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Item 7. Management’s Discussion and Analysis

2026-03-27 compared with 2025-03-11 · 123 added, 149 removed, 225 unchanged (55% of the section changed)

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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.

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.

We have leveraged 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 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.

We have targeted full enrollment in the monotherapy dose expansion arm in the first half of 2025 and in the combination expansion arm in the second half of 2025.

We plan to meet with regulatory authorities to discuss potential registrational pathways in the second half of 2025 and to release a monotherapy and combination therapy clinical data update in the fourth quarter of 2025.

We have evaluated WTX-330 in a Phase 1 clinical trial for the treatment of immunotherapy resistant advanced or metastatic solid tumors or lymphoma, to be followed by expansion arms in relapsed/refractory tumors following treatment with checkpoint inhibitors or tumors for which checkpoint inhibitors are not approved.

We announced the initiation of patient dosing in February 2023.

We reported initial data from the Phase 1 clinical trial in June 2024.

In March 2024, we received alignment from the U.S.

Food and Drug Administration, or the FDA, on the comparability path for WTX-330 for an improved manufacturing process.

In December 2024, we submitted an amended investigational new drug application, or IND, for WTX-330, and we expect to initiate a Phase 1/2 dose- and regimen-finding clinical trial of WTX-330 in the first quarter of 2025 in patients with selected advanced or metastatic solid tumors.

We presented updated interim safety and efficacy data from the Phase 1 clinical trial at the Society for Immunotherapy of Cancer Annual Meeting in November 2024.

We continue to further the development of our preclinical product candidates, WTX-518, a systemically delivered, conditionally activated Interleukin-18 INDUKINE molecule in development for the treatment of cancer designed to promote activation of immune cells in the TME, resulting in antitumor immunity, WTX-712, a systemically delivered, conditionally activated Interleukin-21, or 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, and WTX-921, a novel Interleukin-10 INDUKINE molecule in development for the treatment of inflammatory bowel disease and potentially other inflammatory diseases.

In April 2024, we presented preclinical data for both WTX-518 and WTX-712 at the American Association for Cancer Research Annual Meeting.

Our preclinical models demonstrate that WTX-518 exhibits remarkable tumor-selective activation, resistance to IL-18BP and robust immune activation, while WTX-712 acts through a unique mechanism that robustly activates tumor-specific T lymphocytes with an expanded therapeutic window through its selective release of wild-type IL-21 in the TME.

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).

Pursuant to the terms of the Collaboration Agreement, we were responsible for certain preclinical development activities with respect to JZP898 and other development activities specified in mutually agreed upon development plans.

Jazz generally

reimbursed us for the cost of such activities.

Jazz is responsible for all other development and commercialization activities conducted to exploit the Licensed Products.

The Phase 1/1b clinical trial of WTX-124 is expected to be completed in the second quarter of 2026.

Additional funding will be required to initiate any further development, which could include a registration-enabling trial.

We are currently seeking a strategic partnership for the further development of WTX-124.

The dose- and regimen-determining Part A of the Phase 1b/2 clinical trial of WTX-330 is expected to be completed in the second quarter of 2026.

Additional funding will be required to further develop WTX-330, which could include sequential administration of WTX-330 and WTX-124 that may provide a novel development path in poorly immunogenic tumors.

We are currently seeking a strategic partnership for the further development of WTX-330.

Strategic Review

In February 2026, we adopted a restructuring plan to extend our capital resources in connection with initiating a process to explore a full range of strategic alternatives to advance our promising platform and drug development pipeline to maximize stockholder value.

We have engaged Piper Sandler & Co., or Piper Sandler, to serve as exclusive financial advisor to assist in the strategic review process.

Measures contemplated during the strategic review process may include, among other options, a sale of our company, a business combination or merger, a sale of our assets, licensing or collaboration arrangements, or other strategic transactions.

There can be no assurance that the strategic review process will result in any agreement or transaction that will enhance stockholder value, or any agreement or transaction at all.

As part of the restructuring plan, our board of directors approved a reduction in force, representing 64% of our workforce, to better align our resources with our pursuit of strategic alternatives (the “Reduction”).

As a result of the Reduction, we estimate that we will incur a one-time charge in the first quarter of 2026 related to employee separation benefits, including severance and related benefits, of approximately $4.1 million, most of which is anticipated to result in cash expenditures to be incurred in the first quarter of 2026.

We may also incur additional costs, including, but not limited to, potential impairment charges not currently contemplated due to events that may occur as a result of, or that are associated with, the restructuring plan.

The estimated charges that we expect to incur are subject to a number of assumptions, and actual results may differ materially from these estimates.

Financial Operations Overview

Historically, all of our revenue has been generated from 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 to Interferon alpha, or IFNα, INDUKINE molecule, JZP898 (formerly WTX-613).

In June 2024, we executed a transfer agreement, or the Transfer Agreement, to assign our rights in a development agreement with a contract manufacturer of JZP898 to Jazz.

The execution of this Transfer Agreement was the last material performance obligation required of us under the Collaboration Agreement.

Financial Operations Overview

All of our revenue has been generated from the Collaboration Agreement with Jazz.

For the years ended December 31, 2024 and 2023, we recognized $1.9 million and $19.9 million of revenue, respectively.

Revenue from the transaction price for the Collaboration Agreement is recognized based on a cost-to-cost input method for both periods and includes upfront, milestone, and cost reimbursement payments.

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 year ended December 31, 2024, we re-evaluated this assessment for 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.

As of the execution of the Transfer Agreement, we no longer have any material performance obligations under the Collaboration Agreement, and all deferred revenue related to the Collaboration Agreement has been recognized as of December 31, 2024.

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 pattern of performance under the Collaboration Agreement and as a result of the timing and amount of milestones, and 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.

We retain the rights to the receipt of payments under the Collaboration Agreement upon successfully achieving various development and regulatory and sales-based milestones.

There can be no assurance of the timing of when such payments will become due to us, if at all.

Operating Expenses

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WTX-1011 208 —

JZP898 545 7,380

WTX-2022 113 —

WTX-712 108 1,389

WTX-518 64 294

Pre-development candidates 3,476 1,793

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$ 25,302 $ 32,775

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.

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.

Research and development activities have historically been central to our business model.

We expect our research and development costs will decrease in the near future as we explore strategic alternatives available to advance our platform and drug development pipeline.

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, if any.

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

• the scope, rate of progress and expenses of our ongoing research activities as well as any preclinical studies and clinical trials, including our ongoing Phase 1/1b clinical trial for WTX-124 and Phase 1 clinical trial for WTX-330, and other research and development activities;

• the outcome of our strategic review process;

• the scope, rate of progress and expenses of our research activities as well as any preclinical studies and clinical trials, including our ongoing Phase 1/1b clinical trial for WTX-124 and the Phase 1b/2 clinical trial for WTX-330, as well as other research and development activities;

• establishing an appropriate safety profile;

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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.

At this time, we cannot reasonably estimate the nature, timing, and estimated costs associated with the efforts that will be necessary to complete our strategic review process.

Other (Expense) Income

Interest Income

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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 (Expense), Net

Other income (expense), net consists primarily of remeasurement gains or losses attributable to changes in the fair value of the conversion option derivative liability associated with the K2HV Loan Agreement and the gain or loss recognized on the change in the fair value of the success payment liability that was associated with our debt agreement with PWB.

Other Income, Net

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

Critical Accounting Policies and Estimates

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The preparation of these consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes.

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.

On an ongoing basis, we evaluate our estimates which include, but are not limited to those related to accrued expenses and assumptions used in the valuation of stock-based compensation expense and the fair value of the derivative liability.

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

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While our significant accounting policies are described in more detail in Note 3, “Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated financial statements included within Part IV, Item 15 in this Annual Report, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

We analyze our collaborations to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of Accounting Standards Codification, or ASC, Topic 808, Collaborative Arrangements , or ASC 808.

This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement.

For arrangements within the scope of ASC 808 that contain multiple elements, we first determine which elements of the collaboration are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and therefore within the scope of ASC Topic 606, Revenue from Contracts with Customers , or ASC 606.

For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, either by analogy to authoritative accounting literature or by applying a reasonable and rational policy election.

For those elements of the arrangement that are accounted for pursuant to ASC 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

In applying ASC 606, we perform the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the promises and performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) we satisfy the performance obligations.

We only apply the five-step model to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we provide to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract, determine those that are performance obligations and assess whether each promised good or service is distinct.

We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or

as) the performance obligation is satisfied.

As part of the assessment, we must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract.

We use key assumptions to determine the standalone selling price, which may include reimbursement rates for personnel costs, development timelines and probabilities of regulatory success.

We do not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of promised goods or services to the customer will be one year or less.

Arrangements that include upfront payments may require deferral of revenue recognition to a future period until obligations under these arrangements are fulfilled.

Event-based milestone payments represent variable consideration, and we use the “most likely amount” method to estimate this variable consideration.

Given the high degree of uncertainty around the occurrence of these events, we consider the milestones and other contingent amounts to be fully constrained until the uncertainty associated with these payments is resolved.

Revenue will be recognized from sales-based royalty payments when or as the sales occur.

We will re-evaluate the transaction price in each reporting period as uncertain events are resolved and other changes in circumstances occur.

Accrued Research and Development Expenses

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We issue stock-based awards to employees and directors, generally in the form of stock options, restricted stock units, or RSUs, restricted stock awards, or RSAs, or as awards under the 2021 Employee Stock Purchase Plan, or the 2021 ESPP.

Occasionally, we may also grant inducement equity awards in the form of non-qualified stock options to purchase shares of our common stock to newly hired employees pursuant to Nasdaq Listing Rule 5635(c)(4), or Inducement Awards.

Stock-based compensation is measured at the grant date based on the estimated fair value of the award and recognized as expense over the requisite service period of the award on a straight-line basis.

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We recognize forfeitures of stock-based awards as they occur.

The grant date fair value of stock options, and awards granted under the 2021 ESPP are measured using the Black-Scholes valuation model, which requires us to make assumptions about the fair value of the underlying common stock on the date of grant.

The grant date fair value of stock options, Inducement Awards, and awards granted under the 2021 ESPP are measured using the Black-Scholes valuation model, which requires us to make assumptions about the fair value of the underlying common stock on the date of grant.

The grant date fair value of RSUs and RSAs is estimated to be equal to the closing price of our common stock on the date of grant.

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For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or Sarbanes-Oxley Act.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised

accounting standards until such time as those standards apply to private companies.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.

We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to continue to take advantage of reduced disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act if we are a smaller reporting company with less than $100.0 million in annual revenue.

Results of Operations

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(60,677) (73,594) 12,917

Other income:

Other (expense) income:

Interest income

3,108 6,673 (3,565)

Interest expense (5,274) (4,656) (618)

Loss on extinguishment of debt — — (553) 553

Other income (expense), net 1,615 (1,142) 2,757

Total other income

Other income, net

2,021 1,615 406

Total other (expense) income (145) 3,079 (3,224)

$ (60,822) $ (70,515) $ 9,693

Revenue was $1.9 million for the year ended December 31, 2024, which is comprised of partial recognition of the $15.0 million upfront payment received in April 2022 upon the execution of the Collaboration Agreement with Jazz and costs incurred for research services which were reimbursed by Jazz, and revenue related to the achievement of certain variable consideration components.

As a result of the execution of the Transfer Agreement, we no longer have any material performance obligations under the Collaboration Agreement, and all deferred revenue related to the Collaboration Agreement has been recognized as of December 31, 2024.

Comparatively, we recognized $19.9 million in collaboration revenue during the year ended December 31, 2023 driven by elevated research and development activities related to and in preparation for the IND submission of JZP898 and a cumulative catch-up of revenue related to achieving a variable consideration component included in the Collaboration Agreement, which led to an additional $4.7 million in revenue recognized during the year ended December 31, 2023.

No revenue was recognized during the year ended December 31, 2025.

Following the execution of the Transfer Agreement with Jazz in June 2024, the only significant source 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 year ended December 31, 2025.

Comparatively, we recognized $1.9 million during the year ended December 31, 2024 related to the Collaboration Agreement with Jazz prior to the execution of the Transfer Agreement.

Research and Development Expenses

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(in thousands)

Manufacturing $ 17,458 $ 8,328 $ 9,130

Personnel 16,192 15,242 950

Clinical trial costs $ 14,563 $ 11,710 $ 2,853

Personnel 12,604 16,192 (3,588)

Manufacturing 6,690 17,458 (10,768)

Contract research organization 4,049 3,607 442

Lab consumables 3,423 3,400 23

Facilities 3,346 2,870 476

Facility costs 3,101 3,346 (245)

Other 400 721 (321)

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Research and development expenses for the year ended December 31, 2025 were $44.8 million, compared to $56.4 million for the year ended December 31, 2024.

The increase of $14.7 million was primarily due to:

• $14.8 million of combined increases in manufacturing costs of $9.1 million and clinical trial costs of $5.7 million.

The increases in both our clinical trial and manufacturing costs are driven by an increase of $20.2 million in costs associated with our continued development efforts of WTX-124 and WTX-330, which continue to progress through their respective clinical trials, including manufacturing to support those clinical trials.

This increase was partially offset by a decrease of $6.3 million in manufacturing costs associated with JZP898 leading up to and following the execution of the Transfer Agreement with Jazz;

• $1.0 million of increased personnel costs, driven primarily by the timing and valuation of stock-based awards granted to employees, as well as the increased use of external consultants to help further the development of our product candidates;

• $0.5 million of increased facility costs due to higher costs associated with maintaining our leased office and laboratory space, including higher real estate taxes, utilities, and maintenance costs.

These increases were partially offset by:

• $1.0 million of decreased lab consumables costs and $0.5 million of decreased contract research costs, primarily due to a shift in focus from discovery efforts to furthering the development of existing product candidates in comparison to the prior period.

The decrease of $11.6 million was primarily due to:

• $3.6 million of decreased personnel costs, driven primarily by a decrease in discretionary bonuses paid to employees during the year ended December 31, 2025 combined with an overall decrease in headcount compared to the year ended December 31, 2024.

Additionally, costs associated with stock-based awards was lower during the year ended December 31, 2025 due to the valuation and timing of awards granted to employees;

• $10.8 million of decreased manufacturing costs, driven by a decrease in costs associated with WTX-330, WTX-124, WTX-721, and JZP898 of $7.5 million, $2.0 million, $0.8 million, and $0.5 million, respectively.

Costs associated with WTX-330 were higher during the year ended December 31, 2024 in preparation for our Phase 1b/2 clinical trial for WTX-330 that was initiated during the first quarter of 2025.

Similarly, costs associated with WTX-124 were higher during the year ended December 31, 2024 due the timing of an increase in manufacturing efforts necessary to continue to support the Phase 1/1b clinical trial of WTX-124.

The decrease in costs associated with WTX-712 is due to the timing of IND-enabling studies performed during the year ended December 31, 2024 that were not recurring during the year ended December 31, 2025.

The costs associated with JZP898 were higher during the year ended December 31, 2024 prior to the execution of the Transfer Agreement with Jazz.

These decreases were partially offset by:

• $2.9 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.

General and Administrative Expenses

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Corporate insurance 1,065 1,151 (86)

IT costs 757 655 102

Information technology costs 750 757 (7)

Other 818 895 (77)

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General and administrative expenses were $15.8 million for the year ended December 31, 2025 compared to $19.0 million for the year ended December 31, 2024.

The increase of $0.4 million was primarily due to:

• $0.5 million of increased personnel costs, driven by annual cost of living adjustments;

• $0.4 million of increased professional services costs, driven by costs incurred to protect our intellectual property and general corporate matters.

These increases were partially offset by:

• $0.6 million of decreased corporate insurance costs, driven by a reduction in associated premiums.

The decrease of $3.2 million was primarily due to:

• $2.3 million of decreased personnel costs, driven primarily by a decrease in discretionary bonuses paid to employees during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Additionally, costs associated with stock-based awards was lower during the year ended December 31, 2025 due to the valuation and timing of awards granted to employees;

• $0.6 million of decreased professional services fees due to decreased use of external consultants during the period.

Interest Income

Interest income was $3.1 million for the year ended December 31, 2025 compared to $6.7 million for the year ended December 31, 2024.

This decrease in interest income was primarily a result of less cash equivalents being held in money market accounts combined with lower interest rates during the year ended December 31, 2024 compared to the year ended December 31, 2023.

This decrease in interest income was primarily the result of lower balances in money market accounts during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Interest Expense

Interest expense was $5.3 million for the year ended December 31, 2025 compared to $4.7 million for the year ended December 31, 2024.

This increase is in part due to the fact that our effective interest rate under the K2HV Loan Agreement is higher than the effective interest rate associated with our previous term loan with PWB.

Additionally, we did not draw down the PWB term loan until March 2023, resulting in interest expense being recognized for only a portion of the year ended December 31, 2023.

Loss on the Extinguishment of Debt

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.

Loss on Extinguishment of Debt

The extinguishment of the PWB term loan resulted in a one-time loss of $0.6 million for the year ended December 31, 2024.

As no corresponding finance activity occurred for the year ended December 31, 2023, we did not incur any gain or loss on a debt extinguishment during the prior period.

Other Income (Expense), Net

Other income (expense), net for the year ended December 31, 2024 primarily consisted of $1.6 million of gains r ecognized for the change in fair value of the conversion option derivative liability associated with the K2HV Loan Agreement.

Other income (expense), net for the year ended December 31, 2023 consisted of $1.0 million in losses recognized for the change in the fair value of the success payment liability during the period, which was settled during the second quarter of 2023, such that we incurred no such losses associated with the success liability in the PWB Loan Agreement during the year ended December 31, 2024.

As no corresponding finance activity occurred for the year ended December 31, 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 year ended December 31, 2025 and 2024 was $2.0 million and $1.6 million, respectively, and primarily consisted of the gains r ecognized for the change in fair value of the derivative liability associated with the K2HV Loan Agreement, as well as foreign currency gains and losses related to services performed by foreign vendors during each period.

Liquidity and Capital Resources

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Our net loss was $60.8 million and $70.5 million for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2024, we had an accumulated deficit of $414.6 million.

As of December 31, 2025, we had cash and cash equivalents of $57.1 million and an accumulated deficit of $475.4 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.

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

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy.

Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements.

We expect to incur substantial operating losses and negative cash flows from operations for the foreseeable future.

There is substantial doubt about our ability to continue as a going concern for at least twelve months from the date these consolidated financial statements are issued in this Annual Report, and we expect continuing operations beyond the near term will require additional liquidity.

We engaged Piper Sandler to serve as exclusive financial advisor to assist in the strategic review process.

There can be no assurance that the strategic review process will result in any agreement or transaction that will enhance stockholder value, or any agreement or transaction at all.

As part of the restructuring plan, our board of directors approved a reduction in force, representing 64% of our workforce, to better align our resources with our pursuit of strategic alternatives.

As a result of the reduction in force, we estimate that we will incur a one-time charge in the first quarter of 2026 related to employee separation benefits, including severance and related benefits, of approximately $4.1 million, most of which is anticipated to result in cash expenditures to be incurred in the first quarter of 2026.

The estimated charges that we expect to incur are subject to a number of assumptions, and actual results may differ materially from these estimates.

While our strategic review process is underway, we expect our overall costs will decrease in the near term due to the reduction in force, the completion of our clinical trials, and other cost reduction initiatives.

The outcome of our strategic review process will inform our future development plans and the costs associated with those efforts.

If we decide to resume enrollment in our clinical trials or development of our preclinical product candidates, however, we expect that our research and development and general and administrative expenses would increase.

We will need additional capital to fund our operations, which we may raise through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements.

We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all.

are then 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.

Additionally, the extent to which we use our at-the-market program as a source of future funding will depend on a number of factors, including the prevailing market price of our common stock, general market conditions, the extent to which we are able to secure funds from other sources, and whether we are then 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.

Our failure to raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition.

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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%.

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 $1.3 million during the year ended December 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.

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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 between January 1, 2025 and 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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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 Topic 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 consolidated statements of operations.

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 , or 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 consolidated statements of operations.

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 its rights and remedies as set forth in the K2HV Loan Agreement and under applicable law.

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 December 31, 2025, we are in compliance with all covenants.

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These debt issuance costs, together with fair value of the embedded derivative of $4.5 million, 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.

We have presented the full amount of the term loan payable, net of discount and issuance costs, as a current liability as of December 31, 2025, given the potential that the loan may be repaid in the subsequent twelve months.

On May 10, 2022, we entered into a sales agreement, or the Sales Agreement, with Leerink Partners LLC, or Leerink Partners, pursuant to which, from time to time, we may offer and sell shares of our common stock, which we refer to as the ATM Offering.

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.

During the year ended December 31, 2024, we had sold an aggregate of 5,272,538 shares under the ATM Offering at an average price of $4.71 per share for net proceeds of $23.5 million after deducting sales commissions and offering expenses.

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, with an aggregate offering price of up to $12.5 million in the ATM Offering as a result of being subject to General Instruction I.B.6 of Form S-3, or the Baby Shelf Limitation.

As of December 31, 2025, we remain subject to the Baby Shelf Limitation.

During the year ended December 31, 2025, we sold an aggregate of 3,626,701 shares of our common stock at an average price of $1.77 per share for net proceeds of $5.9 million after deducting sales commissions and offering expenses.

Jazz Collaboration

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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.

In addition, we are eligible to receive tiered mid-single digit royalties based on Jazz’s, and any of its affiliates’ and sublicensees’, annual net sales of Licensed Products, subject to reduction in specified circumstances.

There is no guarantee of when the conditions necessary to receive the milestone payments will be met, if at all.

Plan of Operation and Future Funding Requirements

As of December 31, 2025, we had cash and cash equivalents of $57.1 million.

We expect that our existing cash and cash equivalents at December 31, 2024, will be sufficient to fund our operational expenses and capital expenditure requirements through at least the second 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.

Our need to raise additional funds may be accelerated if our research and development expenses exceed our current expectations, if we acquire a third party, or if we acquire or license rights to additional product candidates or new technologies from one or more third parties.

We also had restricted cash and cash equivalents of $0.9 million as of December 31, 2025.

Based on our current operating plan, we expect that our cash and cash equivalents as of December 31, 2025, will be sufficient to fund operational expenses and capital expenditure requirements into the fourth quarter of 2026 and will be insufficient to allow us to fund our current operating plan through at least twelve months from the date these consolidated financial statements are issued in this Annual Report.

These conditions raise substantial doubt about our ability to continue as a going concern for at least twelve months from the date these consolidated financial statements are issued in this Annual Report.

As described above, we have initiated a process to explore a full range of strategic alternatives to advance our promising platform and drug development pipeline to maximize stockholder.

The outcome of our strategic review process will inform our future funding requirements, however, because of the numerous risks and uncertainties associated with the strategic review process, we are unable to estimate our current operating capital requirements.

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

• the nature, timing, and extent of our strategic review process;

• the pursuit of viable strategic alternatives, if any;

• 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;

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• the timing of, and the cost involved in, obtaining marketing approval for WTX-124 and WTX-330 or any future product candidates, and our ability to obtain marketing approval and generate revenue from any potential commercial sales of such product candidates;

• the cost of building a sales force in anticipation of product commercialization and the cost of commercialization activities for WTX-124, WTX-330 or any future product candidates if we receive marketing approval, including marketing, sales and distribution costs;

• the cost of building a sales force in anticipation of product commercialization and the cost of commercialization activities for WTX-124, WTX-330, our INDUCER molecules, or any future product candidates if we receive marketing approval, including marketing, sales and distribution costs;

• the potential emergence of competing therapies and other adverse market developments;

• the amount and timing of any payments we may be required to make pursuant to our license agreement with Harpoon Therapeutics, Inc., or Harpoon, or other future license agreements or collaboration agreements;

• the amount and timing of any payments we may be required to make pursuant to our license agreement with Harpoon Therapeutics, Inc., or other future license agreements or collaboration agreements;

• our ability to establish future collaborations, licensing or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;

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• the costs of operating as a public company.

Our cash and cash equivalents will not be sufficient to complete development of WTX-124, WTX-330 or any other product candidates.

Accordingly, we will be required to obtain further funding to achieve our business objectives.

Until such time, if ever, as we can generate substantial revenue from product sales, we expect to fund our operations and capital funding needs through equity and/or debt financing.

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If we raise additional funds through governmental funding, collaborations, strategic partnerships and alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs.

Any of these actions could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

If we are unable to raise capital when needed or on acceptable terms, we may be forced to delay, reduce, or eliminate certain costs related to our operations and research and development programs.

The following table provides information regarding our cash flows:

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Financing activities

13,080 58,429

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

$ (54,264) $ (43,362)

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Net cash used in operating activities for the year ended December 31, 2025 was $60.3 million compared to $56.2 million for the year ended December 31, 2024.

This increase of approximately $23.6 million was primarily attributable to a decrease in revenue from our Collaboration Agreement of $18.1 million, combined with an increase in research and development expenses of $14.7 million, primarily driven by our continued development efforts of our product candidates.

The change in net loss outlined above is partially offset by a net increase of $9.6 million in non-cash charges and changes in operating assets and liabilities.

This increase in cash used for operating activities of $4.1 million is driven by several factors, including a decrease in the interest income recognized during the year ended December 31, 2025 of $3.6 million compared to the year ended December 31, 2024.

Additionally, as a result of the execution of the Transfer Agreement in June 2024, we recognized no revenue during the year ended December 31, 2025;

a decrease of $1.9 million from the collaboration revenue recognized during the year ended December 31, 2024, net of the change in deferred revenue and other receivables for the same period.

Finally, our operating expenses, excluding non-cash expenses, have decreased $12.0 million during the year ended December 31, 2025 compared to the year ended December 31, 2024.

This decrease was largely offset by an increase of $10.7 million in the cash used to pay down our current operating liabilities, net of prepaid expenses.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 was $0.3 million, compared to $0.8 million for the year ended December 31, 2023.

The activity for both periods represents capital expenditures of property and equipment used in our operations.

Net cash used in investing activities for the year ended December 31, 2024 was $0.3 million, which represents capital expenditures of property and equipment used in our operations during the period.

No such expenditures occurred during the year ended December 31, 2025.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $6.0 million compared to $13.1 million for the year ended December 31, 2024.

Cash provided by financing activities for the year ended December 31, 2024 primarily consisted of net proceeds from our ATM Offering during the period of $23.6 million, as well as the drawdown of the new term loan under the K2HV Loan Agreement of $30.0 million offset by the repayment of the previous PWB term loan of $40.0 million.

Comparatively, cash provided by financing activities for the year ended December 31, 2023 consisted of proceeds from the $40.0 million drawdown of the PWB term loan combined with $18.3 million in net proceeds from our ATM Offering during the period.

Inflation generally affects us by increasing our cost of labor and certain services;

however, we do not believe that inflation has had a material impact on our results of operations since inception.

Cash provided by financing activities for the year ended December 31, 2025 primarily consists of net proceeds of $5.9 million from our ATM Offering.

Net proceeds from our ATM Offering were significantly higher for the year ended December 31, 2024 due to significantly higher transaction volume combined with a higher average

price per share of our common stock sold, which resulted in $23.6 million in net proceeds from our ATM Offering during the year ended December 31, 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

In the normal course of business, we enter into agreements with CROs, contact manufacturers, vendors and other third parties for preclinical studies and clinical trials, manufacturing services and other services and products for operating purposes.

In the normal course of business, we enter into agreements with CROs, contract manufacturers, vendors and other third parties for preclinical studies and clinical trials, manufacturing services and other services and products for operating purposes.

These contracts do not contain minimum purchase commitments and are cancellable by us upon prior written notice.

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Term Loan Facilities

See “Liquidity and Capital Resources – Sources of Liquidity – Term Loan Facilities” for a descriptions of the PWB Loan Agreement and the K2HV Loan Agreement.

Lease Agreements

In April 2019, we entered into a lease for office and laboratory space.

In May 2022, we entered into a sublease agreement with Crossbow Therapeutics, Inc., or Crossbow, a related party, to sublease the entirety of this space.

Both our lease and the sublease with Crossbow expired in March 2024.

See “Liquidity and Capital Resources – Sources of Liquidity – Term Loan Facilities” for a description of the K2HV Loan Agreement.

Lease Agreement

The lease for office and laboratory space that we entered into in June 2021 commenced in May 2022 and expires in May 2030.

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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-K

Item 7. Management’s Discussion and Analysis