What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-08 · 175 added, 83 removed, 234 unchanged (52% of the section changed)

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We are leveraging our proprietary PREDATOR platform to design conditionally activated molecules that stimulate both adaptive and innate immunity with the goal of addressing the limitations of conventional proinflammatory immune therapies.

Our molecules, which we refer to as INDUKINE molecules, are intended to activate selectively in the tumor microenvironment, or TME.

Our molecules, which we refer to as INDUKINE and INDUCER molecules, are intended to activate selectively in the tumor microenvironment, or TME.

Our most advanced product candidates, WTX-124 and WTX-330, are systemically delivered, conditionally activated Interleukin-2 and Interleukin-12, respectively, INDUKINE molecules for the treatment of multiple tumor types.

We are currently evaluating WTX-124 in a Phase 1/1b clinical trial as a monotherapy and in combination with Merck & Co., Inc.’s anti-PD-1 therapy KEYTRUDA (pembrolizumab) in patients with immunotherapy sensitive advanced or metastatic solid tumors who have failed standard of care treatment, including checkpoint inhibitor therapy.

In June 2024, we reported updated interim data from the monotherapy dose-escalation arms of the Phase 1/1b clinical trial, selected a recommended dose for expansion and initiated monotherapy dose expansion arms, and reported initial data from the combination dose escalation cohorts of the Phase 1/1b clinical trial.

In June 2024, we reported updated interim data from the monotherapy dose-escalation arms of the Phase 1/1b clinical trial, selected a recommended dose for expansion, initiated monotherapy dose expansion arms, and reported initial data from the combination dose escalation cohorts of the Phase 1/1b clinical trial.

All expansion arms are actively enrolling patients in the ongoing Phase 1/1b clinical trial at a recommended dose of 18 mg administered intravenously every two weeks.

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Guided by these data, we initiated a Phase 1b/2 clinical trial of WTX-330 in the first quarter of 2025 in patients with selected advanced or metastatic solid tumors and dosed our first patient in the second quarter of 2025.

We continue to further the development of our preclinical product candidates, WTX-712, WTX-518, and WTX-921.

We continue to build our PREDATOR platform to generate a pipeline of innovative therapeutics that cover a diversity of immune stimulating mechanisms with the potential to address significant unmet medical need in therapeutic areas including new immuno-oncology, autoimmune, and inflammatory diseases.

Our PREDATOR platform consists of our protein engineering technologies and our know-how, which we use to generate INDUKINE and INDUCER molecules with multiple functional domains rationally engineered into a single protein to achieve the desired pharmaceutical profile.

Each of our lead INDUKINE and INDUCER molecules consists of four components:

an immunomodulating agent (cytokine or T cell engager), an inactivation domain, a half-life extension domain, and a proprietary protease-cleavable linker.

Our INDUKINE molecules contain cytokines that modulate the immune system within a disease-specific tissue, with full potency and functionality observed in preclinical studies.

Our INDUCER molecules contain potent T cell engager molecules that redirect T cells to tumor cells via tumor associated antigens, resulting in T cell dependent killing of tumor cells.

The inactivation domain physically blocks the immunomodulating payload in non-diseased tissues throughout the body, or the periphery, preventing the payload from being active until the inactivation domain is removed by protease cleavage in the disease-specific tissue, resulting in an active immunomodulating agent (cytokine or T cell engager).

The half-life extension domain enables high systemic and disease-specific tissue exposure for the INDUKINE or INDUCER molecule prior to its cleavage in the disease-specific tissue.

After tissue specific cleavage, the half-life extension domain is removed, and the payload is released to modulate the activity of immune cells.

We select the proprietary protease-cleavable linker to enable conditional release of the immunomodulating agent

of the INDUKINE or INDUCER molecule within disease-specific tissue.

This selection is based on our extensive screening in preclinical studies to identify protease-cleavable linkers that are efficiently cleaved by a broad array of disease-specific tissues (e.g., human tumor tissues) with minimal cleavage in non-diseased tissues.

We continue to further the development of our INDUKINE preclinical product candidates, WTX-712, WTX-518, and WTX-921.

WTX-712 is a systemically delivered, conditionally activated Interleukin-21 (IL-21) INDUKINE molecule that is being developed to minimize the severe toxicities that have been observed with recombinant IL-21 therapy and maximize clinical benefit when administered as monotherapy or in combination with checkpoint inhibitors in refractory and/or immunologically unresponsive tumors.

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WTX-921 is a systemically delivered, conditionally activated Interleukin-10 (IL-10) INDUKINE molecule for treatment of inflammatory bowel disease, or IBD, and potentially other inflammatory diseases.

Our PREDATOR platform consists of our protein

engineering technologies and our know-how, which we use to generate INDUKINE molecules with multiple functional domains rationally engineered into a single protein to achieve the desired pharmaceutical profile.

Each of our lead INDUKINE molecules consists of four components:

a cytokine, an inactivation domain, a half-life extension domain and a proprietary protease-cleavable linker.

Our INDUKINE molecules for oncology contain cytokines that mediate pro-inflammatory, anti-cancer mechanisms within the TME, with full potency and functionality observed in preclinical studies.

The inactivation domain physically blocks the cytokine portion of the INDUKINE molecule in non-tumor tissue throughout the body, or the periphery, preventing it from binding to its receptor until it is cleaved and thereby activated in the TME.

The half-life extension domain enables high systemic and tumor tissue exposure for the INDUKINE molecule prior to its cleavage in the tumor.

After cleavage in the tumor, the half-life extension domain is removed, and the cytokine is released to activate immune cells.

We select the proprietary protease-cleavable linker to enable conditional release of the cytokine portion of the INDUKINE molecule within tumor tissue.

This selection is based on our extensive screening in preclinical studies to identify protease-cleavable linkers that are efficiently cleaved by a broad array of human tumor tissues with minimal cleavage in non-tumor tissues.

We are also utilizing this PREDATOR platform know-how and expertise to develop conditionally activated immune cell engagers.

Immune cell engagers, such as T cell engagers, are typically bispecific antibodies that redirect immune cells to cancer cells via engagement with tumor associated cell surface antigens, leading to immune cell mediated killing of the cancer cells.

We have provided initial preclinical data for our proprietary INDUCER T cell engager molecules demonstrating that our PREDATOR masking technology silenced peripheral activity and prevented cytokine release.

We expect to nominate our first INDUCER development candidate in the second quarter of 2025.

We are also utilizing this PREDATOR platform know-how and expertise to develop conditionally activated immune cell engagers, such as T cell engagers.

T cell engagers are typically bispecific antibodies that redirect immune cells to cancer cells via engagement with tumor associated cell surface antigens, leading to immune cell mediated killing of the cancer cells.

We call our T cell engager molecules INDUCER molecules and have provided initial preclinical data for our proprietary INDUCER T cell engager molecules demonstrating that our PREDATOR masking technology silenced peripheral activity and prevented cytokine release.

We have nominated our first INDUCER development candidate, WTX-1011, targeting Six-Transmembrane Epithelial Antigen of the Prostate 1 (STEAP1).

STEAP1 has limited expression in normal tissues but is overexpressed in prostate tumors.

This makes it an attractive target for T cell engager therapy, but existing anti-STEAP1 T-cell engager therapies are still associated with notable toxicities in the periphery such as cytokine release.

Preclinical data has demonstrated that the masking technology in Werewolf’s WTX-1011 INDUCER molecule has successfully silenced peripheral activity and prevented cytokine release, providing an expanded therapeutic window.

In April 2022, we entered into a global collaboration and license agreement, or the Collaboration Agreement, with Jazz Pharmaceuticals Ireland Limited, or Jazz, under which Jazz acquired exclusive global development and commercialization rights related to Interferon alpha, or IFNα, INDUKINE molecule, JZP898 (formerly WTX-613), as well as products containing certain isolated recombinant polypeptides comprising IFNα that meet specified criteria (each such product, a Licensed Product).

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The Collaboration Agreement includes multiple development and regulatory and sales-based milestones, which were excluded from the transaction price at inception of the Collaboration Agreement based on our assessment that there was a high level of uncertainty of achieving the milestones.

During the three months ended March 31, 2025, we re-evaluated this assessment as it pertains to any milestones that continue to be excluded from the transaction price, and concluded not to recognize any adjustment to the transaction price associated with variable consideration previously excluded from the transaction price.

During the six months ended June 30, 2025, we re-evaluated this assessment as it pertains to any milestones that continue to be excluded from the transaction price, and concluded no adjustment to the transaction price associated with variable consideration previously excluded from the transaction price should be recognized.

As of the execution of the Transfer Agreement, we no longer have any material performance obligations under the Collaboration Agreement, and all remaining deferred revenue related to the Collaboration Agreement was recognized upon execution of the Transfer Agreement.

Accordingly, we recognized no revenue related to the Collaboration Agreement during the three months ended March 31, 2025.

Accordingly, we recognized no revenue related to the Collaboration Agreement during the six months ended June 30, 2025.

In the future, our ability to generate revenue from the Collaboration Agreement will depend on successfully achieving the various development and regulatory and sales-based milestones.

We may also generate revenue from product sales or other collaboration agreements, strategic alliances and licensing arrangements.

We expect that potential future revenue, if any, will fluctuate from quarter-to-quarter and year-to-year based upon our ability to successfully meet the criteria for payment of the remaining development and regulatory milestones, and the timing and amount of other payments and product sales, to the extent any are successfully commercialized.

We expect that potential future revenue, if any, will

fluctuate from quarter-to-quarter and year-to-year based upon our ability to successfully meet the criteria for payment of the remaining development and regulatory milestones, and the timing and amount of other payments and product sales, to the extent any are successfully commercialized.

If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

(in thousands)

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WTX-712 17 368 104 574

WTX-921 31 — 40 —

WTX-518 1 169 2 183

JZP898 — 200 — 524

Pre-development candidates 1,063 262 1,644 510

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Research and development activities are central to our business model.

We expect that our research and development expenses will continue to increase substantially for the foreseeable future as we progress our clinical trials of WTX-124 and WTX-330, continue preclinical development of WTX-712, WTX-518 and WTX-921, and continue to discover and develop additional product candidates.

We expect that our research and development expenses will continue to be substantial for the foreseeable future as we progress our clinical trials of WTX-124 and WTX-330, continue preclinical development of WTX-712 and WTX-518, begin preclinical development of WTX-1011, and continue to discover and develop additional product candidates.

As a result of our entry into the Collaboration Agreement, which commenced in April 2022, our external preclinical development costs for JZP898 were generally reimbursed by Jazz until we completed all material performance obligations in June 2024.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming.

We cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete development of our current or future product candidates.

We cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete

development of our current or future product candidates.

The actual probability of success for our product candidates will depend on a variety of factors, including:

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and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We expect that our general and administrative expenses will increase in the future as we increase our personnel headcount to support the increasing size and complexity of our research, development and manufacturing activities.

We expect that our general and administrative expenses will fluctuate in the future based on the operating needs of our business, including the general and administrative resources needed to support our research, development and manufacturing activities.

Other (Expense) Income

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Interest expense represents interest incurred from our loan agreement, or the PWB Loan Agreement, with Pacific Western Bank, or PWB, until the extinguishment of the PWB term loan in May 2024, interest incurred from our loan and security agreement, or the K2HV Loan Agreement, with K2 HealthVentures LLC, or K2HV, and non-cash interest expense related to the amortization of debt issuance costs.

Other Income (Expense), Net

Other income (expense), net primarily consists of the unrealized gain or loss recognized on the change in the fair value of the derivative liability associated with the K2HV Loan Agreement.

Loss on Extinguishment of Debt

Loss on extinguishment of debt consists of any residual financial impact from the repayment of term loans with lenders, specifically the extinguishment of the PWB term loan in May 2024.

Other Income, Net

Other income, net primarily consists of the unrealized gain or loss recognized on the change in the fair value of the derivative liability associated with the K2HV Loan Agreement.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

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

The following table summarizes our results of operations:

Three Months Ended

March 31, $ Change

June 30, $ Change

(in thousands)

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Interest expense (1,301) (1,142) (159)

Other income (expense), net 168 (1) 169

Loss on extinguishment of debt — (553) 553

Other income, net 11 1,613 (1,602)

Total other (expense) income (440) 1,711 (2,151)

$ (17,982) $ (17,249) $ (733)

No revenue was recognized during the three months ended March 31, 2025.

No revenue was recognized during the three months ended June 30, 2025.

Following the execution of the Transfer Agreement with Jazz in June 2024, the only significant sources of revenue expected to be generated from the Collaboration Agreement are the remaining development and regulatory and sales-based milestones.

Based on our assessment that there continues to be a high level of uncertainty of achieving these milestones, no revenue from the remaining milestones has been recognized during the period.

Comparatively, we recognized $0.7 million during the three months ended March 31, 2024 related to the Collaboration Agreement with Jazz prior to the execution of the Transfer Agreement.

