ASSEMBLY BIOSCIENCES, INC. 10-K

Item 7. Management’s Discussion and Analysis o f Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information appearing elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied in any forward-looking statements as a result of various factors, including those set forth in this Form 10-K under “Item 1A. Risk Factors.” Overview We are a biotechnology company developing innovative therapeutics targeting serious viral diseases with the potential to improve the lives of patients worldwide. Our pipeline includes multiple clinical-stage investigational therapies, including: (1) two long-acting helicase-primase inhibitors (HPI) for the treatment of recurrent genital herpes; (2) an orally bioavailable hepatitis delta virus (HDV) entry inhibitor; and (3) a highly potent next-generation capsid assembly modulator (CAM) designed to disrupt the replication cycle of hepatitis B virus (HBV) at several key points. Our pipeline also includes a novel, oral broad-spectrum non-nucleoside polymerase inhibitor (NNPI) for the treatment of transplant-related herpesviruses, which is currently undergoing studies to enable a regulatory filing, and we have additional research programs against multiple antiviral targets. In December 2025, pursuant to our collaboration with Gilead Sciences, Inc. (Gilead and the Gilead Collaboration), Gilead exercised its option to license our HPI program for the treatment of recurrent genital herpes, including our long-acting investigational candidates ABI-1179 (1179) and ABI-5366 (5366). For additional information regarding Gilead’s exercise of its option, see “Collaboration and License Agreement—Gilead Sciences, Inc.—Option Exercise.” Our Clinical Programs and Regulatory Filing-Enabling Program 2025 was a pivotal year for us, as we reported data readouts for 5366, 1179, 4334 and 6250 as follows: • February 2025: o 1179 – Positive Phase 1a interim results in the Phase 1a/b study • June 2025: o 4334 – Positive Phase 1b topline results • August 2025: o 5366 – Positive Phase 1b interim results from the weekly dosing cohorts in the Phase 1a/b study o 6250 – Positive Phase 1a interim results • December 2025: o 1179 – Positive Phase 1b interim results in the Phase 1a/b study o 5366 – Positive Phase 1b interim results from the monthly dosing cohorts in the Phase 1a/b study In addition, during December 2024, we identified a development candidate, ABI-7423 (7423), in our broad-spectrum NNPI program targeting transplant-associated herpesviruses. 7423 is a prodrug, and in October 2025, we transitioned our development from 7423 to 7272, its parent molecule. 7272 is currently in regulatory filing enabling studies. Recurrent Genital Herpes/HSV-1 and HSV-2 Genital herpes can be caused by either herpes simplex virus type 1 (HSV-1) or herpes simplex virus type 2 (HSV-2). HSV-1 and HSV-2 are acquired by oral or genital contact either during symptomatic or asymptomatic reactivation of the virus. Both viruses replicate in neurons, where they can remain latent for the rest of the individual’s life and periodically reactivate, with the virus spreading, replicating and causing disease in epithelial tissues. Initial infection can be asymptomatic or can be marked by serious symptoms, including painful skin lesions, swelling of lymph nodes and urinary problems that can persist for two to three weeks. While genital herpes can be caused by either HSV-1 or 46 HSV-2, recurrences are more likely to be experienced by individuals infected by HSV-2. Genital herpes recurrence can cause painful genital lesions that can lead to increased transmission and debilitate individuals, and symptoms may become more serious with additional episodes. Additional complications include increased risk of HIV infection, as 30% of HIV infections acquired through sexual transmission are attributable to HSV-2 infection. In addition, people with recurrent genital herpes often experience associated psychosocial impacts, including anxiety, concerns about transmission, depression and social stigma. Immunocompromised individuals may experience more severe and prolonged symptoms due to increased recurrence rates. HPIs are antiviral agents in development for the treatment of recurrent genital herpes, with a clinically-validated mechanism of action. HPIs inhibit the HSV helicase-primase complex, which is a unique viral enzyme complex without a human homolog, consisting of helicase, primase and cofactor subunits. These subunits have functions that are essential for viral DNA replication and are conserved across HSV-1 and HSV-2. Unlike nucleoside analogs, these compounds do not require phosphorylation by the HSV thymidine kinase (TK) and ongoing viral replication to become active drugs. As a result, HPIs are active immediately upon reactivation of latent HSV-1 and HSV-2. Furthermore, HPIs are active against TK-deficient HSV-1 and HSV-2, which is a major mechanism of resistance to nucleoside analogs. Most people with initial symptomatic genital herpes who are infected with HSV-2 have frequent recurrences, generally between three and 15 per year, impacting over four million people in the United States and France, Germany, Italy and Spain (collectively, the EU4) and the United Kingdom (UK). Currently, there are three antiviral drugs (all nucleoside analogs) that have been approved in the United States and the EU4/UK for the treatment of genital herpes. However, no new drugs have been approved in these regions to treat genital herpes for more than 25 years. In addition to the approved nucleoside analogs, agents such as local anesthetics or analgesics may be used to alleviate local symptoms of minor pain and discomfort. Nucleoside analogs can be administered as episodic therapy as individual outbreaks arise or daily as chronic suppressive therapy for those with high post-exposure recurrences. However, these agents are only partially effective at controlling the infection or reducing transmission risk. With current nucleoside analog therapies, only one out of three people with recurrent genital herpes with six or more recurrences per year are able to make it through a year of treatment without a recurrence. There are still high titer (greater than 10 4 HSV-2 DNA copies/mL) shedding episodes under this current standard of care for recurrent genital herpes, which can lead to recurrent episodes and transmission of genital herpes. In addition, nucleoside analogs also carry a high pill burden as a lifelong daily treatment, with doses ranging from one to three times daily. There is also high treatment variability among those taking nucleoside analogs, as many seeking care may not consistently receive suppressive therapy. Based on the limitations of current therapies, we see a path to advancing the treatment paradigm for people suffering from recurrent genital herpes. To reach that goal, we discovered and began the clinical development of a novel, potent, long-acting HPI for recurrent genital herpes, 5366, which demonstrated low nanomolar potency in vitro against both HSV-1 and HSV-2 clinical isolates and a favorable nonclinical safety profile in the U.S. Food and Drug Administration's (FDA) Good Laboratory Practice (GLP) toxicology studies. In addition, we began development of a second novel, potent, long-acting HPI for genital herpes, 1179, which was in-licensed to us as part of our collaboration with Gilead. As Gilead has exercised its option to exclusively license our HPI program, including 5366 and 1179, development will be in Gilead’s sole control following completion of the Phase 1a/b studies of 5366 and 1179, which we are managing until they are complete. For additional information regarding the option exercise, see “Collaboration and License Agreements—Gilead Sciences, Inc.—Option Exercise.” During the first quarter of 2024, we filed a Clinical Trial Application (CTA) to support initiation of a Phase 1a/b clinical study for 5366, which was approved in April 2024. We reported interim data from the Phase 1b portion of the 5366 study in August 2025, focused on two different oral doses of 5366 administered on a once-weekly basis. For the powered antiviral endpoint, HSV-2 shedding rate, highly potent antiviral activity was observed with a 94% reduction compared to placebo (p<0.01) over the 29-day evaluation period in the cohort evaluating a 350 mg weekly dose. This reduction exceeded our target for the study of an 80-85% reduction in the rate of HSV-2 shedding. For a secondary clinical endpoint of genital lesion rate, a 94% reduction compared to placebo (p<0.01) was observed with the 350 mg weekly dose. The rate of genital swabs with high viral load (i.e., >10 4 copies/mL HSV DNA), a potential surrogate for HSV-2 transmission and a secondary endpoint, was reduced by 98% compared to placebo (p<0.05) in this cohort. 47 We reported additional interim data from the Phase 1b portion of the 5366 study in December 2025, which included data from a monthly oral dosing regimen. In the 5366 monthly dose cohort, potent antiviral activity was observed, with a 76% reduction in HSV-2 shedding rate compared to placebo (p<0.01) over the 29-day evaluation period. The majority of positive swabs (89%) were collected in the last two weeks of the evaluation period when drug levels were declining. We observed an 88% reduction in virologically confirmed genital lesion rate (p=0.01), along with an 81% reduction in the number of samples with high viral load (p<0.01) compared to placebo in the monthly dose cohort. Across the two weekly oral dose cohorts and the monthly oral dose cohort of the Phase 1b study, 5366 demonstrated a pharmacokinetic (PK) profile that continues to support once-weekly and potentially once-monthly dosing. 5366 was observed to be well-tolerated at all dose levels tested in the Phase 1b portion of the study. The two weekly oral cohorts are complete and unblinded safety data has been reported; the oral monthly cohort is ongoing and safety data remains blinded. Across all cohorts, the proportion of participants reporting treatment-emergent AEs was similar between 5366 and placebo recipients, and all were Grade 1 or Grade 2. One Grade 3 AE was reported, hypertriglyceridemia, in a participant with relevant medical history who had Grade 4 elevated triglycerides pre-dose on Day 1. This AE resulted in study discontinuation but was not considered treatment related. The proportion of participants reporting treatment-emergent lab abnormalities was similar in 5366 and placebo recipients with the majority being Grade 1 or Grade 2. In the unblinded weekly oral dose cohorts: there were three participants with treatment-emergent Grade 3 lab abnormalities, all of which are considered unrelated to assigned treatment; one participant with exercise-associated elevation in creatine kinase (150/30 mg QW); one participant with an elevation of cholesterol in the follow up period, which participant had a Grade 2 elevation at baseline (350 gm QW); and one participant, who was dosed with placebo, with decreased neutrophils. There did not appear to be a dose-response relationship in either the frequency or severity of the treatment-emergent AEs or lab abnormalities. No serious AEs have been reported to date. All participants in the Phase 1b portion of the 5366 study have completed dosing and follow up. The observed PK profile continues to support once-weekly dosing and the potential for once-monthly oral dosing regimens. Additionally, all chronic toxicology studies have been completed. With these data, 5366 is ready to move into a Phase 2 clinical study. A late-breaking oral presentation of the interim 5366 Phase 1b data reported in August 2025 was presented at the 38th Congress of the International Union Against Sexually Transmitted Infections – Europe, which took place in October 2025 in Athens, Greece. The 5366 data reported in August and December 2025 will be presented at the Congress of the European Society of Clinical Microbiology and Infectious Diseases (ESCMID) taking place in Munich, Germany in April 2026. In addition to 5366, we have also begun the clinical development of 1179, a structurally-differentiated HPI with single digit nanomolar potency against HSV-1 and HSV-2 and a nonclinical PK and safety profile to date that is supportive of a potential long-acting treatment by once-weekly oral administration. We submitted the CTA for the study in September 2024, which was approved in October 2024. We reported interim data from two oral weekly dose cohorts in the Phase 1b portion of the 1179 study in December 2025. For the powered antiviral endpoint, HSV-2 shedding rate, highly potent antiviral activity was observed with a 98% reduction in HSV-2 shedding rate compared to placebo (p<0.01) over the 29-day evaluation period in the 50 mg weekly dose cohort. This reduction exceeded our target for the study of an 80-85% reduction in HSV-2 shedding rate. Further, data revealed a 91% reduction in virologically confirmed lesion rate compared to placebo (p<0.01) with the 50 mg weekly dose. There was also a >99% reduction in the number of samples with high viral load, a potential surrogate for HSV-2 transmission and a secondary endpoint. Across both oral weekly dose cohorts, 1179 demonstrated a PK profile that continues to support once-weekly dosing. 1179 was observed to be well-tolerated at both doses. Overall, the proportion of participants reporting treatment-emergent AEs was similar between 1179 and placebo recipients. Of the treatment-emergent AEs reported, the majority were Grade 1 or Grade 2. The most common AEs were upper respiratory tract infection and headache. There have been no serious AEs reported to date. One Grade 3 AE of migraine was reported in a participant enrolled in the 20 mg/placebo cohort. 48 All participants in the Phase 1b portion of the 1179 study have completed dosing and follow up. With these data, 1179 can move directly into Phase 2 enabling studies for a once-weekly treatment regimen, subject to the completion of chronic toxicology studies, which are underway. The completion of the Phase 1b studies of both 5366 and 1179 constitute an option triggering point under the terms of the Gilead Collaboration Agreement, as defined below under "Collaboration and License Agreement — Gilead Sciences, Inc." The 1179 data reported in December 2025 will be presented at ESCMID in April 2026. In December 2025, Gilead exercised its option early to license our HPI program for the treatment of recurrent genital herpes, including 5366 and 1179. We expect to receive Gilead’s development plan and budget for the HPI program and make our decision regarding the Profit-Share (as defined below) by mid-2026. We anticipate Gilead will initiate a Phase 2 clinical study for the HPI program in 2026. For more information regarding Gilead’s exercise of its option, see “Collaboration and License Agreement—Gilead Sciences, Inc.