Arbutus Biopharma Corp 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Ernst & Young, LLP, Independent Registered Public Accounting Firm - PCAOB ID: 42 79 Consolidated Balance Sheets at December 31, 202 5 and 202 4 81 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 202 5 and 202 4 82 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 202 5 and 202 4 83 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 5 and 202 4 84 Notes to Consolidated Financial Statements 85 78 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Arbutus Biopharma Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Arbutus Biopharma Corporation (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 79 Valuation of contingent consideration liability Description of the Matter As discussed in Note 10 to the consolidated financial statements, the Company’s contingent consideration liability, which consists of sales-based milestones and royalties, resulting from the acquisition of Enantigen in 2014, is remeasured to its estimated fair value each reporting period. As of December 31, 2025, the contingent consideration liability was $8.4 million. Auditing the valuation of the contingent consideration liability was complex and highly judgmental due to the higher degree of estimation required in determining the fair value. In particular, the fair value estimate was sensitive to significant assumptions such as the probability of successfully commercializing a treatment for the hepatitis B virus, the timing of future payments, and the discount rate. These assumptions are affected by expectations about future industry, regulatory, market or economic conditions and are forward-looking and inherently uncertain. How We Addressed the Matter in Our Audit To test the estimated fair value of the contingent consideration liability, we performed audit procedures that included, among others, assessing the terms of the arrangement, evaluating the methodology used, and testing the significant assumptions discussed above used by the Company in its analysis. We also compared the significant assumptions to current industry, market and economic trends to corroborate the Company’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the contingent consideration liability that would result from changes in the significant assumptions. We also involved our valuation specialists to assist us in evaluating the valuation methodology and the discount rate. /s/ Ernst & Young LLP We have served as the Company's auditor since 2019. Philadelphia, Pennsylvania March 23, 2026 80 ARBUTUS BIOPHARMA CORPORATION Consolidated Balance Sheets (Expressed in thousands of US Dollars, except share amounts) December 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 18,008 $ 36,330 Investments in marketable securities, current 73,463 86,293 Accounts receivable 1,447 2,409 Prepaid expenses and other current assets 1,538 2,284 Total current assets 94,456 127,316 Property and equipment, net of accumulated depreciation and impairment 32 3,309 Right of use asset — 1,048 Other non-current assets 130 34 Total assets $ 94,618 $ 131,707 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities $ 5,459 $ 7,564 Deferred license revenue, current — 7,571 Lease liability, current 547 483 Total current liabilities 6,006 15,618 Liability related to sale of future royalties 3,442 4,829 Deferred license revenue, non-current — 2,863 Contingent consideration 8,395 10,225 Lease liability, non-current 199 806 Total liabilities 18,042 34,341 Stockholders’ equity Common shares Authorized: Unlimited number without par value Issued and outstanding: 192,531,225 and 189,963,492 as of December 31, 2025 and 2024, respectively. 1,421,429 1,410,025 Additional paid-in capital 83,318 82,048 Deficit ( 1,380,073 ) ( 1,346,572 ) Accumulated other comprehensive loss ( 48,098 ) ( 48,135 ) Total stockholders' equity 76,576 97,366 Total liabilities and stockholders' equity $ 94,618 $ 131,707 See accompanying notes to the consolidated financial statements. 81 ARBUTUS BIOPHARMA CORPORATION Consolidated Statements of Operations and Comprehensive Loss (Expressed in thousands of US Dollars, except share and per share amounts) Year ended December 31, 2025 2024 Revenue Collaborations and licenses $ 12,601 $ 3,919 Non-cash royalty revenue 1,482 2,252 Total revenue 14,083 6,171 Operating expenses Research and development 25,241 54,037 General and administrative 15,893 22,108 Change in fair value of contingent consideration ( 1,830 ) 2,625 Restructuring costs 12,939 3,720 Total operating expenses 52,243 82,490 Loss from operations ( 38,160 ) ( 76,319 ) Other income Interest income 4,068 6,585 Gain on sale of property and equipment 674 — Interest expense ( 97 ) ( 137 ) Foreign exchange gain / (loss) 14 ( 49 ) Total other income 4,659 6,399 Net loss $ ( 33,501 ) $ ( 69,920 ) Loss per share Basic and diluted $ ( 0.17 ) $ ( 0.38 ) Weighted average number of common shares Basic and diluted 191,599,600 185,608,874 Comprehensive loss Unrealized gain on available-for-sale securities $ 37 $ 286 Comprehensive loss $ ( 33,464 ) $ ( 69,634 ) See accompanying notes to the consolidated financial statements. 82 ARBUTUS BIOPHARMA CORPORATION Consolidated Statement of Stockholders’ Equity (Expressed in thousands of US Dollars, except share amounts) Common Shares Number of shares Share capital Additional paid-in capital Deficit Accumulated other comprehensive loss Total stockholders' equity Balance at December 31, 2023 169,867,414 $ 1,349,821 $ 81,270 $ ( 1,276,652 ) $ ( 48,421 ) $ 106,018 Stock-based compensation — — 8,986 — — 8,986 Issuance of common shares pursuant to the Open Market Sale Agreement 16,499,999 44,123 — — — 44,123 Issuance of common shares pursuant to exercise of ESPP 227,333 536 ( 140 ) — — 396 Issuance of common shares pursuant to exercise of stock options 2,958,264 14,355 ( 6,878 ) — — 7,477 Issuance of common shares upon settlement of RSUs 410,482 1,190 ( 1,190 ) — — — Unrealized gain on available-for-sale securities — — — — 286 286 Net loss — — — ( 69,920 ) — ( 69,920 ) Balance at December 31, 2024 189,963,492 $ 1,410,025 $ 82,048 $ ( 1,346,572 ) $ ( 48,135 ) $ 97,366 Stock-based compensation — — 6,953 — — 6,953 Issuance of common shares pursuant to exercise of ESPP 60,493 252 ( 71 ) — — 181 Issuance of common shares pursuant to exercise of stock options 1,926,656 9,634 ( 4,094 ) — — 5,540 Issuance of common shares upon settlement of RSUs 580,584 1,518 ( 1,518 ) — — — Unrealized gain on available-for-sale securities — — — — 37 37 Net loss — — — ( 33,501 ) — ( 33,501 ) Balance at December 31, 2025 192,531,225 $ 1,421,429 $ 83,318 $ ( 1,380,073 ) $ ( 48,098 ) $ 76,576 See accompanying notes to the consolidated financial statements. 83 ARBUTUS BIOPHARMA CORPORATION Consolidated Statements of Cash Flows (Expressed in thousands of US Dollars) Year ended December 31, 2025 2024 OPERATING ACTIVITIES Net loss $ ( 33,501 ) $ ( 69,920 ) Non-cash items: Depreciation and amortization 363 1,380 Loss on impairment of leasehold improvements and lab equipment 2,811 167 Gain on sale of property and equipment ( 674 ) — Stock-based compensation expense 6,953 8,986 Change in fair value of contingent consideration ( 1,830 ) 2,625 Non-cash royalty revenue ( 1,482 ) ( 2,251 ) Non-cash interest expense 95 127 Net accretion of investments in marketable securities ( 2,349 ) ( 3,135 ) Net change in operating items: Accounts receivable 1,375 ( 633 ) Prepaid expenses and other assets 1,698 2,298 Accounts payable and accrued liabilities ( 2,105 ) ( 2,707 ) Change in deferred license revenue ( 10,434 ) ( 1,357 ) Other liabilities ( 557 ) ( 430 ) Net cash used in operating activities ( 39,637 ) ( 64,850 ) INVESTING ACTIVITIES Purchase of investments in marketable securities ( 140,061 ) ( 141,509 ) Disposition of investments in marketable securities 155,277 164,639 Proceeds from sale of property and equipment 364 — Acquisition of property and equipment — ( 182 ) Net cash provided by investing activities 15,580 22,948 FINANCING ACTIVITIES Issuance of common shares pursuant to the Open Market Sale Agreement — 44,123 Issuance of common shares pursuant to exercise of stock options 5,540 7,477 Issuance of common shares pursuant to ESPP 181 396 Net cash provided by financing activities 5,721 51,996 Effect of foreign exchange rate changes on cash and cash equivalents 14 ( 49 ) (Decrease) / increase in cash and cash equivalents $ ( 18,322 ) $ 10,045 Cash and cash equivalents, beginning of period $ 36,330 $ 26,285 Cash and cash equivalents, end of period $ 18,008 $ 36,330 See accompanying notes to the consolidated financial statements. 