Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties and assumptions. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis. You should carefully read the “Special Note Regarding Forward Looking Statements” and “Risk Factors” sections of this Annual Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biopharmaceutical company focused on developing novel immunotherapeutic drug candidates for treating autoimmune and inflammatory diseases within the immunology and inflammation ("I&I") space. Helping patients and their families is the guiding principle at the heart of Barinthus Bio. We aim to achieve this by developing truly transformational and highly disease-specific immunotherapies.
We are prioritizing the development of a pipeline for I&I indications enabled by our proprietary and highly differentiated platform for promoting immune tolerance, referred to as SNAP-TI, that are designed to guide patient's T cells to reduce inflammation and restore the natural state of immune non-responsiveness to healthy tissue. Our lead candidate, VTP-1000, is designed to restore immune non-responsiveness to gluten in patients with celiac disease, and is currently being assessed
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in a Phase 1 clinical trial. Based on encouraging preclinical data, we believe that the SNAP-TI platform has the potential to impact multiple other I&I indications.
We are also exploring partnership opportunities for VTP-300, a product candidate to treat CHB that harnesses viral vector platform technologies, consisting of ChAdOx and MVA; which are designed to increase disease-specific CD8+ T cells. VTP-300 is a Phase 2 immunotherapeutic treatment modality that is a component of a treatment regimen to establish functional cure in patients who are chronically infected by the hepatitis B virus.
We believe our core capabilities at the intersection of T cell immunology and immunotherapeutic technology platforms combined with our track record of successfully executing development path activities uniquely position us to navigate towards delivering promising new treatments for patients with autoimmune and inflammatory diseases and building value for shareholders.
In September 2025, we entered into the Merger Agreement to combine in an all-stock transaction with Clywedog. The newly combined company will advance a differentiated portfolio of clinical-stage candidates targeting metabolic and autoimmune diseases, with four clinical data milestones expected within 18 months of the closing of the transaction. Upon the closing of the transaction, the combined company will be renamed “Clywedog Therapeutics Holdings, Inc.” and is expected to trade on the Nasdaq under the new ticker symbol “CLYD.” The transaction is expected to close in the second quarter of 2026, supported by existing cash and additional investments by OrbiMed and TPAV, LLC, both existing shareholders in Clywedog, and new investors.
We have incurred net losses in each annual and interim reporting period since 2023. For the years ending December 31, 2025 and 2024, we incurred net losses of $66.5 million and $61.2 million, respectively. As of December 31, 2025 and 2024, we had an accumulated deficit of $304.1 million and $237.7 million, respectively, and we do not currently expect positive cash flows from operations in the foreseeable future. We expect to incur net operating losses for at least the next several years as we advance our product candidates through clinical development, seek regulatory approval, prepare for approval, and in some cases proceed to commercialization of our product candidates, as well as continue our research and development efforts, as and when appropriate.
At this time, we cannot reasonably estimate, or know the nature, timing and estimated costs of all of the efforts that will be necessary to complete the development of any of our product candidates that we develop through our programs. We are also unable to predict when, if ever, material net cash inflows will commence from sales of product candidates we develop, if at all. This is due to the numerous risks and uncertainties associated with developing product candidates to approval and commercialization, including the uncertainty of:
• successful completion of preclinical studies and clinical trials;
• sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;
• acceptance of INDs for our planned clinical trials or future clinical trials;
• successful and timely enrollment and completion of clinical trials;
• data from our clinical program supporting approvable and commercially acceptable risk/benefit profiles for our product candidates in the intended populations;
• receipt and maintenance of necessary regulatory and marketing approvals from applicable regulatory authorities, in the light of the commercial environment then existent;
• availability and successful procurement of raw materials required to manufacture our products for clinical trials, scale-up of our manufacturing processes and formulation of our product candidates for later stages of development and commercial production;
• establishing either our own manufacturing capabilities or satisfactory agreements with third-party manufacturers for clinical supply for later stages of development and commercial manufacturing;
• entry into collaborations or partnerships, where appropriate, to further the development of our product candidates;
• obtaining and maintaining intellectual property and trade secret protection or regulatory exclusivity for our product candidates as well as qualifying for, maintaining, enforcing and defending such intellectual property rights and claims;
• successfully launching or assisting with the launch of commercial sales of our product candidates following approval;
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• acceptance of each product’s benefits and uses by patients, the medical community and third-party payors following approval;
• the prevalence and severity of any adverse events experienced with our product candidates in development;
• establishing and maintaining a continued acceptable safety profile of the product candidates following approval;
• obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors if necessary or desirable; and
• effectively competing with other therapies.
A change in the outcome of any of these or other variables with respect to the development of any of our current and future product candidates could significantly change the costs and timing associated with the development of that product candidate, in either direction. Furthermore, our operating plans may change in the future owing to research outcomes or other opportunities, and we may need additional funds to meet operational needs and capital requirements associated with such altered operating plans. Unless and until we can generate a substantial amount of revenue from our product candidates, if approved, we expect to finance our future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing. Based on our current standalone research and development plans, we expect that our existing cash, cash equivalents, restricted cash and other financial resources will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. These estimates are based on assumptions that may prove to be wrong, and we could use our available capital resources more quickly than we expect.
If we raise additional funds through collaborations, strategic alliances, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we would be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Recent Developments
Merger Agreement Amendment
In February 2026, we announced we have entered into an amendment to the Merger Agreement with Clywedog to update the exchange ratio framework to provide additional flexibility in finalizing the transaction terms and to revise certain minimum cash requirements to reflect anticipated transaction timing. All other material terms remain unchanged.
Nasdaq Listing Rule Compliance
On January 6, 2026, we announced we received a letter from the Nasdaq indicating that the closing bid price of our ADSs, each representing one ordinary share of the Company, was below $1.00 per share for 30 consecutive business days, and that, therefore, we are not in compliance with Nasdaq Listing Rule 5450(a)(1), which is the minimum bid price requirement for continued listing on the Nasdaq Global Market. The notice from Nasdaq has no immediate effect on the listing of the ADSs, and the ADSs will continue to be listed on the Nasdaq Global Market under the symbol “BRNS.” Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we have automatically been afforded a 180-calendar day period, or until June 29, 2026, to regain compliance with the minimum bid price requirement. The continued listing standard will be met if the closing bid price of the ADSs is at least $1.00 per share for a minimum of ten consecutive business days during the 180-calendar day period. If we are not in compliance by June 29, 2026, we may be afforded a second 180-calendar day period to regain compliance if it meets certain requirements. We intend to monitor the closing bid price of the ADSs and are currently evaluating our options for regaining compliance, which could include a reverse stock split of the ADSs.
Impact of International Conflict
In respect of the international conflicts in Gaza, Ukraine and Iran, we have no operations or suppliers based in Israel, Gaza, Ukraine, Belarus, Russia or Iran, and as a result, as of the date of this Annual Report on Form 10-K, we believe the impact on our business, operations and financial condition will be minimal.
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Impact of Global Economic Conditions and Inflationary Pressures
Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations and financial condition. Inflationary pressures, volatile interest rates, or intensified disruptions in the global financial markets could adversely affect our future financing capability or ability to access the capital markets. Additionally, we may incur future increases in operating costs due to additional inflationary increases.
Components of Our Operating Results
Revenue
To date, we have not generated any revenue from direct product sales and do not expect to do so in the near future, if at all. Most of our revenue to date has been derived from the OUI License Agreement Amendment with OUI relating to Vaxzevria.
In April 2020, we entered into the OUI License Agreement Amendment with OUI in respect of our rights to use the ChAdOx1 technology in COVID-19 vaccines to facilitate the license of those rights by OUI to AstraZeneca. Under this agreement, we are entitled to receive from OUI a share of payments, including royalties and milestones, received by OUI from AstraZeneca in respect of this vaccine. In March, 2022, we were notified by OUI of the commencement of payments to us arising from AstraZeneca’s commercial sales of Vaxzevria. In May 2024, AstraZeneca announced the initiation of withdrawal of marketing authorization for Vaxzevria in Europe as demand had declined. In October 2024, we were informed of additional amounts due to the Company from Oxford University Innovation Limited (OUI) in relation to the Company's share of royalties received by OUI as a result of prior commercial sales of Vaxzevria by AstraZeneca. As a result there was no revenue for the year ending December 31, 2025 (year ended December 31, 2024 $15.0 million), representing the amounts we have been notified of as due by OUI to date. We do not expect to receive any further payments relating to future commercial sales of Vaxzevria and, if such payments are due, that we will be notified of such payments in a timely manner.
Operating Expenses
Our operating expenses since inception have consisted of research and development costs and general and administrative costs.
Research and Development Expenses
Since our inception, we have focused significant resources on our research and development activities, including establishing and building on our adenovirus platform, further enhancing our in-licensed ChAdOx1, ChAdOx2 and MVA vectors, developing a next-generation adenoviral vector, acquiring new technology platforms including SNAP-TI and SNAP-CI, conducting preclinical studies, developing various manufacturing processes, and advancing our clinical programs. Research and development activities account for a large portion of our operating expenses, and product candidates in later stages of development generally have higher development costs than those in earlier stages, due to larger and more complex clinical trials, manufacturing scale-up and an increase in research and development headcount to oversee these activities. We are currently seeking partners to fund or collaborate on certain of our programs, including VTP-300 and VTP-850, which we do not intend to develop beyond the completion of the ongoing trials, as applicable. We expect research and development expenses to increase in the future as we progress our program through the next stage of development. Research and development costs are expensed as incurred. These costs include:
• salaries, benefits, and other related costs, including share-based compensation, for personnel engaged in research and development functions;
• expenses incurred in connection with the development of our programs including preclinical studies and clinical trials of our product candidates, under agreements with third parties, such as consultants, contractors, academic institutions and CROs;
• the cost of manufacturing drug products for use in preclinical development and clinical trials, including agreements with third parties, such as contract manufacturing organizations, consultants and contractors;
• laboratory costs; and
• leased facility costs, equipment depreciation and other expenses, which include direct and allocated expenses.
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General and Administrative Expenses
Our general and administrative expenses consist primarily of personnel-related expenses, including share-based compensation, in our executive, finance, business development and other administrative functions. Other general and administrative expenses include consulting fees and professional service fees for auditing, tax and legal services, rent expenses related to our offices, depreciation, impairment of property and equipment and right-of-use assets, foreign exchange gains and losses on our cash balances, other central non-research costs and changes in the fair value of contingent consideration. When determining the fair value of contingent consideration, significant judgment is used to determine the probability of success of achievement of the technology and clinical milestones and the date of the expected milestone. Our general and administrative expenses would continue to increase in the future if we expand our operating activities and if we seek to manufacture and/or commercialize any of our current and future product candidates. These costs will increase if our headcount rises to allow full support for our operations as a public company, including increased expenses related to legal, accounting, regulatory and tax-related services associated with maintaining compliance with requirements of the Nasdaq and the SEC, directors’ and officers’ liability insurance premiums and investor relations activities.
Other Operating Income
Other operating income includes grant income from an agreement (the "CEPI Funding Agreement") with the Coalition for Epidemic Preparedness Innovations ("CEPI") pursuant to which CEPI will provide funding to us to advance the development of VTP-500, a vaccine candidate against MERS. When there is reasonable assurance that we will comply with the conditions attached to a received grant, and when there is reasonable assurance that the grant will be received, grant income is recognized as other operating income on a gross basis in the consolidated statements of operations and comprehensive loss on a systematic basis over the periods in which we recognize expenses for the related costs for which the grants are intended to compensate. Payments received in advance of incurring reimbursable expenses are recorded as deferred income. Any remaining unused amounts of the cash payments received on the balance sheets will be disclosed as restricted cash in the notes of the consolidated financial statements. Minimal future activity is expected in relation to the VTP-500 program following the strategic decision to prioritize pipeline assets in the I&I space.
Other Income/(Expense)
Interest Income
Interest income results primarily from the interest earned on our short-term cash deposits and cash balances held by Barinthus Biotherapeutics (UK) Limited.
Interest Expense
Interest expense results primarily from the asset retirement obligation discounted over the length of the relevant lease.
Research and Development Incentives
Research and development incentives contain payments receivable from the U.K. government related to corporation tax relief for qualifying expenditure on research and development projects in the U.K. We account for such relief received as other income.
Qualifying expenditures largely comprise employment costs for research staff, consumables, outsourced contract research organization costs, externally provided workers and utilities costs incurred as part of research projects. A large portion of costs relating to research and development, clinical trials and manufacturing activities are eligible for inclusion within these tax credit cash rebate claims.
For 2025, we benefit from the applicable U.K. research and development tax credit regime which is the merged scheme Research & Development expenditure credit ("RDEC") and enhanced R&D intensive support ("ERIS") that replaces the old RDEC and small and medium-sized enterprise ("SME") schemes for accounting periods beginning on or after April 1, 2024. For expenditure under the merged scheme, the rate of Research and Development expenditure credit is 20%, which is the same as the rate under the old RDEC scheme for expenditure incurred on or after April 1, 2023. For loss-makers and small profit-makers, a lower rate of notional tax restriction (currently 19%) applies at payment. The amount of the Pay As You Earn ("PAYE") cap for claims under both the merged scheme and ERIS is £20,000 plus 300% of the company’s relevant PAYE and National Insurance contributions liabilities. The PAYE cap (where applicable) will limit the amount of payable credit that can be received in the accounting period under consideration. Any excess over the cap will be carried forward and treated as an amount of Research and Development expenditure credit to which the company will be entitled for the next accounting period. Based on prior claims and the split of qualifying spend it is expected that the PAYE cap is unlikely to affect the net benefit. Furthermore, legislation included in Finance Act 2024 restricts the extent to which
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payments to contractors for R&D and externally provided workers can qualify for R&D relief where R&D activity takes place outside the U.K., which may restrict the ability to include cost incurred on externally provided workers based in the U.S.
For 2024, we benefited from the applicable U.K. research and development tax credit regime, being the Small and Medium-sized Enterprises R&D tax relief program ( “ SME Program ” ), and, to the extent that our projects are grant funded or relate to work subcontracted to us by third parties, the Research and Development Expenditure Credit program. Under the SME Program, we were able to surrender some of our trading losses that arise from qualifying research and development activities for a cash rebate of up to 18.6% of such qualifying research and development expenditure, as the SME additional deduction is 86% and the SME credit rate is 10%.
Under both the merged RDEC scheme and the SME program, a company qualifies as an R&D intensive business if R&D expenditure constitutes at least 30% of total expenditure. From the analysis performed, we have not and do not expect to claim under the loss-making R&D intensive scheme criteria primarily due to the proportion of total relevant expenditure occurring outside the U.K.
In future years, we may not be able to continue to claim research and development tax credits under the U.K. research and development tax credit regime if we no longer qualify based on the eligibility criteria. Unsurrendered U.K. losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of U.K. taxable profits. There was no tax loss restriction applied to the R&D tax credits in the U.K. for the years ended December 31, 2025 and 2024.
Critical Accounting Policies and Use of Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to fair value of contingent consideration and impairment of intangible assets. Management bases its estimates on historical experience and on various other market specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.
We believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements and understanding and evaluating our reported financial results.
Long-lived Assets
We review long-lived assets to be held and used, including property and equipment, intangible assets and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. Evaluation of recoverability is first based on an estimate of undiscounted future cash flows resulting from the use of the asset or asset group and its eventual disposition. In the event such cash flows are not expected to be sufficient to recover the carrying amount of the asset or asset group, the assets are written down to their estimated fair values.
Intangible assets
In September 2025, we announced that we have entered into the Merger Agreement to combine in an all-stock transaction with Clywedog. The indicative offer price was below the fair value of our net assets expected at completion and below prior valuations utilized in our most recent impairment assessments, thereby constituting an impairment triggering event. As a result, we recorded a total impairment charge for acquired development technology intangible assets of $4.7 million during the quarter ended September 30, 2025. The determination of the fair value of our net assets expected at completion, is a non-recurring fair value measurement. Subsequently, we reviewed for additional indicators of impairment and did not identify any additional impairment triggers nor was any additional impairment expense recorded.
Contingent Consideration
We recognize a contingent consideration liability related to the acquisition of Avidea. The liability is remeasured to fair value at each reporting date until the contingency is resolved. The fair value of the contingent consideration is a Level 3 valuation determined using significant unobservable inputs being the probability of success of achievement of the milestones and the expected date of the milestone achievement. Avidea’s stockholders may be entitled to receive an
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aggregate of up to $40.0 million in additional payments, payable in a combination of cash and ADSs, upon the achievement of certain milestones. This contingent consideration is included within the purchase price and is recognized at its fair value on the acquisition date, and subsequently remeasured to fair value at each reporting date until the contingency is resolved. Changes in fair value are recognized in general and administrative expenses in the consolidated statements of operations and comprehensive loss. The fair value of contingent consideration is based on the probability of pursuit of the activity associated with the milestone, the probability of success of the achievement of the milestone, the expected date of milestone achievement and applying the relevant discount rate.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table sets forth the significant components of our results of operations (in thousands):
Year ended December 31, 2025 Year ended December 31, 2024 Change
License revenue
$ — $ 14,969 $ (14,969)
Operating expenses:
Research and development
25,564 42,236 (16,672)
General and administrative 40,830 29,670 11,160
Impairment of intangible assets 4,667 — 4,667
Goodwill impairment — 12,209 (12,209)
Total operating expenses 71,061 84,115 (13,054)
Other operating income
506 1,176 (670)
Loss from operations (70,555) (67,970) (2,585)
Other income/(expense):
Interest income 1,957 2,678 (721)
Interest expense (51) (53) 2
Research and development incentives 2,000 3,983 (1,983)
Other income 16 135 (119)
Total other income, net 3,922 6,743 (2,821)
Loss before income tax (66,633) (61,227) (5,406)
Tax benefit 175 44 131
Net loss $ (66,458) $ (61,183) $ (5,275)
Revenue
For the year ended December 31, 2025 and 2024, our revenue consisted of nil and $15.0 million, respectively from the OUI License Agreement Amendment with respect to amounts owed to us by OUI for the commercial sales of Vaxzevria. In 2024, AstraZeneca announced it had made the strategic decision to initiate the withdrawal of marketing authorization for Vaxzevria within Europe, citing decline in demand as the reason for the decision. We do not expect to receive any further payments relating to future commercial sales of Vaxzevria and, if such payments are due, that we will be notified of such payments in a timely manner.
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Research and Development Expenses
The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024:
Year ended December 31, 2025 Year ended December 31, 2024 Change
Direct research and development expenses by program:
VTP-1000 Celiac $ 6,063 $ 5,486 $ 577
Barinthus legacy assets 1
8,531 18,223 (9,692)
Total direct research and development expenses $ 14,594 $ 23,709 $ (9,115)
Indirect research and development expenses:
Personnel-related (including share-based compensation) 8,413 15,867 (7,454)
Facility related 1,370 1,249 121
Other indirect costs 1,187 1,411 (224)
Total indirect research and development expenses
10,970 18,527 (7,557)
Total research and development expenses $ 25,564 $ 42,236 $ (16,672)
1 In January 2025, we announced a strategic focus on developing a pipeline in I&I, and the deprioritization of our programs in infectious disease and oncology. The following programs were previously presented separately and have been grouped collectively as "Barinthus Legacy Assets" for both years presented: VTP-300 HBV, VTP-850 Prostate Cancer, VTP-200 HPV, VTP-600 NSCLC, VTP-500 MERS and other and earlier stage programs.
Our research and development expenses for the years ended December 31, 2025 and 2024 were $25.6 million and $42.2 million, respectively, and consisted of direct and indirect research and development expenses.
Direct expenses for the years ended December 31, 2025 and 2024 were $14.6 million and $23.7 million, respectively, and consisted of outside services, consultants, laboratory materials, clinical trials, manufacturing of clinical trial materials, as well as costs for external preclinical services and sample testing. Of the $9.1 million decrease, $9.7 million pertains to a net decrease in spend across Barinthus legacy asset infectious disease and oncology programs as the ongoing trials reached clinical completion and following the strategic decision to partner these programs for future development. This decrease is partially offset by a $0.6 million increase in spend on VTP-1000 for the ongoing Phase 1 AVALON clinical trial.
Indirect research and development expenses for the years ended December 31, 2025 and 2024 were $11.0 million and $18.5 million, respectively. Of the $7.6 million decrease, $7.5 million relates to the reduction in headcount and the associated reduction in personnel-related expense (including share-based compensation).
General and Administrative Expenses
General and administrative expenses for the years ended December 31, 2025 and 2024 were $40.8 million and $29.7 million, respectively. The increase of $11.1 million relates primarily to a $12.0 million change in foreign exchange gains and losses (from a gain of $2.4 million for the year ended December 31, 2024 to a loss of $9.6 million for the year ended December 31, 2025), as well as an increase of $6.5 million in professional fees attributable to increased strategic activity.
These increases are partially offset by a $2.6 million net reduction in depreciation and amortization reflecting the $5.3 million impairment charge recorded in the year ended December 31, 2024 in relation to the U.K. operating lease right-of-use assets and property and equipment. For the year ended December 31, 2025, depreciation includes a $1.1 million impairment charge in relation to U.S. right-of-use assets and leasehold improvements and $1.6 m accelerated depreciation due to a decrease in the estimated useful lives of the U.K. right of use and fixed assets.
Personnel-related expenses decreased $2.8 million due to the reduction in headcount and the associated reduction in personnel-related expense (including share-based compensation). Other general and administrative costs decreased $1.4 million which is attributable to reduced travel expenses, reduced communications expenses, lower insurance premiums and other reductions in facility-related expenses.
Impairment of intangible assets expense
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For the years ended December 31, 2025 and 2024, impairment of intangible assets expense was $4.7 million and nil million, respectively. This increase relates to the impairment assessment performed during the third quarter of 2025, following an impairment triggering event identified in relation to us entering a definitive merger agreement to combine in an all-stock merger transaction with Clywedog. See Note 7 for further details.
Goodwill Impairment Expense
For the years ended December 31, 2025 and 2024, goodwill impairment expense was nil and $12.2 million, respectively. The decrease relates to the impairment assessment performed during the fourth quarter of 2024, based on the expected utilization of Company assets and external market conditions.
Interest Income
For the years ended December 31, 2025 and 2024, interest income was $2.0 million and $2.7 million respectively, which primarily resulted from the reduction in interest rates and the reduction in cash amounts on short-term cash deposits held by Barinthus Biotherapeutics (UK) Limited.
Research and Development Incentives
For the years ended December 31, 2025 and 2024, research and development incentives were $2.0 million and $4.0 million, respectively. Such research and development incentives relate to corporation tax relief on research and development project incentive programs in the U.K. The decrease of $2.0 million is primarily due to a decrease in qualifying R&D activities related to the strategic decision to stop development of the viral vector programs beyond the completion of the ongoing clinical trials in the U.K. and reduced R&D recovery rate under the new merged scheme for 2025.
Tax benefit
For the years ended December 31, 2025 and 2024, the tax benefit was $0.18 million and $0.04 million respectively, which primarily relates to movements in deferred tax.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have funded our operations primarily through private and public placements of our ordinary and preferred shares as well as from grants and research incentives, various agreements with public funding agencies, the issuance of convertible loan notes, and most recently from upfront royalty and milestone payments from OUI in connection with the OUI License Agreement Amendment for Vaxzevria. Through December 31, 2025, we have received gross proceeds of approximately $330.1 million from the issuance of our ordinary and preferred shares and convertible loan notes. As of December 31, 2025, we had cash, cash equivalents and restricted cash of $71.9 million. Key financing and corporate milestones include the following:
• Between July 2020 and November 2020, we raised gross proceeds of $41.2 million from the issuance of convertible loan notes;
• In March 2021, we raised gross proceeds of $125.2 million from the issuance of our Series B shares.
• In May 2021, we raised gross proceeds of $110.5 million from the initial public offering of our ordinary shares on Nasdaq.
• Between April 2022 and November 2024, we received $59.5 million of cash from OUI for the commercial sales of Vaxzevria.
• Between December 2022 and December 31, 2024, we raised net proceeds of $5.1 million from the issuance of 2,558,586 shares represented by ADSs through “at-the-market” offerings under the sales agreement with Jefferies LLC ("Jefferies").
We do not currently expect positive cash flows from operations in the foreseeable future, if at all. In most periods, we have incurred operating losses as a result of ongoing efforts to develop our immunotherapy platforms and our product candidates, including conducting ongoing research and development, preclinical studies, clinical trials, providing general and administrative support for these operations and developing our intellectual property portfolio. We expect to continue to incur net negative cash flows from operations for at least the next few years as we progress clinical development, seek regulatory approval, prepare for and, if approved, proceed to manufacture and commercialization of our most advanced
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product candidates. Operating profits may arise earlier if programs are licensed or sold to third parties before final approval, but this cannot be guaranteed.
On September 29, 2025, we entered into the Merger Agreement providing for our combination with Clywedog. We have agreed to various covenants and agreements, including, among others, agreements to conduct our business in the ordinary course of business between the execution of the Merger Agreement and the closing of the Combinations. Outside of certain limited exceptions, we may not take certain actions without Clywedog’s consent, including (i) acquiring businesses and disposing of significant assets, (ii) incurring expenditures above specified thresholds; (iii) incurring additional debt outside the ordinary course of business, (iv) issuing additional securities, or (v) repurchasing ordinary shares or ADSs.
Cash Flows
The following table sets forth a summary of the primary sources and uses of cash (in thousands) for each period presented:
Year ended December 31, 2025 Year ended December 31, 2024
Net cash used in operating activities $ (47,979) $ (28,940)
Net cash provided by/(used in) investing activities
416 (892)
Net cash provided by financing activities
2 2,163
Effect of exchange rates on cash, cash equivalents and restricted cash 7,013 (2,021)
Net decrease in cash, cash equivalents and restricted cash $ (40,548) $ (29,690)
Cash Used in Operating Activities
During the year ended December 31, 2025, net cash used in operating activities was $48.0 million, primarily resulting from our net loss of $66.5 million, adjusted by depreciation and amortization expense of $5.8 million, long-lived asset impairment charge of $5.8 million, unrealized foreign exchange loss of $3.7 million, non-cash lease expenses of $3.3 million, share based compensation of $0.5 million and changes in our operating assets and liabilities, net of $0.4 million primarily related to a $6.4 million decrease in research and development incentives receivable, a $6.0 million decrease in accounts payable and accrued expenses, a $2.0 million decrease in operating lease liabilities, a $1.7 million decrease in prepaid expenses, and a $0.5 million decrease in deferred income.
During the year ended December 31, 2024, net cash used in operating activities was $28.9 million, primarily resulting from our net loss of $61.2 million, adjusted by goodwill impairment expense of $12.2 million, depreciation and amortization of $5.8 million, an impairment charge of $5.3 million, share based compensation of $4.7 million, non-cash lease expenses of $1.4 million and changes in our operating assets and liabilities, net of $2.6 million primarily related to a $3.6 million decrease in prepaid expenses, a $1.8 million decrease in operating lease liabilities, a $1.7 million increase in deferred income, a $1.4 million increase in accounts payable and accrued expenses and a $2.3 million increase in research and development incentives receivable.
Net Cash Provided By / (Used In) Investing Activities
During the years ended December 31, 2025 and 2024, cash provided by/(used) in investing activities was $0.4 million and $(0.9) million, respectively. For the year ended December 31, 2025, these amounts primarily related to proceeds received upon the sale of U.K. laboratory equipment. For the year ended December 31, 2024, these amounts primarily related to lab and office equipment purchases in both our U.K. and U.S. facilities.
Net Cash Provided by Financing Activities
During the year ended December 31, 2025 cash provided by financing activities related only to net proceeds from the issuance of ordinary shares in the form of ADSs through stock option exercises. During the year ended December 31, 2024, cash provided by financing activities of $2.2 million primarily related to net proceeds received from the issuance of ordinary shares in the form of ADSs through the “at-the-market” sales agreement with Jefferies LLC.
Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash
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During the years ended December 31, 2025 and 2024, the effect of foreign exchange on cash, cash equivalents and restricted cash was a $7.0 million gain and $2.0 million loss respectively, primarily as a result of fluctuations between the United States dollar and pound sterling exchange rates.
Future Funding Requirements
To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, undertaking preclinical studies and conducting clinical trials of our product candidates. As a result, we have incurred losses in each year since our inception in 2016, except for 2022 when we were profitable. We have negative operating cash flows for the periods ending December 31, 2025 and 2024. As of December 31, 2025, we had an accumulated deficit of $304.1 million. We expect to continue to incur significant losses and negative cash flows from operations for the foreseeable future. We anticipate that our expenses will increase substantially if, and as we:
• pursue the clinical and preclinical development of our current product candidates;
• use our technologies to advance additional product candidates into preclinical and clinical development;
• seek marketing authorizations for product candidates that successfully complete clinical trials, if any;
• attract, hire and retain additional clinical, regulatory, quality control and other personnel;
• conduct preclinical studies and clinical trials for our current and future product candidates based on our proprietary synthetic and biologic platforms, including SNAP-TI;
• expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company;
• establish our manufacturing capabilities through third parties or by ourselves and scale-up manufacturing to provide adequate supply for clinical trials and commercialization;
• expand, maintain, protect and enforce our intellectual property portfolio;
• establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or through a selected partner;
• acquire or in-license other product candidates and technologies for development and commercialization;
• incur additional legal, accounting and other expenses in operating our business, including the additional costs associated with operating as a public company; and
• incur additional legal, advisory, accounting, tax and other expenses in operating our business, including the additional costs associated with completing the Contemplated Transactions.
Even if we succeed in commercializing one or more of our product candidates, we will continue to incur substantial research and development costs and other expenditures to develop and market additional product candidates and we may never generate revenue that is significant or large enough to achieve profitability. We may also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital unless and until such losses are eliminated by revenue.
If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Accordingly, our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.
Since our foundation, we have invested a significant portion of our efforts and financial resources in research and development activities for our viral vector platform (ChAdOx and MVA), acquisition of additional complementary platforms such as SNAP-TI, development of new technologies, and our product candidates derived from these technologies. Preclinical studies and especially clinical trials and additional research and development activities will require substantial funds to complete. We believe that we will continue to expend substantial resources for the foreseeable future in connection with the development of our current product candidates and programs as well as any future product candidates we may elect to pursue, as well as the gradual gaining of control over our required manufacturing capabilities and other corporate functions. These expenditures will include costs associated with conducting preclinical studies and
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clinical trials, obtaining regulatory approvals, and potentially in-house manufacturing and supply, as well as marketing and selling any products approved for sale. In addition, other unanticipated costs may arise as outlined above. Because the outcome of any preclinical study or clinical trial is uncertain and the rate of change of third-party costs is also unpredictable, we cannot reasonably estimate now the actual amounts which will be necessary to complete the development and commercialization of our current or future product candidates successfully.
Our future capital requirements may depend on many factors, including:
• the timing, outcome and terms of the Contemplated Transactions currently in progress as well as associated transaction and advisory costs;
• the scope, progress, results and costs of researching and developing our current and future product candidates and programs, and of conducting preclinical studies and clinical trials;
• the number and development requirements of other product candidates that we may pursue, and of other indications for our current product candidates that we may pursue;
• the stability, scale and yield of future manufacturing processes as we scale-up production and formulation of our product candidates either internally or externally for later stages of development and commercialization;
• the timing of, success achieved and the costs involved in obtaining regulatory and marketing approvals and developing our ability to establish license or sale transactions and/or sales and marketing capabilities, if any, for our current and future product candidates if clinical trials and approval processes are successful;
• the success of our collaborations with current and any future collaboration partners;
• our ability to establish, maintain or terminate collaborations, strategic licensing or other arrangements and the financial terms of such agreements;
• the costs of future commercialization activities, including product launch, product sales, marketing, manufacturing and distribution, for any of our current and future product candidates for which we receive marketing approval;
• the timing, receipt and amount of commercial sales, revenues, milestones or royalties or other income from our future products, should any of our product candidates receive marketing approval; and
• the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining, enforcing and protecting our intellectual property rights and defending intellectual property-related claims including litigation costs and any damages awarded in such litigation; and
• the emergence and success or otherwise of competing autoimmune or infectious disease therapies and other market developments.
A change in the outcome of any of these or other variables with respect to the development of any of our current and future product candidates could significantly change the costs and timing associated with the development of that product candidate, in either direction. Furthermore, our operating plans may change in the future owing to research outcomes or other opportunities, and we may need additional funds to meet operational needs and capital requirements associated with such altered operating plans. Unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing.
Based on our current standalone research and development plans, we expect that our existing cash, cash equivalents, restricted cash and other financial resources will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. These estimates are based on assumptions that may prove to be wrong, and we could use our available capital resources more quickly than we expect.
We may require substantial additional financing in the future to meet any such unanticipated factors, including if the Contemplated Transactions are not consummated timely or at all. If we raise additional funds through collaborations, strategic alliances, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we would be required to delay, limit, reduce or terminate our product development programs, future commercialization efforts, other operational plans or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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Lease, Purchase, and Other Obligations
We have operating lease obligations related to our property, plant and equipment. The details of these leases are disclosed in Item 2. “Properties". The obligations related to both short- and long-term lease arrangements are set forth in Note 16 “Commitment and Contingencies” to our consolidated financial statements.
We enter into contracts in the normal course of business with CROs and other third parties for clinical trials and preclinical research studies and testing. These contracts are generally cancellable by us upon prior notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancellable obligations of our service providers, up to the date of cancellation.
We have contingent payment obligations that we may incur upon achievement of clinical, regulatory and commercial milestones, as applicable, or royalty payments that we may be required to make under our licenses; however, the amount, timing and likelihood of such payments are not known as of December 31, 2025. See section entitled “Business - Our Collaboration and License Agreements.
Emerging Growth Company Status
We are an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As an emerging growth company, we may delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the closing of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our ADSs held by non-affiliates exceeded $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncement that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements.
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