What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-03 compared with 2025-03-06 · 84 added, 73 removed, 198 unchanged (44% of the section changed)

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Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found within Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.

We are a messenger RNA medicines company focused on the development of infectious disease vaccines and opportunities within liver and respiratory rare diseases.

We developed the world’s first approved self-amplifying messenger RNA (sa-mRNA) vaccine, KOSTAIVE® (“KOSTAIVE”).

KOSTAIVE achieved approval in Japan in 2023 as a vaccine against COVID-19.

Sales of KOSTAIVE began in Japan in October 2024, marking our transition to a commercial stage company.

We have several key platform technologies that we leverage to develop and advance a pipeline of mRNA-based vaccines and therapeutics for infectious diseases and for rare genetic disorders with significant unmet medical needs.

We are a messenger RNA medicines company focused on the development of liver and respiratory rare disease therapeutics.

We have ongoing Phase 2 clinical studies for our RNA therapeutic candidates to potentially treat ornithine transcarbamylase (OTC) deficiency and cystic fibrosis (CF).

We developed the world’s first approved self-amplifying messenger RNA (sa-mRNA) vaccine, KOSTAIVE ® (“KOSTAIVE”), which we have partnered with Seqirus, Inc.

(“CSL Seqirus”), a part of CSL Limited.

KOSTAIVE has achieved approval in Japan, the European Union and the United Kingdom as a vaccine against COVID-19, and sales of KOSTAIVE began in Japan in October 2024.

We have several key platform technologies that we leverage to develop and advance a pipeline of mRNA-based therapeutics for rare genetic disorders with significant unmet medical needs and vaccines for infectious diseases.

Current mRNA medicines have two critical components:

the messenger RNA (“mRNA”) constructs and the lipid nanoparticles (“LNP”) which help deliver the mRNA to disease-relevant target tissues.

We believe we are among the world leaders in both areas.

We have extensive expertise in the design and optimization of mRNA constructs, including with respect to a type of mRNA technology known as self-amplifying mRNA (sa-mRNA).

Our proprietary self-amplifying mRNA technology platform, or STARR® (“STARR”), has been demonstrated to induce a longer-lasting and broader humoral immune response at lower dose levels than conventional mRNA-based vaccines.

Our proprietary LNP delivery system, LUNAR® (“LUNAR”), is intended to address the major hurdle in RNA drug development, namely the effective and safe delivery of RNA therapeutics to disease-relevant target tissues.

Our proprietary self-amplifying mRNA technology platform, or STARR ® (“STARR”), has been demonstrated to induce a robust, longer-lasting and broader humoral immune response at lower dose levels than conventional mRNA-based vaccines.

Our proprietary LNP delivery system, LUNAR ® (“LUNAR”), is intended to address the major hurdle in RNA drug development, namely the effective and safe delivery of RNA to disease-relevant target tissues.

LUNAR may enable multiple nucleic acid medicines.

The approval of KOSTAIVE in Japan was a significant milestone which validates our LUNAR and STARR platforms, as well as sa-mRNA more generally as a meaningful modality.

Finally, we have significant expertise and valuable know-how in the development and scalability of complex and robust manufacturing processes required to deliver the next generation of nucleic acid medicines.

We also have significant expertise and valuable know-how in the development and scalability of complex and robust manufacturing processes required to deliver the next generation of nucleic acid medicines.

Our internal pipeline includes RNA therapeutic candidates to potentially treat ornithine transcarbamylase (OTC) deficiency and cystic fibrosis (CF), both rare diseases.

In our vaccine program, we have partnered with Seqirus, Inc.

(“CSL Seqirus”), a part of CSL Limited and one of the world’s leading influenza vaccine providers, on the development and commercialization of mRNA vaccines for COVID-19, influenza and certain other infectious diseases.

We made significant progress in 2024.

Commercial sales of KOSTAIVE began in October 2024 in Japan by Meiji Seika Pharma (“Meiji”), CSL Seqirus’ exclusive partner in Japan, marking the first commercial sales of an Arcturus-developed product.

In February 2025, we received approval of KOSTAIVE from the European Commission (EC), which provided further validation of our platform by another significant regulatory authority.

In our vaccine program, we have partnered with CSL Seqirus, one of the world’s leading influenza vaccine providers, on the development and commercialization of mRNA vaccines for COVID-19, influenza and three other infectious diseases.

In CSL Limited’s half-year results presented on February 11, 2026, CSL Limited reported an accounting write-down of approximately $430 million attributable to our collaboration agreement with CSL Seqirus, citing declining COVID-19 disease burden and more onerous U.S.

regulatory requirements.

In our CF program, we enrolled and completed dosing in the three initially planned cohorts of our Phase 2 multiple ascending dose study of ARCT-032, confirming the safety and tolerability of ARCT-032 dosed daily for four weeks.

This study was initiated in December 2024 and was designed to identify a safe and effective dose regimen in those with Class I (null) CFTR mutations and people with CF who do not benefit from CFTR modulators.

In the study, six CF adults with Class I CFTR mutations inhaled 10 mg doses of ARCT-032 daily over 28 days.

Interim results released in October 2025 demonstrated that the treatment was generally safe and well tolerated.

Treatment-related adverse events (AEs) that were identified in the single-dose Phase 1 study were also observed in some participants for the first few doses but ceased with continued dosing.

Bronchospasm has not been reported in this study thus far, neither with nor without albuterol pretreatment.

One serious adverse event (SAE) occurred in a participant after the end of the dosing period.

The safety review committee found no convincing evidence that the SAE is related to ARCT-032 and approved the study to proceed.

We intend to initiate a 12-week safety and preliminary efficacy study in up to 20 CF participants in the first half of 2026, after the third cohort completes treatment.

ARCT-032 has received Orphan Drug Designation by the U.S.

Food and Drug Administration (the “FDA”) and Orphan Medicinal Product Designation by the European Medicines Agency (the “EMA”) for the treatment of CF, and Rare Pediatric Disease Designation from the FDA.

KOSTAIVE is the brand name approved in Japan and Europe for ARCT-154, which is the version of the sa-mRNA COVID vaccine encoding the ancestral strain of SARS-CoV-2, and also for updated variant-specific versions of this vaccine.

We may use KOSTAIVE or the specific internally generated name, such as ARCT-154, ARCT-2301 and ARCT-2303, to identify a version of the vaccine.

We initiated dosing in a Phase 1 clinical trial of a novel seasonal influenza sa-mRNA vaccine candidate under our collaboration with CSL Seqirus in January 2024.

In our OTC program, we have continued to conduct a Phase 2 double-blind multiple-dose study of ARCT-810.

Five patients with OTC deficiency have now completed dosing, and a sixth patient has initiated dosing.

A type C meeting with the FDA to discuss our plans for a proposed future pediatric study under the RDEP (Rare Disease Evidence Principles) is scheduled for the first half of 2026.

ARCT-810 has received Orphan Drug Designation from the FDA and Orphan Medicinal Product Designation from the EMA for treatment of OTC deficiency, as well as Fast Track Designation and Rare Pediatric Disease Designation from the FDA.

Commercial sales of KOSTAIVE began in October 2024 in Japan by Meiji Seika Pharma, Ltd.

(“Meiji”), CSL Seqirus’ exclusive partner in Japan, marking the first commercial sales of an Arcturus-developed product.

In September 2025, Meiji launched a new presentation of KOSTAIVE in Japan.

The product is a 2-dose vial lyophilized presentation incorporating the updated XEC variant strain.

Approval for offshore manufacturing of the 2-dose vial lyophilized presentation was granted by Japan in August 2025, followed by approval for onshore manufacturing in January 2026.

KOSTAIVE was approved by the European Commission (EC) in February 2025 and by the United Kingdom in January 2026, providing further validation of our platform by additional significant regulatory authorities.

In December 2024, we initiated dosing of an sa-mRNA vaccine candidate against pandemic avian influenza (bird flu) in a Phase 1 trial funded by the Biomedical Advanced Research and Development Authority (“BARDA”).

In our OTC program, we completed dosing of eight subjects in August 2024 in a Phase 2 double-blind multiple-dose study of ARCT-810.

In the second quarter of 2024, we expanded the Phase 2 clinical program of ARCT-810 with an open-label, multiple-dose study which initiated dosing in December 2024.

received Orphan Drug Designation from the FDA and Orphan Medicinal Product Designation from the European Medicines Agency (the “EMA”) for treatment of OTC deficiency, as well as Fast Track Designation and Rare Pediatric Disease Designation from the FDA.

In our CF program, we initiated dosing in December 2024 in a Phase 2 multiple ascending dose study of ARCT-032 designed to identify a safe and effective dose in people with Class I (null) CFTR mutations and other CF patients who do not benefit from CFTR modulators.

In July 2024, we completed dosing and follow-up visits for seven participants in a safety and tolerability Phase 1b clinical study in New Zealand of ARCT-032 in adults with CF.

ARCT-032 has received Orphan Drug Designation by the FDA and Orphan Medicinal Product Designation by the EMA for the treatment of CF, and Rare Pediatric Disease Designation from the FDA.

The study results were received in the second half of 2025, indicating a favorable tolerability and safety profile and the ability to induce a robust and durable humoral immune response in young and older adults.

We also improved our platform technologies and advanced our early-stage research activities and manufacturing process development and operations.

We conducted exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could potentially be useful for identification and development of additional products for our portfolio.

Also, with our sourcing partners, we manufactured cGMP (current good manufacturing practices) batches yielding significant quantities of clinical trial materials for global studies of our candidates, and with our collaborator, CSL Seqirus, we have established commercial production processes for the COVID-19 vaccine program.

We conducted exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could be useful for identification and development of additional products for our portfolio.

Our activities since inception have consisted principally of performing research and development activities, clinical research activities, general and administrative activities and raising capital to fund those efforts.

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During fiscal year 2025, we received milestone payments totaling $39.1 million from CSL Seqirus.

We expect to receive future payments from CSL Seqirus primarily by meeting future milestones related to the CSL Collaboration Agreement.

At December 31, 2025, the Company’s balance of cash and cash equivalents, including restricted cash, was $232.8 million.

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Collaboration and License Agreement

In 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus, a part of CSL Limited, one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize mRNA vaccines.

CSL Seqirus received exclusive global rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other infectious diseases with non-exclusive rights to pandemic pathogens.

We received an up-front payment of $200.0 million during the fourth quarter of 2022.

We will be eligible to receive development milestones totaling more than $1.3 billion if all products are registered in the licensed fields.

We will also be entitled to receive up to $3.0 billion in commercial milestones based on “net sales” of vaccines in the various fields.

In addition, we are entitled to receive a 40% share of net profits from COVID-19 vaccine sales and up to low double-digit royalties of annual net sales for vaccines against influenza and the other three specified infectious disease pathogens, as well as royalties on revenues from vaccines that may be developed for pandemic preparedness.

The CSL Collaboration Agreement sets forth how CSL Seqirus and we shall collaborate to research and develop vaccine candidates.

In the COVID-19 field, we will lead activities for certain regulatory filings for ARCT-154 in the US and Europe and for research and development activities of a next-generation COVID vaccine candidate.

CSL Seqirus will lead and be responsible for all other research and development in COVID-19, influenza and the other fields.

In November 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines.

The CSL Collaboration Agreement became effective on December 8, 2022, following clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Under the CSL Collaboration Agreement, CSL Seqirus receives global exclusive rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other infectious diseases.

Specifically, the collaboration agreement grants CSL Seqirus a license to our STARR mRNA technology and LUNAR lipid-mediated delivery, as well as mRNA drug substance and drug product manufacturing expertise.

CSL has also been granted global non-exclusive rights in the field of pandemic preparedness (i.e., pathogens identified as priority diseases by the WHO), with the right to convert to an exclusive license.

The CSL Collaboration Agreement sets forth how the parties will collaborate to research and develop vaccine candidates.

In the COVID-19 field, we undertake activities for certain regulatory filings for our leading

self-amplifying mRNA vaccine candidate in COVID-19, ARCT-154, in the United States and Europe and for research and development activities of a next-generation COVID vaccine candidate.

CSL Seqirus leads and is responsible for all other research and development in COVID-19, influenza and the other fields.

We received an up-front payment of $200.0 million, with the potential to receive development milestones totaling more than $1.3 billion if all products are registered in the licensed fields.

We also are entitled to potentially receive up to $3.0 billion in commercial milestones based on “net sales” of vaccines in the various fields.

In addition, we are entitled to receive a 40% share of net profits from COVID-19 vaccine sales and up to low double-digit royalties of annual net sales for vaccines against influenza, pandemic preparedness and three additional infectious diseases.

Entitlement to all such payments is subject to the strict conditions, requirements, royalty reduction provisions and other limitations set forth in the CSL Collaboration Agreement.

Either party may terminate the CSL Collaboration Agreement on a field-by-field basis for material breach by the other party, following notice and opportunity to cure.

CSL Seqirus may also terminate the collaboration agreement in its entirety or on a field-by-field basis for any reason or no reason whatsoever, with certain limitations.

The CSL Collaboration Agreement may also be terminated by CSL Seqirus for safety reasons, clinical data nonviability, commercial nonviability and other specified reasons.

In March 2024, we entered into Amendment Number Two to the CSL Collaboration Agreement to reflect updates to the development program and other adjustments consistent with our prior disclosures regarding the Collaboration and License Agreement (“Amendment Number Two”).

Amendment Number Two, among other things, adjusts (i) the development plans for certain product candidates, (ii) various development milestones related to such product candidates, (iii) provisions of the CSL Collaboration Agreement related to specific royalty payments, (iii) provisions of the CSL Collaboration Agreement related to distributors, and (iv) proprietary payment calculations related to the foregoing.

On May 30, 2025, we initiated an arbitration against CSL Seqirus before the International Chamber of Commerce, seeking payment of a milestone under the CSL Collaboration Agreement based on the European Commission’s grant of marketing authorization for a presentation of KOSTAIVE ® in the European Union.

regulatory requirements.

Wells Fargo Credit Agreement

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entered into a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”) whereby Wells Fargo agreed to make a $50.0 million revolving credit line available to the Company (as amended, the “Wells Fargo Loan”) with each Wells Fargo Loan evidenced by a revolving line of credit note (each, a “Note”).

On June 26, 2024, the parties entered into

Amendment No.

On June 26, 2024, the parties entered into Amendment No.

1 to the Wells Fargo Loan, whereby the term was extended by one year to April 2026.

As of December 31, 2024, no borrowings were made against the Wells Fargo Loan.

Borrowings under the agreement will bear interest at a rate of 1.00% above either the Daily Simple SOFR or Term SOFR (as such terms are defined in the Wells Fargo Loan), with “SOFR” being the rate per annum equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York.

If an Event of Default (as defined in the credit agreement) occurs, then all Wells Fargo Loans shall bear interest at a rate equal to 2.00% above the interest rate applicable immediately prior to the occurrence of the Event of Default.

The original term of the agreement is two years, with an option for one-year renewals subject to Wells Fargo approval and the Company furnishing to Wells Fargo a non-refundable commitment fee equal to 0.25% of the Wells Fargo Loan amount for each such renewal.

There is no penalty for terminating the agreement.

There is no penalty for terminating the facility prior to the maturity date of the Wells Fargo Loan.

As collateral, the Company has agreed to pledge $55.0 million in cash to be held at the Company’s securities accounts with Wells Fargo Securities, LLC, an affiliate of Wells Fargo, pursuant to a security agreement.

Borrowings under the agreement bore interest at a rate of 1.00% above either the Daily Simple SOFR or Term SOFR (as such terms are defined in the Wells Fargo Loan), with “SOFR” being the rate per annum equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York.

If an Event of Default (as defined in the credit agreement) had occurred, then all Wells Fargo Loans would bear interest at a rate equal to 2.00% above the interest rate applicable immediately prior to the occurrence of the Event of Default.

The original term of the agreement was two years, with an option for one-year renewals subject to Wells Fargo approval and the Company furnishing to Wells Fargo a non-refundable commitment fee equal to 0.25% of the Wells Fargo Loan amount for each such renewal.

There was no penalty for terminating the agreement and no penalty for terminating the facility prior to the maturity date of the Wells Fargo Loan.

As collateral, the Company had agreed to pledge $55.0 million in cash to be held at the Company’s securities accounts with Wells Fargo Securities, LLC, an affiliate of Wells Fargo, pursuant to a security agreement.

In December 2025, the Company terminated the credit agreement and related security agreement, and the $55.0 million of cash previously pledged as collateral was released and is no longer classified as restricted cash.

Grant from the Biomedical Advanced Research and Development Authority

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As of December 31, 2025, the remaining available funding net of revenue earned was $26.7 million.

Vinbiocare Agreement

During 2021, we entered into a technology license and technical support agreement and the framework drug substance supply agreement with Vinbiocare, a member of Vingroup Joint Stock Company (collectively, the “Vinbiocare License & Supply Agreements”), whereby we would provide technical expertise and support services to Vinbiocare to assist in the build out of an mRNA drug product manufacturing facility in Vietnam.

We received an upfront payment in aggregate of $40.0 million as part of the Vinbiocare License and Supply Agreements.

In October 2022, in association with the termination of the Vinbiocare License and Supply Agreements, we signed the Vinbiocare Support Agreement with Vinbiocare which continues Vinbiocare’s clinical obligations and reserved a portion of the original $40.0 million upfront payment received from the License and Supply Agreements to be paid over the future periods.

The Vinbiocare Support Agreement requires us to pay to Vinbiocare certain limited payments, including upon the occurrence of specified events through the first quarter of 2025.

Vinbiocare is also eligible to receive a single digit percentage of amounts received by Arcturus on net sales, if any, of ARCT-154 (or next-generation COVID vaccine) up to a capped amount.

General Financial Resources

A portion of our current cash balance is expected to be utilized during fiscal year 2025 to fund (i) the continued Phase 2 trial of ARCT-810, our LUNAR-OTC candidate, (ii) advances to our LUNAR-CF program in clinical trials, (iii) expenses incurred prior to customer payments under the CSL Collaboration Agreement and BARDA agreement and (iv) continued exploratory activities related to our platform and other general administrative activities.

A portion of our current cash balance is expected to be utilized during fiscal year 2026 to fund (i) advances to our LUNAR-CF program in clinical trials, (ii) the continued Phase 2 trial of ARCT-810, our LUNAR-OTC candidate, (iii) expenses incurred prior to customer payments under the CSL Collaboration Agreement and BARDA agreement and (iv) continued exploratory activities related to our platform and other general administrative activities.

Our future capital requirements are difficult to forecast and will depend on many factors that are out of our control.

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Additionally, equity or debt financings may have a dilutive effect on the holdings of our existing shareholders.

We expect to continue to incur additional losses in the long term, and we will need to execute on milestones within the CSL Collaboration Agreement, raise additional debt or equity financing or enter into additional partnerships to fund development.

Our ability to transition to profitability is dependent on regulatory approvals and subsequent sales of KOSTAIVE, executing on milestones within the CSL Collaboration Agreement and identifying and developing other successful mRNA drug and vaccine candidates.

We expect to continue to incur additional losses in the long term, and we will need to raise additional debt or equity financing or enter into additional partnerships to fund development.

Our ability to transition to profitability is dependent on regulatory approvals and subsequent sales of KOSTAIVE, and identifying and developing other successful mRNA drug and vaccine candidates.

If we are not able to achieve planned milestones or incur costs in excess of our forecasts, we will need to reduce discretionary spending, discontinue the development of some or all of our programs, which will delay part of our development programs, all of which will have a material adverse effect on our ability to achieve our intended business objectives.

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Our future funding requirements are difficult to forecast and will depend on many factors, including but not limited to the following:

• the development of our LUNAR-COV19 and LUNAR-FLU vaccine candidates;

• the development of our cystic fibrosis and OTC deficiency therapeutic candidates;

• the achievement of milestones under our strategic alliance agreements;

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Net cash used in operating activities was $74.3 million for the year ended December 31, 2025, compared to $59.7 million for the year ended December 31, 2024.

The $41.6 million increase in cash used was primarily driven by a $93.8 million year-over-year impact from deferred revenue, as 2023 benefited from a $38.6 million deferred revenue inflow, while 2024 saw a $55.2 million outflow due to revenue recognition exceeding new milestone payments under the CSL collaboration agreement.

Additionally, the increase in cash outflows was due to a higher net loss and the absence of a $34.0 million debt extinguishment gain recognized in 2023.

These impacts were partially offset by a $57.4 million improvement in accounts receivable, as payments from CSL and BARDA were received in 2024 and a $6.5 million increase in accrued liabilities, primarily due to the timing of bonus accruals.

The $14.5 million increase was primarily due to a $29.7 million increase in accounts receivable and a $21.2 million decrease in accrued liabilities, reflecting the timing of billings, collections, and payments, as well as a $12.6 million decrease in share-based compensation due to reduced headcount and a lower stock price.

These changes were partially offset by a $31.3 million smaller decrease in deferred revenue compared to the prior year, a $15.2 million reduction in net loss, a $7.5 million increase in cash provided by prepaid expenses and other assets, and the net impact of other working capital and non-cash items, which together reduced the overall increase in cash used in operating activities.

Investing Activities

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Financing Activities

Net cash provided by financing activities was $5.4 million for the year ended December 31, 2024, compared to a net cash outflow of $24.1 million in 2023 ,representing a $29.5 million increase.

The primary drivers of this increase were the repayments of the Singapore Loan and the Loan and Security Agreement with Western Alliance Bank during 2023, with no similar debt repayments occurring in 2024.

Net cash provided by financing activities was $13.4 million for the year ended December 31, 2025, compared to $5.4 million in 2024.

The primary driver of the increase was an $11.7 million increase in proceeds from the issuance of common stock under our Sales Agreement for at‑the‑market equity offerings, partially offset by a $3.6 million decrease in proceeds from the exercise of stock options.

Results of Operations

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Revenue decreased by $70.3 million during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

The decrease during 2024 primarily relates to a $15.9 million decrease in revenue related to the CSL collaboration agreement, primarily due to an $82.0 million decrease in milestone achievements during 2024 as compared to 2023, offset by a $23.4 million increase in revenue related to CSL commercial supply agreements and increased revenue recognition from amortization due to the progress of the CSL development programs during 2024.

The remaining decrease is primarily due to a decrease of $1.8 million related to the completion of the amortization of the upfront payment during 2023 from the 2015 Research Collaboration and License Agreement with Ultragenyx

Pharmaceuticals, Inc., as well as $0.7 million less revenue in 2024 due the termination of the 2017 Research Collaboration and License Agreement with Janssen Pharmaceuticals, Inc.

The decrease was primarily offset by an increase in the revenue of $4.8 million related to the increase in reimbursable research and development expenses for the grant agreement with BARDA.

The decrease during 2025 primarily relates to a $72.2 million decrease in revenue related to the CSL collaboration agreement, primarily due to a $33.1 million decrease in milestone achievements during 2025 as compared to 2024, and a $15.8 million decrease in revenue related to CSL commercial supply agreements, along with decreased revenue recognition from amortization during 2025 as a result of reduced development activities.

The decrease was partially offset by an increase in grant revenue of $0.9 million related to the reimbursable research and development expenses for the agreements with BARDA and the Gates Foundation.

Operating Expenses

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Our research and development expenses consist primarily of external manufacturing costs, in-vivo research studies and clinical trials performed by contract research organizations, clinical and regulatory consultants, personnel related expenses, facility related expenses and laboratory supplies related to conducting research and development activities.

Research and development expenses were $195.2 million for the year ended December 31, 2024, compared with $192.1 million for the year ended December 31, 2023, primarily reflecting increased payroll and benefits costs due to share-based compensation expense, progress within our BARDA, LUNAR-CF, and LUNAR-FLU programs, and clinical trial costs for the LUNAR-COVID program.

The overall increase was offset by decreased manufacturing-related expenses due to lower costs associated with drug product supply agreements related to the LUNAR-COVID program during the year ended December 31, 2024.

We expect that our research and development efforts and associated costs will continue to be substantial over the next several years as our pipeline progresses.

Research and development expenses were $112.2 million for the year ended December 31, 2025, compared with $195.2 million for the year ended December 31, 2024.

The decrease was primarily driven by lower manufacturing and clinical costs related to the LUNAR‑COVID program, reflecting the program’s transition from a development program to the commercial phase.

Additional decreases were attributable to lower manufacturing costs for the LUNAR‑CF and LUNAR‑FLU programs, as well as lower clinical costs associated with the LUNAR‑OTC

These reductions were partially offset by higher clinical costs for Phase 2 of the LUNAR‑CF program.

Payroll and benefits expenses also decreased, primarily due to lower stock‑based compensation expense and a reduction in headcount.

Early-stage programs represent programs that are in the pre-clinical or Phase 1 clinical stage and may be partnered or unpartnered, and primarily includes the LUNAR-FLU program which is partnered with CSL Seqirus.

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Payroll and benefits primarily consists of employee salaries and benefits, share-based compensation and consultant costs.

Although such expenses increased during 2024 as compared to 2023, we expect that they will not increase over the next twelve months due to reduced share-based compensation.

We expect that payroll and benefits costs will not increase over the next twelve months

Facilities and equipment expenses include rent, common area maintenance (“CAM”) costs, depreciation, shipping costs and various other costs related to the operation of our two office and laboratory locations.

These costs decreased during 2024 as compared to 2023 as we downsized from three to two facilities.

Facilities and equipment expenses are not expected to increase during the next twelve months.

These costs increased primarily due to a lease‑related impairment recognized in the fourth quarter after the Company vacated an office location with no further operational use.

General and Administrative Expenses

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General and administrative expenses were $46.1 million and $52.8 million for the years ended December 31, 2025 and 2024, respectively.

We expect that general and administrative expenses will decrease slightly during the next twelve months due to reduced share-based compensation from fully vested stock options.

The decrease was primarily due to reduced share-based compensation expense as well as reduced payroll and benefits associated with reductions in headcount.

Finance income (expense), net

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The decrease in interest income from 2024 to 2025 was the result of lower interest rates during the year ended 2025 and a decrease in cash and cash equivalents.

Interest expense decreased during the year ended 2024 as compared to the year ended 2023 as no interest expense has been incurred since to the first quarter of 2023.

This was a result of the extinguishment of the Loan and Security Agreement dated October 12, 2018 with Western Alliance Bank, and forgiveness of the term loan from Economic Development Board of the Republic of Singapore pursuant to the Manufacturing Support Agreement dated November 7, 2020.

Critical Accounting Policies and Estimates

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Research and Development Expenses, Including Clinical Trial Accruals/Expenses

Research and development costs consist of salaries and benefits, including share-based compensation, laboratory supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities on our behalf, such as clinical research organizations, or CROs, and contract manufacturing organizations, or CDMOs.

Research and development costs are expensed as incurred.

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We estimate the incremental borrowing rate using observable inputs (such as market interest rates) when available and are required to make certain entity and asset-specific estimates.

The incremental borrowing rate used in the calculation of the present value of lease payments in calculating lease liabilities and the corresponding ROU requires the use of significant judgment by management.

The incremental borrowing rate used in the calculation of the present

value of lease payments in calculating lease liabilities and the corresponding ROU requires the use of significant judgment by management.

Share-Based Compensation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis