What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-18 · 400 added, 356 removed, 301 unchanged (72% of the section changed)

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• The Company invented its second-generation platform, the TRBC platform, to create novel immunotherapeutics designed to treat diseases, including cancer, as well as improve quality-of-life conditions.

The immunotherapeutics created using the TRBC platform include multi-specific cytokines, targeted second-generation immune checkpoint inhibitors, and immune-cell engagers, which have the capabilities to activate subsets of immune cells that specifically target cancerous or infected cells.

As of July 13, 2024, the Company, Dr.

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The Company continues to evaluate its portfolio to identify compounds which may be good candidates for licensing or other collaborations, where it will be to our advantage to leverage the expertise and financial strength of a partner in the development of a compound or market.

Wugen License Agreement and Potential Spin Off in Favor of HCWB

We signed our first out-license agreement at the end of 2020, when we entered into an exclusive worldwide license (the “Wugen License”) with Wugen, Inc., a company specializing in cell-based therapies for cancer.

Wugen licensed limited rights to develop, manufacture, and commercialize cell-based therapy treatments for cancer based on two of our internally-developed, multi-cytokine fusion protein molecules, HCW9201 and HCW9206.

Wugen has created an off-the-shelf NK-cell treatment called WU-NK-101 based on the licensed molecules.

Wugen is focusing is clinical development strategy on its CAR-T program, which is in a pivotal clinical trial.

Since inception in December 2020, the Company has recognized $16.2 million of revenues derived from the Wugen License, including upfront license fees in cash and shares of Wugen common stock, purchase of the Company’s inventory of certain molecules needed for manufacturing, and purchases of materials for its clinical trials.

In addition, the Company received over $1.8 million of reimbursement for some of the Company’s R&D expenses.

In the quarter ended June 30, 2025, the Company agreed to a request from Wugen to suspend the Wugen License, including all of its rights related to the license molecules and its obligation to pay $500,000 annually to reimburse the Company for certain R&D expenses.

The suspension will run for a period of one year from the effective date and will end on May 29, 2026.

During the suspension, the Company has the right to terminate the license in order to enter other business development transactions related to the licensed molecules.

The Company is currently in active discussions for a license agreement with major biologics manufacturing companies who are interested in licensing molecules to use as reagents in the manufacturing process for CAR-T therapies.

The Company has no remaining performance obligations.

There is no deferred revenue related to the sale of clinical material to Wugen.

There is product in storage that is the responsibility of Wugen.

No impairment charges were taken in relation to the suspension.

WY Biotech License Agreement

In November 2024, the Company and WY Biotech Co., Ltd.

(“WY Biotech”) entered into a License, Research and Co-Development Agreement (“WY Biotech License”), as amended.

The WY Biotech License is a grant of an exclusive, worldwide license to use and apply HCW11-006, a preclinical molecule, for in vivo applications.

The Company holds an Opt-In Right under the provisions of the WY Biotech License, which gives the Company the option to assume all control and responsibility for the development, manufacture and commercialization of HCW11-006 for in vivo applications in North America, South America, and Central America.

The Company retains ex vivo rights.

Under the amended terms, the parties agreed to extend the timing for the payment of the upfront license fee of $7.0 million and reduced the performance obligation for the Company to the delivery of a technical report that characterized the licensed molecule by May 13, 2025.

In the quarter ended June 30, 2025, the Company delivered the technical report and WY Biotech notified the Company that it completed its due diligence to study the technical report delivered by the Company and elected to continue with the exclusive worldwide WY Biotech License, as amended.

As a result, WY Biotech is financially obligated to the Company, as detailed in the WY Biotech License, as amended, including the obligation to pay a $7.0 million upfront license fee.

WY Biotech is in the process of finalizing agreements with its contract development and manufacturing organization (“CDMO”) and investors.

Since the Company has no payment history with WY Biotech, it did not recognize the upfront license fee as revenue as we concluded collectability was not probable.

In order to accommodate WY Biotech’s timing in finalizing agreements, the Company and WY Biotech agreed to extend the latest date for payment of the $7.0 million license fee to September 30, 2025.

As of June 30, 2025, the Company determined that it had fully satisfied the performance obligation under the agreement and that the $7.0 million non-refundable, upfront license fee was fixed and not subject to future performance.

Based on its assessment under ASC 606-10-25-1(e), the Company concluded revenue would be recognized when WY Biotech enters legally binding agreements with its investors, at which time it would be considered collectable.

$5.0 Million Equity Offering and Equity Dividend to Investor

On May 15, 2025, the Company closed on an equity offering with gross proceeds of $5.0 million through a follow-on offering of an aggregate of 671,140 units at a purchase price of $7.45 per unit priced at-the-market under Nasdaq rules, with an existing institutional investor, the Investor.

Each unit consisted of one share of Common Stock or one Pre-Funded Warrants to purchase one share of Common Stock, with two warrants, each of which can be exercised for one share of Common Stock for $7.45 per share.

In addition, the Company has entered into a privately negotiated agreement with the Investor to reduce the existing exercise price of its outstanding warrants to purchase up to 167,925 shares of Common Stock (the “Existing Warrants”) from $41.20 per share to $7.45 per share.

The Company estimated the fair value of the securities issued and the value of repricing the warrants, and determined a fair value of $15.2 million.

The difference between the gross proceeds and estimated fair value was recognized as an equity dividend to an existing stockholder.

Full Settlement of $7.7 million of Debt to Strengthen the Company’s Balance Sheet

On May 7, 2025, the Company restructured $7.4 million of debt that was issued in the form of Secured Notes including accumulated accretion of a fixed bonus payable upon Maturity Date for full settlement.

Investors included:

$2.4 million invested by Dr.

Wong, Founder and Chief Executive Officer;

$220,000 invested by Rebecca Byam, Chief Financial Officer;

$25,000 invested by Lee Flowers, Senior Vice President of Business Development;

$140,000 invested by Scott T.

Garrett, the Chairman of the Company’s Board of Directors;

$60,000 invested by Gary M.

Winer, who was a member of our Board of Directors at the time of his investment;

$25,000 invested by Rick S.

Greene, a member of our Board of Directors;

as well as other significant stockholders.

Converting noteholders received 253,083 unregistered shares of Common Stock at a conversion price of $26.00 per share, and Common Stock Warrants to purchase up to 126,540 shares of Common Stock at an exercise price of $26.00 per share.

In addition, the Company transferred to converting noteholders the right to receive the proceeds of the liquidation or sale of 1,067,796 of the Company’s Wugen shares, which was recorded as a contingent liability at a fair value of $1.6 million as of June 30, 2025.

The Company recognized a $3.5 million gain from the restructuring, inclusive of derecognition of accumulated accretion of a fixed bonus payable upon Maturity Date of $860,462.

Due to the related party nature of the noteholders, the gain was recorded to additional paid-in capital for the period ended June 30, 2025.

On May 15, 2025, the Company extinguished $270,000 of debt that was issued in the form unsecured promissory notes, according to conversion provisions of the purchase agreement.

Investors included:

$60,000 invested by Hing C.

Wong, the Company’s Founder and CEO;

$100,000 invested by Scott T.

Garrett, the Chairman of the Company’s Board of Directors;

$10,000 invested by Gary M.

Winer, who was a member of the Company’s Board of Directors at the time of his investment;

and other significant stockholders.

According to the terms of the conversion provision contained in the purchase agreement, the Company issued 36,242 registered shares of the Company’s Common Stock at a conversion price of $7.45 per share.

These securities are subject to a 90-day lockup.

In addition, the Company transferred to converting noteholders the right to receive the proceeds of the liquidation or sale of 67,500 of the Company’s Wugen shares, which was recorded as a contingent liability at a fair value of $103,950 as of June 30, 2025.

The Company recognized a loss of upon conversion of $131,134.

Due to the related party nature of the noteholders, the loss was recorded to additional paid-in capital for the period ended June 30, 2025.

The Company and WY Biotech Co., Ltd.

(“WY Biotech”) are currently finalizing the terms of an amendment to an exclusive worldwide license agreement (“WY Biotech License”) that the parties first entered on November 17, 2024.

The subject of the license is the use of in vivo rights to one of the Company’s preclinical molecules, HCW11-006.

The Company had extended the date for payment of the $7.0 million upfront license fee due under the WY Biotech License while WY Biotech worked to finalize agreements with their contract development and manufacturing organization (“CDMO”) and investors.

On September 5, 2025, WY Biotech proposed further revisions and additions to the terms of the WY Biotech License.

Negotiations between the parties to restructure the terms of the WY Biotech License are ongoing.

Pursuant to the terms currently being negotiated, the Company will retain its payment-free, milestone-free, and royalty-free option to recapture the development and commercialization in vivo rights of the licensed molecule for the United States, Canada, Central America, and South America (Opt-in Territory) after the conclusion of the Phase 1 clinical trial.

WY Biotech is financially responsible for all costs associated with research and development, manufacturing, clinical development, regulatory approval, and commercialization for the molecule.

The Company will be responsible for costs associated with clinical development, regulatory approval, and commercialization in the Opt-in Territory, if it exercises its opt-in rights.

$2.2 Million Raised through Issuance of Common Stock through Standby Equity Purchase Agreement

The Company has issued, and may issue additional, shares of Common Stock under its Standby Equity Purchase Agreement (“SEPA”) as a means of accessing the public market.

In the three and nine months ended September 30, 2025, the Company issued 475,000 shares of Common Stock through the SEPA, resulting in net proceeds of $2.2 million, $2.0 million of which settled as of September 30, 2025.

Compliance with Nasdaq Listing Rules

On June 26, 2025, HCW Biologics Inc.

(the “Company”) announced that it received formal notice from The Nasdaq Stock Market LLC (“Nasdaq”) that the Company is in compliance with Listing Rule 5550(b)(1) (the “Equity Rule”).

On May 13, 2025, the Company received formal notice from Nasdaq that it regained compliance with the bid price requirement in Listing Rule 5550(a)(2), the public float requirement in Listing Rule 5550(a)(4), and the market value of publicly held shares requirement in Listing Rule 5550(a)(5).

As a result, the Company was in compliance with all applicable criteria for continued listing on the Nasdaq Capital Market tier, and the previously disclosed listing compliance matters have been closed.

The Company was notified that it will remain subject to a “Panel Monitor,” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), for a period of one year from the date of the Nasdaq notice, through June 23, 2026.

If, during the term of the Panel Monitor, the Company does not continue to remain in compliance with the Equity Rule, the Company will not be provided with the opportunity to submit a compliance plan for review by the Listing Qualifications Staff and must instead request a hearing before the Panel to address the deficiency, with such request staying any further action with respect to the Company’s listing on Nasdaq pending completion of the hearing process.

An important part of the Company’s future financing plans is the ability to access the public markets for the sale of securities.

This requires that the Company remain in compliance with all Nasdaq Listing Rules, and it is currently deficient in meeting the requirements of Listing Rule 5550(b)(1), or the Equity Rule, related to the requirement to maintain a minimum balance of $2.5 million in stockholders’ equity.

The Company was recently granted an extension to regain compliance with the Equity Rule until December 31, 2025, as discussed in more detail below.

In the first quarter of 2025, after a hearing with a Nasdaq Hearings Panel (the “Panel”), the Panel granted the Company an extension to June 30, 2025 to regain compliance with all Nasdaq Listing Rules.

In particular, the Company was deficient in three areas:

Listing Rule 5550(a)(2), or requirements for the minimum bid price;

Listing Rule 5550(a)(4), or requirements for the public float requirement in and the market value of publicly held shares;

and the Equity Rule.

On June 26, 2025, the Company announced that it received a formal notice from the Listing Qualifications Staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) that the Company was in compliance with the Equity Rule for continued listing on the Nasdaq Capital Market (the “Exchange”).

At that time, the Company was also notified that it will remain subject to a “Panel Monitor,” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), for a period of one year from the date of the Nasdaq notice, through June 23, 2026.

While the Company successfully completed several elements of its compliance plan including the Reverse Stock Split, restructuring or converting $7.7 million of debt, putting a Standby Equity Purchase Agreement in place, and completing a $5.0 million equity financing by June 30, 2025, as previously reported, the Company’s upfront license fee from WY Biotech did not meet the criteria for revenue recognition for the period ended June 30,2025.

As a result, as of June 30, 2025, the Company did not meet the requirements of the Equity Rule.

The Company filed its Form 10-Q for the quarter ended June 30, 2025 on August 18, 2025.

On August 19, 2025, the Company received written notice from the Staff that as of June 30, 2025, the Company was non-compliant with the Equity Rule for continued listing on the Exchange.

The Company made a timely request for a hearing before the Panel and was granted a hearing.

On October 13, 2025, the Panel granted the Company an extension in which to regain compliance with all continued listing rules of the Exchange.

The Panel’s determination follows the Company’s hearing on September 25, 2025, at which the Company presented, and the Panel considered, the Company’s plan to regain compliance with the Equity Rule.

The Panel granted the Company’s request for continued listing on the Exchange, subject to, among other things, the Company demonstrating compliance with the Equity Rule by December 31, 2025, and with all other Exchange continued listing rules by February 16, 2026.

The Company was advised that February 16, 2026, represents the full extent of the Panel’s discretion to grant continued listing while the Company is non-compliant with the Nasdaq Listing Rules.

The Panel also required that the Company provide prompt notification of any significant events that occur during the exception period that may affect the Company’s compliance with Nasdaq requirements.

In addition, the Company must timely file Form 10-Q for the third quarter, and provide notice of the status of certain elements of the Company’s compliance plan.

Any compliance documentation submitted by the Company will be subject to review by the Panel, which may, in its discretion, request additional information before determining that the Company has complied with the terms of the exception.

The Panel has discretion to review its decision to grant an exception period within 45 calendar days after issuance of the written decision.

Biologics Manufacturing Facility

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– “Legal Proceedings.” On August 8, 2025, B&I Contractors, Inc., one of the defendants in the BE&K Complaint, filed a motion for summary judgment (the “MSJ”) as to the Count I (Foreclosure of Construction Lien).

The Company has responded to the BE&K and Fisk Complaints and cross-claims and intends to file a timely response to the B&I MSJ.

The Company has responded to the BE&K and Fisk Complaints and cross-claims as well as the B&I MSJ.

The parties are engaged in discovery and the court has set the case for trial in early December 2026.

The Company entered a loan agreement with Cogent Bank (“2022 Loan Agreement”) for $6.5 million on August 15, 2022, to provide a portion of the funds required to purchase this facility.

The 2022 Loan Agreement contains discretionary acceleration provisions, one of which was triggered as a result of the mechanics liens discussed above.

On October 24, 2025, the Company received a demand letter in which Cogent Bank gave notice that the loan was in default and the Company had thirty (30) days after receipt of the demand letter to cure the mechanics liens.

The Company and Cogent Bank are negotiating for the terms of a forbearance agreement to provide the Company more time to comply with the demand made by Cogent Bank.

The Company has continued to pursue financing alternatives to provide the funding needed to come current in past amounts due and complete the construction and renovation of the property.

Clinical Development

On January 28, 2025, the Company received clearance of its IND from the FDA to initiate a first-in-human Phase 1 dose escalation clinical trial to evaluate one of its lead drug candidates, HCW9302, in patients with moderate-to-severe alopecia areata, a common autoimmune disease in humans that currently has no curative FDA approved treatments.

The Company intends to include up to five clinical sites in this study, and we expect to open and initiate the clinical trial in the third quarter of 2025.

The following compounds have been identified by the Company as our product candidates for clinical development.

The Company has constructed over 50 proprietary compounds, of which only a select few will be developed through internal programs and Company-sponsored clinical trials.

Other compounds may be selected by the Company to develop through corporate partners who will advance clinical development and commercialization through business development transactions, such as licensing agreements.

HCW9302 is the lead product candidate for the Company’s clinical development program for autoimmune disorders.

In the fourth quarter of 2025, the Company expects to dose the first patient in a Company-sponsored, multi-center Phase 1 dose-escalation clinical trial (NCT07049328) to evaluate HCW9302 in patients with alopecia areata, a common autoimmune disease in humans that currently has no curative FDA approved treatments.

The Company currently has two clinical sites open, one at The Ohio State University Wexner Medical Center (“The Ohio State University”) and one at the Tampa James A.

Haley Veterans' Hospital (“Tampa VA Hospital”).

Both sites are actively screening patients.

HCW9302 is a fusion protein molecule that contains two IL-2 domains linked by an extracellular tissue factor domain.

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CD4 + effector T cells (also known as helper T cells) are crucial for immune responses, but under certain conditions, their excessive activation can lead to negative effects like inflammation, tissue damage, and autoimmune reactions, particularly when they become dysregulated and target self-antigens, contributing to conditions like multiple sclerosis, rheumatoid arthritis, and inflammatory bowel disease.

The Company recently announced results of studies of our proprietary compound, HCW9206, and its availability for commercialization.

Given the results of the studies, HCW9206 has the potential to provide a solution for key challenges facing T-cell receptor - T cell (“CAR-T”) therapies.

While CAR-T therapy is a revolutionary technology that continues to play a pivotal role in treatment of cancer, autoimmune diseases, and age-related diseases, it faces challenges.

In the result of the studies shared by the Company, we showed that HCW9206 has the potential to significantly reduce costs and improve clinical efficacy of engineered effector T cells.

This data was first shared at the 2025 Annual Meeting of American Association of Immunologists.

HCW9206 is a proprietary fusion protein shown to be highly effective at generating CAR-Ts for immunotherapy.

HCW9206 is a novel class of immunotherapeutic drug that enables the combination of multiple immune stimulatory cytokines within a single molecule.

The activity of HCW9206 was significantly better than that of standard methods employing anti-CD3/anti-CD28 and IL-2 reagents for CAR lentiviral transduction and subsequent expansion of human CAR-Ts.

At the 2025 Annual Meeting of American Association of Immunologists, our collaborator gave a poster presentation that showed that HCW9206 is not only a better reagent than the current anti-CD3/anti-CD28/IL-2 method for CAR-T viral transduction, it also effectively expanded stem cell-like memory T cells (T scm ) carrying the CAR constructs.

It is well known that the T scm subset of T cells exhibits better targeted cell killing and persistence than other subsets of T cells, including memory T cells, following adoptive transfer into patients.

In experimental humanized models in mice, adoptively transferred HCW9206-generated HIV- and CD19-specific CAR-Ts displayed more potency in the suppression of HIV-1 and leukemic cells with enhanced persistence, respectively, when compared with the same CAR-Ts generated with the standard methods.

The results of these studies represent an alternative novel strategy for CAR-T cell production with the advantage of generating a large population of CAR-Ts with a T scm cell phenotype, which should enhance the persistence of CAR-Ts in patients.

This strategy will likely improve long-term survival of disease-specific CAR-Ts following adoptive transfer and enable sustained suppression of malignancies, chronic infections and autoimmune diseases.

The GMP master cell bank of HCW9206 and its manufacturing process has been established, and its drug master file as an ex vivo reagent has been filed with the US Food and Drug Administration.

The Company has commenced a search to identify a strong commercial partner for the sale and/or integration of HCW9206 as a reagent into CAR-T based manufacturing processes.

Second-Generation Multi-Specific T-Cell Engagers

The Company has developed second-generation, multi-specific T-cell engagers against solid tumors, particularly for pancreatic cancer, using its novel proprietary TRBC product discovery and development platform technology.

The Company has selected its T-Cell Engager program as a candidate for clinical development through a business development transaction with a large pharmaceutical company.

T-cell engagers revolutionized the immunotherapeutic approach against cancer.

Currently, T-cell engagers have approval from the U.S.

Food and Drug Administration to be used in the treatment of a small number of indications, including various hematological and solid tumors.

The Company believe that it has created a potentially highly effective T-cell engagers against difficult-to-treat solid tumors by using exceptional targets while managing immunosuppression.

The TRBC technology enabled the Company to construct T-cell engagers that not only target cancer antigens and CD3 activation of effector T cells, but also simultaneously reduce the immunosuppression in tumor microenvironment.

Currently, T-cell engagers have approval from the FDA to be used in the treatment of a small number of indications, including various hematological and solid tumors.

The Company believes that it has created potentially highly effective T-cell engagers against difficult-to-treat solid tumors by using exceptional targets while managing immunosuppression.

Such immunosuppression plays a pivotal role in reducing effector T-cell infiltration and anti-tumor efficacy in solid tumors.

