What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-31 compared with 2025-03-31 · 160 added, 209 removed, 634 unchanged (37% of the section changed)

12 unchanged sentences

We have audited the accompanying consolidated balance sheets of Connect Biopharma Holdings Limited (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, based on our audits, the 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 two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

47 unchanged sentences

400,000,000 shares authorized;

55,349,208 shares issued and outstanding at December 31, 2024 and 55,102,954 shares issued and outstanding at December 31, 2023

56,442,308 and 55,349,208 shares issued and outstanding at December 31, 2025 and 2024, respectively

Additional paid-in capital 444,176 439,357

10 unchanged sentences

License and collaboration revenues $ 64 $ 26,033

Total revenue 26,033 —

Operating expenses:

12 unchanged sentences

Foreign currency translation adjustments 477 ( 670 )

Unrealized gains on available-for-sale investments 12 354

Unrealized gains (losses) on available-for-sale investments ( 2 ) 12

Comprehensive loss $ ( 55,005 ) $ ( 16,286 )

24 unchanged sentences

Net loss — — — — — ( 55,480 ) ( 55,480 )

Net unrealized gains on available-for-sale investments — — — 12 — — 12

Net unrealized losses on available-for-sale investments — — — ( 2 ) — — ( 2 )

Foreign currency translation adjustments — — — 477 — — 477

10 unchanged sentences

Depreciation and amortization 704 660

Realized gain on available-for-sale investments — ( 1 )

Accretion of discounts on available-for-sale investments ( 773 ) ( 123 )

1 unchanged sentence

Loss on disposal of property and equipment 37 9

Loss on disposal of land use rights — 102

Change in operating assets and liabilities:

Accounts receivable, net 776 ( 789 )

Prepaid expenses and other assets 1,786 3,694

Prepaid expenses and other current assets ( 4,110 ) 1,786

Other non-current assets ( 605 ) —

2 unchanged sentences

Contract liabilities 3 ( 13,156 )

Operating leases ( 14 ) ( 5 )

Operating lease liabilities 54 ( 14 )

Other non-current liabilities ( 518 ) 227

4 unchanged sentences

Purchases of property and equipment ( 434 ) ( 750 )

Proceeds from sale of land use rights — 2,941

Proceeds from sale of property and equipment 2 —

Net cash (used in) provided by investing activities ( 3,451 ) 74,980

Net cash provided by (used in) investing activities 9,818 ( 3,451 )

Financing activities:

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 408 ( 595 )

Net (decrease) increase in cash and cash equivalents ( 27,431 ) 26,716

Net decrease in cash and cash equivalents ( 39,887 ) ( 27,431 )

Cash and cash equivalents at beginning of year 78,232 105,663

1 unchanged sentence

Supplemental disclosure of cash flow information:

Income taxes paid $ 111 $ 120

Federal income taxes paid $ 291 $ 110

State income taxes paid $ 1 $ 1

See accompanying Notes to Consolidated Financial Statements.

2 unchanged sentences

Organization and Business

Connect Biopharma Holdings Limited (the “Company,” “Connect,” or “Connect Biopharma”) was incorporated in November 2015 in the Cayman Islands as an exempted company with limited liability.

The Company completed its initial public offering in March 2021 and the Company’s American Depositary Shares (“ADSs”) have been listed on the Nasdaq Global Market since then.

Each ADS represents one ordinary share, par value United States (“U.S.”) Dollar (“USD”) $ 0.000174 per share.

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.

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 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 (“SEC”).

Connect Biopharma Holdings Limited (“Connect,” “Connect Biopharma,” the “Company,” “we,” “us,” “our” and similar terms refer to Connect Biopharma Holdings Limited, together with its subsidiaries), headquartered in San Diego, California, is a clinical-stage biopharmaceutical company dedicated to transforming care for asthma and chronic obstructive pulmonary disease.

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

Connect Biopharma was incorporated in November 2015 in the Cayman Islands as an exempted company with limited liability.

The Company completed its initial public offering in March 2021, and its ordinary shares, par value $ 0.000174 per share (“Ordinary Shares”), are listed on the Nasdaq Global Market under the symbol “CNTB”.

Liquidity and Going Concern

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

In March 2026, the Company entered into a securities purchase agreement with a select group of accredited investors to sell 6.1 million shares of its 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.

The Company estimates 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 its current operating plans, the Company expects that its 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 Securities and Exchange Commission (“SEC”).

Summary of Significant Accounting Policies

Basis of Presentation

The Company continues to qualify as a Foreign Private Issuer under SEC rules, however, the Company has voluntarily elected to become a domestic filer, beginning with this Annual Report on Form 10-K for the year ended December 31, 2024.

The Company continues to qualify as a Foreign Private Issuer under SEC rules, however, the Company has voluntarily elected to become a domestic filer, beginning with its Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 31, 2025.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.

GAAP”) and applicable rules and regulations of the SEC.

