Company: LBRX
Filing Date: 2025-07-23
Form Type: DRS/A
Source: 0000950123-25-006557
Chunk: 352

Company: LB PHARMACEUTICALS INC
Filing Date: 2025-07-23
Form: DRS/A
Chunk 352
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2 Notes include conversion features which met the definition of a derivative liability. The conversion features were bifurcated from the host contract and a liability and corresponding discount were recorded on the date of issuance. The liability is remeasured at fair value at the end of each reporting period, with any changes recorded in the accompanying statements of operations. F-16

LB Pharmaceuticals Inc Notes to Financial Statements The 2020 Notes and 2022 Notes would automatically convert into the class of the stock issued in the Company’s next qualified financing at a conversion price equal to 80% of the per-shareprice of such securities issued. If the per-shareprice of the next qualified financing was below $2.35, the outstanding principal of the 2020 Notes and 2022 Notes would convert at the per-shareprice paid for such securities issued (see Note 11 Notes). In May 2023, the Company received a signed commitment for a qualified financing at $1.50 per share, thus the Company determined that the conversion feature had no value as of June 30, 2023. The 2020 Notes and 2022 Notes were converted to Series C preferred stock on August 29, 2023. See Note 11 Notesfor additional information related to the 2020 Notes and the 2022 Notes and the note conversion features. For the year ended December 31, 2023, the change in the fair value of the Level 3 note conversion feature liability resulted in the recording of a gain on change in fair value of derivative instruments of $16.6 million in the accompanying statements of operations. The following are the assumptions used in the Black-Scholes valuation model in order to determine the fair value of the note conversion feature derivative liabilities for the embedded conversion feature related to 2022 Notes issued during the year ended December 31, 2023:

|                                   |     | January 26, 2023 |            |   |
|:----------------------------------|:----|:-----------------|-----------:|:--|
| Term – financing event (in years) |     |                  |       0.33 |   |
| Term – exit event (in years)      |     |                  |       1.33 |   |
| Volatility                        |     |                  |      65.90 | % |
| Risk-free rate                    |     |                  |       4.53 | % |
| Debt maturity date                |     |                  | 11/30/2024