and commercialize any approved products. Future financing may not be available on favorable terms or at all.
• Reliance on Partnerships: The Novo Nordisk collaboration is critical for Septerna's financial stability and pipeline advancement. Any issues or termination of this partnership could significantly impact the company.
• Intellectual Property: Septerna's success depends on its ability to obtain, maintain, and enforce patent protection for its platform and product candidates.
• Key Personnel: The company's success is highly dependent on its scientific and management teams.
• Market Acceptance: Even if approved, there is no guarantee that Septerna's products will achieve market acceptance or be commercially successful.
• No Dividends Expected: Septerna plans to reinvest any future earnings back into the business to fund growth, so investors should not expect cash dividends in the foreseeable future.
• Operational Risks: As an early-stage company, Septerna faces risks related to manufacturing, supply chain, and general operational execution.

7. Future Outlook Septerna's immediate future focuses on leveraging its strong cash position and the Novo Nordisk partnership to:

• Advance SEP-479 and SEP-631 through preclinical development and into human clinical trials, with specific IND filing and Phase 1 initiation timelines being key milestones.
• Continue expanding its pipeline of GPCR-targeted programs.
• Protect its intellectual property through patents and other means.
• Recognize the substantial deferred revenue as milestones are achieved within the Novo Nordisk collaboration.
• Explore additional strategic partnerships to further validate its platform and expand its therapeutic reach.