Apogee Therapeutics, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Apogee Therapeutics, Inc. INDEX TO FINANCIAL STATEMENTS ​ ​ ​ ​ Page Report of the Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 141 Consolidated Balance Sheets 142 Consolidated Statements of Operations 143 Consolidated Statements of Comprehensive Loss 144 Consolidated Statements of Preferred Units and Stockholders’ Equity/Members’ Deficit 145 Consolidated Statements of Cash Flows 146 Notes to the Consolidated Financial Statements 147 ​ ​ ​ ​ 140 Table of Contents REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders of Apogee Therapeutics, Inc. ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of Apogee Therapeutics, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, preferred units and stockholders’ equity/members’ deficit and cash flows for the year ended December 31, 2023, and the period from February 4, 2022 (inception) to December 31, 2022, 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, 2023 and 2022, and the results of its operations and its cash flows for the year ended December 31, 2023, and the period from February 4, 2022 (inception) to December 31, 2022, 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. ​ /s/ Ernst & Young LLP ​ Boston, Massachusetts ​ March 5, 2024 ​ We have served as the Company’s auditor since 2023. ​ ​ 141 Table of Contents APOGEE THERAPEUTICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except unit/share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, DECEMBER 31, ​ ​ 2023 ​ 2022 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 118,316 ​ $ 151,890 Marketable securities ​ ​ 277,143 ​ ​ — Prepaid expenses and other current assets ​ 2,950 ​ 165 Total current assets ​ 398,409 ​ 152,055 Property and equipment, net ​ ​ 377 ​ ​ — Right-of-use asset, net ​ ​ 2,217 ​ ​ — Other non-current assets ​ ​ 401 ​ ​ — Total assets ​ $ 401,404 ​ $ 152,055 Liabilities, preferred units and stockholders' equity/members’ deficit ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 2,143 ​ $ 418 Lease liability ​ ​ 1,101 ​ ​ — Accrued expenses ​ 17,314 ​ 9,562 Total current liabilities ​ 20,558 ​ 9,980 Long-term liabilities: ​ ​ ​ ​ ​ ​ Lease liability, net of current ​ ​ 933 ​ ​ — Total liabilities ​ 21,491 ​ 9,980 Commitments and contingencies (Note 9) ​ ​ Series A Preferred Units; no units authorized, issued and outstanding at December 31, 2023; 20,000,000 units authorized, issued and outstanding as of December 31, 2022 ​ — ​ 28,971 Series B Preferred Units; no units authorized, issued and outstanding at December 31, 2023; 45,089,212 units authorized, issued and outstanding as of December 31, 2022 ​ — ​ 148,496 Stockholders’ equity/members’ deficit: ​ ​ ​ Common Units; no units authorized, issued and outstanding at December 31, 2023; 5,000,000 units authorized, issued and outstanding as of December 31, 2022 ​ — ​ 2,251 Incentive Units; no units authorized, issued and outstanding at December 31, 2023; 12,412,473 units authorized, 9,648,374 issued and 1,625,086 outstanding as of December 31, 2022 ​ ​ — ​ ​ 2,142 Preferred Stock; 10,000,000 authorized, $ 0.00001 par value, no shares issued and outstanding at December 31, 2023; No shares authorized, issued and outstanding at December 31, 2022 ​ ​ — ​ ​ — Common Stock; 400,000,000 authorized, $ 0.00001 par value, 50,655,671 issued and 48,338,769 outstanding as of December 31, 2023; No shares authorized, issued and outstanding at December 31, 2022 ​ — ​ — Additional paid-in capital ​ ​ 503,354 ​ ​ — Accumulated other comprehensive income ​ ​ 329 ​ ​ — Accumulated deficit ​ ( 123,770 ) ​ ( 39,785 ) Total stockholders’ equity/members’ deficit ​ 379,913 ​ ( 35,392 ) Total liabilities, preferred units and stockholders’ equity/members’ deficit ​ $ 401,404 ​ $ 152,055 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 142 Table of Contents APOGEE THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PERIOD FROM ​ YEAR ENDED FEBRUARY 4, 2022 ​ ​ DECEMBER 31, ​ (INCEPTION) TO ​ ​ 2023 ​ DECEMBER 31, 2022 Operating expenses: ​ ​ ​ ​ ​ ​ Research and development (1) ​ $ 68,424 ​ $ 27,786 General and administrative (2) ​ 24,579 ​ 2,941 Total operating expenses ​ 93,003 ​ 30,727 Loss from operations ​ ( 93,003 ) ​ ( 30,727 ) Other income (expense), net: ​ ​ ​ ​ Interest income, net ​ 9,018 ​ 92 Other financing expense, net: ​ ​ — ​ ​ ( 9,150 ) Total other income (expense), net ​ 9,018 ​ ( 9,058 ) Net loss ​ $ ( 83,985 ) ​ $ ( 39,785 ) Net loss per share, basic and diluted ​ $ ( 3.36 ) ​ $ ( 16.16 ) Weighted-average common shares outstanding, basic and diluted ​ 25,005,774 ​ 2,462,236 (1) Includes related-party amounts of $ 26,285 for the year ended December 31, 2023 and $ 23,326 for the period from February 4, 2022 (inception) to December 31, 2022. (2) Includes related-party amounts of $ 33 for the year ended December 31, 2023 and $ 317 for the period from February 4, 2022 (inception) to December 31, 2022. The accompanying notes are an integral part of these consolidated financial statements. ​ 143 Table of Contents APOGEE THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PERIOD FROM ​ ​ ​ FEBRUARY 4, 2022 ​ YEAR ENDED ​ (INCEPTION) TO ​ ​ DECEMBER 31, 2023 DECEMBER 31, 2022 ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 83,985 ) ​ $ ( 39,785 ) Change in unrealized gains on marketable securities, net of tax ​ ​ 329 ​ ​ — Comprehensive loss ​ $ ( 83,656 ) ​ $ ( 39,785 ) ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 144 Table of Contents APOGEE THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF PREFERRED UNITS AND STOCKHOLDERS’ EQUITY/MEMBERS’ DEFICIT (In thousands, except unit/share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Series A ​ Series B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Stockholders’ ​ ​ Preferred ​ Preferred ​ ​ Common ​ Incentive ​ Common ​ Additional ​ ​ ​ Other ​ Equity / ​ ​ Units ​ Units Units ​ Units ​ Stock ​ Paid-in ​ Accumulated ​ Comprehensive ​ Members’ ​ Units Amount Units Amount ​ ​ Units Amount Units Amount ​ Units Amount ​ Capital ​ Deficit Income Deficit Balance at February 4, 2022 (inception) — ​ $ — — ​ $ — ​ — ​ $ — — ​ $ — ​ — ​ $ — ​ $ — ​ $ — $ — ​ $ — Issuance of Common Units in payment of option fee — ​ — — ​ — ​ 5,000,000 ​ 2,251 — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ 2,251 Issuance of Series A preferred units − initial closing, net of tranche rights of $ 1,050 and issuance costs of $ 179 5,000,000 ​ 3,771 — ​ — ​ — ​ — — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ — Issuance of Series A preferred units - subsequent closings, inclusive of tranche option liability ​ 15,000,000 ​ ​ 25,200 ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of Series B preferred units - initial closing, net of issuance costs of $ 504 ​ — ​ ​ — ​ 45,089,212 ​ ​ 148,496 ​ ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Equity Based Compensation Expense ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ 1,625,086 ​ ​ 2,142 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,142 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 39,785 ) ​ ​ — ​ ​ ( 39,785 ) Balance at December 31, 2022 ​ 20,000,000 ​ $ 28,971 ​ 45,089,212 ​ $ 148,496 ​ ​ 5,000,000 ​ $ 2,251 ​ 1,625,086 ​ $ 2,142 ​ — ​ $ — ​ $ — ​ $ ( 39,785 ) ​ $ — ​ $ ( 35,392 ) Vesting of incentive units ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ 922,338 ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Conversion of preferred, common, and incentive units into common stock ​ ( 20,000,000 ) ​ ​ ( 28,971 ) ​ ( 45,089,212 ) ​ ​ ( 148,496 ) ​ ​ ( 5,000,000 ) ​ ​ ( 2,251 ) ​ ( 2,547,424 ) ​ ​ ( 4,686 ) ​ 27,597,438 ​ ​ — ​ ​ 184,404 ​ ​ — ​ ​ — ​ ​ 177,467 Common stock issued in IPO, net of issuance costs of $ 29,666 ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ 20,297,500 ​ ​ — ​ ​ 315,391 ​ ​ — ​ ​ — ​ ​ 315,391 Vesting of restricted stock ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ 443,831 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Equity-based compensation expense — ​ — — ​ — ​ — ​ — — ​ 2,544 ​ — ​ ​ — ​ ​ 3,559 ​ ​ — ​ — ​ 6,103 Change in unrealized gain on marketable securities, net of tax ​ — ​ — — ​ — ​ — ​ — — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ 329 ​ 329 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 83,985 ) ​ ​ — ​ ​ ( 83,985 ) Balance at December 31, 2023 ​ — ​ $ — — ​ $ — ​ — ​ $ — — ​ $ — ​ 48,338,769 ​ $ — ​ $ 503,354 ​ $ ( 123,770 ) ​ $ 329 ​ $ 379,913 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 145 Table of Contents APOGEE THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR FEBRUARY 4, 2022 ​ ​ ENDED ​ (INCEPTION) TO ​ ​ DECEMBER 31, 2023 ​ DECEMBER 31, 2022 Cash flows from operating activities: ​ ​ Net loss ​ $ ( 83,985 ) ​ $ ( 39,785 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: ​ ​ ​ ​ Equity-based compensation expense ​ 6,103 ​ 2,142 Loss on remeasurement of tranche option liability ​ ​ — ​ ​ 9,150 Non-cash research and development license expense ​ — ​ 2,251 Amortization of discounts on marketable securities ​ ​ ( 3,071 ) ​ ​ — Non-cash lease expense ​ ​ 87 ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ Prepaid expenses and other current assets ​ ( 2,785 ) ​ ( 165 ) Other assets ​ ​ ( 107 ) ​ ​ — Accounts payable ​ 1,613 ​ 418 Operating lease liability ​ ​ ( 270 ) ​ ​ — Accrued expenses ​ 7,654 ​ 9,562 Net cash used in operating activities ​ ( 74,761 ) ​ ( 16,427 ) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Purchases of marketable securities ​ ​ ( 303,743 ) ​ ​ — Maturities of marketable securities ​ ​ 30,000 ​ ​ — Purchases of property and equipment ​ ​ ( 167 ) ​ ​ — Net cash used in investing activities ​ ( 273,910 ) ​ — Cash flows from financing activities: ​ ​ ​ ​ Proceeds from issuance of Series A Preferred Units and the tranche option, net ​ ​ — ​ ​ 19,821 Proceeds from issuance of Series B Preferred Units, net ​ ​ — ​ ​ 148,496 Proceeds from issuance of common stock, net of issuance costs ​ ​ 315,391 ​ ​ — Net cash provided by financing activities ​ 315,391 ​ 168,317 (Decrease) increase in cash, cash equivalents and restricted cash ​ ( 33,280 ) ​ 151,890 Cash, cash equivalents and restricted cash, beginning of period ​ 151,890 ​ — Cash, cash equivalents and restricted cash, end of period ​ $ 118,610 ​ $ 151,890 Supplemental disclosures of non-cash activities: ​ ​ ​ ​ Exchange of 72,636,636 preferred, common, and incentive units in connection with the Reorganization (Note 1) ​ $ 184,404 ​ $ — Settlement of Series A Preferred Units tranche obligation ​ $ — ​ $ 10,200 Operating lease right-of-use asset obtained in exchange for operating lease liability ​ $ 2,304 ​ $ — Purchases of property and equipment included in accounts payable ​ $ 210 ​ $ — Reconciliation of cash, cash equivalents and restricted cash: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 118,316 ​ $ 151,890 Restricted cash ​ ​ 294 ​ ​ — Total ​ $ 118,610 ​ $ 151,890 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 146 Table of Contents APOGEE THERAPEUTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of the Business Apogee Therapeutics, Inc., together with its consolidated subsidiary (collectively, “Apogee” or the “Company”), a successor to Apogee Therapeutics, LLC, is a biotechnology company seeking to develop differentiated biologics for the treatment of atopic dermatitis, asthma, chronic obstructive pulmonary disease and related inflammatory and immunology indications with high unmet need. The Company’s antibody programs are designed to overcome limitations of existing therapies by leveraging clinically validated mechanisms and incorporating advanced antibody engineering to optimize half-life and other properties designed. The Company commenced its operations in February 2022 as a Delaware limited liability company named Apogee Therapeutics, LLC. The Company was founded by leading healthcare investors, Fairmount Funds and Venrock Healthcare Capital Partners and has since assembled a management team of drug developers with significant experience in clinical development. As a result of the Reorganization (as defined below) and in connection with the Company’s initial public offering (“IPO”) in July 2023, the Company directly wholly owns the assets of Apogee Therapeutics, LLC, including the stock of its subsidiary. In addition, the Company engages third parties, including Paragon Therapeutics, Inc. (“Paragon”), who is also a related party, to perform ongoing research and development and other services on its behalf. In February 2022, the Company entered into an antibody discovery and option agreement with Paragon, which was subsequently amended in November 2022 (as amended, the “2022 Option Agreement”). Under the terms of the 2022 Option Agreement, Paragon identifies, evaluates and develops antibodies directed against certain mutually agreed therapeutic targets of interest to the Company. The 2022 Option Agreement initially included two selected targets, IL-13 and IL-4Rα, and was subsequently amended in November 2022 to include an additional selected target, OX40L. Under the 2022 Option Agreement, the Company has the exclusive option to, on a research program-by-research program basis, be granted an exclusive, worldwide license to all of Paragon’s rights, title and interest in and to the intellectual property resulting from the applicable research program to develop, manufacture and commercialize the antibodies and products directed to the selected targets. In November 2023, the Company entered into an additional antibody discovery and option agreement with Paragon (the “2023 Option Agreement”). Under the terms of the 2023 Option Agreement, Paragon identifies, evaluates and develops antibodies directed against certain mutually agreed therapeutic targets of interest to the Company. In November 2022, the Company exercised its option available under the 2022 Option Agreement with respect to the IL-13 Research Program (as defined below) and, in April 2023, the Company exercised its options available under the 2022 Option Agreement with respect to the IL-4Rα Research Program and OX40L Research Program. Upon such exercises, the parties entered into associated license agreements for each target. Under the terms of each license agreement, Paragon granted to the Company an exclusive, worldwide, royalty-bearing, sublicensable right and license with respect to certain information, patent rights and sequence information related to antibodies directed at the respective target to use, make, sell, import, export and otherwise exploit the antibodies directed at the respective target. The Company is solely responsible for the development, manufacture and commercialization of IL-13, IL-4Rα and OX40L products at its own cost and expense. On July 13, 2023, the Company completed a reorganization, pursuant to which the members of Apogee Therapeutics, LLC contributed their units in Apogee Therapeutics, LLC to Apogee Therapeutics, Inc. in exchange for shares of common stock or non-voting common stock of Apogee Therapeutics, Inc. and Apogee Therapeutics, LLC became a wholly-owned subsidiary of Apogee Therapeutics, Inc. (the “Reorganization”), as follows: ● holders of Series A Preferred Units of Apogee Therapeutics, LLC received 7,678,000 shares of non-voting common stock of Apogee Therapeutics, Inc.; ● holders of Series B Preferred Units of Apogee Therapeutics, LLC received 11,501,108 shares of common stock and 5,808,642 shares of non-voting common stock of Apogee Therapeutics, Inc.; 147 Table of Contents ● holders of common units of Apogee Therapeutics, LLC received 1,919,500 shares of common stock of Apogee Therapeutics, Inc.; ● holders of vested incentive units of Apogee Therapeutics, LLC received 690,188 shares of common stock of Apogee Therapeutics, Inc.; and ● holders of unvested incentive units of Apogee Therapeutics, LLC received 2,779,358 shares of restricted common stock of Apogee Therapeutics, Inc. On July 18, 2023, the Company completed its IPO, pursuant to which it issued and sold an aggregate of 20,297,500 shares of its common stock (inclusive of 2,647,500 shares pursuant to the exercise of the underwriters’ overallotment option in full) at the IPO price of $ 17.00 per share for net cash proceeds of $ 315.4 million, after deducting underwriting discounts and commissions and other offering expenses. The shares of Apogee Therapeutics, Inc. began trading on the Nasdaq Global Market on July 14, 2023 under the symbol APGE. The Company is subject to risks and uncertainties common to early stage companies in the biotechnology industry, including, but not limited to, completing preclinical studies and clinical trials, obtaining regulatory approval for its programs, market acceptance of products, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, and the ability to raise additional capital to fund operations. The Company’s two most advanced programs currently under development, APG777 and APG808, as well as other programs, will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure, and extensive compliance reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. The Company has primarily funded its operations with proceeds from the sales of preferred units and common stock and has not generated any revenue since inception. As a result, the Company will need substantial additional funding to support its continued operations and growth strategy. Until such a time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. The Company may be unable to raise additional funds or enter into such other agreements on favorable terms, or at all. If the Company fails to raise capital or enter into such agreements as, and when, needed, the Company may have to significantly delay, scale back or discontinue the development and commercialization of one or more of its programs. Company Liquidity The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued. The Company had an accumulated deficit of $ 123.8 million as of December 31, 2023. Further, the Company incurred a net loss of $ 84.0 million and experienced negative cash flows from operations of $ 74.8 million for the year ended December 31, 2023. Based on the Company’s current operating plan, it estimates that its existing cash and cash equivalents of $ 118.3 million, and marketable securities of $ 277.1 million as of December 31, 2023 will be sufficient to enable the Company to fund its operating expenses and capital requirements through at least the next twelve months from the issuance of these consolidated financial statements. The Company is subject to those risks associated with any biotechnology company that has substantial expenditures for research and development. There can be no assurance that the Company’s research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, the Company operates in an environment of rapid technological change and is largely dependent on the services of its employees and consultants. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then it may be unable to continue its operations at planned levels and be forced to reduce its operations. 148 Table of Contents 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements prior to the Reorganization include the accounts of Apogee Therapeutics, LLC and its wholly-owned subsidiary. The consolidated financial statements subsequent to the Reorganization include the accounts of Apogee Therapeutics, Inc. and its wholly-owned subsidiary. These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates of the Financial Accounting Standards Board (“FASB”). In the Company’s management opinion, the information furnished in these consolidated financial statements reflect all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the financial position and results of operations for the reported periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Apogee Therapeutics, Inc. and its wholly-owned subsidiary, Apogee Biologics, Inc. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Significant estimates relied upon in preparing the accompanying consolidated financial statements include, among others: research and development expenses and related prepaid or accrued costs, the valuation of equity-based compensation awards and related expense, the valuation of preferred units and preferred unit tranche rights. Segments The Company has one operating segment and one reporting unit. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of assessing performance and allocating resources. All of the Company’s assets are located in the United States. Deferred Offering Costs The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After the consummation of the equity financing, these costs are recorded in stockholders’ equity/members’ deficit as a reduction of additional paid-in capital or the associated preferred unit account, as applicable. In the event the offering is terminated, all capitalized deferred offering costs are expensed. As of December 31, 2023, the Company had no deferred offering costs. 149 Table of Contents Fair Value of Financial Instruments The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below: Level 1— Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2— Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3— Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Items measured at fair value on a recurring basis as of December 31, 2023 include cash equivalents and marketable securities (Notes 3 and 4). The carrying amounts reflected in the accompanying consolidated balance sheets for prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term nature. Property and Equipment, net Property and equipment are recorded at cost. Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets: ​ ​ ​ ​ ​ ESTIMATED USEFUL LIFE Laboratory equipment ​ 5 years ​ ​ Upon disposal, retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred. Preferred Units Tranche Option Freestanding Financial Instrument The unit purchase agreement for the Company’s Series A Preferred Units (see Note 10) provided for three subsequent closings following the initial closing, which such subsequent closings were subject to approval of the Company’s Board of Managers (the “Board of Managers”), which was controlled by the holders of the Series A Preferred Units (“Tranche Options”). The Company classified these Tranche Options as an asset or liability as each preferred unit Tranche Option is a freestanding financial instrument that may require the Company to transfer assets upon satisfaction of certain conditions. Each preferred unit Tranche Option was initially recorded at fair value upon the date of issuance of each preferred unit 150 Table of Contents tranche option and was subsequently remeasured to fair value at each reporting date. Changes in the fair value of the Tranche Option were recognized as a component of other income (expense), net in the accompanying consolidated statement of operations and comprehensive loss. Changes in the fair value of the Tranche Option were recognized until each respective Tranche Option was settled. As of December 31, 2023, all Tranche Options issued in connection with the Series A Preferred Unit purchase agreement had been fully settled. Preferred Units The Company has classified the preferred units as temporary equity in the accompanying consolidated balance sheets because the units could become effectively settled for cash or other assets due to certain contingent event clauses that are outside of the Company’s control. The preferred units are not currently settleable, but are entitled to a distribution of available proceeds upon a change of control or a sale event which is a bona fide, negotiated transaction in which the Company has determined to affect a change of control. Because the occurrence of a change of control and a sale event is not currently probable, the carrying values of the preferred units are not being accreted to their redemption values. Subsequent adjustments to the carrying values of the preferred units would be made only when the change of control or sale event becomes probable. Research and Development Expense Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and bonuses, overhead costs, contract services and other related costs. The value of goods and services received from contract research organizations and contract manufacturing organizations in the reporting period are estimated based on the level of services performed, and progress in the period in cases when the Company has not received an invoice from the supplier. In circumstances where amounts have been paid in excess of costs incurred, the Company records a prepaid expense. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations to those third parties as of period end. Any accrual estimates are based on a number of factors, including the Company’s knowledge of the progress towards completion of the specific tasks to be performed, invoicing to date under the contracts, communication from the vendors of any actual costs incurred during the period that have not yet been invoiced and the costs included in the contracts. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the estimates made by the Company. Income Taxes Income taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company makes estimates and judgments about future taxable income based on assumptions that are consistent with the Company’s plans and estimates. Should the actual amounts differ from these estimates, the amount of the Company’s valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to the tax provision in a period in which such estimates are changed, which in turn would affect net income or loss. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit to the extent that the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position as well as consideration of the available facts and circumstances. The Company records interest and penalties related to uncertain tax positions, if applicable, as a component of income tax expense. 151 Table of Contents Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original final maturities of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in interest-bearing money market funds and U.S. treasury securities. Marketable Securities The Company’s investments are comprised of U.S. government agency securities and U.S. treasury securities. Investments are classified at the time of purchase, based on management’s intent, as held-to-maturity, available-for-sale, or trading. All of the Company’s marketable security investments are classified as available-for-sale securities and are reported at fair market value using quoted prices in active markets for similar securities. The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included as a component of other income within the consolidated statements of operations and comprehensive loss. The Company assesses its available-for-sale securities under the available-for-sale security impairment model in ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements as of each reporting date in order to determine if a portion of any decline in fair value below carrying value is the result of a credit loss for its available-for-sale securities. The Company records credit losses for its available-for-sale securities in the consolidated statements of operations and comprehensive loss as credit loss expense, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit losses on its available-for-sale securities. Declines in fair value below carrying value attributable to non-credit related factors are recorded as accumulated other comprehensive loss, which is a separate component of stockholders’ equity. The Company classifies its available-for-sale securities as current assets on the consolidated balance sheets as they mature within one year from the balance sheet date. Leases The Company determines the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date and thereafter if modified. The lease term includes any renewal options and termination options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. Fixed lease expense for operating leases is recognized on a straight-line basis, unless the right-of-use assets have been impaired, over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the statements of operations and comprehensive loss. Equity-Based Compensation Prior to the Reorganization, the Company issued equity-based awards to employees, managers, executives, non-employees and service providers in the form of common units and incentive units. Subsequent to the Reorganization, the Company issued equity-based awards to employees, managers, executives, non-employees and service providers in the form of restricted common units and stock options. The Company accounts for equity-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). Due to the absence of an active market for the Company’s common units or incentive units prior to the completion of the IPO, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common units and incentive units. The estimated fair value of the common units and incentive units was determined at each grant date based upon a variety of factors, including the illiquid nature of 152 Table of Contents the common units, arm’s-length sales of the Company’s equity units (including preferred units), the effect of the rights and preferences of the preferred unit unitholders, and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could have resulted in different fair values of the common units and incentive units at each valuation date. Subsequent to the completion of the IPO, the fair value of the Company’s common stock underlying its equity awards is based on the quoted market price of the Company’s common stock on the grant date. The Company estimates the fair value of its stock options using the Black-Scholes option pricing model, which uses as inputs the fair value of the Company’s common stock, and certain management estimates, including the expected stock price volatility, the expected term of the award, the risk-free rate, and expected dividends. Expected volatility is calculated based on reported volatility data for a representative group of publicly traded companies for which historical information is available. The Company selects companies with comparable characteristics with historical share price information that approximates the expected term of the equity-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period that approximates the calculated expected term of the stock options. The Company will continue to apply this method until a sufficient amount of historical information regarding the volatility of its stock price becomes available. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. The Company uses the simplified method, under which the expected term is presumed to be the midpoint between the vesting date and the end of the contractual term. The Company utilizes this method due to lack of historical exercise data. The expected dividend yield is assumed to be zero as the Company has no current plans to pay any dividends on common stock. The fair value of the RSUs are based on the Company’s stock price on the date of the grant. The Company generally issues equity awards that are subject to either service-based vesting conditions and in limited instances, service-based and performance-based vesting conditions. Compensation expense for awards issued to grantees with service-based vesting conditions are recognized on a straight-line basis based on the grant date fair value over the associated requisite service period of the award, which is generally the vesting term. Compensation expense for awards to grantees with service-based and performance-based vesting conditions are recognized based on the grant-date fair value over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable. As of each reporting date, the Company estimates the probability that specified performance criteria will be met and does not recognize compensation expense until it is probable that the performance-based vesting condition will be achieved. The Company evaluates whether an equity award should be classified and accounted for as a liability award or equity award for all equity-based compensation awards granted. As of December 31, 2023, all of the Company’s equity-based awards were equity classified. Forfeitures are recognized as they occur. The Company classifies equity-based compensation expense in the accompanying consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified, as applicable. Concentrations of Credit Risk and Significant Suppliers Financial instruments that potentially expose the Company to credit risk primarily consist of cash and cash equivalents, restricted cash, and marketable securities. The Company’s investment portfolio is comprised of money market funds and debt securities issued by U.S. government. The Company maintains its deposits with accredited financial institutions and, consequently, the Company does not believe it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Bank accounts in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2023 and December 31, 2022, predominantly all of the Company’s primary operating accounts significantly exceeded the FDIC limits. 153 Table of Contents The Company is dependent on third-party organizations to research, develop, manufacture and process its product candidates for its development programs. In particular, the Company relies on one third-party contract manufacturer to produce and process its two most advanced programs, APG777 and APG808, for preclinical and clinical activities. The Company expects to continue to be dependent on a small number of manufacturers to supply it with its requirements for all products. The Company’s research and development programs could be adversely affected by a significant interruption in the supply of the necessary materials. A significant amount of the Company’s research and development activities are performed under its agreements with Paragon (see Note 8). Off-Balance Sheet Arrangements As of December 31, 2023 and December 31, 2022, the Company had no off-balance sheet risks such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and events other than those with stockholders. The Company’s unrealized gains and losses on marketable securities represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the consolidated statements of comprehensive loss. Net Loss Per Share The Company follows the two-class method when computing net loss per share. Prior to the Reorganization, the Company issued units that met the definition of participating securities, including the Company’s Series A Preferred Units, the Series B Preferred Units, and vested incentive units (each a participating security), and subsequent to the Reorganization, the Company has two classes of common stock outstanding comprised of voting and non-voting shares. The rights of the holders of voting and non-voting shares are identical, except with respect to voting and conversion. Each share of non-voting stock may be converted into one share of voting stock at any time at the option of the stockholder, subject to certain beneficial ownership limitations. The two-class method determines net loss per unit and net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income for the period to be allocated between common and participating securities based upon their respective rights to share in the income as if all income for the period had been distributed. Prior to the Reorganization, during periods of loss, there was no allocation required under the two-class method since the participating securities did not have a contractual obligation to fund the losses of the Company. Subsequent to the Reorganization, net loss per share for each class of common stock issued is the same as they are entitled to the same liquidation and dividend rights. Prior to the Reorganization, the Company calculated basic net loss per common share by dividing net loss by the weighted-average number of common units outstanding for the period. Subsequent to the Reorganization, the Company calculates basic net loss per common share by dividing net loss by the weighted-average number of common shares outstanding for the period. The Company has generated a net loss in the periods presented so the basic and diluted net loss per unit and net loss per share are the same as the inclusion of the potentially dilutive securities would be anti-dilutive. For periods presented that include the Reorganization, including the year ended December 31, 2023, the weighted-average shares of common stock outstanding include the weighted average number of common units outstanding prior to the Reorganization. 154 Table of Contents 3. Marketable Securities The Company did not hold any available-for-sale securities as of December 31, 2022. The following is a summary of the Company’s investing portfolio as of December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AS OF DECEMBER 31, 2023 ​ ​ ​ ​ UNREALIZED ​ ​ ​ COST GAINS LOSSES FAIR VALUE Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasury securities ​ $ 123,836 ​ $ 140 ​ $ ( 2 ) ​ $ 123,974 Debt securities issued by U.S. government agencies ​ 152,978 ​ 199 ​ ( 8 ) ​ 153,169 ​ ​ $ 276,814 ​ $ 339 ​ $ ( 10 ) ​ $ 277,143 ​ As of December 31, 2023, the Company had five securities with a total fair market value of $ 62.5 million in an unrealized loss position. The Company does not intend to sell its investments before recovery of the amortized cost basis of its debt securities at maturity and no allowance for credit losses was recorded as of December 31, 2023. All securities held by the Company have a maturity date of one year or less. Securities are evaluated at the end of each reporting period. The Company did not record any impairment related to its available-for-sale securities during the year ended December 31, 2023. 4. Fair Value Measurements The Company estimated the fair value of the Tranche Options, as defined below (see Note 10), at the time of issuance and subsequently remeasured them at each reporting period and prior to settlement, which occurred prior to December 31, 2022. The fair value of the Tranche Options was determined using a contingent forward model, which considered as inputs the estimated fair value of the preferred units as of each valuation date, the risk-free interest rate, probability of achievement, salvage value and estimated time to each tranche closing. The most significant assumptions in the contingent forward model impacting the fair value of the Tranche Options is the fair value of the Company’s Series A Preferred Unit, probability of achievement and time to the tranche closing as of each measurement date. The Company determined the fair value per share of the underlying preferred unit by taking into consideration the most recent sales of its preferred units, results obtained from third-party valuations and additional factors the Company deems relevant. The following table presents information about the Company’s financial assets and liabilities measured at fair value on a reoccurring basis and indicates the level of fair value hierarchy utilized to determine such values as of December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AS OF DECEMBER 31, 2023 ​ LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 110,655 ​ $ — ​ $ — ​ $ 110,655 Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasury securities ​ ​ 123,974 ​ ​ — ​ ​ — ​ ​ 123,974 Debt securities issued by U.S. government agencies ​ — ​ 153,169 ​ — ​ 153,169 ​ ​ $ 234,629 ​ $ 153,169 ​ $ — ​ $ 387,798 ​ As of December 31, 2022, the Company did not have any assets or liabilities measured at fair value using Level 3 significant unobservable inputs. The following table provides a reconciliation of all assets and liabilities measured at fair 155 Table of Contents value using Level 3 significant unobservable inputs which were settled during the period ended December 31, 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TRANCHE OPTION TRANCHE OPTION ​ ​ ​ PREFERRED UNIT ​ PREFERRED UNIT ​ ​ ​ ASSET (LIABILITY) TOTAL Balance as of February 4, 2022 (inception) ​ $ — ​ $ — ​ $ — Issuance ​ 650 ​ ( 1,700 ) ​ ( 1,050 ) Change in fair value ​ ​ ( 50 ) ​ ​ ( 9,100 ) ​ ​ ( 9,150 ) Transfer to temporary equity upon settlement ​ ( 600 ) ​ 10,800 ​ 10,200 Balance as of December 31, 2022 ​ $ — ​ $ — ​ $ — ​ ​ 5. Property and Equipment, net As of December 31, 2023, the Company had property and equipment, net of $ 0.4 million, which consisted entirely of lab equipment. The Company recognized an immaterial amount of depreciation expense for the year ended December 31, 2023. The Company did not own any property and equipment as of December 31, 2022. 6. Prepaids and Other Assets Prepaid expenses and other current assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, DECEMBER 31, ​ ​ 2023 ​ 2022 Prepaid expenses ​ $ 1,736 ​ $ 108 Other current assets ​ 1,214 ​ 57 Total ​ $ 2,950 ​ $ 165 ​ As of December 31, 2023, the Company had restricted cash of $ 0.3 million held as a letter of credit for the benefit of a contract research organization. The related letter of credit was classified within other non-current assets on the consolidated balance sheet as of December 31, 2023. The Company had no restricted cash as of December 31, 2022. ​ 7. Accrued Expenses Accrued expenses consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, DECEMBER 31, ​ ​ 2023 ​ 2022 Accrued external research and development expenses ​ $ 6,685 ​ $ 8,847 Accrued manufacturing expenses ​ ​ 9,219 ​ ​ — Accrued other ​ 1,243 ​ 200 Accrued employee compensation ​ 167 ​ 515 Total ​ $ 17,314 ​ $ 9,562 ​ ​ ​ 8. Other Significant Agreements Paragon Option Agreements In February 2022, the Company entered into an antibody discovery and option agreement with Paragon, which was subsequently amended in November 2022 (as amended, the “2022 Option Agreement”). Under the terms of the 2022 Option Agreement, Paragon identifies, evaluates and develops antibodies directed against certain mutually agreed therapeutic targets of interest to the Company. The 2022 Option Agreement initially included two selected targets, IL-13 and IL-4Rα, and was subsequently amended in November 2022 to include an additional selected target, OX40L. Under the 2022 Option Agreement, the Company has the exclusive option to, on a research program-by-research program basis, 156 Table of Contents be granted an exclusive, worldwide license to all of Paragon’s right, title and interest in and to the intellectual property resulting from the applicable research program to develop, manufacture and commercialize the antibodies and products directed to the selected targets (each, an “Option”). From time to time, the Company can choose to add additional targets to the collaboration by mutual agreement with Paragon. Pursuant to the terms of the 2022 Option Agreement, the parties initiated certain research programs that generally focus on a particular target (each, a “Research Program”). Each Research Program is aimed at discovering, generating, identifying and/or characterizing antibodies directed to the respective target. For each Research Program, the parties established a research plan that sets forth the activities that will be conducted, and the associated research budget (each, a “Research Plan”). Upon execution of the 2022 Option Agreement, the Company and Paragon agreed on an initial Research Plan that outlined the services that will be performed commencing at inception of the arrangement related to IL-13 and IL-4Rα. The Research Plan for OX40L was agreed to prior to December 31, 2022. The Company’s exclusive option with respect to each Research Program is exercisable at its sole discretion at any time during the period beginning on the initiation of activities under the associated Research Program and ending a specified number of days following the delivery of the data package from Paragon related to the results of the Research Plan activities (the “Option Period”). There is no payment due upon exercise of an Option pursuant to the 2022 Option Agreement. Unless terminated earlier, the 2022 Option Agreement shall continue in force on a Research Program-by-Research Program basis until the earlier of: (i) the end of the Option Period for such Research Program, as applicable, if such Option is not exercised by the Company; and (ii) the effective date of the license agreement for such Research Program if the Company exercises its Option with respect to such Research Program (the “2022 Term”). Upon the expiration of the 2022 Term for all then-existing Research Programs, under the 2022 Option Agreement, the 2022 Option Agreement will automatically expire in its entirety. The Company may terminate the 2022 Option Agreement or any Research Program at any time for any or no reason upon 30 days ’ prior written notice to Paragon, provided that the Company must pay certain unpaid fees due to Paragon upon such termination, as well as any non-cancellable obligations reasonably incurred by Paragon in connection with its activities under any terminated Research Program. Each party has the right to terminate the 2022 Option Agreement or any Research Program upon (i) 30 days ’ prior written notice of the other party’s material breach that remains uncured for the 30 day period and (ii) the other party’s bankruptcy. In consideration for the exclusive options granted under the 2022 Option Agreement, the Company paid an upfront cash amount of $ 1.3 million and issued 1,250,000 common units to Paragon. Paragon was also entitled to up to an additional 3,750,000 of common units in exchange for the rights granted under the 2022 Option Agreement, which were issued in connection with the closings of the additional Tranche Options of the Series A Preferred Unit financing (see Note 10). Through December 31, 2023, the Company had issued a total of 5,000,000 common units to Paragon with an aggregate fair value of $ 2.2 million on the grant date. Under the 2022 Option Agreement, on a Research Program-by-Research Program basis following the finalization of the Research Plan for each respective Research Program, the Company is required to pay Paragon a nonrefundable fee in cash of $ 0.5 million. The Company is also obligated to compensate Paragon on a quarterly basis for its services performed under each Research Program based on the actual costs incurred. The Company expenses the service fees as the associated costs are incurred when the underlying services are rendered. Such amounts are classified within research and development expenses in the accompanying consolidated statement of operations and comprehensive loss. The Company concluded that the rights obtained under the 2022 Option Agreement represent an asset acquisition whereby the underlying assets comprise in-process research and development assets with no alternative future use. The 2022 Option Agreement did not qualify as a business combination because substantially all of the fair value of the assets acquired was concentrated in the exclusive license options, which represent a group of similar identifiable assets. Therefore, the aggregate acquisition cost of $ 3.5 million, related to the upfront cash and equity payments, was recognized as acquired in-process research and development expense, which is reported as a component of research and development expense during the period from February 4, 2022 (inception) to December 31, 2022. Amounts paid as on-going development cost reimbursements associated with services being rendered under the related Research Programs is recognized as research and development expense when incurred. In November 2023, the Company entered into an additional antibody discovery and option agreement with Paragon (the “2023 Option Agreement,” and together with the 2022 Option Agreement, collectively the “Option 157 Table of Contents Agreements”). Under the terms of the 2023 Option Agreement, Paragon identifies, evaluates and develops antibodies directed against certain mutually agreed therapeutic targets of interest to the Company. The 2023 Option Agreement initially includes one undisclosed target. Under the 2023 Option Agreement, the Company has the exclusive option to, on a research program-by-research program basis, be granted an exclusive, worldwide license to all of Paragon’s right, title and interest in and to the intellectual property resulting from the applicable research program to develop, manufacture and commercialize the antibodies and products directed to the selected targets Option. From time to time, the Company can choose to add additional targets to the collaboration by mutual agreement with Paragon. Pursuant to the terms of the 2023 Option Agreement, the parties may initiate Research Programs. Each Research Program is aimed at discovering, generating, identifying and/or characterizing antibodies directed to the respective target. For each Research Program, the parties must establish a Research Plan. In January 2024, the Company and Paragon agreed on an initial Research Plan that outlines the services that will be performed commencing at inception of the arrangement related to the undisclosed target. The Company’s exclusive option with respect to each Research Program is exercisable at its sole discretion at any time during the period beginning on the initiation of activities under the associated Research Program and ending a specified number of days following the delivery of the data package from Paragon related to the results of the Research Plan activities. There is no payment due upon exercise of an Option pursuant to the 2023 Option Agreement. Following entry into the 2023 Option Agreement, the Company and Paragon will negotiate a form of License Agreement to be entered into in the event that the Company exercises its exclusive option with respect to each Research Program, which License Agreement will include certain pre-agreed economic and other business terms. Unless terminated earlier, the 2023 Option Agreement shall continue in force on a Research Program-by-Research Program basis until the earlier of: (i) the end of the Option Period for such Research Program, as applicable, if such Option is not exercised by the Company; and (ii) the effective date of the license agreement for such Research Program if the Company exercises its Option with respect to such Research Program (the “2023 Term”). Upon the expiration of the 2023 Term for all then-existing Research Programs, under the 2023 Option Agreement, the 2023 Option Agreement will automatically expire in its entirety. The Company may terminate the 2023 Option Agreement or any Research Program at any time for any or no reason upon 30 days ’ prior written notice to Paragon, provided that the Company must pay certain unpaid fees due to Paragon upon such termination, as well as any non-cancellable obligations reasonably incurred by Paragon in connection with its activities under any terminated Research Program. Each party has the right to terminate the 2023 Option Agreement or any Research Program upon (i) 30 days ’ prior written notice of the other party’s material breach that remains uncured for the 30 day period and (ii) the other party’s bankruptcy. Under the 2023 Option Agreement, on a Research Program-by-Research Program basis following the finalization of the Research Plan for each respective Research Program, the Company is required to pay Paragon a nonrefundable fee in cash of $ 2.0 million. The Company is also obligated to compensate Paragon on a quarterly basis for its services performed under each Research Program based on the actual costs incurred. The Company expenses the service fees as the associated costs are incurred when the underlying services are rendered. For the year ended December 31, 2023 and for the period from February 4, 2022 (inception) to December 31, 2022, the Company recognized $ 15.9 million and $ 22.3 million, respectively, of research and development expense in connection with services provided by Paragon under the Option Agreements, including nonrefundable fees following the finalization of a Research Plan. Paragon License Agreements In November 2022, the Company exercised its option available under the 2022 Option Agreement with respect to the IL-13 Research Program. Upon such exercise, the parties entered into an associated license agreement (the “IL-13 License Agreement”). In April 2023, the Company exercised its option available under the 2022 Option Agreement with respect to the IL-4Rα Research Program and OX40L Research Program. Upon such exercise, the parties entered into associated license agreements (the “IL-4Rα License Agreement” and the “OX40L License Agreement,” respectively, and collectively with the IL-13 License Agreement, the “License Agreements”). Under the terms of each of the License Agreements, Paragon granted to the Company an exclusive, worldwide, royalty-bearing, sublicensable right and license with respect to certain information, patent rights and sequence information related to antibodies directed at the respective target to use, make, sell, import, export and otherwise exploit the antibodies directed at the respective target. Pursuant to 158 Table of Contents the License Agreements, the Company granted to Paragon a similar license (except that such license the Company granted to Paragon is non-exclusive) to the respective licenses with respect to multispecific antibodies that are directed at the respective target and one or more other antibodies. The Company was also granted a right of first negotiation with Paragon concerning the development, license and grant of rights to certain multispecific antibodies associated with each license. The Company is solely responsible for the continued development, manufacture and commercialization of products at its own cost and expense for each licensed target. The Company is obligated to pay Paragon up to $ 3.0 million upon the achievement of specific development and clinical milestones for the first product under each of the License Agreements that achieves such specified milestones, including a payment of $ 1.0 million upon the nomination of a development candidate and $ 2.0 million upon the first dosing of a human patient in a Phase 1 trial. Upon execution of the IL-13 License Agreement, the Company paid Paragon a $ 1.0 million fee for the nomination of a development candidate. In August 2023, the Company announced the dosing of its first participant in the Phase 1 trial of APG777 and incurred a milestone payment of $ 2.0 million to Paragon in the third quarter of 2023. In November 2023, the Company finalized the nomination of a development candidate under the IL-4Rα License Agreement and made a milestone payment of $ 1.0 million to Paragon in the fourth quarter of 2023. Except for the three milestone payments totaling an aggregate of $ 4.0 million, no other milestone or royalty payments have become due to Paragon through December 31, 2023. The Company is also obligated