Based on our assessment that there continues to be a high level of uncertainty of achieving these milestones, no revenue from the remaining milestones has been recognized during the three months ended June 30, 2025.

Comparatively, we recognized $1.1 million during the three months ended June 30, 2024 related to the Collaboration Agreement with Jazz prior to the execution of the Transfer Agreement.

Research and Development Expenses

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Three Months Ended

March 31, $ Change

June 30, $ Change

(in thousands)

Clinical trial costs $ 4,201 $ 4,566 $ (365)

Personnel 3,750 4,295 (545)

Manufacturing 2,052 3,899 (1,847)

Clinical trial costs 2,792 1,769 1,023

Contract research organization 1,190 763 427

Lab consumables 1,045 735 310

Facility costs 776 771 5

Contract research organization 672 1,059 (387)

Other 129 242 (113)

Total research and development expenses $ 13,143 $ 15,271 $ (2,128)

Research and development expenses for the three months ended March 31, 2025 were $13.1 million, compared to $12.9 million for the three months ended March 31, 2024.

The increase of $0.2 million was primarily due to:

• $1.0 million of increased clinical trial costs, driven by costs associated with the continued enrollment in our ongoing Phase 1/1b clinical trial of WTX-124 and the initiation of a Phase 1b/2 clinical trial of WTX-330;

• $0.2 million of increased lab consumables for supplies procured in our efforts to further the development of our preclinical candidates.

These increases were partially offset by:

• $0.4 million of decreased contract research organization costs due to costs incurred during the three months ended March 31, 2024 associated with improving the manufacturing process for WTX-330, which were non-recurring during the three months ended March 31, 2025;

• $0.3 million of decreased manufacturing costs driven primarily by a decrease in costs associated with JZP898 following the execution of the Transfer Agreement with Jazz;

Research and development expenses for the three months ended June 30, 2025 were $13.1 million compared to $15.3 million for the three months ended June 30, 2024.

The decrease of $2.1 million was primarily due to:

• $0.4 million of decreased clinical trial costs driven primarily by a decrease in costs associated with the Phase 1/1b clinical trial for WTX-124, which incurred higher patient and site monitoring costs during three months ended June 30, 2024 compared to the three months ended June 30, 2025;

• $0.5 million of decreased personnel costs, driven primarily by the timing and valuation of stock-based awards granted to employees;

• $1.8 million of decreased manufacturing costs driven primarily by a decrease in costs associated with WTX-330, which were higher during the three months ended June 30, 2024 in preparation for our Phase 1b/2 clinical trial for WTX-330 that was initiated during the first quarter of 2025.

These decreases were partially offset by:

• $0.4 million of increased contract research organization costs and $0.3 million of increased lab consumables, both driven primarily by costs associated with furthering the development of our preclinical candidates.

General and Administrative Expenses

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Three Months Ended

March 31, $ Change

June 30, $ Change

(in thousands)

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$ 4,399 $ 4,832 $ (433)

General and administrative expenses were $4.9 million for the three months ended March 31, 2025, compared to $5.0 million for three months ended March 31, 2024.

The decrease of $0.1 million was primarily due to a moderate decrease in professional services fees of $0.1 million.

General and administrative expenses were $4.4 million for the three months ended June 30, 2025 compared to $4.8 million for three months ended June 30, 2024.

The decrease of $0.4 million was primarily due to a decrease in personnel costs of $0.3 million driven primarily by the timing and valuation of stock-based awards granted to employees.

Interest Income

Interest income was $1.0 million for the three months ended March 31, 2025, compared to $2.0 million for the three months ended March 31, 2024.

This decrease in interest income was primarily a result of less cash equivalents being held in money market accounts during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Interest income was $0.9 million for the three months ended June 30, 2025 compared to $1.8 million for the three months ended June 30, 2024.

This decrease in interest income was primarily a result of lower balances in money market accounts during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Interest Expense

Interest expense was $1.3 million for the three months ended March 31, 2025, compared to $1.0 million for the three months ended March 31, 2024.

Interest expense was $1.3 million for the three months ended June 30, 2025, compared to $1.1 million for the three months ended June 30, 2024.

This increase in interest expense was primarily the result of a higher effective interest rate under the K2HV Loan Agreement, compared to the effective interest rate associated with our previous term loan with PWB.

Other Income (Expense), Net

Other income (expense), net for the three months ended March 31, 2025 consisted of $0.2 million of gains recognized for the change in fair value of the derivative liability associated with the K2HV Loan Agreement.

As we entered into the K2HV Loan Agreement during the second quarter of 2024, no similar activity existed for the three months ended March 31, 2024.

Loss on Extinguishment of Debt

The extinguishment of the PWB term loan resulted in a one-time loss of $0.6 million for the three months ended June 30, 2024.

As no corresponding finance activity occurred for the three months ended June 30, 2025, we did not incur any gain or loss on a debt extinguishment during the current period.

Other Income, Net

Other income, net for the three months ended June 30, 2025 and 2024 primarily consists of the gains recognized for the change in fair value of the derivative liability associated with the K2HV Loan Agreement during each period.

Results of Operations

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

The following table summarizes our results of operations:

Six Months Ended

June 30, $ Change

(in thousands)

Collaboration revenue $ — $ 1,885 $ (1,885)

Operating expenses:

Research and development

26,263 28,179 (1,916)

General and administrative

9,270 9,828 (558)

Total operating expenses

35,533 38,007 (2,474)

Operating loss

(35,533) (36,122) 589

Other (expense) income:

Interest income 1,847 3,766 (1,919)

Interest expense (2,564) (2,145) (419)

Loss on extinguishment of debt — (553) 553

Other income, net 179 1,612 (1,433)

Total other (expense) income (538) 2,680 (3,218)

$ (36,071) $ (33,442) $ (2,629)

No revenue was recognized during the six months ended June 30, 2025.

Comparatively, we recognized $1.9 million during the six months ended June 30, 2024 related to the Collaboration Agreement with Jazz prior to the execution of the Transfer Agreement.

Research and Development Expenses

The following table summarizes our research and development expenses:

Six Months Ended

June 30, $ Change

(in thousands)

Personnel $ 8,081 $ 8,765 $ (684)

Clinical trial costs 6,993 6,335 658

Manufacturing 5,515 7,708 (2,193)

Lab consumables 1,987 1,486 501

Contract research organization 1,862 1,822 40

Facility costs 1,581 1,664 (83)

Other 244 399 (155)

Total research and development expenses $ 26,263 $ 28,179 $ (1,916)

Research and development expenses for the six months ended June 30, 2025 were $26.3 million compared to $28.2 million for the six months ended June 30, 2024.

The decrease of $1.9 million was primarily due to:

• $0.7 million of decreased personnel costs, driven primarily by the timing and valuation of stock-based awards granted to employees;

• $2.2 million of decreased manufacturing costs, driven by a decrease of costs associated with WTX-330 and JZP898 of $4.7 million and $0.5 million, respectively.

Costs associated with WTX-330 were higher during the six months ended June 30, 2024 in preparation for our Phase 1b/2 clinical trial for WTX-330 that was initiated during the first quarter of 2025, and costs associated with JZP898 were higher during the six months ended June 30, 2024 prior to the execution of the Transfer Agreement with Jazz.

These decreases were partially offset by an increase in costs associated with WTX-124 of $3.2 million due to our manufacturing efforts to continue to support our ongoing Phase 1/1b clinical trial for WTX-124.

These decreases were partially offset by:

• $0.7 million of increased clinical trial costs, driven by costs associated with the continued enrollment in our ongoing Phase 1/1b clinical trial for WTX-124 and the initiation of our Phase 1b/2 clinical trial for WTX-330;

• $0.5 million of increased lab consumables for supplies procured in our efforts to further the development of our preclinical candidates.

General and Administrative Expenses

The following table summarizes our general and administrative expenses:

Six Months Ended

June 30, $ Change

(in thousands)

Personnel $ 4,745 $ 5,028 $ (283)

Professional services 2,462 2,571 (109)

Facilities 657 696 (39)

Corporate insurance 537 599 (62)

Information technology costs

Other 502 527 (25)

Total general and administrative expenses $ 9,270 $ 9,828 $ (558)

General and administrative expenses were $9.3 million for the six months ended June 30, 2025 compared to $9.8 million for the six months ended June 30, 2024.

The decrease of $0.6 million was due to moderate decreases across all general and administrative expenses, including a decrease in personnel costs of $0.3 million driven primarily by the timing and valuation of stock-based awards granted to employees.

Interest Income

Interest income was $1.8 million for the six months ended June 30, 2025 compared to $3.8 million for the six months ended June 30, 2024.

This decrease in interest income was primarily a result of lower balances in money market accounts during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Interest Expense

Interest expense was $2.6 million for the six months ended June 30, 2025 compared to $2.1 million for the six months ended June 30, 2024.

Loss on Extinguishment of Debt

The extinguishment of the PWB term loan resulted in a one-time loss of $0.6 million for the six months ended June 30, 2024.

As no corresponding finance activity occurred for the six months ended June 30, 2025, we did not incur any gain or loss on a debt extinguishment during the current period.

Other Income, Net

Other income, net for the six months ended June 30, 2025 and 2024 primarily consists of the gains recognized for the change in fair value of the derivative liability associated with the K2HV Loan Agreement during each period.

Liquidity and Capital Resources

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and enabling manufacturing for our development programs.

Our net loss was $18.1 million for the three months ended March 31, 2025.

As of March 31, 2025, we had an accumulated deficit of $432.7 million.

Our net loss was $18.0 million and $36.1 million the three and six months ended June 30, 2025, respectively.

As of June 30, 2025, we had an accumulated deficit of $450.7 million.

As we have no products that are approved for sale, we have not generated any revenue from product sales to date, and we do not expect to generate any such revenue for the foreseeable future, if at all.

Instead, we have financed our operations primarily through aggregate cash proceeds from convertible promissory notes, private placements of our convertible preferred stock, our initial public offering, payments from Jazz under the Collaboration Agreement, sales of common stock through our at-the-market program, and the drawdown of our term loans.

Because our product candidates are in clinical development and the outcome of our efforts is uncertain, we cannot

estimate the actual costs necessary to successfully complete the development and commercialization of our product candidates, or when we may achieve profitability, if at all.

We expect to continue to incur substantial and increasing expenses and net losses for the foreseeable future, as we continue to advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel and operate as a public company.

Because our product candidates are in clinical development and the outcome of our efforts is uncertain, we cannot estimate the actual costs necessary to successfully complete the development and commercialization of our product candidates, or when we may achieve profitability, if at all.

property portfolio, hire additional research and development and business personnel and operate as a public company.

As a result, we expect that our accumulated deficit will also increase significantly.

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$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, and then interest and equal principal payments each month thereafter through the maturity date.

A third tranche commitment of up to $10.0 million was 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.

Our ability to draw upon the third tranche commitment expired on June 30, 2025 without being drawn upon.

A fourth tranche commitment of up to $20.0 million is available to be drawn down at our option through May 1, 2026, 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 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%.

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The Final Fee is being accreted to interest expense using the effective interest method over the life of the debt.

price of the lesser of $6.3182 per share, or the Fixed Price Conversion, and the lowest effective price per share of our first equity financing following the closing of the K2HV Loan Agreement, or the Variable Price Conversion, subject to customary adjustments and 9.99% and 19.99% beneficial ownership limitations.

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, or the Fixed Price Conversion, and the lowest effective price per share of our first equity financing following the closing of the K2HV Loan Agreement, 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.

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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 its 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.

As of June 30, 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.

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The Sales Agreement provides that Leerink Partners is 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, or 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 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, subject to limitations on our ability to use Form S-3 to sell more than one-third of the aggregate market value of our public float in the trailing 12-month period, which limitations will remain in place until such time as our public float exceeds $75 million.

During the three months ended March 31, 2025, we did not sell any shares of our common stock 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, which was subsequently increased in February 2024 to $75.0 million.

On May 8, 2025, we filed a new Registration Statement on Form S-3 and filed a new prospectus covering the ATM Offering, or the Prospectus.

As a result of becoming subject to General Instruction I.B.6 of Form S-3, which is referred to as the Baby Shelf Limitation, we are entitled to offer and sell shares of our common stock with an aggregate offering price of up to $12.5 million in the ATM Offering.

As of June 30, 2025, we remain subject to the Baby Shelf Limitation.

During the six months ended June 30, 2025, we sold 421,766 shares of our common stock at an average price of $1.33 per share for net proceeds of $0.3 million after deducting sales commissions and offering expenses.

Jazz Collaboration

As of March 31, 2025, we have received $20.0 million in payments from Jazz, excluding payments for reimbursed costs, under the terms of the Collaboration Agreement.

As of June 30, 2025, we have received $20.0 million in payments from Jazz, excluding payments for reimbursed costs, under the terms of the Collaboration Agreement.

We are eligible to receive up to an additional $515.0 million in development and regulatory milestones, and up to $740.0 million in sales-based milestones for all Licensed Products.

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Plan of Operation and Future Funding Requirements

As of March 31, 2025, we had cash and cash equivalents of $92.0 million.

We also had restricted cash and cash equivalents of $1.2 million as of March 31, 2025.

We believe that our existing cash and cash equivalents at March 31, 2025, will be sufficient to fund our operational expenses and capital expenditure requirements into the fourth quarter of 2026.

As of June 30, 2025, we had cash and cash equivalents of $77.6 million.

We also had restricted cash and cash equivalents of $0.9 million as of June 30, 2025.

We believe that our existing cash and cash equivalents at June 30, 2025, will be sufficient to fund our operational expenses and capital expenditure requirements into the fourth quarter of 2026.

We have based this estimate on assumptions that may prove to be wrong, however, and we could use our capital resources sooner than we expect.

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The timing and amount of our operating expenditures will depend largely on:

associated with attracting, hiring and retaining skilled personnel and consultants as our preclinical and clinical activities increase;

• the scope, progress, timing, costs and results of researching and developing our current product candidates or any future product candidates, including with respect to our clinical trials of WTX-124 and WTX-330 and the costs associated with attracting, hiring and retaining skilled personnel and consultants as our preclinical and clinical activities increase;

• the cost of manufacturing our product candidates WTX-124, WTX-330, and any future product candidates for clinical trials and, if we are able to obtain marketing approval, for commercial sale;

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The following table provides information regarding our cash flows:

Three Months Ended

Six Months Ended

(in thousands)

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Financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents

Net decrease in cash, cash equivalents and restricted cash and cash equivalents

$ (33,724) $ (19,063)

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2025 was $18.9 million, compared to $15.3 million for the three months ended March 31, 2024.

This increase of $3.7 million was primarily attributable to a decrease in revenue from our Collaboration Agreement of $0.7 million, combined with a decrease in interest income of $1.0 million and an increase in interest expense of $0.3 million.

The change in net loss outlined above is also increased by a decrease of $1.8 million in non-cash charges and changes in operating assets and liabilities.

Net cash used in operating activities for the six months ended June 30, 2025 was $34.1 million compared to $29.5 million for the six months ended June 30, 2024.

The increase in cash used for operating activities of $4.6 million is driven by several factors, including a decrease in interest income recognized during the six months ended June 30, 2025 of $1.9 million compared to the six months ended June 30, 2024.

Additionally, we recognized no collaboration revenue during the six months ended June 30, 2025 following the execution of the Transfer Agreement in June 2024;

a decrease of $0.5 million from the collaboration revenue recognized during the six months ended June 30, 2024, net of the change in deferred revenue for the same period.

Finally, the cash used to pay down our current operating liabilities increased by $2.2 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to higher operating costs towards the end of 2024 and leading into the first quarter of 2025.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2024 was $0.1 million, which represents capital expenditures of property and equipment used in our operations during the period.

No such expenditures occurred during the three months ended March 31, 2025.

Net cash used in investing activities for the six months ended June 30, 2024 was $0.1 million, which represents capital expenditures of property and equipment used in our operations during the period.

No such expenditures occurred during the six months ended June 30, 2025.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2024 primarily consisted of $20.2 million in net proceeds from our ATM Offering during the period.

No such proceeds were received during the three months ended March 31, 2025.

Net cash provided by financing activities for the six months ended June 30, 2025 was $0.4 million, compared to the $10.5 million for the six months ended June 30, 2024.

Net proceeds from our ATM Offering were significantly higher for the six months ended June 30, 2024 due to significantly higher transaction volume combined with a higher average price per share of our common stock sold, which resulted in $21.1 million in net proceeds from our ATM Offering during the six months ended June 30, 2024.

These proceeds were partially offset by the repayment of all amounts outstanding under the PWB Loan Agreement, which resulted in the repayment of $10.7 million in term loans, net of proceeds and debt issuance costs from the K2HV Loan Agreement.

Contractual Obligations

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On an ongoing basis, we evaluate our estimates which 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.

estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances.

We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances.

Actual results could differ from those estimates under different assumptions and conditions.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in our 2024 Annual Report, which was filed with the SEC on March 11, 2025.

During the three months ended March 31, 2025, there were no material changes to our critical accounting policies from those previously disclosed.

During the three and six months ended June 30, 2025, there were no material changes to our critical accounting policies from those previously disclosed.

Quantitative and Qualitative Disclosures about Market Risk.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis