AARD

Business Context and Reporting Period

Aardvark Therapeutics, Inc. (AARD) is a clinical-stage biopharmaceutical company focused on developing small-molecule therapeutics targeting Bitter Taste Receptors (TAS2Rs) for metabolic diseases, specifically hyperphagia associated with Prader-Willi Syndrome (PWS). This Form 10-Q covers the quarterly period ended June 30, 2026. The company is classified as an emerging growth company and a smaller reporting company.

Key Financial Metrics

Note: The company has no revenue and no debt. Liquidity is supported by cash and short-term investments totaling approximately $73.9 million as of June 30, 2026.

Material Changes vs. Prior Period

• Net Loss Increase: Net loss for the six months ended June 30, 2026, increased to $36.0 million from $23.7 million in the same period in 2025. This was driven by a $6.1 million increase in Research and Development (R&D) expenses and a $5.1 million increase in General and Administrative (G&A) expenses.
• Expense Drivers: The increase in R&D expenses was primarily due to higher external costs for clinical and toxicology studies and increased personnel costs prior to a workforce reduction. G&A expenses rose due to increased headcount, bonuses, and severance costs associated with the workforce reduction.
• Liquidity Position: Cash and cash equivalents increased to $73.8 million from $47.1 million at year-end 2025, while short-term investments decreased significantly from $63.0 million to $21 thousand. This shift reflects the liquidation of investments to fund operations.
• Stock-Based Compensation: Stock-based compensation expense increased significantly to $3.95 million for the six months ended June 30, 2026, compared to $0.87 million in the prior year period.

Guidance, Outlook, and Risks

• Clinical Hold and Trial Termination: In February 2026, the company voluntarily paused enrollment in its Phase 3 HERO trial and other trials due to reversible cardiac observations. In May 2026, the FDA placed a full clinical hold on the ARD-101 program. In June 2026, the company terminated the HERO and Open Label Extension (OLE) trials and does not intend to resume them as previously designed.
• Future Development: The company is evaluating whether and how to pursue further clinical development of ARD-101, including a potentially redesigned trial. Progress is contingent on FDA removal of the clinical hold, alignment on a new protocol, and sufficient capital.
• Liquidity Outlook: Management believes existing cash resources ($73.9 million) are sufficient to fund operations into late 2027. However, the company expects to incur significant losses for the foreseeable future and will require additional capital to continue development.
• Workforce Reduction: A workforce reduction was implemented in Q2 2026 to align costs with revised operating priorities. As of June 2026, 99% of outstanding stock options held by employees were underwater, prompting a proposal to reprice options subject to shareholder approval.
• Risks: Key risks include the inability to resolve the FDA clinical hold, failure to secure additional financing, and the potential for the company to be forced to delay or terminate development programs if funding is unavailable.

Investor Verification Checklist

• Verify the status of the FDA clinical hold on ARD-101 and the timeline for potential resolution.
• Confirm the details of the proposed stock option repricing and the outcome of the shareholder vote scheduled for August 14, 2026.
• Monitor cash burn rates and the company's ability to raise additional capital via the $150 million ATM facility or other means.
• Review the specific safety data regarding the "reversible cardiac observations" that triggered the clinical hold.
• Assess the impact of the terminated Phase 3 HERO trial on the company's valuation and future development roadmap.