84 ARBUTUS BIOPHARMA CORPORATION Notes to Consolidated Financial Statements (Tabular amounts in thousands of US Dollars, except share and per share amounts) 1. Organization Description of the Business Arbutus Biopharma Corporation (“Arbutus” or the “Company”) is a clinical-stage biopharmaceutical company focused on infectious disease. The Company is currently developing imdusiran (AB-729), its proprietary, GalNAc-conjugated, subcutaneously-delivered ribonucleic acid interference (RNAi) therapeutic, and AB-101, its proprietary oral PD-L1 inhibitor, for the treatment of chronic hepatitis B (cHBV). The Company continues to protect and defend its intellectual property, which is the subject of its ongoing lawsuit against Pfizer Inc. and BioNTech SE (collectively, Pfizer/BioNTech) for their use of the Company’s patented lipid nanoparticle (LNP) technology in their COVID-19 messenger ribonucleic acid interference (mRNA)-LNP vaccines. The court issued a claim construction ruling in September 2025, which construed the disputed claim terms in a manner the Company generally considers to be favorable. The parties are awaiting further scheduling in the litigation. On March 3, 2026, the Company, along with Genevant Sciences GmbH and its parent (collectively, Genevant), entered into a settlement agreement (the Moderna Settlement Agreement) to resolve all patent infringement litigation and patent revocation proceedings involving Moderna, Inc. and its affiliates (collectively, Moderna) pending in the United States and internationally (the Moderna LNP Litigation). Under the terms of the Moderna Settlement Agreement, Moderna will make an aggregate $950.0 million noncontingent lump sum payment (the Noncontingent Settlement Payment) to the Company and Genevant on or before July 8, 2026. In addition, Moderna is obligated to pay the Company and Genevant an additional aggregate contingent lump sum payment of $1.3 billion (the Contingent Settlement Payment) upon a ruling that is favorable to the Company and Genevant in a limited appeal related to 28 U.S.C. §1498 (§1498) that Moderna is allowed to file pursuant to the Moderna Settlement Agreement (the Moderna §1498 Appeal). Under the Company’s license with Genevant, it is entitled to receive, after deduction of litigation costs, 20% of the Noncontingent Settlement Payment. In addition, as of the date of this annual report, the Company owns approximately 16% of the outstanding common equity of Genevant. The Company is currently evaluating a return of capital to its shareholders in the third quarter of calendar year 2026, following the receipt of its portion of the Noncontingent Settlement Payment. Liquidity At December 31, 2025, the Company had an aggregate of $ 91.5 million in cash, cash equivalents and investments in marketable securities. The Company had no outstanding debt as of December 31, 2025. The Company believes it has sufficient cash resources to fund its operations for at least the next 12 months. The success of the Company’s operations is dependent on obtaining the necessary regulatory approvals to bring one or more of its product candidates to market and achieve profitability from operations. The Company’s development activities and the commercialization of its products are dependent on its ability to successfully complete these activities and to obtain adequate financing through a combination of financing activities and operations. It is not possible to predict either the outcome of the Company’s existing or future development programs or the Company’s ability to continue to fund these programs in the future. 2. Significant accounting policies Basis of presentation and principles of consolidation These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include the accounts of Arbutus Biopharma Corporation and its one wholly-owned subsidiary, Arbutus Biopharma, Inc. All intercompany balances and transactions have been eliminated. 85 Use of estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses and contingent liabilities as of the end or during the reporting period. Actual results could significantly differ from those estimates. Significant estimates in the accompanying consolidated financial statements impact contingent consideration. Cash and cash equivalents Cash and cash equivalents are all highly liquid instruments with an original maturity of three months or less when purchased. Cash equivalents are recorded at cost plus accrued interest. The carrying value of these cash equivalents approximates their fair value. Investments in marketable securities The Company’s short-term investments consist of marketable securities that have original maturities exceeding three months and remaining maturities of less than one year. The Company classifies investments with remaining maturities of one year or longer as non-current. These investments are accounted for as available-for-sale securities and are reported at fair value, with unrealized gains and losses reported in other comprehensive loss until their disposition. Realized gains and losses from the sale of marketable securities, if any, are calculated using the specific-identification method, and are recorded as a component of other income or loss. The Company reviews its available-for-sale securities at each period end to determine if they remain available-for-sale based on the Company’s current intent and ability to sell the security if it is required to do so. Declines in value judged to be other-than-temporary are included in interest expense in the Company’s statements of operations and comprehensive loss. As of December 31, 2025, the recorded value of the Company’s investments in marketable securities was deemed to be recoverable in all respects. All investments are governed by the Company’s Investment Policy approved by the Company’s Board of Directors (the Board). Foreign currency translation and functional currency conversion The Company’s functional currency is the United States dollar. M onetary assets and liabilities denominated in foreign currencies are translated into United States dollars using exchange rates in effect at the balance sheet date. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets and non-monetary liabilities are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transaction. Foreign exchange gains and losses are included in the statement of operations and comprehensive loss as foreign exchange gains or losses. Investment in Genevant Arbutus accounts for its interest in Genevant as equity securities without readily determinable fair values. Accordingly, an estimate of the fair value of the securities is based on the original cost less previously recognized equity method losses, less impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar Genevant securities. As of December 31, 2025, Arbutus owned approximately 16 % of the outstanding common equity of Genevant and the carrying value of Arbutus’ investment in Genevant was zero . See Note 5 for more information. 86 Property and equipment Property and equipment is recorded at cost less impairment losses and accumulated depreciation. The Company records depreciation using the straight-line method over the estimated useful lives of the capital assets as follows: Useful Life (Years) Laboratory equipment 5 Computer and office equipment 2 to 5 Furniture and fixtures 5 Leasehold improvements are depreciated over their estimated useful lives but in no case longer than the lease term, except where lease renewal is reasonably assured. Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If such a review should indicate that the carrying amount of long-lived assets is not recoverable, then such assets are written down to their fair values. Substantially all of the Company’s premises, property and equipment are located in the United States. See Note 7 for more information. Revenue from collaborations and licenses The Company generates revenue through certain collaboration agreements and license agreements. Such agreements may require the Company to deliver various rights and/or services, including intellectual property rights or licenses and research and development services. Under such agreements, the Company is generally eligible to receive non-refundable upfront payments, funding for research and development services, milestone payments and royalties. The Company’s collaboration agreements fall under the scope of Accounting Standards Codification (ASC) Topic 808, Collaborative Arrangements (ASC 808), when both parties are active participants in the arrangement and are exposed to significant risks and rewards. For certain arrangements under the scope of ASC 808, the Company analogizes to ASC Topic 606, Revenue from Contracts with Customers (ASC 606), for some aspects, including for the delivery of a good or service (i.e., a unit of account). ASC 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers under a five-step model: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as a performance obligation is satisfied. In contracts where the Company has more than one performance obligation to provide its customer with goods or services, each performance obligation is evaluated to determine whether it is distinct based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the contract is then allocated between the distinct performance obligations based on their respective relative stand-alone selling prices. The estimated stand-alone selling price of each deliverable reflects the Company’s best estimate of what the selling price would be if the deliverable was regularly sold on a stand-alone basis and is determined by reference to market rates for the good or service when sold to others or by using an adjusted market assessment approach if the selling price on a stand-alone basis is not available. The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred to the customer for the related goods or services. Consideration associated with at-risk substantive performance milestones, including sales-based milestones, is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. Sales-based royalties received in connection with licenses of intellectual property are subject to a 87 specific exception in the revenue standards, whereby the consideration is not included in the transaction price and recognized in revenue until the customer’s subsequent sales or usages occur. Leases The Company accounts for its lease under ASC 842, Leases , which generally requires the recognition of operating and financing lease liabilities with corresponding right-of-use assets on the balance sheet. See Note 6 for more information. Research and development costs Research and development costs include compensation and benefits for research and development employees, an allocation of overhead expenses and costs associated with materials and supplies used in clinical trials and research and development, outside contracted services including clinical and preclinical study costs, legal, regulatory compliance and fees paid to consultants or outside parties for research and development activities performed on the Company’s behalf. Such costs are charged to expense in the period in which they are incurred. Research and development costs that are paid in advance of performance or receipt are recorded as prepaid expense and are amortized over the period that the services are performed. Net loss per share Net loss per share is calculated based on the weighted average number of common shares outstanding. Diluted net loss per share does not differ from basic net loss per share for the years ended December 31, 2025 and 2024, since the effect of including potential common shares would be anti-dilutive. For the year ended December 31, 2025, potential common shares of 14.0 million pertaining to outstanding stock options and unvested restricted stock units were excluded from the calculation of net loss per share. A total of approximately 16.9 million outstanding stock options and unvested restricted stock units were excluded from the calculation for the year ended December 31, 2024. See Note 12 and Note 13 for more information about the Company’s common shares. Deferred income taxes Income taxes are accounted for using the asset and liability method of accounting. Deferred income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases and for loss carry-forwards. Deferred income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax laws or rates is included in earnings in the period that includes the enactment date. When realization of deferred income tax assets does not meet the more-likely-than-not criterion for recognition, a valuation allowance is provided. Stock-based compensation The Company measures and recognizes compensation expense for all share-based compensation arrangements based on estimated fair values. The Company uses the Black-Scholes option valuation model to estimate the fair value of stock options at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options. For those assumptions, the Company uses historical data and other information to estimate the expected price volatility and risk-free interest rate for all awards. The expected life of stock options granted are estimated to be five years for employees and six years for directors and executives, based on the Company’s historical experience. Assumptions on the dividend yield are based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. The restricted stock units granted by the Company are measured at the grant-date price of the Company’s common shares. Expense is recognized over the vesting period for all awards and commences at the grant date for time-based awards. For awards where vesting may be accelerated if certain performance conditions are achieved, the Company will accelerate recognition of any unrecognized expense if and when it becomes probable that the performance conditions will be satisfied. Forfeitures are recognized as they occur. 88 For the Company’s Employee Stock Purchase Plan, the fair value of the right to acquire stock at a discounted price under the plan is calculated using the Black-Scholes valuation model. Expense is recognized over the period the employee contributes to the plan through payroll deductions. Comprehensive loss Comprehensive loss is comprised of net loss and adjustments for the change in unrealized gains and losses on investments in available-for-sale marketable securities. The Company includes comprehensive loss and its components in the consolidated statements of operations and comprehensive loss, net of tax effects if any. Concentrations of Credit Risk Financial instruments which potentially subject the Company to credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds these investments in highly rated financial institutions, and, by policy, limits the amounts of credit exposure to any one financial institution. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements. Recent accounting pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves income tax disclosures by requiring: (1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The ASU indicates that all entities will apply the guidance prospectively with an option for retroactive application to each period presented in the financial statements. The Company has implemented ASU 2023-09 for the year ended December 31, 2025 on a prospective basis. See Note 15 for more information. The Company has reviewed all other recently issued standards and has determined that such standards will not have a material impact on the Company’s financial statements or do not otherwise apply to the Company’s operations. 3. Fair value measurements The Company measures certain financial instruments and other items at fair value. To determine the fair value, the Company uses the fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The three levels of inputs that may be used to measure fair value are as follows: • Level 1 inputs are quoted market prices for identical instruments available in active markets. The Company’s cash and cash equivalents are measured using Level 1 inputs. • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. If the asset or liability has a contractual term, the input must be observable for substantially the full term. An example includes quoted market prices for similar assets or liabilities in active markets. The Company’s investments in marketable securities are measured using Level 2 inputs. 89 • Level 3 inputs are unobservable inputs for the asset or liability and will reflect management’s assumptions about market assumptions that would be used to price the asset or liability. The Company’s liability-classified options and contingent consideration are measured using Level 3 inputs. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the immediate or short-term maturity of these financial instruments. To determine the fair value of the contingent consideration related to a stock purchase agreement with Enantigen Therapeutics, Inc.’s (Enantigen) selling shareholders (Note 10), the Company uses a probability weighted assessment that considers the likelihood of successfully commercializing a treatment for cHBV, the timing of future revenues related to commercial sales, and a probability adjusted discount rate that reflects the early stage nature of the development program, time to complete the program development, and overall biotech indices. The following table presents information about inputs used in measuring the fair value of the contingent consideration: As of December 31, 2025 As of December 31, 2024 Timing of milestone payments 2035 - 2038 2032 - 2035 Payment (in $000s) $ 102,500 $ 102,500 Discount rate 10.1 % - 10.4 % 9.9 % - 10.5 % Probability of success 25 % 25 % Fair value of contingent consideration (in $000s) $ 8,395 $ 10,225 These assumptions used in the discounted cash flow model are level 3 inputs as defined above. The Company assessed the sensitivity of the fair value measurement to changes in these unobservable inputs and determined that changes within a reasonable range would not result in a materially different assessment of fair value. The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques used to determine such fair value: Level 1 Level 2 Level 3 Total As of December 31, 2025 (in thousands) Assets Cash and cash equivalents $ 18,008 $ — $ — $ 18,008 Investments in marketable securities, current — 73,463 — 73,463 Total $ 18,008 $ 73,463 $ — $ 91,471 Liabilities Contingent consideration — — 8,395 8,395 Total $ — $ — $ 8,395 $ 8,395 90 Level 1 Level 2 Level 3 Total As of December 31, 2024 (in thousands) Assets Cash and cash equivalents $ 36,330 $ — $ — $ 36,330 Investments in marketable securities, current — 86,293 — 86,293 Total $ 36,330 $ 86,293 $ — $ 122,623 Liabilities Contingent consideration — — 10,225 10,225 Total $ — $ — $ 10,225 $ 10,225 The following table presents the changes in fair value of the Company’s contingent consideration: Liability at beginning of the period Increase in fair value of liability Liability at end of the period (in thousands) Year ended December 31, 2025 $ 10,225 $ ( 1,830 ) $ 8,395 Year ended December 31, 2024 $ 7,600 $ 2,625 $ 10,225 91 4. Investments in marketable securities Investments in marketable securities and cash equivalents consisted of the following: Amortized Cost Gross Unrealized Gain (1) Gross Unrealized Loss (1) Fair Value As of December 31, 