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Item 7. Management’s Discussion and Analysis

2026-03-03 compared with 2025-03-19 · 87 added, 125 removed, 171 unchanged (55% of the section changed)

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Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”

We are a clinical-stage targeted oncology company committed to developing targeted therapies designed to improve outcomes for cancer patients.

We are advancing an innovative portfolio of therapeutics, drawing on leadership that previously played key roles in the design, development, and commercialization of cutting-edge targeted cancer therapies, including antibody-drug conjugate therapies, or ADCs.

We believe that the pursuit of novel or underexplored targets will be central to the next generation of transformative therapies, and we are dedicated to developing targeted cancer therapies with first-in-class and best-in-class potential.

Our goal is to establish a broad pipeline of preclinical and clinical assets and develop these assets into approved products for commercialization.

We are advancing a pipeline comprising two clinical assets and four preclinical assets.

Varegacestat, formerly AL102, is an investigational gamma secretase inhibitor, or GSI, currently under evaluation in a Phase 3 clinical trial for the treatment of desmoid tumors.

Our investigational new drug application, or IND, for IM-1021, a receptor tyrosine kinase-like orphan receptor 1, or ROR1, antibody-drug conjugate, received FDA clearance in December 2024, and the Phase 1 trial is ongoing with the first patient dosed in February 2025.

Our other preclinical assets include IM-3050, a fibroblast activation protein, or FAP, targeted radioligand therapy, or RLT, for which we submitted an IND in March 2025, and three solid tumor ADC drug candidates:

IM-1617, IM-1340, and IM-1335, all of which are in IND-enabling activities.

We have six additional ADCs currently undergoing lead optimization in advance of future development decisions.

At present, our internal discovery efforts center on designing ADCs against novel or underexplored targets.

We are a biotechnology company committed to the development of first-in-class and best-in-class targeted oncology therapies.

Our goal is to establish a broad portfolio of differentiated clinical assets to improve the lives of cancer patients.

Key to that strategy is our deep expertise in the discovery, design, development, manufacturing, and ultimately commercialization of antibody-drug conjugates and other oncology therapeutics.

We are advancing a pipeline that includes three clinical assets and three preclinical assets.

Varegacestat, formerly AL102, is an investigational, oral, once-daily gamma secretase inhibitor, or GSI.

In December 2025, we announced positive topline results from the global pivotal Phase 3 RINGSIDE trial of varegacestat in patients with progressing desmoid tumors.

We anticipate submitting a new drug application, or NDA, in the second quarter of 2026.

IM-1021, a receptor tyrosine kinase-like orphan receptor 1, or ROR1, antibody-drug conjugate, is currently under evaluation in a Phase 1 trial.

In November 2025, we reported observed objective responses at multiple dose levels in B-cell lymphoma patients treated with IM-1021, and we plan to share initial data in 2026.

IM-3050, a fibroblast activation protein, or FAP, targeted radioligand therapy, or RLT, received IND clearance in April 2025, and we plan to initiate a Phase 1 trial in early 2026 after delivery of third-party diagnostic radiotracer supply.

Our preclinical assets include three solid tumor ADCs with anticipated 2026 IND submissions:

IM-1617, IM-1340, and IM-1335.

Our pipeline also includes numerous early-stage ADCs produced by our internal discovery efforts, providing opportunities for additional IND submissions in 2027 and beyond.

Our approach to discovery centers on designing ADCs against novel or underexplored targets.

We believe that pursuing differentiated targets provides a path to significant clinical benefit and meaningful market opportunities.

This strategy is supported by HC74, the differentiated, novel topoisomerase 1, or TOP1, inhibitor payload we exclusively licensed from Zentalis Pharmaceuticals, Inc., or Zentalis, in January 2024 and subsequently purchased from Zentalis in October 2024.

We have efforts underway to develop additional linkers and payloads and believe that a broad toolbox of linkers and payloads supports our mission to design and develop a diverse pipeline of ADCs.

To expand and advance our innovative portfolio of therapeutics, we draw on leadership that previously played key roles in the design, development, and commercialization of cutting-edge targeted cancer therapies, including the first ADCs commercialized for Hodgkin and T-cell lymphoma, urothelial cancer and cervical cancer.

HC74, our differentiated, novel topoisomerase 1, or TOP1, inhibitor payload, supports this strategy.

We have efforts underway to develop additional linkers and payloads and believe that a broad toolbox of linkers and payloads supports our mission to design and develop a diverse pipeline of ADCs with differentiated safety, efficacy, and tolerability profiles that address unmet medical need.

Our current programs

Varegacestat (formerly AL102)

Our lead clinical asset is varegacestat, an oral, once daily GSI therapy that is being evaluated for the treatment of desmoid tumors.

In the Phase 2 RINGSIDE study Part A, varegacestat demonstrated objective response rates, or ORR, of 75% of evaluable patients and 64% in the intent-to-treat population;

median reduction in tumor volume of 88%;

and an 85% reduction in T2 imaging, which is suggestive of a reduction in cellularity.

The Phase 2 data also show that varegacestat has a safety profile consistent with other GSI therapies.

Enrollment in a Phase 3 registrational trial was completed in February 2024, and we expect to report topline data from this trial in the second half of 2025.

Our lead clinical asset is varegacestat, an investigational, oral, once-daily GSI therapy under evaluation for the treatment of desmoid tumors.

In December 2025, we reported positive Phase 3 RINGSIDE (Part B) topline results showing that the study met all primary and key secondary endpoints.

Varegacestat achieved the primary endpoint of progression free survival, delivering an 84% reduction in the risk of disease progression or death versus placebo (HR=0.16, p<0.0001).

The confirmed objective response rate (ORR) based on RECIST v1.1 was 56% with varegacestat vs.

9% with placebo (p<0.0001), as assessed by blinded independent central review.

In an exploratory analysis, varegacestat demonstrated a median best change in tumor volume of -83% vs.

+11% with placebo, as assessed by blinded independent central review.

In addition, the trial met all key secondary endpoints, with varegacestat achieving statistically significant improvements vs.

placebo in landmark tumor volume reduction and worst pain intensity.

The Phase 3 RINGSIDE topline and Phase 2 RINGSIDE data also show that varegacestat has a safety profile consistent with other GSI therapies.

We acquired varegacestat from Ayala Pharmaceuticals, Inc., or Ayala, in March 2024.

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IM-1021 is a ROR1 ADC that incorporates HC74, our proprietary TOP1i payload.

ROR1 is expressed in both hematologic malignancies and solid tumors with limited normal tissue expression, and previous ADCs targeting ROR1 have demonstrated clinical activity.

In preclinical studies, IM-1021 showed sustained tumor regression in preclinical models, including a mouse model of triple-negative breast cancer, or TNBC, and a mouse model of mantle cell lymphoma, or MCL We believe that IM-1021 may provide improved therapeutic index as compared to other ROR1-targeted ADCs in development.

IM-1021 received IND clearance in December 2024, and the phase 1 clinical trial is ongoing with a starting dose of 2 mg/kg of adjusted ideal body weight.

We expect dose escalation to include patients both with solid tumors and with B-cell lymphoma.

ROR1 is expressed in both hematologic malignancies and solid tumors with limited normal tissue expression.

Previous ADCs targeting ROR1 have demonstrated clinical activity.

We believe that IM-1021 may provide improved therapeutic index as compared to other ROR1-targeted ADCs in development.

The Phase 1 clinical trial is ongoing, with objective responses observed in participants with B-cell lymphomas at multiple dose levels.

We expect to present initial data for IM-1021 in 2026.

IM-3050 (FAP Radioligand Therapy)

IM-3050 is a FAP-targeted lutetium-177, Lu-177 or 177Lu, RLT product candidate for the treatment of solid tumors.

FAP, or fibroblast activation protein, is a cell surface protease that serves as a tumor-specific marker due to its broad expression on cancer associated fibroblasts, the most common tumor stromal cell.

FAP is a cell surface protease that serves as a tumor-specific marker due to its broad expression on cancer associated fibroblasts, the most common tumor stromal cell.

FAP is expressed in 75% of solid tumors.

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In vivo data show single dose antitumor activity and tolerability.

We submitted an IND for this program to the FDA in March 2025, and expect to initiate a Phase 1 clinical trial in the second half of 2025 .

We received IND clearance for this program in April 2025 and plan to initiate a Phase 1 trial in early 2026 after delivery of third-party diagnostic radiotracer supply.

IM-1617 (Solid Tumor ADC)

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The target is a receptor tyrosine kinase that promotes tumor cell survival and mediates immune cell exclusion, providing potential for a secondary mechanism of action.

IND-enabling work for IM-1617 was initiated in the fourth quarter of 2024.

IND-enabling work for IM-1617 is ongoing and we expect to submit an IND for this program to the FDA in early 2026.

IM-1340 (Solid Tumor ADC)

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It has a unique expression profile that spans neuroendocrine tumors, or NETs, and other carcinomas, including lung and prostate tumors, with limited expression in normal tissue.

IND-enabling work for IM-1335 was initiated in the fourth quarter of 2024.

IND-enabling work for IM-1340 is ongoing and we expect to submit an IND for this program to the FDA in mid-2026.

IM-1335 (Solid Tumor ADC)

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We identified limitations that we expect contributed to the failure of the prior ADC against this target, and we believe that IM-1335 overcomes these limitations.

IND-enabling work for IM-1335 was initiated in the fourth quarter of 2024.

IND-enabling work for IM-1335 is ongoing and we expect to submit an IND for this program to the FDA in late 2026.

Other Programs and Platforms

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We pair our portfolio of antibodies to potential first-in-class ADC targets with rigorous target selection based on a deep understanding of target biology.

That target-driven approach is complemented by HC74, our differentiated, proprietary TOP1 inhibitor payload and our optimized, proprietary linkers.

Recent Events

Ayala Purchase Agreement

In March 2024, we completed an asset purchase pursuant to an asset purchase agreement, or the Ayala Purchase Agreement, initially entered into with Ayala Pharmaceuticals, Inc., or Ayala, in February 2024, pursuant to which we acquired Ayala’s AL101 and varegacestat (then known as AL102) programs and assumed certain liabilities associated with the acquired assets.

Under the Ayala Purchase Agreement, we paid Ayala approximately $20.0 million in cash and issued 2,175,489 shares of our common stock with an aggregate fair value of $50.6 million on the date of issuance.

We are also obligated to pay Ayala up to $37.5 million in the aggregate upon the achievement of certain development, regulatory and commercial milestones.

Zentalis Pharmaceuticals License and Purchase Agreements

In January 2024, we entered into a license agreement with Zentalis, or the Zentalis License Agreement, pursuant to which we received an exclusive, worldwide, royalty-bearing, sublicensable license under certain intellectual property relating to Zentalis’ proprietary ADC platform technology, ROR1 antibodies and ADCs targeting ROR1 to exploit products covered by or incorporating the licensed intellectual property rights or, collectively, the Zentalis Licensed Assets.

Under the Zentalis License Agreement, we paid Zentalis $15.0 million in cash and issued Zentalis 2,298,586 shares of our common stock with an aggregate fair value of $23.4 million on the date of issuance.

In October 2024, we completed an asset purchase agreement with Zentalis, or the Zentalis Purchase Agreement, pursuant to which we purchased the Zentalis Licensed Assets previously licensed to us under the then-existing Zentalis License Agreement.

Upon closing of the Zentalis Purchase Agreement, the Zentalis License Agreement was terminated.

Under the Zentalis Purchase Agreement, we issued Zentalis 1,805,502 shares of our common stock with an aggregate fair value of $21.0 million on the date of issuance.

We are also obligated to pay Zentalis a one-time payment of $5.0 million in cash upon the achievement of a developmental milestone that was previously a milestone under the Zentalis License Agreement.

The $5.0 million developmental milestone was achieved in the fourth quarter of 2024 and paid in the first quarter of 2025.

Bristol-Myers Squibb

In connection with the closing of the Ayala Purchase Agreement in March 2024, we assumed a license agreement, the BMS License Agreement, with Bristol-Myers Squibb Company, or BMS, pursuant to which we obtained a worldwide, non-transferable, royalty-bearing, exclusive, sublicensable, license under certain patent rights and know-how of BMS to research, discover, develop, make, have made, use, sell, offer to sell, export, import and commercialize AL101 and varegacestat, or the BMS Licensed Compounds, and products containing AL101 or varegacestat, or the BMS Licensed Products, for all uses including the prevention, treatment or control of any human or animal disease, disorder or condition.

In August 2024, we amended the BMS License Agreement and issued BMS 230,415 shares of our common stock with an aggregate fair value of $2.7 million on the date of issuance.

Under the as amended BMS License Agreement, we are obligated to pay BMS up to approximately $142.0 million in the aggregate upon the achievement of certain clinical development or regulatory milestones for AL101 and varegacestat across multiple indications.

In addition, we are obligated to pay BMS up to $50.0 million in the aggregate upon the achievement of certain commercial milestones for each BMS Licensed Product.

2025 Public Offering

In January 2025, we issued 22,258,064 shares of our common stock in a public offering for aggregate proceeds of $172.5 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by us, or the 2025 Financing.

2024 Public Offering

In February 2024, we issued 11,500,000 shares of our common stock in a public offering for net proceeds of $215.4 million, after deducting underwriting discounts and commissions and offering expenses payable by us, or the 2024 Financing.

That target-driven approach is complemented by HC74, our differentiated, proprietary TOP1i payload and our optimized, proprietary linkers.

Components of our results of operations

Collaboration revenue

We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future.

To date, we have generated our revenue through a Collaboration and Option Agreement, or the Collaboration Agreement, with AbbVie Global Enterprises Ltd., or AbbVie.

Our collaboration revenue to date consists of payments from AbbVie that we recognize over the expected performance period under this agreement.

We expect that revenues for the foreseeable future will be derived primarily from this agreement and any additional collaborations into which we may enter.

We have not received any royalties under the Collaboration Agreement with AbbVie to date .

We have not generated any revenue from product sales and do not expect to do so for the foreseeable future.

To date, we have generated our revenue through a Collaboration and Option Agreement, or the Collaboration Agreement, with AbbVie Global Enterprises Ltd., or AbbVie, which terminated in accordance with its terms in July 2025.

Revenue recognized under the Collaboration Agreement consisted of payments received from AbbVie and was recognized over the performance period.

No further collaboration revenue will be recognized under the Collaboration Agreement.

In-process research and development expenses

Intangible assets acquired in an asset acquisition for use in research and development activities which have no alternative future use are expensed as in-process research and development, or IPR&D, expense on the acquisition date.

IPR&D expense for the year ended December 31, 2024 primarily relates to the acquisition of certain assets and licenses from Ayala, Zentalis, and others.

IPR&D expense for the year ended December 31, 2023 primarily relates to the acquisition of certain assets and licenses in connection with the Morphimmune merger.

Intangible assets acquired in an asset acquisition or license agreement for use in research and development activities which have no alternative future use are expensed as in-process research and development, or IPR&D, expense on the acquisition date.

Any potential future milestone payment amounts will be expensed as IPR&D when the related contingency is resolved and the milestone consideration becomes payable.

Research and development expenses

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The prepaid amounts are expensed as the benefits are consumed.

Research and development activities are central to our business model.

Research and development activities are central to our business model and may vary substantially from year to year and quarter to quarter depending on the stage of product development.

For example, product candidates in later stages of clinical development generally have higher costs than those in earlier stages of development, primarily due to the size and cost of later-stage clinical trials compared to early development activities.

We expect that our research and development expenses will increase substantially in connection with the continuation of our activities and new agreements.

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General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, direct and allocated facility related expenses and other operating costs.

We anticipate that our general and administrative expenses will increase in the future to support increased and progressed research and development activities and to operate as a public company.

We anticipate that our general and administrative expenses will increase in the future to support increased and progressed research and development activities, activities to prepare for the potential commercialization of varegacestat, and increased activities and costs to operate as a public company.

Interest income

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Collaboration revenue decreased by $2.1 million, from $9.0 million for the year ended December 31, 2024 to $6.9 million for the year ended December 31, 2025.

The decrease was primarily due to a decrease in certain research and development activities allocated to AbbVie during the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease was primarily due to the Company recognizing all remaining revenue and costs associated with our performance obligations under the Collaboration Agreement by the end of the second quarter of 2025.

In-process research and development expenses

IPR&D expense for the year ended December 31, 2024 primarily related to the write-off of acquired IPR&D assets that were determined to have no alternative future use .

IPR&D expense for the year ended December 31, 2023 related to the write-off of IPR&D assets acquired in connection with the Morphimmune merger that were determined to have no alternative future use.

IPR&D expense for the year ended December 31, 2025 relates to the achievement of a development milestone associated with reporting positive topline results for the Phase 3 RINGSIDE trial of varegacestat.

IPR&D expense for the year ended December 31, 2024 primarily related to the write-off of acquired IPR&D assets acquired from Ayala, Bristol-Myers Squibb Company, Zentalis and others that were determined to have no alternative future use.

Research and development expenses

Research and development expenses increased by $47.7 million, from $129.5 million for the year ended December 31, 2024 to $177.3 million for the year ended December 31, 2025.

