Lyra Therapeutics (LYRA) Risk Analysis

On March 13, 2026 Nasdaq notified us that it will commence procedures to delist us from The Nasdaq Capital Market. This occurred after we ceased our appeal efforts with respect to Nasdaq's delisting determination, which culminated in a letter from the Nasdaq Hearings Advisor at The Nasdaq Stock Market LLC on March 13, 2026 confirming that we had withdrawn our appeal. Trading in our common stock was suspended at the open of trading on March 17, 2026. In connection with the suspension of trading, Nasdaq has indicated that it will file a Form 25 Notification of Delisting with the U.S. Securities and Exchange Commission after all internal procedural periods have run. Being delisted from Nasdaq could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. In addition, without a Nasdaq market listing, stockholders may have a difficult time getting a quote for the sale or purchase of our common stock, the sale or purchase of our common stock would likely be made more difficult and the trading volume and liquidity of our common stock could decline. Delisting from Nasdaq could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded by other parties. When our common stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter quotation system, such as the OTCQB market, where an investor may find it more difficult to sell our common stock or obtain accurate quotations as to the market value of our common stock. We cannot assure you that our common stock, if delisted from Nasdaq, will be listed on another national securities exchange or quoted on an over-the counter quotation system. On August 20, 2025, we received a letter (the "Deficiency Letter") from Nasdaq indicating that our stockholders' equity as reported in our Quarterly Report on Form 10-Q for the period ended June 30, 2025 (the "Q2 Form 10-Q"), did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that a listed company's stockholders' equity be at least $2.5 million. As reported on our Q2 Form 10-Q, our stockholders' equity as of June 30, 2025 was approximately $1.6 million. The Deficiency Letter had no immediate effect on the listing or trading of our common stock and the common stock continued to trade at that time on The Nasdaq Capital Market under the symbol "LYRA." In accordance with Nasdaq Listing Rule 5810(c)(2)(C), we were provided an initial period of 45 calendar days to submit a plan to regain compliance. Subsequent to the receipt of the Deficiency Letter, and prior to that deadline, we submitted a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1) to Nasdaq by December 31, 2025. On November 11, 2025 we received a letter from Nasdaq accepting our proposal to use December 31, 2025 as the deadline to regain compliance. On December 30, 2025 we submitted a letter to Nasdaq requesting a further compliance extension until January 30, 2026. On February 2, 2026, we received a letter (the "Staff Determination Letter") from the Listing Qualifications Department of Nasdaq notifying the Company that Nasdaq has determined to delist the Company's common stock from The Nasdaq Stock Market. In the Staff Determination Letter, Nasdaq stated that, pursuant to Listing Rule 5101, it believes the Company is a "public shell" and that the continued listing of its securities is no longer warranted. Nasdaq cited the Company's January 12, 2026 Form 8-K disclosure, in which the Company announced that its Board of Directors had approved a plan to suspend development of LYR-210, the Company's lead product candidate, and a reduction in force that resulted in the termination of employment of nearly all of the Company's employees including the conversion of both the Chief Executive Officer and Chief Financial Officer from employees to consultants. Based on these factors, in Nasdaq's view the Company no longer has an operating business and may be subject to market abuses or other conduct detrimental to the interests of the investing public. Additionally, Nasdaq cited as a separate basis for delisting the Company's failure to comply with the minimum $2,500,000 stockholders' equity requirement for continued listing set forth in Listing Rule 5550(b). Nasdaq had previously notified the Company on August 20, 2025, that it did not comply with this requirement and had granted the Company an extension until December 31, 2025, to regain compliance. The Company subsequently requested additional time until January 30, 2026, to complete a financing transaction; however, Nasdaq determined that the Company did not meet the terms of the extension and has no basis to grant additional time given that the Company has effectively laid off its entire staff and has no current operations.

Until such time, if ever, as we can generate substantial revenue, we may finance our cash needs through a combination of equity offerings, debt financings, marketing, and distribution arrangements and other collaborations, strategic alliances, and licensing arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our operations and our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, redeeming our stock, making certain investments, and engaging in certain merger, consolidation, or asset sale transactions, among other restrictions. If we raise additional funds through additional collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, or product candidates or grant licenses on terms that may not be favorable to us.

Our stock price may be volatile. The stock market in general and the market for smaller biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above your purchase price. The market price for our common stock may be influenced by many factors, including: - the success of competitive products or technologies;- actual or expected changes in our growth rate relative to our competitors;- results of clinical trials of our product candidates or those of our competitors;- developments related to our existing or any future collaborations;- regulatory actions with respect to our product candidates or our competitors' products and product candidates;- regulatory or legal developments in the United States and other countries;- development of new product candidates that may address our markets and make our product candidates less attractive;- changes in physician, hospital, or healthcare provider practices that may make our product candidates less useful or appealing;- announcements by us, our partners, or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations, or capital commitments;- developments or disputes concerning patent applications, issued patents, or other proprietary rights;- the level of expenses related to any of our product candidates or clinical development programs;- failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;- actual or expected changes in estimates as to financial results, development timelines, or recommendations by securities analysts;- variations in our financial results or those of companies that are perceived to be similar to us;- changes in the structure of healthcare payment or reimbursement systems;- market conditions in the pharmaceutical and biotechnology sectors;- short selling activities;- general economic, industry, and market conditions; and - the other factors described in this "Risk Factors" section and elsewhere in this Annual Report on Form 10-K. In addition, the trading prices for common stock of other biotechnology companies may become highly volatile as a result of geopolitical events. The extent to which such events may impact our business, pre-clinical studies, and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

We are considered a "smaller reporting company." We are therefore entitled to rely on certain reduced disclosure requirements, such as an exemption from disclosing certain executive compensation information and three years of financial statements. We are also exempt from the requirement to obtain an external audit on the effectiveness of internal control over financial reporting provided in Section 404(b) of the Sarbanes-Oxley Act. These exemptions and reduced disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock prices may be more volatile.

Provisions in our restated certificate of incorporation and our amended and restated bylaws may discourage, delay, or prevent a merger, acquisition, or other change in control of our Company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our Board of Directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors. Among other things, these provisions include those establishing: - a classified Board of Directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our Board of Directors;- no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;- the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of the Board of Directors or the resignation, death, or removal of a director, which prevents stockholders from filling vacancies on our Board of Directors;- the ability of our Board of Directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;- the ability of our Board of Directors to alter our bylaws without obtaining stockholder approval;- the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend, or repeal our bylaws or repeal the provisions of our restated certificate of incorporation regarding the election and removal of directors;- a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;- the requirement that a special meeting of stockholders may be called only by the chairman of the Board of Directors, the chief executive officer, the president, or the Board of Directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and - advance notice procedures that stockholders must comply with in order to nominate candidates to our Board of Directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of us. Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.