Werewolf Therapeutics, Inc. 10-Q

Item 1. Financial Statements Werewolf Therapeutics, Inc. Condensed Consolidated Balance Sheets (unaudited) (amounts in thousands, except share and per share amounts) March 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 92,042 $ 110,995 Prepaid expenses and other current assets 2,415 2,071 Total current assets 94,457 113,066 Property and equipment, net 5,896 6,322 Restricted cash and cash equivalents, net of current portion 891 1,220 Operating lease right of use asset 5,813 6,001 Other assets 179 320 Total assets $ 107,236 $ 126,929 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 986 $ 3,035 Accrued expenses and other current liabilities 9,271 10,588 Operating lease liability, current 1,412 1,557 Total current liabilities 11,669 15,180 Operating lease liability, net of current portion 9,017 9,435 Note payable, net of discount, issuance costs, and current portion 26,585 26,095 Derivative liability 2,658 2,829 Total liabilities 49,929 53,539 Commitments and contingencies Stockholders’ equity: Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized as of March 31, 2025 and December 31, 2024; no shares issued or outstanding as of March 31, 2025 and December 31, 2024 — — Common stock, $ 0.0001 par value, 200,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 44,827,159 shares issued and outstanding as of March 31, 2025 and December 31, 2024 5 5 Additional paid-in capital 489,979 487,973 Accumulated deficit ( 432,677 ) ( 414,588 ) Total stockholders’ equity 57,307 73,390 Total liabilities and stockholders’ equity $ 107,236 $ 126,929 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Werewolf Therapeutics, Inc. Condensed Consolidated Statements of Operations (unaudited) (amounts in thousands, except share and per share amounts) Three Months Ended March 31, 2025 2024 Revenue: Collaboration revenue $ — $ 742 Operating expenses: Research and development 13,120 12,908 General and administrative 4,871 4,996 Total operating expenses 17,991 17,904 Operating loss ( 17,991 ) ( 17,162 ) Other (expense) income: Interest income 997 1,973 Interest expense ( 1,263 ) ( 1,003 ) Other income (expense), net 168 ( 1 ) Total other (expense) income ( 98 ) 969 Net loss $ ( 18,089 ) $ ( 16,193 ) Net loss per common share, basic and diluted $ ( 0.40 ) $ ( 0.39 ) Weighted-average common shares outstanding, basic and diluted 44,827,159 41,607,279 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents Werewolf Therapeutics, Inc. Condensed Consolidated Statements of Stockholders’ Equity (unaudited) (amounts in thousands, except share amounts) Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2024 44,827,159 $ 5 $ 487,973 $ ( 414,588 ) $ 73,390 Stock-based compensation expense — — 2,006 — 2,006 Net loss — — — ( 18,089 ) ( 18,089 ) Balance at March 31, 2025 44,827,159 $ 5 $ 489,979 $ ( 432,677 ) $ 57,307 Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2023 39,107,048 $ 4 $ 455,443 $ ( 344,073 ) $ 111,374 Issuance of common stock from at the market offering, net of issuance costs of $ 985 4,169,324 — 20,089 — 20,089 Stock-based compensation expense — — 2,305 — 2,305 Stock option exercises 5,999 — 12 — 12 Net loss — — — ( 16,193 ) ( 16,193 ) Balance at March 31, 2024 43,282,371 $ 4 $ 477,849 $ ( 360,266 ) $ 117,587 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents Werewolf Therapeutics, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (amounts in thousands) Three Months Ended March 31, 2025 2024 Operating activities: Net loss $ ( 18,089 ) $ ( 16,193 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 2,006 2,305 Depreciation expense 426 464 Non-cash interest expense 490 92 Non-cash lease expense 188 376 Change in fair value of derivative liability ( 171 ) — Changes in operating assets and liabilities: Prepaid expenses and other assets 131 704 Other receivables — 575 Accounts payable, accrued expenses and other liabilities ( 3,366 ) ( 2,469 ) Deferred revenue — ( 407 ) Operating lease liability ( 563 ) ( 744 ) Net cash used in operating activities ( 18,948 ) ( 15,297 ) Investing activities: Purchases of property and equipment — ( 111 ) Net cash used in investing activities — ( 111 ) Financing activities: Proceeds from at the market offering of common stock, net of issuance costs — 20,247 Proceeds from stock option exercises — 12 Net cash provided by financing activities — 20,259 Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents ( 18,948 ) 4,851 Cash, cash equivalents and restricted cash and cash equivalents—beginning of period 112,215 155,577 Cash, cash equivalents and restricted cash and cash equivalents—end of period $ 93,267 $ 160,428 Reconciliation of cash, cash equivalents and restricted cash and cash equivalents to the condensed consolidated balance sheets Cash and cash equivalents $ 92,042 $ 139,189 Prepaid expenses and other current assets 334 212 Restricted cash and cash equivalents, net of current portion 891 21,027 Total cash, cash equivalents and