2025 (in thousands) Cash equivalents Money market funds $ 10,218 $ — $ — $ 10,218 Total $ 10,218 $ — $ — $ 10,218 Investments in marketable short-term securities US treasury bills $ 37,411 $ 41 $ — $ 37,452 US government bonds 35,965 46 — 36,011 Total $ 73,376 $ 87 $ — $ 73,463 (1) Gross unrealized gain (loss) is pre-tax and is reported in accumulated other comprehensive loss. Amortized Cost Gross Unrealized Gain (1) Gross Unrealized Loss (1) Fair Value As of December 31, 2024 (in thousands) Cash equivalents Money market fund $ 29,533 $ — $ — $ 29,533 Total $ 29,533 $ — $ — $ 29,533 Investments in marketable short-term securities US corporate bonds $ 30,776 $ 27 $ ( 6 ) $ 30,797 US treasury bills 55,467 29 55,496 Total $ 86,243 $ 56 $ ( 6 ) $ 86,293 (1) Gross unrealized gain (loss) is pre-tax and is reported in accumulated other comprehensive loss. The contractual maturity of the $ 73.5 million and $ 86.3 million of short-term marketable securities held by the Company as of December 31, 2025 and December 31, 2024, respectively, was less than one year. As of December 31, 2025 and December 31, 2024, the Company did not hold any long-term marketable securities. At December 31, 2025, the Company had no available-for-sale investment debt securities in an unrealized loss position. At December 31, 2024, the Company had 6 available-for-sale investment debt securities in an unrealized loss position without an allowance for credit losses. Unrealized losses on the Company’s investments in debt securities have not been recognized into income as the issuers’ bonds are of high credit quality and the decline in fair value is largely due to market conditions and/or changes in interest rates. The Company does not intend to sell and it is more likely than not that the Company will not be required to sell the securities prior to the anticipated recovery of their amortized cost basis. The issuers continue to make timely interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity. Accrued interest receivable on investments in marketable securities was $ 0.3 million at both December 31, 2025 and 2024 and is included in prepaid expenses and other current assets. The Company had realized gains on investments of less than $ 0.1 million for both of the years ended December 31, 2025 and 2024 . 92 5. Investment in Genevant In April 2018, the Company entered into an agreement with Roivant Sciences Ltd. (Roivant), its largest shareholder, to launch Genevant Sciences Ltd., a company focused on nucleic acid- and gene editing-based therapeutics enabled by the Company’s LNP and ligand conjugate delivery technologies. The Company licensed rights to its LNP and ligand conjugate delivery platforms to Genevant outside of hepatitis B (HBV), except to the extent certain rights had already been licensed to other third parties (the Genevant License). The Company retained all rights to its LNP and conjugate delivery platforms for HBV. Under the Genevant License, as amended, if a third-party sublicensee of intellectual property licensed by Genevant from the Company commercializes a sublicensed product, the Company becomes entitled to receive a specified percentage of certain revenue that may be received by Genevant for such sublicense, including royalties, commercial milestones and other sales-related revenue, or, if less, tiered low single-digit royalties on net sales of the sublicensed product. The specified percentage is 20 % in the case of a mere sublicense (i.e., naked sublicense) by Genevant without additional contribution and 14 % in the case of a bona fide collaboration with Genevant. Additionally, if Genevant receives proceeds from an action for infringement by any third parties of the Company’s intellectual property licensed to Genevant, the Company would be entitled to receive, after deduction of litigation costs, 20 % of the proceeds received by Genevant or, if less, tiered low single-digit royalties on net sales of the infringing product (inclusive of the proceeds from litigation or settlement, which would be treated as net sales). The Company accounts for its interest in Genevant as equity securities without readily determinable fair values. Accordingly, an estimate of the fair value of the securities is based on the original cost less previously recognized equity method losses, less impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or a similar Genevant securities. As of December 31, 2025 and 2024, the carrying value of the Company’s investment in Genevant was zero and the Company owned approximately 16 % of the outstanding common equity of Genevant. 6. Leases In the first quarter of 2025, the Board decided to exit our corporate headquarters at 701 Veterans Circle, Warminster, Pennsylvania. The lease for this property expires on April 30, 2027 and was the Company’s sole operating lease as of December 31, 2025. The Company accounts for its lease under ASC 842, Leases . Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term. The lease does not provide an implicit rate so in determining the present value of lease payments, the Company utilized its incremental borrowing rate for the lease, which was 9.0 %. The Company recognizes lease expense on a straight-line basis over the remaining lease term. During the years ended December 31, 2025 and 2024, the Company incurred total operating lease expenses of $ 0.3 million and $ 0.7 million, respectively, which included lease expenses associated with fixed lease payments of $ 0.2 million and $ 0.5 million, respectively, and variable payments associated with common area maintenance and similar expenses of $ 0.1 million and $ 0.2 million, respectively. Weighted average remaining lease term and discount rate were as follows: As of December 31, 2025 Weighted-average remaining lease term (years) 1.3 Weighted average discount rate 9.0 % The Company did not include options to extend its lease terms as part of its ROU asset and lease liabilities. 93 Supplemental cash flow information related to the Company’s operating lease was as follows: Twelve Months Ended December 31, 2025 2024 (in thousands) Cash paid for amounts included in the measurement of lease liabilities $ 634 $ 616 Future minimum lease payments under the Company’s operating lease as of December 31, 2025 were as follows: As of December 31, 2025 (in thousands) 2026 $ 654 2027 133 2028 — 2029 — 2030 — Thereafter — Total lease payments $ 787 Less: interest ( 41 ) Present value of lease payments $ 746 7. Property and equipment During the year ended December 31, 2025 and related to its 2025 restructuring and planned exit from its corporate headquarters in Warminster, Pennsylvania (Note 16), the Company recorded impairment charges of $1.9 million and $0.9 million for leasehold improvements and laboratory equipment, respectively. In connection with the exit from the building and disposal of equipment, the Company also wrote off the fully-depreciated or fully-impaired balances associated with these assets in 2025. The Company’s property and equipment balances as of the years ended December 31, 2025 and 2024 were as follows: Cost Accumulated depreciation Net book value December 31, 2025 (in thousands) Lab equipment $ — $ — $ — Leasehold improvements — — — Computer hardware and software 245 ( 213 ) 32 $ 245 $ ( 213 ) $ 32 Cost Accumulated depreciation Net book value December 31, 2024 (in thousands) Lab equipment $ 7,238 $ ( 6,105 ) $ 1,133 Leasehold improvements 8,590 ( 6,489 ) 2,101 Computer hardware and software 477 ( 402 ) 75 $ 16,305 $ ( 12,996 ) $ 3,309 Depreciation expense for the years ended December 31, 2025 and 2024 was $ 0.4 million and $ 1.4 million, respectively. 94 8. Accounts payable and accrued liabilities Accounts payable and accrued liabilities were comprised of the following: December 31, 2025 December 31, 2024 (in thousands) Trade accounts payable $ 1,173 $ 2,316 Payroll accruals 2,159 3,393 Research and development accruals 412 691 Professional fee accruals 1,075 1,164 Restructuring liabilities 640 — Total $ 5,459 $ 7,564 In March 2025, the Company implemented changes to focus its efforts on advancing the clinical development of imdusiran and AB-101 by ceasing all discovery efforts, implementing workforce reductions, and halting preparations for a potential IM-PROVE III clinical trial. In addition, in 2025, the decision was made to exit the Company’s corporate headquarters in Warminster, Pennsylvania and to discontinue in-house scientific research. The Company recognized $ 12.9 million of restructuring charges in 2025, of which there was $ 0.6 million in severance and medical benefit costs and lease expenses accrued as of December 31, 2025. 9. Sale of future royalties On July 2, 2019, the Company entered into a Purchase and Sale Agreement (the Agreement) with the Ontario Municipal Employees Retirement System (OMERS), pursuant to which the Company sold to OMERS part of its royalty interest on future global net sales of ONPATTRO (Patisiran) (ONPATTRO), an RNA interference therapeutic currently being sold by Alnylam Pharmaceuticals, Inc. (Alnylam). ONPATTRO utilizes Arbutus’s LNP technology, which was licensed to Alnylam pursuant to the Cross-License Agreement, dated November 12, 2012, by and between the Company and Alnylam (the LNP License Agreement). Under the terms of the LNP License Agreement, the Company is entitled to tiered royalty payments on global net sales of ONPATTRO ranging from 1.00 % to 2.33 % after offsets, with the highest tier applicable to annual net sales above $ 500 million. This royalty interest was sold to OMERS, effective as of January 1, 2019, for $ 20 million in gross proceeds before advisory fees. OMERS will retain this entitlement until it has received $ 30 million in royalties, at which point 100 % of such royalty interest on future global net sales of ONPATTRO will revert to the Company. OMERS has assumed the risk of collecting up to $ 30 million of future royalty payments from Alnylam and Arbutus is not obligated to reimburse OMERS if they fail to collect any such future royalties. The $ 30 million in royalties to be paid to OMERS is accounted for as a liability, with the difference between the liability and the gross proceeds received accounted for as a discount. The discount, as well as $ 1.5 million of transaction costs, will be amortized as interest expense based on the projected balance of the liability as of the beginning of each period. As of December 31, 2025, the Company estimated an effective annual interest rate of approximately 2.1 %. Over the course of the Agreement, the actual interest rate will be affected by the amount and timing of royalty revenue recognized and changes in the timing of forecasted royalty revenue. On a quarterly basis, the Company will reassess the expected timing of the royalty revenue, recalculate the amortization and effective interest rate and adjust the accounting prospectively as needed. The Company recognizes non-cash royalty revenue related to the sales of ONPATTRO during the term of the Agreement. As royalties are remitted to OMERS from Alnylam, the balance of the recognized liability is effectively repaid over the life of the Agreement. From the inception of the royalty sale through December 31, 2025, an aggregate of $ 26.5 million of royalties have been earned by OMERS. There are a number of factors that could materially affect the amount and timing of royalty payments from Alnylam, none of which are within the Company’s control. 95 During the year ended December 31, 2025, the Company recognized non-cash royalty revenue of $ 1.5 million and $ 0.1 million of related non-cash interest expense. During the year ended December 31, 2024, the Company recognized non-cash royalty revenue of $ 2.3 million and related non-cash interest expense of $ 0.1 million. The table below shows the activity related to the net liability for the years ended December 31, 2025 and December 31, 2024: Twelve Months Ended December 31, 2025 2024 (in thousands) Net liability related to sale of future royalties - beginning balance $ 4,829 $ 6,953 Non-cash royalty revenue ( 1,482 ) ( 2,251 ) Non-cash interest expense 95 127 Net liability related to sale of future royalties - ending balance $ 3,442 $ 4,829 In addition to the royalty from the LNP License Agreement, the Company is also receiving a second royalty interest ranging from 0.75 % to 1.125 % on global net sales of ONPATTRO, with 0.75 % applying to sales greater than $ 500 million, originating from a settlement agreement and subsequent license agreement with Acuitas Therapeutics, Inc. (Acuitas). The royalty from Acuitas has been retained by the Company and was not part of the royalty sale to OMERS. In addition to the two royalty entitlements, the Company is entitled to receive payments upon the achievement of contractual milestones related to Alnylam’s use of the Company’s proprietary LNP technology for other products. 10. Contingencies and commitments Stock Purchase Agreement with Enantigen In October 2014, Arbutus Inc., the Company’s wholly-owned subsidiary, acquired all of the outstanding shares of Enantigen pursuant to a stock purchase agreement. The amount paid to Enantigen’s selling shareholders could be up to an additional $ 102.5 million in sales performance milestones in connection with the sale of the first commercialized product by Arbutus for the treatment of HBV, regardless of whether such product is based upon assets acquired under this agreement, and a low single-digit royalty on net sales of such first commercialized HBV product, up to a maximum royalty payment of $ 1.0 million that, if paid, would be offset against Arbutus’ milestone payment obligations. Certain other development milestones related to the acquisition were tied to programs which are no longer under development by Arbutus, and therefore the contingency related to those development milestones is zero . The contingent consideration is a financial liability and is measured at its fair value at each reporting period, with any changes in fair value from the previous reporting period recorded in the statement of operations and comprehensive loss (Note 3). The fair value of the contingent consideration was $ 8.4 million as of December 31, 2025. 96 11. Collaborations and royalty entitlements Collaborations Qilu Pharmaceuticals Co, Ltd. In December 2021, the Company entered into a technology transfer and license agreement (the Qilu License Agreement) with Qilu Pharmaceutical Co., Ltd. (Qilu), pursuant to which the Company granted Qilu a sublicensable, royalty-bearing license, under certain intellectual property owned by the Company, which was non-exclusive as to development and manufacturing and exclusive with respect to commercialization of imdusiran, including pharmaceutical products that include imdusiran, for the treatment or prevention of hepatitis B in China, Hong Kong, Macau and Taiwan (Greater China and Taiwan). In partial consideration for the rights granted by the Company, Qilu paid the Company a one-time upfront cash payment of $ 40.0 million on January 5, 2022 and agreed to pay the Company up to $ 245 million, net of withholding taxes, upon the achievement of certain technology transfer, development, regulatory and commercialization milestones (the Milestone Payments). Qilu paid $ 4.4 million of withholding taxes to the Chinese taxing authority on the Company’s behalf, related to the upfront cash payment. In addition, Qilu agreed to pay the Company double-digit royalties into the low twenties percent based upon annual net sales of imdusiran in Greater China and Taiwan. The royalties were payable on a product-by-product and region-by-region basis, subject to certain limitations. Qilu was responsible for all costs related to developing, obtaining regulatory approval for, and commercializing imdusiran for the treatment or prevention of hepatitis B in Greater China and Taiwan. Qilu was required to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize at least one imdusiran product candidate in Greater China and Taiwan. A joint development committee was established between the Company and Qilu to coordinate and review the development, manufacturing and commercialization plans. Both parties also entered into a supply agreement and related quality agreement pursuant to which the Company would manufacture and supply Qilu with all quantities of imdusiran necessary for Qilu to develop and commercialize in Greater China and Taiwan until the Company completed its manufacturing technology transfer to Qilu and Qilu received all approvals required for it or its designated contract manufacturing organization to manufacture imdusiran in Greater China and Taiwan. Concurrent with the execution of the license agreement, the Company entered into a Share Purchase Agreement (the Share Purchase Agreement) with Anchor Life Limited, a company established pursuant to the applicable laws and regulations of Hong Kong and an affiliate of Qilu (the Investor), pursuant to which the Investor purchased 3,579,952 of the Company’s common shares at a purchase price of USD $ 4.19 per share, which was a 15 % premium on the thirty-day average closing price of the Company’s common shares as of the close of trading on December 10, 2021 (the Share Transaction). The Company received $ 15.0 million of gross proceeds from the Share Transaction on January 6, 2022. The common shares sold to the Investor in the Share Transaction represented approximately 2.5 % of the Company’s common shares outstanding immediately prior to the execution of the Share Purchase Agreement. In June 2025, the Company and Qilu mutually agreed to conclude the strategic partnership and terminated the Qilu License Agreement and related agreements, and the Company now once again holds global rights for imdusiran. As no obligations remain under the Qilu License Agreement, the Company recognized all previously deferred revenue in the second quarter of 2025. For the period of time the Qilu License Agreement was effective, it fell under the scope of ASC 808 as both parties were active participants in the arrangement and were exposed to significant risks and rewards. While this arrangement was in the scope of ASC 808, the Company analogized to ASC 606 for some aspects of this arrangement, including for the delivery of a good or service (i.e., a unit of account). In accordance with the guidance, the Company identified the following commitments under the arrangement: (i) rights to develop, use, sell, have sold, offer for sale and import any product comprised of Licensed Product (as defined in the Qilu License Agreement) (the Qilu License) and (ii) drug supply obligations and manufacturing technology transfer (the Manufacturing Obligations). The Company determined that these two commitments were not distinct performance obligations for purposes of recognizing revenue as the manufacturing process is highly specialized and Qilu would not be able to benefit from the Qilu License Agreement without the Company’s involvement in the manufacturing activities until the 97 transfer of the manufacturing know-how was complete. As such, the Company combined these commitments into one performance obligation to which the transaction price was allocated and recognized this transaction price associated with the bundled performance obligation over time using an inputs method based on labor hours expended by the Company on its Manufacturing Obligations. The Company determined the initial transaction price of the combined performance obligation to be $ 50.4 million, which includes the $ 40.0 million upfront fee, $ 4.4 million of withholding taxes paid by Qilu on behalf of the Company and the premium paid for the Share Transaction of $ 4.1 million. The Company determined the Milestone Payments to be variable consideration subject to constraint at inception. At the end of each subsequent reporting period, the Company will reevaluate the probability of achievement of the future development, regulatory, and sales milestones subject to constraint and, if necessary, will adjust its estimate of the overall transaction price. Any such adjustments will be recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. Due to the conclusion of the strategic partnership with Qilu, the Company recognized the remainder of the $ 9.6 million of deferred revenue during the twelve months ended December 31, 2025. The Company also recognized $ 0.8 million of revenue based on labor hours expended by the Company on its Manufacturing Obligations during the twelve months ended December 31, 2025. The Company recognized $ 1.4 million of revenue during the twelve months ended December 31, 2024, related to labor hours expended. The Company incurred $ 0.6 million of incremental costs in obtaining the Qilu License Agreement, which was capitalized in other current assets and other assets and amortized as a component of general and administrative expense commensurate with the recognition of the combined performance obligation. The Company recognized the remainder of the amortization expense at the conclusion of the strategic partnership, recognizing a total of $ 0.2 million of amortization expense during the twelve months ended December 31, 2025. The Company recognized amortization expense of less than $ 0.1 million for the twelve months ended December 31, 2024. Until the conclusion of the strategic partnership with Qilu, the Company reevaluated the transaction price and the total estimated labor hours expected to be incurred to satisfy the performance obligations and adjusted the deferred revenue at the end of each reporting period, which resulted in changes to the amount of collaboration revenue recognized and deferred revenue. Barinthus Biotherapeutics plc In July 2021, the Company entered into a clinical collaboration agreement with Barinthus Biotherapeutics plc (Barinthus), formerly Vaccitech plc, pursuant to which the Company completed IM-PROVE II, a Phase 2a proof-of-concept clinical trial evaluating the safety, antiviral activity and immunogenicity of a combination treatment with Barinthus’ VTP-300, an HBV immunotherapeutic, administered after imdusiran in patients with cHBV infection. This clinical trial was amended to include a treatment arm with the addition of an approved PD-1 monoclonal antibody inhibitor, nivolumab (Opdivo). The Company was responsible for managing this Phase 2a proof-of-concept clinical trial, subject to oversight by a joint development committee comprised of representatives from the Company and Barinthus. The Company and Barinthus retained full rights to their respective product candidates and split all costs associated with the clinical trial. The Company incurred $ 1.4 million and $ 2.1 million of costs related to the collaboration, net of Barinthus’s 50 % share, during the years ended December 31, 2025 and 2024, respectively, and reflected those costs in research and development in the statements of operations and comprehensive loss. 98 Royalty Entitlements Alnylam Pharmaceuticals, Inc. and Acuitas Therapeutics, Inc. In 2012, the Company entered into the LNP License Agreement with Alnylam that entitles Alnylam to develop and commercialize products with the Company’s LNP technology in exchange for milestone and royalty payments. The Company has two royalty entitlements to Alnylam’s global net sales of ONPATTRO. In addition, the Company is entitled to receive payments upon the achievement of contractual milestones related to Alnylam’s use of the Company’s proprietary LNP technology for other products. Alnylam launched ONPATTRO, the first approved application of the Company’s LNP technology, in 2018. Under the terms of this license agreement, the Company is entitled to tiered royalty payments on global net sales of ONPATTRO ranging from 1.00 % - 2.33 % after offsets, with the highest tier applicable to annual net sales above $ 500 million. This royalty interest was sold to OMERS, effective as of January 1, 2019, for $ 20 million in gross proceeds before advisory fees. OMERS will retain this entitlement until it has received $ 30 million in royalties, at which point 100 % of this royalty entitlement on future global net sales of ONPATTRO will revert back to the Company. OMERS has assumed the risk of collecting up to $ 30.0 million of future royalty payments from Alnylam and the Company is not obligated to reimburse OMERS if they fail to collect any such future royalties. If this royalty entitlement reverts to the Company, it has the potential to provide an active royalty stream or to be otherwise monetized again in full or in part. From the inception of the royalty sale through December 31, 2025, an aggregate of $ 26.5 million of royalties have been earned by OMERS. See Note 9 for further details. The Company is also receiving a second royalty interest ranging from 0.75 % to 1.125 % on global net sales of ONPATTRO, with 0.75 % applying to sales greater than $ 500 million, originating from a settlement agreement and subsequent license agreement with Acuitas Therapeutics, Inc. (Acuitas). This royalty entitlement from Acuitas has been retained by the Company and was not part of the royalty entitlement sale to OMERS. Gritstone Oncology, Inc. On October 16, 2017, the Company entered into a license agreement with Gritstone that granted them worldwide access to its portfolio of proprietary and clinically validated LNP technology and associated intellectual property to deliver Gritstone’s self-replicating, non-mRNA, RNA-based neoantigen immunotherapy products. Gritstone paid the Company an upfront payment, and will make payments for achievement of development, regulatory, and commercial milestones and royalties. As a result of the Company’s agreement with Genevant (see Note 5 for details), from April 11, 2018 going forward, Genevant is entitled to 50 % of the revenues earned by the Company from Gritstone. Gritstone filed for Chapter 11 bankruptcy protection in October 2024, which resulted in Seattle Project Corp. purchasing most of the assets of Gritstone, including the rights under this license agreement. There was no change to the Company’s rights under this license agreement as a result of the bankruptcy and sale of assets. The Company is the agent in this arrangement and records revenue on a net basis. Milestone payments that are not within the control of the Company or the licensee, such as those that require regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company did not receive any payments from Gritstone or Seattle Project Corp. during the years ended December 31, 2025 or 2024. 99 Revenues from the Company’s royalty entitlements are summarized in the following table: Year ended December 31, 2025 2024 (in thousands) Revenue from collaborations and licenses Royalties from sales of ONPATTRO $ 1,667 $ 2,562 Qilu Pharmaceutical Co., Ltd. 10,434 1,357 Other milestone and royalty payments 500 — Non-cash royalty revenue Royalties from sales of ONPATTRO 1,482 2,252 Total revenue $ 14,083 $ 6,171 12. Shareholders’ equity Authorized share capital The Company’s authorized share capital consists of an unlimited number of common shares and preferred shares, without par value, and 1,164,000 Series A participating convertible preferred shares, without par value. Open Market Sale Agreement Effective March 26, 2025, the Company terminated its Open Market Sale Agreement with Jefferies LLC (Jefferies) dated December 20, 2018, as amended by Amendment No. 1, dated December 20, 2019, Amendment No. 2, dated August 7, 2020 and Amendment No. 3, dated March 4, 2021 (as amended, the Sale Agreement), under which the Company could issue and sell common shares, from time to time. Previously, on November 6, 2024, the Company filed: i) a shelf registration statement on Form S-3 with the SEC (File No. 333-283038) with an accompanying base prospectus, declared effective by the SEC on December 5, 2024 (the December 2024 Registration Statement), for the offer and sale of up to $ 300.0 million of the Company’s securities; and ii) a prospectus supplement with the SEC in connection with the offering of up to $ 100.0 million of the Company’s common shares pursuant to the Sale Agreement under the December 2024 Registration Statement (the December 2024 Prospectus Supplement). The Company did not utilize any of the December 2024 Prospectus Supplement pursuant to the Sale Agreement prior to the termination of the Sale Agreement. During the year ended December 31, 2024, the Company issued 16,499,999 common shares under the Sale Agreement, resulting in net proceeds of approximately $ 44.1 million. During the year ended 2025, the Company issued no common shares under the Sale Agreement. 