Annexon, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and related notes thereto for the year ended December 31, 2025, included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission, or the SEC, on March 30, 2026. In addition to historical financial information, this discussion and other parts of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, based upon current expectations about us and our industry that involve substantial risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “position,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ from those anticipated. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements . Overview We are a biopharmaceutical company advancing the next generation platform of targeted immunotherapies aimed at complement-mediated neuroinflammatory diseases that impact nearly 10 million people worldwide. Building on more than a decade of expertise stopping acute and chronic neuroinflammation at its source, we have demonstrated robust target engagement in the body, brain and eye, and clinical proof of concept in multiple diseases. Our strategic priorities include advancing two late-stage registrational programs, tanruprubart toward our first approval in Guillain-Barré Syndrome, or GBS, and vonaprument toward pivotal data in dry age-related macular degeneration, or AMD, with geographic atrophy, or GA, as well as developing ANX1502, a novel oral small molecule for autoimmune conditions. Tanruprubart is an investigational targeted immunotherapy delivered in a single infusion to rapidly halt aggressive neuroinflammation and damage in GBS, an acute, rare, neuromuscular emergency that annually affects ~150,000 people worldwide. There are currently no therapies approved by the FDA for GBS and no substantial evidence of effectiveness from the current standard of care. In the placebo-controlled Phase 3 trial, approximately 90% of GBS patients treated with tanruprubart improved by week 1 and more than twice as many treated patients achieved a normal state of health at week 26. Tanruprubart has consistently demonstrated rapid and sustained functional improvements across a comprehensive data package. We continue to engage with applicable EU and U.S. regulators to advance tanruprubart towards registration worldwide. Our Marketing Authorization Application, or MAA, filed with the European Medicines Agency, or EMA, in January 2026 for tanruprubart for the treatment of GBS is under review, and we continue to engage with EU regulators through the MAA review process. Tanruprubart has been granted orphan designation from the EMA. Tanruprubart has also been granted Fast Track and orphan drug designation for the treatment of GBS from the FDA. The currently ongoing open-label U.S./Europe FORWARD study is designed to broaden Western experience with tanruprubart, and we anticipate initial pharmacokinetics, or PK, pharmacodynamics, or PD, biomarker and functional data in 2026 to supplement our comprehensive data package for tanruprubart in GBS. Following such data, we plan to engage with the FDA with the goal of reaching alignment on our current and supplemental data package and information supporting the generalizability of tanruprubart in Western patients for submission of a biologics license application, or BLA, in 2026. Vonaprument is an investigational neuroprotective inhibitor of C1q and the classical complement cascade delivered intravitreally for GA, a leading cause of blindness affecting more than eight million people worldwide. There are no approved therapies for GA targeting the preservation of vision. Vonaprument is the only investigational therapy in GA to show significant vision preservation on assessments of best corrected visual acuity, or BCVA, and low luminance visual acuity, demonstrating significant protection from vision loss in both normal and low light conditions, as well as significant preservation of central retinal photoreceptors necessary for visual acuity. In the Phase 2 ARCHER trial, vonaprument also reduced risk of 15-letter vision loss by more than 70%. In July 2025, we completed enrollment of 659 patients in ARCHER II, a global, sham-controlled, double-masked Phase 3 trial. The primary endpoint of ARCHER II is the gold standard for visual acuity, measuring proportion of patients with confirmed BCVA 17 ≥15-letter loss at any two consecutive visits through month 15. A secondary endpoint is EZ loss, which is a key anatomic measure of photoreceptor health and function. We plan to report topline data in the fourth quarter of 2026. We have established a global registration path with the FDA and EMA, which supports the potential of vonaprument to be the first treatment approved in both Europe and the U.S. for the protection of vision in patients with GA. The single-study program will be analyzed as two sub-studies in the U.S. in accordance with the FDA’s two-trial recommendation. Vonaprument is the first and only therapeutic candidate for the treatment of GA to receive Priority Medicine, or PRIME, designation by the EMA, which provides early and proactive support to developers of promising medicines that may offer a major therapeutic advantage over existing treatments or benefit to patients without treatment options. Vonaprument was also selected by the EMA