CYPH — Q2 2026 Financial Report Analysis

A $39 million profit that came from the price of one coin

Cypherpunk Technologies, the former Leap Therapeutics, now runs mainly as a digital asset treasury: a listed company that raises money from shareholders and uses it to buy and hold a cryptocurrency, in this case Zcash (ZEC), a coin built for private transactions. It still owns a cancer drug program through its Leap subsidiary, but that program is mostly paused while the company looks for funding. In the second quarter of 2026 it reported net income of $39.4 million, or $0.18 per diluted share, against a $16.6 million loss a year earlier. All of that profit, and more, came from one line: a $46.0 million unrealized gain on its ZEC, because the coin's price rose from $243.35 on March 31 to $400.09 on June 30. "Unrealized" means the coins weren't sold; the company simply valued its holdings at the end-of-quarter price. Without that gain, the quarter was a pre-tax loss of about $4.6 million.

At a glance

• 323,394 ZEC held, worth $129.4 million on June 30. That's 91% of total assets ($143.0 million). The share price now mostly tracks one volatile coin.
• $46.0 million gain in Q2, after a $77.6 million loss in Q1. Across the first half the ZEC line is a net $31.6 million loss, so the six-month result is a $37.8 million loss, even with the Q2 profit.
• Share count up 28.5% in six months (83.9 million to 107.8 million shares) from selling new stock on the market, and a deal signed in August adds rights to another 43.3 million shares.

The numbers

Six-month figures: net loss of $37.8 million (2025: $32.1 million loss), operating expenses $9.5 million (2025: $32.8 million), and a $31.6 million unrealized loss on ZEC.

Takeaway: This quarter's profit is a measure of where the ZEC price stood on June 30, not of a business that earns money. The company has no revenue and spent about $2.5 million in cash-type operating costs in the quarter. What's worth watching is ZEC per share, not EPS, and that is being diluted by new share sales and by an August mining-equipment purchase paid for in stock.

How the accounting works, and why the profit swings so much

Cypherpunk's ZEC sits with Gemini, a crypto exchange and custodian. Because Gemini holds the coins, the company accounts for them as a receivable, a right to get the coins back on demand. The filing splits that into two parts: the $110.5 million it paid for the coins (an average of $341.83 each), plus an "embedded derivative," which is the change in the coins' market value since purchase. That second part is revalued every quarter and every move goes straight into net income. On June 30 it was $18.8 million, meaning the holdings were worth that much more than they cost.

That's why the results swing so hard. In Q1 the ZEC price fell and the company booked a $77.6 million unrealized loss. In Q2 the price rose 64% and it booked a $46.0 million gain. The filing says ZEC traded between roughly $390 and $585 from July 1 to August 11, and the company itself warns that the Q3 result depends on the September 30 price.

Where the costs went

• Research and development fell to $0.2 million from $10.5 million. Per the MD&A, clinical trial costs fell by $7.5 million and manufacturing by $0.7 million "due to the completion of our clinical trials," and R&D payroll fell by $1.8 million after the 2025 layoffs, which cut about 75% of staff.
• General and administrative costs rose to $4.5 million from $1.8 million. $1.7 million of the increase is stock-based compensation (pay in shares and share units) from awards granted to staff and directors in Q4 2025. Professional fees rose $0.2 million because of audit and consulting work on the digital assets. Total stock-based pay in the quarter was $2.2 million.
• No restructuring charge this year, against $4.5 million of severance and related costs in Q2 2025.

What the headline numbers hide

• The profit isn't cash. Net income was $39.4 million, but operations used $6.1 million of cash in the first half (H1 net loss of $37.8 million, with the $31.6 million non-cash ZEC loss and $4.3 million of stock pay added back). The company has no revenue, so every dollar of costs is paid from cash it raised or, in theory, from selling coins.
• The GAAP result and the business point in opposite directions. Take out the $46.0 million gain and Q2 was a pre-tax loss of about $4.6 million. The company publishes no adjusted figures, so this is our own subtraction from the income statement.
• The tax line is also a ZEC effect. Q2 carried a $2.0 million tax charge, which the filing says rebuilt part of a deferred tax liability (tax it would owe if it sold the coins at a gain) that it had reversed in Q1 when the price fell. Over the half year that's a $3.1 million tax benefit.
• EPS is spread across far more shares. Diluted weighted shares were 217.3 million against 41.4 million a year ago. The count includes about 80.8 million shares from pre-funded warrants: rights to shares that are already paid for except a $0.001 exercise price, so they're counted as if already issued. Nearly all of them (80,768,504) were issued in the October 2025 private placement led by Winklevoss Capital, which started the ZEC strategy. Common shares in that deal were sold at $0.52064 each.
• The company bought coins at higher prices than the June 30 value. By our math from the two 10-Qs, it added 19,927 ZEC in Q2 for $9.5 million, about $479 each, against a quarter-end price of $400.09. The Q1 filing confirms 10,719 of those coins were bought between April 1 and May 13 at $480.47 on average.
• The buying is paid for by selling new shares. In the first half the company sold 22.2 million new shares through an at-the-market (ATM) program, meaning gradual sales into the market through Cantor Fitzgerald, for $19.2 million net. It spent $13.5 million of cash on ZEC and $5.0 million on a SAFE (a right to future equity) in Zcash Open Development Lab, a Zcash software developer. Cash fell to $7.6 million from $14.0 million at year-end.
• No receivables or inventory issue to check, since there are no sales. The Australian R&D tax refund receivable ($0.6 million at year-end) has now been collected in full.

Value per share is the real scorecard

For a company like this, the useful measure is how much ZEC stands behind each share, and whether new share sales raise or lower it. On the Q2 basic weighted share count of 184.3 million (which includes the pre-funded warrants), $129.4 million of ZEC works out to roughly $0.70 of ZEC per share, plus about $0.04 of cash. That's our calculation, not a company figure. The company doesn't publish ZEC-per-share or a premium/discount-to-holdings figure, which makes it hard to tell whether stock sales add or remove value for existing holders.

That figure is close to where the stock traded. On July 20, Nasdaq told the company its shares had closed below $1.00 for 30 business days in a row. It regained compliance on September 2 after the price recovered (both disclosed in 8-Ks).

After the quarter: a mining fleet paid for in shares

On August 17 the company agreed to buy Zcash mining equipment and hosting contracts from Moria Mining LLC for $33.3 million. It paid with a pre-funded warrant for 43,290,042 shares, about $0.77 per share, issued to Winklevoss Treasury Investments, an affiliate of the seller (8-K filed August 18; the press release calls it the world's largest Zcash mining fleet). This is a related-party deal. The 10-Q identifies Winklevoss Treasury Investments as "Winklevoss Capital," the lead investor in the October 2025 placement, which beneficially owns 19.9% of the common stock. That makes the price paid for the equipment a point to check, along with the share price used. That adds roughly 23% to the Q2 basic share count. Mining could give the company its first operating income stream, earning new ZEC, but it also brings running costs (hosting and power) that the filing doesn't yet quantify. Whether the fleet's ZEC output justifies issuing that many shares will only show up in the Q3 and Q4 numbers.

The drug program on the side

Leap's antibody sirexatamab (DKN-01) missed its main goal in the Phase 2 DeFianCe colorectal cancer trial. A later analysis found more benefit in patients with high blood levels of the protein DKK1, and the filing stresses that this analysis was exploratory. In Q2 the FDA agreed with the company on a roughly 270-patient Phase 3 design in DKK1-high second-line colorectal cancer and granted Fast Track designation in May. The company isn't paying for that trial itself: it has started a strategic process to fund or partner the program, possibly as a spin-out, and R&D spend is down to regulatory upkeep.

Outlook

Management gives no financial guidance. The company says its $7.6 million of cash plus the $200 million Cantor ATM program are enough to fund operations for at least 12 months. That only holds as long as the market keeps buying new shares at prices worth selling at. What to watch in the Q3 10-Q, likely due around mid-November:

1. The September 30 ZEC price. It will drive Q3 net income more than anything the company controls. The filing's own example: at $500 a coin, the Q3 gain would be about $32.3 million.
2. The mining fleet's first numbers: ZEC mined versus hosting and power costs, and how the $33.3 million of equipment is depreciated.
3. Share count versus ZEC count. If the share count grows faster than ZEC holdings, each share is backed by less ZEC, whatever the reported profit says.
4. Any result from the sirexatamab strategic process. A partner deal would move a cost off the books.

Our read: Cypherpunk's reported earnings are now essentially a bet on ZEC's price. The questions for a shareholder are whether the company keeps adding ZEC per share faster than it issues new stock, and whether mining turns into a real cash-producing operation rather than another non-cash line.