restricted cash and cash equivalents $ 93,267 $ 160,428 Supplemental disclosure of cash flow information: Cash paid for interest $ 773 $ 910 Supplemental disclosure of non-cash investing and financing activities: Issuance costs in accounts payable and accrued expenses $ — $ 194 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents Werewolf Therapeutics, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 1. Nature of Business Werewolf Therapeutics, Inc. was incorporated in the state of Delaware in October 2017. As used throughout these unaudited, condensed consolidated financial statements, the terms “Werewolf,” “we,” “us,” and “our” refer to the business of Werewolf Therapeutics, Inc., and its wholly owned subsidiary. We are an innovative biopharmaceutical company pioneering the development of therapeutics engineered to stimulate the body’s immune system for the treatment of cancer and other immune-mediated conditions. Our headquarters are located in Watertown, Massachusetts. Since inception, we have devoted substantially all of our efforts and financial resources to organizing and staffing the company; business planning; raising capital; developing and optimizing our platform technology; identifying potential product candidates; enhancing our intellectual property portfolio; undertaking research, preclinical studies, and clinical trials; and enabling manufacturing for our development programs. We are subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if our product development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales. We had cash and cash equivalents of $ 92.0 million at March 31, 2025. We expect that our cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of the condensed consolidated financial statements in this Form 10-Q. However, additional funding will be necessary beyond this point to fund future preclinical and clinical activities. We expect to finance our future cash needs through a combination of equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements. There is no guarantee that additional financing will be available to us on acceptable terms, or at all. If we fail to raise capital as and when needed, we may be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts, or seek to merge with or to be acquired by another company. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements as of March 31, 2025 and December 31, 2024, and for the three months ended March 31, 2025 and 2024, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments which are necessary for a fair presentation of our financial position and results of our operations, as of and for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 11, 2025 (the “2024 Annual Report”). The information presented in the condensed consolidated financial statements and related notes as of March 31, 2025, and for the three months ended March 31, 2025 and 2024, is unaudited. The December 31, 2024 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements. Interim results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025, or any future period. The accompanying condensed consolidated financial statements include the accounts of Werewolf Therapeutics, Inc. and its wholly owned subsidiary, Werewolf Therapeutics Mass Securities, Inc. All intercompany transactions and balances have been eliminated in consolidation. 8 Table of Contents Summary of Significant Accounting Policies The significant accounting policies and estimates used in the preparation of the condensed consolidated financial statements are described in our audited financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in the 2024 Annual Report. Other than as set forth below there have been no material changes in our significant accounting policies during the three months ended March 31, 2025. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, those related to revenue recognition, accrued expenses, assumptions used in the valuation of stock-based compensation expense and the fair value of the derivative liability, and income taxes. Actual results could differ from those estimates. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU No. 2023-09”), which enhances the transparency and decision usefulness of income tax disclosures primarily related to rate reconciliation and income taxes paid. We adopted ASU No. 2023-09 on January 1, 2025. The adoption did not have a material impact on our condensed consolidated financial statements. Recent Accounting Pronouncements In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-04) (“ASU No. 2024-03”), which requires the disclosure of additional information about specific expense categories in the notes to the consolidated financial statements at interim and annual reporting periods. The provisions of ASU No. 2024-03 are effective for annual reporting periods beginning after December 31, 2026, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption. Subsequent Events We have evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Other than as described in these condensed consolidated financial statements, we did not identify any subsequent events that require adjustment or disclosure in the condensed consolidated financial statements. 3. Collaboration and License Agreement A detailed description of the contractual terms and our accounting for our exclusive global collaboration and license agreement (the “Collaboration Agreement”) with Jazz Pharmaceuticals Ireland Limited ("Jazz") is included in our audited financial statements and notes in the 2024 Annual Report. In June 2024, we executed a transfer agreement (the “Transfer Agreement”) to assign our rights in a development agreement with a contract manufacturer of our interferon alpha INDUKINE molecule JZP898 to Jazz. The execution of this Transfer Agreement was the last material performance obligation required of us under the Collaboration Agreement. As of the execution of the Transfer Agreement, we no longer have any material performance obligations under the Collaboration Agreement. As a result, all remaining deferred revenue related to the Collaboration Agreement had been recognized upon execution of the Transfer Agreement. Revenue recognized during the three months ended March 31, 2024 includes $ 0.4 million of revenue that was included in deferred revenue as of December 31, 2023. At the end of each reporting period, we re-evaluate our estimate of the transaction price associated with the Collaboration Agreement and determine if variable consideration previously excluded from the transaction should be included in the transaction price based on changes in circumstances, if any. During the three months ended March 31, 2025 and 2024, we did not recognize any adjustments to the transaction price associated with variable consideration previously excluded from the transaction price. As of March 31, 2025, we have not received any royalty payments under the Collaboration Agreement. 4. Financial Instruments and Fair Value Measurements Our assets that are required to be measured at fair value on a recurring basis consist of money market funds, classified as cash, cash equivalents and restricted cash and cash equivalents on our condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024. 9 Table of Contents Our liabilities that are required to be measured at fair value on a recurring basis consist of a derivative liability pursuant to a loan and security agreement (the “K2HV Loan Agreement”) with K2 HealthVentures LLC (“K2HV”) (see Note 6, Term Loan ) on our condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024. The carrying amounts reflected in the condensed consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature. Assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 were as follows: Level 1 Level 2 Level 3 Total (in thousands) Assets: Money market funds $ 86,557 $ — $ — $ 86,557 Total assets $ 86,557 $ — $ — $ 86,557 Liabilities: Derivative liability $ — $ — $ 2,658 $ 2,658 Total liabilities $ — $ — $ 2,658 $ 2,658 Assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 were as follows: Level 1 Level 2 Level 3 Total (in thousands) Assets: Money market funds $ 105,526 $ — $ — $ 105,526 Total assets $ 105,526 $ — $ — $ 105,526 Liabilities: Derivative liability $ — $ — $ 2,829 $ 2,829 Total liabilities $ — $ — $ 2,829 $ 2,829 There were no changes in valuation techniques used during the three months ended March 31, 2025. Derivative Liability In May 2024, we entered into the K2HV Loan Agreement, as further described in Note 6, which provides up to $ 60.0 million principal in term loans. Pursuant to the terms of the K2HV Loan Agreement, the lenders thereto may elect, prior to the full repayment of the term loans, to convert up to $ 5.0 million of the outstanding principal of the term loans into shares of our common stock at a conversion price of the lesser of $ 6.3182 per share (the “Fixed Price Conversion”) and the lowest effective price per share of our first equity financing following the closing of the K2HV Loan Agreement (the “Variable Price Conversion”), subject to customary adjustments and 9.99 % and 19.99 % beneficial ownership limitations. The Fixed Price Conversion and Variable Price Conversion within the K2HV Loan Agreement are required to be bifurcated as a single compound embedded derivative carried at fair value, with subsequent changes in fair value recognized in the condensed consolidated statements of operations. The following table reconciles the change in fair value of the derivative liability during the three months ended March 31, 2025 based on Level 3 inputs (in thousands): Balance at December 31, 2024 $ 2,829 Change in fair value ( 171 ) Balance at March 31, 2025 $ 2,658 The change in fair value of the derivative liability is included in other income (expense), net in the accompanying condensed consolidated statements of operations. We recognized a gain on the change in fair value of the derivative liability of $ 0.2 million during the three months ended March 31, 2025. 10 Table of Contents The fair value of the derivative liability in the term loan was estimated using the Monte Carlo model. A summary of the weighted-average significant unobservable inputs (Level 3 inputs) used in measuring the derivative liability in the term loan as of March 31, 2025 and December 31, 2024 is as follows: March 31, 2025 December 31, 2024 Stock Price $ 0.97 $ 1.48 Volatility 106.0 % 103.0 % Risk-free rate (continuous) 3.9 % 4.2 % Expected term (in years) 0.75 0.58 Dividend yield (continuous) — % — % 5. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities were comprised as follows: March 31, 2025 December 31, 2024 (in thousands) Manufacturing $ 4,617 $ 4,783 Employee compensation and benefits 1,632 3,616 Contract research 1,408 820 Professional fees 1,099 747 Accrued interest 266 266 Other 249 356 Total accrued expenses and other current liabilities $ 9,271 $ 10,588 6. Term Loan PWB Loan Agreement In April 2022, we entered into the PWB Loan Agreement with PWB and subsequently drew down an aggregate of $ 40.0 million in term loans. The term loans accrued interest on the outstanding daily balance at a floating annual rate equal to greater of (i) 0.5 % above the prime rate then in effect or (ii) 4.5 %. If the prime rate changed throughout the term, the interest rate would have been adjusted effective on the date of the prime rate change. All interest chargeable under the PWB Loan Agreement was computed on a 360-day year for the actual number of days elapsed, with interest payable monthly. We recognized interest expense related to the PWB Loan Agreement of $ 1.0 million during the three months ended March 31, 2024. In May 2024, we repaid all amounts outstanding under the PWB Loan Agreement, using $ 29.5 million in net loan proceeds received under the K2HV Loan Agreement, as described below, together with $ 10.5 million in existing cash. We recognized a total loss on extinguishment of debt in the amount of $ 0.6 million during the second quarter of 2024 primarily due to the write off of unamortized debt issuance costs. K2HV Loan Agreement In May 2024, we, as borrower, entered into the K2HV Loan Agreement with K2HV (together with any other lender from time to time, the “Lenders”); K2HV, as administrative agent for the Lenders; and Ankura Trust Company, LLC, as collateral trustee for the Lenders. The K2HV Loan Agreement provides up to $ 60.0 million principal in term loans. We received $ 30.0 million in gross loan proceeds at closing; $ 25.0 million from the first tranche commitment and $ 5.0 million from the second tranche commitment. A third tranche commitment of up to $ 10.0 million is available to be drawn at our option through June 30, 2025, subject to the achievement, as determined by the administrative agent in its discretion, of certain time-based, clinical and regulatory milestones and receipt of not less than $ 60.0 million in net cash proceeds from certain financing activities, with at least $ 50.0 million from a single offering of common stock. A fourth tranche commitment of up to $ 20.0 million is available to be drawn down at our option through May 1, 2026 or if the third tranche is funded, May 1, 2027, subject to Lender’s review of our clinical, financial and operating plan and subject to the Lender’s consent in its sole and absolute discretion. The term loan matures on May 1, 2028, and we are obligated to make interest only payments for the first 24 months, or 36 months if the third tranche is funded, followed by interest and equal principal payments each month thereafter through the maturity date. The term loan bears a variable interest rate equal to the greater of (i) 10.3 %, and (ii) the sum of (A) the prime rate last quoted in The Wall Street Journal (or a comparable replacement rate if The Wall Street Journal ceases to quote such rate) and (B) 1.8 %. We may prepay, at our option, all, but not less than all, of the outstanding principal balance and all accrued and 11 Table of Contents unpaid interest with respect to the principal balance being prepaid of the term loans, subject to a prepayment premium to which the Lenders are entitled and certain notice requirements. We are obligated to pay a final fee equal to 6.95 % of the aggregate amount of the term loans funded, or the Final Fee, to occur upon the earliest of (i) the maturity date, (ii) the acceleration of the term loans, and (iii) the prepayment of the term loans. The Final Fee is being accreted to interest expense using the effective interest method over the life of the debt. The Lenders may elect prior to the full repayment of the term loans to convert up to $ 5.0 million of outstanding principal of the term loans into shares of our common stock, pursuant to the Fixed Price Conversion or the Variable Price Conversion, subject to customary adjustments and 9.99 % and 19.99 % beneficial ownership limitations. There will be no prepayment penalty for any principal amount converted into common stock. We determined that the Fixed Price Conversion and the Variable Price Conversion within the K2HV Loan Agreement are required to be bifurcated as an embedded derivative under ASC 815, Derivatives and Hedging (“ASC 815”), at fair value, and recorded as a discount on the debt on the date of issuance, with subsequent changes in fair value recognized in the accompanying condensed consolidated statements of operations. See Note 4 for further discussion on this derivative instrument. As security for our obligations under the K2HV Loan Agreement, we granted the Lenders a first priority security interest on substantially all of our assets (other than intellectual property), subject to certain exceptions. The K2HV Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, dispose of assets, make changes to our business, management, ownership or business locations, merge or consolidate, incur additional indebtedness, incur additional liens, pay dividends or other distributions or repurchase equity, make investments, and enter into certain transactions with affiliates, in each case subject to certain exceptions. Upon the occurrence of an event of default, a default interest rate of an additional 5.0 % per annum may be applied to the outstanding loan balances, and the Lenders may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the K2HV Loan Agreement and under applicable law. As of March 31, 2025, we are in compliance with all covenants. Subject to certain conditions, we granted the Lenders the right, prior to repayment of the term loans, to invest up to $ 5.0 million in the aggregate in future offerings of capital stock, at market terms, subject to certain exceptions and conditions. We incurred debt issuance costs of $ 0.7 million in connection with the term loans, composed of the facility fee of $ 0.4 million and other expenses paid to the Lenders of $ 0.2 million and external legal fees of $ 0.1 million. These debt issuance costs, together with the fair value of the embedded derivative of $ 4.5 million at inception of the K2HV Loan Agreement, resulted in a debt discount of $ 5.1 million which is being amortized to interest expense over the term of the K2HV Loan Agreement using the effective interest method. As of March 31, 2025, the fair value of the term loan was estimated to be approximately $ 27.8 million. The fair value was measured using a discounted cash flow analysis, specifically the yield method, which requires the use of Level 3 inputs in the fair value hierarchy. The outstanding term loans payable consists of the following: March 31, 2025 December 31, 2024 (in thousands) Term loans $ 30,000 $ 30,000 Unamortized debt discount ( 3,415 ) ( 3,905 ) Total debt, long-term $ 26,585 $ 26,095 The following table provides the components of interest expense related to the K2HV Loan Agreement: Three Months Ended March 31, 2025 2024 (in thousands) Interest expense based on coupon interest rate ( 10.3 %) of outstanding term loans $ 773 $ — Amortization of debt discount and accretion of Final Fee ( 8.94 %) 490 — Total interest expense on effective rate ( 19.24 %) $ 1,263 $ — 12 Table of Contents The following table presents the total principal payments and Final Fee scheduled to become due during each of the years ended December 31 (in thousands): 2025 (remaining as of March 31, 2025) $ — 2026 9,600 2027 14,400 2028 8,085 Total principal payments and Final Fee $ 32,085 7. Common and Preferred Stock Common Stock We are authorized to issue 200,000,000 shares of common stock. Common stockholders are entitled to dividends if and when declared by our board of directors. As of March 31, 2025, no dividends on common stock had been declared by us. On May 10, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Leerink Partners LLC (“Leerink Partners”), pursuant to which we are entitled to offer and sell shares of our common stock (the “ATM Offering”). The Sales Agreement provides that Leerink Partners will be entitled to a sales commission equal to 3.0 % of the gross sales price per share of all shares sold under the ATM Offering. We were initially entitled to offer and sell shares of our common stock having an aggregate offering price of up to $ 50.0 million in the ATM Offering. On February 9, 2024, we filed a prospectus supplement (the “Prospectus Supplement”) under our shelf registration statement for the offer and sale of shares of our common stock having an offering price of up to an additional $ 25.0 million in the ATM Offering. Following our filing of the Prospectus Supplement, we are now entitled to offer and sell shares of our common stock with an aggregate offering price of up to $ 75.0 million pursuant to the Sales Agreement. During the three months ended March 31, 2025, we did not sell any shares of our common stock under the ATM Offering. During the three months ended March 31, 2024, we sold 4,169,324 shares of our common stock at an average price of $ 5.05 per share for net proceeds of $ 20.1 million after deducting sales commissions and offering expenses. We have reserved shares of common stock for issuance as follows: As of March 31, 2025 As of December 31, 2024 Shares reserved for exercises of outstanding stock options 10,282,640 7,634,937 Shares reserved for exercises of warrants 46,487 58,904 Shares reserved for issuance under the 2021 Employee Stock Purchase Plan 657,399 433,264 Shares reserved for issuance under the 2021 Stock Incentive Plan 1,513,575 1,919,921 Shares reserved for issuance as part of the K2HV Loan Agreement conversion feature 791,364 791,364 Total shares reserved for future issuance 13,291,465 10,838,390 Preferred Stock We are authorized to issue 5,000,000 shares of undesignated preferred stock in one or more series. As of March 31, 2025, no shares of preferred stock were issued or outstanding. 8. Stock-based Compensation 2017 Stock Incentive Plan In December 2017, we adopted the 2017 Stock Incentive Plan (the “2017 Plan”), as amended and restated, under which we could grant incentive stock options (“ISOs”), non-qualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), stock appreciation rights and other stock-based awards to eligible employees, officers, directors and consultants. The terms of stock options and RSAs, including vesting requirements, were determined by our board of directors, subject to the provisions of the 2017 Plan. 2021 Stock Incentive Plan In April 2021, our board of directors adopted and our stockholders approved the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective immediately prior to the effectiveness of our initial public offering (the “IPO”). As a result of the adoption of the 2021 Plan, no further awards will be made under the 2017 Plan. 13 Table of Contents The 2021 Plan provides for the grant of ISOs, non-qualified stock options, RSAs, RSUs, stock appreciation rights and other stock-based awards. Our employees, officers, directors, consultants and advisors are eligible to receive awards under the 2021 Plan. The terms of awards, including vesting requirements, are determined by our board of directors, subject to the provisions of the 2021 Plan. We initially registered 3,352,725 shares of common stock under the 2021 Plan, pursuant to a Registration Statement on Form S-8 filed with the SEC on April 30, 2021, which was comprised of (i) 2,843,116 shares of common stock reserved for issuance under the 2021 Plan, (ii) 31,884 shares of common stock originally reserved for issuance under the 2017 Plan that became available for issuance under the 2021 Plan upon the completion of the IPO, and (iii) 477,725 shares of unvested restricted stock subject to repurchase by us that may become issuable under the 2021 Plan following such repurchase. The 2021 Plan also provides that an additional number of shares will be added annually to the shares authorized for issuance under the 2021 Plan on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2022 and continuing until, and including, the fiscal year ending December 31, 2031. The number of shares added each year will be equal to the lesser of (i) 5 % of the number of outstanding common stock on such date and (ii) such amount as determined by our board of directors. As of March 31, 2025, a cumulative total of 7,152,859 additional shares have been added to the total shares authorized for issuance under the 2021 Plan in accordance with these terms. 2021 Employee Stock Purchase Plan The 2021 Employee Stock Purchase Plan (“2021 ESPP”) permits eligible employees to purchase shares of our common stock at a discount and consists of consecutive six-month offering periods, each containing a single six-month purchase period. On the first day of each offering period, each employee who is enrolled in the 2021 ESPP will automatically receive an option to purchase up to a whole number of shares of our common stock. The purchase price of each of the shares purchased, in a given purchase period, will be equal to 85 % of the lesser of the closing price of a share of our common stock on (i) the first day of the offering period, or (ii) the last day of the offering period. During the three months ended March 31, 2025 and 2024, no shares of our common stock were purchased by participants of the 2021 ESPP. Stock-Based Compensation Expense Total stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows: Three Months Ended March 31, 2025 2024 (in thousands) Research and development $ 1,055 $ 1,182 General and administrative 951 1,123 Total stock-based compensation $ 2,006 $ 2,305 RSU Activity We have granted RSUs to our employees under the 2021 Plan. As of December 31, 2024, all RSUs granted to employees or non-employees had become fully vested or had been previously forfeited. No RSUs were granted during the three months ended March 31, 2025. Accordingly, we had no unrecognized stock-based compensation expense related to unvested RSUs as of March 31, 2025. No RSUs vested during the three months ended March 31, 2024. Stock Option Activity The fair value of stock options granted during the three months ended March 31, 2025 and 2024 was calculated on the date of grant using the following weighted-average assumptions: Three Months Ended March 31, 2025 2024 Risk-free interest rate 4.4 % 3.9 % Expected term (in years) 5.9 6.0 Expected annual dividend yield — % — % Expected volatility 95.3 % 92.6 % Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the three months ended March 31, 2025 and 2024 was $ 1.22 and $ 3.59 per share, respectively. 14 Table of Contents The following table summarizes stock option activity during the three months ended March 31, 2025: Options Outstanding Number of Options Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in millions) Outstanding at December 31, 2024 7,634,937 $ 6.24 Granted 2,902,213 $ 1.56 Exercised — $ — Cancelled ( 254,510 ) $ 3.24 Outstanding at March 31, 2025 10,282,640 $ 5.00 7.82 $ — Exercisable at March 31, 2025 5,285,639 $ 7.01 6.57 $ — No stock options were exercised during the three months ended March 31, 2025. The aggregate intrinsic fair value of stock options exercised during the three months ended March 31, 2024 was nominal . As of March 31, 2025, we had unrecognized stock-based compensation expense related to unvested stock options of $ 9.8 million, which we expect to recognize over a weighted-average period of approximately 2.4 years. 9. Related Parties In May 2022, we entered into a sublease agreement with Crossbow Therapeutics, Inc. (“Crossbow”), for which entities affiliated with MPM Capital (“MPM Capital”) are also beneficial owners, to sublease the entirety of our office and laboratory space in Cambridge, Massachusetts. Luke Evnin, Ph.D., the chair of our board of directors, co-founded MPM Capital and serves as Managing Director of MPM Capital. Briggs Morrison, who serves on our board of directors, serves as Executive Partner of MPM Capital and Chief Executive Officer of Crossbow. The term of the sublease agreement commenced in June 2022 and ended in March 2024, with no option to extend. We received $ 0.2 million from Crossbow in June 2022 as a security deposit, which was remitted to Crossbow following the termination of the sublease. 10. Net Loss Attributable to Common Stockholders per Share For purposes of the diluted net loss attributable to common stockholders per share calculation, outstanding stock options, unvested RSAs, unvested RSUs, the conversion option derivative under the K2HV Loan Agreement, and warrants to purchase common stock are considered to be potentially dilutive securities; however, the following weighted-average amounts were excluded from the calculation of diluted net loss attributable to common stockholders per share because their effect would be anti-dilutive: March 31, 2025 2024 Outstanding stock options 10,282,640 7,450,864 Unvested RSUs — 361,500 Warrants to purchase common stock 46,487 58,904 Common stock to be issued under the 2021 ESPP 91,857 34,227 Common stock to be issued upon exercise of the K2HV Loan Agreement conversion feature 791,364 — Total 11,212,348 7,905,495 11. Segment Information We have one reportable segment which focuses on the discovery and development of cancer therapeutics. The segment derives its revenues from the Collaboration Agreement with Jazz (see Note 3, Collaboration and License Agreement ). Our chief operating decision maker (“CODM”) manages our operations on an integrated basis for the purpose of allocating resources. When evaluating our financial performance, our CODM regularly reviews total expenses and expenses by function and makes decisions using this information based on the performance of the enterprise as a whole. Our CODM primarily evaluates the performance of the enterprise based on results that have a direct impact on our available cash and cash equivalents and accordingly places less significance on non-cash expenses such as stock-based compensation and depreciation expenses in determining how to allocate resources. 15 Table of Contents Segment assets regularly reviewed by our CODM include measures of liquidity, primarily available cash and cash equivalents, and are consistent with the presentation of cash and cash equivalents reported in our condensed consolidated balance sheets. The following is a summary of our segment and consolidated net loss, including significant segment expenses: Three Months Ended March 31, 2025 2024 (in thousands) Collaboration revenue $ — $ 742 Less: Clinical development 4,329 2,728 Manufacturing 4,088 4,393 General and administrative support 3,823 3,739 Research and discovery 3,319 4,275 Other segment expenses (a) 2,432 2,769 Interest income 997 1,973 Interest expense ( 1,263 ) ( 1,003 ) Other income (expense), net 168 ( 1 ) Segment and consolidated net loss $ ( 18,089 ) $ ( 16,193 ) (a) Other segment expenses includes non-cash expenses for stock-based compensation and depreciation expenses. 16 Table of Contents