Corvus Pharmaceuticals, Inc. 10-K

Item 8. Financial Statements and Supplementary Data CORVUS PHARMACEUTICALS, INC. ANNUAL REPORT ON FORM 10-K INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 82 Consolidated Financial Statements ​ Consolidated Balance Sheets 84 Consolidated Statements of Operations and Comprehensive Loss 85 Consolidated Statements of Stockholders’ Equity 86 Consolidated Statements of Cash Flows 87 Notes to C onsolidated Financial Statements 88 ​ ​ ​ 81 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Board of Directors and Stockholders of Corvus Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Corvus Pharmaceuticals, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. ​ Substantial Doubt About the Company’s Ability to Continue as a Going Concern ​ The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred significant net operating losses and negative cash flows from operations since inception that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. ​ Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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. ​ Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial 82 Table of Contents statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Clinical Trial Accruals As described in Notes 2 and 8 to the consolidated financial statements, the Company recorded $1.67 million in clinical trial accruals as of December 31, 2024. Management applies significant judgment in developing estimates for clinical trial accruals based on assumptions related to the vendors’ progress towards completion. Management estimates the vendors’ progress towards completion using data such as clinical site activations, patient enrollment or information provided to the Company by its vendors regarding actual costs incurred. Management determines accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or stage of completion, or the services completed. The principal considerations for our determination that performing procedures relating to clinical trial accruals is a critical audit matter are (i) the significant judgment by management in estimating the clinical trial accruals and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to the vendors’ progress towards completion of clinical trials. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others (i) testing management’s process for estimating the clinical trial accruals; (ii) evaluating the appropriateness of the method used by management to develop the estimate; (iii) testing the completeness and accuracy of data used to develop the estimate; and (iv) evaluating the reasonableness of the significant assumption related to the vendors’ progress towards completion of clinical trials. Evaluating management’s assumption related to the vendors’ progress towards completion of clinical trials involved (i) obtaining and examining contract terms on a test basis to evaluate the completeness and consistency of the costs in the contract with the costs used in developing the estimate; (ii) verifying patient visits on a test basis; and (iii) considering whether this assumption was consistent with evidence obtained in other areas of the audit. /s/ PricewaterhouseCoopers LLP San Jose, California March 25, 2025 We have served as the Company’s auditor since 2015 ​ 83 Table of Contents CORVUS PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 8,740 ​ $ 12,620 Marketable securities ​ 43,224 ​ 14,529 Accounts receivable - related party ​ 75 ​ 26 Prepaid and other current assets ​ 2,368 ​ 781 Total current assets ​ 54,407 ​ 27,956 Property and equipment, net ​ 151 ​ 236 Operating lease right-of-use asset ​ ​ 1,177 ​ ​ 1,149 Investment in Angel Pharmaceuticals ​ ​ 12,540 ​ ​ 16,123 Other assets ​ ​ 632 ​ ​ 89 Total assets ​ $ 68,907 ​ $ 45,553 ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 2,582 ​ $ 1,525 Operating lease liability ​ ​ 185 ​ ​ 1,374 Accrued and other liabilities ​ 3,725 ​ 3,970 Warrant liability ​ ​ 28,910 ​ ​ — Total current liabilities ​ 35,402 ​ 6,869 Operating lease liability ​ ​ 937 ​ ​ — Total liabilities ​ 36,339 ​ 6,869 Commitments and contingencies (Note 15) ​ ​ Stockholders’ equity: ​ ​ Preferred stock: $ 0.0001 par value; 10,000,000 shares authorized at December 31, 2024 and December 31, 2023; 0 shares issued and outstanding at each of December 31, 2024 and December 31, 2023 ​ ​ — ​ ​ — Common stock: $ 0.0001 par value; 290,000,000 shares authorized at December 31, 2024 and December 31, 2023; 67,899,779 and 49,038,582 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively ​ 7 ​ 5 Additional paid-in capital ​ 430,859 ​ 374,363 Accumulated other comprehensive loss ​ ( 1,288 ) ​ ( 967 ) Accumulated deficit ​ ( 397,010 ) ​ ( 334,717 ) Total stockholders’ equity ​ 32,568 ​ 38,684 Total liabilities and stockholders’ equity ​ $ 68,907 ​ $ 45,553 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 84 Table of Contents CORVUS PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Operating expenses: ​ ​ ​ ​ Research and development ​ $ 19,385 ​ $ 16,526 ​ $ 24,468 General and administrative ​ 8,163 ​ 6,881 ​ 8,097 Total operating expenses ​ 27,548 ​ 23,407 ​ 32,565 Loss from operations ​ ( 27,548 ) ​ ( 23,407 ) ​ ( 32,565 ) Interest income and other expense, net ​ 1,824 ​ 1,584 ​ 654 Gain from sale of property and equipment ​ ​ 5 ​ ​ — ​ ​ 22 Change in fair value of warrant liability ​ ​ ( 33,377 ) ​ ​ — ​ ​ — Sublease income - related party ​ ​ — ​ ​ 78 ​ ​ 587 Loss before equity method investment ​ ​ ( 59,096 ) ​ ​ ( 21,745 ) ​ ​ ( 31,302 ) Loss from equity method investment ​ ​ ( 3,197 ) ​ ​ ( 5,284 ) ​ ​ ( 10,005 ) Net loss ​ $ ( 62,293 ) ​ $ ( 27,029 ) ​ $ ( 41,307 ) Net loss per share, basic and diluted ​ $ ( 1.02 ) ​ $ ( 0.56 ) ​ $ ( 0.89 ) Shares used to compute net loss per share, basic and diluted ​ 60,985,165 ​ 48,025,274 ​ 46,553,511 Other comprehensive loss: ​ ​ ​ ​ Unrealized gain on marketable securities ​ 65 ​ 66 ​ ( 48 ) Cumulative foreign currency translation adjustment ​ ( 386 ) ​ ( 470 ) ​ ( 2,384 ) Comprehensive loss ​ $ ( 62,614 ) ​ $ ( 27,433 ) ​ $ ( 43,739 ) ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 85 Table of Contents CORVUS PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-in ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ Shares Amount Capital Income (Loss) Deficit Equity Balance at December 31, 2021 ​ 46,553,511 ​ $ 5 ​ $ 361,669 ​ $ 1,869 ​ $ ( 266,381 ) ​ $ 97,162 Stock-based compensation expense ​ — ​ ​ — ​ ​ 2,692 ​ ​ — ​ ​ — ​ ​ 2,692 Unrealized loss on marketable securities ​ — ​ ​ — ​ ​ — ​ ​ ( 48 ) ​ ​ — ​ ​ ( 48 ) Foreign currency translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ ( 2,384 ) ​ ​ — ​ ​ ( 2,384 ) Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 41,307 ) ​ ​ ( 41,307 ) Balance at December 31, 2022 ​ 46,553,511 ​ $ 5 ​ $ 364,361 ​ $ ( 563 ) ​ $ ( 307,688 ) ​ $ 56,115 Issuance of common stock in connection with at-the-market offering, net ​ 2,461,903 ​ ​ — ​ ​ 7,843 ​ ​ — ​ ​ — ​ ​ 7,843 Common stock issued on exercise of stock options ​ 23,168 ​ ​ — ​ ​ 12 ​ ​ — ​ ​ — ​ ​ 12 Stock-based compensation expense ​ — ​ ​ — ​ ​ 2,147 ​ ​ — ​ ​ — ​ ​ 2,147 Unrealized loss on marketable securities ​ — ​ ​ — ​ ​ — ​ ​ 66 ​ ​ — ​ ​ 66 Foreign currency translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ ( 470 ) ​ ​ — ​ ​ ( 470 ) Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 27,029 ) ​ ​ ( 27,029 ) Balance at December 31, 2023 ​ 49,038,582 ​ $ 5 ​ $ 374,363 ​ $ ( 967 ) ​ $ ( 334,717 ) ​ $ 38,684 Common stock issued in connection with registered direct offering, net ​ 13,512,699 ​ ​ 1 ​ ​ 16,404 ​ ​ — ​ ​ — ​ ​ 16,405 Pre-funded warrants issued in connection with registered direct offering, net ​ — ​ ​ — ​ ​ 5,031 ​ ​ — ​ ​ — ​ ​ 5,031 Issuance of common stock upon exercise of common stock warrants ​ 5,311,198 ​ ​ 1 ​ ​ 31,990 ​ ​ — ​ ​ — ​ ​ 31,991 Common stock issued on exercise of stock options ​ 37,300 ​ ​ — ​ ​ 68 ​ ​ — ​ ​ — ​ ​ 68 Stock-based compensation expense ​ — ​ ​ — ​ ​ 3,003 ​ ​ — ​ ​ — ​ ​ 3,003 Unrealized gain on marketable securities ​ — ​ ​ — ​ ​ — ​ ​ 65 ​ ​ — ​ ​ 65 Foreign currency translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ ( 386 ) ​ ​ — ​ ​ ( 386 ) Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 62,293 ) ​ ​ ( 62,293 ) Balance at December 31, 2024 ​ 67,899,779 ​ $ 7 ​ $ 430,859 ​ $ ( 1,288 ) ​ $ ( 397,010 ) ​ $ 32,568 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 86 Table of Contents CORVUS PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Cash flows from operating activities ​ ​ ​ ​ Net loss ​ $ ( 62,293 ) ​ $ ( 27,029 ) ​ $ ( 41,307 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Depreciation and amortization ​ 85 ​ 151 ​ 367 Accretion related to marketable securities ​ ( 1,141 ) ​ ( 894 ) ​ ( 170 ) Stock-based compensation ​ 3,003 ​ 2,147 ​ 2,692 Gain from sale of property and equipment ​ ( 5 ) ​ — ​ ( 22 ) Change in fair value of warrant liability ​ 33,377 ​ — ​ — Loss from equity method investment ​ 3,197 ​ 5,284 ​ 10,005 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable - related party ​ ( 49 ) ​ 562 ​ ( 81 ) Prepaid and other current assets ​ ( 1,587 ) ​ ( 8 ) ​ 581 Operating lease right-of-use asset ​ ​ ( 28 ) ​ ​ 1,068 ​ ​ 973 Other assets ​ ​ ( 543 ) ​ ​ 40 ​ ​ 107 Accounts payable ​ 1,057 ​ ( 451 ) ​ 411 Accrued and other liabilities ​ ( 245 ) ​ ( 3,578 ) ​ 467 Operating lease liability ​ ​ ( 252 ) ​ ​ ( 1,227 ) ​ ​ ( 1,046 ) Net cash used in operating activities ​ ( 25,424 ) ​ ( 23,935 ) ​ ( 27,023 ) Cash flows from investing activities ​ ​ ​ Purchases of marketable securities ​ ( 70,119 ) ​ ( 47,048 ) ​ ( 66,191 ) Maturities of marketable securities ​ 42,630 ​ 62,623 ​ 43,162 Purchases of property and equipment ​ — ​ ( 34 ) ​ ( 269 ) Proceeds from sale of property and equipment ​ ​ 5 ​ ​ – ​ ​ 22 Net cash (used in) provided by investing activities ​ ( 27,484 ) ​ 15,541 ​ ( 23,276 ) Cash flows from financing activities ​ ​ ​ Proceeds from issuance of common stock, net (includes $ 1,794 in aggregate gross proceeds from related parties) ​ 16,405 ​ — ​ — Proceeds from issuance of pre-funded warrants, net (includes $ 1,769 in aggregate gross proceeds from related parties) ​ 5,031 ​ — ​ — Proceeds from issuance of common warrants (includes $ 1,472 in aggregate gross proceeds from related parties) ​ 8,934 ​ — ​ — Proceeds from the exercise of common stock warrants ​ ​ 18,590 ​ ​ — ​ — Proceeds from issuance of common stock in connection with at-the-market offering, net ​ ​ — ​ ​ 7,843 ​ ​ — Proceeds from exercise of common stock options ​ 68 ​ 12 ​ — Net cash provided by financing activities ​ 49,028 ​ 7,855 ​ 0 Net decrease in cash and cash equivalents ​ ( 3,880 ) ​ ( 539 ) ​ ( 50,299 ) Cash and cash equivalents at beginning of the period ​ 12,620 ​ 13,159 ​ 63,458 Cash and cash equivalents at end of the period ​ $ 8,740 ​ $ 12,620 ​ $ 13,159 Supplemental disclosures of cash flow information ​ ​ ​ Reclassification of common stock warrant liability into additional paid-in capital upon exercise of common stock warrants ​ $ 13,401 ​ $ — ​ $ — ​ The accompanying notes are an integral part of these consolidated financial statements. 87 Table of Contents CORVUS PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization Corvus Pharmaceuticals, Inc. (“Corvus” or the “Company”) was incorporated in Delaware on January 27, 2014 and commenced operations in November 2014. Corvus is a clinical-stage biopharmaceutical company. The Company’s operations are located in South San Francisco, California. Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Corvus Biopharmaceuticals, Ltd. and Corvus Hong Kong Limited. All intercompany accounts and transactions have been eliminated from the consolidated financial statements. Initial Public Offering On March 22, 2016, the Company’s registration statement on Form S-1 (File No. 333-208850) relating to its initial public offering (“IPO”) of its common stock was declared effective by the Securities and Exchange Commission (“SEC”) and the shares of its common stock began trading on the Nasdaq Global Market on March 23, 2016. The public offering price of the shares sold in the IPO was $ 15.00 per share. The IPO closed on March 29, 2016, pursuant to which the Company sold 4,700,000 shares of its common stock. On April 26, 2016, the Company sold an additional 502,618 shares of its common stock to the underwriters upon partial exercise of their over-allotment option, at the initial offering price of $ 15.00 per share. The Company received aggregate net proceeds of approximately $ 70.6 million, after underwriting discounts, commissions and offering expenses. Immediately prior to the consummation of the IPO, all outstanding shares of convertible preferred stock were converted into common stock. Follow-on Public Offering In March 2018, the Company completed a follow-on public offering in which the Company sold 8,117,647 shares of common stock at a price of $ 8.50 per share, which included 1,058,823 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock. The aggregate net proceeds received by the Company from the offering were approximately $ 64.9 million, net of underwriting discounts and commissions and offering expenses payable by the Company. ​ In February 2021, the Company completed a follow-on public offering in which the Company sold 9,783,660 shares of common stock at a price of $ 3.50 per share, which included 1,212,231 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock. The aggregate net proceeds received by the Company from the offering were approximately $ 32.0 million, net of underwriting discounts and commissions and offering expenses. ​ Registered Direct Offering On May 6, 2024, the Company completed a registered direct offering which resulted in gross proceeds of approximately $ 30.6 million. The financing consisted of the sale of 13,512,699 shares of common stock and accompanying common stock warrants to purchase 13,078,509 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7312 per share, and the sale of pre-funded warrants to purchase 4,144,085 shares of common stock and accompanying common warrants to purchase 4,010,927 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7311 per share. The common warrants have an exercise price of $ 3.50 per share of common stock (or $ 3.4999 per pre-funded warrant in lieu thereof), are exercisable at any time after the date of issuance, subject to certain ownership limitations, and expire on June 30, 2025. The pre-funded warrants have an exercise price of $ 0.0001 and are exercisable any time after the date of the issuance, subject to certain 88 Table of Contents ownership limitations. During the year ended December 31, 2024, 5,311,198 of common stock warrants were exercised, resulting in aggregate proceeds of approximately $ 18.6 million received by the Company. Liquidity The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations. Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of soquelitinib, ciforadenant and mupadolimab. The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of soquelitinib, ciforadenant and mupadolimab, as well as product candidates under the Company’s other development programs. These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining regulatory approvals, manufacturing and supply, sales and marketing and general operations. In addition, other unanticipated costs may arise. Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of soquelitinib, ciforadenant and mupadolimab or any other product candidates. The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 397.0 million as of December 31, 2024. To date, none of the Company’s product candidates have been approved for sale and therefore the Company has not generated any revenue from sales of commercial products. Management expects operating losses to continue for the foreseeable future. The Company has funded its operations to date primarily through the sale of redeemable convertible preferred stock and common stock. As of December 31, 2024, the Company had cash, cash equivalents and marketable securities of $ 52.0 million. The Company’s cash, cash equivalents and marketable securities are not sufficient to fund the Company’s planned operations for a period of at least 12 months from the date these consolidated financial statements are issued. To fund the Company's planned operations, the Company will need to raise additional capital. The Company intends to raise additional capital through private and public equity offerings, including its “at-the-market” offering program, debt financings, the potential exercise of common warrants outstanding with an exercise price of $ 3.50 per share and potential future collaboration, license and development agreements. However, there can be no assurance that the Company will be successful in acquiring additional funding at levels sufficient to fund its operations or on terms acceptable to the Company or at all. If the Company is unsuccessful in its efforts to raise additional capital or if sufficient funds on acceptable terms are not available when needed, the Company could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate one or more of its development programs, out-license intellectual property rights to its product candidates and sell unsecured assets, or a combination of the above, any of which may have a material adverse effect on the Company’s business, results of operations, financial condition and/or its ability to fund its obligations on a timely basis or at all. Failure to manage discretionary spending or raise additional capital, as needed, may adversely impact the Company’s ability to achieve its intended business objectives. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of the issuance of these consolidated financial statements. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern. 89 Table of Contents 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s functional and reporting currency is the U.S. dollar, except for its investment in its equity method investee which is the Chinese renminbi (RMB). The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from such estimates. Concentrations of Credit Risk and Other Risks and Uncertainties Substantially all of the Company’s cash and cash equivalents are deposited in accounts with two financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. The Company maintains its cash with an accredited financial institution and accordingly, such funds are subject to minimal credit risk. The Company’s marketable securities consist of investments in U.S. Treasury securities and U.S. government agency securities, which can be subject to certain credit risks. However, the Company mitigates the risks by investing in high-grade instruments, limiting its exposure to any one issuer, and monitoring the ongoing creditworthiness of the financial institutions and issuers. The Company has not experienced any losses on its deposits of cash, cash equivalents or marketable securities. The Company is subject to a number of risks similar to other early stage biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, its reliance on third parties to conduct its clinical trials, the need to obtain marketing approval for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s product candidates, its right to develop and commercialize its product candidates pursuant to the terms and conditions of the licenses granted to the Company, and protection of proprietary technology. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment, that of the development and commercialization of drugs and antibodies that target critical elements of the immune system. See Note 4 Segments for further details. Cash, Cash Equivalents and Marketable Securities The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. Investments with remaining maturities, at the date of purchase, greater than three months are classified as “available-for-sale” and are carried at fair value with unrealized gains and losses, if any, included as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Interest and realized gains and losses are included in interest income. Realized gains and losses are recognized based on the specific identification model. 90 Table of Contents Fair Value Measurements Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). The carrying amount of the Company’s financial instruments, including cash equivalents, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance included in Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding. Warrants that meet all of the criteria for equity classification are required to be recorded as a component of additional paid-in capital at the time of issuance, or when the conditions for equity classification are met, and are not remeasured. Warrants that do not meet the required criteria for equity classification are classified as liabilities. The Company adjusts such warrants to fair value at each reporting period until the warrants are exercised or expire. Any change in fair value is recognized in the Company’s statements of operations and comprehensive loss. Investments in Equity Securities The Company uses the equity method of accounting for its equity investment if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. The Company’s proportionate share of the net income (loss) resulting from the equity method investment is reported under the line item captioned “loss from equity method investment” in the Consolidated Statements of Operations and Comprehensive Loss and the carrying value of the equity method investments is reported under the line captioned “Investment in Angel” in the Consolidated Balance Sheets. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and the foreign currency translation adjustment as applicable. For equity method investees with a functional currency different than the Company’s reporting currency, the Company follows the guidance under ASC 830-10-15-5, pursuant to which, the foreign currency financial statements of a foreign investee accounted for by the equity method should be translated to the reporting entity's reporting currency. The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified. See Note 6 Equity Method Investment, for further information. 91 Table of Contents Property and Equipment, Net Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets: ​ ​ ​ ​ Laboratory equipment 5 years Computer equipment and purchased software ​ 3 years Leasehold improvements ​ Shorter of asset's useful life or remaining term of lease ​ Maintenance and repairs that do not extend the life or improve the asset are expensed when incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation or amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations. Impairment of Long-Lived Assets The Company regularly reviews the carrying value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the asset or asset group. Should impairment exist, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the projected discounted future net cash flows arising from the asset. All long-lived assets are maintained in the United States of America. Research and Development Expenses The Company records research and development expenses as incurred. The Company accounts for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made. Research and development expenses consist of costs incurred by the Company for the discovery and development of the Company’s product candidates and include: ● employee-related expenses, including salaries, benefits, travel and non-cash stock-based compensation expense; ● external research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, academic and non-profit institutions and consultants; ● costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use; ● license fees; and ● other expenses, which include direct and allocated expenses for laboratory, facilities and other costs. Clinical Trial Accruals Costs for preclinical studies and clinical trial activities are recognized based on an evaluation of the vendors’ progress towards completion of specific tasks. The Company applies significant judgment in developing estimates for clinical trial accruals based on assumptions related to vendors’ progress towards completion. In developing these estimates, management estimates vendors’ progress towards completion using data such as clinical site activations, patient enrollment or information provided to the Company by its vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly 92 Table of Contents from the period in which the services are performed. The Company determines accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion, or the services completed. The Company’s estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Stock-Based Compensation The Company maintains incentive plans under which incentive stock options and nonqualified stock options may be granted to employees and non-employee service providers. The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of ASC 718, “Compensation—Stock Compensation.” For stock options granted to employees, the Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair values. The value of the award is recognized as an expense ratably over the requisite service period. The fair value of stock options is determined using the Black-Scholes option pricing model. Forfeitures are accounted for when they occur. Stock-based compensation expense related to stock options granted to non-employees is recognized based on the fair value of the stock options, determined using the Black-Scholes option pricing model. The awards generally vest over the time period the Company expects to receive service from the non-employee. Income Taxes The Company accounts for income taxes under the asset and liability method. The Company estimates actual current tax exposure together with assessing temporary differences resulting from differences in accounting for reporting purposes and tax purposes for certain items, such as accruals and allowances not currently deductible for tax purposes. These temporary differences result in deferred tax assets and liabilities, which are included in the Company’s balance sheets. In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the Company’s statements of operations and comprehensive loss become deductible expenses, under applicable income tax laws or when net operating loss or credit carryforwards are utilized. Accordingly, realization of the Company’s deferred tax assets is dependent on future taxable income against which these deductions, losses and credits can be utilized. The Company must assess the likelihood that the Company’s deferred tax assets will be recovered from future taxable income and a valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be recovered. The Company applies judgment in the determination of the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Based on the available evidence, the Company is unable, at this time, to support the determination that it is more likely than not that its deferred tax assets will be utilized in the future. Accordingly, the Company recorded a full valuation allowance for all periods presented. The Company intends to maintain a valuation allowance until sufficient evidence exists to support its reversal. The Company recognizes benefits of uncertain tax positions if it is more likely than not such positions will be sustained upon examination based solely on their technical merits as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company recognizes any material interest and penalties related to unrecognized tax benefits in income tax expense. The Company is required to file income tax returns in the U.S. federal jurisdiction. The Company currently is not under examination by the Internal Revenue Service or other jurisdictions for any tax years. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The Company’s elements of other comprehensive loss in any period presented were unrealized gains and losses on available-for-sale marketable securities and cumulative foreign currency translation adjustments. 93 Table of Contents Net Loss per Share Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding and Exchange Warrants outstanding during the period, without consideration of potentially dilutive securities. In accordance with Accounting Standards Codification Topic 260, Earnings Per Share , the Prefunded Warrants are included in the computation of basic net loss per share because the exercise price is negligible and they are fully vested and exercisable at any time after the original issuance date. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares, Prefunded Warrants, and potentially dilutive securities outstanding for the period. Diluted net loss per share is the same as basic net loss per share for all periods presented since the effect of potentially dilutive securities is anti-dilutive given the net loss of the Company. Recent Accounting Pronouncements 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 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. 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 effect of adopting this ASU. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. This ASU requires disclosures to include significant segment expenses that are regularly provided to the CODM, a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this update effective December 31, 2024, on a retrospective basis. Refer to Note 4 Segments for further details. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” As adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis. The Company is currently evaluating the impact of this ASU but does not expect any material impacts upon adoption. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expense. This update requires entities to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. ASU 2024-03 may be applied retrospectively or prospectively. The Company is currently evaluating the impact of ASU 2024-03 on its financial statement presentation and disclosures. ​ 94 Table of Contents 3. Net Loss per Share The following table shows the calculation of net loss per share (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Numerator: ​ ​ ​ ​ Net loss - basic and diluted ​ $ ( 62,293 ) ​ $ ( 27,029 ) ​ $ ( 41,307 ) Denominator: ​ ​ ​ ​ Weighted average common shares and prefunded warrants outstanding used to compute basic and diluted net loss per share ​ 60,985,165 ​ 48,025,274 ​ 46,553,511 Net loss per share, basic and diluted ​ $ ( 1.02 ) ​ $ ( 0.56 ) ​ $ ( 0.89 ) ​ The amounts in the table below were excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Common warrants (1) ​ 11,778,238 — — Outstanding options ​ 11,935,100 9,244,150 7,006,250 Total shares of common stock equivalents ​ 23,713,338 9,244,150 7,006,250 ​ ​ ​ ​ (1) Based on the treasury stock method, such common warrants that are in-the-money should be included in the calculation of diluted earnings per share (“EPS”) if the impact is not anti-dilutive. Therefore, as the Company was in a net loss position for the year ended December 31, 2024 and other expense from the revaluation of the common warrants was $ 33.4 million for the year ended December 31, 2024, respectively, the impact of including the common warrants in calculating diluted EPS would be antidilutive and the Company has excluded the common warrants from the calculation of diluted net loss per share. ​ 4. Segments The Company views its operations and manages its business in one operating segment, that of the development and commercialization of drugs and antibodies that target critical elements of the immune system. The Company's CODM is made up of the Chief Executive Officer and Chief Financial Officer. The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net loss that is reported on the consolidated statement of operations and comprehensive loss. The measure of segment assets is reported on the balance sheet as total consolidated assets. Managing and allocating resources on a consolidated basis enables the CODM to assess the overall level of resources available and how to best deploy these resources across functions and programs that are in line with the Company's long-term company-wide strategic goals. 95 Table of Contents The following table presents reportable segment net loss, including significant expense categories, attributable to the Company's reportable segment for the years ended December 31, 2024, 2023 and 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 ​ 2022 Compensation and benefits, excluding stock-based compensation ​ $ 7,438 $ 6,737 $ 7,239 Stock-based compensation ​ ​ 3,003 ​ 2,148 ​ 2,691 Drug manufacturing ​ ​ 2,485 ​ 2,195 ​ 11,213 Clinical trial ​ ​ 4,148 ​ 2,716 ​ 3,159 Outside general and administrative ​ ​ 3,101 ​ 2,703 ​ 2,978 Facilities and insurance ​ ​ 3,219 ​ 3,160 ​ 3,342 Other segment items (1) ​ ​ 4,154 ​ 3,748 ​ 1,943 Total segment expense ​ ​ 27,548 ​ 23,407 ​ 32,565 Non-operating income and expense, net ​ ​ 34,745 ​ 3,622 ​ 8,742 Net loss ​ $ 62,293 $ 27,029 $ 41,307 ​ (1) Includes consulting, non-clinical research and laboratory supplies. ​ ​ ​ ​ ​ ​ 5. Fair Value Measurements Financial assets and liabilities are measured and recorded at fair value. The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs: ● Level 1—Quoted prices in active markets for identical assets or liabilities ● Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly ● Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability There have been no transfers of assets and liabilities between levels of hierarchy. The Company’s Level 2 investments are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default projections based on historical data and other observable inputs. 96 Table of Contents Financial Assets The following tables present information as of December 31, 2024 and 2023 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ Fair Value Measured Using ​ Total ​ (Level 1) (Level 2) (Level 3) Balance Assets ​ ​ ​ ​ Cash equivalents ​ $ 8,333 ​ $ — ​ $ — ​ $ 8,333 Marketable securities ​ 37,764 ​ 5,460 ​ — ​ 43,224 ​ ​ $ 46,097 ​ $ 5,460 ​ $ — ​ $ 51,557 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Fair Value Measured Using ​ Total ​ (Level 1) (Level 2) (Level 3) Balance Assets ​ ​ ​ ​ Cash equivalents ​ $ 12,280 ​ $ — ​ $ — ​ $ 12,280 Marketable securities ​ ​ 10,356 ​ 4,173 ​ — ​ 14,529 ​ ​ $ 22,636 ​ $ 4,173 ​ $ — ​ $ 26,809 ​ As of December 31, 2024, marketable securities had a maximum remaining maturity of less than two years . As of December 31, 2024 and 2023, the fair value of available for sale marketable securities by type of security were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ ​ Cost ​ Gains ​ Losses ​ Value U.S. Treasury securities ​ $ 37,688 ​ $ 76 ​ $ — ​ $ 37,764 U.S. Government agency securities ​ ​ 5,456 ​ ​ 4 ​ ​ — ​ ​ 5,460 ​ ​ $ 43,144 ​ $ 80 ​ $ — ​ $ 43,224 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ ​ Cost ​ Gains ​ Losses ​ Value U.S. Treasury securities ​ $ 10,348 ​ $ 8 ​ $ — ​ $ 10,356 U.S. Government agency securities ​ ​ 4,166 ​ ​ 7 ​ ​ — ​ ​ 4,173 ​ ​ $ 14,514 ​ $ 15 ​ $ — ​ $ 14,529 ​ Financial Liabilities ​ The following tables present information as of December 31, 2024 about the Company’s liabilities that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ Fair Value Measured Using ​ Total ​ (Level 1) (Level 2) (Level 3) Balance Warrant liability ​ $ — ​ $ — ​ $ 28,910 ​ $ 28,910 ​ The Company had no liabilities measured at fair value on a recurring basis as of December 31, 2023. ​ 97 Table of Contents During the year ended December 31, 2024, the changes in the Company’s warrant liability were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrants Warrant liability balance as of December 31, 2023 ​ $ — Issuance of warrants ​ ​ 8,934 Change in fair value ​ ​ 33,377 Exercise of warrants ​ ​ ( 13,401 ) Warrant liability balance as of December 31, 2024 ​ $ 28,910 ​ The Company uses the Black-Scholes pricing model to determine the fair value of its warrant liabilities using Level 3 inputs. Inputs used to determine estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock. The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants. The key inputs into valuation models used to estimate the fair value of the warrant liabilities as of May 6, 2024, the issuance date, and as of December 31, 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 6, ​ ​ ​ ​ ​ ​ 2024 ​ ​ December 31, ​ ​ (Date of ​ ​ 2024 ​ ​ Issuance) ​ Risk-free interest rate ​ 4.2 % ​ ​ 5.1 % Expected volatility ​ 106.6 % ​ ​ 104.4 % Expected term (in years) ​ 0.50 ​ ​ ​ 1.15 ​ Share price $ 5.35 ​ ​ $ 1.91 ​ ​ ​ ​ ​ ​ 6. Equity Method Investment In August 2020, the Company established Angel Pharmaceuticals Co. Ltd. (“Angel”), a wholly-owned corporate venture in the People’s Republic of China (“China”) designed to develop, manufacture, and commercialize soquelitinib, ciforadenant and mupadolimab compounds for distribution within the countries of China, Taiwan, Macao, and Hong Kong (collectively, the “Territories”) based on intellectual property licenses to be contributed to Angel by the Company. In October 2020, Angel raised financing from third-party investors, the licenses were entered into and the Company’s ownership interest was reduced to 53.2 %. Under the license agreements, the Company is required to provide manufacturing supply services for future supply of drug products for use in clinical trials, research and development, operational support, and participate in the joint steering committee which oversees the development and commercialization of the compounds. Angel is not required to make any payments to the Company regarding the licensed compounds or the additional services outlined in the agreement. Pursuant to the terms of the agreement, during ta 7 -year exclusive grant back period, Angel grants to Corvus an exclusive, fully paid-up and sublicensable license for sole and jointly owned IP. After the 7 -year exclusive grant back period, the licenses for sole and jointly owned IP that Angel grants to the Company will be non-exclusive, fully paid, and sublicensable. As a result of the financing, the Company reassessed its interest in Angel and determined that while Angel is a Variable Interest Entity (“VIE”), the Company is not considered the primary beneficiary of such VIE since Corvus does not have the power, through voting or similar rights and the license agreements, to direct the activities of Angel that most significantly impact Angel’s economic performance. Further, the Company determined that as it has a significant influence over Angel, and, therefore, it shall account for its investment in Angel using the equity method starting in October 2020, the date it lost control over Angel. At the date of loss of control, the Company derecognized all of 98 Table of Contents Angel’s assets and liabilities from its balance sheet, recognized the retained equity interest at its fair value of $ 37.5 million, and recognized a gain of $ 37.5 million, which is included in gain on deconsolidation of Angel Pharmaceuticals on the consolidated statement of operations for the year ended December 31, 2020. As of December 31, 2024, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel’s Employee Stock Ownership Plan. The Company recognized its share of losses in Angel for the total amount of $ 3.2 million, $ 5.3 million and $ 10.0 million as loss from equity method investment on the consolidated statement of operations for the years ended December 31, 2024, 2023 and 2022, respectively. Since inception through December 31, 2024, Angel has not recorded any revenue. The Company evaluates its equity method investment in Angel for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. For further discussion of the Company’s impairment policy, see Note 2. Summary Financial Information Summary financial information for Angel is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ As of Balance Sheet Data December 31, 2024 ​ December 31, 2023 ​ (in thousands) Current assets ​ $ 12,957 ​ $ 17,628 Non-current assets ​ 1,316 ​ 1,427 Current liabilities ​ 1,202 ​ 1,725 Non-current liabilities ​ 593 ​ 648 Stockholders' equity ​ ​ 12,478 ​ ​ 16,682 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Statement of Operations Data 2024 ​ 2023 ​ 2022 ​ ​ (in thousands) ​ Revenue ​ $ — ​ $ — ​ $ — ​ Gross Profit ​ — ​ — ​ — ​ Net income (loss) ​ ​ ( 3,783 ) ​ ​ ( 6,213 ) ​ ​ ( 11,846 ) ​ Share of loss from investments accounted for using the equity method ​ ( 3,197 ) ​ ( 5,284 ) ​ ( 10,005 ) ​ ​ ​ 7. License and Collaboration Agreements Scripps Licensing Agreement In December 2014, the Company entered into a license agreement with The Scripps Research Institute (“Scripps”), pursuant to which it was granted a non-exclusive, world-wide license for all fields of use under Scripps’ rights in certain know-how and technology related to a mouse hybridoma clone expressing an anti-human CD73 antibody, and to progeny, mutants or unmodified derivatives of such hybridoma and any antibodies expressed by such hybridoma, from which we developed CPI-006. Scripps also granted the Company the right to grant sublicenses in conjunction with other proprietary rights the Company holds, or to others collaborating with or performing services for the Company. Under this license agreement, Scripps has agreed not to grant any additional commercial licenses with respect to such materials, other than march-in rights granted to the U.S. government. Upon execution of the agreement, the Company made a one-time cash payment to Scripps of $ 10,000 in 2015 and is also obligated to pay a minimum annual fee to Scripps of $ 25,000 . The one-time cash payment was recorded as research and development expense as technological feasibility of the asset had not been established and there was no alternative future use. A minimum annual fee payment is due on each anniversary of the effective date of the agreement 99 Table of Contents for the term of the agreement. The Company is also required to make performance-based cash payments upon successful completion of clinical and sales milestones. The aggregate potential milestone payments are $ 2.5 million. The Company is also required to pay royalties on net sales of licensed products (including CPI-006) sold by it, its affiliates and its sublicensees at a rate in the low-single digits. In addition, should the Company sublicense the rights licensed under the agreement, it has agreed to pay a percentage of sublicense revenue received at specified rates that start at double digit percentages and decrease to single digit percentages based on the elapsed time from the effective date of the agreement and the time of entry into such sublicense. To date, no milestone payments have been made. The Company’s license agreement with Scripps will terminate upon expiration of its obligation to pay royalties to Scripps under the license agreement. The Company’s license agreement with Scripps is terminable by the consent of the parties, at will by the Company upon providing 90 days written notice to Scripps, or by Scripps for certain material breaches, or if the Company undergoes a bankruptcy event. In addition, Scripps may terminate the license on a product-by-product basis, or the entire agreement, if the Company fails to meet specified diligence obligations related to the development and commercialization of licensed products. Scripps may also terminate the agreement after the third anniversary of the effective date of the agreement if it reasonably believes, based on reports the Company provides to Scripps, that the Company has not used commercially reasonable efforts as required under the agreement, subject to a specified notice and cure period. Vernalis Licensing Agreement In February 2015, the Company entered into a license agreement with Vernalis (R&D) Limited (“Vernalis”), which was subsequently amended as of November 5, 2015, and, pursuant to which the Company was granted an exclusive, worldwide license under certain patent rights and know-how, including a limited right to grant sublicenses, for all fields of use to develop, manufacture and commercialize products containing certain adenosine receptor antagonists, including ciforadenant. Pursuant to this agreement, the Company made a one-time cash payment to Vernalis in the amount of $ 1.0 million, which was recorded as research and development expense as technological feasibility of the asset had not been established and there was no alternative future use. The Company is also required to make cash milestone payments to Vernalis upon the successful completion of clinical and regulatory milestones for licensed products depending on the indications for which such licensed products are developed and upon achievement of certain sales milestones. In February 2017, the Company made a milestone payment of $ 3.0 million to Vernalis following the expansion of a cohort of patients with renal cell cancer treated with single agent ciforadenant in the Company’s Phase 1/1b clinical trial. During the year ended December 31, 2024, no clinical or regulatory milestones were completed or paid to Vernalis and the aggregate potential milestone payments were approximately $ 220 million for all indications as of December 31, 2024. The Company has also agreed to pay Vernalis tiered incremental royalties based on the annual net sales of licensed products containing ciforadenant on a product-by-product and country-by-country basis, subject to certain offsets and reductions. The tiered royalty rates for products containing ciforadenant range from the mid-single digits up to the low-double digits on a country-by-country net sales basis. The royalties on other licensed products that do not include ciforadenant also increase with the amount of net sales on a product-by-product and country-by-country basis and range from the low-single digits up to the mid-single digits on a country-by-country net sales basis. The Company is also obligated to pay to Vernalis certain sales milestones as indicated above when worldwide net sales reach specified levels over an agreed upon time period. The agreement will expire on a product-by-product and country-by-country basis upon the expiration of the Company’s payment obligations to Vernalis in respect of a particular product and country. Both parties have the right to terminate the agreement for an uncured material breach by the other party. The Company may also terminate the agreement at its convenience by providing 90 days written notice, provided that the Company has not received notice of its own default under the agreement at the time the Company exercises such termination right. Vernalis may also terminate the agreement if the Company challenges a licensed patent or undergoes a bankruptcy event. 100 Table of Contents Monash License Agreement In April 2017, the Company entered into a license agreement with Monash University (“Monash”), pursuant to which the Company was granted an exclusive, sublicensable worldwide license under certain know-how, patent rights and other intellectual property rights controlled by Monash to research, develop, and commercialize certain antibodies directed to CXCR2 for the treatment of human diseases. Upon execution of the agreement, the Company made a one-time cash payment to Monash of $ 275,000 and reimbursed Monash for certain patent prosecution costs incurred prior to execution of the agreement. The Company recorded these payments as research and development expenses for the year ended December 31, 2017. The Company is also obligated to pay an annual license maintenance fee to Monash of $ 25,000 until a certain development milestone is met with respect to the licensed product, after which no further maintenance fee will be due. The Company is also required to make development and sales milestone payments to Monash with respect to the licensed products. During the year ended December 31, 2024, no development or sales milestones were completed or paid to Monash and the aggregate potential milestones were $ 45.1 million as of December 31, 2024. The Company is also required to pay to Monash tiered royalties on net sales of licensed products sold by it, its affiliates and its sublicensees at a rate ranging in the low-single digits. In addition, should the Company sublicense its rights under the agreement, the Company has agreed to pay a percentage of sublicense revenue received at specified rates that are currently at low double digit percentages and decrease to single digit percentages based on the achievement of development milestones. The term of the Company’s agreement with Monash continues until the expiration of its obligation to pay royalties to Monash thereunder. The license agreement is terminable at will by the Company upon providing 30 days written notice to Monash, or by either party for material breaches by the other party. In addition, Monash may terminate the entire agreement or convert the license to a non-exclusive license if the Company has materially breached its obligation to use commercially reasonable efforts to develop and commercialize a licensed product, subject to a specified notice and cure mechanism. 8. Balance Sheet Components (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 Prepaid and Other Current Assets ​ ​ ​ ​ ​ ​ Interest receivable ​ $ 141 ​ $ 37 Prepaid research and development manufacturing expenses ​ ​ 1,209 ​ ​ 149 Prepaid facility expenses ​ ​ 308 ​ ​ 196 Prepaid insurance ​ ​ 162 ​ ​ 179 Other ​ 548 ​ 220 ​ ​ $ 2,368 ​ $ 781 Property and Equipment ​ ​ ​ ​ ​ ​ Laboratory equipment ​ $ 2,522 ​ $ 2,678 Computer equipment and purchased software ​ 171 ​ 171 Leasehold improvements ​ 2,084 ​ 2,084 ​ ​ 4,777 ​ 4,933 Less: accumulated depreciation and amortization ​ ( 4,626 ) ​ ( 4,697 ) ​ ​ $ 151 ​ $ 236 Accrued and Other Liabilities ​ ​ ​ ​ ​ ​ Accrued clinical trial expense ​ $ 1,672 ​ $ 2,302 Accrued manufacturing expense ​ 679 ​ 675 Personnel related ​ 820 ​ 684 Accrued legal and accounting ​ ​ 265 ​ ​ 64 Other ​ 289 ​ 245 ​ ​ $ 3,725 ​ $ 3,970 ​ ​ ​ ​ 101 Table of Contents During the years ended December 31, 2024, 2023, and 2022, the Company recorded $ 0.1 million, $ 0.2 million and $ 0.4 million in depreciation expense, respectively. ​ 9 . Warrants ​ On May 6, 2024, the Company completed a registered direct offering in which the Company sold an aggregate of 13,512,699 shares of common stock and common warrants to purchase up to 13,078,509 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7312 per share and common warrant, and pre-funded warrants to purchase up to 4,144,085 shares of common stock and common warrants to purchase up to 4,010,927 shares of common stock (or pre-funded warrants in lieu thereof), at a combined offering price of $ 1.7311 per share underlying each pre-funded warrant and common warrant, which equals the offering price per share and common warrant less the $ 0.0001 exercise price per share of the pre-funded warrants. The pre-funded warrants have an exercise price per share of common stock equal to $ 0.0001 per share. The exercise price and the number of shares of common stock issuable upon exercise of the pre-funded warrants are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. The pre-funded warrants are exercisable at any time after the date of issuance. In accordance with accounting guidance discussed in Note 2, the Company recorded $ 5.0 million to additional paid-in capital upon issuance of the pre-funded warrants on May 6, 2024. As of December 31, 2024, none of the pre-funded warrants have been exercised. The common warrants have an exercise price per share of common stock equal to $ 3.50 per share (or $ 3.4999 per pre-funded warrant). The exercise price and the number of shares of common stock (or pre-funded warrants in lieu thereof) issuable upon exercise of the common warrants are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. The common warrants are exercisable at any time after the date of issuance and will expire on June 30, 2025. In accordance with accounting guidance discussed in Note 2, the Company recorded $ 8.9 million to warrant liability upon issuance of the common warrants on May 6, 2024 and recorded a change in fair value of warrant liability of $ 33.4 million to other income in its consolidated statement of operations and comprehensive loss for the year ended December 31, 2024, respectively. The value of the common warrants upon issuance on May 6, 2024 has been included within the consolidated statement of cash flows from financing activities. During the year ended December 31, 2024, 5,311,198 of the common warrants were exercised, resulting in proceeds of $ 18.6 million. As of December 31, 2024, 11,778,238 of the common warrants are outstanding and the Company’s warrant liability was $ 28.9 million. ​ 10. Common Stock As of December 31, 2024, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock. Each share of common stock is entitled to one vote . Common stockholders are entitled to dividends if and when declared by the board of directors. As of December 31, 2024, no dividends on common stock had been declared. On August 6, 2024, the Company entered into an open market sale agreement (the “2024 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s common stock, from time-to-time, with aggregate gross sales proceeds of up to $ 100.0 million, through an at-the-market equity offering program under which Jefferies will act as its sales agent. The issuance and sale of shares of common stock by the Company pursuant to the 2024 Sales Agreement are deemed an “at-the-market” offering under the Securities Act of 1933, as amended. Jefferies is entitled to compensation for its services up to 3.0 % of the gross proceeds of any shares of common stock sold through Jefferies under the 2024 Sales Agreement. During the year ended December 31, 2024, the Company did no t sell any shares of common stock under its at-the-market offering program. As of December 31, 2024, $ 100.0 million remained available for sale under the 2024 Sales Agreement. 102 Table of Contents The Company has reserved shares of common stock, for issuance as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 2022 Pre-funded warrants 4,144,085 ​ — ​ — Outstanding common warrants ​ 11,778,238 ​ — ​ — Shares available for future option grants ​ 2,850,693 ​ 3,617,943 ​ 4,017,011 Outstanding options 11,935,100 ​ 9,244,150 ​ 7,006,250 Shares reserved for employee stock purchase plan 400,000 ​ 400,000 ​ 400,000 Total 31,108,116 ​ 13,262,093 ​ 11,423,261 ​ ​ 11. Stock Option Plans In February 2014, the Company adopted the 2014 Equity Incentive Plan (the “2014 Plan”), which was subsequently amended in November 2014, July 2015 and September 2015, under which it granted incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”). Terms of stock agreements, including vesting requirements, are determined by the board of directors or a committee authorized by the board of directors, subject to the provisions of the 2014 Plan. In general, awards granted by the Company vest over four years and have maximum exercise term of 10 years . The 2014 Plan provides that grants must be at an exercise price of 100 % of fair market value of the Company’s common stock as determined by the board of directors on the date of the grant. In connection with the consummation of the IPO in March 2016, the 2016 Equity Incentive Award Plan (the “2016 Plan”) became effective. Under the 2016 Plan, incentive stock options, non-statutory stock options, stock purchase rights and other stock-based awards may be granted. Terms of stock agreements, including vesting requirements, are determined by the board of directors or a committee authorized by the board of directors, subject to the provisions of the 2016 Plan. In general, awards granted by the Company vest over four years and have a maximum exercise term of 10 years . The 2016 Plan provides that grants must be at an exercise price of 100 % of fair market value of the Company’s common stock as determined by the board of directors on the date of the grant. In conjunction with adopting the 2016 Plan, the 2014 Plan was terminated and no further awards will be granted under the 2014 Plan. Options outstanding under the 2014 Plan as of the effective date of the 2016 Plan that are forfeited or lapse unexercised may be re-issued under the 2016 Plan, up to a maximum of 1,136,229 shares. Activity under the Company’s stock option plans is set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ ​ ​ Weighted ‑ ​ ​ Shares ​ ​ ​ Average ​ ​ Available ​ Number of ​ Exercise ​ for Grant Options Price Balance at December 31, 2023 3,617,943 9,244,150 ​ $ 4.17 Additional shares authorized 1,961,000 — ​ — Options granted ( 2,807,000 ) 2,807,000 ​ 4.45 Options exercised — ( 37,300 ) ​ 1.87 Options forfeited 78,750 ( 78,750 ) ​ 1.84 Balance at December 31, 2024 2,850,693 11,935,100 ​ $ 4.26 ​ ​ ​ The weighted average grant date fair value of options granted for the years ended December 31, 2024, 2023 and 2022, was $ 3.60 , $ 1.12 and $ 0.69 , respectively. 103 Table of Contents Options outstanding that had vested or were expected to vest at December 31, 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Aggregate ​ ​ ​ ​ Weighted ​ Remaining ​ Intrinsic ​ ​ Number ​ Average ​ Contractual ​ Value ​ ​ of shares ​ Exercise Price ​ Life (years) ​ (in thousands) Vested 7,171,370 ​ $ 4.98 5.55 ​ $ 15,294 Expected to vest 4,763,730 ​ $ 3.19 9.13 ​ $ 10,348 ​ In the table above, aggregate intrinsic value represents the difference between the exercise price of the options to purchase common stock and the fair value of the Company’s common stock of $ 5.35 per share as of December 31, 2024. The aggregate intrinsic value of stock options exercised in the years ended December 31, 2024, 2023 and 2022, was less than $ 0.1 million, $ 1.0 million and $ 0.0 million, respectively. The total fair value of options that vested in the year ended December 31, 2024, 2023 and 2022, was $ 2.6 million, $ 2.1 million, and $ 2.8 million, respectively. 12. Stock-Based Compensation The Company’s results of operations include expenses relating to stock-based awards as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Research and development ​ $ 1,016 ​ $ 755 ​ $ 1,039 General and administrative ​ 1,987 ​ 1,392 ​ 1,653 Total ​ $ 3,003 ​ $ 2,147 ​ $ 2,692 ​ Valuation Assumptions The Company estimated the fair value of employee stock options using the Black-Scholes valuation model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options were estimated using the following assumptions for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 2022 ​ Risk-free interest rate ​ 4.3 % 3.9 % 3.0 % Expected volatility ​ 102.3 % 97.1 % 83.8 % Expected term (in years) ​ 5.8 ​ 5.7 ​ 5.5 Expected dividend yield ​ 0 % 0 % 0 % ​ Risk-free Interest Rate: The risk-free interest rate is estimated based on the U.S. Treasury securities with maturity dates commensurate with the expected term of the equity award. Volatility: The expected volatility in 2024 and 2023 was determined based on the Company’s historical stock price volatility. In 2022, the Company utilized the average historical stock price volatility of a peer group of publicly traded companies to represent its expected future stock price volatility, due to the insufficient trading history of the Company’s common stock. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size and financial leverage of potential comparable companies. For each grant, the Company measured historical volatility over a period equivalent to the expected term. 104 Table of Contents Expected Term: The Company uses the simplified method prescribed in the ASC 718, Compensation—Stock Compensation, to calculate the expected term of options granted to employees and directors. Expected Dividends: The Company has not paid and does not anticipate paying any dividends in the near future. At December 31, 2024 and 2023, the unrecognized compensation expense associated with respect to options granted to employees was $ 11.8 million and $ 4.5 million, respectively, and is expected to be recognized on a straight-line basis over 2.71 and 2.27 years, respectively. ​ ​ 13. Income Taxes The components of loss before income tax is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 2022 Domestic ​ $ ( 62,293 ) ​ $ ( 27,029 ) ​ $ ( 41,307 ) Foreign ​ — ​ — ​ — ​ ​ $ ( 62,293 ) ​ $ ( 27,029 ) ​ $ ( 41,307 ) ​ During the years ended December 31, 2024, 2023 and 2022, the Company recorded no income tax benefits for the net operating losses (“NOLs”) incurred due to the uncertainty of realizing a benefit from those items. A reconciliation of the Company’s effective tax rate to the U.S. Federal statutory rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 2022 Federal tax benefit at statutory rate ​ 21 % 21 % 21 % State tax, net of Federal benefit ​ 7 % 8 % 8 % Change in valuation allowance ​ ( 12 ) % ( 25 ) % ( 22 ) % Research and development tax credits ​ 2 % 3 % 2 % Share based Compensation ​ — % ( 1 ) % ( 1 ) % 162(m) covered employees compensation limitation ​ ( 1 ) % — % — ​ FIN48 Reserve ​ — % ( 1 ) % — % Investment in Angel ​ ( 1 ) % ( 5 ) % ( 7 ) ​ Warrant liability ​ ( 15 ) % — % — % Other ​ ( 1 ) % — ​ ( 1 ) ​ Effective income tax rate ​ 0 % 0 % 0 % ​ The effective tax rate is different from the federal statutory tax rate primarily due to a foreign rate differential and a valuation allowance against deferred tax assets as a result of the Company’s history of losses. 105 Table of Contents The principal components of the Company’s net deferred tax assets are as follows (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 2022 Deferred tax assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 64,080 ​ $ 59,314 ​ $ 56,030 Tax credit carryforwards ​ 11,953 ​ 10,752 ​ 9,888 Capitalized tax assets ​ 118 ​ 138 ​ 155 Accruals ​ 135 ​ 116 ​ 124 Stock compensation ​ ​ 5,898 ​ ​ 5,883 ​ ​ 5,487 Operating lease liability ​ ​ 314 ​ ​ 384 ​ ​ 728 IRC 174 capitalization ​ ​ 8,387 ​ ​ 6,713 ​ ​ 4,518 Other ​ — ​ — ​ 21 Total deferred tax assets ​ $ 90,885 ​ $ 83,300 ​ $ 76,951 Deferred tax liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use asset ​ $ ( 330 ) ​ $ ( 322 ) ​ $ ( 620 ) Other ​ ​ ( 22 ) ​ ​ — ​ ​ — Valuation allowance ​ ( 90,533 ) ​ ( 82,978 ) ​ ( 76,331 ) Net deferred tax assets ​ $ — ​ $ — ​ $ — ​ The Company recorded a valuation allowance against its deferred tax assets at December 31, 2024, 2023 and 2022 because Company management believed that it was more likely than not that these assets would not be fully realized in the future. The valuation allowance increased by approximately $ 7.6 million, $ 6.6 million and $ 9.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Changes in the valuation allowance for deferred tax assets relate primarily to the increase in the Company’s net operating loss carryforward. As of December 31, 2024, the Company had federal NOL carryforwards of approximately $ 243.8 million and state NOL carryforwards of approximately $ 317.8 million which are available to reduce future taxable income. The NOLs will begin to expire in 2034 , if not utilized. Utilization of the net operating loss carryforwards are subject to various limitations due to the ownership change limitations provided by Internal Revenue Code (“IRC”) Section 382 and similar state provisions. As of December 31, 2024, the Company also had $ 10.2 million of federal research and development tax credit, $ 0.5 million of federal orphan drug credit, and $ 5.4 million of state research and development tax credit carryforwards available to reduce future income taxes. The federal research and development tax credits will begin to expire 2036 , if not utilized. The state research and development tax credits have no expiration date. U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. This excess totaled approximately $ 12.5 million as of December 31, 2024, which will be indefinitely reinvested; deferred income taxes have not been provided on such investments in foreign subsidiaries. As of December 31, 2024, the Company had unrecognized tax benefits (“UTBs”) of approximately $ 13.1 million. All of the deferred tax assets associated with these UTBs are fully offset by a valuation allowance. The following table summarizes the activity related to UTBs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 2022 Unrecognized tax benefits beginning of the period ​ $ 12,823 ​ $ 12,720 ​ $ 12,504 Decrease related to the prior year ​ 17 ​ ( 119 ) ​ — Increased related to the current year ​ 296 ​ 222 ​ 216 Unrecognized tax benefits, end of the period ​ $ 13,136 ​ $ 12,823 ​ $ 12,720 ​ The Company follows the provisions of ASC 740, Accounting for Income Taxes, and the accounting guidance 106 Table of Contents related to accounting for uncertainty in income taxes. The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities. None of the Company’s unrecognized tax benefits that, if recognized, would affect its effective tax rate. The Company does not anticipate the total amounts of unrecognized tax benefits will significantly increase or decrease in the next 12 months. The Company will recognize both accrued interest and penalties related to unrecognized benefits in income tax expense. Management determined that no accrual for interest or penalties was required as of December 31, 2024, 2023 and 2022. The Company currently has no federal or state tax examinations in progress nor has it had any federal or state examinations since inception. As a result of the Company’s net operating loss carryforwards, all of its tax years are subject to federal, state and foreign tax examinations. 107 Table of Contents 14. Facility Leases As of December 31, 2024, the Company had entered into two operating lease agreements and records rent expense on a straight-line basis over the effective term of each lease, including any free rent periods and incentives. As the interest rate implicit in lease arrangements is typically not readily available, in calculating the present value of the lease payments, the Company has utilized its incremental borrowing rate, which is determined based on the prevailing market rates for collateralized debt with maturity dates commensurate with the term of its leases. Burlingame Lease In January 2015, the Company signed an initial operating lease (the “Burlingame Lease”), effective February 1, 2015 for 8,138 square feet of office and laboratory space with a one year term located at 863 Mitten Road, Burlingame, California. Between January 2015 and September 2021, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the Burlingame Lease to January 2025. The lease agreement includes annual rent escalations. Under the Burlingame Lease and subsequent amendments, the landlord provided approximately $ 1.9 million in free rent and lease incentives. The Burlingame Lease is a net lease, as the non-lease components (i.e. common area maintenance) are paid separately from rent based on actual costs incurred. Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred. As of December 31, 2024, all noncancelable rent payments under the Burlingame Lease had been made and no right-of-use asset under this operating lease remained. As of December 31, 2023, the right-of-use asset under operating lease was $ 1.1 million. The elements of lease expense under the Burlingame Lease were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Statements of operations and ​ December 31, ​ ​ comprehensive loss location 2024 2023 2022 ​ Costs of operating lease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease costs ​ Research and development, General and administrative ​ $ 1,273 ​ $ 1,224 ​ $ 1,051 ​ Costs of non-lease components (previously common area maintenance) ​ Research and development, General and administrative ​ ​ 471 ​ ​ 420 ​ ​ 351 ​ Total operating lease cost ​ ​ ​ $ 1,744 ​ $ 1,644 ​ $ 1,402 ​ Other Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating cash flows used for operating lease ​ ​ ​ $ 1,892 ​ $ 1,839 ​ $ 1,695 ​ Remaining lease term ​ ​ ​ 0.1 years ​ 1.1 years ​ 2.1 years ​ Discount rate ​ ​ ​ 8.0 % ​ 8.0 % ​ 8.0 % ​ ​ As of December 31, 2023, minimum rental commitments under the Burlingame Lease were as follows (in thousands): ​ ​ ​ ​ Year Ended December 31 (in thousands) ​ ​ 2024 ​ $ 1,434 Total lease payments ​ 1,434 Less: imputed interest ​ ​ ( 60 ) Total $ 1,374 ​ South San Francisco Lease On October 22, 2024, the Company entered into a sub-sublease agreement (the “South San Francisco Lease”), pursuant to which the Company sub-leased approximately 20,916 square feet of office and lab space. The sub-sublease has a term of three years commencing on February 21, 2025 with an option to extend at fair market value for an 108 Table of Contents additional 27 months . The Company’s obligation for the payment of base rent for the Premises begins on the commencement date and will initially be $ 33,833 per month, up to monthly base rent of $ 47,200 during the third year of the sub-sublease. In addition to base rent, the Company is obligated to pay its proportionate share of taxes, insurance and operating expenses. In November 2024, the Company paid the Sublandlord $ 231,235 in prepaid rent, which shall be applied to the monthly base rent and the Company’s proportionate share of additional expenses for the first three months of the term of the sub-sublease. Although the non-cancellable lease term commences on February 1, 2025, for purposes of determining the right-of-use asset balance, in accordance with ASC Topic 842, the Company used November 25, 2024 as the commencement date, the date on which the sublandlord granted the Company access to the premises. The sub-sublease is a net lease, as the non-lease components (i.e. common area maintenance) are paid separately from rent based on actual costs incurred. Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred. As of December 31, 2024, the right-of-use asset under South San Francisco Lease was $ 1.1 million. The elements of lease expense under the South San Francisco Lease were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Statements of operations and ​ December 31, ​ ​ comprehensive loss location 2024 ​ Costs of operating lease ​ ​ ​ ​ ​ ​ Operating lease costs ​ Research and development, General and administrative ​ $ 46 ​ Costs of non-lease components (previously common area maintenance) ​ Research and development, General and administrative ​ ​ — ​ Total operating lease cost ​ ​ ​ $ 46 ​ Other Information ​ ​ ​ ​ ​ Operating cash flows used for operating lease ​ ​ ​ $ 153 ​ Remaining lease term ​ ​ ​ 3 years ​ Discount rate ​ ​ ​ 11.7 % ​ ​ As of December 31, 2024, minimum rental commitments under the South San Francisco Lease were as follows (in thousands): ​ ​ ​ ​ Year Ended December 31 (in thousands) ​ ​ 2025 $ 305 2026 ​ ​ 486 2027 ​ $ 566 Total lease payments ​ 1,357 Less: imputed interest ​ ​ ( 235 ) Total $ 1,122 ​ ​ 15. Commitments and Contingencies In August 2015, the Company entered into an agreement for a line of credit of $ 0.1 million for the purpose of issuing its landlord a letter of credit of $ 0.1 million as a security deposit under the Burlingame Lease. The Company pledged money market funds and marketable securities as collateral for the line of credit. For further discussion of the Company’s facility lease agreement, see Note 14. Pursuant to the Company’s license agreements with each of Vernalis, Scripps and Monash, it has obligations to make future milestone and royalty payments to these parties, respectively. However, because these amounts are 109 Table of Contents contingent, they have not been included on the Company’s balance sheet until probable. For further discussion of the Vernalis, Scripps and Monash licensing agreements, see Note 7. Indemnifications In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware law. There have been no claims to date and the Company has a directors and officers insurance policy that may enable it to recover a portion of any amounts paid for future claims. Legal Proceedings The Company is not a party to any material legal proceedings. 16. Related Party Transactions On May 6, 2024, the Company closed a registered direct offering which resulted in gross proceeds of approximately $ 30.6 million. The financing consisted of the sale of 13,512,699 shares of common stock and accompanying common stock warrants to purchase 13,078,509 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7312 per share, and the sale of pre-funded warrants to purchase 4,144,085 shares of common stock and accompanying common warrants to purchase 4,010,927 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7311 per share. The common warrants have an exercise price of $ 3.50 per share of common stock (or $ 3.4999 per pre-funded warrant in lieu thereof), are exercisable at any time after the date of issuance, subject to certain ownership limitations, and expire on June 30, 2025. The pre-funded warrants have an exercise price of $ 0.0001 and are exercisable any time after the date of the issuance, subject to certain ownership limitations. ​ As part of the registered direct offering, the following number of shares of common stock, pre-funded warrants and common warrants were sold to related parties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Number of Number of ​ Aggregate ​ ​ ​ Shares of ​ Pre-Funded ​ Common ​ Purchase ​ Common Stock Warrants Warrants Price OrbiMed Advisors LLC (1) ​ ​ — ​ ​ 1,444,085 ​ ​ 1,397,684 ​ $ 2,499,856 Puissance Capital Management (2) ​ ​ 866,451 ​ ​ — ​ ​ 838,610 ​ ​ 1,500,000 Richard A. Miller, M.D. (3) ​ ​ 577,634 ​ ​ — ​ ​ 559,073 ​ ​ 1,000,000 William B. Jones, Ph.D. (4) ​ ​ 20,001 ​ ​ — ​ ​ 19,358 ​ ​ 34,624 ​ (2) Peter Thompson, M.D., a member of our Board of Directors since November 2014, is a Member of OrbiMed Advisors, LLC. (3) Ted Wang, Ph.D., a Co-Founder, General Manager and Director of Angel Pharmaceuticals, of which the Company holds a 49.7 % ownership interest, is the founder of Puissance Capital Management. (4) Richard A. Miller, M.D. is the Company’s President, Chief Executive Officer and Chairman of the Board. (5) William B. Jones, Ph.D. is the Company’s Senior Vice President, Pharmaceutical Development. ​ The Company holds a 49.7 % ownership in Angel and, in connection with intellectual property licensing agreements between the Company and Angel Pharmaceuticals, the Company provides operational support and clinical 110 Table of Contents drug supplies to Angel. Third-party and internal personnel costs incurred by the Company are billed to Angel in the period incurred and recorded as an offset to expenses. During the years ended December 31, 2024 and 2023, there were no internal personnel costs billed to Angel and during the year ended December 31, 2022, the Company billed Angel for approximately $ 0.1 million in internal personnel costs. During the years ended December 31, 2024, 2023 and 2022 the Company billed Angel for approximately $ 0.0 million, $ 0.1 million and $ 1.3 million in third-party costs, respectively. Of the third-party costs billed to Angel in the year ending December 31, 2022, approximately $ 0.5 million were associated with clinical drug supply manufactured and expensed in prior years. The remaining $ 0.1 million and $ 0.8 million in third-party costs were primarily associated with clinical drug supply passthrough costs incurred during the years ended December 31, 2023 and 2022, respectively, and did not have an impact on the Company’s consolidated statements of operations. ​ In addition to the provision of clinical supplies to Angel, Angel may provide clinical supplies and research services to the Company on an as needed basis. These transactions are recorded as research and development expense. During the years ended December 31, 2023 and 2022, Angel billed the Company for approximately $ 0.2 million and $ 0.2 million, respectively, associated with clinical drug supply and research services provided to the Company. There were no clinical supplies or research services billed by Angel to the Company during the year ended December 31, 2024. ​ In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel. Pursuant to the sublease, rent is due monthly and is subject to scheduled annual increases and Angel is responsible for certain operating expenses and taxes throughout the life of the sublease. The sublease expired in January 2023. Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations. For the years ended December 31, 2023 and 2022, the Company recognized $ 0.1 million and $ 0.6 million of sublease income, respectively. ​ In July 2021, Linda S. Grais, M.D., J.D., a member of the Company’s Board of Directors, was appointed as a non-executive member of the Board of Directors of ICON plc (“ICON”), effective upon completion of ICON’s acquisition of PRA Health Sciences, Inc. ICON is a clinical research organization and provides services to support the Company’s clinical trials. During the years ended December 31, 2024, 2023 and 2022, the Company recorded approximately $ 351,000 , $ 254,000 and $ 429,000 , respectively, in clinical trial expenses under its agreements with ICON. ​ ​ ​ Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.