—Option Exercise.” Our HBV and HDV Programs The World Health Organization (WHO) estimates that 254 million people worldwide are chronically infected with HBV as of 2022, and 1.2 million new infections occur each year. HBV is a leading global cause of chronic liver disease and liver transplants, and the WHO estimates that 1.1 million people died in 2022 from HBV, mostly due to cirrhosis and hepatocellular carcinoma. Of the 254 million people living with chronic HBV infection, only approximately 33 million, or 13%, were aware of their infection, and only approximately 7 million, or 3%, of those diagnosed received treatment. HBV is a highly prevalent disease that infects almost three times the number of people infected with hepatitis C virus and HIV infections combined, according to the WHO. The current standard of care for chronic HBV infection, nucleos(t)ide analog reverse transcriptase inhibitors (NrtIs), are taken life-long and reduce, but do not eliminate, the virus and result in very low cure rates. No new mechanisms of action (MOA) have been approved for the treatment of chronic HBV infection in over 25 years. The focus of our HBV program is to improve outcomes and increase the number of patients diagnosed and treated through the development of finite and curative therapies targeting an orthogonal MOA. HDV is a “satellite virus” of HBV because it can only infect people (1) who are already infected with HBV or (2) at the same time as a person is infected with HBV. HDV affects a subset of approximately 12 to 72 million HBV infected people. These individuals infected with HDV, which comprise an estimated 4.5% of hepatitis B surface antigen (HBsAg) positive individuals, experience a substantially increased disease burden, as they account for 18% of cirrhosis and 20% of hepatocellular carcinoma associated with HBV. HDV is considered the most severe form of hepatitis, as 70% of individuals infected with HDV progress to cirrhosis within ten years. While HDV is less prevalent in the United States, it is a significant and serious health problem with inadequate treatment in many parts of Europe, Africa, the Middle East, East Asia and parts of South America. HDV may be significantly underdiagnosed, because there were no HDV-targeted therapies approved until very recently, and the first therapy approved is only approved in European Union (EU), Australia and Canada. HDV is known to accelerate disease progression and increase the incidence of liver cirrhosis and liver cancer, which results in higher morbidity and mortality rates than HBV alone. The current standard of care treatment for HDV is off-label pegylated interferon-α (IFN-α) injected weekly or, in the EU, Australia and Canada, a large, complex peptide inhibitor that requires daily injections, bulevirtide. There are no approved HDV treatments in the United States. We believe a safe and effective oral small molecule entry inhibitor would be a significant innovation for people living with HDV, who face a significant and immediate disease burden. HDV Entry Inhibitor HDV is a small RNA virus that encodes just two viral proteins and relies on host enzymes as well as the HBsAg from HBV to replicate, which limits the number of HDV-specific antiviral targets. Similar to HBV, HDV utilizes HBsAg to enter hepatocytes by binding the cellular transmembrane protein sodium taurocholate co-transporting peptide (NTCP). NTCP is highly expressed on human hepatocytes, where it serves as one of several proteins involved in the transport of bile acids. The binding of specific small or large molecules to NTCP has been shown to effectively inhibit the interaction of HBsAg with NTCP, which prevents HBV and HDV from infecting hepatocytes. The inhibition of HBV and HDV infection by molecules that bind NTCP has been demonstrated in vitro, in animal models and clinically. Notably, bulevirtide, a peptide blocker of NTCP, is the only approved therapy for HDV. 6250 49 has the same clinically-validated MOA as bulevirtide. The binding of NTCP-targeted HBV/HDV entry inhibitors to NTCP has also been shown to inhibit the transport of certain bile acids into cells, which results in plasma elevations of bile acids; this effect has been well-tolerated clinically and may serve as a biomarker of pharmacologically active concentrations of drug in the plasma. In nonclinical studies in non-human primates, clinically-relevant doses of 6250 elevated bile acids to levels similar to those seen in humans with bulevirtide. We believe a safe and effective oral small molecule entry inhibitor would be a significant innovation for people living with HDV and could significantly improve treatment uptake and diagnosis rates, especially when compared with currently available injectable products. A Phase 1a clinical study of 6250 was initiated in the fourth quarter of 2024, and in August 2025, we announced interim PK, biomarker and safety data from single-ascending and multiple-ascending doses cohorts in healthy participants. Across the cohorts evaluated to date, a mean half-life of approximately four days was observed for 6250 when dosed orally, supporting the once-daily oral dosing profile target. Given this half-life, accumulation was observed in the multiple-dose cohorts with exposures on the last day of dosing generally reaching six- to seven-fold higher than the exposure seen after the first dose. Dose-dependent elevations of total serum bile acids (TBAs) were observed for both the 5 mg and 25 mg single-dose cohorts, indicative of NTCP target engagement. In the highest single-dose cohort of 25 mg, coproporphyrin I (CP-1), a biomarker for off-target engagement of the organic anion transporters, OATP1B1 and/or OATP1B3, was also elevated. CP-1 elevation was not noted at the other doses. Given the predicted 6250 accumulation driven by the long half-life and the observed elevations of TBAs for the single-dose cohorts, doses at and below 1 mg daily were selected for the multiple-dose cohorts to characterize the lower end of the dose-response curve. Elevation of TBAs was observed for both the 0.2 mg and 1 mg daily multiple-dose cohorts, consistent with the respective 6250 exposures. Minimal TBA elevation was observed in the 0.05 mg daily multiple-dose cohort. Treatment-emergent AEs and laboratory abnormalities were all Grade 1 or 2 in severity with the majority being Grade 1. There were no serious AEs in any dose cohort. No protocol defined stopping criteria were met. There were no clinically significant electrocardiogram abnormalities or patterns of AEs noted. One Grade 2 ALT elevation was observed in the cohort evaluating the highest single-dose level of 25 mg. In this cohort, off-target engagement of other liver transporters was also seen as indicated by elevated CP-1 levels. Grade 1 ALT elevations were observed at a low frequency across the other cohorts. All ALT elevations were self-limited, and none were accompanied with elevations in bilirubin or other markers of liver injury. The elevations resolved in the study period with ongoing drug exposure due to 6250's four-day half-life. We have completed enrollment and the follow-up period in the Phase 1a study, as well as the chronic toxicology studies to enable longer term dosing and we are preparing for Phase 2 clinical studies, with Phase 2 initiation expected in the fourth quarter of 2026. 6250 Phase 1a data will be presented at the European Association for the Study of the Liver (EASL) Congress taking place in Barcelona, Spain in May 2026. Capsid Assembly Modulator HBV is a DNA virus that infects hepatocytes and establishes a reservoir of covalently closed circular DNA (cccDNA), a unique viral DNA moiety that resides in the nucleus of HBV-infected hepatocytes and is associated with viral persistence and chronic infection. No currently approved oral therapies target cccDNA activity directly. As a result, we have worked to discover and develop compounds targeting the core protein, a viral protein involved in numerous aspects of the HBV replication cycle, including the generation of HBV cccDNA. A benchmark for therapeutic agents aiming to decrease cccDNA levels is the use of several key viral antigens as surrogate biomarkers of active cccDNA. The same biomarkers can be used in both primary human hepatocytes and infected individuals. On this basis, our next-generation CAM, 4334, has shown nonclinical proof of principle. In a variety of cell culture models, 4334 has demonstrated the ability to reduce production of HBV DNA levels as well as 50 the surrogate markers for cccDNA establishment: HBV e antigen (HBeAg), HBV core-related antigen (HBcrAg) and HBV pre-genomic RNA (pgRNA). As a next-generation CAM, 4334 was optimized to potently disrupt viral replication (MOA #1) and prevent the establishment and replenishment of new cccDNA (MOA #2). In contrast, while active against MOA #1, first-generation CAMs have not demonstrated adequate potency to sufficiently block MOA #2. Further, the current standard of care, NrtIs, impacts the viral life cycle after establishment of cccDNA and can only inhibit production of new viral particles, and it does so incompletely. The chemical scaffold of 4334 is novel and distinct from all our prior CAM candidates. We believe that 4334 has a best-in-class nonclinical profile, with single-digit nanomolar potency against MOA #1 and MOA #2, pan-genotypic activity, an improved resistance profile and a favorable safety profile. Through mechanistic studies presented at multiple conferences, we have demonstrated that 4334 promotes the formation of empty capsids by acceleration of capsid assembly, prevents the formation of cccDNA by disrupting incoming capsids, and prematurely disrupts capsids containing duplex linear DNA, the precursor for integrated HBV DNA. A Phase 1a study demonstrated that 4334 was well-tolerated when administered orally as single or multiple doses. During the second quarter of 2024, we dosed our first participant in a Phase 1b clinical study of 4334. We reported interim clinical results from the initial 150 mg cohort in December 2024, and topline clinical results including a subsequent 400 mg cohort in June 2025. In both the 150 mg and 400 mg cohorts, 4334 continued to show a half-life supportive of once-daily oral dosing. In addition, results for both cohorts indicated that 4334 maintained clinical exposures multiple folds above those anticipated to be required for potent viral activity and inhibition of cccDNA formation. Mean declines in HBV DNA of 2.9 log 10 IU/mL and 3.2 log 10 IU/mL were observed over 28 days in a population of predominately HBeAg negative participants receiving 150 mg and 400 mg, respectively. Among the subset of participants with detectable HBV RNA at baseline, mean declines of 2.5 log 10 U/mL and 2.3 log 10 U/mL were observed over 28 days in the participants receiving 150 mg and 400 mg, respectively. As anticipated, limited changes in viral antigens were observed for the study population over the 28-day treatment period. These antiviral data are consistent with the high potency seen preclinically for 4334. The safety data also demonstrated that 4334 was well-tolerated with a favorable safety profile observed. The 400 mg cohort was the final cohort for this Phase 1b study and final data was presented at the American Association for the Study of Liver Disease, The Liver Meeting® in November 2025. The completion of the Phase 1b study of 4334 constitutes an option triggering point under the terms of the Gilead Collaboration Agreement, as defined below under "Collaboration and License Agreement — Gilead Sciences, Inc." In March 2026, Gilead declined to either exercise its option to license 4334 or defer its option until completion of Phase 2 studies. As a result, the Company retains full control of 4334, including the right to evaluate partnering opportunities for 4334 outside of the Gilead Collaboration. We are actively evaluating partnering opportunities for 4334 and have initiated a structured process to find potential partners. We do not plan to advance 4334 further without a partner. Transplant-Associated Herpesviruses In a transplant setting, when patients are experiencing immunosuppression, they are at high risk of uncontrolled viral replication and severe disease brought on by one or more herpesviruses, including cytomegalovirus (CMV), HSV-1, HSV-2, varicella zoster virus (VZV) and Epstein-Barr virus (EBV). Each of these herpesviruses are highly prevalent, as approximately (1) 60% of transplant patients are CMV-positive; (2) 60% of transplant patients are HSV-positive; (3) 80% of transplant patients are VZV-positive and (4) 45% of transplant patients are EBV-positive. These viruses establish lifelong latent infections and frequently reactivate in transplant patients due to the use of immunosuppressive drugs following transplantation. These uncontrolled herpesvirus infections increase the risk of severe disease and serious complications, including organ rejection, graft loss and death, and impacted approximately 95,000 people receiving transplants in 2021 in the United States and Europe. While there are approved antivirals that are administered in a transplant setting, currently approved antivirals are not active against a broad spectrum of transplant-associated herpesviruses and pose the risk of potentially serious side effects and drug-drug interactions. As a result of these limitations, we identified an opportunity to develop an oral, broad-spectrum NNPI for transplant-associated herpesvirus infections, which could greatly advance treatment. 51 In December 2024, we nominated 7423, a prodrug, as our development candidate to undergo regulatory filing-enabling studies. In October 2025, we transitioned our discovery and development from 7423 to its parent molecule, 7272, which is currently in regulatory filing-enabling nonclinical studies. Research Programs In addition to our investigational therapy programs that have nominated development candidates and have advanced into clinical studies or regulatory-filing enabling studies, our research team continues to actively focus on proprietary research to discover and nominate novel antivirals to treat serious viral diseases. Collaboration and License Agreement Gilead Sciences, Inc. In October 2023, we entered into an Option, License and Collaboration agreement (the Gilead Collaboration Agreement) with Gilead pursuant to which Gilead (1) exclusively licensed to us its HPI program and its NNPI program, while retaining opt-in rights to these programs, and (2) has an option to take an exclusive license, on a program-by-program basis, to all of our other current and future pipeline programs. During the 12-year collaboration term (subject to payment of certain extension fees) and for a specified period thereafter, Gilead may exercise its opt-in rights, on a program-by-program basis, at one of two timepoints—completion of a certain Phase 1 study or, upon payment of a deferral fee and completion of a certain Phase 2 study for the first product within the program—upon payment of an opt-in fee ranging from $45.0 million to $125.0 million per program depending on the type of program and when the option is exercised. Pursuant to the Gilead Collaboration Agreement, Gilead made an $84.8 million upfront cash payment to us. In December 2024, we and Gilead entered into the First Amendment to the Gilead Collaboration Agreement, which restructured the timing of specific options exercisable and the fees payable to us under the terms of the Gilead Collaboration Agreement due to an agreed upon development plan for 6250. To facilitate this development plan, (1) we received a payment of $10.0 million from Gilead and (2) the opt-in fee payable by Gilead in connection with 6250 was restructured, though it remains in the range of opt-in fees detailed above. The $10.0 million payment received in connection with the First Amendment to the Gilead Collaboration Agreement is creditable towards future collaboration-related payments payable by Gilead. This credit was applied toward Gilead’s opt-in fee paid for the HPI program in December 2025. If Gilead exercises its opt-in right to any current or future program under the collaboration, we are eligible to receive up to $330.0 million in potential regulatory and commercial milestones on that program, in addition to royalties ranging from the high single-digits to high teens, depending on the clinical stage of the program at the time of the opt-in. Following Gilead’s exercise of its option for each program, we may opt-in to cover 40% of the research and development costs in the United States and share 40% of the profits and operating loss in the United States for products within the program in lieu of receiving milestones and royalties for that program in the United States, unless we later opt out of the cost/profit share for the program. Prior to Gilead’s potential exercise of its opt-in, we are primarily responsible for all discovery, research and development on both our programs and the two Gilead-contributed programs. Following Gilead’s opt-in, Gilead will control the further discovery, research, development and commercialization on any optioned programs, and is responsible for all related costs unless we opt in to share 40% of all costs and profits in the United States. During the term, Gilead will continue to support the collaboration through extension fees of $75.0 million in each of the third, fifth and seventh anniversaries of the collaboration. The Gilead Collaboration Agreement is subject to termination by either party for the other party’s uncured, material breach or insolvency. Subject to certain limitations, we and Gilead both have certain termination for convenience rights, upon sufficient prior written notice, with respect to programs that one party in-licenses from the other (subject to Gilead’s option rights), and with respect to Gilead, for programs it has option rights to (subject to certain time limitations with respect to existing Company programs). Gilead also has a right to terminate the collaborative activities under the Gilead Collaboration Agreement at certain specified points during the collaboration term. Other customary termination rights are further provided in the Gilead Collaboration Agreement. We and Gilead also entered into a Common Stock Purchase Agreement and an Investor Rights Agreement (together, the Gilead Equity Agreements), which were both amended in June 2024 in connection with a financing transaction, in which a new investor purchased shares of common stock and was issued a warrant (the 2024 Financing Transaction). Pursuant to the Gilead Equity Agreements, Gilead made an upfront equity investment of $15.2 million by purchasing 52 from us 1,089,472 shares of our common stock at a purchase price of $13.92 per share. The terms of the Gilead Equity Agreements provided Gilead the right to elect to purchase additional shares of common stock from us at a premium in an amount that results in Gilead owning 29.9% of our then-outstanding voting common stock. This right was exercised in December 2024, at a purchase price of $21.37 per share, which represents a 35% premium to the 30-trading day volume weighted average price immediately prior to the date of purchase. The Gilead Equity Agreements also include a three-year standstill provision and a two-year lockup provision, each with customary exceptions, and provide Gilead with certain other stock purchase rights and registration rights, as well as the right to designate two directors (or, alternatively, board observers at Gilead’s election) to our board of directors. In December 2023, Gilead designated Tomas Cihlar, Ph.D. to serve on our board of directors, and in March 2024, Gilead designated Robert D. Cook II to serve on our board of directors. Gilead participated in the 2024 Financing Transaction on the same terms as the new investor pursuant to the anti-dilution provision in the Investor Rights Agreement. We and Gilead entered into a Securities Purchase Agreement for the issuance and sale, in a private placement, of 179,500 shares of our common stock and a warrant to purchase up to 179,500 shares of our common stock. The warrant sold to Gilead has an exercise price equal to $17.00 per share, became immediately exercisable on the date of issuance and will expire on June 18, 2029. Subject to certain exceptions, neither Gilead nor its affiliates may exercise any portion of the warrant to the extent that Gilead would own more than 19.9% of the number of our shares of common stock outstanding immediately after giving effect to such exercise. Gilead also participated in a financing transaction in August 2025 on the same terms as the new investors. We and Gilead entered into a Securities Purchase Agreement for the issuance and sale, in a private placement, of 2,295,920 shares of our common stock at a combined purchase price of $19.60 per shares and accompanying one-half of one Class A Warrant and one-half of one Class B Warrant (collectively, the August 2025 Private Placement). The common stock, the Class A Warrant and the Class B Warrant were sold to Gilead pursuant to the terms of the Investor Rights Agreement. The Class A Warrant and the Class B Warrant each provide for the right to purchase up to 1,147,960 shares of our common stock. The Class A Warrant has an exercise price of $21.60 per share, became immediately exercisable on the date of issuance and will expire on or prior to the earlier of (a) August 11, 2030 (five years from the date of issuance) and (b) the date that is 30 days after the public announcement that we have completed enrollment of at least 200 patients total for our Phase 2 clinical study evaluating 5366 versus valacyclovir. The Class B Warrant has an exercise price of $21.60 per share and is exercisable between November 15, 2026 and December 31, 2026. Notwithstanding the foregoing, if, prior to November 15, 2026, we publicly announce that we have received at least $75.0 million in the aggregate of non-dilutive capital in connection with a collaboration agreement, then the Class B Warrant automatically terminates in full. In October 2025, as required under the registration rights terms of the Investor Rights Agreement, we filed a registration statement on Form S-3 (the Registration Statement) with the Securities and Exchange Commission (SEC) to register all of the shares of our common stock that have been issued and sold to Gilead, as well as all of the shares of common stock underlying the warrants that have been issued and sold to Gilead. The SEC declared the Registration Statement effective in November 2025. Option Exercise In December 2025, Gilead exercised its option to exclusively license our HPI program for the treatment of recurrent genital herpes, including 5366 and 1179. This is the first program that Gilead will advance under the Gilead Collaboration. Under the terms of the Gilead Collaboration Agreement, we received a $35 million payment in connection with Gilead’s exercise of our HPI program. The $35 million payment reflects a $45 million option fee, net of $10 million in accelerated funding that we received under the First Amendment to the Gilead Collaboration Agreement, which was creditable against future payments. Gilead received an exclusive license to 5366 and 1179 and will have the sole right and responsibility for further clinical development and commercialization of the HPI program. We remain eligible to receive up to $330 million in regulatory and commercial milestones, as well as tiered royalties on net sales ranging from the high single-digits to low teens. We will also have the right to opt in to share 40% of all costs and profits in the United States (the Profit-Share) in lieu of receiving milestones and royalties for that program in the United States after receipt of a development plan and budget from Gilead. 53 Operations Since our inception, we have had no revenue from product sales and have funded our operations principally through debt financings prior to our initial public offering in 2010 and through equity financings and collaborations since then. Our operations to date have been primarily limited to organizing and staffing our company, discovering and developing our product candidates, licensing our product candidates, maintaining and improving our patent portfolio and raising capital. We have generated significant losses to date, and we expect to continue to generate losses as we develop our product candidates. As of December 31, 2025, we had an accumulated deficit of $832.0 million. Because we do not generate revenue from any of our product candidates, our losses will continue as we further develop and seek regulatory approval for, and commercialize, our product candidates. Additionally, we expect our research and development expenses to increase over the coming years as we continue the development of our product candidates. As a result, our operating losses are likely to be substantial over the next several years and thereafter if none of our product candidates are approved or successfully launched. We are unable to predict the extent of any future losses or when we will become profitable, if at all. Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Note 2 to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Revenue Recognition from Collaboration We analyze our collaboration arrangements to assess whether such arrangements, or transactions between arrangement participants, involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities or are more akin to a vendor-customer relationship. In making this evaluation, we consider whether the activities of the collaboration are considered to be distinct and deemed to be within the scope of the collaborative arrangement accounting standard and those that are more reflective of a vendor-customer relationship and, therefore, within the scope of the revenue with contracts with customers accounting standard. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For arrangements or transactions between arrangement participants determined to be within the scope of the contracts with customers accounting standard, we evaluate the term of the arrangement and recognize revenue when the customer obtains control of promised goods or services in a contract for an amount that reflects the consideration we expect to receive in exchange for those goods or services. For contracts with customers, we apply the following five-step model, each of which requires judgment, in order to determine this amount: (1) identification of the contract(s) with a customer; (2) identification of the performance obligations in the contract, including whether they are distinct in the context of the contract; (3) measurement of the transaction price, including the constraint on variable consideration; (4) allocation of the transaction price to the performance obligations; and (5) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the five-step model to contracts when it is probable we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. As part of the accounting for contracts with customers, we must develop assumptions that require judgment to determine the estimated relative standalone selling price (SSP) of each performance obligation identified in the contract. We then allocate the total transaction price to each performance obligation based on its SSP and recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. We account for contract modifications, defined as changes in the scope or price (or both) of a contract that are approved by the parties to the contract, such as a contract amendment, when the parties to a contract approve a modification that 54 either creates new, or changes existing, enforceable rights and obligations of the parties to the contract. We use one of the following methods depending on facts and circumstances: (i) as a separate contract if the modification adds distinct goods or services and the price reflects the SSP of those additional goods or services; (ii) as a termination of the existing contract and creation of a new contract if the remaining goods or services are distinct from those transferred before the modification; or (iii) as a cumulative catch-up adjustment to the original contract if the remaining goods or services are not distinct from those transferred before the modification. We entered into the First Amendment to the Gilead Collaboration Agreement in December 2024 and a letter agreement in July 2025. We determined each of these amendments to the Gilead Collaboration Agreement represent a contract modification within the scope of the revenue from contracts with customers guidance. For both contract modifications, we concluded there continues to be a single combined performance obligation consisting of a series of distinct research and development services (R&D Services), and therefore, the remaining services under the modified agreement are distinct from the R&D Services already provided. Accordingly, we accounted for each modification as a termination of the existing contract and the creation of a new contract and are recognizing the revenue prospectively by reassessing the transaction price and allocating it to the remaining R&D Services. We estimated the SSP of extension fees and opt-in rights pursuant to the modified Gilead Collaboration Agreement using significant estimates, including forecasted revenues and costs, development timelines, discount rates, and probabilities of technical and regulatory success. For both modifications, we concluded none of the options in the contract were performance obligations as they were contingent upon option exercise, were capable of being distinct from the R&D Services and were not offered at a discount to their SSP. In December 2025, Gilead exercised its option to exclusively license our HPI program, which we determined was a new contract under the contracts with customers accounting standard as it was deemed an exercise of a marketing offer made pursuant to the original terms of the Gilead Collaboration Agreement and First Amendment. We determined the exclusive license granted to Gilead for the HPI program represents a distinct performance obligation because Gilead can benefit from the license together with readily available resources and its ability to sublicense the rights. The $35.0 million opt-in fee is included in the fixed transaction price. Variable consideration related to regulatory and commercial milestone payments, royalties and cost reimbursements are constrained because such amounts are highly susceptible to factors outside our influence. We recognize revenue from R&D Services under the Gilead Collaboration Agreement over time using a cost-based input method, which continues to be appropriate following subsequent contract modifications of the Gilead Collaboration Agreement. We recognize revenue from exclusive licenses to our programs under the Gilead Collaboration Agreement at a point in time upon transfer of the license, when Gilead obtains the ability to use and benefit from the license. Revenue related to certain performance obligations that are satisfied over time could be materially impacted as a result of changes in the estimated total research effort required to satisfy those obligations. In addition, amounts of variable consideration (including regulatory and commercial milestones) are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. The effect of any change made to an estimated input component or variable consideration and, therefore revenue recognized, would be recorded as a change in estimate. Such changes in estimate could have a material impact on the revenue recognized in a future period. We regularly review our expectations of the extent of progress, including whether any variable consideration was no longer constrained, and, if any changes in estimates were made, we recognized revenue using the cumulative catch-up method. Research and Development Contract Costs and Accruals As part of the process of preparing our consolidated financial statements, we are required to estimate certain research and development expenses. This process involves reviewing quotations and contracts, reviewing the terms of our license agreements, communicating with our vendors and applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Such payments are evaluated for current or long-term classification based on when they will be realized or consumed. Examples of estimated amortized or accrued research and development expenses include fees to: • contract research organizations (CROs) and other service providers in connection with clinical studies; 55 • contract manufacturing organizations (CMOs) in connection with the production of clinical trial materials; and • vendors in connection with nonclinical development activities. We base our expenses related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows and expense recognition. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In either amortizing or accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the related prepayment or accrual accordingly. Our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in our reporting changes in estimates in any particular period. Adjustments to prior period estimates have not been material for the years ended December 31, 2025 and 2024. Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 Collaboration Revenue The following table summarizes the period-over-period changes in our collaboration revenue (in thousands, except for percentages): Year Ended December 31, $ Change % Change 2025 2024 2025 vs. 2024 2025 vs. 2024 Collaboration revenue from a related party $ 72,303 $ 28,520 $ 43,783 154 % Collaboration revenue was $72.3 million for the year ended December 31, 2025 compared to $28.5 million for the year ended December 31, 2024. The $43.8 million increase was primarily driven by the recognition of $35.0 million of revenue associated with the exclusive license granted and transferred to Gilead for the HPI program in December 2025. The increase also reflects the additional $10.0 million payment we received in December 2024 under the First Amendment to the Gilead Collaboration Agreement, which was largely recognized in 2025. Research and Development Expenses Research and development expenses consist primarily of employee-related expenses, fees paid to CROs and CMOs, lab supplies and other third-party expenses that support our research and discovery, nonclinical and clinical activities. External program costs represent a significant portion of our research and development expenses, which we track by product candidate once it has been nominated. We use our employee and infrastructure resources, as well as certain third-party costs, across multiple research and development programs, and we do not specifically allocate these costs to our programs. 56 The following table summarizes the period-over-period changes in our research and development expenses (in thousands, except for percentages): Year Ended December 31, $ Change % Change 2025 2024 2025 vs. 2024 2025 vs. 2024 External program expenses: 5366 $ 9,353 $ 6,215 $ 3,138 50 % 1179 8,119 4,239 3,880 92 % 6250 5,780 6,396 (616 ) (10 %) 4334 890 2,646 (1,756 ) (66 %) 7272 (1) 2,300 — 2,300 100 % Research and discovery 8,161 8,985 (824 ) (9 %) VBR — (43 ) (2) 43 (100 %) Total external program expenses 34,603 28,438 6,165 22 % Employee and contractor-related expenses 26,729 23,819 2,910 12 % Facility and other expenses 3,481 3,676 (195 ) (5 %) Total research and development expenses $ 64,813 $ 55,933 $ 8,880 16 % (1) In October 2025, we transitioned our discovery and development from 7423 to its parent molecule, 7272, which is currently in regulatory filing-enabling preclinical studies. (2) Reflects net amounts refundable to us after final reconciliation of costs for the clinical trial conducted pursuant to the Clinical Trial Collaboration Agreement with Arbutus Biopharma Corporation, which was terminated in February 2023. We received the refund in 2025. Research and development expenses were $64.8 million for the year ended December 31, 2025, compared to $55.9 million for the year ended December 31, 2024. The $8.9 million increase was primarily driven by higher external program expenses as we advanced our pipeline. Most notably, our HPI program incurred additional costs as both the 1179 and 5366 Phase 1a/b studies were underway during 2025, with more participants enrolled than in 2024. Employee and contractor-related expenses also increased, reflecting $2.1 million in increased compensation costs driven by annual salary increases and larger bonuses due to strong performance against our 2025 corporate objectives. The increase additionally reflects $1.1 million of higher stock-based compensation expense associated with performance stock units (PSUs) granted in 2025. These increases were partially offset by decreases in external program expenses from the completion of our 4334 Phase 1b study in mid-2025. General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs for personnel in executive, finance, accounting, business development, information technology, legal and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, insurance costs, legal fees relating to patents and corporate matters and fees for accounting and consulting services. The following table summarizes the period-over-period change in our general and administrative expenses (in thousands, except for percentages): Year Ended December 31, $ Change % Change 2025 2024 2025 vs. 2024 2025 vs. 2024 General and administrative expenses $ 19,608 $ 18,007 $ 1,601 9 % General and administrative expenses were $19.6 million for the year ended December 31, 2025, compared to $18.0 million for the year ended December 31, 2024. The $1.6 million increase was primarily driven by $1.2 million of higher professional fees related to patent filings as well as an increase of $0.5 million in stock-based compensation expense associated with PSUs granted in 2025. 57 Interest and Other Income, Net Interest income consists of interest earned on our cash and cash equivalents and available-for-sale marketable securities. The following table summarizes the period-over-period changes in our interest and other income, net (in thousands, except for percentages): Year Ended December 31, $ Change % Change 2025 2024 2025 vs. 2024 2025 vs. 2024 Interest and other income, net $ 5,996 $ 5,573 $ 423 8 % Interest and other income, net was $6.0 million for the year ended December 31, 2025, compared to $5.6 million for the year ended December 31, 2024. The $0.4 million increase was primarily driven by a larger investment portfolio balance following our financing transaction in August 2025. Income Tax Expense The following table summarizes the period-over-period changes in our income tax expense (in thousands, except for percentages): Year Ended December 31, $ Change % Change 2025 2024 2025 vs. 2024 2025 vs. 2024 Income tax expense $ — $ 330 $ (330 ) (100 %) There was no income tax expense for the year ended December 31, 2025. Income tax expense was $0.3 million for the year ended December 31, 2024 due to taxable income incurred from the upfront payments received under the Gilead Collaboration in 2023. Liquidity and Capital Resources Sources of Liquidity As a result of our significant research and development expenditures and the lack of any FDA-approved products to generate product sales revenue, we have not been profitable and have generated operating losses since we were incorporated in October 2005. We have funded our operations through December 31, 2025 principally through equity financings, raising an aggregate of $821.8 million in net proceeds, and strategic collaborations, raising an aggregate of $236.2 million. Funding Requirements We expect our future operating expenses to increase over the coming years as we continue to expand our pipeline and advance our candidates. We monitor our cash needs and the status of the capital markets on a continuous basis. From time to time, we opportunistically raise capital and have done so numerous times since our initial public offering by issuing equity securities. We expect to continue to raise capital when and as needed and at the time and in the manner most advantageous to us. As of December 31, 2025, we held cash, cash equivalents and marketable securities of $248.1 million. Based on our current operating plan, we believe we have sufficient funds to meet our operating requirements into 2028. We have based our estimate on assumptions that may prove to be wrong, and we may utilize our available capital resources sooner than we currently expect. Our contractual obligations include operating lease obligations totaling $3.2 million as of December 31, 2025, of which $0.8 million are short-term. We also enter into contracts in the normal course of business with CROs for clinical trials and CMOs for clinical supply manufacturing and with vendors for nonclinical research studies and other services and products for operating purposes, which generally provide for termination within 30 days of notice. 58 Our future capital requirements will depend on many factors, including: • our ability to realize future potential benefits pursuant to the Gilead Collaboration and maintain the collaboration; • the future development costs we would incur if we elect to participate in the Profit-Share for programs advanced by Gilead under the Gilead Collaboration; • the scope, progress, results and costs of our ongoing drug discovery, nonclinical development, laboratory testing and clinical studies of our product candidates and any additional clinical studies we may conduct in the future; • our ability to manufacture, and to contract with third parties to manufacture, adequate supplies of our product candidates for our clinical studies and any eventual commercialization; • the costs, timing and outcome of regulatory review of our product candidates; and • the costs of preparing, filing and prosecuting patent applications in the United States and abroad, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims. Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2025 2024 Net cash used in operating activities $ (41,093 ) $ (51,117 ) Net cash (used in) provided by investing activities (113,468 ) 40,171 Net cash provided by financing activities 174,667 29,449 Net increase in cash and cash equivalents $ 20,106 $ 18,503 Operating Activities Net cash used in operating activities was $41.1 million for the year ended December 31, 2025, compared to $51.1 million for the same period in 2024. The decrease was primarily due to $25.2 million more cash received under the Gilead Collaboration Agreement in 2025 compared to 2024, partially offset by higher operating expenses in 2025 from the advancement of our clinical pipeline, most notably due to costs incurred for our HPI program. Investing Activities Net cash used in investing activities was $113.5 million for the year ended December 31, 2025, compared to net cash provided by investing activities of $40.2 million for the same period in 2024. The change was primarily due to our purchases of marketable securities following our financing in August 2025, as we invested the proceeds from those offerings. Financing Activities Net cash provided by financing activities was $174.7 million for the year ended December 31, 2025, compared to $29.4 million for the same period in 2024. The increase was due to larger net proceeds of $166.4 million from our financing in August 2025 and the subsequent exercise of warrants issued in that transaction, totaling $5.5 million, compared to the $27.3 million net proceeds received from our June and December 2024 financings. 59 Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk Not applicable. Item 8. Financial Statemen ts and Supplementary Data (a) Financial Statements The financial statements required to be filed pursuant to this Item 8 are appended to this report. An index of those financial statements is found on page F-1. (b) Supplementary Data Not applicable. Item 9. Changes in and Disagreements with Acco untants on Accounting and Financial Disclosure None.