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These product candidates exhibit potent and antigen-specific anti-pancreatic cancer activities both in vitro and in humanized mouse models at dose levels that are well tolerated.

We plan to begin actively seeking a partner for the development of the Company’s T-Cell Engager and other Immune Cell Engagers in Q3 2025.

On November 7, 2025, the Company presented a poster at the 40th annual meeting of the Society for Immunotherapy of Cancer (“SITC”) entitled, “A novel multi-functional bispecific T-cell engager molecule for cancer therapy.” Highlights of the data presented include the unique features of the Company’s T-cell engager:

• Broad coverage for human solid tumor indications by targeting tissue factor, with high potency and precision, shown in xenograft models including Patient-Derived Xenograft (PDX) tumor.

• Tetra-valent construct to address immunosuppressive tumor microenvironment.

• Activates tumor-infiltrated exhausted T cells.

• Favorable tolerability profile in non-human primates at dosing levels significantly higher than the efficacious level.

• Long serum half-life and favorable pharmacokinetics shown in non-human primate studies, without using the Fc fusion technology commonly found in bi-specific or tri-specific fusion molecules.

• Streamlined GMP manufacturing process similar to the process used for therapeutic monoclonal antibody.

• Subcutaneous administration to improve safety and quality-of-life for patients.

Second-Generation Immune Checkpoint Inhibitors

The Company has developed second-generation, pembrolizumab-based immunotherapeutics against solid tumors, particularly for pancreatic and ovarian cancer, using its novel proprietary TRBC product discovery and development platform technology.

Pembrolizumab, known as KEYTRUDA ® (a registered trademark of Merck Sharp & Dohme LLC), is the leading FDA-approved ICI.

Pembrolizumab, known as KEYTRUDA ® (a registered trademark of Merck Sharp & Dohme LLC), is the leading FDA-approved immune checkpoint inhibitor (“ICI”).

Since their introduction to the treatment of cancer in 2011, immune checkpoint inhibitors (“ICIs”) have been hailed as a breakthrough cancer therapy.

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The Company’s pembrolizumab-based fusion molecules have been selected as leading clinical product candidates because they exhibit potent anti-pancreatic cancer activities and outperform pembrolizumab as monotherapy for cancer both in vitro and in humanized mouse models at dose levels that are well tolerated.

This novel fusion immunotherapeutics block the checkpoint receptors and engages the costimulatory receptors, analogous to taking the foot off the brake and simultaneously hitting the gas, thus, representing a breakthrough second-generation ICI which revives anti-tumor function of T cells.

This novel fusion immunotherapeutic blocks the checkpoint receptors and engages the costimulatory receptors, analogous to taking the foot off the brake and simultaneously hitting the gas, thus, representing a breakthrough second-generation ICI which revives anti-tumor function of T cells.

On November 8, 2025, the Company presented a poster at SITC entitled, “A novel tetra-specific pembrolizumab-based immunotherapeutic.” The Company’s lead product candidate is HCW11-040, a second-generation immune checkpoint inhibitor that is a unique combination of cytokines in a multi-functional fusion protein molecule, constructed with a unique combination IL-15 and IL-7 domains and a Transforming Growth Factor β (“TGF-β”) trap.

It demonstrates PD-1/PD-L1 blocking activity equivalent to pembrolizumab (generic form of Keytruda®) in preclinical studies.

Results of these preclinical studies also highlight the advantages of HCW11-040 over the first generation immune checkpoint inhibitors:

• To improve efficacy, HCW11-040 is equipped with other moieties in addition to pembrolizumab which neutralizes the immunosuppressive cytokine, TGF-β, and activates effector immune cell responses.

• The mouse homologue of HCW11-040 expands progenitor exhausted T (TPEX) cells significantly better than mouse ICI or pembrolizumab alone.

TPEX cells are a key subset of T cells that respond to ICIs.

TPEX cells have self-renewal capabilities and are considered a primary driver for the success of ICI therapies, making them a target for improving treatment outcomes.

• HCW11-040 expands and activates human peripheral blood lymphocytes (“PBMCs”) significantly better than pembrolizumab alone.

• HCW11-040 exhibits significantly better anti-tumor activity of human PBMCs than pembrolizumab alone against human pancreatic cancer and leukemia cells in organoid models.

• No evidence of inducing cytokine release syndrome.

• Subcutaneous administration expected to improve safety and quality-of-life for patients.

• Streamlined GMP manufacturing process is similar to the process used for therapeutic monoclonal antibodies.

KE YTRUDA® is a registered trademark of Merck Sharp & Dohme LLC, a subsidiary of Merck & Co., Inc.

and the company is not affiliated with HCW Biologics Inc.

We have an opportunity to enter into a new license agreement based on using HCW9206 as a reagent in the manufacture of CAR-T products.

On May 29, 2025, the Company agreed to a request from Wugen Inc.

(“Wugen”) to suspend the Wugen License.

The suspension will run for a period of one year from the effective date of suspension and will end on May 29, 2026.

During the suspension, the Company has the exclusive right to seek alternate licensees and terminate the license in order to enter other business development transactions related to the ex vivo use of the licensed molecules.

In research conducted with two leading research institutions, studies have shown that HCW9206 has the potential to provide a solution for key challenges facing chimeric antigen receptor T-cell (“CAR-T”) therapies.

While CAR-T therapy is a revolutionary technology that continues to play a pivotal role in treatment of cancer, autoimmune diseases, and age-related diseases, it faces significant challenges.

In the results of the studies shared by the Company, we demonstrated that HCW9206 has the potential to significantly reduce costs and improve clinical efficacy of engineered effector T cells.

At the 2025 Annual Meeting of the American Association of Immunologists, our collaborator gave a poster presentation demonstrating that HCW9206 is not only a better reagent than the current anti-CD3/anti-CD28/IL-2 method for CAR-T viral transduction, but it also effectively expanded stem cell-like memory T cells (T scm ) carrying the CAR constructs.

The results of these studies represent a novel alternative strategy for CAR-T cell production with the advantage of generating a large population of CAR-Ts with a T scm cell phenotype, which should enhance the persistence of CAR-Ts in patients.

The GMP master cell bank of HCW9206 and its manufacturing process have been established, and its drug master file as an ex vivo reagent has been filed with the FDA.

The Company has commenced a search to identify a strong commercial partner for the sale and/or integration of HCW9206 as a reagent for incorporation into CAR-T based manufacturing processes.

HCW11-006 is one of the molecules constructed using the Company’s novel TRBC platform.

HCW11-006 is part of the group of compounds the Company classifies as Class I, Multi-Functional Immune Cell Stimulators.

T he Company continues to hold worldwide exclusive ex vivo rights to HCW11-006.

WY Biotech has licensed HCW11-006 for in vivo applications.

Our preclinical studies demonstrated that this multi-functional product candidate is highly effective at inducing anti-tumor CD8 + T cell and NK cell responses without triggering unwanted side effects in relevant solid tumor animal models.

It appears to be a potent immunostimulatory agent and should combine well with other therapies, including immune checkpoint inhibitors, immune cell engagers, therapeutic antibodies, and CAR-T therapies.

In ex vivo applications, the Company has studied the benefit of using HCW11-006 as a reagent useful in the manufacture of CAR-T therapies.

In these studies, the Company has seen that HCW11-006 has the potential to significantly reduce costs and improve clinical efficacy of engineered effector T cells.

On November 8, 2025, the Company presented a poster at SITC entitled, “Enhancing immune cell expansion, checkpoint inhibitor synergy, and in vivo CAR-T and lymphocyte support using HCW11-006 -- a novel cytokine fusion molecule.”

Trends and Uncertainties

Inflationary Cost Environment, Banking Crisis, Supply Chain Disruption and the Macroeconomic Environment

Inflationary Cost Environment, Banking Crisis, Supply Chain Disruption and the Macroeconomic Environment including Government Shutdown

The Company’s operations have been affected by many headwinds, including inflationary pressures, including those brought about by tariffs and other economic policies, high interest rates, ongoing global supply chain disruptions resulting from increased geopolitical tensions such as the war in the Middle East, the conflict between Russia and Ukraine, China-Taiwan relations as well as U.S.

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The Company uses a number of strategies to effectively navigate these issues, including product redesign, alternate sourcing, and establishing contingencies in budgeting and timelines.

The Company has used equity financing as a key element of its financing strategy, which relies on registration statements that must be declared effective by the SEC.

On October 1, 2025 at 12:01 a.m.

EDT, the federal government of the United States began a shutdown as a result of the failure by the U.S.

Senate to pass appropriations legislation for the 2026 fiscal year, which began that day.

During the shutdown, the SEC has only limited operations.

As a result of the shutdown, the Company will have limited access to public markets through public offerings of our stock, which could negatively impact the Company’s operations and ability to carry on clinical development programs.

However, the extent and duration of such events and conditions, and resulting disruptions to our operations, are highly unpredictable.

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The Company entered the Wugen License in December 2020.

On May 30, 2025, the Company agreed to a request from Wugen to suspend the Wugen License for a period of one-year.

In the second quarter of 2025, the Company agreed to a request from Wugen to suspend the Wugen License for a period of one-year.

During this time, the Company may seek other business development transactions and may choose to terminate the Wugen License.

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The Company recognizes revenue generated for supply of material for clinical development using an input method based on the costs incurred relative to the total expected cost, which determines the extent of the Company’s progress toward completion.

The Company entered the WY Biotech License in November 2024.

On May 30, 2025, WY Biotech notified the Company that it completed its due diligence to study the technical report delivered by the Company and elected to continue with the WY Biotech License.

As a result, WY Biotech is financially obligated to the Company, as detailed in the WY Biotech License, as amended, including the obligation to pay a $7.0 million upfront license fee.

WY Biotech is in the process of finalizing agreements with its contract development and manufacturing organization (“CDMO”) and investors.

Since the Company has no payment history with WY Biotech, it did not recognize the upfront license fee as revenue as we concluded collectability was not probable.

In order to accommodate WY Biotech’s timing in finalizing agreements, the Company and WY Biotech agreed to extend the latest date for payment of the $7.0 million license fee to September 30, 2025.

The Company and WY Biotech Co., Ltd.

(“WY Biotech”) are currently finalizing the terms of an amendment to an exclusive worldwide license agreement (“WY Biotech License”) that the parties first entered on November 17, 2024.

The subject of the license is the use of in vivo rights to one of the Company’s preclinical molecules, HCW11-006.

On September 5, 2025, WY Biotech proposed further revisions and additions to the terms of the WY Biotech License.

Negotiations between the parties to restructure the terms of the WY Biotech License are ongoing.

WY Biotech is financially responsible for all costs associated with research and development, manufacturing, clinical development, regulatory approval, and commercialization for the molecule.

The Company will be responsible for costs associated with clinical development, regulatory approval, and commercialization in the Opt-in Territory, if it exercises its opt-in rights.

Operating Expenses

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We expect general and administrative expenses incurred in the normal course of business for other purposes, such as costs for recruitment and retention of personnel, service fees for consultants, advisors and accountants, as well as costs to comply with government regulations, corporate governance, internal control over financial reporting, insurance and other requirements for a public company, to continue to increase for the foreseeable future as we build our clinical programs.

Legal Expenses

Legal expenses include fees incurred by the Company in its own defense and that of Dr.

Wong, our Founder and Chief Executive Officer, with a legal matter brought against the Company and Dr.

Wong by a former employer of Dr.

During the period ended December 31, 2022, Altor/NantCell initiated legal proceedings against Dr.

Wong and the Company.

On April 26, 2023, the parties stipulated that Altor/NantCell’s action against the Company would be consolidated with the Altor/NantCell arbitration demand against Dr.

On April 27, 2023, the U.S.

District Court for the Southern District of Florida (the “Court”) with jurisdiction over the lawsuit against the Company approved the parties’ stipulation and ordered the parties to arbitration.

On May 1, 2023, Altor/NantCell filed a demand against the Company before JAMS.

On May 3, 2023, Altor/NantCell dismissed the federal court action without prejudice and the Court ordered the case dismissed without prejudice and closed the case.

Proceedings against the Company and Dr.

Wong were consolidated in the arbitration before JAMS (the “Arbitration”).

On March 26, 2024, Altor/NantCell filed a complaint (the “Complaint”) against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr.

The Arbitration hearing was held on May 20, 2024 to May 31, 2024, after which the parties entered into settlement negotiations.

As reported in the Company’s Form 8-K filed on July 18, 2024 and further described in Part II, Item 1.

– “Legal Proceedings” below, as of July 13, 2024, the Company and Dr.

Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement and Release (the “Settlement Agreement”) with Altor BioScience, LLC (“Altor”), NantCell, Inc.

(“NantCell”), and ImmunityBio, Inc.

(the parent of Altor and NantCell, together with Altor and NantCell, “ImmunityBio”), to resolve the previously disclosed Arbitration before JAMS brought by Altor and NantCell as well as a Complaint Altor filed against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr.

The Settlement Agreement includes mutual general releases by and among the parties thereto.

No party is required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in connection with the matter.

The Arbitration and related Complaint were dismissed as of December 31, 2024.

Legal Expenses (Recoveries), Net

Legal expenses (recoveries), net include legal fees incurred by the Company for its own defense and for the defense of Dr.

Wong, our Founder and Chief Executive Officer, net of insurance reimbursements in connection with the Arbitration brought by ImmunityBio and its affiliates against the Company and Dr.

The Arbitration and related Complaint were dismissed with prejudice as of December 31, 2024.

See Part II, Item 1, “Legal Proceedings.”

Nonoperating Loss

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The Company is pursuing all available remedies to recover this loss.

Given the limited success that these efforts have had to date for the recovery of funds, the Company recognized a loss of $1.3 million in the three- and six-month periods ended June 30, 2024.

Given the limited success that these efforts have had to date for the recovery of funds, the Company recognized a loss of $1.3 million in the nine-month period ended September 30, 2024.

Interest Expense

Interest expense includes interest paid on debt.

This includes interest due on the Cogent Bank loan, Secured Notes issued by the Company and accretion of original issue discount and debt issuance costs.

Unrealized Gain on Investment

Unrealized gain on investment includes the gain on Wugen shares which Company elected to measure at fair value in the period ended June 30, 2025.

This includes interest due on the Cogent Bank loan, Secured Notes issued by the Company and accretion of original issue discount and accretion of debt issuance costs.

On August 15, 2022, we entered into a loan and security agreement with Cogent Bank to partially fund our purchase of the property we acquired on that same date (the “2022 Loan”).

We borrowed $6.5 million under this agreement.

Amounts outstanding on the term loan accrue interest at a rate per annum equal to 5.75%.

We were obligated to make interest-only payments on this loan from September 2022 through August 2023 and principal and interest payments in 48 equal monthly installments, based on a 25-year maturity schedule, commencing September 15, 2023.

From March 31, 2024 to October 30, 2024, the Company issued $6.9 million in Secured Notes in multiple closings.

During the second quarter of 2025, certain noteholders agreed to restructure amounts owed by the Company and convert to equity.

Noteholders who purchased notes for $325,000 did not elect to convert their Secured Notes.

The Secured Notes bear interest at an annual rate of 9%, payable quarterly in arrears.

These noteholders are also entitled to a fixed bonus, payable on the Maturity Date, which is accreted on a straight line basis.

On May 8, 2025, the Company issued a $150,000 promissory note with a personal guarantee from the Company’s Founder and Chief Executive Officer, which has an original issue discount of $75,000 which is accreted on a straight-line basis from the date of issuance to the Maturity Date of February 7, 2026 (the “Secured Promissory Note”).

Change in Fair Value of Investment and Contingent Liability, net

The Company accounts for our investment in Wugen shares at fair value beginning in the second quarter of 2025.

Similarly, the Company’s contingent liability is recorded at fair value.

A change in fair value of investment and contingent liability, net is recognized through earnings.

Prior to that time, the Company accounted for the Wugen shares using the fair value measurement alternative.

Therefore, the value of the investment in Wugen, and similarly the contingent liability, is recognized at fair value each reporting period based on available market information and valuation techniques.

Gain (Loss) on Sale of Put Shares

The Company recognizes an unrealized or realized gain or loss on put shares when we sell shares of Common Stock under the SEPA, which is recognized through earnings.

Other Income, Net

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenues

7 unchanged sentences

Interest expense

Unrealized gain on investment

Change in fair value of investment and contingent liability, net

Loss on sale of put shares

Other income, net

Comparison of the Three Months ended June 30, 2024 and June 30, 2025

The Company recognized revenues of $618,854 and $6,550 for the three months ended June 30, 2024 and 2025, respectively.

Revenues were derived exclusively from the sale of licensed molecules to Wugen in the three months ended June 30, 2024.

There were no deferred revenues as of June 30, 2024 or June 30, 2025.

Comparison of the Three Months ended September 30, 2024 and September 30, 2025

The Company recognized revenues of $426,423 and $15,606 for the three months ended September 30, 2024 and 2025, respectively.

Revenues were derived exclusively from the sale of licensed molecules to Wugen and related ancillary services such as storage and insurance.

As of September 30, 2025, the Company agreed to a request from Wugen to suspend the Wugen License, which will run for a period of one year from the effective date of the suspension, or until May 29, 2026.

The Company expects to generate revenue for ancillary services provided to Wugen during this time, as provided for under the amended Wugen license.

During the suspension, the Company is free to enter licenses with other parties for the molecules that are subject of the Wugen license.

We are seeking a large biologics manufacturer who has a use for a reagent based on HCW9206 and like molecules to improve the efficacy of their manufacturing process of CAR-T products.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended June 30, 2024 and June 30, 2025:

The following table summarizes our research and development expenses for the three months ended September 30, 2024 and September 30, 2025:

Three Months Ended

September 30,

Salaries, benefits and related expenses

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Total research and development expenses

Research and development expenses decreased by $802,362, or 40%, from $2.0 million for the three months ended June 30, 2024 to $1.2 million for the three months ended June 30, 2025.

The decrease was primarily due to a decline in manufacturing and materials and preclinical expenses.

Salaries, benefits, and related expenses increased by $21,794, or 3%, from $756,646 for the three months ended June 30, 2024 to $778,440 for the three months ended June 30, 2025.

This increase was primarily attributable to the loss of $125,000 of the Wugen reimbursement of certain R&D expenses, which required that the Company pay all of these expenses.

Manufacturing and materials expense decreased by $717,784, or 95%, from $751,770 for the three months ended June 30, 2024 to $33,986 for the three months ended June 30, 2025.

In the three months ended June 30, 2024, costs were primarily attributable to increased costs of production and materials related to manufacturing high-producing cell line of HCW9101, an affinity ligand we use in our manufacturing process.

In the three months ended June 30, 2025, the Company had produced and vialed the product necessary for the clinical trials for HCW9302.

Manufacturing activities for the molecules invented with the Company’s new TRBC platform have not yet commenced.

the Company is focused on internal development and preparation for the subsequent creation of master cell banks to generate TRBC-based products.

Expenses associated with preclinical activities decreased by $111,528, or 43%, from $258,476 for the three months ended June 30, 2024 to $146,948 for the three months ended June 30, 2025.

In the three months ended June 30, 2024, toxicology and other IND-enabling studies were winding down, as we prepare to submit the IND application for HCW9302, for which the Company received clearance of its IND from FDA early in 2025.

In the three months ended June 30, 2025, there was a $195,830 decrease in cost related to toxicology and drug testing that were necessary for the IND application.

Expenses associated with clinical activities increased by $45,815, or 70%, from $65,120 for the three months ended June 30, 2024 to $110,935 for the three months ended June 30, 2025.

The increase of expenses is primarily attributable to a $45,217 increase in costs related to outside advisors and collaborators and a $16,163 increase in costs related to site fees and data management, partially offset by a $15,575 decrease in patient-related fees.

We anticipate that clinical expenses will increase in the coming year due to the initiation of the clinical trial to evaluate HCW9302 in an autoimmune indication.

Other expenses, which include overhead allocations, decreased by $40,659, or 21%, from $197,174 for the three months ended June 30, 2024 to $156,515 for the three months ended June 30, 2025.

Research and development expenses increased by $217,334, or 18%, from $1.2 million for the three months ended September 30, 2024 to $1.4 million for the three months ended September 30, 2025.

The increase was primarily due to increases in expenses related to salaries and benefits and preclinical expenses.

Salaries, benefits, and related expenses increased by $148,637, or 23%, from $652,867 for the three months ended September 30, 2024 to $801,504 for the three months ended September 30, 2025.

This increase was primarily attributable to the suspension of the Wugen license and its obligation to reimburse certain research and development expenses.

In the third quarter of 2024, the Company received $125,000 for reimbursement of certain research and development expenses, which did not occur in the same period in 2025.

Manufacturing and materials expense increased by $2,511, or 5%, from $47,748 for the three months ended September 30, 2024 to $50,259 for the three months ended September 30, 2025.

For both periods, costs were related to ancillary costs, such as storage and insurance for drug supply that was already manufactured and ready for future use.

Expenses associated with preclinical activities increased by $170,979, or 118%, from $144,746 for the three months ended September 30, 2024 to $315,725 for the three months ended September 30, 2025.

In the three months ended September 30, 2024, costs were incurred primarily for IND-enabling studies to prepare for the submission of an IND application to evaluate HCW9302 in a clinical study in patients with an autoimmune disease.

In the three months ended September 30, 2025, the Company conducted preclinical studies for TRBC-based molecules, many of which were required to prepare the complete the package needed to launch the business development program to identify a corporate partner to advance the clinical development of the Company’s T-cell engager lead product candidate.

Also during this time, the Company narrowed down candidates in the group of compounds known as second-generation immune checkpoint inhibitors, to identify HCW11-040 as the lead product candidate with the greatest potential for treating large, unmet medical needs, especially in cancer and other aging-related diseases.

Expenses associated with clinical activities decreased by $83,781, or 51%, from $164,139 for the three months ended September 30, 2024 to $80,358 for the three months ended September 30, 2025 primarily because the Company completed two Phase 1/1b clinical trials in 2024, but the Company had no ongoing clinical trials in the three months ended September 30, 2025.

The decrease in cost is primarily due to decreases of $41,125 for R&D outsourcing and other professional fees, $27,890 for start-up and Institutional Review Board (“IRB”) fees, and $38,061 in patient fees, offset by an increase of $25,895 in fees for software licenses and data management.

We anticipate clinical activities and related expenses to increase in the future.

In the fourth quarter of 2025, the Company expects to dose the first patient in a Company-sponsored, multi-center Phase 1 clinical trial (NCT07049328) to evaluate HCWC9302 in an autoimmune disease.

There are currently two clinical sites opened at The Ohio State University and the Tampa VA Hospital, both of which are actively screening patients.

As clinical activities increase, the Company expect to incur increased expenses.

Other expenses, which include overhead allocations, decreased by $21,012, or 12%, from $177,413 for the three months ended September 30, 2024 to $156,401 for the three months ended September 30, 2025.

This decrease is primarily attributable to a $21,634 decrease allocation of depreciation for scientific equipment.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended June 30, 2024 and June 30, 2025:

The following table summarizes our general and administrative expenses for the three months ended September 30, 2024 and September 30, 2025:

Three Months Ended

September 30,

Salaries, benefits and related expenses

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NM = Not meaningful

General and administrative expenses increased $501,828, or 31%, from $1.6 million for the three months ended June 30, 2024 to $2.1 million for the three months ended June 30, 2025.

The increase is primarily due to increases in fees for professional services and accretion expense related to the fixed bonus payment due to the holders of the Secured Notes, in the event they are repaid on the Maturity Date, partially offset by a decrease in expenses related to facilities and office expenses.

Salaries, benefits and related expenses increased by $50,565, or 7%, from $714,974 for the three months ended June 30, 2024 to $765,539 for the three months ended June 30, 2025.

There was a $33,931 increase in salaries, bonus payments and related taxes and a $33,203 increase in expense related to stock-based compensation, partially offset by a $16,569 decrease in expenses related to employee benefits.

Professional services increased by $266,678, or 116%, from $229,963 for the three months ended June 30, 2024 to $496,641 for the three months ended June 30, 2025.

There was a $210,521 increase in fees paid for audit services, technical accounting advice, tax services, as well as the costs related to maintaining compliance with SEC and Nasdaq listing requirements.

During this period, the Company completed a reverse stock split and received a Nasdaq determination letter for compliance with all listing rules.

There was a $47,544 increase in fees paid related to patents.

As a result of the Settlement Agreement, the Company agreed to maintain certain patent protection for rights retained under the Settlement Agreement as well as new patents related to the TRBC drug discovery and development platform and compounds created using this platform.

Facilities and office expenses decreased by $92,975, or 45%, from $204,715 for the three months ended June 30, 2024 to $111,740 for the three months ended June 30, 2025, primarily due to decreases of $93,576 in fees paid for licenses, software and IT services.

Throughout 2024, the Company issued $6.9 million of Secured Notes.

The terms of the Secured Notes were amended on July 2, 2024 to include a fixed bonus payment in the event that the Secured Notes were repaid on their Maturity Date.

In the three months ended June 30, 2025, the Company recognized an expense of $102,248 for accretion of the fixed bonus payment.

On May 7, 2025, $6.6 million of the principal of the Secured Notes converted to equity.

The accretion expense represents the accretion for the period up to the conversion date for these Secured Notes.

Other expenses increased by $184,231, or 59%, from $313,934 for the three months ended June 30, 2024 to $498,165 for the three months ended June 30, 2025.

The increase is primarily attributable a $79,314 increase in insurance-related costs and an increase of $105,363 for expenses related to recognition of financing costs that did not qualify for deferral, primarily related to the registration of the underlying shares of the Equity Purchase Agreement with Square Gate.

Legal Expenses

In the three months ended June 30, 2024, the Company incurred $10.4 million in legal expenses in connection with the Arbitration.

The Company incurred legal expenses on its own behalf and on behalf of Dr.

Wong in preparation for the hearing, which took place in May 2024.

During the three months ended June 30, 2024, terms for the Settlement were reached.

General and administrative expenses increased $251,537, or 15%, from $1.6 million for the three months ended September 30, 2024 to $1.9 million for the three months ended September 30, 2025.

The increase is primarily attributable to an increase in expenses for salaries and benefits and professional services.

Salaries, benefits and related expenses increased by $80,919, or 13%, from $619,070 for the three months ended September 30, 2024 to $699,989 for the three months ended September 30, 2025.

There was a $116,337 increase in salaries, bonus payments and related taxes, partially offset by decreases of $25,415 in expense related to stock-based compensation and $11,445 in Board compensation, brought about by the resignation of Gary M.

Winer from the Company’s Board of Directors at the end of the second quarter of 2025.

Professional services increased by $175,461, or 47%, from $376,910 for the three months ended September 30, 2024 to $552,371 for the three months ended September 30, 2025.

There was a $239,812 increase in fees paid for audit services, technical accounting advice, tax services, as well as the costs related to maintaining compliance with SEC and Nasdaq listing requirements, partially offset by a decrease of $69,183 for legal fees related to patent filings and other matters related to the Company’s intellectual property portfolio.

Facilities and office expenses decreased by $9,059, or 7%, from $134,580 for the three months ended September 30, 2024 to $125,521 for the three months ended September 30, 2025, primarily due to a decrease of $28,353 in fees paid for licenses, software, partially offset by an increase of $21,060 in fees for IT services.

In the three months ended September 30, 2025, the Company began a data migration project which is expected to yield significant improvements in cybersecurity.

Other expenses increased by $9,160, or 2%, from $384,367 for the three months ended September 30, 2024 to $393,527 for the three months ended September 30, 2025.

There was a $62,255 increase in finance costs related to SEPA issuance costs, partially offset by decreases of $25,953 in insurance premiums and $20,283 in tax expenses.

Legal Expenses (Recoveries), Net

In the three months ended September 30, 2024, the Company incurred $949,455 in legal expenses in connection with the Arbitration.

The Arbitration was settled on July 13, 2024, and the Arbitration and related Complaint were dismissed with prejudice as of December 31, 2024.

As of June 30, 2025, the Company reported a balance of $12.4 million for legal fees incurred but not yet paid that were included within Accounts payable and an accrual of $6,700 for accrued legal fees within Accrued liabilities and other current liabilities.

We require a reasonable payment plan to prevent these expenses from overwhelming the Company’s resources.

We are engaged in discussions with the law firms involved with this matter.

In the three months ended September 30, 2025, the Company incurred legal expenses of $6,006 related to the Arbitration.

Prospectively, we anticipate we will incur some expenses for costs of remaining in compliance with the terms of the Settlement Agreement.

As of September 30, 2025, the Company reported a balance of $12.1 million for legal fees incurred as a result of the Arbitration but not yet paid, and these are included within Accounts payable.

The Company is engaged in discussions with the law firms involved with this matter to negotiate terms for a payment plan.

See Part II, Item 1, “Legal Proceedings.”

In the three months ended June 30, 2025, the Company incurred $142,542 of legal expenses related to the Arbitration.

We anticipate we will continue to incur expenses for the costs of remaining in compliance with the terms of the Settlement Agreement.

Interest Expense

On August 15, 2022, we entered into a loan and security agreement with Cogent Bank to partially fund our purchase of the property we acquired on that same date (the “2022 Loan”).

We borrowed $6.5 million under this agreement.

Amounts outstanding on the term loan accrue interest at a rate per annum equal to 5.75%.

Related to the 2022 Loan, in the three months ended June 30, 2024 and June 30, 2025, we paid $93,789 and $92,569, respectively, in cash for interest.

For the three months ended June 30, 2024 and 2025, interest was expensed.

From March 31, 2024 to October 30, 2024, the Company issued $6.9 million in Secured Notes in multiple closings.

The Secured Notes bear interest at an annual rate of 9%, payable quarterly in arrears.

During the three months ended June 30, 2024 and 2025, the Company incurred $65,293 and $67,324, respectively, of interest expense related to the Secured Notes.

The noteholders holding $6.6 million of the outstanding principal of the Secured Notes converted their Secured Notes for equity on May 7, 2025.

In the three months ended June 30, 2025, the Company recognized $6,389 of accretion expense.

For the three months ended June 30, 2024 and 2025, the Company recognized $2,592 and $17,314, respectively, for the amortization of debt issuance costs included within Interest expense on the condensed interim statement of operations.

Unrealized Gain on Investment

The Company recognized $1.7 million of unrealized gain on investment for the three months ended June 30, 2025.

There was no unrealized gain on investment in the comparable period in 2024.

Related to the 2022 Loan, in the three months ended September 30, 2024 and September 30, 2025, we paid $93,936 and $92,106, respectively, in cash for interest.

For the three months ended September 30, 2024 and 2025, interest was expensed.

For the three months ended September 30, 2024 and September 30, 2025, the Company recognized interest of $87,386 and $7,373, respectively, related to the Secured Notes.

In the three months ended September 30, 2025, the Company recognized $25,000 of accretion expense for the Secured Promissory Note.

For the three months ended September 30, 2024 and 2025, the Company recognized $2,592 and $27,592, respectively, for the amortization of debt issuance costs included within Interest expense on the condensed interim statement of operations.

Change in Fair Value of Investment and Contingent Liability, Net

The Company recognized a $966,284 loss due to the change in fair value of the investment in Wugen shares and the related contingent liability, net for the three months ended September 30, 2025.

During the three months ended September 30, 2025, the Company’s investment in Wugen was diluted as a result of a new Wugen capital raise through the issuance of preferred stock;

and therefore, the estimated fair value of the Company’s investment was reduced as was the fair value of the related contingent liability.

There was no change in fair value of the investment in Wugen shares and contingent liability, net in the comparable period in 2024.

The net change in fair value was recognized through earnings on the accompanying condensed interim statements of operations.

Loss on Sale of Put Shares

In the three months ended September 30, 2025, the Company recognized $182,146 for a loss on the sale of put shares, related to the 475,000 shares sold using the Company’s SEPA.

The Company entered the SEPA agreement in the first quarter of 2025.

Other Income, Net

Other income, net had a de minimis increase from $15,485 for the three months ended June 30, 2024 to $16,373 for the three months ended June 30, 2025.

Comparison of the Six Months ended June 30, 2024 and June 30, 2025

The Company recognized $1.7 million and $11,615 of revenues for the six months ended June 30, 2024 and 2025, respectively.

In the six months ended June 30, 2024 and 2025, revenues were derived exclusively from the sale of licensed molecules to Wugen.

Under the terms of the supply agreement between Wugen and the Company, the Company earns an industry-standard gross margin.

Occasionally, Wugen acquires product which is part of inventory we made for our own use.

In these instances, we do not apply the standard costs since the cost of manufacturing these materials would have already been expensed in a prior period.

As of June 30, 2025, the Company agreed to a request from Wugen to suspend the Wugen License for a period of one year, so the Company expects there will be no revenue under the Wugen license during this time.

The suspension will run for a period of one year from the effective date and will end on May 29, 2026.

Other income, net had a de minimis increase from $11,310 for the three months ended September 30, 2024 to $13,290 for the three months ended September 30, 2025.

Comparison of the Nine Months ended September 30, 2024 and September 30, 2025

The Company recognized $2.2 million and $27,222 of revenues for the nine months ended September 30, 2024 and 2025, respectively.

Revenues were derived exclusively from the sale of licensed molecules to Wugen and related ancillary services such as storage and insurance.

The Company expects to generate revenue for ancillary services provided to Wugen during this time, as provided for under the amended Wugen license.

During the suspension, the Company is free to enter licenses with other parties for the molecules that are subject of the Wugen license.

We are in active negotiations with some large biologics manufacturers concerning a license for HCW9206, which can be used to make the manufacturing of CAR-T products more efficient.

We are seeking a large biologics manufacturer who has a use for a reagent based on HCW9206 and like molecules to improve the efficacy of their manufacturing process of CAR-T products.

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2024 and June 30, 2025:

Six Months Ended

The following table summarizes our research and development expenses for the nine months ended September 30, 2024 and September 30, 2025:

Nine Months Ended

September 30,

Salaries, benefits and related expenses

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Total research and development expenses

Research and development expenses decreased by $1.5 million, or 35%, from $4.2 million for the six months ended June 30, 2024 to $2.7 million for the six months ended June 30, 2025.

This decrease was primarily attributable to a decrease in expenses related to manufacturing and materials and preclinical expenses, although expenses declined in all categories.

Salaries, benefits, and related expenses decreased by $56,847, or 4%, from $1.5 million for the six months ended June 30, 2024 to $1.5 million for the six months ended June 30, 2025.

This decrease is primarily attributable to a decrease in salaries and payroll taxes of $177,258 and a decrease of $73,277.

In addition, the Company did not have the Wugen reimbursement of certain R&D expenses at this time, which ordinarily would have offset costs.

During this time, the Wugen reimbursement to support the Company’s R&D activities declined by $187,500.

Manufacturing and materials expense decreased by $1.0 million, or 78%, from $1.3 million for the six months ended June 30, 2024 to $296,783 for the six months ended June 30, 2025.

In the six months ended June 30, 2024, costs were primarily attributable to the costs of production and materials related to manufacturing the high producing cell-line of HCW9101.

In the six months ended June 30, 2025, the decrease in manufacturing and materials costs were primarily attributable to a $1.0 million decrease in drug costs and a $15,107 decrease in ancillary expenses such as shipping and storage costs.

Expenses associated with preclinical activities decreased by $219,507, or 40%, from $543,567 for the six months ended June 30, 2024 to $324,060 for the six months ended June 30, 2025.

In the six months ended June 30, 2024, toxicology and other IND-enabling studies were winding down, as we prepared its IND application for the evaluation of HCW9302 in an autoimmune disease.

The Company received clearance of its IND from FDA early in 2025.

In the six months ended June 30, 2025, expenses were incurred in connection with further testing and research with collaborators.

Expenses associated with clinical activities decreased by $33,003, or 10%, from $331,758 for the six months ended June 30, 2024 to $298,755 for the six months ended June 30, 2025.

The decrease was primarily attributable to a $73,231 decrease in patient fees, partially offset by a $41,815 in costs related to clinical site maintenance and data management.

In the six months ended June 30, 2024, our activities were focused on post-clinical correlative studies which we conducted through collaborations.

In the six months ended June 30, 2024, as a result of the Settlement Agreement, ImmunityBio has the exclusive right to the use of HCW9218 in the treatment of cancer.

In the six months ended June 30, 2025, activities were focused on additional studies with collaborators and start up fees related to opening clinical sites in preparation for the initiation of the clinical trial to evaluate HCW9302 in an autoimmune disease.

Other expenses, which include overhead allocations, decreased by $106,288, or 26%, from $412,680 for the six months ended June 30, 2024 to $306,392 for the six months ended June 30, 2025.

The decrease in other expenses is primarily attributable to a $87,716 decrease in the allocation of depreciation and a $18,267 decrease in costs related to repairs and maintenance.

Research and development expenses decreased by $1.2 million, or 23%, from $5.3 million for the nine months ended September 30, 2024 to $4.1 million for the nine months ended September 30, 2025.

This decrease was primarily attributable to decreases in expenses related to manufacturing and materials and clinical trials.

Salaries, benefits, and related expenses increased by $91,800, or 4%, from $2.2 million for the nine months ended September 30, 2024 to $2.3 million for the nine months ended September 30, 2025.

This increase was primarily attributable to the suspension of the Wugen license and its obligation to reimburse certain research and development expenses.

In the nine months ended September 30, 2024, the Wugen reimbursement was $312,500 higher than it was in the nine months ended September 30, 2025.

To partially offset the impact of the suspension of the Wugen reimbursement for certain research and development expenses, the Company reduced salaries by $146,884 and other benefits and related tax expenses by $78,476.

Manufacturing and materials expense decreased by $1.0 million, or 75%, from $1.4 million for the nine months ended September 30, 2024 to $347,042 for the nine months ended September 30, 2025.

In the nine months ended September 30, 2024, costs were primarily attributable to the costs of production and materials related to manufacturing the high producing cell-line of HCW9101, which is used in the manufacturing process for all TOBI-based molecules.

In the nine months ended September 30, 2025, decrease in manufacturing and materials costs were primarily attributable to decreases of $1.0 million in raw materials and other production costs and $26,579 in ancillary expenses such as shipping and storage costs, partially offset by an increase of $16,953 in insurance expenses.

Expenses associated with preclinical activities decreased by $48,525, or 7%, from $688,310 for the nine months ended September 30, 2024 to $639,785 for the nine months ended September 30, 2025.

In the nine months ended September 30, 2024, toxicology and other IND-enabling studies were winding down, and the IND application to be granted authorization to conduct a clinical study to evaluate HCW9302 in an autoimmune disease was finalized and submitted for review.

In the nine months ended September 30, 2025, there was a decrease of $195,830 in drug testing, partially offset by increases of $55,448 expenses for fees to collaborators and $91,857 for supply of experimental research materials for studies.

Expenses associated with clinical activities decreased by $116,797, or 24%, from $495,910 for the nine months ended September 30, 2024 to $379,113 for the nine months ended September 30, 2025.

The decrease was primarily attributable to decreases of $144,715 for fees for collaborators and other professional fees and $111,293 in patient fees, partially offset by increases of $108,889 in other clinical expenses, such as start up costs and IRB fees, and $30,322 in software and data management expenses.

In the nine months ended September 30, 2025, activities were focused on additional studies with collaborators and start up fees related to opening clinical sites in preparation for the initiation of a clinical trial for HCW9302.

In the fourth quarter of 2025, the Company expects to dose the first patient in a Company-sponsored, multi-center Phase 1 clinical trial (NCT07049328) to evaluate HCWC9302 in an autoimmune disease.

There are two sites open at The Ohio State University and the Tampa VA Hospital, both of which are actively screening patients.

As clinical activities increase, the Company expect to incur increased expenses.

Other expenses, which include overhead allocations, decreased by $127,291, or 22%, from $590,083 for the nine months ended September 30, 2024 to $462,792 for the nine months ended September 30, 2025.

The decrease in other expenses is primarily attributable to decreases of $109,351 in the allocation of depreciation and $16,924 in costs for repairs and maintenance.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the six months ended June 30, 2024 and June 30, 2025:

Six Months Ended

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2024 and September 30, 2025:

Nine Months Ended

September 30,

Salaries, benefits and related expenses

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NM = Not meaningful

General and administrative expenses related to the ordinary course of business increased by $1.1 million, or 36%, from $3.2 million for the six months ended June 30, 2024 to $4.3 million for the six months ended June 30, 2025.

The increase is primarily attributable to increases in salaries and benefits, professional fees, accretion of the fixed bonus payable if Secured Notes are repaid on the Maturity Date, and insurance costs.

Salaries, benefits and related expenses increased by $317,441, or 26%, from $1.2 million for the six months ended June 30, 2024 to $1.5 million for the six months ended June 30, 2025.

In the six months ended June 30, 2024, officers waived a $298,159 a performance-based bonus payment that was earned in 2022, which effectively reduced the salaries, benefits and related expenses by that amount.

Excluding the benefit of the waiver of the performance-based bonus, there was a $19,282 increase in salaries, benefits and related expenses from the six months ended June 30, 2024 to the six months ended June 30, 2025.

In the six months ended June 30, 2025, there was a $35,978 increase in employee benefits, partially offset by a $16,695 decrease in salaries and related taxes.

Professional services increased by $367,239, or 63%, from $583,769 for the six months ended June 30, 2024 to $951,008 for the six months ended June 30, 2025.

The increase is primarily attributable to a $356,801 increase in fees paid for audit services, technical accounting advice, tax services, as well as the costs related to maintaining compliance with SEC and Nasdaq listing requirements.

During this period, the Company completed a reverse stock split and received a Nasdaq determination letter for compliance with all listing rules.

There was an increase of $16,400 related to expenses for public relations activities such as press releases.

In the six months ended June 30, 2025, professional services include legal expenses of $305,536 for fees related to patents, a $5,962 decrease from the comparable period a year earlier.

Facilities and office expenses decreased by $202,246, or 50%, from $408,314 for the six months ended June 30, 2024 to $206,068 for the six months ended June 30, 2025.

The decrease is primarily due to a $187,483 decrease in fees paid for licenses, software and IT services.

Throughout 2024, the Company issued $6.9 million of Secured Notes.

The terms of the Secured Notes were amended on July 2, 2024 to include a fixed bonus payment in the event that the Secured Notes were repaid on their Maturity Date.

In the six months ended June 30, 2025, the Company recognized an expense of $375,308 for accretion of the fixed bonus payment.

On May 7, 2025, $6.6 million of the principal of the Secured Notes converted to equity.

The accretion expense represents the accretion for the period up to the conversion date for these Secured Notes.

Other expenses increased by $292,000, or 42%, from $691,215 for the six months ended June 30, 2024 to $983,215 for the six months ended June 30, 2025.

The increase is primarily attributable to a $108,848 related to expenses for financing costs, including the Equity Purchase Agreement with Square Gate and a $194,915 increase in insurance-related costs, partially offset by a $17,937 decrease in travel-related expenses.

Legal Expenses

Legal expenses related to the Arbitration were $14.8 million for the six months ended June 30, 2024.

In the six months ended June 30, 2024, preparations for the Arbitration were taking place with witness preparation and depositions.

The Arbitration hearing was held from May 20, 2024 to May 31, 2024, which required a large team of lawyers primarily to represent the Company and Dr.

Wong, our Founder and Chief Executive Officer, but also for Dr.

Peter Rhode, our Chief Scientific Officer and Vice President of Clinical Affairs and an officer of the Company;

as well as other employees.

The hearing was followed by an extended period of intense negotiations which culminated in a Settlement Agreement entered into by the Company and Dr.

Wong as of July 13, 2024 with Altor/NantCell and its parent, ImmunityBio.

While the Company has relief from the future burden of ongoing legal expenses related to these proceedings, we incurred significant legal expenses for our defense and for the defense of officers and employees.

We require a reasonable payment plan to prevent these expenses from overwhelming the Company’s resources.

We are engaged in discussions with the law firms involved with this matter.

General and administrative expenses increased by $1.4 million, or 29%, from $4.8 million for the nine months ended September 30, 2024 to $6.2 million for the nine months ended September 30, 2025.

The increase is primarily attributable to increases in expenses related to salaries and benefits, professional services, accretion of the fixed bonus payable if Secured Notes are repaid on the Maturity Date, and financing activities.

Salaries, benefits and related expenses increased by $398,355, or 21%, from $1.9 million for the nine months ended September 30, 2024 to $2.3 million for the nine months ended September 30, 2025.

In the nine months ended September 30, 2024, officers waived a $298,159 performance-based bonus payment that was earned in 2022, which effectively reduced the salaries, benefits and related expenses by that amount.

Excluding the benefit of the waiver of the performance-based bonus, there was a $99,645 increase in salaries offset by decreases of $25,847 in expenses for employee benefits and $11,445 in Board compensation, due to the resignation of Gary M.

Winer from the Board of Directors late in the second quarter of 2025.

Professional services increased by $542,701, or 56%, from $960,680 for the nine months ended September 30, 2024 to $1.5 million for the nine months ended September 30, 2025.

The increase is primarily attributable to increases of $157,100 in fees for audit services, $169,443 in fees for technical accounting advice, $119,977 in legal fees and other services required for SEC filings, and $65,810 for fees for Nasdaq listing and preparation for a meeting with the Nasdaq Hearings Panel, partially offset by a decrease of $75,147 for legal fees related to patent filings and other matters related to the Company’s intellectual property portfolio.

Facilities and office expenses decreased by $211,302, or 39%, from $542,890 for the nine months ended September 30, 2024 to $331,588 for the nine months ended September 30, 2025.

The decrease is primarily due to a $199,176 decrease in fees paid for licenses, software and IT services, primarily due to the termination of certain software licenses required for the data management system utilized during the Arbitration.

The Arbitration and related Complaint were dismissed with prejudice as of December 31, 2024.

Other expenses increased by $306,325, or 29%, from $1.1 million for the nine months ended September 30, 2024 to $1.4 million for the nine months ended September 30, 2025.

The increase is primarily attributable to increases of $168,974 in insurance premiums and $159,714 related to expenses for financing costs, including the Commitment Fee and issuance costs for the SEPA, partially offset by decreases of $26,262 in travel-related expenses and $22,315 in tax expenses.

Legal Expenses (Recoveries), Net

In the nine months ended September 30, 2024, Legal expenses (recoveries), net were $15.8 million, incurred for preparations leading up to the Arbitration hearing, which was held from May 20 - 31, 2024, negotiations for the Settlement Agreement entered into on July 13, 2024, and other activities related to remediation necessary to comply with the terms of the Settlement Agreement.

As of September 30, 2025, the Company reported a balance of $12.1 million for legal fees incurred in connection to the Arbitration but not yet paid that were included within Accounts payable.

We are engaged in discussions with the law firms involved to negotiate a reasonable payment plan.

See Part II, Item 1, “Legal Proceedings.”

In the six months ended June 30, 2025, the Company received a $2.0 million insurance reimbursement for legal fees incurred on behalf of Dr.

In the nine months ended September 30, 2025, the Company received a $2.0 million insurance reimbursement for legal fees incurred on behalf of Dr.

Hing Wong, the Company’s Founder and Chief Executive Officer, for his defense costs associated with the Arbitration, in prior periods, which was paid directly to the law firm involved.

The insurance reimbursement is included within Legal expenses, net, along with legal fees related to the Arbitration of $402,995 incurred in the six months ended June 30, 2025.

For the six months ended June 30, 2025, the Company reported a contra expense of $1.6 million in Legal expenses, net in the accompanying condensed interim statement of operations.

The insurance reimbursement is included within Legal expenses (recoveries), net, along with legal fees related to the Arbitration of $409,055 incurred in the nine months ended September 30, 2025.

For the nine months ended September 30, 2025, the Company reported a contra expense of $1.6 million in Legal expenses (recoveries), net in the accompanying condensed interim statement of operations.

Interest Expense

On August 15, 2022, we entered into a loan and security agreement with Cogent Bank to partially fund our purchase of the property we acquired on that same date (the “2022 Loan”).

We borrowed $6.5 million under this agreement.

Amounts outstanding on the term loan accrue interest at a rate per annum equal to 5.75%.

Related to the 2022 Loan, in the six months ended June 30, 2024 and June 30, 2025, we paid $188,162 and $183,604, respectively, in cash for interest.

For the six months ended June 30, 2024, three months interest was capitalized and three months interest was expensed.

For the six months ended June 30, 2025, interest was expensed.

From March 31, 2024 to October 30, 2024, the Company issued $6.9 million in Secured Notes in multiple closings.

The Secured Notes bear interest at an annual rate of 9%, payable quarterly in arrears.

During the six months ended June 30, 2024 and 2025, the Company incurred $65,293 and $220,558, respectively, of interest expense related to the Secured Notes.

The noteholders holding $6.6 million of the outstanding principal of the Secured Notes converted their Secured Notes for equity on May 7, 2025.

On May 8, 2025, the Company issued a $150,000 promissory note with a personal guarantee from the Company’s Founder and Chief Executive Officer, which has an original issue discount of $75,000 which is accreted from the date of issuance to the Maturity Date of February 7, 2026.

In the six months ended June 30, 2025, the Company recognized $14,722 of accretion expense.

For the six months ended June 30, 2024 and 2025, the Company recognized $5,183 and $74,344, respectively, for the amortization of debt issuance costs included within Interest expense on the condensed interim statement of operations.

Unrealized Gain on Investment

The Company recognized $1.7 million of unrealized gain on investment for the six months ended June 30, 2025.

There was no unrealized gain on investment in the comparable period in 2024.

Related to the 2022 Loan, in the nine months ended September 30, 2024 and September 30, 2025, we paid $282,098 and $275,710, respectively, in cash for interest.

For the nine months ended September 30, 2024, three months interest was capitalized and six months interest was expensed.

For the nine months ended September 30, 2025, interest was expensed.

For the nine months ended September 30, 2024 and September 30, 2025, the Company recognized interest of $152,679 and $227,931, respectively, related to the Secured Notes.

In the nine months ended September 30, 2025, the Company recognized $39,722 of accretion expense for the Secured Promissory Note.

For the nine months ended September 30, 2024 and 2025, the Company recognized $7,775 and $47,497, respectively, for the amortization of debt issuance costs included within Interest expense on the condensed interim statement of operations.

Change in Fair Value of Investment and Contingent Liability, Net

The Company recognized a net gain of $782,404 as a result of the change in fair value of the investment in Wugen shares and the related contingent liability, net for the nine months ended September 30, 2025.

There was no change in fair value of investment and contingent liability, net in the comparable period in 2024.

The net change in fair value was recognized through earnings on the accompanying condensed interim statements of operations.

During the nine months ended September 30, 2025, the Company’s investment value of Wugen shares was impacted by (a) the Company made an election to fair value its investment in Wugen shares in the second quarter of 2025, whereas previously the Company was accounting for the investment under the measurement alternative and (b) during the third quarter of 2025, the Company’s investment was diluted as a result of a new capital raise by Wugen through the issuance of preferred stock.

The Company’s contingent liability was similarly impacted by the dilution subsequent to the recognition of the liability during the second quarter of 2025.

Loss on Sale of Put Shares

In the nine months ended September 30, 2025, the Company recognized a $182,146 loss for a loss on the sale of put shares, related to the 475,000 shares sold using the Company’s SEPA.

Other Income, Net

Other income, net increased from $41,086 for the six months ended June 30, 2024 to $41,122 in the six months ended June 30, 2025.

Other income, net increased from $52,397 for the nine months ended September 30, 2024 to $54,412 in the nine months ended September 30, 2025.

Liquidity and Capital Resources

Sources of Liquidity

As of June 30, 2025, our principal source of liquidity was $2.4 million in cash and cash equivalents, including money market investments, and as a result, there was substantial doubt over whether the Company had sufficient capital to operate for the next twelve months from the issuance date of this Quarterly Report.

As of September 30, 2025, our principal source of liquidity was $1.1 million in cash and cash equivalents, including money market investments, and as a result, there was substantial doubt over whether the Company had sufficient capital to operate for the next twelve months from the issuance date of this Quarterly Report.

We considered elements of our financing plan that were probable and likely to be implemented within the next year.

While we have already begun to successfully execute our financing plan, including raising $11.9 million in two equity financings, putting an Equity Purchase Agreement in place, and completing our performance obligation under the WY Biotech License to earn an $7.0 million upfront license fee which we expect to collect in the third quarter of 2025, we concluded that elements of our financing plan are not probable and thus they were not sufficient to include in our going concern analysis.

In addition, during the period ended June 30, 2025, the Company strengthened our balance sheet by extinguishing $7.7 million of debt through restructuring and conversion to equity, including restructuring $7.4 million of Secured Notes and accumulated accretion of a fixed bonus payable upon Maturity Date and converting $270,000 of unsecured promissory notes according to the terms in the agreement.

In the coming year, we believe we have some significant potential valuation inflection points related to expected initiation of a clinical trial to evaluate HCW9302 in an autoimmune disease, licensing agreements and revelations regarding the potential of some of the new class of molecules the Company has created with our TRBC platform.

While we have already begun to successfully execute our financing plan, including raising $7.0 million in the nine months ended September 30, 2025 through issuance of equity securities.

In addition, during the nine months ended September 30, 2025, the Company strengthened our balance sheet by extinguishing $7.7 million of debt through restructuring and conversion to equity, including restructuring $7.4 million of Secured Notes and accumulated accretion of a fixed bonus payable upon Maturity Date and converting $270,000 of unsecured promissory notes according to the terms in the agreement.

In the coming year, we believe we have some significant potential valuation inflection points related to the initiation of the Phase 1 clinical trial to evaluate HCW9302 in an autoimmune disease, licensing agreements, and disclosures of our discoveries regarding the lead product candidates among the new class of molecules the Company has created with our TRBC platform.

These events could provide much needed momentum for successful financings.

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If such revisions are insufficient, the Company may have to curtail or cease operations.

The Company expects to continue to access the public markets through the issuance of shares of Common Stock and other securities.

Thus, resolving the compliance issues with Nasdaq is a critical element to our liquidity and capital reserves.

On June 26, 2025, Company announced that it received formal notice from Nasdaq that the Company is in compliance with Listing Rule 5550(b)(1) (the “Equity Rule”).

As a result, the Company is in compliance with all applicable criteria for continued listing on the Nasdaq Capital Market tier, and the previously disclosed listing compliance matters have been closed.

The Company was also notified that it will remain subject to a “Panel Monitor,” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), for a period of one year from the date of the Nasdaq notice, through June 23, 2026.

One of the means the Company has at its disposal for accessing the public market through the issuance of shares of Common Stock is a standby equity purchase agreement.

On February 20, 2025, the Company entered into an Equity Purchase Agreement and a related Registration Rights Agreement with Square Gate Capital Master Fund, LLC - Series 4 (“Square Gate”), pursuant to which the Company will have the right, but not the obligation, to sell to Square Gate, and Square Gate will have the obligation to purchase from the Company, up to $20.0 million (the “Maximum Commitment Amount”) worth of the Company’s shares of Common Stock, at the Company’s sole discretion, over the next 36 months (the “Put Shares”), subject to certain conditions precedent and other limitations.

On April 16, 2025, the SEC declared a registration statement effective to sell up to $40.0 million of the Company’s shares to Square Gate, according to provisions of the Equity Purchase Agreement.

In the three and nine months ended September 30, 2025, the Company issued 475,000 shares of Common Stock through the SEPA for net proceeds of $2.2 million, $2.0 million of which were settled as of September 30, 2025.

On February 20, 2025, the Company entered the SEPA and a related Registration Rights Agreement with Square Gate Capital Master Fund, LLC - Series 4 (“Square Gate”), pursuant to which the Company will have the right, but not the obligation, to sell to Square Gate, and Square Gate will have the obligation to purchase from the Company, up to $20.0 million (the “Maximum Commitment Amount”) worth of the Company’s shares of Common Stock, at the Company’s sole discretion, over the next 36 months (the “Put Shares”), subject to certain conditions precedent and other limitations.

On August 14, 2025, the parties agreed to amend the SEPA to allow for intraday trading.

Standby Equity Purchase Agreement.

In the nine months ended September 30, 2025, the Company closed on a $5.0 million in a follow-on public offering with an offering priced at the market under Nasdaq rules.

Contemporaneously with the May 2025 financing, the Company entered into an agreement with the Investor to set a new exercise price of $7.45 per share, with respect to certain Common Stock Warrants to purchase 167,925 shares of the Company’s Common Stock which were issued in the November 20, 2024 financing.

On November 20, 2024, the Company closed a $6.9 million registered direct offering and a concurrent private placement of common stock and warrants with an offering priced above market under Nasdaq rules.

All of these transactions were all completed with one institutional investor.

Sale of Common Stock and Warrants .

An important part of the Company’s future financing plans is the ability to access the public markets for the sale of securities.

This requires that the Company remain in compliance with all Nasdaq Listing Rules, and it is currently deficient in meeting the requirements of Listing Rule 5550(b)(1), or the Equity Rule, related to the minimum requirements to maintain a $2.5 million balance in stockholders’ equity.

The Company was recently granted an extension to regain compliance with the Equity Rule until December 31, 2025, as discussed in more detail below.

In the first quarter of 2025, following a hearing before the Panel, the Panel granted the Company an extension until June 30, 2025 to regain compliance with all Nasdaq Listing Rules The Company had been deficient in three areas:

Listing Rule 5550(a)(2), or requirements for the minimum bid price;

Listing Rule 5550(a)(4), or requirements for the public float requirement in and the market value of publicly held shares, and the Equity Rule.

While the Company successfully completed several elements of its compliance plan including the Reverse Stock Split, the restructuring or conversion of $7.7 million of debt, putting a Standby Equity Purchase Agreement in place, and completing a $5.0 million equity financing by June 30, 2025, as previously reported, the Company’s upfront license fee from WY Biotech did not meet the criteria for revenue recognition for the period ended June 30,2025.

As a result, as of June 30, 2025, the Company did not meet the requirements of the Equity Rule.

The Company filed its Form 10-Q for quarter ended June 30, 2025 on August 18, 2025.

On August 19, 2025, the Company received written notice from the Staff that as of June 30, 2025, the Company was non-compliant with the Equity Rule for continued listing on the Exchange.

The Company made a timely request for a hearing before the Panel and was granted a hearing.

On October 13, 2025, the Panel granted the Company an extension in which to regain compliance with all continued listing rules of the Exchange.

The Company was advised that February 16, 2026, represents the full extent of the Panel’s discretion to grant continued listing while the Company is non-compliant with the Nasdaq Listing Rules.

In addition, the Company must timely file Form 10-Q for the third quarter, and provide notice of the status of certain elements of the Company’s compliance plan.

The Panel has discretion to review its decision to grant an exception period within 45 calendar days after issuance of the written decision.

In addition to equity financings, a key strategy in our financing plan is identifying candidates in our sizeable molecule portfolio that would be appropriate to develop through business development transactions, especially out-licensing.

In the second quarter of 2025, we intend to begin our search for an appropriate partner to commercialize our Immune-Cell Engagers, including T-Cell Engagers, created using our TRBC drug discovery and development platform.

In the second quarter of 2025, we began our search for an appropriate partner to commercialize our Immune-Cell Engagers, including T-Cell Engagers, created using our TRBC drug discovery and development platform.

Since the inception of the Wugen License in December 2020, the Company has recognized cumulative revenues of $16.2 million.

In the quarter ended June 30, 2025, the Company agreed to a request from Wugen to suspend the Wugen License, including Wugen’s clinical trial due diligence obligations and its obligation to pay $500,000 annually to reimburse the Company for certain R&D expenses.

During the nine months ended September 30, 2025, the Company agreed to a request from Wugen to suspend the Wugen License, including Wugen’s clinical trial due diligence obligations and its obligation to pay $500,000 annually to reimburse the Company for certain research and development expenses.

The suspension will run for a period of one year from the effective date and will end on May 29, 2026.

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We are actively engaged in discussions with several large biologics manufacturing companies with interest in a license for these molecules.

In the quarter ended June 30, 2025, WY Biotech notified the Company that it completed its due diligence to study the technical report delivered by the Company and elected to continue with the exclusive worldwide license agreement, as amended (the “WY Biotech License”).

As a result, WY Biotech is financially obligated to the Company, as detailed in the WY Biotech License, as amended, including the obligation to pay the $7.0 million upfront license fee.

In order to accommodate WY Biotech’s timing in finalizing agreements with its CDMO and investors, the Company and WY Biotech agreed to extend the date for payment of the $7.0 million license fee on or before September 30, 2025.

Since the Company has no payment history with WY Biotech, the Company will recognize revenue when there are legally binding agreements with investors, as we concluded collectability was not probable.