100 13. Stock-based compensation Awards outstanding and available for issuance During the year ended December 31, 2025, the Company had stock options outstanding under the following plans (collectively, the Arbutus Plans): the 2016 Omnibus Share and Incentive Plan (the 2016 Plan), the 2011 Omnibus Share Compensation Plan (the 2011 Plan); and the 2023 inducement grant. During the year ended December 31, 2025, the Company had restricted stock units outstanding under the 2016 Plan. As of December 31, 2025, the aggregate number of shares authorized for awards under the Arbutus Plans was 40,493,870 . As of December 31, 2025, the Company had 12,430,999 options and 1,529,959 restricted stock units outstanding and 16,881,800 awards available for issuance under the Arbutus Plans. The Company issues new common shares of stock to settle options exercised. The 2011 Plan expired in June 2021. Under the 2016 Plan, the Board may grant options, and other types of awards, to employees, directors and consultants of the Company. The exercise price of the options is determined by the Board but will be at least equal to the closing market price of the common shares on the date of grant and the term may not exceed 10 years. Options granted generally vest over four years for employees and for directors’ initial grants, and immediately for directors’ annual grants. In July 2023, the Company provided an inducement grant of 500,000 options in connection with the hiring of its then-General Counsel and Chief Compliance Officer, which is governed by substantially the same terms as the 2016 Plan. Hereafter, information on options governed by the Arbutus Plans is presented on a consolidated basis as the terms of the plans are similar. 101 Stock options under the Arbutus Plans The following table summarizes activity related to the Company’s equity-classified stock options for the year ended December 31, 2025: Number Weighted-Average Exercise Price Balance as of December 31, 2024 15,451,687 $ 3.37 Options granted 5,263,722 $ 3.33 Options exercised ( 1,926,656 ) $ 2.87 Options forfeited, canceled or expired ( 6,357,754 ) $ 3.44 Balance as of December 31, 2025 12,430,999 $ 3.39 The intrinsic value of options exercised under the Arbutus Plans during 2025 and 2024 was $ 1.8 million and $ 1.4 million, respectively. The weighted average grant-date fair value of stock options granted during the year ended December 31, 2025 and 2024 was $ 2.34 and $ 1.87 , respectively. The following table summarizes additional information related to the Company’s equity-classified stock options as of December 31, 2025: As of December 31, 2025 Options outstanding and expected to vest Number of stock options outstanding 12,430,999 Weighted-average exercise price $ 3.39 Intrinsic value (in $000s) $ 18,345 Weighted-average term remaining 6.2 years Vested stock options Number of vested stock options 9,146,505 Weighted-average exercise price $ 3.44 Intrinsic value (in $000s) $ 13,243 Weighted-average term remaining 5.2 years The assumptions used in the Black-Scholes option-pricing for grants made during the years ended December 31, 2025 and 2024 were as follows: December 31, 2025 December 31, 2024 Expected average option term 5.7 years 5.6 years Expected volatility (historical) 82.2 % 92.0 % Expected dividends — % — % Risk-free interest rate 4.02 % 3.84 % The Company considers all available information when estimating the fair value of its stock option grants. 102 Restricted Stock Units under the 2016 Plan The following table summarizes activity related to the Company’s restricted stock units, for the year ended December 31, 2025: Number Weighted-Average Grant-Date Fair Value Balance as of December 31, 2024 1,493,136 $ 2.57 Restricted stock units granted 1,968,509 $ 3.58 Restricted stock units vested ( 580,584 ) $ 2.61 Restricted stock units forfeited, canceled or expired ( 1,351,102 ) $ 2.90 Balance as of December 31, 2025 1,529,959 $ 3.55 The restricted stock units vest over three years in equal annual installments beginning one year from the grant date. The weighted average grant-date fair value of restricted stock units granted during the years ended December 31, 2025 and 2024 was $ 3.58 and $ 2.40 , respectively. Employee Stock Purchase Plan In May 2020, the Company’s shareholders approved the 2020 Employee Stock Purchase Plan (the ESPP) which became effective on May 28, 2020. A total of 1,500,000 common shares were reserved for issuance under the ESPP. Company employees contribute funds via payroll deductions, which are used to buy Company common shares at a discount of up to 15 % based on the lower of the price at the start of the offering period and at the end of the relevant purchase period within such offering period. The initial offering period under the ESPP was September 1, 2020 through August 31, 2021 with purchase dates set on February 26, 2021 and August 31, 2021, with subsequent offering periods beginning on September 1 and ending on August 31. The Company issued 60,493 and 227,333 shares under its ESPP for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, there were 554,175 shares remaining for issuance under the ESPP. For both of the years ended December 31, 2025 and 2024, the Company recognized less than $ 0.1 million of stock-based compensation expense related to the ESPP. The fair value of the right to acquire stock at a discounted price under the ESPP is calculated using the Black-Scholes valuation model and recorded as stock-based compensation. Expense is recognized over the period the employee contributes to the plan through payroll deductions. Stock-based compensation expense Total stock-based compensation expense was comprised of the vesting of options and restricted stock units awarded to employees under the Arbutus Plans calculated in accordance with the fair value method as described above and amortization of compensation cost related to the ESPP. The Company recognizes forfeitures as they occur, and the effects of forfeitures are reflected in stock-based compensation expense. Stock-based compensation has been recorded in the consolidated statement of operations and comprehensive loss as follows: Year Ended December 31, 2025 2024 (in thousands) Research and development $ 1,901 $ 3,647 General and administrative 2,550 5,339 Restructuring $ 2,502 $ — Total $ 6,953 $ 8,986 103 At December 31, 2025, there remained $ 6.3 million and $ 4.1 million of unrecognized compensation expense related to unvested equity employee stock options and restricted stock units, respectively, to be recognized as expense over weighted-average periods of approximately 2.9 years and 1.7 years, respectively. For each of the years ended December 31, 2025 and 2024, the Company had zero performance-based stock compensation expense. Modification associated with restructuring During the year ended December 31, 2025, the Company recognized $ 2.5 million of expense related to the modification of stock options for employees who were terminated as a result of the restructuring (Note 16). The modifications involved extension of the post-termination exercise period from 90 days to one year. The expense was recorded as part of restructuring costs in the consolidated statements of operations and comprehensive income. 14. Segment Reporting The Company has one reportable segment. The Company’s chief operating decision maker is the Chief Executive Officer and President. The accounting policies of the single segment are the same as those described in the summary of significant accounting policies. The chief operating decision maker assesses performance for the single segment and decides how to allocate resources based on net loss that also is reported on the statement of operations and comprehensive loss as consolidated net loss. The chief operating decision maker uses net loss to monitor budget versus actual results and to evaluate the overall cash burn of the business. Year ended December 31, 2025 2024 (in thousands) Revenue $ 14,083 $ 6,171 Less: Research and development employee expense, lab supplies and overhead 13,961 26,613 Imdusiran IM-PROVE I, II & III clinical trials expense 4,824 15,735 AB-101-001 Phase 1a/1b clinical trial expense 6,220 10,196 Other early research and development programs expense 236 1,493 General and administrative expense 15,893 22,108 Restructuring expense 12,939 3,720 Other segment expense (1) ( 1,747 ) 2,811 Add: Interest income 4,068 6,585 Gain on sale of property and equipment 674 — Segment net loss $ ( 33,501 ) $ ( 69,920 ) Adjustments and reconciling items — — Consolidated net loss $ ( 33,501 ) $ ( 69,920 ) (1) Other segment expense includes the change in the fair value of contingent consideration, non-cash interest expenses and foreign currency exchange gains and losses. 104 15. Income taxes The Company is subject to taxation and files income tax returns in Canadian federal and provincial, and United States federal and several state jurisdictions. As described in Note 2, the Company implemented ASU 2023-09 for the year ended December 31, 2025 on a prospective basis. Income tax expense varies from the amounts that would be computed by applying the combined Canadian federal tax rate of 25% to the loss before income taxes as shown in the following tables. The change in the rate from 27% in 2024 to 25% in 2025 is due to the adoption of the new standard, which requires the rate reconciliation to begin with the federal rate in the country of domicile. In 2024, a combined rate of 27% was used (federal of 15% and provincial of 12%). The domestic and foreign components of loss before income taxes were as follows: Year ended December 31, 2025 2024 (in thousands) Domestic $ 11,952 $ ( 1,671 ) Foreign $ ( 45,453 ) $ ( 68,249 ) Loss before income taxes $ ( 33,501 ) $ ( 69,920 ) There is no provision for federal, state or foreign income taxes. A reconciliation of the Canadian federal statutory income tax rate to the effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09 is as follows: Year Ended December 31, 2025 (in thousands, except percentages) Computed taxes (benefits) at Canadian federal rates $ ( 8,374 ) 25 % Domestic tax effects: Change in valuation allowance ( 2,540 ) 8 % Other ( 449 ) 1 % Domestic provincial tax effects: Tax abatement ( 1,195 ) 4 % Provincial tax 1,435 ( 4 ) % Change in valuation allowance ( 203 ) 1 % Other ( 36 ) — % Foreign tax effects: United States Foreign tax rate differential 1,818 ( 5 ) % Non-taxable and non-deductible items: stock options 879 ( 3 ) % Tax credits: research and development credits ( 403 ) 1 % Changes in valuation allowance 8,706 ( 26 ) % Other adjustments: Stock option adjustment 304 ( 1 ) % Other 58 — % Effective tax rate $ — — % 105 The reconciliation of the combined Canadian federal and provincial income tax rate to the effective income tax rate for the year ended December 31, 2024 is as follows: Year Ended December 31, 2024 (in thousands) Computed taxes (benefits) at Canadian federal and provincial tax rates $ ( 18,888 ) Permanent and other differences 515 Federal R&D credit ( 1,122 ) Change in valuation allowance 11,748 Difference due to income taxed at foreign rates 4,101 Stock-based compensation 1,327 Other 2,319 Income tax expense $ — The Company had investment tax credits available to reduce Canadian federal income taxes of $ 7.1 million as of both December 31, 2025 and 2024, which expire between 2031 and 2037, and provincial income taxes of $ 2.0 million as of both December 31, 2025 and 2024, which expire between 2024 and 2027. The investment tax credits are accounted for under a flow-through method. In addition, the Company had research and development credits of $ 8.7 million as of December 31, 2025 and $ 8.3 million as of December 31, 2024, which expire between 2031 and 2038 and which can be used to reduce future taxable income in the United States. The Company had scientific research and experimental development expenditures of $ 61.8 million available for indefinite carry-forward as of both December 31, 2025 and 2024. The Company also had net operating losses of $ 152.7 million and $ 150.8 million as of December 31, 2025 and 2024, respectively, which are due to expire between 2035 and 2038 and which can be used to offset future taxable income in Canada. As of December 31, 2025 and 2024, the Company had $ 11.7 million of net operating losses due to expire in 2035 which can be used to offset future taxable income in the United States. United States net operating loss carryforwards arising in 2019 and future periods have an indefinite carryforward period. As of December 31, 2025 and 2024, the Company had $ 329.9 million and $ 260.0 million of net operating losses subject to an indefinite carryforward period which can be used to offset future taxable income in the United States. As a result of ownership changes occurring on October 1, 2014 and March 4, 2015, the Company’s ability to use these losses may be limited under Internal Revenue Code Section 382. Losses incurred to date may be further limited if a subsequent change in control occurs. The Company generated $ 12.0 million of pre-tax domestic income and $ 45.5 million in pre-tax foreign losses, respectively, for the year ended December 31, 2025. The Company generated $ 1.7 million of pre-tax domestic losses and $ 68.2 million in pre-tax foreign losses, respectively, for the year ended December 31, 2024. The Company used accumulated domestic net operating losses to offset the taxable income in both years. As required by the 2017 Tax Cuts and Jobs Act and effective in 2022, the deferred tax asset as of December 31, 2025 and 2024 included $ 27.2 million and $ 33.7 million, respectively, related to the mandatory capitalization and amortization of research and development expenses. 106 Significant components of the Company’s deferred tax assets and liabilities are shown below: As of December 31, 2025 2024 (in thousands) Deferred tax assets (liabilities): Operating loss carryforwards $ 111,292 $ 96,075 Canadian research and development deductions 16,673 16,700 Book amortization in excess of tax 308 ( 232 ) Revenue recognized for tax purposes in excess of revenue recognized for accounting purposes 929 1,296 Tax value in excess of accounting value in lease inducements 157 51 Deferred revenue — 2,817 Canadian Federal investment tax credits 5,147 5,147 Canadian Provincial investment tax credits 1,953 1,953 Equity method investment 3,375 3,375 U.S. Federal research and development credits 8,677 8,310 Deductible stock options 3,559 4,037 U.S. research and experimental expenditures capitalization 27,188 33,707 Accrued interest payable 1,869 1,796 Amortization 191 256 Other 72 138 Total deferred tax assets $ 181,390 $ 175,426 Valuation allowance ( 181,390 ) ( 175,426 ) Net deferred tax assets (liabilities) $ — $ — 16. Restructuring In both 2024 and 2025, the Company implemented changes to focus its efforts on advancing the clinical development of imdusiran and AB-101 by ceasing all discovery efforts, implementing workforce reductions, and halting preparations for a potential IM-PROVE III clinical trial. In 2025, the decision was made to exit the Company’s corporate headquarters in Warminster, Pennsylvania and to discontinue in-house scientific research. The restructuring has resulted in a total workforce after reductions of 19 employees. Significant components of the Company’s restructuring charges are shown below: Year ended December 31, 2025 2024 (in thousands) Severance and continuing benefits $ 6,331 $ 2,857 Non-cash stock compensation modification expense 2,483 — Non-cash impairment of leasehold improvements and laboratory equipment 2,811 167 Non-cash impairment of lease right-of-use asset 948 — Accrual of lease-related operating expenses 364 — Contract close-out costs — 696 Total restructuring charges $ 12,939 $ 3,720 107 17. Related Party Transaction On August 5, 2025, the Company entered into an agreement with Keith Manchester, M.D. for consulting services regarding the Company’s development strategy and its hepatitis B programs. Dr. Manchester served as a member of the Board until February 24, 2025 and is considered a related person due to his service on the Board during the fiscal year ended December 31, 2025. In connection with this agreement, the Company granted an option to purchase 400,000 common shares to Dr. Manchester, with 5/48ths vesting immediately and the remainder vesting monthly. Vesting of all unvested shares may be accelerated if certain performance conditions are achieved, at the discretion of the Board. The grant date fair value of the award was calculated using the Black-Scholes option valuation model, and expense will be recognized over the expected service period. The Company will accelerate recognition of any unrecognized expense if and when it becomes probable that the performance conditions will be satisfied. 18. Subsequent Events On March 3, 2026, subsequent to the Company’s December 31, 2025 balance sheet date, the Company and Genevant entered into the Moderna Settlement Agreement to resolve the Moderna LNP Litigation. As part of the Moderna Settlement Agreement, the Company and Genevant will receive an aggregate $ 950 million Noncontingent Settlement Payment in July 2026. This portion of the settlement is noncreditable and nonrefundable. In addition, the Company and Genevant are entitled to receive an additional Contingent Settlement Payment of up to an aggregate $ 1.3 billion upon the occurrence of certain events related to the Moderna §1498 Appeal, but which may be subject to repayment. Under the Genevant License, the Company is entitled to receive, after reimbursement of both the Company’s and Genevant’s litigation costs, 20 % of the Noncontingent Settlement Payment. As of December 31, 2025, the Company owns approximately 16 % of the outstanding common equity of Genevant. As the settlement was executed after December 31, 2025, no amounts related to the settlement have been reflected in the accompanying consolidated financial statements. 108 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.