Company: LBRX
Filing Date: 2025-08-22
Form Type: S-1
Source: 0001193125-25-186467
Chunk: 352

Company: LB PHARMACEUTICALS INC
Filing Date: 2025-08-22
Form: S-1
Chunk 352
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Expected Volatility: The Company used the historical stock price volatility of a peer group of publicly-traded companies to calculate the expected volatility.

Risk-Free Interest Rate: The risk-free interest rate is based on 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: The Company has never paid cash dividends and does not expect to
pay any cash dividends in the foreseeable future. Accordingly, estimated dividend yield is zero.

The fair value for each restricted common stock award
and penny warrants are estimated on the date of grant based on the most recent calculation of fair value of the Company’s common stock.

Common Stock Warrants and Warrant Liability

The
Company accounts for common stock warrants issued as freestanding instruments in accordance with applicable accounting guidance as either liabilities or as equity instruments depending on the specific terms of

F-12

LB Pharmaceuticals Inc

Notes to Financial Statements

the warrant agreement. The Company classifies warrant liabilities on the balance sheet as long-term liabilities, which are revalued at each balance sheet date subsequent to the initial issuance.
Changes in the fair value of the warrant liabilities are recorded in change in fair value of derivative instruments in the statements of operations. The Company values the aggregate equity value and allocates the value to the appropriate classes of
equity through the use of the Black-Scholes option pricing model. The value of the warrants is derived through this equity allocation. Certain assumptions used in the model include expected volatility, dividend yield and risk-free interest rate. See
Note 3 Fair Value Measurements for a description of these assumptions.

Redeemable Convertible Preferred Stock

The Company records all shares of redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The
redeemable convertible preferred stock is recorded outside of permanent equity because upon the occurrence of certain deemed liquidation events, the majority of the holders can opt to redeem the shares at the liquidation preference and these events,
including a merger, acquisition or sale of substantially all of the assets, are considered not solely within the Company’s control. The Company has not adjusted the carrying values of the redeemable convertible preferred stock to its
redemption value because it is not considered redeemable as of December 31, 2024 and 2023.

Research and Development

Research and development costs include expenditures in connection with clinical trials, employee cash and stock-based compensation, regulatory and scientific
consult