Previously, the Company prepared its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

The transition from IFRS to U.S.

GAAP was made retrospectively for all periods presented.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included.

Principles of Consolidation

11 unchanged sentences

• Connect Biopharma (Shanghai) Co., Ltd.

• Connect Biopharma (Shenzhen) Co., Ltd

Use of Estimates

35 unchanged sentences

Cash, cash equivalents and short-term investments are financial instruments that potentially subject us to concentrations of credit risk.

We deposit our cash in financial institutions located in the Cayman Islands, mainland China,

the U.S., Australia and Hong Kong.

We deposit our cash in financial institutions located in the Cayman Islands, mainland China, the U.S., Australia and Hong Kong.

At times, such deposits may be in excess of the insured limits provided by each jurisdiction.

22 unchanged sentences

Amortization is calculated on a straight-line basis over the asset’s estimated useful life.

Connect SZ acquired long-term land use rights in Taicang, Jiangsu Province, PRC.

In 2022, Connect SZ terminated its construction project in Taicang.

In 2023, Connect SZ completed the cancellation and sale of the land use rights to the Taicang government resulting in proceeds from the sale of $ 2.9 million.

Impairment of Long-Lived Assets

10 unchanged sentences

The ROU lease assets equal the lease liabilities, less unamortized lease incentives, unamortized initial direct costs and the cumulative difference between rent expense and amounts paid under the lease.

The lease term includes any option to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The lease term includes any option to extend or terminate the lease when it is reasonably

certain that we will exercise that option.

Lease expense is recognized on a straight-line basis over the lease term.

10 unchanged sentences

The Company only recognizes revenue to which it is probable that it will collect the consideration to which it is entitled to exchange for the goods or services that will be transferred to the customer.

When the Company enters into any arrangement involving the sale or license of intellectual property rights and other services, the Company determines whether the arrangement is subject to accounting guidance in Topic 606 and ASC 808, Collaboration Arrangements (“Topic 808”).

If the Company determines that an arrangement includes goods or services that are central to the Company’s business operations for consideration, the Company will then identify the performance obligations in the contract using the unit of account guidance in Topic 606.

30 unchanged sentences

Share-Based Compensation Expense

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.

On January 1, 2025, we began using the Black-Scholes option pricing model to estimate the fair value of each option grant on the grant date, in order to better align with our peers.

Prior to 2025, we estimated the fair value of each option grant on the grant date using the Binomial option pricing model.

In connection with our change in method of estimating the fair value per share, we also began estimating the expected term of each option grant based on the simplified method described in SEC Staff Accounting Bulletin No.

107, Share-Based Payment .

We believe the simplified method is appropriate, as all of our stock option grants would be considered “plain-vanilla” and we have a limited history of option exercise activity.

The fair value of each option grant 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.

1 unchanged sentence

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.

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

Government Grants

15 unchanged sentences

Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.

Net changes in foreign currency translation adjustments and unrealized gains and

losses on available-for-sale securities are included in other comprehensive loss and represent the difference between our net loss and comprehensive loss for both periods presented.

Net changes in foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities are included in other comprehensive loss and represent the difference between our net loss and comprehensive loss for both periods presented.

Net Loss per Share

2 unchanged sentences

For purposes of this calculation, stock options and employee share purchase rights are considered to be ordinary share equivalents and are included in the calculation of diluted net loss per share only when their effect is dilutive.

Because we have incurred a net loss for both periods presented in the consolidated statements of operations and comprehensive loss, the following ordinary share equivalents were not included in the computation of net loss per share because their effect would be anti-dilutive (in thousands):

Because the Company incurred a net loss for the years ended December 31, 2025 and 2024, the following ordinary share equivalents were not included in the computation of net loss per share because their effect would be anti-dilutive (in thousands):

Stock options outstanding 15,191 14,263

Employee share purchase rights 563 467

15,754 14,730

Recent Accounting Pronouncements

In November 2023, FASB issued Accounting Standards Update No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances segment disclosures primarily by requiring disclosure of significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

Retrospective application is required.

The requirements of ASU 2023-07 are disclosure-related and did not have an impact on the Company’s consolidated financial position and results of operations.

See Note 12, Segment Information , for our segment disclosures.

Not Yet Adopted

In December 2023, FASB issued Accounting Standards Update No.

In December 2023, FASB issued Accounting Standards Update (“ASU”) No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), to enhance income tax reporting disclosures and require disclosure of specific categories in the tabular rate reconciliation.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, on a prospective basis.

Early adoption and retrospective application are permitted.

We are currently evaluating the impact on our disclosures.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

On January 1, 2025, we adopted the provisions of ASU 2023-09 on a prospective basis and the required disclosures are included Note 12.

The adoption of ASU 2023-09 did not have a material impact on our annual consolidated financial statements but resulted in new or expanded disclosures upon adoption.

Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”).

1 unchanged sentence

The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion.

ASU 2024-03 may be applied either prospectively or retrospectively and is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

Early adoption is permitted.

ASU 2024-03 may be applied either prospectively or retrospectively and is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the impact on our disclosures.

In September 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”).

ASU 2025-05 provides all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.

Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient.

An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collection are evaluated.

ASU 2025-05 must be applied prospectively and is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

We are currently evaluating the impact of ASU 2025-05 on our 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 (“ASU 2025-10”).

ASU 2025-10 establishes the accounting for government grants received by business entities, including guidance for (1) a grant related to an asset and (2) a grant related to income.

The provisions of ASU 2025-10 can be applied on either a modified prospective or modified retrospective approach.

The amendments in ASU 2025-10 are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual periods.

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

We are currently evaluating the impact of ASU 2025-10 on our consolidated financial statement and related disclosures.

Fair Value Measurements

27 unchanged sentences

government agency obligations 8,325 — 8,325 —

corporate debt securities 1,387 — 1,387 —

commercial paper 1,831 — 1,831 —

3 unchanged sentences

As of December 31, 2025, cash equivalents included $ 21.4 million of available-for-sale securities with contractual maturities of three months or less and short-term investments included $ 6.0 million of available-for-sale securities with contractual maturities of three months to one year.

As of December 31, 2023, short-term investments included $ 12.6 million of available-for-sale securities with contractual maturities of three months to one year.

As of December 31, 2024, cash equivalents included $ 3.0 million of available-for-sale securities with contractual maturities of three months or less and short-term investments included $ 15.5 million of available-for-sale securities with contractual maturities of three months to one year.

The money market funds as of December 31, 2025 and 2024 are included in cash and cash equivalents on the consolidated balance sheets.

3 unchanged sentences

The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable.

The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices and obtaining market values from other pricing sources.

After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of December 31, 2024 and 2023.

The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices

and obtaining market values from other pricing sources.

After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of December 31, 2025 or 2024.

The Company does not have any investments classified as Level 3.

18 unchanged sentences

government agency obligations 8,326 — ( 1 ) 8,325

corporate debt securities 1,387 — — 1,387

commercial paper 1,831 — — 1,831

5 unchanged sentences

The Company does not intend to sell the investment in unrealized loss position and it is unlikely that the Company will be required to sell the investment before the recovery of its amortized cost basis.

Based on its evaluation, the Company determined its year-to-date credit losses related to its available-for-sale securities were immaterial at December 31, 2024.

Based on its evaluation, the Company determined its credit losses related to its available-for-sale securities were immaterial at December 31, 2025 and December 31, 2024.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity.

We regularly monitor and evaluate the realizable value of our available-for-sale investment securities.

We did not recognize any impairment losses for the years ended December 31, 2024 and 2023.

Unrealized gains and losses associated with our investments are reported in accumulated other comprehensive loss.

For the year ended December 31, 2024 and 2023, we recorded $ 12,000 and $ 354,000 , respectively, in net unrealized gains associated with our available-for-sale investments.

Realized gains and losses associated with our investments, if any, are reported in the statements of operations and comprehensive loss.

We did not recognize any realized gains or losses during the year ended December 31, 2024.

We recognized $ 1,000 in realized gains during the year ended December 31, 2023.

The Company regularly monitors and evaluates the realizable value of its available-for-sale investment securities.

The Company did not recognize any impairment losses for the years ended December 31, 2025 or 2024.

Unrealized gains and losses associated with the Company’s investments are reported in accumulated other comprehensive loss.

For the year ended December 31, 2025, the Company recorded $ 2,000 in net unrealized losses associated with our available-for-sale investments.

For the year ended December 31, 2024, the Company recorded $ 12,000 in net unrealized gains associated with our available-for-sale investments.

Realized gains and losses associated with its investments, if any, are reported in the statements of operations and comprehensive loss.

The Company did not recognize any realized gains or losses during the years ended December 31, 2025 or 2024.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

Prepaid expenses $ 2,149 $ 3,845

Prepaid clinical and manufacturing expenses $ 5,825 $ 1,541

Prepaid insurance 329 242

Prepaid taxes 243 —

Interest receivables 148 262

Other assets 53 54

Other prepaid expenses and current assets 29 419

Total prepaid expenses and other current assets $ 6,574 $ 2,464

9 unchanged sentences

Depreciation and amortization expense for the years ended December 31, 2025 and 2024 was $ 0.7 million for both periods.

The Company recorded an impairment loss of $ 0.2 million for the year ended December 31, 2024.

No impairment loss was recorded during the year ended December 31, 2025.

The Company recorded an impairment loss of $ 0.2 million for the year ended December 31, 2024.

Accrued Liabilities

9 unchanged sentences

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 (the “Territory”), while Connect retains rights in all other markets.

Under the License Agreement, Connect was required to complete all of rademikibart’s ongoing clinical trials and related analysis in the Territory in atopic dermatitis (“AD”), while the Licensee will be responsible for rademikibart’s new drug application for AD in China and will also conduct and be responsible for the costs of all future clinical studies in all additional disease indications for rademikibart in Greater China.

As consideration for the rights granted to Simcere under the License Agreement, Simcere paid Licensor a non-refundable, non-creditable up-front fee of approximately $ 21 million.

Simcere is required to make milestone payments to the Licensor up to an aggregate amount of $ 123 million upon the achievement of certain development, regulatory and commercial milestones.

The achievement of certain milestones is dependent upon the timing and success of future development activities to be completed by Simcere.

Under the License Agreement, Connect was required to complete all of rademikibart’s

ongoing clinical trials and related analysis in the Territory in atopic dermatitis (“AD”), while the Licensee is responsible for rademikibart’s new drug application for AD in China and will also conduct and be responsible for the costs of all future clinical studies in all additional disease indications for rademikibart in Greater China.

As consideration for the rights granted to Simcere under the License Agreement, Simcere paid the Licensor a non-refundable, non-creditable up-front fee of approximately $ 21 million.

Simcere is also required to make milestone payments to the Licensor upon the achievement of certain development, regulatory and commercial milestones (“Milestones”), initially totaling up to $ 123 million.

In 2024, we received approximately $ 5 million in Milestone payments from Simcere for the achievement of certain development Milestones.

In 2025, one time-based Milestone in the amount of approximately $ 8 million lapsed because it was not achieved by the deadline set forth in the License Agreement.

Accordingly, as of December 31, 2025, we are eligible to receive remaining Milestone payments up to an aggregate amount of approximately $ 110 million.

The achievement of these Milestones is dependent upon the timing and success of future development, regulatory and commercial activities to be completed by Simcere.

Simcere is also required to make payments for cost reimbursements related to certain development activities, including supply of material for clinical development.

4 unchanged sentences

The Company evaluated the License Agreement which provides Simcere with the right to use the Company’s intellectual property in the Territory.

The Company concluded that the License Agreement was subject to Topic 606 as the Company viewed the License Agreement as a contract with a customer as the activities were central to its business operations.

The Company concluded that the License Agreement was subject to Topic 606 because the Company viewed the License Agreement as a contract with a customer as the activities were central to its business operations.

As such, the Company assessed the terms of the License Agreement and identified four performance obligations for the license to research, develop, manufacture and commercialize rademikibart in the Territory.

10 unchanged sentences

For cost reimbursements related to the supply of material for clinical development, the Company recognizes revenue when Simcere obtains control of the goods.

For the year ended December 31, 2025, the Company recognized $ 0.1 million as license and collaboration revenues related to cost reimbursements for clinical materials.

For the year ended December 31, 2024, the Company recognized $ 26.0 million as license and collaboration revenues.

Of the $ 26.0 million, $ 24.4 million related to the upfront license fee and achievement of certain development milestones and $ 1.6 million related to cost reimbursements for clinical materials.

For the year ended December 31, 2023, the Company did not recognize any revenue under the License Agreement.

Allocation of the Transaction Price

1 unchanged sentence

However the Company has allocated certain regulatory and development milestone payments only to certain specific performance obligation(s) where the terms of such payments relate specifically to the Company’s efforts to satisfy the respective performance obligation, and provided that such allocation is consistent with the objective that transaction price is allocated to each performance obligation in order to reflect the consideration to which the Company expects to be entitled to receive in exchange for satisfying those performance obligations.

The Company allocated the $ 25.0 million transaction price based on relative stand-alone selling prices of each performance obligation as $ 23.8 million for the license, $ 0.1 million for the transfer of the current manufacturing process, $ 0.2 million for development and transfer of a new manufacturing process, and $ 0.9 million for completion of certain rademikibart development services.

completion of certain rademikibart development services.

The Company developed the estimated stand-alone selling price for the license using a discounted cash flows model, which is an income approach.

5 unchanged sentences

The revenue associated with the transfer of the intellectual property and know-how and transfer of the current manufacturing process were recognized at a point in time upon successful completion of each obligation during 2024.

The Company will

recognize the revenue associated with the transfer of a new manufacturing process at a point in time upon successful completion of the obligation.

The Company will recognize the revenue associated with the transfer of a new manufacturing process at a point in time upon successful completion of the obligation.

For the performance obligation to complete certain development services, the Company recognized the transaction price over the expected performance period using an input method.

8 unchanged sentences

As of December 31, 2025 and 2024, the Company had no contract assets related to the License Agreement.

As of December 31, 2024 and 2023, the Company had $ 0.2 million and $ 13.3 million, respectively, in contract liabilities related to the upfront fee received under the License Agreement.

As of December 31, 2025 and 2024, the Company had $ 0.2 million in contract liabilities related to the upfront fee received under the License Agreement.

During the year ended December 31, 2024, $ 13.1 million of the contract liability was recognized as revenue which was included in the contract liability balance at the beginning of the year.

4 unchanged sentences

The Company was not a party to any material litigation and did not have contingency reserves established for any liabilities as of December 31, 2025 or 2024.

As of December 31, 2024, we had an operating 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 an operating 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 and 2023, the weighted average remaining lease term was 1.0 year and 1.8 years, respectively, and the weighted average discount rate used to determine the operating lease liability was 4.8 % and 4.9 %, respectively.

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

This operating lease for the new corporate headquarters is for 6,942 square feet of office space which expires on January 31, 2028.

In the first quarter of 2025, we recognized an initial ROU lease asset of $ 0.9 million and a lease liability of $ 0.9 million related to this space in San Diego, California.

We have an operating lease for 25,476 square feet of laboratory and office space in Taicang, China, with a lease term that expires on April 30, 2027.

We also had an operating lease for 3,628 square feet of office space in San Diego, California, with a lease term that expired on April 30, 2025.

As of December 31, 2025 and 2024, the weighted average remaining lease term was 2.0 years and 1.0 year, respectively, and the weighted average discount rate used to determine the operating lease liability was 8.1 % and 4.8 %, respectively.

Rent expense under all operating leases totaled $ 0.5 million and $ 0.3 million, respectively, for the years ended December 31, 2025 and 2024.

During the years ended December 31, 2025 and 2024, we paid $ 0.4 million and $ 0.3 million, respectively, for our operating leases.

Annual future minimum lease payments as of December 31, 2025 are as follows (in thousands):

3 unchanged sentences

Total lease liabilities $ 690

Rent expense under all operating leases totaled $ 0.3 million for both the years ended December 31, 2024 and 2023.

During both the years ended December 31, 2024 and 2023, we paid $ 0.3 million for our operating leases.

Development Agreements

4 unchanged sentences

We intend to use our current financial resources to fund our obligations under these commitments.

Purchase Obligations

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.

Reorganization

4 unchanged sentences

During the year ended December 31, 2024, we recognized $ 3.2 million of the total expense, $ 1.8 million of which was included in general and administrative expense , and $ 1.4 million of which was included in research and development expense .

As of December 31, 2024, we have paid $ 0.4 million of the cash severance charges.

The remaining cash severance charges are expected to be substantially paid in the first quarter of 2025.

As of December 31, 2025, we have paid all cash severance.

We have accounted for these expenses in accordance with the FASB ASC Topic 420, Exit or Disposal Cost Obligation.

Shareholders’ Equity

Ordinary Shares Reserved for Future Issuance

As of December 31, 2024, we reserved ordinary shares as follows:

Number of Shares

Stock options outstanding 14,263,242

Ordinary shares reserved for future grants under the equity incentive plans 4,442,951

Ordinary shares reserved for future purchases under the Employee Share Purchase Plan 1,020,251

Total ordinary shares reserved for future issuance 19,726,444

Treasury Shares

4 unchanged sentences

Statutory Reserves

In accordance with the People’s Republic of China (“PRC”) regulations and the articles of association of the companies registered in the PRC, companies are required to set aside 10% of their net profit for the year, offsetting any prior year losses, to the statutory surplus reserve fund as determined under the relevant PRC accounting standards.

prior year losses, to the statutory surplus reserve fund as determined under the relevant PRC accounting standards.

When the balance of such reserve reaches 50% of the entity’s registered capital, any further appropriation is optional.

years ended December 31, 2024 and 2023, we did not make any profit appropriations to the reserve fund, as all of our subsidiaries in the PRC were in an accumulated loss position.

During the years ended December 31, 2025 and 2024, we did not make any profit appropriations to the reserve fund, as all of our subsidiaries in the PRC were in an accumulated loss position.

Under PRC laws and regulations, there are restrictions on the Company’s PRC subsidiaries with respect to transferring certain of their net assets to the Company either in the form of dividends, loans, or advances.

5 unchanged sentences

In January 2022, the number of shares reserved for issuance under the ESPP increased by 550,763 shares.

Our Board did not approve any increases to the authorized shares for fiscal years 2023 and 2024.

Our Board did not approve any increases to the authorized shares for fiscal years 2023, 2024 or 2025.

At December 31, 2025, a total of 1,150,763 shares were authorized under the ESPP.

16 unchanged sentences

or (ii) such lesser number of shares as may be determined by the Board.

Our Board determined that the increase under the 2021 Plan for the fiscal years beginning January 1, 2022, 2023 and 2024, to be 5.0 % 2.5 % and 5.0 %, respectively, of our outstanding shares as determined on December 31, 2022, 2023 and 2024, respectively.

Our Board determined the increase under the 2021 Plan for the fiscal years beginning January 1, 2022, 2023, 2024 and 2025, to be 5.0 % 2.5 %, 5.0 %, and 5.0 %, respectively, of our outstanding shares as determined on December 31, 2022, 2023, 2024, and 2025, respectively.

In no event will more than 60,000,000 shares be issuable upon the exercise of incentive share options (within the meaning of Section 422 of the U.S.

Internal Revenue Code) under the 2021 Plan.

In January 2022, January 2023, and January 2024, the maximum number of ordinary share available for grant increased by 2,753,815 , 1,376,031 , and 2,755,000 ordinary shares, respectively, resulting in an aggregate of 12,884,846 ordinary shares authorized for issuance as of December 31, 2024.

At December 31, 2024, there were 4,374,174 shares available for future grant under the 2021 Plan.

At December 31, 2025, there were 17,647,834 ordinary shares authorized for issuance and 6,325,438 shares available for future grant under the 2021 Plan.

Any shares that are issuable on exercise of options granted that expire, are cancelled or that we receive pursuant to a net exercise of options are available for future grant and issuance.

7 unchanged sentences

At December 31, 2025, there were 68,777 shares available for future grants.

All stock option grants issued under the Inducement Plan were approved by our Board and will be registered on Form S-8 with the SEC.

The following summarizes all stock option plan activity:

Outstanding Options

All stock option grants issued under the Inducement Plan were approved by our Board and were registered on Form S-8 with the SEC.

The following summarizes all stock option plan activity for the year ended December 31, 2025:

Number of Options Weighted-Average

Exercise Price

Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (millions)

Outstanding at December 31, 2024 14,263,242 $ 2.93

3 unchanged sentences

Outstanding at December 31, 2025 15,190,575 $ 2.14 8.5 $ 17.2

Options exercisable at December 31, 2025 5,096,895 $ 3.02 7.4 $ 5.8

For the year ended December 31, 2025, options cancelled consisted of 372,573 options forfeited with a weighted-average exercise price of $ 1.58 and 1,977,631 options expired with a weighted-average exercise price of $ 8.30 .

The total intrinsic value of stock option exercises, which is the difference between the exercise price and closing price of our ordinary shares on the date of exercise, during the year ended December 31, 2024 and 2023 was $ 128,000 and $ 2,000 , respectively.

As of December 31, 2024 and 2023, the total intrinsic value of options outstanding and exercisable was $ 0.5 million and $ 0.2 million, respectively.

Years Ended December 31,

Options Weighted-

Exercise Price Options Weighted-

Exercise Price

Exercisable at end of year 4,252,615 $ 6.29 2,998,933 $ 6.94

Options vested or expected to vest 14,263,242 $ 2.93 6,514,909 $ 5.10

Exercise prices and weighted-average remaining contractual lives for the options outstanding as of December 31, 2024 were:

Options Range of

Prices Weighted-

Life (in years) Weighted-

Exercise Price Options

Exercisable Weighted-

Exercise Price

3,245,976 $ 0.75 - $ 1.13

8.94 $ 0.93 657,080 $ 0.82

3,489,825 $ 1.15 - $ 1.73

8.22 $ 1.22 709,996 $ 1.26

4,532,973 $ 1.77 - $ 2.66

9.38 $ 1.77 73,749 $ 1.97

732,504 $ 3.05 - $ 4.58

2.60 $ 4.17 697,625 $ 4.17

589,829 $ 4.70 - $ 7.05

5.46 $ 4.70 469,911 $ 4.70

1,344,385 $ 8.16 - $ 12.24

1.78 $ 10.05 1,341,089 $ 10.05

327,750 $ 16.41 - $ 24.62

4.50 $ 21.75 303,165 $ 21.70

14,263,242 $ 0.75 - $ 24.62

7.66 $ 2.93 4,252,615 $ 6.29

The total intrinsic value of stock option exercises, which is the difference between the exercise price and closing price of our ordinary shares on the date of exercise, during the year ended December 31, 2025 and 2024 was $ 1.0 million and $ 0.1 million, respectively.

On December 31, 2025, we had reserved 15,190,575 ordinary shares for future issuance on exercise of outstanding options granted under the 2019, 2021 and Inducement Plans.

Share-Based Compensation

The following summarizes share-based compensation expense related to share-based payment awards pursuant to our equity compensation arrangements (in thousands):

The following summarizes share-based compensation expense related to share-based payment awards granted pursuant to all of our equity compensation arrangements (in thousands):

Research and development $ 1,099 $ 2,951

2 unchanged sentences

As of December 31, 2025, there was $ 13.3 million of total unrecognized compensation cost related to non-vested, share-based payment awards granted under all of our equity compensation plans.

Total unrecognized compensation cost will be adjusted for future forfeitures.

Total unrecognized compensation cost will be adjusted for forfeitures.

We expect to recognize this compensation cost over a weighted-average period of 3.0 years.

The fair value of each option grant is estimated on the grant date using the binomial option pricing model with the following weighted-average assumptions:

The following are the weighted-average assumptions for stock options:

Risk-free interest rate 3.9 % 4.4 %

1 unchanged sentence

Volatility 103.4 % 104.5 %

Option life (years) 10 10

Expected life (years) 6 10

Early exercise multiple (years) — 2.2 - 2.8

The fair value of each employee share purchase right granted is estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:

The following are the weighted-average assumptions for purchase rights under the ESPP:

Risk-free interest rate 4.1 %

27 unchanged sentences

We also have a defined contribution benefit plan covering all of our employees in the PRC which is organized by the relevant government authorities in the PRC.

The government authorities undertake to assume the retirement benefit obligations payable to all existing and further retired employees under these plans and the Company has no further obligation for post-retirement benefits beyond the contributions made.

The government authorities undertake to assume the retirement benefit obligations payable to all existing and further retired employees under these plans and the Company has no further

obligation for post-retirement benefits beyond the contributions made.

Contributions to these plans are expensed as incurred.

4 unchanged sentences

Net loss before income taxes $ ( 55,283 ) $ ( 15,405 )

A reconciliation of the statutory tax rates for the years ended December 31, 2024 and 2023 is as follows:

Tax at statutory federal rate 21.0 % 21.0 %

State tax, net of federal benefit — % — %

The provision for income tax expense for the years ended December 31, 2025 and 2024 consisted of the following (in thousands):

Federal $ 196 $ 222

Income tax expense $ 197 $ 223

A reconciliation of the statutory tax rates for the years ended December 31, 2025 is as follows:

December 31, 2025

federal statutory tax rate $ ( 11,610 ) 21.0 %

State and local income tax, net of federal benefit* ( 19 ) — %

Foreign tax effects:

Prior year return to provision 4,759 ( 8.6 ) %

Changes in valuation allowances ( 2,930 ) 5.3 %

Other ( 716 ) 1.3 %

Statutory tax rate difference between Hong Kong and Unites States 5,750 ( 10.4 ) %

Changes in valuation allowances 3,592 ( 6.5 ) %

Other 128 ( 0.2 ) %

Cayman Islands

Statutory tax rate difference between Cayman Islands and United States 1,287 ( 2.3 ) %

Other foreign jurisdictions ( 91 ) 0.2 %

Federal research and development tax credits ( 626 ) 1.1 %

Changes in valuation allowances 528 ( 1.0 ) %

Non-taxable or non-deductible items 111 ( 0.2 ) %

Changes in unrecognized tax benefits 34 — %

Effective tax rate $ 197 ( 0.3 ) %

*California represents the tax effect for this category

A reconciliation of the statutory tax rates for the years ended December 31, 2024 is as follows:

December 31, 2024

federal statutory tax rate 21.0 %

Stock options ( 6.1 ) %

5 unchanged sentences

Effective tax rate ( 1.5 ) %

The Company’s federal income taxes from continuing operations for the years ended December 31, 2024 and 2023 was $ 0.2 million and $ 0.1 million, respectively.

The Company was not subject to any state incomes taxes for the years ended December 31, 2024 and 2023.

Significant components of the Company’s deferred tax assets and liabilities from continued operations as of December 31, 2024 and 2023 are as follows:

Significant components of the Company’s deferred tax assets and liabilities from continued operations as of December 31, 2025 and 2024 were as follows:

Deferred tax assets:

16 unchanged sentences

valuation allowance was a decrease of $ 0.6 million for the year ended December 31, 2025.

December 31, 2024, the Company has net operating losses of $ 205.0 million in China, which begin to expire in 2025.

The Company has NOLs of $ 182.2 million in Hong Kong and NOLs of $ 5.1 million in Australia, which all carryforward indefinitely.

As of December 31, 2025, the Company has Net Operating Losses (“NOLs”) of $ 193.3 million in China, which begin to expire in 2026.

The Company has NOLs of $ 225.8 million in Hong Kong and $ 5.0 million in Australia, which all carryforward indefinitely.

The change in the China, Hong Kong and Australia valuation allowances was an increase of $ 0.6 million for the year ended December 31, 2025.

4 unchanged sentences

Balance at end of year $ 1,247 $ 1,213

The Company does not expect the unrecognized tax benefit reserves to change within the next 12 months from the date this Annual Report on Form 10-K is filed with the SEC.

Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefit reserves will not impact the Company’s effective tax rate.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.

The Company’s policy is to recognize interest and penalties related to

income tax matters in income tax expense.

For the years ended December 31, 2025 and 2024, the Company has not recognized any interest or penalties related to income taxes.

4 unchanged sentences

The Company is currently not under any examinations in the jurisdictions it operates in.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law, introducing significant U.S.

Key provisions of the OBBBA include changes to bonus depreciation, capitalized research and development

expenditures and interest deductibility.

The OBBBA did not have a material impact on the Company’s effective tax rate or

consolidated financial statements for the year ended December 31, 2025.

Segment Information

18 unchanged sentences

and $ 3.8 million and $ 4.1 million, respectively, in the PRC.

Subsequent Event

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

This operating lease for the new corporate headquarters is for 6,942 square feet of office space and expires on January 31, 2028.

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.

Condensed Financial Information of Parent

Certain foreign subsidiaries of the Company have restrictions on their ability to transfer certain of their net assets to the Company either in the form of dividends, loans, or advances.

The Company performed a test on the restricted net assets of combined subsidiaries in accordance with SEC Regulation S-X Rule 4-08 (e) and concluded that it was applicable for the Company to disclose the financial statements of the parent company.

The condensed parent company only financial statements have been derived from the Company’s consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto.

Condensed Balance Sheet

(in thousands)

Cash and cash equivalents $ 47,065 $ 79,253

Short-term investments 15,476 12,640

Prepaid expenses and other current assets 555 706

Amounts due from subsidiaries 13,078 12,997

Investments in subsidiaries 27,484 4,604

Total assets $ 103,658 $ 110,200

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable and accrued liabilities $ 117 $ 586

Amounts due to subsidiaries 10,875 7,867

Other non-current liabilities 500 250

Total liabilities 11,492 8,703

Total shareholders' equity 92,166 101,497

Total liabilities and shareholders' equity $ 103,658 $ 110,200

Condensed Statement of Operations and Comprehensive Loss

(in thousands)

Years Ended December 31,

General and administrative expense $ ( 6,010 ) $ ( 5,412 )

Interest income 3,893 4,608

Equity losses of subsidiaries ( 13,511 ) ( 61,302 )

Net Loss attributable to Connect Biopharma Holdings Limited shareholders ( 15,628 ) ( 62,106 )

Other comprehensive loss:

Foreign currency translation adjustments ( 670 ) ( 614 )

Unrealized gains on available-for-sale investments 12 354

Comprehensive loss attributable to Connect Biopharma Holdings Limited shareholders $ ( 16,286 ) $ ( 62,366 )

Condensed Statement of Cash Flows

(in thousands)

Years Ended December 31,

Net cash used in operating activities $ ( 2,110 ) $ ( 771 )

Net cash (used in) provided by investing activities ( 30,305 ) 32,070

Net cash provided by financing activities 227 45

Net (decrease) increase in cash and cash equivalents ( 32,188 ) 31,344

Cash and cash equivalents at beginning of year 79,253 47,909

Cash and cash equivalents at end of year $ 47,065 $ 79,253

During the years ended December 31, 2024 and 2023, no cash dividend was declared and paid by the parent company.

As of December 31, 2024, there were no material contingencies, significant provisions of long-term obligations, and mandatory dividend or redemption requirements of redeemable shares or guarantees of the parent company, except for those which have been separately disclosed in the Consolidated Financial Statement, if any.

Basis of preparation

The condensed financial information of the parent company has been prepared using the same accounting policies as set out in its consolidated financial statements, except that the parent company has used the equity method to account for its investment in its subsidiaries.

Accordingly, the condensed financial information presented herein represents the financial information of the parent company.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted.

The footnote discloses certain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying Consolidated Financial Statements.

Subsequent Events

In March 2026, we entered into the Private Placement.

The total estimated net proceeds from the Private Placement are expected to be $ 18.6 million (gross proceeds of $ 20.2 million, net of $ 1.6 million in estimated placement agent fees and other offering expenses).

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

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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

As previously disclosed in our Current Report on Form 6-K filed with the SEC on December 23, 2024, the Audit Committee of the Board appointed CBIZ CPAs P.C.

(“CBIZ”) as its independent registered public accounting firm on December 17, 2024.

PricewaterhouseCoopers Zhong Tian LLP (“PwC China”), the Company’s former independent registered public accounting firm, was dismissed by the Company on December 10, 2024.

The appointment of CBIZ was made after careful consideration and a thorough evaluation process by the Company and was approved by the Audit Committee.

During the Company’s fiscal years ended December 31, 2023 and 2022, and the subsequent interim period through December 10, 2024, there were no disagreements (as that term is described in Item 16F (a)(1)(iv) of Form 20-F and the related instructions) between the Company and PwC China on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of PwC China, would have caused PwC China to make reference to the subject matter of the disagreement in connection with its reports on the Company's consolidated financial statements for such years, nor were there any “reportable events”, as that term is described in Item 16F(a)(1)(v)(A) through (D) of Form 20-F.

During the Company’s fiscal years ended December 31, 2023 and 2022, and the subsequent interim period through December 17, 2024, neither the Company, nor anyone on its behalf, consulted CBIZ regarding either (a) the application of accounting principles to a specified transaction, either completed or proposed;

or (b) the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company or oral advice was provided that CBIZ concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue;

or (c) any matter that was the subject of a disagreement, as defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto), or any “reportable events” as that term is described in Item 16F(a)(1)(v)(A) through (D) of Form 20-F.

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 8. Financial Statements and Supplementary Data