Company: LBRX
Filing Date: 2025-07-23
Form Type: DRS/A
Source: 0000950123-25-006557
Chunk: 346

Company: LB PHARMACEUTICALS INC
Filing Date: 2025-07-23
Form: DRS/A
Chunk 346
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 three levels of the fair value hierarchy are as follows:

Level1–
Observable inputs, such as quoted prices for identical assets and liabilities in active markets.

Level2 –Observable
inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are
observable or can be corroborated by observable market data.

Level3 – Unobservable inputs supported by little or
no market data and requires management to develop its own assumptions based on best estimates of what market participants would use in pricing an asset or liability at the reporting date.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to
the fair value measurement in its entirety. To the extent that the valuation

F-11

LB Pharmaceuticals Inc

Notes to Financial Statements

is based on models or inputs that are less observable or unobservable in the market, the determination of fair value may require significant judgment and involve uncertainty. Changes in fair
value measurements could have a significant impact on the results of operations in any given period.

The carrying amounts of cash equivalents, marketable
securities, accounts payable and accrued expenses approximate the related fair values due to the short-term maturities of these instruments. The Company’s derivative liabilities are carried at fair value based on the fair value hierarchy. The
Company invests its excess cash in financial instruments, which are readily convertible into cash, such as money market funds, fixed-income securities, and U.S. government securities. Cash equivalents, where applicable, are classified as
Level 1 or Level 2, as defined by the fair value hierarchy.

Stock-Based Compensation

The Company uses equity-based compensation programs to provide long-term performance incentives for its employees, directors and consultants. These incentives
consist primarily of stock options, restricted stock grants and penny warrants.

The Company measures all stock options and other stock-based awards
to employees, directors and non-employees based on the fair value on the date of the grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting
period of the respective award. The Company records the expense for these awards using the straight-line method over the service period. The Company recognizes adjustments to stock-based compensation expense for forfeitures as they occur. The
Company classifies stock-based compensation expenses in its statements of operations in the same manner in which the award