for the Product Development Coordinator Pilot launched in July 2025 to help PRIME designation holders efficiently navigate regulatory interactions including expedited scientific advice, MAA submission readiness activities, and ad-hoc queries throughout the development program. ANX1502 is a novel oral small molecule inhibiting the activated form of C1s, an enzyme carried by C1q to initiate the classical cascade, which we believe is first-in-kind and has the potential to offer the advantages of selective upstream classical complement inhibition with the convenience and flexibility of oral administration. In a Phase 1 single-ascending dose and multiple-ascending dose clinical trial in healthy volunteers designed to evaluate the safety, tolerability, PK and PD, ANX1502 was generally well tolerated across cohorts with no serious adverse events, achieved target levels of active drug and showed supportive impact on a PD biomarker of complement activity. We are evaluating an enteric-coated tablet formulation of ANX1502 in an ongoing POC study in patients with cold agglutinin disease, or CAD. We have observed drug levels at and exceeding the pre-defined target in fasted CAD patients. Dosing is ongoing to enhance our understanding of ANX1502’s profile and we plan to provide an update upon study completion in 2026. We were incorporated in March 2011 and commenced operations later that year. To date, we have focused primarily on performing research and development activities, hiring personnel and raising capital to support and expand these activities. We do not have any products approved for sale, and we have not generated any revenue from product sales. We have incurred net losses each year since our inception. Our net losses were $44.1 million and $54.4 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of $961.5 million and cash and cash equivalents and short-term investments of $225.0 million. Components of Operating Results Revenue Our product candidates are not approved for commercial sale. We have not generated any revenue from sales of our product candidates and do not expect to do so in the foreseeable future and until we complete clinical development, submit regulatory filings and receive approvals from applicable regulatory bodies for such product candidates, if ever. Operating Expenses Research and Development Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of direct and indirect costs incurred for the development of our product candidates. Direct expenses include: • preclinical and clinical outside service costs associated with discovery, preclinical and clinical testing of our product candidates; • professional services agreements with third party contract organizations, investigative clinical trial sites and consultants that conduct research and development activities on our behalf; • contract manufacturing costs to produce clinical trial materials and commercial materials to support our planned regulatory package submissions to FDA and other foreign regulatory agencies; and • laboratory supplies and materials. Indirect expenses include: • compensation and personnel-related expenses (including stock-based compensation); • allocated expenses for facilities and depreciation; and • other indirect costs. 18 We record research and development expenses as incurred. Payments made to other entities are under agreements that are generally cancelable by us. Advance payments for goods or services to be received in future periods for use in research and development activities are deferred as prepaid expenses. The prepaid amounts are then expensed as the related services are performed. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We expect our future research and development expenses to vary from period to period as we pursue regulatory approval of our product candidates, continue to advance our product candidates through late-stage clinical trials, invest in capabilities to prepare for commercialization including manufacturing, and hire additional personnel to support our organization. The process of conducting the necessary clinical research, development and manufacturing to obtain regulatory approval is costly and time-consuming, and the successful development and approval of our product candidates is highly uncertain. General and Administrative General and administrative expenses consist primarily of compensation and personnel-related expenses (including stock-based compensation) for our personnel in executive, finance and other administrative functions. General and administrative expenses also include professional fees paid for accounting, legal and tax services, allocated expenses for facilities and depreciation and other general and administrative costs. We expect our general and administrative expenses to vary from period to period as we continue to support our research and development activities, grow our business, advance our product candidates in late-stage clinical trials and toward regulatory approval and commercialization activities, and operate as a public company. Interest and Other Income, Net Interest and other income, net, primarily consists of interest income earned on our cash equivalents and short-term investments. Results of Operations Comparison of the Three Months Ended March 31, 2026 and 2025 The following tables summarize our results of operations for the periods presented: Three Months Ended March 31, 2026 2025 Dollar Change % Change (in thousands) Operating expenses: Research and development $ 35,786 $ 48,179 $ (12,393 ) (26 %) General and administrative 10,267 9,226 1,041 11 % Total operating expenses 46,053 57,405 (11,352 ) (20 %) Loss from operations (46,053 ) (57,405 ) 11,352 (20 %) Interest and other income, net 1,911 3,049 (1,138 ) (37 %) Net loss $ (44,142 ) $ (54,356 ) $ 10,214 (19 %) 19 Research and Development Expenses Three Months Ended March 31, 2026 2025 Dollar Change % Change (in thousands) Direct costs: Clinical and nonclinical outside services $ 13,971 $ 10,562 $ 3,409 32 % Consulting and professional services 4,579 6,464 (1,885 ) (29 %) Contract manufacturing 4,644 15,865 (11,221 ) (71 %) Laboratory supplies and materials 149 322 (173 ) (54 %) Indirect costs: Compensation and personnel-related (including stock-based compensation) 10,383 12,747 (2,364 ) (19 %) Facilities and depreciation 1,771 1,984 (213 ) (11 %) Other 289 235 54 23 % Total research and development expenses $ 35,786 $ 48,179 $ (12,393 ) (26 %) Research and development expenses decreased by $12.4 million, or 26%, for the three months ended March 31, 2026 compared to the same period in 2025. The change was primarily attributable to a decrease of $11.2 million in completed contract manufacturing activity for the tanruprubart European MAA filing as well as the vonaprument manufacturing technology transfer to a commercial-ready facility. Compensation and personnel-related expenses (including stock-based compensation) decreased by $2.4 million, reflecting lower headcount, and consulting and professional services expenses decreased by $1.9 million. In addition, direct clinical and nonclinical outside services costs increased by $3.4 million associated with the vonaprument Phase 3 ARCHER II trial in GA and the ongoing tanruprubart FORWARD study in GBS. General and Administrative Expenses Three Months Ended March 31, 2026 2025 Dollar Change % Change (in thousands) Consulting and professional services $ 4,400 $ 3,200 $ 1,200 38 % Compensation and personnel-related (including stock-based compensation) 4,891 4,745 146 3 % Facilities and depreciation 657 712 (55 ) (8 %) Other 319 569 (250 ) (44 %) Total general and administrative expenses $ 10,267 $ 9,226 $ 1,041 11 % General and administrative expenses increased by $1.0 million, or 11%, for the three months ended March 31, 2026 compared to the same period in 2025, primarily driven by a $1.2 million increase in consulting and professional services costs for corporate affairs activity across our portfolio. Interest and other income, net Interest and other income, net, decreased by $1.1 million, or 37%, for the three months ended March 31, 2026 compared to the same period in 2025. The decrease was primarily due to lower average cash and investment balances. Liquidity and Capital Resources Sources of Liquidity Due to our significant research and development expenditures, we have generated operating losses each year since our inception. To date, we have funded our operations primarily through the sale of equity securities including, most recently in November 2025, the public offering of approximately $86.3 million of common stock and pre-funded warrants. In addition, on March 30, 2026, we 20 entered into a sales agreement with TD Cowen, or the 2026 Sales Agreement, pursuant to which we may offer and sell, from time to time through TD Cowen, at our option, shares of our common stock having an aggregate offering price of up to $150.0 million. As of March 31, 2026, we had available cash and cash equivalents and short-term investments of $225.0 million and an accumulated deficit of $961.5 million. Historical Cash Flows Three Months Ended March 31, 2026 2025 (in thousands) Net cash used in operating activities $ (46,796 ) $ (50,055 ) Net cash provided by investing activities 27,056 97,620 Net cash provided by financing activities 32,896 59 Increase in cash, cash equivalents and restricted cash $ 13,156 $ 47,624 Cash Flow from Operating Activities Cash used in operating activities for the three months ended March 31, 2026 was $46.8 million, which consisted of a net loss of $44.1 million, and a net change of $7.1 million in our operating assets and liabilities, partially offset by $4.4 million in non-cash charges. The non-cash charges consisted of stock-based compensation of $4.2 million, depreciation and amortization of $0.5 million, and a reduction in the carrying amount of right-of-use assets of $0.4 million, partially offset by accretion of discount on available-for-sale securities of $0.6 million. Cash used in operating activities for the three months ended March 31, 2025 was $50.1 million, which consisted of a net loss of $54.4 million, partially offset by $4.1 million in non-cash charges and a net change of $0.2 million in our operating assets and liabilities. The non-cash charges consisted of stock-based compensation of $5.1 million, depreciation and amortization of $0.5 million and a reduction in the carrying amount of right-of-use assets of $0.4 million, partially offset by accretion of discount on available-for-sale securities of $1.9 million. Cash Flow from Investing Activities Cash provided by investing activities for the three months ended March 31, 2026 was $27.1 million, which consisted of $33.0 million of proceeds from maturities of available-for-sale securities, partially offset by $5.9 million of purchases of available-for-sale securities. Cash provided by investing activities for the three months ended March 31, 2025 was $97.6 million, which consisted of $159.5 million of proceeds from maturities of available-for-sale securities, partially offset by $61.8 million of purchases of available-for-sale securities and $0.1 million of purchases of property and equipment. Cash Flow from Financing Activities Cash provided by financing activities for the three months ended March 31, 2026 was $32.9 million, which consisted of $32.7 million of net proceeds from the issuance of common stock under our 2024 ATM program and $0.2 million of net proceeds from the exercise of common stock options and employee stock purchase plan purchases. Cash provided by financing activities for the three months ended March 31, 2025 was $0.1 million, which consisted of $0.1 million of proceeds from the exercise of common stock options. Funding Requirements We use our cash to fund operations, primarily to fund our clinical trials, research and development expenditures and related personnel costs. We expect our future research and development expenses to increase as we pursue regulatory approval of our product candidates, continue to advance our product candidates through late-stage clinical trials, invest in capabilities to prepare for commercialization including manufacturing, and hire additional personnel to support our organization. In addition, we expect our general and administrative expenses to increase as we continue to support our research and development activities, grow our business, advance our product candidates in late-stage clinical trials and toward regulatory approval and commercialization activities, and operate as a public company. The timing and amount of our operating expenditures will depend on many factors, including: • the scope, progress, results and costs of researching and developing our current product candidates or any other future product candidates we choose to pursue, and conducting preclinical studies and clinical trials; 21 • the timing of, and the costs involved in, obtaining feedback from regulators on our clinical trials and regulatory approvals for our lead product candidates or any future product candidates; • the number and characteristics of any additional product candidates we develop or acquire; • the timing and amount of any milestone, royalty and/or other payments we are required to make pursuant to our current or any future license or collaboration agreements; • the cost of manufacturing our lead product candidates or any future product candidates and any products we successfully commercialize; • the cost of building a sales force in anticipation of product commercialization; • the cost of commercialization activities of our product candidates, if approved for sale, including marketing, sales and distribution costs; • our ability to establish strategic collaborations, licensing or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement; • any product liability or other lawsuits related to our products; • the expenses needed to attract, hire and retain skilled personnel; • the costs associated with operating as a public company; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our intellectual property portfolio; and • the timing, receipt and amount of sales of any future approved products. Based upon our current operating plan, we believe that our existing cash and cash equivalents and short-term investments will enable us to fund operating expenses into the second half of 2027. We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We will be required to seek additional funding in the future until such time, if ever, as we can generate substantial product revenue, and currently intend to do so through public or private equity offerings or debt financings, credit or loan facilities, collaborations or a combination of one or more of these funding sources. We may also need to seek additional funds sooner than planned as result of changes in our development plans and regulatory requirements to support registration of our product candidates. Additional funds may not be available to us on acceptable terms or at all. If we fail to obtain necessary capital when needed on acceptable terms, or at all, we could be forced to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. If we raise additional funds by issuing equity securities, our stockholders will suffer dilution and the terms of any financing may adversely affect the rights of our stockholders. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, is likely to involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities received any distribution of our corporate assets. 2025 Financing In November 2025, we raised net proceeds of approximately $80.5 million after deducting underwriting discounts and offering expenses through the sale of 29,423,075 shares of our common stock at a price of $2.60 per share and pre-funded warrants to purchase an aggregate of 3,750,000 shares of common stock at a price of $2.599 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each pre-funded warrant. 2024 Financing In June 2024, we raised net proceeds of approximately $116.8 million after deducting underwriting discounts and offering expenses through the sale of 13,001,120 shares of our common stock at a price of $6.25 per share and pre-funded warrants to purchase an aggregate of 7,000,000 shares of common stock at a price of $6.249 per share, which equals the per share offering price for the shares 22 of common stock less the $0.001 exercise price for each pre-funded warrant. In March 2026, we issued an aggregate of 4,499,124 shares of common stock upon the cashless exercise of pre-funded warrants to purchase 4,500,000 shares of common stock. 2023 Financing In December 2023, we raised net proceeds of approximately $117.0 million after deducting underwriting discounts and offering expenses through the sale of 25,035,000 shares of our common stock at a price of $2.880 per share and pre-funded warrants to purchase an aggregate of 18,379,861 shares of common stock at a price of $2.879 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each pre-funded warrant. In March 2026, we issued an aggregate of 2,027,384 shares of common stock upon the cashless exercise of pre-funded warrants to purchase 2,027,778 shares of common stock. 2022 Financing In July 2022, we raised net proceeds of approximately $122.5 million after deducting fees and expenses through the sale of an aggregate of 9,013,834 shares of common stock, pre-funded warrants to purchase up to 24,696,206 shares of our common stock and accompanying common warrants to purchase up to 8,427,508 shares of our common stock. The offering price per share and accompanying common warrant was $3.87125 per share and the offering price per pre-funded warrant and accompanying common warrant was $3.87025 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each such pre-funded warrant. The pre-funded warrants remain exercisable until exercised in full. The common warrants had an exercise price of $5.806875 per share and, except as described in the next paragraph, expired on June 30, 2025. Both the pre-funded and common warrants were immediately exercisable, subject to beneficial ownership limitations. In June 2025, we and holders of common warrants exercisable for 6,877,622 shares of our common stock entered into amendments to the common warrants held by such holders. The amendments extended the term of the common warrants by one year until June 30, 2026, and removed the cashless exercise option. If all such common warrants are exercised in full for cash (without regard to any applicable ownership limitations), we would receive aggregate gross proceeds of approximately $39.9 million. The remaining common warrants to purchase 1,226,993 shares of our common stock not subject to these amendments expired unexercised on June 30, 2025. Pre-Funded and Common Warrants The following summarizes warrant activity during the three months ended March 31, 2026 and 2025: Number of Common Warrants Number of Pre-funded Warrants Weighted-Average Exercise Price Balances as of December 31, 2025 6,877,622 42,293,577 Exercised — (6,527,778 ) $ 0.001 Balances as of March 31, 2026 6,877,622 35,765,799 Number of Common Warrants Number of Pre-funded Warrants Weighted-Average Exercise Price Balances as of December 31, 2024 8,104,615 38,543,577 Issued — — $ — Balances as of March 31, 2025 8,104,615 38,543,577 At the Market (ATM) Program In March 2026, we entered into a sales agreement with TD Securities (USA) LLC, or TD Cowen, as sales agent, pursuant to which we may offer and sell, from time to time through TD Cowen, at our option, shares of our common stock having an aggregate offering price of up to $150.0 million, or the 2026 ATM program. We agreed to pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds for the common stock sold through the 2026 ATM program. During the three months ended March 31, 2026, no sales were made under the 2026 ATM program. Subsequent to March 31, 2026 and through the date of issuance of these interim unaudited condensed consolidated financial statements, we sold 1,305,463 shares of common stock under the 2026 ATM program for net proceeds of approximately $8.1 million, after deducting commissions paid to TD Cowen. In March 2024, we entered into a sales agreement with TD Cowen, as sales agent, or 2024 ATM program, pursuant to which we could issue and sell shares of our common stock for an aggregate maximum offering of $100.0 million. During the three months ended March 31, 2026, we sold 6,049,762 shares of our common stock under the 2024 ATM program for net proceeds of approximately $32.7 23 million, after deducting commissions paid to TD Cowen and other offering costs. Approximately $33.3 million remained available under the 2024 ATM program, which we terminated in May 2026. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. During the quarter ended March 31, 2026, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025. Recent Accounting Pronouncements Not Yet Adopted See Note 2— Basis of Presentation and Significant Accounting Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. Item 3. Quantitative and Qualitat ive Disclosures About Market Risk Not applicable.