We record direct research and development expenses which consist primarily of external costs related to manufacturing, outsourced research, product development, and clinical trial costs, including fees paid to investigators, consultants, central laboratories and CROs, to specific product candidates.

Indirect research and development expenses have not been allocated directly to a program as they benefit multiple product programs, and primarily consist of personnel salary, benefit and stock-based compensation costs, depreciation, laboratory materials and services, and costs to maintain our facilities.

The table below shows our research and development expenses incurred with respect to each active program (in thousands).

For the year ended December 31, 2025, we revised the presentation of our research and development expenses in the table below to align with how management evaluates our research programs and expenses.

Prior period amounts have been reclassified to conform to the current year presentation.

Year Ended December 31,

Direct research and development

Varegacestat (1)

Other product candidates (4)

Indirect research and development (5)

(1) The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to manufacturing and clinical trial activities related to varegacestat, which we acquired from Ayala in March 2024.

(2) The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to increased outsourced research, manufacturing and IND-enabling activities pertaining to IM-1021, which we licensed from Zentalis in January 2024 and subsequently acquired from Zentalis in October 2024.

(3) The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to increased outsourced research, manufacturing and IND-enabling activities for IM-3050.

(4) The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to increased ADC discovery activities.

(5) The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was due primarily to an increase in personnel and personnel-related costs in support of varegacestat, IM-1021, IM-3050 and other development and discovery programs.

(1) The increase for the year ended December 31, 2025 compared to the year ended December 31, 2024 was due primarily to clinical trial activities, as well as manufacturing and consulting activities associated with our Phase 3 trial and in preparation for our expected NDA submission in Q2 2026.

(2) The decrease for the year ended December 31, 2025 compared to the year ended December 31, 2024 was due primarily to the timing of outsourced research, manufacturing and IND-enabling activities as well as a shift to using internal rather than external resources for program activities, partially offset by an increase in clinical trial activities as we initiated our Phase 1 trial in February 2025.

(3) The decrease for the year ended December 31, 2025 compared to the year ended December 31, 2024 was due primarily to the timing of outsourced research, manufacturing and IND-enabling activities, partially offset by an increase in clinical trial start up activities as we prepare to initiate a Phase 1 trial in early 2026.

(4) The increase for the year ended December 31, 2025 compared to the year ended December 31, 2024 was due primarily to increased manufacturing activities for our three product candidates IM-1617, IM-1340 and IM-1335 as we prepare for IND submissions, partially offset by reductions in target identification activities as well as professional and contract laboratory services due to the replacement of certain outsourced services with internal resources.

(5) The increase for the year ended December 31, 2025 compared to the year ended December 31, 2024 was due primarily to increases in personnel and personnel-related costs and facilities and laboratory costs in support of our product candidates and discovery programs.

General and administrative expenses

General and administrative expenses increased by $10.8 million, from $33.0 million for the year ended December 31, 2024 to $43.8 million for the year ended December 31, 2025.

The increase was primarily a result of a $10.1 million increase in personnel-related costs from an increase in headcount, including a $6.4 million increase in share-based compensation.

The increase was primarily a result of an $8.1 million increase in personnel-related costs, including a $3.9 million increase in share-based compensation, and due to increases in professional service and software expenses to support the overall growth of the organization.

Interest income

Interest income increased by $10.1 million from $2.7 million for the year ended December 31, 2023 to $12.8 million for the year ended December 31, 2024.

The increase was primarily a result of higher cash and cash equivalent and marketable security balances.

Interest income decreased by $1.1 million from $12.8 million for the year ended December 31, 2024 to $11.7 million for the year ended December 31, 2025.

The decrease was primarily a result of lower interest rates during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Liquidity and capital resources

Sources of liquidity

Since our inception in 2006, we have devoted substantially all our resources to research and development, raising capital, building our management team, building our intellectual property portfolio and entering and executing on collaborations and strategic transactions.

To date, we have financed our operations primarily through sales of our equity securities, collaboration arrangements, strategic partnerships and transactions and to a lesser extent, through expense reimbursements received from a governmental contract that ended in 2022.

To date, we have not generated any revenue from commercial sale of products and do not expect to generate revenue from commercial sales for the foreseeable future.

To date, we have financed our operations primarily through sales of our equity securities.

We have devoted substantially all our resources to research and development programs and to general and administrative costs to support our operations, raising capital, building our management team, building our intellectual property portfolio and entering and executing on collaborations and strategic transactions.

To date, we have not generated any revenue from commercial sale of products.

Since inception, we have incurred significant operating losses and negative cash flows from operations.

Our net losses were $212.4 million and $293.0 million for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $217.3 million and an accumulated deficit of $515.8 million.

In February 2024, we completed our 2024 Financing and issued 11,500,000 shares of our common stock at $20.00 per share for net proceeds of $215.4 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

As of December 31, 2025, we had cash and cash equivalents of $653.5 million and an accumulated deficit of $728.2 million.

In January 2025, we issued and sold 22,258,064 shares of our common stock at $7.75 per share in a public offering for net proceeds of $161.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us, or the January 2025 Offering.

In December 2025, we issued and sold 21,418,750 shares of our common stock at $21.50 per share in a public offering for net proceeds of $432.4 million, after deducting underwriting discounts and commissions and offering expenses payable by us, or the December 2025 Offering.

In May 2024, we entered into an “at the market” sales agreement, or the 2024 ATM Agreement, with TD Securities (USA) LLC, or TD Cowen, as sales agent, pursuant to which we may offer and sell from time to time shares of our common stock having an aggregate offering price of up to $200.0 million, or the ATM Shares .

We have agreed to pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds from any ATM Shares sold through the 2024 ATM Agreement.

In November 2024, we sold 2,030,431 shares of common stock under the 2024 ATM Agreement, resulting in net proceeds of approximately $19.6 million.

In January 2025, we completed our 2025 Financing and issued 22,258,064 shares of our common stock at $7.75 per share for gross proceeds of $172.5 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

As of December 31, 2025, we had sold an aggregate of 6,655,587 shares of common stock under the 2024 ATM Agreement for gross proceeds of $65.9 million and net proceeds of approximately $64.5 million, with approximately $134.1 million remaining available for future offerings.

The following table summarizes our sources and uses of cash for the years ended December 31, 2025 and 2024 (in thousands):

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Cash used in operating activities

Cash used in investing activities

Cash provided by (used in) investing activities

Cash provided by financing activities

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Operating activities

Net cash used in operating activities for the year ended December 31, 2025 was $190.9 million, consisting primarily of our net loss of $212.4 million and a net change in operating assets and liabilities of $15.2 million, partially offset by noncash charges of $36.7 million.

The noncash charges primarily consisted of $25.7 million of share-based compensation and $10.0 million of IPR&D recognized upon the achievement of a development milestone associated with reporting positive topline results for the Phase 3 RINGSIDE trial of varegacestat, accrued for as of December 31, 2025.

The change in operating assets and liabilities primarily consisted of a decrease in accounts payable of $9.2 million, a decrease in deferred revenue of $6.9 million, and an increase in prepaid expenses and other assets of $3.5 million, partially offset by an increase in accrued expenses and other current liabilities of $4.5 million.

Net cash used in operating activities for the year ended December 31, 2024 was $110.8 million, consisting primarily of our net loss of $293.0 million, partially offset by noncash charges of $167.3 million and a net change in operating assets and liabilities of $14.9 million.

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The change in operating assets and liabilities primarily consisted of an increase in accrued expenses and other current liabilities of $13.6 million, an increase in accounts payable of $9.5 million and a decrease in prepaid expenses and other assets of $0.9 million, partially offset by a decrease in deferred revenue of $9.0 million.

Net cash used in operating activities for the year ended December 31, 2023 was $7.6 million, consisting primarily of our net loss of $106.8 million, partially offset by noncash charges of $87.2 million and a net change in operating assets and liabilities of $12.0 million.

The noncash charges primarily consisted of $80.8 million of IPR&D assets acquired without alternative future use and $6.2 million of share-based compensation.

The change in operating assets and liabilities primarily consisted of an increase in deferred revenue of $16.0 million, partially offset by an increase in prepaid expenses and other assets of $4.1 million.

Investing activities

Net cash provided by investing activities for the year ended December 31, 2025 was $60.8 million, consisting primarily of $200.0 million from maturities of marketable securities, partially offset by $123.3 million of purchases of marketable securities, $9.7 million of purchases of property and equipment and $6.2 million of purchases of IPR&D assets.

Net cash used in investing activities for the year ended December 31, 2024 was $85.1 million, consisting primarily of $186.6 million of purchases of marketable securities, $46.3 million of purchases of IPR&D assets and $7.2 million of purchases of property and equipment, partially offset by $155.0 million from maturities of marketable securities.

Net cash used in investing activities for the year ended December 31, 2023 was $30.5 million, consisting primarily of $38.9 million of purchases of marketable securities and $0.8 million of purchases of property and equipment, offset by $9.3 million received in connection with the Morphimmune merger.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2024 was $240.5 million, consisting of gross proceeds of $230.0 million from the 2024 Financing, gross proceeds of $20.0 million from the issuance of common stock under the 2024 ATM Agreement and $5.8 million from the exercise of options and common stock warrants, partially offset by offering costs of $15.2 million from our 2024 Financing and 2024 ATM Agreement.

Net cash provided by financing activities for the year ended December 31, 2023 was $116.4 million, consisting of gross proceeds of $125.4 million from the private investment in public equity, or PIPE, transaction held concurrently with the closing of the Morphimmune merger in October 2023, the exercise of options, and the issuance of common stock under our prior ATM sales agreement that we terminated in November 2023, partially offset by the payment of $9.0 million for offering costs related to the PIPE transaction.

Net cash provided by financing activities for the year ended December 31, 2025 was $640.4 million, consisting of gross proceeds of $633.0 million from the January 2025 Offering and December 2025 Offering, $45.9 million from the issuance of common stock under the 2024 ATM Agreement and $0.9 million from the exercise of options, partially offset by offering costs of $39.5 million from our January 2025 Offering and December 2025 Offering and 2024 ATM Agreement.

Net cash provided by financing activities for the year ended December 31, 2024 was $240.5 million, consisting of gross proceeds of $230.0 million from the issuance of shares of our common stock in a public offering, or 2024 Offering, gross proceeds of $20.0 million from the issuance of common stock under the 2024 ATM Agreement and $5.8 million from the exercise of options and common stock warrants, partially offset by offering costs of $15.2 million from our 2024 Offering and 2024 ATM Agreement.

Funding requirements

We expect our expenses to increase substantially in connection with our ongoing and future activities, particularly as we advance and expand our clinical development of varegacestat, seek regulatory approval for varegacestat, advance the clinical development of IM-1021, continue the development of IM-3050 and any other current and future product candidates, and continue to pursue our business development strategy.

We expect that our primary uses of capital will be for clinical development services, non-clinical research, strategic transactions, manufacturing, legal and other regulatory compliance expenses, compensation and related expenses, risk management and general overhead costs.

We expect that our existing cash, cash equivalents and marketable securities as of December 31, 2024, together with the proceeds from the 2025 Financing, will be sufficient to fund our current and planned operating expenses and capital expenditures for at least 12 months from the filing date of this Annual Report on Form 10-K.

We will need additional financing to support our continuing operations and pursue our research and development strategy.

We expect our expenses to increase substantially in connection with our ongoing and future activities, particularly as we advance and expand our clinical development of varegacestat, seek regulatory approval for varegacestat, prepare for the commercialization of varegacestat, if approved, advance the clinical development of IM-1021 and IM-3050, continue the development of our other current product candidates and any future product candidates, and continue to pursue our business development strategy.

We expect that our primary uses of capital will be for the potential commercial launch of varegacestat for the treatment of desmoid tumors, if approved, continued commercial development and manufacturing scale-up for varegecestat, continued clinical and preclinical development of other pipeline assets, as well as for working capital and other general corporate purposes including potential strategic transactions, legal and other regulatory compliance expenses, compensation and related expenses, risk management and general overhead costs.

We expect that our existing cash and cash equivalents as of December 31, 2025 will be sufficient to fund our current and planned operating expenses and capital expenditures for at least 12 months from the filing date of this Annual Report.

We will need additional financing to support our continuing operations and pursue our research and development strategy and commercialization of varegacestat, if approved.

We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner than we currently expect.

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Our future funding requirements will depend on many factors including:

● the extent to which we acquire or in-license products, intellectual property and other technologies and the terms on which we acquire or in-license those assets;

• the scope, progress, results and costs of discovery, preclinical development, manufacturing and clinical trials for programs and product candidates that we currently own and those that we may discover or acquire rights to in the future;

● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims and the success of our intellectual property portfolio;

• the costs, timing and outcome of regulatory review of the programs and product candidates we may develop;

• the costs of future activities, including product sales, medical affairs, marketing, manufacturing, distribution, coverage and reimbursement for any programs or product candidates for which we receive regulatory approval;

• the extent to which we acquire or in-license products, intellectual property and other technologies and the terms on which we acquire or in-license those assets;

• the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims and the success of our intellectual property portfolio;

• the success of our existing and any future license agreements, collaborations and other strategic transactions and the achievement of milestones or occurrence of other developments that trigger payments to or from us under any such agreements and transactions;

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Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, including pursuant to the 2024 ATM Agreement, debt financings, collaborations, strategic alliances and licensing arrangements.

As a result of the war between Russia and Ukraine, conflicts in the Middle East, trade wars, bank failures, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic and political factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.

As a result of wars, conflicts, trade wars, bank failures, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic and geopolitical factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.

There can be no assurance that deterioration in credit and financial markets and confidence in economic conditions will not occur.

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Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements appearing elsewhere in this Annual Report, we believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas that involve management’s judgement and estimates and are reasonably likely to have a material impact on our financial condition or results of operations.

While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements appearing elsewhere in this Annual Report, we believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas that involve management’s judgment and estimates and are reasonably likely to have a material impact on our financial condition or results of operations.

Asset acquisitions

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Acquired IPR&D that has no alternative future use is expensed immediately in the consolidated statements of operations and comprehensive loss.

Collaboration revenue

In January 2023, we entered into a research discovery collaboration arrangement, which was determined to be within the scope of Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers , or ASC 606.

We evaluate our collaborative arrangements pursuant to ASC 808, Collaborative Arrangements , or ASC 808, and ASC 606.

We consider the nature and contractual terms of collaborative arrangements and assesses whether the arrangement involves a joint operating activity pursuant to which we are an active participant and is exposed to significant risks and rewards with respect to the arrangement.

If we are an active participant and are exposed to significant risks and rewards with respect to the arrangement, we account for the arrangement as a collaboration under ASC 808.

If we are not exposed to significant risks and rewards and the contract is with a customer, we account for the collaboration under ASC 606.

Payments pursuant to collaborative arrangements may include non-refundable upfront payments, research option and license option payments, milestone payments upon the achievement of significant regulatory and development events, commercial sales milestones, and royalties on product sales.

The amount of variable consideration is constrained until it is probable that the revenue is not at a significant risk of reversal in a future period.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under a collaboration arrangement, we apply the five-step model of ASC 606:

(i) identify the contract with a customer;

(ii) identify the performance obligations in the contract, including whether they are capable of being distinct;

(iii) determine the transaction price, including the constraint on variable consideration;

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

and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

We apply significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met, and assessing the recognition of variable consideration.

When consideration is received prior to us completing our performance obligation under the terms of a contract, a contract liability is recorded as deferred revenue.

Deferred revenue expected to be recognized as revenue within the 12 months following the balance sheet date is classified as a current liability.

Share-based compensation

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Research and development costs are expensed as incurred.

Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses until the related goods are delivered or services are performed.

Such payments are evaluated for current or long-term classification based on when such services are expected to be received.

In-licensing fees, development milestones, maintenance fees and other costs to acquire technologies utilized in research and development for product candidates that have not yet received regulatory approval and that are not expected to have alternate future use are expensed when incurred.

As part of preparing our financial statements, we are required to estimate and accrue expenses.

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We execute all our clinical trials with support from contract research organizations, or CROs, and other vendors and we accrue costs for clinical trial activities performed by these third parties based upon the estimated amount of work completed on each trial.

The significant factors used in estimating accruals include the number of patients enrolled, the activities to be performed for each patient, the number of active clinical sites, and the duration for which the patients will be enrolled in the trial.

The significant factors used in estimating accruals include the number of participants enrolled, the activities to be performed for each patient, the number of active clinical sites, and the duration for which the participants will be enrolled in the trial.

We monitor patient enrollment levels and related activities to the extent possible through internal reviews, correspondence with CROs and review of contractual terms.

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To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions until the last day of the fiscal year following the fifth anniversary of our initial public offering (i.e., December 31, 2025) or such earlier time that we are no longer an emerging growth company.

We would cease to be an emerging growth company earlier if we have more than $1.235 billion in annual revenue during our most recently completed fiscal year, we have more than $700.0 million in market value of our stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter, or we issue more than $1.0 billion of non-convertible debt securities over a three-year period.

For so long as we remain an emerging growth company, we are permitted, and intend, to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies.

We may choose to take advantage of some, but not all, of the available exemptions.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.

This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

Therefore, the reported results of operations contained in our financial statements may not be directly comparable to those of other public companies.

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-K

Item 7. Management’s Discussion and Analysis