Candel Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures. Limitations on Effectiveness of Controls and Procedures Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Evaluation of Disclosure Controls and Procedures Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended). We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based on the evaluation of our disclosure controls and procedures as of December 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive officer and principal financial officer, or persons performing similar functions, and effected by a company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of a company’s assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of the company’s management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Under the supervision of and with the participation of our principal executive officer and principal financial 124 officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2025. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm on internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.” Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the three months ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. During the three months ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted , terminated or modified a Rule 10b5-1 trading arrangement or any “non-Rule 10b5-1 trading agreement” (as defined in Item 408(c) of Regulation S-K). On March 10, 2026, we entered into that certain First Amendment to Loan and Security Agreement among the Company and Trinity Capital Inc. (the First Amendment to Trinity LSA). The First Amendment to Trinity LSA amended our financial covenant such that the period in which we are required, if our market capitalization is less than $550 million, to maintain minimum cash and cash equivalents of 67.5% of all of the aggregate principal amount of outstanding obligations under the Trinity LSA shall be through the date that we have raised at least $93.5 million in unrestricted net cash proceeds from one or more bona fide equity financings and/or upfront proceeds from business development after the Closing Date (as defined in the Trinity LSA). The First Amendment to Trinity LSA also makes corresponding amendments and additions to defined terms. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . Not applicable. 125 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item 10 will be included in our Definitive Proxy Statement to be filed with the Securities and Exchange Commission (SEC) with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this Item 11 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item 12 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item 13 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services . Our independent public accounting firm is KPMG LLP, Boston, Massachusetts, PCAOB Auditor ID 185 . The information required by this Item 14 will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders and is incorporated herein by reference. 126 PART IV Item 15. Exhibits and Financial Statement Schedules. For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page F-1 of this Annual Report on Form 10-K, incorporated into this Item by reference. Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto. Exhibits Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of Candel Therapeutics, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 30, 2021) 3.2 Amended and Restated Bylaws of Candel Therapeutics, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 30, 2021) 3.3 Amendment to the Amended and Restated Bylaws of Candel Therapeutics, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on May 30, 2024) 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 4.2 Description of Securities (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 10-K filed with the SEC on March 13, 2025) 4.3 Investors’ Rights Agreement (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on June 25, 2021) 4.4 Form of November 2018 Unconditional Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 4.5 Form of November 2018 Conditional Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 4.6 Form of Warrant to Purchase Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.5 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on June 25, 2021) 4.7 Form of Lender Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 14, 2025) 10.1# 2015 Stock Plan, as amended, and forms of award agreements thereunder (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.2# 2021 Stock Option and Incentive Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.3# Senior Executive Cash Incentive Bonus Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.4# Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.5# Employment Agreement by and between Advantagene, Inc. d/b/a Candel Therapeutics and Paul Peter Tak, M.D., Ph.D. dated September 12, 2020 (incorporated by reference to Exhibit 10.5.1 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.6# Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.7 Exclusive License Agreement by and between Advantagene, Inc. and Ventagen, LLC dated March 1, 2014 (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.8 Exclusive License Agreement by and between Advantagene, Inc., d/b/a Candel Therapeutics and Periphagen, Inc. dated December 9, 2019 (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 127 10.9 Exclusive Patent License Agreement by and between Advantagene, Inc. and Mass General Brigham (formerly known as The Brigham and Women’s Hospital, Inc.) dated September 15, 2020 (incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.10 Lease of Premises at 117 Kendrick Street, Needham, Massachusetts by and between 117 Kendrick DE, LLC and the Registrant dated as of February 4, 2019 (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1/A (File No. 333- 257444) filed with the SEC on July 16, 2021) 10.11# Employment Agreement by and between Candel Therapeutics, Inc. and Francesca Barone dated February 3, 2022 (incorporated by reference to Exhibit 10.12 to the Registrant's Annual Report on Form 10-K filed with the SEC on March 29, 2022) 10.12# Consulting Agreement by and between Candel Therapeutics, Inc. and Susan Stewart dated October 19, 2021 (incorporated by reference to Exhibit 10.13 to the Registrant's Annual Report on Form 10-K filed with the SEC on March 29, 2022) 10.13# Employment Agreement by and between Candel Therapeutics, Inc. and Seshu Tyagarajan dated April 14, 2022 (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 12, 2022) 10.14** Master Production Services Agreement by and between Candel Therapeutics and SAFC Carlsbad, Inc., effective November 3, 2022 (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 30, 2023) 10.15** Amendment to Exclusive License Agreement by and between Candel Therapeutics, Inc. and Periphagen, Inc. dated June 7, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2023) 10.16** First Amendment to Lease of Premises at 117 Kendrick Street, Needham, Massachusetts by and between 117 Kendrick DE, LLC and the Registrant dated as of August 18, 2025 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 21, 2025). 10.17** Loan and Security Agreement, by and among the Registrant, Trinity Capital Inc. and the other parties thereto, dated as of October 14, 2025 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 14, 2025). 10.18 Form of Omnibus Amendment, Release and Waiver to Warrants to Purchase Common Stock, by and among the Registrant and the other parties thereto, dated as of October 14, 2025 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 14, 2025). 10.19#* Candel Therapeutics, Inc. 2025 Inducement Plan and forms of award agreements thereunder 10.20#* Candel Therapeutics, Inc. Non-Employee Director Compensation Policy 10.21*** Purchase Agreement by and between Candel Therapeutics, Inc. and RTW Investments, LP, dated as of February 19, 2026 10.22* First Amendment to Loan and Security Agreement, by and among the Registrant, Trinity Capital Inc., and the other parties thereto, dated as of March 10, 2026. 19.1 Candel Therapeutics, Inc. Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Registrant’s Form 10-K filed with the SEC on March 13, 2025) 21.1 List of Subsidiary (incorporated by reference to Exhibit 21.1 to the Registrant's Annual Report on Form 10-K filed with the SEC on March 29, 2022) 23.1* Consent of KPMG LLP, Independent Registered Public Accounting Firm 24.1* Power of Attorney (included on signature page) 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1*+ Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1 Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 28, 2024) 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 128 * Filed herewith. + The certifications furnished in Exhibit 32.1 hereto are deemed to be furnished with this Annual Report on form 10-K and will not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. # Indicates a management contract or any compensatory plan, contract or arrangement ** Portions of this exhibit have been omitted by means of redacting a portion of the text and replacing it with “[***]” because they are both (i) not material and (ii) the type of information that the Registrant treats as private or confidential. Item 16. Form 10-K Summary . Not applicable. 129 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets F- 3 Consolidated Statements of Operations F- 4 Consolidated Statements of Stockholders’ Equity F- 5 Consolidated Statements of Cash Flows F- 6 Notes to Consolidated Financial Statements F- 7 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Candel Therapeutics, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Candel Therapeutics, Inc. and subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Company’s auditor since 2019. Boston, Massachusetts March 12, 2026 F- 2 Candel Therapeutics, Inc. Consolidated Ba lance Sheets (In thousands, except share and per share amounts) DECEMBER 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 119,731 $ 102,654 Prepaid expenses and other current assets 1,658 1,150 Total current assets 121,389 103,804 Fixed assets, net 1,642 2,191 Lease right of use assets 1,661 542 Restricted cash 416 266 Other assets 87 63 Total assets $ 125,195 $ 106,866 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 1,129 $ 237 Accrued expenses 7,334 5,113 Current portion of term loans — 9,895 Current portion of lease liability 445 566 Warrant liabilities — 21,718 Other current liabilities 89 — Total current liabilities 8,997 37,529 Deferred revenue 89 — Term loans, net of current portion 46,122 1,733 Other long-term debt 1,008 870 Lease liability, net of current portion 1,459 407 Warrant liabilities 15,598 — Total liabilities 73,273 40,539 Commitments and contingencies (Note 15) Stockholders’ equity: Preferred stock, $ 0.01 par value; 10,000,000 shares authorized at December 31, 2025 and 2024; no shares issued or outstanding at December 31, 2025 and 2024, respectively. — — Common stock, $ 0.01 par value; 150,000,000 shares authorized at December 31, 2025 and 2024; 55,020,911 and 46,933,088 shares issued at December 31, 2025 and 2024, respectively; and 54,898,303 and 46,810,480 shares outstanding at December 31, 2025 and 2024, respectively. 550 469 Treasury stock (at cost) ( 448 ) ( 448 ) Additional paid-in capital 282,207 258,511 Accumulated deficit ( 230,387 ) ( 192,205 ) Total stockholders’ equity 51,922 66,327 Total liabilities and stockholders’ equity $ 125,195 $ 106,866 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Candel Therapeutics, Inc. Consolidated Statements of Ope rations (In thousands, except share and per share amounts) YEAR ENDED DECEMBER 31, 2025 2024 Operating expenses: Research and development $ 30,496 $ 19,314 General and administrative 17,770 14,057 Total operating expenses 48,266 33,371 Loss from operations ( 48,266 ) ( 33,371 ) Other income (expense): Grant income 89 — Interest income 3,915 1,086 Interest expense ( 2,119 ) ( 2,090 ) Change in fair value of warrant liabilities 8,199 ( 20,802 ) Total other income (expense), net 10,084 ( 21,806 ) Net loss and comprehensive loss $ ( 38,182 ) $ ( 55,177 ) Net loss per share, basic and diluted $ ( 0.72 ) $ ( 1.74 ) Weighted-average common shares outstanding, basic and diluted 52,958,644 31,675,076 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Candel ThErapeutics, Inc. Consolidated Statements of Stockholders’ Equity (In thousands, except share and per share amounts) COMMON STOCK TREASURY STOCK SHARES AMOUNT SHARES AMOUNT ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT STOCKHOLDERS’ EQUITY Balance as of December 31, 2023 29,213,627 $ 290 ( 122,608 ) $ ( 448 ) $ 149,931 $ ( 137,028 ) $ 12,745 Issuance of common stock and accompanying pre-funded warrants in public offering, net of issuance costs of $ 6.1 million 12,000,001 120 — — 85,808 — 85,928 Sale of common stock through at-the-market offerings, net of issuance costs of $ 0.5 million 2,936,057 29 — — 15,801 — 15,830 Options exercised 846,943 9 — — 1,680 — 1,689 Stock-based compensation — — — — 4,170 — 4,170 Restricted stock unit vesting 1,936,460 21 — — ( 21 ) — — Change in fair value of NC Ohio Trust Warrants — — — — 1,142 — 1,142 Net loss — — — — — ( 55,177 ) ( 55,177 ) Balance as of December 31, 2024 46,933,088 $ 469 ( 122,608 ) $ ( 448 ) $ 258,511 $ ( 192,205 ) $ 66,327 Issuance of common stock in registered direct offering, net of issuance costs of $ 0.7 million 3,221,395 32 — — 14,299 — 14,331 Sale of common stock through at-the-market offerings, net of issuance costs of $ 0.2 million 987,772 10 — — 5,028 — 5,038 Options exercised 219,813 3 — — 513 — 516 Stock-based compensation — — — — 4,315 — 4,315 Restricted stock unit vesting 330,779 3 — — ( 3 ) — — Change in fair value of NC Ohio Trust Warrants — — — — ( 498 ) — ( 498 ) Exercise of pre-funded warrants 3,328,064 33 — — ( 33 ) — — Issuance costs related to common stock and accompanying pre-funded warrants in public offering — — — — 75 — 75 Net loss — — — — — ( 38,182 ) ( 38,182 ) Balance as of December 31, 2025 55,020,911 $ 550 ( 122,608 ) $ ( 448 ) $ 282,207 $ ( 230,387 ) $ 51,922 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Candel Therapeutics, Inc. Consolidated Statements of Cas h Flows (In thousands, except share and per share amounts) YEAR ENDED DECEMBER 31, 2025 2024 Cash Flows from Operating Activities: Net loss $ ( 38,182 ) $ ( 55,177 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 845 990 Impairment of fixed assets 90 41 Loss on the sale and disposal of fixed assets 306 — Non-cash stock compensation expense 3,817 5,312 Non-cash lease expense 321 274 Non-cash interest expense 138 119 Change in fair value of warrant liabilities ( 8,199 ) 20,802 Accretion of debt discount 360 270 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 508 ) 234 Other assets ( 24 ) 53 Accounts payable 802 ( 185 ) Accrued expenses 2,254 757 Deferred income 178 — Lease liability ( 509 ) ( 513 ) Net cash used in operating activities ( 38,311 ) ( 27,023 ) Cash Flows from Investing Activities: Purchase of fixed assets ( 587 ) ( 16 ) Proceeds from the sale of fixed assets 27 — Net cash used in investing activities ( 560 ) ( 16 ) Cash Flows from Financing Activities: Proceeds from term loan, net of issuance costs 47,946 — Proceeds from issuance of common stock in registered direct offering, net of issuance costs 14,331 — Proceeds from sale of common stock through at-the-market offerings, net of issuance costs 5,038 15,830 Proceeds from option exercises 516 1,689 Proceeds from issuance of common stock and accompanying pre-funded warrants in public offering, net of issuance costs — 85,928 Principal payments on term loan payable to a bank ( 11,733 ) ( 9,167 ) Net cash provided by financing activities 56,098 94,280 Net increase in cash, cash equivalents and restricted cash 17,227 67,241 Cash, cash equivalents and restricted cash at beginning of period 102,920 35,679 Cash, cash equivalents and restricted cash at end of period $ 120,147 $ 102,920 Supplemental cash flow information: Cash paid for interest $ 1,280 $ 1,795 Supplemental disclosures of non-cash information: Change in right of use asset and lease liability due to lease amendment $ 1,440 $ — Initial fair value of warrant liability in connection with debt financing $ 2,079 $ — Capital expenditures in accounts payable and accrued expenses $ 132 $ — Deferred offering issuance costs in accounts payable and accrued expenses $ 93 $ — The accompanying notes are an integral part of these consolidated financial statements. F- 6 Candel Therapeutics, Inc. Notes to Consolidated Fin ancial Statements 1. Organization and Basis of Presentation Candel Therapeutics, Inc., formerly known as Advantagene, Inc. (the Company), is a clinical stage biopharmaceutical company that was incorporated in Delaware in June 2003. On November 30, 2020, the Company changed its name to Candel Therapeutics, Inc. The Company is focused on developing off-the-shelf viral immunotherapies that elicit an individualized, systemic anti-tumor immune response to help patients fight cancer. The Company’s engineered viruses are designed to induce immunogenic cell death through direct viral-mediated cytotoxicity in cancer cells, thus releasing tumor neo-antigens and creating a pro-inflammatory microenvironment at the site of injection. This is intended to lead to in-situ immunization against the injected tumor and uninjected distant metastases. The Company has established two off-the-shelf viral immunotherapy platforms and its two product candidates, aglatimagene and linoserpaturev, are in clinical trials for a number of tumor types. The Company is subject to risks and uncertainties common to companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. Since inception, the Company has funded its operations primarily with proceeds from the sale of its convertible notes and capital stock and from debt borrowings. The Company had a net loss of $ 38.2 million and $ 55.2 million for the years ended December 31, 2025, and 2024, respectively. In addition, as of December 31, 2025, the Company had an accumulated deficit of $ 230.4 million . The Company expects to continue to generate operating losses and negative cash flows from operations for the foreseeable future. On August 5, 2022, the Company filed a shelf registration statement on Form S-3 (as amended to date, the 2022 Shelf) with the U.S. Securities and Exchange Commission (SEC), which covered the offering, issuance, and sale by us of up to an aggregate of $ 200.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. We simultaneously entered into a sales agreement with Jefferies LLC, as sales agent, to provide for the issuance and sale by us of up to $ 75.0 million of our common stock from time to time in “at-the-market” offerings under the 2022 Shelf (the 2022 ATM Program). The 2022 Shelf was declared effective by the SEC on August 12, 2022 and expired on August 12, 2025. As of August 12, 2025, the Company had sold and issued 3,923,829 shares of common stock under the 2022 ATM Program, with total net proceeds of $ 20.9 million. On December 16, 2024, the Company completed a public offering of its common stock and, in lieu of common stock to certain investors, pre-funded warrants to purchase shares of its common stock. The Company issued and sold 12,000,001 shares of common stock, including full exercise of the underwriters’ option to purchase an additional 2,000,000 shares, at a public offering price of $ 6.00 per share. Additionally, in lieu of common stock to certain investors, the Company issued and sold pre-funded warrants to purchase 3,333,333 shares of its common stock at a public offering price of $ 5.99 per pre-funded warrant, which represents the per share public offering price of each share of common stock less the $ 0.01 per share exercise price for each pre-funded warrant. The aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company were approximately $ 92.0 million. On June 25, 2025, the Company com pleted a registered direct offering of its common stock. The Company issued and sold 3,221,395 shares of common stock, at a price of $ 4.67 per share to purchasers including existing healthcare-focused institutional investors, executive officers, and directors of the Company. The aggregate gross proceeds before deducting estimated offering expenses payable by the Company were approximately $ 15.0 million. On August 14, 2025, the Company filed a shelf registration statement on Form S-3 (the 2025 Shelf) with the SEC, which covers the offering, issuance, and sale by us of up to an aggregate of $ 300.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. The Company simultaneously entered into a sales agreement with Jefferies LLC, as sales agent, to provide for the issuance and sale by the Company of up to $ 50.0 million of our common stock from time to time in “at-the-market” offerings under the 2025 Shelf (the 2025 ATM Program). The 2025 Shelf was declared effective by the SEC on August 22, 2025. As of December 31, 2025 and through March 5, 2026 , the Company has no t sold any shares of common stock under the 2025 ATM Program. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and F- 7 ability to pursue its business strategies. There can be no assurances that additional funding will be available on terms acceptable to the Company, or at all. The Company believes that existing resources will fund planned operations for at least 12 months from the issuance date of these consolidated financial statements. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and that contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (FASB). The FASB sets generally accepted accounting principles (GAAP) that the Company follows to ensure its financial condition, results of operations, and cash flows are consistently reported. References to GAAP issued by the FASB in these notes to the consolidated financial statements are to the FASB Accounting Standards Codification (ASC). Principles of Consolidation The consolidated financial statements include the accounts of Candel Therapeutics, Inc. and its wholly owned subsidiary Candel Therapeutics Securities Corporation. All intercompany transactions and balances have been eliminated. Emerging Growth Company The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the Jobs Act). Under the Jobs Act emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the Jobs Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the Jobs Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and related disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company’s management evaluates its estimates, which include but are not limited to management’s judgments of accrued expenses, valuation of stock-based option awards, valuations of warrants, and income taxes. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original final maturities of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents comprise marketable securities with maturities of less than three months when purchased. Cash equivalents are reported at fair value. Restricted Cash The Company had $ 0.4 million and $ 0.3 million of restricted cash as of December 31, 2025 and 2024 , respectively, which represents cash held as a security deposit under the terms of the Company’s Needham, Massachusetts facility lease and as security for the Company credit card program. Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: • Level 1—Quoted prices in active markets for identical assets or liabilities. F- 8 • Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of cash and cash equivalents (considered as Level 1 measurements), accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. The carrying value of the Company's term loan approximates fair value due to the variable interest rate. The Company’s warrant liabilities are carried at fair value and are classified as Level 3 measurement. Property and Equipment Property and equipment consist of laboratory and manufacturing equipment, networking and computer equipment, furniture and fixtures and leasehold improvements. Property and equipment are recorded at cost, and depreciated using the straight-line method over the estimated useful lives of the respective assets: ASSET ESTIMATED USEFUL LIFE Networking and computer equipment 5 years Laboratory equipment 5 years Manufacturing equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of the useful life or remaining lease term Leases Lease right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments to be made over the lease term. The lease right of use asset is equal to the lease liability and adjusted for prepaid rent, initial direct costs, and incentives. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. The Company has elected to not apply the recognition requirements of ASC 842 for short-term leases, which is defined as a lease that, at the lease commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. For real estate lease agreements entered into or modified after the adoption of ASC 842 that include lease and non-lease components, the Company has elected to account for the lease and non-lease components, such as common area maintenance charges, as a single lease component term. Concentrations of Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Periodically, the Company maintains deposits in accredited financial institutions in-excess of the federally insured limits. The Company deposits its cash in financial institutions with a high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal risk associated with commercial banking relationships. Impairment of Long-lived Assets Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. Long-lived assets consist of fixed assets and operating lease assets. F- 9 During the years ended December 31, 2025 and 2024, the Company recorded impairment charges totaling approximately $ 90,000 and $ 41,000 , respectively, related to manufacturing equipment that the Company has determined it does not plan to use for its intended use, and the Company recorded an impairment to reduce the carrying value to its estimated fair value. The Company has not recorded any other impairment losses on such long-lived assets. Revenue Recognition The Company applies ASC Topic 606, Revenue from Contracts with Customers, (ASC 606). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and then assesses whether or not each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Research and Development Costs and Accruals Research and development expenses include salaries and benefits, materials and supplies, preclinical and clinical trial expenses, stock-based compensation expense, depreciation of equipment, contract services and other outside expenses. The Company has entered into various research and development-related contracts with clinical and research institutions, contract research organizations, and other companies. These agreements are generally cancelable, and related payments are recorded as research and development expenses as incurred. Costs of certain development activities, such as manufacturing, pre-clinical and clinical trial expenses, are recognized based on an evaluation of the progress to completion of specific tasks. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. Costs incurred in obtaining technology licenses and intellectual property are charged to research and development expenses as acquired in-process research and development if the technology licensed or intellectual property acquired has not reached technological feasibility and has no alternative future use. Patent Costs All patent-related costs incurred in connection with preparing, filing, maintaining and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified in general and administrative expenses. Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all share-based payments to employees and directors to be recognized as expense in the consolidated statements of operations based on their grant date fair values. In addition, in accordance with FASB Accounting Standards Update (ASU) 2016-09 which identifies areas for simplification of several areas of share-based payment transactions, the Company treats non-employee grants the same as employee grants. The Company estimates the fair value of options granted using the Black-Scholes option pricing model for stock option grants to both employees and non-employees. The Company believes the fair value of the stock options granted to non-employees is more reliably determinable than the fair value of the services provided. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to a lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on a combination of the historical volatility of the Company and of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No. F- 10 107, Share-Based Payment, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The expected term is applied to the stock option grant group as a whole, as the Company does not expect substantially different exercise or post-vesting termination behavior among its employee population. For options granted to non-employees, the Company utilizes the contractual term of the share-based payment as the basis for the expected term assumption. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company generally expenses the fair value of its share-based compensation awards to employees and non-employees on a straight-line basis over the requisite service period, which is generally the vesting period. Government Grants The Company has applied for grants for the reimbursement of expenditures with the Massachusetts Life Sciences Center for certain qualified operating expenditures, including employee related costs. The Company recognizes government grants when there is reasonable assurance that the Company will comply with the conditions attached to the grant arrangement and the grant will be received. Government grants are recorded as grant income and classified in other income in the consolidated statements of operations. The Company recognized government grant income of $ 88,800 and zero for the years ended December 31, 2025 and 2024 , respectively. Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic 740, Income Taxes (ASC 740) which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. At December 31, 2025 and 2024, the Company has concluded that a full valuation allowance is necessary for its deferred tax assets (see Note 12). The Company accounts for uncertainty in income taxes, by applying the two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax is then assessed as the amount of benefits to be recognized in the consolidated financial statements. The amount of benefits that may be used are the largest amounts that have a greater than 50 % likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves or unrecognized tax benefits that are considered appropriate as well as the related net interest received. As of December 31, 2025 , the Company did not record any unrecognized benefits from uncertain tax positions in its consolidated financial statements. Net Loss Per Share Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, including the pre-funded warrants given their nominal exercise price. Diluted net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period, including the pre-funded warrants given their nominal exercise price and, if dilutive, the weighted-average number of potential shares of common stock. In periods where the Company reports a net loss attributable to common stockholders, diluted net loss per share is the same as basic net loss per share, since dilutive shares of common stock are not assumed to have been issued if their effect is anti-dilutive. Diluted net loss per share is the same as basic net loss per share for the years ended December 31, 2025 and 2024 since all potential shares of common stock instruments are anti-dilutive as a result of the loss for such periods. Recently Adopted Accounting Standards In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures, which amends guidance in ASC 280, Segment Reporting. The amendments in this ASU expand segment disclosure requirements, including new segment disclosure requirements for entities with a single F- 11 reportable segment, among other disclosure requirements. The ASU’s amendments are effective for public business entities for interim periods beginning after December 15, 2024. The Company adopted ASU 2023-07 on an interim basis beginning on January 1, 2025 (see Note 17). In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. For entities other than PBEs, the requirements will be effective for annual periods beginning after December 15, 2025. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. As of December 31, 2025 , the Company adopted this new ASU retrospectively (see Note 12) and it only impacts the Company's income tax disclosures with no impact to its operations, cash flows, or financial condition. Recently Issued Accounting Standards In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which modifies the disclosure or presentation requirements related to a variety of FASB Accounting Standard Codification topics. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K is effective, with early adoption prohibited. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the associated amendment will be removed from the Codification and will not become effective for any entities. The Company is currently evaluating the potential impact that ASU 2023-06 may have on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure in the notes to the financial statements of the nature of certain expenses included in the income statement. The ASU's amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. Adoption can be either prospectively or retrospectively applied. The Company is currently evaluating the potential impact that ASU 2024-03 may have on its consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes references to prescriptive and sequential development stages, requiring companies to capitalize internal-use software costs when management commits to funding the software project and it is probable the project will be completed. The ASU's amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. Adoption can be applied prospectively, retrospectively or with a modified transition approach. The Company is currently evaluating the potential impact that ASU 2025-06 may have on its consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides recognition, measurement, presentation, and disclosure requirements for government grants. The ASU's amendments are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods. Adoption can be applied with a modified prospective approach, a modified retrospective approach or retrospectively. The Company is currently evaluating the potential impact that ASU 2025-10 may have on its consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to clarify and improve certain aspects of interim financial reporting, including the requirements for interim disclosures and the application of recognition and measurement guidance in interim periods. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Adoption can be applied prospectively or retrospectively. The Company is currently evaluating the potential impact that ASU 2025-11 may have on its consolidated financial statements and related disclosures. F- 12 3. Fair Value of Financial Assets and Liabilities The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands): FAIR VALUE MEASUREMENTS AS OF DECEMBER 31, 2025 USING: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liabilities: Warrant liabilities — — 15,598 15,598 Total $ — $ — $ 15,598 $ 15,598 FAIR VALUE MEASUREMENTS AS OF DECEMBER 31, 2024 USING: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liabilities: Warrant liability — — 21,718 21,718 Total $ — $ — $ 21,718 $ 21,718 Valuation of Warrant Liabilities Series B Warrants In connection with the November 13, 2018 issuance of Series B convertible preferred stock, the Company issued warrants to purchase shares of common stock of which certain warrants are shown as a liability on the balance sheet, see Note 10. The fair value of the warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the warrant liability use various valuation methods, including the Monte Carlo method, the option-pricing method, probability-weighted expected return and the hybrid method, all of which incorporate assumptions and estimates, to value the common stock warrants. The hybrid method is often used when a company is expecting a liquidity event in the near future and is a combination of the option-pricing and probability-weighted expected return methods. Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying shares of common stock, risk-free interest rate, expected dividend yield, expected volatility of the price of the underlying common stock, and the remaining contractual term of the warrants. The most significant assumption in the model impacting the fair value of the common stock warrants is the fair value of the Company’s common stock as of each remeasurement date. Lender Warrants In connection with the October 14, 2025 Trinity LSA, the Company is required to issue to the Lenders warrants to purchase shares of common stock of which certain warrants are shown as a liability on the balance sheet, see Note 10. The fair value of the associated warrant liability is determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the warrants is determined using a hybrid Monte Carlo simulation and Black-Scholes methodology, which incorporates assumptions and estimates to value the common stock warrants. Key inputs, estimates, and assumptions impacting the fair value measurement include the Company stock price, risk-free interest rate, expected dividend yield, volatility, remaining contractual term of the warrants, timing of milestone achievements, and expected stock price increases and decreases in success and failure scenarios related to the milestones. The most significant assumptions in the model impacting the fair value of the common stock warrants is the volatility of the Company’s common stock, and expected stock price increases or decreases on the respective milestone dates. The following table provides a roll forward of the aggregate fair values of the Company’s warrant liabilities, for which fair value is determined by Level 3 inputs (in thousands): WARRANT LIABILITIES Balance at December 31, 2023 $ 916 Change in fair value 20,802 Balance at December 31, 2024 $ 21,718 Lender warrants in connection with debt financing 2,079 Change in fair value ( 8,199 ) Balance at December 31, 2025 $ 15,598 F- 13 4. Fixed Assets, Net Fixed assets, net consisted of the following (in thousands): DECEMBER 31, 2025 2024 Laboratory equipment $ 1,506 $ 1,219 Manufacturing equipment 300 695 Furniture and fixtures 159 159 Networking and computer equipment 227 85 Leasehold improvements 3,008 3,109 Total fixed assets $ 5,200 $ 5,267 Less: accumulated depreciation ( 3,558 ) ( 3,076 ) Fixed assets, net $ 1,642 $ 2,191 Depreciation expense was $ 0.8 million and $ 1.0 million for the years ended December 31, 2025 and 2024. The Company recorded a $ 0.3 million loss on the sale and disposal of fixed assets for the year ended December 31, 2025 . The Company did no t record any loss on the sale and disposal of fixed assets for the year ended December 31, 2024 . 5. Accrued Expenses Accrued expenses consisted of the following (in thousands): DECEMBER 31, 2025 2024 Payroll and employee related expenses $ 3,384 $ 3,038 Third-party research and development expenses 2,681 765 Professional fees 805 920 Other 464 390 $ 7,334 $ 5,113 6. Term Loan On February 24, 2022 , the Company entered into a four-year loan and security agreement (the SVB Loan Agreement) with Silicon Valley Bank (SVB) pursuant to which SVB has agreed to provide term loans to the Company in an aggregate principal amount of up to $ 25.0 million. The Company borrowed $ 20.0 million upon entering into the SVB Loan Agreement. The term loan was secured by substantially all of the Company’s properties, rights and assets, except for its intellectual property, which was subject to a negative pledge under the Loan Agreement. The term loan bore interest at a floating rate per annum equal to the greater of (A) 5.75 % and (B) the prime rate (as published in the money rates section of The Wall Street Journal) plus 2.50 %. The Company was required to make monthly interest payments, and commencing on February 1, 2024 , 24 consecutive installments of principal plus monthly payments of accrued interest. The term loan had a maturity date of January 1, 2026 . Upon repayment in full of the term loans, the Company was required to pay a final payment fee equal to 4.50 % of the original principal amount of any funded term loan being repaid. The SVB Loan Agreement permitted voluntary prepayment of all, but not less than all, of the SVB term loan, subject to a prepayment premium of 1 % to 3 % based upon the timing of the repayment. During the years ended December 31, 2025 and 2024, the Company recorded interest expense relating to the SVB Loan Agreement of $ 0.6 million and $ 2.0 million , respectively. The Company incurred $ 89,000 of debt issuance costs and a $ 0.9 million final payment fee, which were recorded as debt discount and amortized over the term of the SVB Loan Agreement. The Company used a portion of the proceeds from the First Tranche of the Trinity LSA to repay the SVB Loan Agreement on October 14, 2025 (see below). On October 14, 2025 , the Company entered into a Loan and Security Agreement, as amended by that certain First Amendment to Loan and Security Agreement dated as of March 10, 2026 (the Trinity LSA), with the lenders party thereto (the Lenders) and Trinity Capital Inc., as administrative agent and collateral agent (the Agent). Under the Trinity LSA, the Lenders agreed to extend debt capital to the Company, at the Company's request, in the form of a term loan, in tranches totaling an aggregate principal amount of up to $ 130.0 million as follows: (a) at closing, the aggregate principal amount of $ 50.0 million (the First Tranche), (b) until May 30, 2027, subject to the achievement of certain regulatory, clinical and operational milestones by March 31, 2027, the aggregate principal amount of $ 20.0 million (the Second Tranche), (c) following funding of the Second Tranche, until February 29, 2028, subject to the F- 14 achievement of certain regulatory and operational milestones by December 31, 2027, the aggregate principal amount of $ 30.0 million (the Third Tranche), and (d) following funding of the Third Tranche, in Lenders’ sole discretion, the aggregate principal amount of $ 30.0 million (the Fourth Tranche and collectively with the First Tranche, the Second Tranche and the Third Tranche, the Tranches). The obligations of the Lenders to extend such debt capital are subject to certain conditions precedent described in the Trinity LSA. The Company is required to pay a commitment fee of 1.0 % of the amount drawn, plus related documentation and funding fees, in connection with each drawdown. On October 14, 2025 (the Closing Date), the Company drew down the First Tranche. The Company’s obligations under the facility are secured by a first priority security interest in substantially all assets of the Company. All Tranches will mature on October 1, 2030 (the Maturity Date), unless earlier accelerated under the terms of the Trinity LSA. At maturity, the Company is required to repay the then-outstanding principal amount, together with any accrued and unpaid interest thereon. In addition, at maturity or early termination of the Trinity LSA, the Company is required to pay the Lenders a 4.25 % final payment fee of the amounts drawn down by the Company under the Trinity LSA. Interest accrues on the Tranches that the Company has drawn down at a floating rate per annum, calculated based on a 360-day year, equal to the greater of (a) the sum of (i) The Wall Street Journal Prime Rate and (ii) 3.0 %, and (b) 9.75 %. For the first 36 months after the Closing Date, the Company is required to make monthly payments of interest only in arrears. Upon the achievement of a certain commercial milestone by June 30, 2028, the Interest Only Period will be extended by twelve months. In the event of such extension of the Interest Only Period, the duration of the Amortization Period will decrease by the same amount. In any event, the total term of all Tranches shall not exceed 60 months. The Company may voluntarily prepay the outstanding loan balance at any time, in whole or in part, subject to the payment of prepayment premiums and payment of the Exit Fee on the principal amount then prepaid. If prepayment occurs on or before the first anniversary of the Closing Date, the premium shall equal 3.0 % of the principal being repaid. Thereafter, if prepayment occurs on or before the second anniversary of the Closing Date, the premium shall equal 2.0 % of the principal being repaid. Thereafter, if prepayment occurs on or before the Maturity Date, the premium shall equal 1.0 % of the principal being repaid. The Trinity LSA contains customary affirmative and negative covenants, including with respect to notice obligations, limitations on new indebtedness, liens, investments and transactions with affiliates of the Company, restrictions on the payment of dividends, maintenance of collateral and accounts and maintenance of insurance. The Trinity LSA also contains financial covenants requiring, if the Company’s market capitalization is less than $ 550 million, the Company to maintain minimum cash and cash equivalents pledged to secure the obligations under the Trinity LSA, less certain accounts payable, of at least (i) beginning from July 1, 2026 through the date, that the Company has raised at least $ 93.5 million in unrestricted net cash proceeds from one or more bona fide equity financings and/or upfront proceeds from business development after the Closing Date, 67.5 % of all of the aggregate principal amount of outstanding obligations under the Trinity LSA, and (ii) beginning from the earlier of (x) October 1, 2027 and (ii) the date upon which the Company receives written notice of certain regulatory outcomes, through the date that the Company obtains certain regulatory approvals, 75 % of the aggregate outstanding principal amount of the obligations under the Trinity LSA. During the year ended December 31, 2025, the Company recorded interest expense relating to the Trinity LSA of $ 1.3 million and zero , respectively. The weighted average effective interest rate as of December 31, 2025 was 14.08 %. The Company incurred $ 2.1 million of financing costs and a $ 2.1 million final payment fee, which were recorded as debt discount and are being amortized to interest expense over the term of the Trinity LSA. The scheduled principal payments and net carrying amount of the Trinity LSA are as follows (in thousands): YEAR ENDING DECEMBER 31, 2026 $ — 2027 — 2028 3,806 2029 24,175 2030 22,019 Total principal 50,000 Final payment fee 2,125 Less: debt discount ( 6,258 ) Accretion of debt discount 255 Net carrying amount $ 46,122 The carrying value of the Company's term loan approximates fair value. 7. Other Long-Term Debt F- 15 Periphagen Note On December 9, 2019, the Company entered into a series of asset purchase agreements with Periphagen, Inc. (Periphagen), a biopharmaceutical company focused on the development of gene therapy vectors. Under the terms of the asset purchase agreements, the Company assumed a $ 1.0 million promissory note (the Periphagen Note) bearing a contractual interest rate of 2 % compounded annually, with the outstanding balance and accrued interest due upon maturity in November 2027 , with no interim installments due. The estimated market rate for the Company for an unsecured loan with a maturity in November 2027 was determined to be 15.83 % as of December 9, 2019. Although the Company does not have a public credit rating, management estimates a CCC credit rating based on the Company’s financial position and stage of development. Using the commensurate rate for a CCC rated company and based on the amount due at maturity, the present value of the future cash outflow was determined to be $ 0.4 million at the transaction date. As of December 31, 2025, the carrying value of the note is $ 1.0 million . The carrying value of the note approximates fair value. Upon maturity, the Company will pay Periphagen $ 1.4 million for the outstanding balance and accrued interest due. 8. Lease On February 4, 2019, the Company signed a lease agreement for its corporate headquarters at 117 Kendrick Street in Needham, Massachusetts. The facility consists of a 15,197 square foot property which houses the corporate, clinical, laboratory and manufacturing operations for the Company. On August 18, 2025, the Company entered into a first amendment to the existing lease agreement dated February 4, 2019, extending the end-date of the term under the existing lease from August 31, 2026 to August 31, 2029 . For each of the years ended December 31, 2025 and 2024, the Company recorded $ 0.4 million of operating lease cost. For the years ended December 31, 2025 and 2024, the Company recorded $ 0.2 million and $ 0.1 million, respectively, of variable lease cost. The total lease expense for the years ended December 31, 2025 and 2024 was $ 0.6 million and $ 0.5 million , respectively. Cash paid for amounts included in the lease liability for each of the years ended December 31, 2025 and 2024 was $ 0.6 million . YEAR ENDED DECEMBER 31, Other Information 2025 2024 Operating cash flows used for operating leases (in thousands) $ 613 $ 598 Weighted-average remaining lease term (years) 3.7 1.7 Weighted-average incremental borrowing rate 7.31 % 7.02 % The future lease payments under non-cancelable leases at December 31, 2025, are as follows (in thousands): 2026 $ 618 2027 613 2028 628 2029 426 Total future lease payments 2,285 Less: imputed interest ( 381 ) Total lease liability $ 1,904 9. Common Stock Common Stock Common shares are voting and dividends may be paid when, as and if declared by the board of directors. Common Stock Reserved The Company has reserved the following shares of common stock for future issuance as of: F- 16 DECEMBER 31, 2025 2024 Stock options outstanding 6,246,920 4,486,181 Unvested restricted stock — 330,779 Shares available for future grant under stock option plan 2,900,246 2,008,379 Warrants 7,762,350 7,507,708 Pre-funded warrants — 3,333,333 16,909,516 17,666,380 Shelf Registration and At-the-Market Offerings On August 5, 2022, the Company filed the 2022 Shelf with the SEC, which covers the offering, issuance, and sale by us of up to an aggregate of $ 200.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. We simultaneously entered into a sales agreement with Jefferies LLC, as sales agent, to provide for the issuance and sale by us of up to $ 75.0 million of our common stock from time to time in “at-the-market” offerings under the 2022 Shelf. The 2022 Shelf was declared effective by the SEC on August 12, 2022 and expired on August 12, 2025. As of August 12, 2025, the Company had sold and issued 3,923,829 shares of common stock under the 2022 ATM Program, with total net proceeds of $ 20.9 million. On August 14, 2025, the Company filed the 2025 Shelf with the SEC, which covers the offering, issuance, and sale by the Company of up to an aggregate of $ 300.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. The Company simultaneously entered into a sales agreement with Jefferies LLC, as sales agent, to provide for the issuance and sale by the Company of up to $ 50.0 million of our common stock from time to time in “at-the-market” offerings under the 2025 Shelf. The 2025 Shelf was declared effective by the SEC on August 22, 2025. As of December 31, 2025 and through March 5, 2026 , the Company has no t sold any shares of common stock under the 2025 ATM Program. 10. Warrants The Company has the following warrants outstanding for the purchase of common stock as of December 31, 2025: WARRANTS SHARES OF COMMON STOCK SUBJECT TO WARRANTS EXERCISE PRICE PER SHARE EXPIRATION DATES Series B Warrants 3,672,484 $ 6.81 September 2027 Conditional Series B Warrants 3,672,484 $ 6.81 September 2027 NC Ohio Trust 162,740 $ 1.46 March 2029 Lender Warrants 254,642 $ 5.89 October 2035 The Company has the following warrants outstanding for the purchase of common stock as of December 31, 2024: WARRANTS SHARES OF COMMON STOCK SUBJECT TO WARRANTS EXERCISE PRICE PER SHARE EXPIRATION DATES Series B Warrants 3,672,484 $ 6.81 November 2025 Conditional Series B Warrants 3,672,484 $ 6.81 November 2025 NC Ohio Trust 162,740 $ 1.46 March 2029 Pre-Funded Warrants 3,333,333 $ 0.01 No expiration Series B Warrants In connection with the November 13, 2018 issuance of Series B convertible preferred stock (the Series B Preferred), the Company issued to the purchaser of the Series B Preferred warrants to purchase 3,672,484 shares of common stock F- 17 for $ 6.81 per share (the Series B Warrants), which became fully exercisable upon issuance. The Series B Warrants contain provisions allowing cashless exercise. In addition, the Company issued to the same stockholder additional five-year warrants for the purchase of 3,672,484 shares of common stock for $ 6.81 per share (the Conditional Series B Warrants), which become exercisable in the event that the Company completes a future financing that meets certain financial milestones or achieves certain share prices as follows: • 918,121 shares vest upon (1) a financing event effected through the sale of our equity securities to third parties resulting in at least $ 20,000,000 in gross proceeds with a per share price of $ 12.47 , or (2) an average market price (determined over a consecutive 10 -day period) of $ 12.47 per share; • an additional 918,121 shares vest upon (1) a financing event with a price per share of $ 13.20 , or (2) an average market price (determined over a consecutive 10 -day period) of, $ 13.20 per share; • an additional 918,121 shares vest upon (1) a financing event with a per share price of $ 13.94 , or (2) an average market price (determined over a consecutive 10 -day period) of, $ 13.94 per share; and • an additional 918,121 shares vest upon (1) a financing event with a per share price of $ 14.68 , or (2) an average market price (determined over a consecutive 10 -day period) of, $ 14.68 per share. On June 24, 2021, the Company’s board of directors approved and on July 14, 2021 the stockholders approved, effective upon the closing of the Company's initial public offering (IPO), an amendment to the terms of the Series B Warrants and the Conditional Series B Warrants to extend the expiration date from November 2023 to November 2025 . In addition, the exercise period for the Conditional Series B Warrants was amended such that in the event the future financing milestones or certain share price targets described above are achieved, the Conditional Series B Warrants can only be exercised in conjunction with the sale of the Company, on a cash or cashless exercise basis, or otherwise in November 2025 through a cashless exercise. On October 14, 2025, the Company entered into an amendment (the Warrant Amendment) with holders, including affiliates of Paul Manning and Chris Martell, who are directors of the Company, of the Series B Warrants and the Conditional Series B Warrants. Pursuant to the Warrant Amendment, the holders agreed (i) to extend the expiration date of the Series B Warrants and the Conditional Series B Warrants from November 2025 to September 2027; (ii) to irrevocably release the Company and its directors, officers and affiliates (collectively, the Releasees) from any and all claims that the holders may have against the Releasees related to any alleged breach of or wrongful act under that certain Series B Preferred Stock Purchase Agreement dated November 13, 2018 by and between the Company and PBM ADV Holdings, LLC (the Purchase Agreement) and the issuance of shares of the Company’s Series B preferred stock or existing warrants under the Purchase Agreement; (iii) to not, during the six months following the Warrant Amendment, (x) transfer or dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or (y) enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of such securities, subject to certain exceptions set forth in the Warrant Amendment; and (iv) that, if requested by the underwriters in any equity financing transaction undertaken by the Company prior to September 30, 2027, to execute a standard lock-up agreement in connection with such equity financing. The Company recorded the Series B Warrants as a component of stockholder’s equity at the time of issuance at their estimated fair value of $ 2.1 million and recorded the Conditional Series B Warrants as a liability on the consolidated balance sheet as the number of shares used to calculate the settlement is not a fixed number of shares. The Conditional Series B Warrants are remeasured to their fair value at each reporting date with changes in the fair value recognized as a component of other income (expense), net in the consolidated statements of operations. The Company will continue to recognize changes in the fair value of the Conditional Series B Warrants until each Conditional Series B Warrant is exercised, expires or qualifies for equity classification. The warrant liability fair value was $ 13.6 million and $ 21.7 million as of December 31, 2025 and 2024, respectively. NC Ohio Trust Warrants On March 20, 2019, the Company established the NC Incorporated Ohio Trust, an irrevocable trust funded by the Company. The beneficiary in the trust agreement has provided past services to the Company for more than 15 years and is a non-employee. The warrant provides the beneficiary the right to purchase 162,740 shares of the Company’s common stock, $ 0.01 par value at an exercise price of $ 1.46 per share, subject to adjustments as specified in the warrant agreement. The Company recognizes the warrants as compensation expense within the consolidated statements of operations when the warrants are granted or at the service inception date if the service inception date precedes the grant date. In the period in which the grant date occurs, cumulative compensation cost shall be adjusted to reflect the cumulative effect of measuring compensation cost based on the fair value at the grant date rather than the fair value previously used at the service inception date or subsequent reporting dates. As of December 31, 2025 and 2024 , a grant date was not established as there was not a mutual understanding of key terms. The Company remeasures the fair value of the award at each reporting date, as the service date preceded the grant date. The value of F- 18 the warrants for 162,740 shares of common stock was $ 0.8 million and $ 1.3 million as of December 31, 2025 and 2024, respectively. The value of the warrants at each reporting date is recorded as stock compensation expense within research and development expense and to stockholders’ equity in the consolidated financial statements. Pre-Funded Warrants In connection with the public offering on December 16, 2024 (see Note 1), the Company has issued pre-funded warrants to purchase common stock in lieu of common stock. As the pre-funded warrants are indexed to the Company’s common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on the Company’s consolidated balance sheet. The pre-funded warrants are exercisable at any time. The holders of Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99 % of the number of shares of the Common Stock outstanding immediately after giving effect to such exercise. The holders of Pre-Funded Warrants may increase or decrease such percentages not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company. During the year ended December 31, 2025 , 3,328,064 shares of common stock were issued upon the cashless exercise of pre-funded warrants. As of December 31, 2025, all pre-funded warrants were exercised. Lender Warrants In connection with the drawdown of any Tranche under the Trinity LSA entered into on October 14, 2025 (see Note 6), the Company is required to issue to the Lenders warrants (the Lender Warrants) to purchase shares of the Company’s common stock, $ 0.01 par value per share. The exercise price for the Lender Warrants is equal to $ 5.89 per share. The number of shares of common stock for which each Lender Warrant is exercisable is equal to 3.0 % of the applicable drawn down amount, divided by the exercise price. The Lender Warrants shall have a term of ten years from the date of issuance and shall permit cashless net exercise, all in accordance with their terms. In connection with the drawdown of the First Tranche, the Company issued a Lender Warrant to purchase up to 254,642 shares of Common Stock. The initial fair value of the Lender Warrants was recognized as debt discount to the term loan and a corresponding warrant liability. The Lender Warrants are remeasured to their fair value at each reporting date with changes in the fair value recognized as a component of other income (expense), net in the consolidated statements of operations. The Company will continue to recognize changes in the fair value of the Lender Warrants until each Lender Warrant is exercised, expires or qualifies for equity classification. The warrant liability fair value was $ 2.0 million and zero as of December 31, 2025 and 2024, respectively. During the year ended December 31, 2025 , no Lender Warrants were exercised. As of December 31, 2025 , there were 254,642 Lender Warrants outstanding. 11. Stock Options, Restricted Stock and Stock-Based Compensation Equity Incentive Plans The Company’s 2015 Stock Plan, as amended, (the 2015 Plan) provides for the Company to sell or issue common shares or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the board of directors and consultants of the Company. The 2015 Plan is administered by the board of directors and exercise prices, vesting and other restrictions are determined at its discretion. All stock option grants are non-statutory stock options except option grants to employees intended to qualify as incentive stock options under the Internal Revenue Code of 1986, as amended. Incentive stock options may not be granted at less than the fair market value of the Company’s common stock on the date of grant, as determined in good faith by the board of directors at its sole discretion. Nonqualified stock options may be granted at an exercise price established by the board of directors at its sole discretion and the vesting periods may vary. Vesting periods are generally four years and are determined by the board of directors. Stock options become exercisable as they vest. Options granted under the 2015 Plan expire no more than ten years from the date of grant. As of December 31, 2025 , there are no shares available for grants under the 2015 Plan and the 2015 Plan continues to govern the terms and conditions of the outstanding awards under the 2015 Plan. On July 14, 2021, the Company’s 2021 Equity Incentive Plan (the 2021 Plan) was approved by the Company’s stockholders, and became effective upon completion of the IPO and serves as the successor to the 2015 Plan. 8,558,685 shares of common stock are reserved under the 2021 Plan, of which 1,900,246 shares remain available for future grants as of December 31, 2025. Equity Inducement Plan On December 24, 2025, the Company's board of directors approved the Company's 2025 Inducement Plan (the 2025 Inducement Plan) which permits the granting of non-qualified stock options, stock appreciation rights, restricted stock F- 19 awards, restricted stock units, and other stock-based awards to employees as an inducement pursuant to Listing Rule 5635(c)(4) of the corporate governance rules of the Nasdaq Stock Market, LLC. The 2025 Inducement Plan became effective upon approval. The 2025 Inducement Plan provides for an overall share limit of 1,000,000 shares of common stock. As of December 31, 2025, 1,000,000 shares remain available for future grants under the 2025 Inducement Plan. Stock Options Stock option activity is summarized as follows: NUMBER OF STOCK OPTIONS WEIGHTED- AVERAGE EXERCISE PRICE WEIGHTED- AVERAGE REMAINING CONTRACTUAL TERM (IN YEARS) AGGREGATE INTRINSIC VALUE (IN THOUSANDS) Outstanding as of December 31, 2024 4,486,181 $ 2.54 6.61 $ 27,599 Granted 2,185,750 7.65 Exercised ( 219,813 ) 2.34 Cancelled, forfeited or expired ( 205,198 ) 6.25 Outstanding as of December 31, 2025 6,246,920 $ 4.21 6.79 $ 13,695 Exercisable as of December 31, 2025 4,099,302 $ 2.99 5.76 $ 12,121 Unvested as of December 31, 2025 2,147,618 $ 6.55 8.76 $ 1,574 The 2015 Plan permits participants to use common stock they previously acquired to pay for the exercise of stock options based upon the fair value on the date of exercise. In connection with the exercise of stock options to purchase 306,518 shares of our common stock at an exercise price of $ 1.46 in 2022, option holders tendered 122,608 shares of our common stock previously acquired in consideration of the full aggregate exercise price in accordance with the terms of the option and the 2015 Plan. The shares tendered are recorded as treasury stock within the Company's consolidated financial statements at December 31, 2025. The fair value of stock options granted was estimated on the grant date using the Black-Scholes option pricing model based on the following range of assumptions: YEAR ENDED DECEMBER 31, 2025 2024 Expected option life (years) 5.50 - 6.08 5.50 - 6.08 Risk-free interest rate 3.69 % - 4.52 % 3.98 % - 4.32 % Expected volatility 117.03 % - 121.09 % 99.30 % - 114.68 % Expected dividend yield 0 % 0 % The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the period. The total intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 was $ 0.7 million and $ 5.7 million , respectively. Restricted Stock Units Under the terms of the restricted stock unit agreements covering the common stock, shares of common stock related to restricted stock units are subject to time-based vesting. The restricted stock units will immediately be forfeited to the Company if the relationship between the recipient and the Company ceases. Restricted stock activity is summarized as follows: NUMBER OF SHARES OPTIONS WEIGHTED- AVERAGE GRANT DATE FAIR VALUE Unvested at December 31, 2024 330,779 $ 0.98 Granted — $ — Vested ( 330,779 ) $ 0.98 Forfeited — $ — Unvested at December 31, 2025 — $ — F- 20 The aggregate fair value of restricted stock units that vested during the years ended December 31, 2025 and 2024 was $ 1.9 million and $ 16.8 million , respectively. Stock-Based Compensation Stock-based compensation expense for the years ended December 31, 2025 and 2024 was classified in the consolidated statements of operations as follows (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 Research and development $ 1,494 $ 3,276 General and administrative 2,323 2,036 Total stock-based compensation expense $ 3,817 $ 5,312 As of December 31, 2025 and 2024, total unrecognized compensation cost related to the unvested stock-based awards was $ 11.2 million and $ 1.9 million , respectively. As of December 31, 2025 and 2024, these amounts are expected to be recognized over a weighted average period of 2.86 and 2.29 years , respectively. 12. Income Taxes The components of net loss before income tax expense are as follows (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 Domestic $ ( 38,182 ) $ ( 55,177 ) Total $ ( 38,182 ) $ ( 55,177 ) Due to the Company's net losses for 2025 and 2024 , as well as the full valuation allowance on its net deferred tax assets as discussed below, the Company did no t record any income tax expense or benefit for the years ended December 31, 2025 and 2024 . A reconciliation of the Company's statutory income tax rate to the Company’s effective income tax rate is as follows (in thousands): YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, 2025 2024 Amount Percent Amount Percent Pretax Loss $ ( 38,182 ) $ ( 55,177 ) US Federal Statutory Tax Rate ( 8,018 ) 21.0 % ( 11,587 ) 21.0 % Tax Credits: Tax Credits - Orphan Drug ( 7 ) — ( 30 ) 0.1 % Tax Credits - Federal R&D ( 662 ) 1.7 % ( 508 ) 0.9 % Change in valuation allowance 10,219 ( 26.7 )% 9,521 ( 17.3 )% Nontaxable or Nondeductible Items: Mark to Market ( 1,722 ) 4.5 % 4,368 ( 7.9 )% Equity Compensation 41 ( 0.1 )% ( 1,843 ) 3.3 % Other 149 ( 0.4 )% 79 ( 0.1 )% Total $ — 0.0 % $ — 0.0 % The Company’s effective tax rate differs from the statutory rate primarily due to continued losses and the maintenance of a full valuation allowance on deferred tax assets, resulting in zero income tax expense for the period. Net deferred tax assets as of December 31, 2025 and 2024 consist of the following (in thousands): F- 21 YEAR ENDED DECEMBER 31, 2025 2024 Deferred tax assets: Net operating losses $ 37,934 $ 29,876 Intangibles 362 422 Accrued expenses and other 756 591 Lease liability 502 257 Stock compensation 1,375 987 Capitalized R&D expenditures 17,008 13,456 Credits 7,736 6,873 Other 33 — Total deferred tax assets 65,706 52,462 Valuation allowance ( 65,268 ) ( 52,185 ) Net deferred tax assets 438 277 Deferred tax liabilities: Right of use asset ( 438 ) ( 143 ) Other — ( 134 ) Total deferred tax liabilities ( 438 ) ( 277 ) Net deferred tax assets (liabilities) $ — $ — As of December 31, 2025 , the Company has gross federal and state net operating loss carryforwards of approximately $ 141.1 million and $ 131.2 million, respectively. The federal net operating loss carryforwards include $ 8.8 million that begins to expire in 2027 and $ 132.3 million that can be carried forward indefinitely. The state net operating loss carryforwards begin to expire in 2032 . As of December 31, 2025 , the Company has gross federal and state tax credit carryforwards of approximately $ 5.7 million and $ 2.6 million, respectively, which begin to expire in 2036 and 2030 , respectively. Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards and certain tax credits. Management has considered the Company’s history of cumulative net losses incurred since inception, as well as its lack of product revenue since inception, and has determined that it is more likely than not that the Company will not realize the benefits of its deferred tax assets. As a result, a full valuation allowance has been established at December 31, 2025 and 2024. Section 382 of the Internal Revenue Code of 1986, as amended (Section 382), contains rules that limit the ability of a company that undergoes in ownership change to utilize its net operating losses (NOLs) and tax credits existing as of the date of such ownership change. Under the rules, such an ownership change is generally any change in ownership of more than 50% of a company’s stock within a rolling three-year period. The rules generally operate by focusing on changes in ownership of all stock considered by the rules as owning, directly or indirectly, 5% or more of the stock of a company and any change in ownership arising from new issuances of stock by the company. The Company has not yet determined if such a limitation would be placed against its available net operating losses. The Company will make such a determination prior to the utilization of any future net operating losses. For tax years beginning after December 31, 2024, OBBBA enacted a new rule under Section 174A allowing companies to immediately expense any domestic research and developmental (R&D) expenditures. For domestic R&D, companies may either immediately expense or elect to capitalize and amortize over at least 60 months under Section 174A. However, foreign R&D continues to require capitalization subject to the mandatory 15-year amortization period under Section 174. The Company has elected to continue amortizing the previously capitalized costs over their remaining life. Beginning in tax year 2025, instead of immediately expensing domestic R&D expenditures under Section 174A, the Company elected to capitalize and amortize its domestic R&D expenditures under Section 59(e) over a 10 year period. Any foreign R&D costs will continue to be capitalized and amortized over 15 years in accordance with the requirements of Section 174. A summary of changes in the valuation allowance for deferred tax assets during the years ended December 31, 2025 and 2024 were as follows (in thousands): F- 22 YEAR ENDED DECEMBER 31, 2025 2024 Valuation allowance $ 52,185 $ 40,548 Increases recorded to income tax provision 13,083 11,637 Decreases recorded to income tax provision — — Valuation allowance $ 65,268 $ 52,185 The Company files income tax returns in the United States and various state and local jurisdictions. The federal and state tax returns are generally subject to examination for the years ended December 31, 2014 through December 31, 2025 . There are currently no pending tax examinations . To the extent the Company has tax attribute carryforwards, the tax year in which the attribute was generated may still be adjusted upon examination. 13. Exclusive Licensing Agreement with a Related Party In March 2014, the Company entered into an exclusive licensing agreement with Ventagen, LLC (Ventagen) which provides Ventagen the right to develop products for commercial sale and distribution within Mexico, Belize, Guatemala, Honduras, El Salvador, Costa Rica, Nicaragua, Panama, Colombia, and Bolivia (the Territory). Ventagen paid the Company $ 1.0 million upon the signing of the agreement and agreed to a fixed future payment to the Company of $ 2.5 million. The future payment will be made upon the achievement of $ 5.0 million of sales of an approved product by Ventagen and is subject to reduction if Ventagen’s costs to develop an approved product exceeds $ 4.0 million. In addition to the upfront payment and the future payment, Ventagen agreed to purchase from the Company all manufactured product that is required for clinical or commercial purposes at a price of cost plus 25 % of the wholesale price of the approved product, subject to a minimum or maximum price. In the event the Company is unable or unwilling to manufacture supply under the terms of the agreement, Ventagen has the right to manufacture its own supply and will be required to pay a fixed fee per dose sold. The Company also agreed to provide certain services to Ventagen related to Ventagen’s development plan. The Company recognized the $ 1.0 million upfront license fee as research and development service revenue as of December 31, 2022. 14. Technology License Agreement On January 20, 2018 the Company entered into an exclusive option agreement (Option Agreement) with MGB. Pursuant to the Option Agreement, the Company has obtained the exclusive right from MGB to negotiate an exclusive license to make, develop and commercialize rQNestin, a genetically modified oncolytic herpes simplex virus for the treatment of certain types of cancers. Pursuant to the Option Agreement, the Company will support a clinical trial to be conducted at MGB pursuant to the terms of a clinical trial agreement to be negotiated and the Company has committed to remitting $ 0.8 million in support of such clinical trial over the course of approximately three years . Upon execution of the Option Agreement, the Company remitted a non-refundable fee of $ 40,000 to MGB to be applied toward the Company’s on-going obligations to reimburse patent expenses. During the years ended December 31, 2025 and 2024 , the Company did no t expense any startup and patient fees for clinical trials performed by MGB. On September 15, 2020, the Company exercised the Option Agreement with MGB and entered into an exclusive worldwide patent license agreement with MGB (the MGB License). In connection with the MGB License, the Company paid a fee of $ 0.1 million and agreed to reimburse patent costs incurred by MGB, including $ 0.1 million paid at the time of entering into the MGB License. Prior to the first commercial sale, the Company is required to pay MGB an annual license fee of $ 50,000 beginning following the fourth anniversary of the effective date. The MGB License contains cumulative milestone payments equaling a maximum amount of $ 39.0 million upon the achievement of various clinical, commercial and sales milestones of both primary and secondary products. Following the first commercial sale, the Company is required to pay royalties to MGB, which are paid at an increasing rate as net sales increase, ranging from low single digits to high single digits. In addition, after the first commercial sale, the Company is required to pay MGB a pre-determined fixed annual minimum royalty, which amount may be credited against earned royalties starting in the fourth year following the first commercial sale. The Company also agreed to pay a single digit royalty rate on net sales of any derived products. 15. Commitments and Contingencies Guarantees The Company has identified the guarantees described below as disclosable, in accordance with ASC 460, Guarantees. As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential F- 23 amount of future payments the Company could be required to make is unlimited; however, the Company has directors’ and officers’ insurance coverage that should limit its exposure and enable it to recover a portion of any future amounts paid. The Company is a party to a number of agreements entered into in the ordinary course of business that contain typical provisions that obligate the Company to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. The Company leases office space under a noncancelable operating lease expiring in 2029 . The Company has standard indemnification arrangements under this lease that require it to indemnify the landlord against all costs, expenses, fines, suits, claims, demands, liabilities, and actions directly resulting from any breach, violation, or nonperformance of any covenant or condition of the lease. As of December 31, 2025 , the Company had no t experienced any losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves have been established. Legal Proceedings From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors. 16. Net Loss Per Share Net Loss Per Share Basic and diluted net loss per share attributable to common stockholders was computed by dividing net loss by the weighted-average common shares outstanding for the period, including the pre-funded warrants given their nominal exercise price for the year ended December 31, 2024 (in thousands, except share and per share data): YEAR ENDED DECEMBER 31, 2025 2024 Numerator: Net loss $ ( 38,182 ) $ ( 55,177 ) Denominator: Weighted-average shares of common stock outstanding, basic and diluted 52,958,644 31,675,076 Net loss per share, basic and diluted $ ( 0.72 ) $ ( 1.74 ) The Company’s potentially dilutive securities have been excluded from the computation of dilutive net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential shares of common stock from the computation of diluted net loss per share because including them would have had an anti-dilutive effect. YEAR ENDED DECEMBER 31, 2025 2024 Outstanding warrants for common stock 7,762,350 7,507,708 Outstanding stock options (as converted to common stock) 6,246,920 4,486,181 Unvested restricted stock — 330,779 14,009,270 12,324,668 17. Segment Reporting F- 24 The Company operates in one business segment, which includes all activities related to the discovery, development, and potential commercialization of off-the-shelf viral immunotherapies that help patients fight cancer. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (CODM). The Company’s CODM is its Chief Executive Officer , who reviews and evaluates consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. In addition to the significant expense categories included within consolidated net loss presented on the Company's consolidated statements of operations, see below for disaggregated amounts that comprise research and development and general and administrative expenses: YEAR ENDED DECEMBER 31, 2025 2024 Operating expenses: Research and development: Clinical development $ 14,738 $ 5,196 Employee-related 12,308 11,669 Facility and equipment costs 1,879 1,566 Pre-clinical research 634 384 Other research and development segment expenses 937 499 Total research and development 30,496 19,314 General and administrative: Employee-related 7,624 6,831 Professional and consulting fees 5,609 5,263 Commercial readiness 2,689 — Other general and administrative segment expenses (1) 1,848 1,963 Total general and administrative 17,770 14,057 Total operating expenses 48,266 33,371 Loss from operations ( 48,266 ) ( 33,371 ) Grant income 89 — Interest income 3,915 1,086 Interest expense ( 2,119 ) ( 2,090 ) Change in fair value of warrant liabilities 8,199 ( 20,802 ) Net loss $ ( 38,182 ) $ ( 55,177 ) (1) Other general and administrative segment expenses primarily consist of insurance, occupancy, and information technology costs. 18. Subsequent Events 2026 Follow-On Offering On February 23, 2026, the Company issued and sold 18,348,624 shares of common stock at a price to the public of $ 5.45 per share for aggregate gross proceeds of approximately $ 100 million (the 2026 Follow-On Offering). The Company received approximately $ 93.5 million in net proceeds from the 2026 Follow-On Offering after deducting underwriting discounts and commissions and offering expenses. The Company also granted the underwriters a 30-day option to purchase up to 2,752,293 additional shares of common stock at the public offering price, less the underwriting discount. RTW Purchase Agreement On February 19, 2026, the Company entered into a purchase and sale agreement (the RTW Purchase Agreement) with funds managed by RTW Investments, LP (RTW). Under the terms of the RTW Purchase Agreement, RTW has agreed to pay the Company $100 million (the RTW Purchase Price) upon the marketing approval of aglatimagene for the treatment of intermediate-risk and high-risk localized prostate cancer by the FDA in exchange for a tiered royalty on future net sales of aglatimagene in the United States. RTW will be entitled to a 4.67% royalty on the portion of annual net sales in the United States that is less than or equal to $1 billion, and a 1.33% royalty on the portion of annual net sales in the United States, exceeding $1 billion. The 4.67% tier will increase to 6.67% if annual net sales do not achieve certain specified levels (the Ratchet), subject to a cure opportunity by the Company (provided that such Ratchet and cure opportunity may each subsequently occur more than once). F- 25 The royalty payments become payable following the first commercial sale of aglatimagene in the United States and end upon RTW’s receipt of $250 million in royalty payments (the RTW Royalty Cap). If the Company undergoes a change of control with, or sells aglatimagene and all of the aglatimagene rights to, a third party, the RTW Purchase Agreement provides the Company and RTW with an option for the Company to pay certain specified amounts to terminate the RTW Purchase Agreement, depending upon the timing for such transaction, up to the RTW Royalty Cap (the Buy-Out Option). If either party exercises the Buy-Out Option, the RTW Purchase Agreement will automatically terminate upon payment of the specified amount. The transaction is subject to certain closing conditions, including that FDA approval must occur by a specified date, conditions related to our indebtedness and other customary closing conditions. The RTW Purchase Agreement also contains customary representations, warranties and indemnities on the part of the Company and RTW and customary covenants on the part of the Company, including around the Company's indebtedness as well as licensing and other activities related to aglatimagene and its rights. Trinity LSA Amendment On March 10, 2026, we entered into that certain First Amendment to Loan and Security Agreement among the Company and Trinity Capital Inc. (the First Amendment to Trinity LSA). The First Amendment to Trinity LSA amended our financial covenant such that the period in which we are required, if our market capitalization is less than $550 million, to maintain minimum cash and cash equivalents of 67.5% of all of the aggregate principal amount of outstanding obligations under the Trinity LSA shall be through the date that we have raised at least $93.5 million in unrestricted net cash proceeds from one or more bona fide equity financings and/or upfront proceeds from business development after the Closing Date (as defined in the Trinity LSA). The First Amendment to Trinity LSA also makes corresponding amendments and additions to defined terms. F- 26 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized . Candel Therapeutics, Inc. Date: March 12, 2026 By: /s/ Paul Peter Tak Paul Peter Tak, M.D., Ph.D., FMedSci President and Chief Executive Officer POWER OF ATTORNEY Each person whose individual signature appears below hereby constitutes and appoints Paul Peter Tak and Charles Schoch, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Paul Peter Tak President and Chief Executive Officer (Principal Executive Officer) March 12, 2026 Paul Peter Tak, M.D., Ph.D. FMedSci /s/ Charles Schoch Chief Financial Officer (Principal Financial and Accounting Officer) March 12, 2026 Charles Schoch /s/ Paul B. Manning Chairman March 12, 2026 Paul B. Manning /s/ Edward J. Benz Jr. Director March 12, 2026 Edward J. Benz, Jr, M.D. /s/ Chris Martell Director March 12, 2026 Chris Martell /s/ Renee Gaeta Director March 12, 2026 Renee Gaeta /s/ Gary Nabel Director March 12, 2026 Gary Nabel, Ph.D., M.D. /s/ Joseph Papa Director March 12, 2026 Joseph Papa /s/ Diem Nguyen Director March 12, 2026 Diem Nguyen, Ph.D., MBA /s/ Nicoletta Loggia Director March 12, 2026 Nicoletta Loggia, Ph.D., R.Ph /s/ Maha Radhakrishnan Director March 12, 2026 Maha Radhakrishnan, M.D. F- 27