to pay royalties to Paragon equal to a low-single digit percentage of net sales of any products under each of the License Agreements, and Paragon has a similar obligation to pay royalties to the Company with respect to the each of the multispecific licenses. Royalties are due on a product-by-product and country-by-country basis beginning upon the first commercial sale of each product and ending on the later of (i) 12 years after the first commercial sale of such product in such country and (ii) expiration of the last valid claim of a patent covering such product in such country (the “Royalty Term”). Unless earlier terminated, the License Agreements remain in effect until the expiration of the last-to-expire Royalty Term for any and all Products associated with the respective license. The Company may terminate the agreement in its entirety or on a country-by-country or product-by-product at any time for any or no reason upon 60 days ’ advance written notice to Paragon, and either party may terminate for (i) the other party’s material breach that remains uncured for 90 days (or 30 days with respect to any failure to make payments) following notice of such breach and (ii) the other party’s bankruptcy. Upon any termination prior to the expiration of a License Agreement, all licenses and rights granted pursuant to such License Agreement will automatically terminate and revert to the granting party and all other rights and obligations of the parties will terminate. The Company concluded that each of the License Agreements constitutes an asset acquisition of in-process research and development assets with no alternative future use. Each of the arrangements did not qualify as a business combination because substantially all of the fair value of the assets acquired was concentrated in the license which comprises a single identifiable asset. Therefore, the aggregate acquisition cost for each license was recognized as research and development expense. For the year ended December 31, 2023 and for the period from February 4, 2022 (inception) to December 31, 2022, the Company recognized $ 10.4 million and $ 1.0 million, respectively, of research and development expense in connection with services provided by Paragon under the License Agreements. Biologics Master Services Agreement — WuXi Biologics (Hong Kong) Limited In June 2022, Paragon and WuXi Biologics (Hong Kong) Limited (“WuXi Biologics”) entered into a biologics master services agreement (the “WuXi Biologics MSA”), which was subsequently novated to the Company by Paragon in the second quarter of 2023. The WuXi Biologics MSA governs all development activities and GMP manufacturing and testing for APG777 and APG808 programs, as well as the Company’s other programs, on a work order basis. Under the WuXi Biologics MSA, the Company is obligated to pay WuXi Biologics a service fee and all non-cancellable obligations in the amount specified in each work order associated with the agreement for the provision of services. The WuXi Biologics MSA terminates on the later of (i) June 20, 2027 or (ii) the completion of services under all work orders executed by the parties prior to June 20, 2027, unless terminated earlier. The term of each work order terminates upon completion of the services under such work order, unless terminated earlier. The Company can terminate 159 Table of Contents the WuXi Biologics MSA or any work order at any time upon 30 days’ prior written notice and immediately upon written notice if WuXi Biologics fails to obtain or maintain required material governmental licenses or approvals. Either party may terminate a work order (i) at any time upon six months ’ prior notice with reasonable cause, provided however that if WuXi Biologics terminates a work order in such manner, no termination or cancellation fees shall be paid busy the Company and (ii) immediately for cause upon (a) the other party’s material breach that remains uncured for 30 days after notice of such breach, (b) the other party’s bankruptcy or (c) a force majeure event that prevents performance for a period of at least 90 days . For the year ended December 31, 2023, the Company recognized $ 20.2 million of research and development expense in connection with the WuXi Biologics MSA subsequent to novation. As of December 31, 2023, there were no non-cancelable obligations under the WuXi Biologics MSA. Cell Line License Agreement — WuXi Biologics (Hong Kong) Limited In June 2022, Paragon and WuXi Biologics entered into a cell line license agreement (the “Cell Line License Agreement”), which was subsequently novated to the Company by Paragon in the second quarter of 2023. Under the Cell Line License Agreement, the Company received a non-exclusive, worldwide, sublicensable license to certain of WuXi Biologics’ know-how, cell line, biological materials (the “WuXi Biologics Licensed Technology”) and media and feeds to make, have made, use, sell and import certain therapeutic products produced through the use of the cell line licensed by WuXi Biologics under the Cell Line License Agreement (the “WuXi Biologics Licensed Products”). Specifically, the WuXi Biologics Licensed Technology is used to manufacture a component of the APG777 and APG808 programs. In consideration for the license, the Company agreed to pay WuXi Biologics a non-refundable license fee of $ 150,000 . Additionally, if the Company manufactures all of its commercial supplies of bulk drug product with a manufacturer other than WuXi Biologics or its affiliates, it is required to make royalty payments to WuXi Biologics in an amount equal to a fraction of a single digit percentage of global net sales of WuXi Biologics Licensed Products manufactured by a third-party manufacturer (the “Royalty”). If the Company manufactures part of its commercial supplies of the WuXi Biologics Licensed Products with WuXi Biologics or its affiliates, then the Royalty will be reduced accordingly on a pro rata basis. The Cell Line License Agreement will continue indefinitely unless terminated (i) by the Company upon six months ’ prior written notice and its payment of all undisputed amounts due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material breach by the Company that remains uncured for 60 days after written notice, (iii) by WuXi Biologics if the Company fails to make a payment and such failure continues for 30 days after receiving notice of such failure, or (iv) by either party upon the other party’s bankruptcy. 9. Commitments and Contingencies Other Contracts Currently, all of the Company’s preclinical and clinical drug manufacturing, storage, distribution or quality testing are outsourced to third-party manufacturers. As development programs progress and new process efficiencies are built, the Company expects to continually evaluate this strategy with the objective of satisfying demand for registration trials and, if approved, the manufacture, sale and distribution of commercial products. Under such agreements, the Company is contractually obligated to make certain payments to vendors upon early termination, primarily to reimburse them for their unrecoverable outlays incurred prior to cancellation as well as any amounts owed by the Company prior to early termination. The actual amounts the Company could pay in the future to the vendors under such agreements may differ from the purchase order amounts due to cancellation provisions. Indemnification Agreements The Company enters into standard indemnification agreements and/or indemnification sections in other agreements in the ordinary course of business. Pursuant to the agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the 160 Table of Contents Company’s business partners. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. There is no limit to the maximum potential amount of future payments the Company could be required to make under these indemnification agreements. As of December 31, 2023, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. The Company was not aware of any claims under these indemnification arrangements as of December 31, 2023 and December 31, 2022. Legal Proceedings The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of FASB ASC Topic 450, Contingencies ( “ ASC 450 ” ) . The Company expenses as incurred the costs related to its legal proceedings. 10. Preferred Shares As of December 31, 2022, the Company had authorized, issued and outstanding an aggregate of 65,089,212 preferred units, of which 20,000,000 units had been designated as Series A Preferred Units and 45,089,212 units had been designated as Series B Preferred Units. All outstanding preferred units were exchanged for 24,987,750 shares of common stock (or non-voting common stock in lieu thereof) in connection with the IPO in July 2023. As of December 31, 2023, the Company did not have any outstanding preferred units. Series A Preferred Units On February 24, 2022, the Company executed the Series A Preferred Unit Purchase Agreement (the “Series A Agreement”) to issue and sell up to 20,000,000 Series A Preferred Units at a purchase price of $ 1.00 per unit. In the initial closing on February 24, 2022, the Company issued 5,000,000 Series A Preferred Units at a purchase price of $ 1.00 , resulting in gross cash proceeds to the Company of $ 5.0 million, and incurred $ 0.2 million of issuance costs. The Series A Agreement provided for three tranche option closings following the initial closing (the “Tranche Options”), which Tranche Option closings were subject to approval of the Board of Managers of Apogee Therapeutics, LLC (the “Board of Managers”), which was controlled by the holders of the Series A Preferred Units. The Board of Managers approved all such subsequent closings resulting in investors purchasing 5,000,000 Series A Preferred Units in each of the three subsequent Tranche Option closings throughout 2022. As a result, the Company received an aggregate of $ 20.0 million in gross proceeds associated with the Series A Agreement. The Company assessed the Tranche Options and concluded that they met the definition of a freestanding financial instrument, as the Tranche Options were legally detachable and separately exercisable from the Series A Preferred Units. Therefore, the Company allocated the proceeds between the Tranche Options and the Series A Preferred Units sold at the initial closing. As the Series A Preferred Units are contingently redeemable upon an event that is not completely within the control of the Company, the Tranche Options are classified as an asset or liability and are initially recorded at fair value. The Tranche Options are measured at fair value at each reporting period, through the settlement of the instrument. Since the Tranche Options are subject to fair value accounting, the Company allocated $ 1.1 million of the initial proceeds to the Tranche Options based on the fair value at the date of issuance with the remaining proceeds beings allocated to the Series A Preferred Units. Upon the Tranche Option closings in August and October 2022, the respective Tranche Option value was remeasured at fair value and then reclassified to Series A Preferred Units upon settlement. Series B Preferred Units On November 15, 2022, the Company executed the Series B Preferred Unit Purchase Agreement (the “Series B Agreement”) to issue and sell 45,089,212 Series B Preferred Units in a single closing at a purchase price of $ 3.30456 per unit, resulting in gross cash proceeds to the Company of $ 149.0 million. The Company incurred $ 0.5 million of issuance costs in connection with the issuance of the Series B Preferred Units. 161 Table of Contents The Company’s preferred units as of December 31, 2022 consisted of the following (in thousands, except unit amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PREFERRED ​ ​ ​ ​ ​ ​ PREFERRED ​ UNITS ​ ​ ​ ​ ​ ​ ​ ​ UNITS ​ ISSUED AND ​ CARRYING ​ LIQUIDATION ​ ​ AUTHORIZED ​ OUTSTANDING ​ VALUE ​ PREFERENCE Series A Preferred Units 20,000,000 20,000,000 ​ $ 28,971 ​ $ 20,000 Series B Preferred Units 45,089,212 45,089,212 ​ 148,496 ​ 149,000 Total 65,089,212 65,089,212 ​ $ 177,467 ​ $ 169,000 ​ Embedded Securities Evaluation The Company assessed the Series A Preferred Units and the Series B Preferred Units for any features that may require separate accounting under FASB ASC Topic 815- Derivatives and Hedging (“ASC 815”). The Company concluded that none of the features required separate accounting as a derivative. 11. Common Stock In July 2023, the Company completed its IPO, selling an aggregate 20,297,500 shares of common stock. All outstanding preferred units were exchanged into 24,987,750 shares of common stock in connection with the IPO. Following the IPO, the Company is authorized to issue 400,000,000 shares of common stock, par value $ 0.00001 . As of December 31, 2023, 50,655,671 and 48,338,769 shares of common stock were issued and outstanding, respectively. The 50,655,671 shares of common stock issued is comprised of 37,169,029 shares of voting common stock, and 13,486,642 shares of non-voting common stock, respectively. As of December 31, 2023, there are 2,316,902 shares of unvested restricted common stock included within the shares of common stock issued. As of December 31, 2022, the Company had 5,000,000 common units authorized, issued and outstanding . 12. Equity-Based Compensation Incentive Units Prior to the Reorganization, the Company periodically granted incentive units to employees, managers and executives, as well as to consultants and service providers of the Company. The incentive units represent a separate substantive class of members’ equity with defined rights. The incentive units represent profits interest in the increase in the value of the entity over a threshold value, or strike price, as determined at the time of grant. The strike price is established for tax compliance purposes related to Internal Revenue Service Revenue Procedure 93-27 and 2001-43 where the Company allocates equity value to separate classes of equity in a hypothetical liquidation transaction as of the date of grant. Each incentive unit issued includes a strike price determined by the Board of Managers. The strike price is based on an estimate of the amount a common unit would receive on the date of issuance of such incentive units in a hypothetical liquidation of the Company in which the Company sold its assets for their fair market value, satisfied its liabilities, and distributed the net proceeds to the holders of units in liquidation of the Company. The Company accounts for equity-based compensation in accordance with ASC 718. In accordance with ASC 718, compensation cost is measured at estimated fair value and is included as compensation expense over the vesting period during which service is provided in exchange for the award. The service-based incentive unit grants generally vest over a four-year service period, with the first 25 % vesting on the 12 -month anniversary of the vesting start date and the remaining vesting in equal monthly installments over the following 36 months . The service-based and performance-based incentive unit grant, which the Company has one such award, vests in the same manner as the service-based award upon the achievement of the performance condition. The Company had one incentive unit grant which vested immediately upon issuance. The holders of vested incentive units are entitled to distributions and are not required to purchase or “exercise” their incentive units in order to receive such distributions. However, distributions to incentive unit holders began only after the cumulative amount distributed to common unit holders exceeds the strike price with respect to such incentive unit. 162 Table of Contents The Company determined that incentive units issued to employees, managers, executives, non-employees and service providers are equity-based service payments and, as such, the Company measures and recognizes the related compensation expense in a manner consistent with its accounting policy for equity-based awards. The fair value of each incentive unit grant is estimated on the grant date using either an option pricing method (“OPM”), or a hybrid method, both of which use market approaches to estimate the Company’s enterprise value. The OPM treats common units, incentive units and preferred units as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the incentive units have value only if the funds available for distribution to unitholders exceed the value of the preferred and common unit distribution preferences and the strike price with respect to such incentive unit at the time of the liquidity event. The hybrid method is a probability-weighted expected return method (“PWERM”), where the equity value is allocated in one or more of the scenarios using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of each unit based upon an analysis of future values, assuming various outcomes. The incentive unit value is based on the probability-weighted value across the scenarios, considering the OPM to estimate the value within each scenario given the rights of each class of unit. A discount for lack of marketability of the incentive unit is then applied to arrive at an indication of fair value for the incentive unit. The following assumptions were used in determining the fair value of incentive units granted during the period: ​ ​ ​ ​ ​ ​ ​ ​ ​ FEBRUARY 4, 2022 ​ ​ ​ YEAR ENDED ​ (INCEPTION) TO ​ ​ ​ DECEMBER 31, 2023 ​ DECEMBER 31, 2022 ​ Risk free interest rate 4.1 % - 4.9 % 4.1 % - 4.3 % Expected dividend yield 0.0 % 0.0 % Expected term (in years) 0.17 - 2.00 ​ 0.71 - 2.25 ​ Expected volatility 84.0 % - 90.0 % 77.0 % - 86.0 % ​ The following table summarizes the Company’s unvested incentive unit activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED- ​ ​ ​ ​ AVERAGE ​ ​ NUMBER OF ​ GRANT DATE FAIR ​ ​ SHARES ​ VALUE PER UNIT Unvested incentive units as of December 31, 2022 8,023,288 ​ $ 1.20 Granted ​ 4,621,901 ​ $ 1.32 Vested ​ ( 922,338 ) ​ $ 1.54 Exchanged for unvested restricted common stock ( 11,722,851 ) ​ $ 1.22 Unvested incentive units as of December 31, 2023 — ​ $ — ​ The fair value of incentive units vested during the year ended December 31, 2023 was $ 1.4 million. ​ 163 Table of Contents Restricted Common Stock Concurrent with the Reorganization, all of the outstanding incentive units were exchanged into 3,469,546 shares of common stock, of which 2,779,358 were unvested restricted common stock. The following table provides a summary of the unvested restricted common stock award activity during the year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED- ​ ​ ​ ​ AVERAGE ​ ​ NUMBER OF ​ GRANT DATE FAIR ​ ​ SHARES ​ VALUE PER SHARE Unvested restricted common stock as of December 31, 2022 — ​ $ — Exchange of incentive units ​ 2,779,358 ​ $ 5.16 Vested ( 443,831 ) ​ $ 4.02 Forfeited ​ ( 18,625 ) ​ $ 13.08 Unvested restricted common stock as of December 31, 2023 2,316,902 ​ $ 5.31 ​ The fair value of restricted stock vested during the year ended December 31, 2023 was $ 1.8 million. ​ 2023 Equity Incentive Plan In July 2023, in connection with the IPO, the Company’s Board of Directors (the “Board”) and stockholders approved the 2023 Equity Incentive Plan (the “2023 Plan”), which became effective on the date of the effectiveness of the registration statement for the IPO. The 2023 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, awards of restricted stock, restricted stock units and other stock-based awards. As of December 31, 2023, the number of shares of common stock reserved for issuance under the 2023 Plan is equal to 6,706,037 shares of common stock. The number of shares available for grant and issuance under the 2023 Plan will be automatically increased on January 1 of each year by a number of shares equal to up to 5 % of the outstanding shares of common stock on such date. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options granted with the following assumptions: ​ ​ ​ ​ ​ ​ YEAR ENDED ​ ​ DECEMBER 31, ​ 2023 Common stock fair value ​ $ 17.00 - $ 27.94 Risk free interest rate ​ 3.9 % - 4.9 % Expected dividend yield ​ 0.0 % Expected term (in years) ​ 5.75 – 6.25 Expected volatility ​ 96.8 % - 104.7 % ​ 164 Table of Contents The following table provides a summary of stock option activity under the 2023 Plan during the year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED- ​ ​ ​ ​ ​ ​ WEIGHTED- ​ AVERAGE ​ AGGREGATE ​ ​ ​ ​ AVERAGE ​ REMAINING ​ INTRINSIC ​ ​ ​ ​ EXERCISE ​ CONTRACTUAL TERM ​ VALUE ​ ​ OPTIONS ​ PRICE (IN YEARS) (IN THOUSANDS) Outstanding as of December 31, 2022 — ​ $ — ​ ​ — ​ $ — Granted ​ 2,518,728 ​ $ 21.50 ​ ​ — ​ ​ — Forfeited ​ ( 12,711 ) ​ $ 23.60 ​ ​ — ​ ​ — Outstanding as of December 31, 2023 ​ 2,506,017 ​ $ 21.49 ​ ​ 9.80 ​ ​ 16,154 Vested and expected to vest as of December 31, 2023 2,506,017 ​ $ 21.49 ​ ​ 9.80 ​ ​ 16,154 Exercisable as of December 31, 2023 5,555 ​ $ 23.60 ​ ​ 9.63 ​ ​ 24 ​ The fair value of options vested during the year ended December 31, 2023 was $ 0.1 million. ​ The following table provides a summary of restricted stock unit activity under the 2023 Plan during the year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED- ​ ​ ​ ​ AVERAGE ​ ​ NUMBER OF ​ GRANT DATE FAIR ​ ​ SHARES ​ VALUE PER SHARE Unvested restricted stock units as of December 31, 2022 — ​ $ — Granted ​ 144,090 ​ $ 22.86 Unvested restricted stock units as of December 31, 2023 144,090 ​ $ 22.86 ​ 2023 Employee Stock Purchase Plan In July 2023, the Board adopted and the Company’s stockholders approved the 2023 Employee Stock Purchase Plan, (the “ESPP”), which became effective on July 13, 2023. As of December 31, 2023, a total of 479,003 shares of common stock were reserved for issuance under the ESPP, and no shares have been issued under the ESPP. Equity-Based Compensation Expense The following table presents the classification of equity-based compensation expense related to equity awards granted to employees, managers, executives, and service providers (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PERIOD FROM ​ YEAR ENDED FEBRUARY 4, 2022 ​ ​ DECEMBER 31, ​ (INCEPTION) TO ​ ​ 2023 ​ DECEMBER 31, 2022 Research and development expense ​ $ 1,574 ​ $ 1,502 General and administrative expense ​ ​ 4,529 ​ 640 Total ​ $ 6,103 ​ $ 2,142 ​ As of December 31, 2023, the total unrecognized compensation expense related to the Company’s unvested restricted stock, restricted stock units, and stock options was $ 56.1 million, which the Company expects to recognize over a weighted-average period of approximately 3.7 years. For the period from February 4, 2022 (inception) to December 31, 2022, the Company recognized an additional $ 2.2 million of equity-based compensation expense, in connection with the additional common units issued under the 2022 Option Agreement with Paragon. In August 2023, the Board approved two option grants to the new Chairman of the Board, (1) to purchase 50,000 shares of the Company’s common stock under the 2023 Plan (“first option”), and (2) to purchase 100,000 shares of the 165 Table of Contents Company’s common stock outside of the 2023 Plan (“second option”), in which the shares underlying both options will vest and become exercisable in equal monthly installments over a three-year period from August 2023. The second option is contingent upon approval of the shares underlying the award by the Company’s stockholders at the 2024 Annual Meeting of Stockholders and failure to obtain stockholder approval will result in the forfeiture of the award. Prior to receiving stockholder approval for the second option, neither a grant date nor a service inception date will occur, and no compensation cost is recognized for the award. Should stockholder approval be received at the 2024 Annual Meeting of Stockholders, a cumulative catch-up in equity-based compensation for the second option will be recognized on the date of stockholder approval . 13. Related Parties Under the Option Agreements and the License Agreements, Paragon, a stockholder of the Company which was founded by a Series A Preferred Unit investor, received upfront consideration in the form of common units, is entitled to receive milestone and royalty payments upon specific conditions and receives payments from the Company for providing ongoing services under the agreements (see Note 8). As of December 31, 2023 and December 31, 2022, $ 5.2 million and $ 8.0 million was due to Paragon, respectively. The Company incurred $ 26.3 million of research and development expenses with Paragon for the year ended December 31, 2023. The Company incurred $ 23.3 million of research and development expenses, exclusive of $ 3.7 million of equity-based research and development expense with Paragon, and $ 0.3 million of general and administrative expenses with Paragon for the period from February 4, 2022 (inception) to December 31, 2022. 14. Net Loss Per Share Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED FEBRUARY 4 ​ ​ DECEMBER 31, ​ (INCEPTION) TO ​ 2023 DECEMBER 31, 2022 Numerator: ​ ​ ​ Net loss ​ $ ( 83,985 ) ​ $ ( 39,785 ) Net loss attributable to common stockholders, basic and diluted ​ $ ( 83,985 ) ​ $ ( 39,785 ) Denominator: ​ ​ Weighted average shares of common stock outstanding, basic and diluted ​ ​ 25,005,774 ​ ​ 2,462,236 Net loss per share attributable to common stockholders, basic and diluted ​ $ ( 3.36 ) ​ $ ( 16.16 ) ​ The following potential common shares, presented based on amounts outstanding period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the period indicated because including them would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PERIOD FROM ​ ​ YEAR FEBRUARY 4 ​ ​ ENDED ​ (INCEPTION) TO ​ DECEMBER 31, 2023 DECEMBER 31, 2022 Series A Preferred Units ​ — 20,000,000 Series B Preferred Units ​ — ​ 45,089,212 Vested Incentive Units ​ — ​ 1,625,086 Unvested Incentive Units ​ — ​ 8,023,288 Stock options ​ 2,506,017 ​ — Unvested restricted common stock ​ 2,316,902 ​ — Unvested restricted stock units ​ 144,090 ​ — Total ​ 4,967,009 74,737,586 ​ ​ ​ 166 Table of Contents 15. Operating Leases In November 2023, the Company entered into a lease agreement for lab space. As of December 31, 2023, the current and non-current portions of the total liability for the operating lease were $ 1.1 million and $ 0.9 million, respectively. As of December 31, 2023, the remaining lease term on the Company’s operating lease was 1.9 years. As of December 31, 2023, the incremental borrowing rate used to determine the operating lease liabilities included on the balance sheet was 10 %. As of December 31, 2023, the future minimum lease payments for the Company’s operating lease for each of the years ending December 31 were as follows (in thousands): ​ ​ ​ ​ ​ ​ Amount 2024 ​ $ 1,244 2025 ​ ​ 964 Thereafter ​ ​ — Total undiscounted lease payments ​ ​ 2,208 Present value adjustment ​ ​ ( 174 ) Total net lease liabilities ​ $ 2,034 ​ Lease expense was $ 0.1 million for the year ended December 31, 2023. 16. Income Tax ​ Prior to the Reorganization, Apogee Therapeutics, LLC was taxed under the Partnership provisions of the Internal Revenue Code. Accordingly, all income and deductions of Apogee Therapeutics, LLC were reported on the members’ individual income tax returns, and no income taxes were recorded by Apogee Therapeutics, LLC. Apogee Biologics, Inc., the operating subsidiary of the Company, was separately taxed as a C corporation for federal tax purposes. Subsequent to the Reorganization, Apogee Therapeutics, Inc. and its subsidiary, are taxed as a consolidated C corporation for federal tax purposes. The Company’s loss before income taxes is comprised solely of domestic losses. There is no income tax expense for the year ended December 31, 2023. The Company generated taxable losses for the respective period. The difference between the effective tax rate and the U.S. federal tax rate were as follows: ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED FEBRUARY 4, 2022 ​ ​ DECEMBER 31, ​ (INCEPTION) TO ​ ​ 2023 ​ DECEMBER 31, 2022 ​ ​ % ​ % U.S. federal statutory tax rate ( 21.0 ) % ( 21.0 ) % Partnership operating expenses not subject to income taxes — % 4.8 % State and local income taxes, net of federal income tax benefit ( 4.9 ) % ( 0.3 ) % Change in state effective income rate ​ ( 1.8 ) % — % Nondeductible items 1.5 % 1.1 % Change in valuation allowance 27.9 % 16.9 % Tax credits ( 1.9 ) % ( 1.5 ) % Other 0.2 % — % Effective tax rate — % — % ​ 167 Table of Contents Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ As of ​ ​ December 31, 2023 ​ December 31, 2022 Deferred tax assets: ​ ​ Capitalized license and research and development payments ​ $ 21,034 ​ $ 4,563 Net operating loss carryforwards ​ 5,370 ​ 620 Research and development credits ​ 2,415 ​ 697 Intangible assets ​ 1,244 ​ 695 Reserves and accruals not currently deductible ​ — ​ 108 Stock compensation ​ 186 ​ — Lease liability ​ 502 ​ — Other ​ 1 ​ — Total deferred tax assets ​ 30,752 ​ 6,683 Deferred tax liabilities: ​ ​ Right-of-use asset ​ ( 574 ) ​ — Total deferred tax liabilities ​ ( 574 ) ​ — Valuation allowance ​ ( 30,178 ) ​ ( 6,683 ) Net deferred tax assets ​ — ​ — ​ The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s cumulative net losses and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of December 31, 2023. The change in the valuation allowance for the year ended December 31, 2023 and period ended December 31, 2022 was $ 23.5 million and $ 6.7 million, respectively. Management reevaluates the positive and negative evidence at each reporting period. As of December 31, 2023 and 2022, the Company had U.S. federal net operating loss carryforwards of approximately $ 23.6 million and $ 3.0 million, respectively, which have no expiration for federal tax purposes. As of December 31, 2023, the Company also had state net operating loss carryforwards of approximately $ 6.5 million, which will begin to expire in 2043 for state tax purposes. ​ As of December 31, 2023 and 2022, the Company had federal research and development credit carryforwards of approximately $ 2.7 million and $ 0.6 million, respectively, which will begin to expire in 2042. The Company also had California research and development credit carryforwards of approximately $ 0.7 million and $ 0.1 million, respectively, which will not expire. ​ The Company will conduct a study of its research and development credit carryforwards, which may result in an adjustment to its unrecognized tax benefits. However, a full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the accompanying consolidated balance sheet or statement of operations if an adjustment were required. ​ A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): ​ ​ ​ ​ ​ Beginning balance as of December 31, 2022 ​ — Changes related to tax positions taken in the prior year ​ 187 Changes related to tax positions taken in the current year ​ 717 Ending Balance as of December 31, 2023 ​ $ 904 ​ 168 Table of Contents The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. Net operating losses are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant members over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not yet completed a study to determine if any such changes have occurred that could limit its ability to use the net operating losses and tax credit carryforwards. ​ All tax returns will remain open for examination by the federal and state taxing authorities for three and four years , respectively, from the date of utilization of any net operating loss carryforwards or research and development credits. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of income tax expense, as necessary. As of December 31, 2023 and 2022, the Company had no accrued interest or penalties related to uncertain tax positions. The Company does not expect that its uncertain tax positions will materially change in the next twelve months. The Tax Cuts and Jobs Act (“TCJA”) included a change in the treatment of research and development expenditures for tax purposes under Section 174. Effective for tax years beginning after December 31, 2021, specified R&D expenditures must undergo a 5-year amortization period for domestic spend and a 15-year amortization period for foreign spend. Prior to the effective date (2021 tax year and prior), taxpayers were able to immediately expense R&D costs under Section 174(a) or had the option to capitalize and amortize R&D expenditures over a 5-year recovery period under Section 174(b). The Company has evaluated the current legislation at this time and prepared the provision by following the treatment of research and development expenditures for tax purposes under Section 174. ​ 17. Subsequent Events In January 2024, the Company finalized the Research Plan with Paragon related to the undisclosed target, pursuant to the 2023 Option Agreement with Paragon. As such, the Company made a one-time non-refundable payment of $ 2.0 million to Paragon in the first quarter of 2024. ​ ​ 169 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.