What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-31 · 42 added, 52 removed, 116 unchanged (45% of the section changed)

10 unchanged sentences

• Results of operations.

This section provides a general description of our operating expenses, as well as an analysis of our results of operations presented in the accompanying consolidated statements of operations and comprehensive loss by comparing the results for the year ended December 31, 2024 to the results for the year ended December 31, 2023.

This section provides a description of our revenues and expenses, as well as an analysis of our results of operations presented in the accompanying consolidated statements of operations and comprehensive loss by comparing the results for the year ended December 31, 2025 to the results for the year ended December 31, 2024.

• Liquidity and capital resources.

1 unchanged sentence

Included in this discussion is our financial capacity to fund our future commitments and a discussion of other financing arrangements.

Connect Biopharma, headquartered in San Diego, California, is a clinical-stage biopharmaceutical company focused on advancing rademikibart, a potentially best-in-class next generation IL-4Rα antibody, to transform care in asthma and chronic obstructive pulmonary disease.

In June 2024, we announced new U.S.-based leadership with the appointment of Barry D.

Quart, Pharm.D., as Chief Executive Officer and Director, and David Szekeres, as President.

In addition, Kleanthis G.

Xanthopoulos, Ph.D.

assumed the role of Chairman of the Board.

This change in leadership was the first step in transforming Connect into a U.S.-centric company and significantly reducing our footprint in China.

We continued to make progress by (i) assembling an experienced U.S.

management team with deep expertise in drug development and regulatory execution, including having collectively received FDA marketing approval for 16 therapeutic products, and with deep expertise in business development, corporate strategy, finance and operations;

(ii) developing a rapid clinical development program for rademikibart, which is expected to be initiated in the first half of 2025;

(iii) relocating our corporate headquarters to San Diego, California;

(iv) transferring the initial manufacturing process of rademikibart to a U.S.

and (v) taking additional steps to become more U.S.-centric, including the voluntary election to become a domestic filer with the SEC, beginning with this Annual Report on Form 10-K.

Connect Biopharma, headquartered in San Diego, California, is a clinical-stage biopharmaceutical company dedicated to transforming care for asthma and COPD.

The Company is advancing rademikibart, a next generation, potentially best-in-class antibody designed to target IL-4Rα.

Corporate Updates

On September 2, 2025, we terminated each of (i) the Deposit Agreement dated March 18, 2021, as amended, by and among the Company, Deutsche Bank Trust Company Americas and the holders and beneficial owners from time to time of American Depositary Shares, each representing an Ordinary Share, and evidenced by American Depositary Receipts (“ADRs”) issued thereunder and (ii) the related ADR program.

At such time, our ADRs were cancelled and exchanged for Ordinary Shares at a one-for-one ratio.

We subsequently listed our Ordinary Shares on Nasdaq under our existing symbol “CNTB”.

Critical Accounting Estimates

2 unchanged sentences

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, accrued research and development expenses, and share-based compensation.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, accrued research and development expenses,

and share-based compensation.

We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

11 unchanged sentences

and royalties on future product sales.

We utilize key assumptions that require judgement to determine the stand-alone selling price for each performance obligation identified in the agreement, which may include revenue forecasts, expected development timelines, discount rates, probabilities of technical and regulatory success and costs for manufacturing clinical supplies.

We utilize key assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the agreement, which may include revenue forecasts, expected development timelines, discount rates, probabilities of technical and regulatory success and costs for manufacturing clinical supplies.

To date, our estimates have not differed materially from actual values.

10 unchanged sentences

However, subsequent changes in estimates may result in a material change in our accruals, which could also materially affect our balance sheet and results of operations.

Share-based Compensation

We estimate the fair value of each option grant using the binomial option pricing model.

This fair value is then amortized using the straight-line single-option method of attributing the value of share-based compensation to expense over the requisite service periods of the awards.

Forfeitures are accounted for, as incurred, as a reversal of share-based compensation expense related to awards that will not vest.

The fair value of each employee share purchase right is estimated on the grant date using the Black-Scholes option pricing model.

The estimated fair value of each purchase right is then expensed on a straight-line basis over the requisite service period, which is generally the purchase period.

The binomial option pricing model and the Black-Scholes option pricing model require inputs of complex and subjective assumptions, including each option’s expected life and price volatility of the underlying shares.

Recent Accounting Pronouncements

4 unchanged sentences

License and collaboration revenues relate to the Simcere License Agreement under which Simcere has been granted exclusive rights to develop, manufacture, and commercialize rademikibart for all indications in Greater China, including mainland China, Hong Kong, Macau, and Taiwan.

License and collaboration revenues for the year ended December 31, 2025 were $64,000 for cost reimbursements for clinical materials.

License and collaboration revenues for the year ended December 31, 2024 were $26.0 million for the upfront license fee, achievement of certain development milestones and cost reimbursements.

There were no license and collaboration revenues for the year ended December 31, 2023.

Research and Development Expense

8 unchanged sentences

For the year ended December 31, 2025, research and development expense was $37.8 million, compared to $29.3 million for the same period in 2024.

The decrease in rademikibart-related costs was primarily due to lower clinical trial and drug manufacturing expenses as a result of (i) completion of the rademikibart global Phase 2b program in patients with asthma in late 2023, (ii) completion of the rademikibart China pivotal trials for patients with atopic dermatitis in late 2023, and (iii) higher costs incurred during 2023 for the manufacturing of rademikibart clinical trial material.

The decrease in other development related costs was primarily due to the completion of the global Phase 2 trial in ulcerative colitis in 2023.

The increase in research and development expense was primarily due to an increase in costs related to the development of rademikibart.

During the second quarter of 2025, we initiated two rademikibart Phase 2 clinical trials in patients experiencing an acute exacerbation of asthma or COPD.

This increase was partially offset by a decrease in non-cash, share-based compensation expense.

At this time, due to the risks inherent in the clinical trial process, we are unable to estimate with any certainty the costs we will incur in the continued development of our Product Candidates.

1 unchanged sentence

rather, we track such expense by the type of cost incurred.

We expect research and development expense to increase in 2025 to support our development efforts, primarily due to the two Phase 2 trials of rademikibart, which we expect to initiate in the first half of 2025.

We expect research and development expense to increase in 2026 to support our development efforts, including completion of the ongoing Phase 2 clinical trials of rademikibart.

The lengthy process of completing our clinical trials and seeking regulatory approval for our Product Candidates requires the expenditure of substantial resources.

3 unchanged sentences

For the year ended December 31, 2025, general and administrative expense was $20.3 million, compared to $19.2 million for the same period in 2024.

The increase was primarily due to costs associated with executive departures, including cash severance of $1.2 million and non-cash, share-based compensation expense related to certain stock option modifications of $0.6 million.

The increase was also due to higher professional fees to support the Company’s ongoing operations.

The increase in general and administrative expense was primarily due to an increase in professional fees to support our efforts to become more U.S.-centric.

This increase was partially offset by a decrease in non-cash, share-based compensation expense.

Other Income, Net

For the year ended December 31, 2025, other income, net was $2.8 million, compared to $7.0 million for the same period in 2024.

Other income, net primarily consists of interest income earned on our cash, cash equivalents and short-term investments and funds received from government grants related to our development activities.

The decrease in other income, net was primarily due to a decrease in government subsidies and interest income earned on our invested cash balances.

Income Tax Expense

3 unchanged sentences

entity is a service provider for the Hong Kong entity and as a result its cost-plus income is subject to taxation in the U.S.

Income tax expense for the years ended December 31, 2024 and 2023 was $0.2 million and $0.1 million, respectively.

Income tax expense for both the years ended December 31, 2025 and 2024 was $0.2 million.

Reorganization

1 unchanged sentence

Liquidity and Capital Resources

As of December 31, 2024, we had cash, cash equivalents and short-term investments of $93.7 million.

Based on our current operating plan and projections, management believes that the Company’s existing cash, cash equivalents and short-term investments will be sufficient to meet the Company’s anticipated cash requirements for a period of at least one year from the date this Annual Report on Form 10-K is filed with the U.S.

Securities and Exchange Commission.

Our net loss for the year ended December 31, 2024 was $15.6 million, or $0.28 per share, compared to a net loss of $62.1 million, or $1.13 per share, for the same period in 2023.

Summary of Statement of Cash Flows

Our net cash used in operating activities for the year ended December 31, 2025 was $51.2 million, compared to $23.6 million for the same period in 2024.

The decrease in net cash used in operating activities was primarily due to a decrease in net loss, adjusted for non-cash share-based compensation expense and accretion of discounts on our available-for-sale investments, partially offset by changes in our operating assets and liabilities.

Our net cash used in investing activities for the year ended December 31, 2024 was $3.5 million, compared to net cash provided by investing activities of $75.0 million for the same period in 2023.

The decrease in cash provided by investing activities was primarily due to net purchases of short-term investments of $2.7 million for the year ended December 31, 2024, compared to net maturities of $72.1 million for the year ended December 31, 2023.

Our net cash provided by financing activities for the year ended December 31, 2024 was $227,000, compared to $45,000 for the same period in 2023.

The increase in cash provided by financing activities was primarily due to an increase in shares issued upon exercise of outstanding stock options.

Historically, we have financed our operations, including technology and product research and development, primarily through sales of our ordinary shares and ADSs, including our IPO that we completed on March 23, 2021 for total cash consideration of $219.9 million before underwriting discounts and commissions, and, through up-front payments, research funding and milestone payments under collaborative arrangements.

Material Cash Requirements

As of December 31, 2024, we had a lease for 3,628 square feet of office space in San Diego, California, with a lease term that expires on April 30, 2025.

We also have a lease for 25,476 square feet of laboratory and office space in Taicang, China, with a lease term that expires on April 30, 2026.

As of December 31, 2024, we had total operating lease obligations of $199,000, with $166,000 due in one year and $33,000 due within two years.

The increase in net cash used in operating activities was primarily due to an increase in net loss of $39.9 million and decrease in non-cash, share-based compensation expense of $3.0 million, partially offset by net changes in our operating assets and liabilities of $16.1 million.

Our net cash provided by investing activities for the year ended December 31, 2025 was $9.8 million, compared to net cash used in investing activities of $3.5 million for the same period in 2024.

The increase in cash provided by investing activities was primarily due to net maturities of short-term investments of $10.3 million for the year ended December 31, 2025, compared to net purchases of $2.7 million for the year ended December 31, 2024.

Our net cash provided by financing activities for the year ended December 31, 2025 was $1.1 million, compared to $0.2 million for the same period in 2024.

The increase in cash provided by financing activities was mainly due to an increase in net proceeds from stock option exercises and purchases under the ESPP.

Liquidity and Material Cash Requirements

As of December 31, 2025, we had $44.3 million in cash, cash equivalents and short-term investments.

In March 2026, we entered into a securities purchase agreement with a select group of institutional accredited investors to sell 6.1 million shares of our ordinary shares in a private placement (“Private Placement”).

The gross proceeds from the Private Placement are $20.2 million, before deducting placement agent fees and other offering expenses.

We estimate the placement agent fees and other offering expenses will be $1.6 million.

The Private Placement is scheduled to close on or about March 31, 2026.

Based on our current operating plans, we expect that our cash, cash equivalents and short-term investments, including the net proceeds from the Private Placement, will be sufficient to fund operations for a period of at least one year from the date this Annual Report on Form 10-K for the year ended December 31, 2025 is filed with the SEC.

Historically, we have financed our operations, including technology and product research and development, primarily through sales of our securities, including our IPO that we completed in March 2021 for total cash consideration of $219.9 million before underwriting discounts and commissions, and, through up-front payments, research funding and milestone payments under collaborative arrangements.

In February 2025, we relocated our corporate headquarters to a new location in San Diego, California.

1 unchanged sentence

We have agreed to pay a basic annual rent for the additional office space that increases incrementally over the term of the lease from $0.3 million for the first 12 months of the lease (inclusive of certain rent abatements) to $0.4 million for the last 12 months of the lease, and such other amounts as set forth in the lease.

At December 31, 2024, purchase obligations primarily consisted of non-cancellable commitments with third-party manufacturers primarily including costs related to the development and technology transfer of a new high-yield cell-line for rademikibart, as well as ongoing stability studies for our Product Candidates.

Total purchase obligations of $3.4 million were not included in our consolidated financial statements for the year ended December 31, 2024, and are due within one year.

In addition, we have a lease for 25,476 square feet of laboratory and office space in Taicang, China, with a lease term that expires on April 30, 2026.

As of December 31, 2025, we had total operating lease obligations of $0.8 million, with $0.4 million due in one year and $0.4 million due within two years.

In March 2026, we entered into a lease amendment to extend the term of our operating lease in Taicang, China until April 30, 2027.

The total rent expense due under this extension is $0.1 million.

We enter into agreements with clinical sites and clinical research organizations for the conduct of our clinical trials and contract manufacturing organizations for the manufacture and supply of preclinical, clinical and, eventually, commercial materials and drug product.

19 unchanged sentences

Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, monetization transactions, government contracts or other strategic transactions.

To the extent that we raise additional capital through the sale of equity, ownership interests of existing holders of our ADSs and ordinary shares will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our ADSs or ordinary shares.

If we raise additional funds through collaboration agreements, strategic alliances, licensing arrangements,

monetization transactions, or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or Product Candidates or grant licenses on terms that may not be favorable to us or grant rights to develop and market products or Product Candidates that we would otherwise prefer to develop and market ourselves.

To the extent that we raise additional capital through the sale of equity, ownership interests of existing holders of our ordinary shares will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our ordinary shares.

If we raise additional funds through collaboration agreements, strategic alliances, licensing arrangements, monetization transactions, or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or Product Candidates or grant licenses on terms that may not be favorable to us or grant rights to develop and market products or Product Candidates that we would otherwise prefer to develop and market ourselves.

Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.

5 unchanged sentences

economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future.

Additionally, the general consensus among economists suggests that we should expect a higher recession risk to continue over the next year, which, together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations.

uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations.

Furthermore, such economic conditions have produced downward pressure on share prices.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates remain high or begin to rise again) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with geopolitical conflicts such as the ongoing wars involving Ukraine and Israel, the impact of any tariffs imposed by or on the U.S.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates remain high or begin to rise again) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with geopolitical conflicts such as the ongoing war involving Ukraine, the impact of any tariffs imposed by or on the U.S.

or other matters impacting global trade, shifting priorities and policies within the U.S.

4 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis