What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-12 compared with 2025-03-11 · 372 added, 499 removed, 671 unchanged (56% of the section changed)

31 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued clinical expenses

7 unchanged sentences

How We Addressed the Matter in Our Audit

To test the accrued clinical expenses, our audit procedures included, among other things, testing the accuracy and completeness of the underlying data used in the estimate, inspecting contracts with third-party service providers and obtaining information directly from third parties.

Impairment of long-lived assets

Description of the Matter

As discussed in Notes 2 and 5 to the consolidated financial statements, the Company’s long-lived assets are assessed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Recoverability is measured by comparison of the carrying amount of an asset group to the future net undiscounted cash flows that the assets are expected to generate.

If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

The Company concluded that the carrying value of the asset group was not recoverable as it exceeded the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition over the remaining useful life of the Company’s primary asset.

The Company applied a discounted cash flow method to estimate the fair values of their asset group.

As a result, the Company recorded an impairment charge of $51.3 million relating to their right‑of‑use assets and related leasehold improvements as of December 31, 2024.

Auditing the Company’s impairment model was challenging due to the subjective assumptions of market rental rates used as an input in determining the fair value of the right-of-use assets and related leasehold improvements.

How We Addressed the Matter in Our Audit

To test the Company’s accounting for the impairment of the asset group, our audit procedures included, among others, utilizing our valuation specialists to assist in evaluating the reasonableness of the Company’s valuation methodology and the market rental rate assumptions, performing an evaluation of market rental rates by benchmarking to other properties of similar type and within the geographic areas, and testing the completeness and accuracy of the inputs within the model.

/s/ Ernst & Young LLP

8 unchanged sentences

Cash and cash equivalents

$ 105,597 $ 145,647

Marketable securities

264,930 400,576

Prepaid expenses and other current assets

Total current assets

379,594 554,686

Restricted cash

Marketable securities, non-current

13,014 16,506

Other investments

19,000 32,001

Property and equipment, net

48,200 102,654

Operating lease right-of-use assets

24,739 39,663

Other non-current assets

$ 490,859 $ 750,029

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

$ 5,366 $ 4,817

Accrued liabilities and other current liabilities

40,411 28,126

Success payment liabilities

Contingent consideration payable

Total current liabilities

53,788 34,519

Operating lease liabilities, non-current

50,994 56,894

Other non-current liabilities

Total liabilities

108,035 95,077

Commitments and contingencies (Note 18)

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Additional paid-in capital 1

1,727,610 1,657,133

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

( 1,619,554 )

Total stockholders’ equity

( 1,345,106 )

Total stockholders’ equity

Total liabilities and stockholders’ equity

$ 490,859 $ 750,029

Amounts previously reported have been retroactively adjusted to reflect the 1-for-20 reverse stock split effected on May 30, 2025.

The accompanying notes are an integral part of these consolidated financial statements.

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Year Ended December 31,

2024 2023 2022

$ 61 $ 130 $ 84,683

Operating expenses:

Research and development

171,603 182,945 159,188

General and administrative

52,041 66,983 117,307

Other operating income, net

( 3,309 ) ( 2,790 ) ( 4,754 )

Acquired in-process research and development

1 unchanged sentence

Total operating expenses

358,816 247,138 271,741

Loss from operations

( 358,755 ) ( 247,008 ) ( 187,058 )

Interest income, net

24,068 23,453 7,053

Other income, net

4,694 1,846 1,887

Other (expense) income, net

Impairment of other investments

Total other income, net

15,761 12,376 3,940

( 342,994 ) ( 234,632 ) ( 183,118 )

Total other (loss) income, net

Other comprehensive loss:

Net unrealized gain (loss) on marketable securities

385 7,505 ( 5,976 )

Net unrealized (loss) gain on marketable securities

Comprehensive loss

$ ( 342,609 ) $ ( 227,127 ) $ ( 189,094 )

Net loss per common share, basic and diluted 1

$ ( 1.31 ) $ ( 0.93 ) $ ( 0.74 )

Weighted-average shares used to compute net loss per common share, basic and diluted 1

261,480 250,983 247,080

(1) Includes related-party revenue of zero for both the years ended December 31, 2024 and 2023 and $ 84,653 for the year ended December 31, 2022.

Amounts previously reported have been retroactively adjusted to reflect the 1-for-20 reverse stock split effected on May 30, 2025.

The accompanying notes are an integral part of these consolidated financial statements.

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(in thousands)

Common Stock Additional

Comprehensive

1 unchanged sentence

Total Stockholders’

Shares Amount

Balance as of December 31, 2022 (1)

242,738 $ 24 $ 1,515,748 $ ( 1,623 ) $ ( 584,362 ) $ 929,787

Stock-based compensation

Issuance of common stock upon exercise of stock options

3,601 1 9,576 — — 9,577

Issuance of common stock under employee stock purchase plan

Issuance of common stock in connection with restricted stock units, net of tax

Other comprehensive loss — — — ( 5,976 ) — ( 5,976 )

Net loss — — — — ( 183,118 ) ( 183,118 )

Other comprehensive income

Balance as of December 31, 2023 (1)

2 unchanged sentences

Issuance of common stock upon exercise of stock options

2,996 — 306 — — 306

Issuance of common stock under employee stock purchase plan

Issuance of common stock in connection with restricted stock units, net of tax

Issuance of common stock for acquisition of IPR&D

Other comprehensive income

— — — 7,505 — 7,505

Net loss — — — — ( 234,632 ) ( 234,632 )

Balance as of December 31, 2024 (1)

1 unchanged sentence

Stock-based compensation

— — 33,144 — — 33,144

Issuance of common stock upon exercise of stock options

1,246 — 154 — — 154

Issuance of common stock under employee stock purchase plan

Issuance of common stock in connection with restricted stock units, net of tax

Issuance of common stock as payment for acquisition of IPR&D asset

37,500 4 36,007 — — 36,011

Other comprehensive income

— — — 385 — 385

— — — — ( 342,994 ) ( 342,994 )

Issuance of common stock in connect with contingent consideration milestone

Issuance of common stock in connection with PIPE financing

Issuance of common stock for acquisition of IPR&D

Other comprehensive loss

Balance as of December 31, 2025

( 1,619,554 )

Amounts previously reported have been retroactively adjusted to reflect the 1-for-20 reverse stock split effected on May 30, 2025.

The accompanying notes are an integral part of these consolidated financial statements.

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Year Ended December 31,

2024 2023 2022

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 342,994 ) $ ( 234,632 ) $ ( 183,118 )

Adjustments to reconcile net loss to net cash used in operating activities:

Acquired IPR&D expense

Impairment of long-lived assets

Stock-based compensation expense

33,144 47,084 81,924

Loss on securities purchase agreement put/call

Depreciation and amortization expense

19,631 20,250 18,020

Net amortization and accretion on marketable securities

( 14,681 ) ( 9,596 ) ( 930 )

Impairment of other investments 13,001 12,923 5,000

Change in fair value of contingent consideration payable

( 3,804 ) — —

Non-cash lease income

( 2,198 ) ( 1,873 ) ( 1,553 )

Loss on property and equipment disposals, net

Change in fair value of contingent consideration payable

Impairment of long-lived assets

Change in fair value of success payment liabilities

( 1,165 ) ( 2,780 ) ( 5,130 )

Gain on marketable equity security

Change in fair value of equity warrant

Gain on other investments — — ( 2,923 )

Impairment of other investments

Loss (gain) on marketable equity security

Changes in operating assets and liabilities:

Prepaid expenses, other current assets and other assets

1,775 3,125 ( 1,968 )

Accounts payable

( 3,234 ) 1,464 667

Accrued liabilities and other current liabilities

( 1,250 ) ( 719 ) ( 463 )

Deferred revenue

— — ( 84,653 )

Operating lease liabilities, non-current — — 4,855

Other non-current liabilities

Net cash used in operating activities

( 162,394 ) ( 163,694 ) ( 169,555 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

( 464 ) ( 2,686 ) ( 24,276 )

Sales of property and equipment

Purchases of marketable securities

( 394,707 ) ( 476,880 ) ( 406,316 )

Maturities of marketable securities

548,941 663,614 419,052

Acquisition of assets, net of cash acquired

( 31,346 ) — —

Net cash provided by (used in) investing activities

122,424 184,048 ( 11,540 )

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from securities purchase agreement equity issuance

Proceeds from exercise of stock options

154 306 9,577

Proceeds from employee stock purchase plan

1 unchanged sentence

Net cash provided by financing activities

1,326 1,743 10,635

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

( 38,644 ) 22,097 ( 170,460 )

Cash, cash equivalents and restricted cash at beginning of period

145,931 123,834 294,294

Cash, cash equivalents and restricted cash at end of period

$ 107,287 $ 145,931 $ 123,834

Represented by:

1 unchanged sentence

Restricted cash

Total $ 107,287 $ 145,931 $ 123,834

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for amounts included in the measurement of lease liabilities

$ 11,467 $ 10,845 $ 10,870

Cash received for amounts related to tenant improvement allowances

$ — $ — $ 4,761

Non-cash investing and financing activities:

Issuance of common stock related to the purchase of the IPR&D asset on Closing Date (Note 3)

$ 36,011 $ — $ —

Equity issued for Acquisition (Note 3)

Securities purchase agreement put/call issuance

Equity issued for contingent consideration - ImmPACT Bio USA Inc.

Contingent consideration payable related to the purchase of the IPR&D asset on Closing Date (Note 3 & 8)

$ 11,404 $ — $ —

Purchases of property and equipment included in accounts payable and accrued liabilities

$ 144 $ 29 $ 1,325

Acquisition of PACT Series D convertible preferred shares $ — $ — $ 2,923

Remeasurement of operating lease right-of-use asset for lease modification

The accompanying notes are an integral part of these consolidated financial statements.

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(the “Company”) was incorporated in Delaware in June 2018.

The Company is a clinical-stage cell therapy company advancing a pipeline of proprietary next-generation chimeric antigen receptor (“CAR”) T-cell product candidates for patients with hematologic malignancies and solid tumors.

The Company’s primary activities since incorporation have been to develop T‑cell therapies, conduct research and development, acquire technology and product candidates, enter into strategic collaboration and license arrangements, enable and execute manufacturing activities in support of its product candidate development efforts, organize and staff the Company, conduct business planning, establish its intellectual property portfolio, submit regulatory submissions, execute clinical trials, raise capital and provide general and administrative support for these activities.

The Company is a late‑stage clinical cell therapy company advancing a pipeline of proprietary next-generation autologous chimeric antigen receptor (“CAR”) T-cell product candidates for patients with hematologic malignancies and solid tumors.

The Company’s lead product candidate, rondecabtagene autoleucel (“ronde-cel”, also known as LYL314), is an autologous dual‑targeting CD19/CD20 CAR T‑cell therapy in development for large B-cell lymphoma (“LBCL”).

The Company has recently acquired exclusive global rights outside of mainland China, Hong Kong, Macau and Taiwan, to a novel guanylyl cyclase C (“GCC”)-targeted CAR T-cell product candidate in early clinical development for refractory metastatic colorectal cancer (“mCRC”) and other GCC-expressing cancers.

The Company’s primary activities since incorporation have been to develop investigational T‑cell therapies, conduct research and development, execute clinical trials, enable and execute manufacturing activities in support of its product candidate development efforts, submit regulatory submissions, acquire technology and product candidates, enter into strategic license and collaboration arrangements, organize and staff the Company, conduct business planning, establish its intellectual property portfolio, raise capital and provide general and administrative support for these activities.

Basis of Presentation and Significant Accounting Policies

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All significant intercompany transactions and balances have been eliminated in consolidation.

Certain prior period amounts have been reclassified to conform with the current period presentation.

Reverse Stock Split

On May 30, 2025, the Company effected a 1-for-20 reverse stock split (“Reverse Split”) of its issued and outstanding shares of common stock, and the common stock began trading on a split-adjusted basis on June 2, 2025.

The Reverse Split did not reduce the total number of authorized shares of common stock or the Company’s preferred stock or change the par values per share of the common stock or preferred stock.

The Reverse Split affected all stockholders uniformly and did not affect any stockholder’s ownership percentage of the shares of common stock (except to the extent that the Reverse Split resulted in some of the stockholders receiving cash in lieu of fractional shares).

All outstanding equity awards entitling their holders to shares of common stock were adjusted as a result of the Reverse Split, in accordance with the terms of each such security.

In addition, the number of shares reserved for future issuance pursuant to the Company’s equity incentive plans was adjusted accordingly.

As a result, all historical per share data, the number of shares issued and outstanding and outstanding equity awards for the periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively in this Form 10-K, where applicable, to reflect the Reverse Split.

As the par value per share of the common stock was unchanged, corresponding amounts have been reclassified from common stock to additional paid-in capital.

Liquidity and Management’s Plan

1 unchanged sentence

The product candidates may require several years and substantial expenditures to complete and ultimately may be unsuccessful.

The Company plans to finance operations with available cash resources or from the issuance of equity or debt securities.

The Company believes that its available cash, cash equivalents and marketable securities as of December 31, 2024 will be adequate to fund its operations at least through the next 12 months from the date these consolidated financial statements are issued.

The Company expects to continue to incur significant operating losses for the foreseeable future and may never be profitable.

As a result, the Company will need to raise additional capital through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements.

Management believes that it has sufficient working capital on hand to fund operations through at least the next 12 months from the date these consolidated financial statements are issued.

Summary of Significant Accounting Policies

1 unchanged sentence

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect reported amounts and related disclosures.

Specific accounts that require management estimates include, but are not limited to, stock-based compensation, valuation of long‑lived and acquired assets, other investments and accrued expenses.

Specific accounts that require management estimates include, but are not limited to, stock-based compensation, valuation of

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

long‑lived and acquired assets, the SPA put/call (as defined below) liability, other investments and accrued expenses.

See Note 13, Stockholders’ Equity , for additional information regarding the SPA put/call.

Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results could differ materially from those estimates.

In June 2022, the Company recorded adjustments to revenue related to a change in estimate in connection with the Collaboration and License Agreement, entered into in 2019 and amended in June 2020 and December 2021 (“GSK Agreement”) with GlaxoSmithKline Intellectual Property (No.

5) Limited and Glaxo Group Limited (together, “GSK”).

The Company and GSK mutually agreed to conclude research activities on an undisclosed target for hematological cancers in June 2022.

As a result, the Company decreased the related estimated project costs, which resulted in an increase in the measure of proportional cumulative performance.

These adjustments increased revenue by $ 83.6 million, decreased net loss by $ 83.6 million and resulted in a $ 0.34 reduction in the Company’s basic and diluted net loss per common share for the year ended December 31, 2022 .

Comprehensive Loss

1 unchanged sentence

For the years ended December 31, 2025 , 2024 and 2023, this was comprised of net unrealized gains and losses on the Company’s marketable securities.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Cash, Cash Equivalents and Restricted Cash

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Such investments are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses repo rted as a component of comprehensive loss.

Realized gains and losses on available-for-sale securities are included in other income, net.

Realized gains and losses on available-for-sale securities are included in other (expense) income, net.

The cost of investments sold is based on the specific-identification method.

1 unchanged sentence

Each reporting period, the Company evaluates whether declines in fair value below carrying value are due to expected credit losses, as well as the Company’s ability and intent to hold the investment until a forecasted recovery occurs.

Expected credit losses, if any, are recorded as an allowance through other income, net.

Expected credit losses, if any, are recorded as an allowance through other (expense) income, net.

Valuation of Other Investments

14 unchanged sentences

For leasehold improvements, amortization is calculated using the straight‑line method based on the shorter of the useful life or the lease term.

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is recorded in other operating income, net in the period realized.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is recorded in other operating income, net in the period realized.

Maintenance and repairs are expensed as incurred.

3 unchanged sentences

Recoverability is measured by comparison of the carrying amount of an asset group to the future net undiscounted cash flows that the assets are expected to generate.

If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

amount of the asset group exceeds the fair value of the asset group.

If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset group.

Any impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the carrying amount of an individual asset shall not be reduced below its fair value.

The Company recognized impairment of long-lived assets expense of $ 51.3 million for the year ended December 31, 2024 and zero for both the years ended December 31, 2023 and 2022.

The Company recognized impairment of long-lived assets expense of $ 1.4 million for the year ended December 31, 2025, $ 51.3 million for the year ended December 31, 2024 and zero for the year ended December 31, 2023.

See Note 5, Impairment of Long-Lived Assets , for details related to long-lived asset impairments recognized during the years ended December 31, 2025 and 2024.

Factors that may indicate potential impairment and trigger an impairment test include, but are not limited to, general macroeconomic conditions, conditions specific to the industry and market, business climate or operational performance of the business and sustained decline in the stock price and market capitalization compared to net book value.

17 unchanged sentences

The Company evaluates lease arrangements for impairment whenever events or changes in circumstances indicate that the carrying amounts of the right-of-use asset may not be fully recoverable.

To the extent an impairment of the right-of-use asset is identified, the Company recognizes a lease impairment and subsequently amortizes the remaining lease asset on a straight-line basis (unless another systematic basis is more representative of the pattern in which the Company expects to consume the future economic benefits from the asset) from the date of impairment to the earlier of the right‑of‑use asset’s useful life or the end of the lease term.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

to consume the future economic benefits from the asset) from the date of impairment to the earlier of the right‑of‑use asset’s useful life or the end of the lease term.

Fair Value Measurements

4 unchanged sentences

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

3 unchanged sentences

As described in Note 7, Other Investments , other investments are carried at cost, minus impairment and any changes, plus or minus, resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Revenue Recognition

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements within the scope of ASC 606, Revenue from Contracts with Customers , ( “ ASC 606 ” ) the Company performs the following five steps:

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

(ii) identify the 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) the performance obligation is satisfied.

In applying the ASC 606 framework, the Company must apply judgment to determine the nature of the promises within a revenue contract and whether those promises represent distinct performance obligations.

In determining the transaction price, the Company does not include amounts subject to uncertainties unless it is probable that there will be no significant reversal of cumulative revenue when the uncertainty is resolved.

Milestone and other forms of variable consideration that the Company may earn are subject to significant uncertainties of research and development related achievements, which generally are deemed not probable until such milestones are actually achieved.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Additionally, the Company develops assumptions that require judgment to determine the standalone selling price of each performance obligation identified in the contract.

The Company then allocates the total transaction price to each performance obligation based on the estimated standalone selling prices of each performance obligation, for which it recognizes revenue as or when the performance obligations are satisfied.

At the end of each subsequent reporting period, the Company re-evaluates the variable consideration and any related constraint and, if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis.

Under the Company’s license agreements, the Company grants the license to a customer as it exists at the point of transfer and the nature of the license is a right to use the Company’s intellectual property as transferred.

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time.

Research and Development Expense

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The Company accrues and expenses clinical trial services performed by third parties based upon actual work completed in accordance with agreements established with its service providers.

The Company estimates the costs through discussions with internal personnel and

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

external service providers as to the progress or stage of completion of services and the agreed-upon fees to be paid for such services.

The Company estimates the costs through discussions with internal personnel and external service providers as to the progress or stage of completion of services and the agreed-upon fees to be paid for such services.

General and Administrative Expense

9 unchanged sentences

However, the Company mitigates the risks by investing in high‑grade instruments, limiting exposure to any one issuer or type of investment and monitoring the ongoing creditworthiness of the financial institutions and issuers.

The Company has not experienced any credit losses in such accounts and does not believe it is exposed to significant risk on these funds.

The Company has not experienced any credit losses in such

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

accounts and does not believe it is exposed to significant risk on these funds.

The Company has no off‑balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

4 unchanged sentences

Stock-based Compensation

Under ASC 718, the Company measures and recognizes expense for restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), employee stock purchases related to the Employee Stock Purchase Plan and stock options granted to employees, directors and consultants based on the fair value of the awards on the date of grant.

Stock-based compensation expense for RSAs, RSUs and stock options is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award.

Under ASC 718, the Company measures and recognizes expense for restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), employee stock purchases related to the Employee Stock Purchase Plan, stock options, performance awards and contingent milestone payments granted to employees, directors, consultants or other third parties based on the fair value of the awards on the date of grant.

Stock-based compensation expense for RSAs, RSUs, stock options and contingent milestone payments are recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award.

The Company accounts for forfeitures as they occur.

For RSAs, RSUs and certain PSUs, the fair value of the Company’s common stock is used to determine the resulting stock-based compensation expense.

The fair value of stock options is estimated on the date of grant using a Black-Scholes option pricing model, which requires management to apply judgment and make estimates using inputs including:

For RSAs, RSUs, certain PSUs and contingent milestone payments, the fair value of the Company’s common stock is used to determine the resulting stock-based compensation expense.

The fair value of certain stock options is estimated on the date of grant using a Black-Scholes option pricing model, which requires management to apply judgment and make estimates using inputs including:

• Fair Value of Common Stock—The fair value of common stock is based on the closing price as reported on the Nasdaq Global Select Market on the date of grant.

2 unchanged sentences

The Company generally uses the simplified method as provided for under the applicable guidance for entities with a limited history of relevant stock option exercise activity.

• Expected Volatility—The expected volatility of stock options is based on the historical volatility of the stock of similar entities within the Company’s industry over a period commensurate with the Company’s expected term assumption.

• Expected Volatility—The expected volatility of stock options is determined by weighting the historical volatility of the Company’s common stock with the historical volatilities of the stock of similar entities within the Company’s industry over a period commensurate with the Company’s expected term assumption.

• Risk-Free Interest Rate—The risk-free interest rate is based on the interest rate payable on U.S.

Treasury securities in effect at the time of grant for a period that is commensurate with the Company’s expected term assumption.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

• Expected Dividend—The Company has not historically paid, and does not expect for the foreseeable future to pay a dividend.

1 unchanged sentence

For awards with performance conditions that vest upon a performance condition being met, compensation expense is recognized for the number of shares expected to be earned after assessing the probability that a certain performance condition will be met and the targeted payout level associated with the performance condition expected to be achieved.

At each reporting date, the Company is required to evaluate whether achievement of a performance condition is probable.

At each reporting date, the Company is required to evaluate whether achievement of a performance condition or a contingent milestone payment is probable.

Cumulative adjustments are recorded each quarter to reflect the estimated outcome of the performance-related conditions until the date results are determined and settled.

If performance conditions are not met or not expected to be met, any compensation expense previously recognized associated with the awards will be reversed.

The fair values of the Company’s PSUs that have market-based metrics are estimated using Monte Carlo simulations.

The fair values of the Company’s PSUs and performance-based stock options that have market-based metrics are estimated using Monte Carlo simulations.

The Company applies an accelerated attribution method to recognize stock-based compensation expense over the applicable service period for these awards.

2 unchanged sentences

The Company determines its deferred tax assets and liabilities based on the differences between the financial reporting and tax basis of assets and liabilities.

The deferred tax assets and liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse.

The deferred tax assets and liabilities are measured using the enacted tax

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

rates that will be in effect when the differences are expected to reverse.

A valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be recovered.

6 unchanged sentences

If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the requirements of a business in which case the transaction is accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date, and that the fair value of acquired intangibles be recorded on the balance sheet.

Any excess of the purchase price over the assigned fair values of the net assets acquired is recorded as goodwill.

Any excess of the purchase price over the assigned fair values of the net assets acquired is recorded as goodwill in a business combination.

If the Company determines an acquisition does not meet the definition of a business combination under the acquisition method of accounting, the transaction is accounted for as an asset acquisition.

For asset acquisitions, a cost accumulation model is used to determine the cost of an asset acquisition, with cost allocated to acquired assets on a relative fair value basis.

Direct transaction costs are recognized as part of the cost of an asset acquisition.

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Goodwill is not recognized in an asset acquisition.

In an asset acquisition, upfront payments allocated to in-process research and development (“IPR&D”) are recorded in research and development expense if it is determined that there is no alternative future use, and subsequent milestone payments are recorded in research and development expense when achieved for technology that has not yet met product feasibility.

In an asset acquisition, upfront payments allocated to in-process research and development (“IPR&D”) are recorded in acquired in‑process research and development expense if it is determined that there is no alternative future use, and subsequent milestone payments are recorded in research and development expense when achieved for technology that has not yet met product feasibility.

Contingent Consideration

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For transactions accounted for as asset acquisitions, the Company records contingent consideration at fair value at the date of the acquisition when deemed probable.

Liabilities for contingent consideration are remeasured each reporting period and subsequent changes in fair value are recognized within other income, net in the Consolidated Statements of

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Operations and Comprehensive Loss.

Liabilities for contingent consideration are remeasured each reporting period and subsequent changes in fair value are recognized within other (expense) income, net in the consolidated statements of operations and comprehensive loss.

The assumptions utilized in the calculation of the fair values include the probability of success and the Company’s stock price.

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Recently Adopted Accounting Pronouncements

Segment Reporting

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources.

Entities with a single reportable segment are required to provide all the updated and existing segment disclosures required by Topic 280.

The Company adopted the annual requirements under ASU 2023-07 on January 1, 2024 on a retrospective basis and adopted interim requirements under ASU 2023-07 on January 1, 2025.

There was no impact on the Company’s reportable segments identified and additional required disclosures have been included in Note 20, Segment .

Recently Issued Accounting Pronouncements

In September 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) .

The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting.

The amendments in ASU 2025-07 are effective for fiscal years and interim periods beginning after December 15, 2026, with early adoption permitted.

The Company early adopted ASU 2025-07 for fiscal 2025 on a prospective basis and the adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The amendments are effective for annual periods beginning after December 15, 2024 and may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements.

The amendments are effective

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

for annual periods beginning after December 15, 2024 and may be applied either prospectively or retrospectively.

The Company adopted ASU 2023-09 for the fiscal 2025 year prospectively with no significant updates.

Recently Issued Accounting Pronouncements

Income Statement Expense Disaggregation

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The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements.

Interim Reporting

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting.

The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements.

ICT License Acquisition

On November 6, 2025, the Company entered into an Exclusive License Agreement with Innovative Cellular Therapeutics Holdings Limited and Innovative Cellular Therapeutics, Inc.

(together, “ICT”) for the development and commercialization of LYL273, a novel GCC-targeted CAR T-cell product candidate for the treatment of mCRC and other GCC-expressing cancers (the “ICT License Agreement”).

Pursuant to the terms of the ICT License Agreement, the Company received exclusive global rights, outside of mainland China, Hong Kong, Macau and Taiwan, to research, develop, manufacture, commercialize and otherwise exploit LYL273 (“LYL273 license”), along with clinical supply through the technology transfer period (subject to a $ 10 million cap) (“Prepaid clinical supply”), in exchange for an upfront payment of $ 40 million in cash and the issuance of 1.9 million shares of the Company’s common stock.

The fair value of the common stock consideration transferred for the ICT License Agreement was calculated based on the closing stock price of the Company’s common stock on November 6, 2025, which was $ 17.88 per share, resulting in total upfront consideration of approximately $ 75.2 million.

In addition, ICT is eligible to receive additional cash and equity payments of (i) a potential $ 30 million clinical milestone payment, up to $ 115 million upon the achievement of certain late-stage regulatory milestones and up to $ 675 million in commercial sales milestones;

(ii) up to an additional 1.85 million shares of the Company’s common stock based on the achievement of certain clinical and regulatory milestones;

and (iii) tiered royalties ranging from mid-single-digits up to 10 % on annual net sales in the United States and low to mid-single-digit royalties on annual net sales in other countries within the licensed territory.

The estimated fair value of the assets acquired on November 6, 2025 are as follows (in thousands):

Assets acquired:

As of November 6, 2025

Prepaid clinical supply

LYL273 license

The fair value of the Prepaid clinical supply was estimated using a market approach as the fair value a market participant would require for the materials (Level 3 of the fair value hierarchy), which resulted in a fair value that differs from the $ 10 million contractual limit.

The Company utilized estimates and assumptions in determining the number of patients and the fair value of Prepaid clinical supply per patient during the technology transfer period to estimate the fair value of the Prepaid clinical supply using the market approach.

A small change in the number of patients or the estimate of the fair value of Prepaid clinical supply per patient may have a material change in the total estimated fair value of the

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Prepaid clinical supply.

During the year ended December 31, 2025, the Company received $ 1.3 million in prepaid clinical supply, resulting in a remaining prepaid clinical supply balance of $ 7.5 million as of December 31, 2025.

Prepaid clinical supply balances are recorded in prepaid expenses and other current assets in the Company’s consolidated balance sheets.

The Company determined that the cash milestones and royalty payments are not subject to derivative accounting under ASC 815, Derivatives and Hedging , as their settlement is contingent upon future net sales and operational milestones related to LYL273.

The Company did not record an associated liability on the acquisition date for the cash milestones or royalty payments as the milestones had not yet been achieved.

The Company will recognize any future cash milestones or royalty payments in the period in which the cash milestones or royalty payments become due and payable.

The Company has not made or accrued for cash milestones or royalty payments as these have not become due and payable.

The Company determined that the milestone payments payable in the Company’s common stock are subject to accounting under ASC 718, Compensation - Stock Compensation.

Consistent with the Company’s treatment of other performance-based equity awards, compensation expense is recognized for the number of shares expected to be earned after assessing the probability that a certain performance condition will be met and the targeted payout level associated with the performance condition expected to be achieved.

At each reporting date, the Company is required to evaluate whether achievement of a performance condition is probable.

If performance conditions are not met or not expected to be met, any compensation expense previously recognized associated with the awards will be reversed.

As of December 31, 2025, it was determined a clinical milestone of 1.1 million shares of common stock was probable of achievement resulting in stock compensation expense of $ 19.7 million, which was recognized in research and development expense.

The Company concluded that the arrangement met the definition of an asset acquisition rather than a business combination, as the transaction failed to meet the definition of a business under ASC 805, Business Combinations .

The $ 66.3 million fair value of the LYL273 license IPR&D acquired was charged to acquired IPR&D expense during the year ended December 31, 2025 as it had no alternative future use as of November 6, 2025.

ImmPACT Acquisition

On October 31, 2024 (the “Closing Date”), the Company completed its previously announced acquisition of ImmPACT Bio USA Inc., a Delaware corporation (“ImmPACT”), pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 24, 2024, by and among the Company, ImmPACT, Inspire Merger Sub Inc., a Delaware corporation and an indirect, wholly owned subsidiary of the Company (“Merger Sub”), and an attorney-in-fact of ImmPACT securityholders (the “Representative”).

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The acquisition was effected via a merger whereby Merger Sub merged with and into ImmPACT (the “Merger”), with ImmPACT surviving the merger as an indirect, wholly-owned subsidiary of the Company.

Contingent consideration following the Closing Date includes (a) additional equity consideration of 12.5 million shares of Company Common Stock (“contingent consideration payable”) that may be earned upon the achievement of the earlier to occur of (i) the demonstration of certain clinical milestones or (ii) the receipt of certain regulatory approvals and (b) a low single-digit royalty on future net sales of the dual-targeting CD19/20 CAR T‑cell product in the United States.

Contingent consideration payable in the Company’s Consolidated Balance Sheet as of December 31, 2024 consists of the additional equity consideration of 12.5 million shares of Company common stock.

Contingent consideration following the Closing Date includes (a) additional equity consideration of 625,000 shares of Company Common Stock (“contingent consideration payable”) that may be earned upon the achievement of the earlier to occur of (i) the demonstration of certain clinical milestones or (ii) the receipt of certain regulatory approvals and (b) a low single-digit royalty on future net sales of the dual-targeting CD19/20 CAR T‑cell product in the United States.

Contingent consideration payable in the Company’s consolidated balance sheet as of December 31, 2024 consisted of the additional equity consideration of 625,000 shares of Company common stock.

All per-share values have been retroactively adjusted to reflect the Reverse Split effected on May 30, 2025.

See Note 2, Summary of Significant Accounting Policies , for additional information regarding the Reverse Split.

Lyell Immunopharma, Inc.

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As a result of this provision, the number of shares underlying the contingent consideration payable is contingently subject to adjustments and the Company has concluded that the arrangement is not indexed to the Company’s equity pursuant to guidance in Accounting Standards Codification (“ASC”) 815-40.

Accordingly, the contingent consideration payable is classified as a liability, subject to be remeasured at fair value at each reporting date with changes in fair value reported in earnings until the liability is settled in accordance with the terms of the Merger Agreement.

Accordingly, the contingent consideration payable was classified as a liability and remeasured at fair value at each reporting date with changes in fair value reported in earnings until the liability was settled in accordance with the terms of the Merger Agreement.

The Company determined that the contingent consideration for the royalty payments is not subject to derivative accounting under ASC 815, Derivatives and Hedging , as its settlement is contingent upon future net sales of the Company's dual-targeting CD19/20 CAR T-cell product in the United States.

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The Company has not made or accrued for contingent payments relating to the royalty payments as these have not become due and payable.

The estimated fair value of the net acquired at Closing Date are as follows (in thousands):

The estimated fair value of the net assets acquired at Closing Date are as follows (in thousands):

Assets acquired:

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Assembled workforce intangible asset

IPR&D asset 87,184

Liabilities Assumed:

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Notes to Consolidated Financial Statements—(Continued)

IPR&D of product candidate IMPT-314.

IPR&D of product candidate ronde-cel.

The $ 87.2 million fair value of the IPR&D acquired was charged to acquired IPR&D expense during the year ended December 31, 2024 as it had no alternative future use at the time of the Closing Date.

License, Collaboration and Success Payment Agreements

License Agreement - In 2018, the Company entered into a license agreement with Fred Hutchinson Cancer Center (“Fred Hutch”) that grants the Company a worldwide, sublicensable license under certain patent rights (exclusive) and certain technology (non-exclusive) to research, develop and commercialize products and processes for all fields of use utilizing chimeric antigen receptors (“CARs”) and/or T-cell receptors (“TCRs”), subject to certain exceptions.

License Agreement - In 2018, the Company entered into a license agreement with Fred Hutchinson Cancer Center (“Fred Hutch”) that grants the Company a worldwide, sublicensable license under certain patent rights (exclusive) and certain technology (non-exclusive) to research, develop and commercialize products and processes for all fields of use utilizing CARs and/or T-cell receptors (“TCRs”), subject to certain exceptions.

Collaboration and Success Payments - In 2018, the Company entered into a research and collaboration agreement with Fred Hutch (“Fred Hutch Collaboration Agreement”), pursuant to which it granted Fred Hutch rights to certain success payments.

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The term of the success payment agreement ends on the earlier to occur of (i) the nine-year anniversary of the date of the agreement and (ii) a change in control transaction.

All per-share values, including the original Series A issuance price referenced herein, have been retroactively adjusted to reflect the Reverse Split effected on May 30, 2025.

See Note 2, Summary of Significant Accounting Policies , for additional information regarding the Reverse Split.

The following table summarizes the aggregate potential success payments, which are payable to Fred Hutch in cash or cash equivalents, or at the Company’s discretion, publicly-tradeable shares of the Company’s common stock:

Multiple of initial equity value at issuance

10 x 20 x 30 x 40 x 50 x

Per share common stock price required for payment

$ 18.29 $ 36.58 $ 54.86 $ 73.15 $ 91.44

Aggregate success payment(s) (in millions)

$ 10 $ 40 $ 90 $ 140 $ 200

The success payments will be owed if the per share fair value of the Company’s common stock on the contractually specified valuation measurement dates during the term of the success payment agreement equals or exceeds the above outlined multiples.

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As of December 31, 2025, no success payments have been incurred as the per share fair value of the Company’s common stock was below the price required for payment.

The success payment liability was estimated at fair value at inception and at each subsequent reporting period and the associated expense was accreted over the service period of the success payment obligations as research and development expense through 2022 .

As of December 31, 2022, the Company’s associated success payment liability was fully accreted to fair value as Fred Hutch had provided the requisite service obligation to earn the potential success payment consideration under the continued collaboration.

For the year ended December 31, 2023 and future periods, the change in the Fred Hutch success payment liability fair value is recognized in other income, net .

The success payment liability was $ 0.4 million and $ 0.1 million as of December 31, 2025 and 2024, respectively.

With respect to the Fred Hutch Collaboration Agreement success payment obligations, the Company recognized success payment expense reversals of $ 0.5 million, $ 1.9 million and $ 3.9 million fo r the years ended December 31, 2024, 2023 and 2022, respectively .

With respect to the Fred Hutch Collaboration Agreement success payment obligations, the Company recognized success payment expense of $ 0.3 million fo r the year ended December 31, 2025 , and expense reversals of $ 0.5 million and $ 1.9 million fo r the years ended December 31, 2024 and 2023, respectively, which are recognized in other (expense) income, net.

License Agreement - In 2019, the Company entered into a license agreement with The Board of Trustees of the Leland Stanford Junior University (“Stanford”) to license specified patent rights.

The Company is required to pay Stanford annual license maintenance payments of $ 50,000 on the second anniversary of the effective date, and each anniversary of the effective date thereafter until the date of the first commercial sale of a licensed product.

Collaboration and Success Payments - In October 2020, the Company entered into a research and collaboration agreement with Stanford (“Stanford Collaboration Agreement”), pursuant to which it granted Stanford rights to certain success payments.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Collaboration Agreement - In October 2020, the Company entered into a research and collaboration agreement with Stanford (“Stanford Collaboration Agreement”), focused on research and development of cellular immunotherapy products.

The Stanford Collaboration Agreement has a four-year term.

The Company funded aggregate research performed by Stanford of $ 12.0 million under the Stanford Collaboration Agreement, with the research conducted in accordance with a research plan and budget approved by the parties.

The Company incurred $ 2.3 million in expense in connection with the Stanford Collaboration Agreement for the year ended December 31, 2024 and $ 3.0 million in expense for both the years ended December 31, 2023 and 2022.

Success Payments - In October 2020, the Company granted Stanford rights to certain success payments, pursuant to the terms of the Stanford Collaboration Agreement.

The potential payments for the Stanford Collaboration Agreement success payments are based on multiples of increased value ranging from 10 times to 50 times based on a comparison of the per share fair market value of the Company’s common stock relative to the original $ 1.83 per share issuance price of the Company’s Series A convertible preferred stock, which converted into an equal number of shares of the Company’s common stock in connection with the closing of the Company’s IPO.

the Company’s common stock relative to the original $ 36.58 per share issuance price of the Company’s Series A convertible preferred stock, which converted into an equal number of shares of the Company’s common stock in connection with the closing of the Company’s IPO.

The aggregate success payments to Stanford are not to exceed $ 200.0 million, which would only occur upon a 50 times increase in value relative to the original $ 36.58 per share issuance price of the Company’s Series A convertible preferred stock.

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The term of each success payment agreement ends on the earlier to occur of (i) the nine year anniversary of the date of the agreement and (ii) a change in control transaction.

All per-share values, including the original Series A issuance price referenced herein, have been retroactively adjusted to reflect the Reverse Split effected on May 30, 2025.

See Note 2, Summary of Significant Accounting Policies , for additional information regarding the Reverse Split.

The following table summarizes the aggregate potential success payments, which are payable to Stanford in cash or cash equivalents, or at the Company’s discretion, publicly-tradeable shares of the Company’s common stock:

Multiple of initial equity value at issuance

10 x 20 x 30 x 40 x 50 x

Per share common stock price required for payment

$ 18.29 $ 36.58 $ 54.86 $ 73.15 $ 91.44

Aggregate success payment(s) (in millions)

$ 10 $ 40 $ 90 $ 140 $ 200

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The success payment liability is estimated at the fair value at inception and at each subsequent reporting period and the expense is accreted over the service period of the Stanford Collaboration Agreement as research and development expense through September 2024.

As of October 2024, the Company’s associated success payment liability was fully accreted to fair value as Stanford had provided the requisite service obligation to earn the potential success payment consideration under the continued collaboration.

For the year ended December 31, 2024 and future periods, the change in the Stanford success payment liability fair value is recognized in other income, net .

For the year ended December 31, 2024 and future periods, the change in the Stanford success payment liability fair value is recognized in other (expense) income, net.

The success payment liability was $ 0.8 million and $ 0.3 million as of December 31, 2025 and 2024, respectively.

With respect to the Stanford Collaboration Agreement success payment obligations, the Company recog nized success expense payment reversals of $ 0.6 million, $ 0.9 million and $ 1.2 million for the years ended December 31, 2024 and 2023 and 2022, respectively.

In 2019, the Company entered into the GSK Agreement with GSK for potential T‑cell therapies that apply the Company’s platform technologies and cell therapy innovations with TCRs or CARs under distinct collaboration programs.

The GSK Agreement defined two initial collaboration targets, LYL331 and LYL132, and allowed GSK to nominate seven additional targets through July 2024, though no additional targets were nominated over the life of the GSK Agreement.

The Company was expected to perform research and development services for each selected target up until a defined point (the “GSK Option Point”), at which time GSK would decide whether or not to exercise an option to obtain a license from the Company (“License Option”) and take over the future development and commercialization.

GSK terminated the GSK Agreement effective December 24, 2022 and Lyell has also discontinued any further work on these programs.

There are no future performance obligations associated with the GSK Agreement.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

The Company received a non-refundable upfront payment of $ 45.0 million under the GSK Agreement.

In connection with the GSK Agreement, in May 2019, the Company also entered into a stock purchase agreement with GSK, pursuant to which the Company agreed to sell 30,253,189 shares of Series AA convertible preferred stock at a price of $ 6.78 per share, which was above the issuance date estimated fair value of $ 4.84 per share.

The difference between the per share values resulted in $ 58.6 million additional deemed consideration, bringing the total upfront consideration of the GSK Agreement to $ 103.6 million.

The GSK Agreement was deemed to be within the scope of ASC 606, Revenue from Contracts with Customers , because GSK engaged the Company to initially provide research and development services, which were outputs of its ongoing activities, in exchange for consideration.

In June 2022, the Company recorded adjustments to revenue related to a change in estimate in connection with the GSK Agreement due to GSK and the Company mutually agreeing to conclude research activities on an undisclosed target for hematological cancers.

The change in estimate decreased the related estimated project costs, which resulted in an increase in the measure of proportional cumulative performance.

The Company recognized revenue related to the research and development services related to the two initial targets of zero , zero and $ 84.7 million for the years ended December 31, 2024, 2023 and 2022 respectively.

As of December 31, 2024, there were no contract assets or contract liabilities related to the license contract.

In June 2020, the Company entered into a commitment agreement (“PACT Commitment Agreement”) with PACT Pharma, Inc.

(“PACT”) to jointly develop and test an anti-cancer T-cell therapy against solid tumors, in connection with which it also purchased PACT Series C-1 convertible preferred stock, which was recorded in other investments at $ 36.4 million in the Company’s Consolidated Balance Sheet.

In December 2021, the Company recorded a $ 36.4 million impairment expense for its investment in PACT.

In February 2021, the Company filed a demand for arbitration seeking, among other things, rescission of the PACT Commitment Agreement.

On October 1, 2022, the Company entered into a settlement agreement to resolve its outstanding legal dispute with PACT, pursuant to which PACT issued shares of PACT’s Series D convertible preferred stock to the Company in exchange for the Company’s tender of its PACT Series C-1 convertible preferred stock.

The settlement agreement also included the termination of the PACT Commitment Agreement.

The Company recorded a gain of $ 2.9 million in October 2022 for the estimated fair value of the PACT Series D convertible preferred stock, which was included in other investments in the Company’s Consolidated Balance Sheet as of December 31, 2022.

In September 2023, the Company performed a qualitative assessment of potential indicators of impairment of the PACT Series D convertible preferred stock investment, resulting in $ 2.9 million impairment expense for the year ended December 31, 2023.

See Note 7, Other Investments , for additional details regarding the PACT investment impairment.

With respect to the Stanford Collaboration Agreement success payment obligations, the Company recog nized success expense payment of $ 0.5 million for the year ended December 31, 2025 , and expense reversals of $ 0.6 million and $ 0.9 million for the years ended December 31, 2024 and 2023, respectively.

Impairment of Long-Lived Assets

As a result of the sustained decline in the Company’s stock price and related market capitalization, deferral and reprioritization of certain research and development programs and associated reduction in force, the Company performed an impairment assessment of long-lived assets for the year ended December 31, 2024.

As a result of the successful transition of the manufacturing of ronde-cel from the Company’s West Hills, Los Angeles manufacturing facility to the Company's LyFE Manufacturing Center TM in Bothell, Washington, and in connection with the planned closure of the West Hills facility, the associated lease has been classified as a separate asset group in 2025.

The Company performed an impairment assessment in 2025 and concluded that the carrying value of the West Hills asset group was not recoverable as it exceeded the future undiscounted cash flows the asset was expected to generate from its use and eventual disposition.

The Company applied a discounted cash flow method to estimate the fair value of the right‑of-use asset, which represented level 3 nonrecurring fair value measurements.

Based on this analysis, the Company recognized long-lived asset impairment charges of $ 1.4 million for the year ended December 31, 2025 within impairment of long-lived assets in the consolidated statements of operations and comprehensive loss.

The Company performed an impairment assessment of long-lived assets for the year ended December 31, 2024 a s a result of the sustained decline in the Company’s stock price and related market capitalization, deferral and reprioritization of certain research and development programs and associated reduction in force .

The Company operates as a single reporting unit based on its business and reporting structure.

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approximately six years remain on the initial term of the Company’s operating lease in South San Francisco, California, which expires in March 2031 .

approximately 5 years remain on the initial term of the Company’s operating lease in South San Francisco, California,

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

which expires in March 2031 .

To allocate and recognize the impairment loss, the Company determined individual fair values of its long-lived assets.

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No impairment was recognized on the remaining long-lived assets as their carrying values were not in excess of their fair values.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Cash Equivalents and Marketable Securities

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December 31, 2025

Losses Fair Value

Money market funds

$ 73,975 $ — $ — $ 73,975

Treasury securities

226,049 262 ( 40 ) 226,271

government agency securities

36,765 51 ( 1 ) 36,815

Corporate debt securities

21,473 20 ( 1 ) 21,492

Total cash equivalents and marketable securities

$ 358,262 $ 333 $ ( 42 ) $ 358,553

Total cash equivalents and fixed income marketable securities

Classified as:

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Marketable securities, non-current

Total cash equivalents and marketable securities

Total cash equivalents and fixed income marketable securities

December 31, 2024

Losses Fair Value

Money market funds

$ 62,075 $ — $ — $ 62,075

Treasury securities

374,214 237 ( 95 ) 374,356

government agency securities

48,924 3 ( 177 ) 48,750

Corporate debt securities

59,668 — ( 62 ) 59,606

Total cash equivalents and marketable securities

$ 544,881 $ 240 $ ( 334 ) $ 544,787

Total cash equivalents and fixed income marketable securities

Classified as:

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Marketable securities, non-current

Total cash equivalents and marketable securities

The fair values of money market and fixed income marketable securities held by the Company in an unrealized loss position for less than 12 months were $ 31.7 million and $ 117.8 million, as of December 31, 2024 and 2023, respectively.

The fair values of money market and fixed income marketable securities held by the Company in an unrealized loss position for greater than 12 months were zero and $ 43.6 million as of December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, all of the Company’s money market and fixed income marketable securities had a maturity date of two years or less, were available for use and were classified as available-for-sale.

Total cash equivalents and fixed income marketable securities

The fair values of money market and fixed income marketable securities held by the Company in an unrealized loss position for less than 12 months were zero and $ 31.7 million, as of December 31, 2025 and 2024, respectively.

The fair values of money market and fixed income marketable securities held by the Company in an unrealized loss position for greater than 12 months were zero as of both December 31, 2025 and 2024.

As of December 31, 2025 and 2024, all of the Company’s money market and fixed income marketable securities had a maturity date of two years or less, were available

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

for use and were classified as available-for-sale.

The Company does not intend to sell these securities nor does the Company believe that it will be required to sell these securities before recovery of their amortized cost basis.

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See Note 8, Fair Value Measurements , for additional information regarding cash equivalents and fixed income marketable securities.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Other Investments

In prior years the Company made minority ownership strategic investments.

As of December 31, 2024 and 2023, the aggregate carrying amount of the Company’s strategic investments in non-publicly traded companies was $ 19.0 million and $ 32.0 million , respectively.

As of both December 31, 2025 and 2024, the aggregate carrying amount of the Company’s strategic investments in non-publicly traded companies was $ 19.0 million .

These investments are measured at initial cost, minus impairment, if any, and plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Cumulative impairments of strategic investments in equity investments without readily determinable fair values still held as of December 31, 2024 and 2023 were $ 23.0 million and $ 15.0 million, respectively.

Cumulative impairments of strategic investments in equity investments without readily determinable fair values still held as of both December 31, 2025 and 2024 were $ 23.0 million, reflecting the full impairment of two of the Company’s other investments .

As a part of the acquisition of each of the Company’s other investments, the Company determines whether an investment or other interest is considered a variable interest.

As of both December 31, 2025 and 2024, t he Company held an interest in one entity that was concluded to be a variable interest for which the Company was not the primary beneficiary as the Company did not have the power to direct the activities that most significantly impact the economic performance of the variable interest entity.

As of December 31, 2024 and 2023 , the carrying value and maximum exposure to loss of the Company’s variable interests were zero and $ 13.0 million, respectively, which are recorded in other investments in the Company’s Consolidated Balance Sheets.

During the years ended December 31, 2024, 2023 and 2022, the Company performed qualitative assessments of potential indicators of impairment and determined that indicators existed for certain of its other investments with carrying amounts of $ 13.0 million, $ 12.9 million and $ 5.0 million , respectively.

During the year ended December 31, 2024, the anticipated funding for one of its other investments was not secured within the expected timeframe.

As of both December 31, 2025 and 2024 , the carrying value and maximum exposure to loss of the Company’s variable interests were zero .

During the years ended December 31, 2025, 2024 and 2023, the Company performed qualitative assessments of potential indicators of impairment.

For the years ended December 31, 2024 and 2023, the Company determined that indicators existed for certain of its other investments with carrying amounts of $ 13.0 million and $ 12.9 million , respectively.

While no single event or factor was solely responsible for the impairments in each year, the Company considered the underlying companies’ operating cash flow requirements over the next year, liquid asset balances to fund those requirements and the underlying companies’ inability to raise funds as indicators of impairment.

Due to these indicators, the Company assessed the valuation of these investments and determined the fair values to be negligible and the impairments to be other-than-temporary in nature.

As a result, the Company recorded impairment expenses of $ 13.0 million for one investment for the year ended December 31, 2024, $ 12.9 million for two investments for the year ended December 31, 2023 and $ 5.0 million for one investment for the year ended December 31, 2022 .

As a result, the Company recorded impairment expenses of $ 13.0 million for one investment for the year ended December 31, 2024 and $ 12.9 million for two investments for the year ended December 31, 2023.

No impairment was recorded for the year ended December 31, 2025.

The impairment expenses were recorded within impairment of other investments on the consolidated statements of operations and comprehensive loss and as reductions to the investment balances within other investments on the consolidated balance sheets.

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December 31, 2025

Level 1 Level 2 Level 3 Total

Financial assets:

Money market funds

$ 73,975 $ — $ — $ 73,975

Treasury securities

— 226,271 — 226,271

government agency securities

— 36,815 — 36,815

Corporate debt securities

— 21,492 — 21,492

Marketable equity security

Total financial assets

$ 74,005 $ 284,578 $ — $ 358,583

Financial liabilities:

Contingent consideration payable

$ — $ — $ 7,600 $ 7,600

Success payment liabilities

$ — $ — $ 411 $ 411

Total financial liabilities

$ — $ — $ 8,011 $ 8,011

Lyell Immunopharma, Inc.

1 unchanged sentence

December 31, 2024

Level 1 Level 2 Level 3 Total

Financial assets:

Money market funds

$ 62,075 $ — $ — $ 62,075

Treasury securities

— 374,356 — 374,356

government agency securities

— 48,750 — 48,750

Corporate debt securities

— 59,606 — 59,606

Marketable equity security

Total financial assets

$ 62,075 $ 482,712 $ — $ 544,787

Financial liabilities:

Contingent consideration payable

Success payment liabilities

$ — $ — $ 1,576 $ 1,576

Total financial liabilities

$ — $ — $ 1,576 $ 1,576

The Company measures the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities.

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Inputs utilized include market pricing based on real-time trade data for the same or similar securities and other significant inputs derived from or corroborated by observable market data.

The Company’s contingent consideration payable is classified as a Level 3 financial instrument.

The contingent consideration payable valuation was estimated using the Company’s common stock price and management’s assessment of the likelihood of achieving either (i) specified clinical milestones or (ii) certain regulatory approvals, which was determined to be approximately 95 %.

The Company’s success payment liabilities are Level 3 financial instruments, which were estimated using Monte Carlo simulations through December 31, 2023.

Monte Carlo simulations model the future movement of stock prices based on several key variables combined with empirical knowledge of the process governing the behavior of the stock price.

The following variables were incorporated in the Monte Carlo simulation to determine the estimated fair value of the success payment liabilities:

fair value of the Company ’ s common stock, expected volatility, the risk-free interest rate and the estimated number and timing of valuation measurement dates on the basis of which payments may be triggered.

The computation of expected volatility was estimated based on available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption.

As of December 31, 2024 , success payment liabilities were estimated by management using its historical experience of the correlation of success payment fair values relative to the Company’s stock price.

The following assumptions were incorporated into the calculation of the estimated fair value of the Fred Hutch and Stanford success payment liabilities as of December 31, 2023:

Fair value of common stock

$ 1.94 $ 1.94

Risk-free interest rate

3.51 % - 5.19 %

Expected volatility

80.0 % 80.0 %

Expected term (in years)

The Company utilizes estimates and assumptions in determining the estimated contingent consideration payable and success payment liabilities and associated changes in fair value.

A small change in the valuation of the Company’s common stock may have a relatively large change in the estimated fair value of the contingent consideration payable and success payment liabilities and associated changes in fair value.

Additionally, a small change in Management’s assessment of the likelihood of achieving either (i) specified clinical milestones or (ii) certain regulatory approvals related to the estimated valuation of the contingent consideration payable may have a relatively large change in its estimated fair value.

In July 2025, the Company completed a $ 50.0 million equity financing that included issuance of mutually exclusive put and call rights related to potential future equity issuance of up to an additional $ 50.0 million financing.

See Note 21, Subsequent Events , for more information about the Company’s exercise of the SPA put right.

These rights were accounted for as a combined financial asset or liability and measured at fair value on a recurring basis.

The SPA put/call is presented within accrued liabilities and other current liabilities on the Company’s consolidated balance sheet as of December 31, 2025.

See Note 13, Stockholders’ Equity , for additional information regarding the SPA put/call liability.

The SPA put/call is classified as a Level 3 financial instrument and the fair value at inception on July 24, 2025 and period-end on December 31, 2025 were estimated using the Monte Carlo simulation valuation method including the following assumptions:

Time to maturity (years)

Risk-free rate

The Company’s contingent consideration payable, success payment liabilities and SPA put/call are classified as Level 3 financial instruments.

In July 2025, the Company issued 625,000 shares of common stock valued at $ 5.9 million upon achievement of a specific clinical milestone, thereby settling the contingent consideration payable related to the ImmPACT acquisition.

Prior to settlement, the liability was valued using the Company’s common stock price and management’s assessment of the probability of achieving either (i) specified clinical milestones or (ii) certain regulatory approvals.

The success payment liabilities were estimated by management using its historical experience of the correlation of success payment fair values relative to the Company’s stock price.

See Note 3, Acquisitions , for additional information regarding the contingent consideration payable.

The Company utilizes estimates and assumptions in determining the estimated contingent consideration payable, success payment liabilities and SPA put/call and associated changes in fair value.

A small change in the value of the Company’s common stock may have a relatively large change in the estimated fair value of the contingent consideration payable, success payment liabilities and SPA put/call and associated changes in fair value.

Additionally, a small change in management’s assessment of the likelihood of achieving either (i) the specified clinical milestones or (ii) certain regulatory approvals related to the estimated valuation of the contingent consideration payable may have a relatively large change in the estimated fair value.

A small change in management’s assessment of the likelihood of achieving either a clinical

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

milestone relating to the Company’s ongoing PiNACLE pivotal trial or certain other corporate milestones relevant to the SPA put/call may have a material change in its estimated fair value.

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities (in thousands):

Contingent Consideration Payable

Success Payment

Success Payment Liabilities

SPA put/call (Asset) Liability

Balance at December 31, 2023

2 unchanged sentences

Change in fair value (1)

( 3,804 ) ( 1,165 )

Settlement via equity issuance

Balance at December 31, 2025

$ 7,600 $ 411

(1) The change in fair value of the contingent consideration payable subsequent to Closing Date is recorded in other income, net for the year ended December 31, 2024.

Changes in the fair value of Fred Hutch and Stanford success payment liabilities are recorded as either other income, net or research and development expenses, depending on the period.

(1) The change in fair value of the contingent consideration payable subsequent to Closing Date, Fred Hutch success payment liabilities and SPA put/call (asset) liability are recorded in other (expense) income, net.

Changes in the fair value of Stanford success payment liabilities are recorded as either other (expense) income, net or research and development expenses, depending on the period.

(See Note 4, License, Collaboration, and Success Payment Agreements .)

In October 2022, the Company received non-voting PACT Series D convertible preferred stock with an estimated fair value of $ 2.9 million using the cost approach (See Note 4, License, Collaboration and Success Payment Agreements ).

In October 2022, the Company received non-voting PACT Series D convertible preferred stock with an estimated fair value of $ 2.9 million using the cost approach.

Under this approach, the fair value of an asset is measured by the cost to reconstruct or replace such asset with another one of like utility.

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In June 2023, the Company performed a qualitative assessment of potential indicators of impairment of the PACT Series D convertible preferred stock investment, resulting in a $ 2.9 million impairment expense for the year ended December 31, 2023 .

See Note 7, Other Investments , for additional details regarding the PACT investment impairment.

Property and Equipment, Net

1 unchanged sentence

Leasehold improvements

$ 79,613 $ 118,319

Laboratory equipment

36,106 33,368

Computer equipment and software

2 unchanged sentences

Property and equipment, at cost

118,879 154,301

Accumulated depreciation and amortization

( 70,679 ) ( 51,647 )

Total property and equipment, net

$ 48,200 $ 102,654

Depreciation and amortization expense was $ 10.4 million , $ 19.4 million and $ 20.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

During the year ended December 31, 2024 , the Company recorded impairment losses of $ 38.7 million for leasehold improvements.

The Company did not record any impairment losses in 2023 and 2022.

The Company did not record any impairment losses related to leasehold improvements in 2025 or 2023.

See Note 5, Impairment of Long‑Lived Assets , for further information.

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Accrued compensation and related benefits

Current lease liabilities 7,974 6,273

Accrued research and development expenses

Other 3,071 1,493

Current lease liabilities

Deferred lease income

Accrued legal

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In January 2021, the Company amended the lease term to extend the lease expiration to March 2031.

On the acquisition Closing Date, the Company acquired an operating lease agreement for approximately 26,000 square feet of office and laboratory space located in Los Angeles, California, with an initial lease term expiring in January 2028.

See Note 3, Acquisition , for further information regarding the acquisition.

On the ImmPACT acquisition Closing Date, the Company acquired an operating lease agreement for approximately 26,000 square feet of office and laboratory space located in Los Angeles, California, with an initial lease term expiring in January 2028.

See Note 3, Acquisitions , for further information regarding the ImmPACT acquisition.

The Company has one five-year option to extend the lease, which is not reasonably assured.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

The following table summarizes the Company’s future minimum operating lease commitments, including expected lease incentives to be received, as of December 31, 2024 (in thousands):

The following table summarizes the Company’s future minimum operating lease commitments, including lease incentives, as of December 31, 2025 (in thousands):

Year Ending December 31:

2025 $ 12,587

Total undiscounted lease payments

4 unchanged sentences

Operating lease liabilities, non-current

Total $ 58,968

The operating lease costs for all operating leases were $ 9.1 million, $ 9.2 million and $ 9.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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The weighted-average discount rates for operating leases were 8.5 % as of both December 31, 2025 and 2024.

The Company entered into subleases in May 2021 and September 2024, whereby the Company agreed to sublease approximately 11,000 and 12,150 square feet, respectively, of its currently leased space in South San Francisco, California currently leased by the Company.

The Company entered into subleases in May 2021 and September 2024, whereby the Company agreed to sublease approximately 11,000 and 12,150 square feet, respectively, currently leased by the Company in South San Francisco, California.

These subleases are classified as operating leases and will expire in March 2031 and July 2026, respectively.

The Company recognized sublease income for these subleases of $ 1.1 million for the year ended December 31, 2024 and $ 0.8 million for both the years ended December 31, 2023 and 2022.

In September 2021, the Company entered into a sublease with Sonoma Biotherapeutics, Inc.

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As a part of the sublease, in September 2021, the Company received a $ 4.6 million tenant improvement contribution payment, which will be recognized over the term of the sublease.

The sublease is classified as an operating lease and will expire in March 2031 if the approximate five-year renewal term is exercised.

The sublease is classified as an operating lease and will expire in September 2026.

The Company recognized Sonoma sublease income of $ 1.9 million for each of the years ended December 31, 2025, 2024 and 2023.

The Company’s sublease income is recognized within other operating income, net in the consolidated statements of operations and comprehensive Loss.

During the year ended December 31, 2024, the Company recorded impairment losses of $ 12.6 million for lease right‑of‑use assets.

The Company did not record any impairment losses for lease right-of-use assets in 2023 and 2022.

Total operating income from the subleases and income solely attributable to the subleases are shown in the table below (in thousands).

Total operating income includes income attributable to the subleases, as well as additional operating fees recognized in other operating income, net such as common area maintenance charges.

Year Ended December 31,

Other operating income, net - subleases

Sublease income

During the year ended December 31, 2025 and 2024 , the Company recorded impairment losses of $ 1.4 million and $ 12.6 million for lease right‑of‑use assets, respectively.

The Company did not record any impairment losses for lease right-of-use assets in 2023.

See Note 5, Impairment of Long‑Lived Assets , for further information.

Convertible Preferred Stock

As of December 31, 2024, no shares of convertible preferred stock were outstanding.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Convertible Preferred Stock

As of December 31, 2025, no shares of convertible preferred stock were outstanding.

Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 10.0 million shares of preferred stock with a par value $ 0.0001 per share.

The Company is authorized to issue 10 million shares of preferred stock with a par value of $ 0.0001 per share.

As of December 31, 2025 and 2024, no shares of preferred stock were outstanding.

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The Company will pay Cowen commissions of up to 3 % of the gross proceeds of the sale, and reimbursement of certain expenses, under this agreement.

Neither the Company nor Cowen is obligated to sell any shares and, to date, the Company has not made any sales under the Sales Agreement.

Neither the Company nor Cowen is obligated to sell any shares.

As of December 31, 2025 , the Company had not made any sales under the Sales Agreement.

In July 2025, the Company entered into the SPA with certain institutional and other accredited investors (the “Purchasers”), pursuant to which the Company sold and issued 3,753,752 shares of common stock at a purchase price of $ 13.32 per share at an initial closing, for gross proceeds of approximately $ 50.0 million.

Pursuant to the SPA, the Company had the right, but not the obligation, to require the Purchasers to purchase approximately $ 50.0 million of additional shares of common stock (and/or pre-funded warrants in lieu of common stock) at a closing (the “Milestone Closing”) upon the occurrence of a milestone event within 12 months following the initial closing (the “Put Right”).

The purchase price per share of common stock in the Milestone Closing will be $ 25.61 , unless the closing price of the common stock on the date before the Milestone Closing is less than $ 10.41 , in which case it will be $ 10.41 per share.

If the purchase price in the Milestone Closing will be $ 10.41 per share, the Company may rescind its Milestone Closing election before completion of the Milestone Closing.

At any time before the Milestone Closing and until the later of 12 months following the initial closing and 40 days after the Purchasers receive notice from the Company of the achievement of a milestone event, each Purchaser will have the right, but not the obligation, to purchase at a closing (each, an “Investor Call Closing”) the same dollar amount of common stock (or pre-funded warrants in lieu thereof) it has committed to purchase in the Milestone Closing, at a purchase price of $ 30.73 per share.

If any Purchaser exercises its right to hold its Investor Call Closing, it will not participate in any subsequent Milestone Closing.

In addition, subject to specified exceptions, if the Company completes a bona fide equity financing for capital-raising purposes on terms that are more favorable to investors than the terms of the Investor Call Closing, the Company’s right to hold the Milestone Closing will terminate.

The Milestone Closing and Investor Call Closing (the “SPA put/call”) were determined to be a combined financial instrument as they are mutually exclusive.

The Company evaluated the SPA put/call under ASC 815 and concluded it does not meet the definition of a derivative.

See Note 8, Fair Value Measurements , for additional information regarding the valuation of the SPA put/call liability.

See Note 21, Subsequent Events , for more information about the Company’s exercise of the SPA put right.

Stock-based Compensation

2021 Equity Incentive Plan

In June 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”), which on the date of the underwriting agreement related to the Company’s IPO became effective with an initial reserve of 26,662,087 shares, plus any shares subject to outstanding awards granted under the 2018 Equity Incentive Plan (“2018 Plan”) that, on or after the effectiveness of the 2021 Plan, terminate or expire before exercise or settlement, are not issued because the award is settled in cash, are forfeited because of the failure to vest or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price.

In addition, the number of shares reserved for issuance under the 2021 Plan automatically increases on January 1 of each year for a period of ten years , beginning on January 1, 2022 and continuing through January 1, 2031, in an amount equal to (1) 5 % of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, or (2) a lesser number of shares determined by the Company’s board of directors no later than December 31 of the immediately preceding year.

On January 1, 2024, the Company reserved an additional 12,697,885 shares of common stock for issuance under the 2021 Plan representing 5 % of the total common shares outstanding as of December 31, 2023.

Under the 2021 Plan, the Company may grant incentive stock options, non-statutory stock options, RSAs, RSUs, stock appreciation rights, performance awards and other stock‑based awards.

Terms of stock awards, including vesting requirements, are determined by the Company’s board of directors or by a committee authorized by the Company’s board of directors, subject to provisions of the 2021 Plan.

Equity Incentive and Employee Stock Purchase Plans

In June 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”) and the 2021 Employee Stock Purchase Plan (“2021 ESPP”), both of which became effective on the date of the underwriting agreement related to the Company’s IPO.

Under the 2021 Plan, the Company may grant incentive stock options, non-statutory stock options, restricted stock awards (“ RSAs”), RSUs, PSUs, stock appreciation rights, performance awards and other stock-based awards.

The term of any stock option granted under the 2021 Plan cannot exceed ten years .

Generally, awards granted by the Company vest over four years , but may be granted with different vesting terms.

In conjunction with adopting the 2021 Plan, the Company discontinued the 2018 Plan with respect to new equity awards.

As of December 31, 2024 , 41,180,525 shares were available for future issuance pursuant to the 2021 Plan.

2021 Employee Stock Purchase Plan

In June 2021, the Company adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”), which became effective immediately prior to the execution of the underwriting agreement related to the Company’s IPO with an initial reserve of 2,470,000 shares.

The 2021 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15 % of their earnings, subject to plan limitations.

Unless otherwise determined by the Company’s board of directors, employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock on the first date of an offering or on the purchase date.

The number of shares of the Company’s common stock reserved for issuance under the 2021 ESPP automatically increases on January 1 of each year for a period of ten years , beginning on January 1, 2022 and continuing through January 1, 2031, by the lesser of (1) 1 % of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, and (2) 4,940,000 shares;

provided, however, that the Company’s board of directors may act to provide a lesser increase in number of shares.

On January 1, 2024, the Company reserved an additional 2,539,577 shares of common stock for issuance under the 2021 ESPP representing 1 % of the total common shares outstanding as of December 31, 2023.

Generally, stock options (other than performance-based stock options, discussed below) and RSU awards granted by the Company vest over four years ,

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

The Company may specify offerings with durations not more than 27 months and may specify shorter purchase periods within each offering.

Under the 2021 ESPP, 954,761 , 986,391 and 475,363 shares have been issued for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024 , 5,046,445 shares were available for future issuance pursuant to the 2021 ESPP.

2018 Equity Incentive Plan

In 2018, the Company established the 2018 Plan that provided for the grant of incentive stock options, non‑statutory stock options, RSAs, RSUs, stock appreciation rights and other stock-based awards.

Terms of stock awards, including vesting requirements, were determined by the board of directors or by a committee authorized by the Company’s board of directors, subject to provisions of the 2018 Plan.

The term of any stock option granted under the 2018 Plan cannot exceed ten years .

Generally, awards granted by the Company vest over four years , but could have been granted with different vesting terms.

Pursuant to the terms of the 2021 Plan, any shares subject to outstanding options originally granted under the 2018 Plan that terminate, expire or lapse for any reason without the delivery of shares to the holder thereof become available for issuance pursuant to awards granted under the 2021 Plan.

While no shares are available for future issuance under the 2018 Plan, it continues to govern outstanding equity awards granted thereunder.

but may be granted with different vesting terms.

PSUs and PBOs generally have a three-year performance period, with vesting subject to the achievement of the associated performance condition.

On January 1, 2025, the Company reserved an additional 737,188 shares of common stock for issuance under the 2021 Plan representing 5 % of the total common shares outstanding as of December 31, 2024 .

The Company’s board of directors elected to reserve no additional shares under the 2021 ESPP for the year beginning January 1, 2025 .

The 2021 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15 % of their earnings, subject to plan limitations.

Under the 2021 ESPP, 51,799 , 47,738 and 49,320 shares were issued for the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2025 , 2,105,974 and 200,833 shares were available for future issuance pursuant to the 2021 Plan and the 2021 ESPP, respectively.

Stock-based Compensation Expense

1 unchanged sentence

Year Ended December 31,

2024 2023 2022

Research and development

$ 14,577 $ 18,207 $ 16,721

General and administrative

18,567 28,877 65,203

Total stock-based compensation expense

$ 33,144 $ 47,084 $ 81,924

Stock Options and RSA Modifications

Research and development stock-based compensation expense for the year ended December 31, 2025 reflects the expense associated with an ICT equity milestone deemed probable of achievement of $ 19.7 million.

See Note 3, Acquisitions , for additional information regarding ICT equity milestones.

At December 31, 2025, total stock-based compensation cost related to unvested awards not yet recognized was $ 26.6 million, which is expected to be recognized over a remaining weighted-average period of 2.4 years.

Stock Options Repricing

In November 2023, the Board of Directors of the Company approved, effective November 16, 2023, a one-time repricing of certain stock option awards that had been granted to date under the 2021 Plan and 2018 Plan.

The repricing impacted stock options with exercise prices greater than $ 2.37 held by employees who remained employed as-of November 16, 2023 and were not impacted by the reduction in workforce.

The repricing impacted stock options with exercise prices greater than $ 47.40 held by employees who remained employed as-of November 16, 2023 and were not impacted by the Company’s November 16, 2023 reduction in workforce.

The original exercise prices of the repriced stock options ranged from $ 52.20 to $ 359.00 per share for 200 total grantees with 1,170,843 shares repriced.

Each stock option was repriced to have a per share exercise price of $ 37.40 , which was the closing price of the Company’s common stock on November 16, 2023.

To receive the new exercise price, option holders were required to remain employed with the Company through November 15, 2024.

To receive the new exercise price, option holders were required to be employed with the Company through November 15, 2024.

Additionally, the vesting schedule for the unvested shares underlying repriced stock options held by executives at the level of senior vice president and above was extended for an additional year.

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Incremental stock-based compensation expense resulting from the repricing was $ 8.9 million in the aggregate.

Expense for vested awards will be recognized through November 15, 2024 and expense for unvested awards will be recognized over the remaining service life of the option.

In December 2022, the Company’s former chief executive officer (“CEO”) resigned.

Under the terms of the separation agreement, the former CEO will be available to provide consulting services to the Company through June 15, 2024, with vested options continuing to be exercisable and unvested options continuing to vest through that date.

The Company concluded that the obligation to provide consulting services was nonsubstantive, and therefore resulted in a modification of their options due to the reduction of their service level.

As the remaining service period was determined to be nonsubstantive, the entire incremental expense of $ 3.7 million associated with the modification was recognized in the fourth quarter of 2022.

At December 31, 2024, total stock-based compensation cost related to unvested awards not yet recognized was $ 44.7 million, which is expected to be recognized over a remaining weighted-average period of 2.3 years.

Expense for vested awards was recognized through November 15, 2024 and expense for unvested awards will be recognized over the remaining service life of the option.

Performance-Based Stock Options

During the year ended December 31, 2025, the Company granted performance-based stock options to certain key employees.

Performance-based stock options (“PBOs”) awarded to employees have a three-year performance period and vest based upon the Company’s performance against a two and three-year relative total shareholder return (“rTSR”) metric or upon the achievement of certain clinical development milestones.

Certain of the clinical development milestones were probable of achievement as of December 31, 2025, representing 7,062 shares.

For the portion of PBOs subject to certain clinical development milestones, 50 % vest upon the achievement of the applicable milestone and the remaining 50 % vest upon the earlier of (a) one year of service from the date of such achievement and (b) the end of the three-year performance period.

The vesting of all PBOs granted is also subject to the respective employee’s continued employment.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

valued the portion of the PBOs subject to the rTSR metric using a Monte Carlo simulation.

The number of PBOs granted subject to the rTSR metrics represents the target number of options that are eligible to be earned based on the achievement of the metrics established at the beginning of the performance period, which ends on December 31 st of the three-year performance period.

For the portion of PBOs subject to the rTSR metrics, employees may ultimately earn between zero and 200 % of the target number of PBOs granted based on the degree of achievement of the applicable rTSR metric.

Accordingly, additional PBOs may be issued or currently outstanding PBOs may be cancelled upon final determination of the degree of achievement of the applicable rTSR metric.

PBOs have contractual terms of ten years from grant date.

A summary of the Company’s PBO activity was as follows:

Number of PBOs

Weighted-Average Exercise Price Per Share

Average Remaining Contractual Life (in years)

Aggregate Intrinsic Value (in thousands)

PBOs outstanding as of December 31, 2024

Canceled or forfeited

PBOs outstanding as of December 31, 2025

PBOs exercisable as of December 31, 2025

(1) PBO grants reflect the target number of shares eligible to be earned at the time of grant.

Performance-Based Restricted Stock Units

During the year ended December 31, 2024, the Company granted PSU awards to certain key employees.

PSUs awarded to employees have a three-year performance period and vest based upon the Company’s performance against a two and three-year relative total shareholder return (“rTSR”) metric, as well as upon the achievement of certain clinical development milestones.

Certain of the clinical development milestones were determined to be probable of achievement as of December 31, 2024, representing 1.5 million shares.

PSUs awarded to employees have a three-year performance period and vest based upon the Company’s performance against a two and three-year rTSR metric, or upon the achievement of certain clinical development milestones.

Certain of the clinical development milestones were determined to be probable of achievement as of December 31, 2025, representing 58,238 shares.

For the portion of PSUs subject to certain clinical development milestones (other than the bonus clinical development milestone), 50 % vest upon the achievement of the applicable milestone, and the remaining 50 % vest upon the earlier of (a) one year of service from the date of such achievement and (b) the end of the three-year performance period.

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For the portion of PSUs subject to the rTSR metrics, employees may ultimately earn between zero and 200 % of the target number of PSUs granted based on the degree of achievement of the applicable rTSR metric.

Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the number of units earned.

Stock-based compensation expense recognized for the PSU awards was approximately $ 1.9 million for the year ended December 31, 2024 and zero for both the years ended December 31, 2023 and 2022.

Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the degree of the achievement of the applicable rTSR metric.

Stock-based compensation expense recognized for the PSU awards was $ 1.7 million and $ 1.9 million for the years ended December 31, 2025 and 2024, respectively and zero for the year ended December 31, 2023.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

A summary of the Company’s PSU activity was as follows:

Performance-Based Restricted Stock Units Outstanding

Weighted-Average

Value at Grant

Date Per Share

Weighted-Average Value at Grant Date Per Share

Unvested PSUs as of December 31, 2024

PSUs granted (1)

2,703,400 $ 1.88

PSUs forfeited or canceled

Unvested PSUs as of December 31, 2025

2,703,400 $ 1.88

(1) PSU grants reflect the target number of shares eligible to be earned at the time of grant.

As of December 31, 2024 , none of the PSU metrics have been met, resulting in no shares vesting.

Restricted Stock Awards

The Company had no unvested RSAs as of both December 31, 2024 and 2023.

The fair value of RSAs vested during the years ended December 31, 2024, 2023 and 2022 was zero , zero and $ 15.2 million, respectively.

The fair value of PSUs vested during the year ended December 31, 2025 was $ 0.4 million and was zero during both the years ended December 31, 2024 and 2023.

As of December 31, 2025 , certain of the PSU metrics have been met, resulting in 33,623 shares vesting.

Restricted Stock Units

A summary of the Company’s RSU activity was as follows:

Number of Shares Weighted-Average

Value at Grant Date

Restricted Stock Units Outstanding

Weighted-Average Value at Grant Date Per Share

Unvested RSUs as of December 31, 2024

2,072,855 $ 2.96

RSUs granted 5,762,499 $ 1.54

RSUs vested ( 1,259,344 ) $ 2.55

RSUs forfeited or canceled

Unvested RSUs as of December 31, 2025

5,623,819 $ 1.72

The fair value of RSUs vested during the years ended December 31, 2025, 2024 and 2023 w as $ 1.7 million, $ 2.0 million and $ 1.4 million, respectively .

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Stock Options

A summary of the Company’s stock option activity was as follows:

Options Weighted-

(in years) Aggregate

Value (in thousands)

Number of Stock Options

Weighted-Average Exercise Price Per Share

Average Remaining Contractual Life (in years)

Aggregate Intrinsic Value (in thousands)

Options outstanding as of December 31, 2024

55,596,831 $ 4.75 6.89 $ 7,368

3,665,500 $ 1.90

( 1,245,836 ) $ 0.12

Canceled or forfeited

( 13,229,412 ) $ 6.18

Options outstanding as of December 31, 2025

44,787,083 $ 2.49 6.62 $ 1,479

Options exercisable as of December 31, 2025

30,273,806 $ 2.74 5.88 $ 1,479

The fair value of stock options granted to employees, directors and consultants was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted-average assumptions:

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

The fair value of stock options and performance-based stock options granted to employees, directors and consultants valued using the Black-Scholes option pricing model was estimated on the date of grant using the following weighted-average assumptions:

Year Ended December 31,

2024 2023 2022

Risk-free interest rate

9 unchanged sentences

The Company has established a full valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets.

As of December 31, 2024 and 2023, the Company had U.S.

federal net operating loss (“NOL”) carryforwards of approximately $ 599.2 million and $ 455.2 million, respectively, which were available to reduce future taxable income and do not expire.

The Company also had U.S.

state NOL carryforwards of $ 702.9 million that begin to expire in 2038 and foreign carryforwards of $ 5.8 million that do not expire.

The Company had gross U.S.

federal and state tax credits of $ 43.6 million and $ 24.2 million as of December 31, 2024 and 2023, respectively, which may be used to offset future tax liabilities.

The federal NOL carryforward period is indefinite, while the tax credits will begin to expire in 2039.

The attributed carryforwards may become subject to annual limitations in the event of certain cumulative changes in the ownership interest of significant stockholders.

This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.

As of December 31, 2024, the Company had a capital loss carryforward of $ 52.5 million, which will expire in 2028.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Beginning with 2025 annual reporting, the Company adopted ASU 2023-09, Improvements to Income Tax Disclosures , prospectively as described in Note 2, Summary of Significant Accounting Policies.

A reconciliation of the U.S.

federal statutory income tax rate to the effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 was as follows (in thousands, except percentages):

Year Ended December 31, 2025

federal statutory tax

Change in valuation allowance

Nontaxable or nondeductible items

Stock-based compensation

Fair value adjustment on PIPE

Other nondeductible items

R&D Tax credits

Worldwide changes in UTB

Effective income tax rate

A reconciliation of income taxes computed using the U.S.

federal statutory rate to that reflected in operations follows:

federal statutory rate to that reflected in operations was as follows:

Year Ended December 31,

2024 2023 2022

federal statutory tax

21.00 % 21.00 % 21.00 %

State tax, net of federal benefit

4.61 7.45 5.10

Valuation allowance

( 20.39 ) ( 29.10 ) ( 28.89 )

Change in valuation allowance

Stock-based compensation

( 2.17 ) ( 2.25 ) ( 6.11 )

2.23 2.96 2.33

0.06 ( 0.06 ) ( 0.15 )

Collaboration revenue

Effective income tax rate

0.00 % 0.00 % 0.00 %

The principal components of the Company’s net deferred tax assets were as follows (in thousands):

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

The principal components of the Company’s net deferred tax assets were as follows (in thousands), noting certain prior year items were reclassified to conform to the current year presentation:

Year Ended December 31,

1 unchanged sentence

Net operating loss carryforward

$ 176,298 $ 133,141

Tax credit carryforward

37,611 22,409

Capital loss carryforward

14,705 14,368

Accrued liabilities and allowances

Deferred revenue

Property and equipment

Intangibles capitalized for tax

Capitalized research and development

1 unchanged sentence

Lease liability

16,486 17,284

Stock-based compensation

10,036 11,244

Gross deferred tax assets

366,357 263,358

Valuation allowance

( 359,440 ) ( 248,420 )

Deferred tax assets, net of valuation allowance

1 unchanged sentence

Operating lease right-of-use assets

( 6,917 ) ( 10,853 )

Property and equipment

Deferred tax liabilities

( 6,917 ) ( 14,938 )

Net deferred tax assets

The Tax Cuts and Jobs Act contained a provision that requires the capitalization of Section 174 costs incurred in years beginning on or after January 1, 2022.

Section 174 costs are expenditures that represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software or technique.

This provision changes the treatment of Section 174 costs such that the expenditures are no longer allowed as an immediate deduction but rather must be capitalized and amortized over five years for domestic research and development and fifteen years for foreign research and development.

The Company has included the impact of this provision, which results in a deferred tax asset of approximately $ 82.4 million as of December 31, 2024.

The changes in the Company’s valuation allowance were as follows (in thousands):

Year Ended December 31,

Beginning balance

Change charged to income tax expense

Ending balance

The One Big Beautiful Bill Act (“OBBBA”) enacted on July 4, 2025, introduced notable changes to the U.S.

Internal Revenue Code, including immediate expensing of domestic Section 174 costs.

Section 174 costs are expenditures which represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software or technique.

As previously required under the Tax Cuts and Jobs Act, the Company capitalized research and development expenditures in the years ended December 31, 2022 through December 31, 2024.

With the enactment of OBBBA, the Company began deducting Section 174 costs in 2025.

As of December 31, 2025, the Company has a deferred tax asset of $ 59.7 million related to capitalized Section 174 expenditures.

As of December 31, 2025 and 2024, the Company had U.S.

federal net operating loss (“NOL”) carryforwards of approximately $ 868.6 million and $ 599.2 million, respectively, which were available to reduce future taxable income and do not expire.

The Company also had U.S.

state NOL carryforwards of $ 876.5 million that begin to expire in 2038 and foreign carryforwards of $ 7.5 million that do not expire.

The Company had gross U.S.

federal and state tax credits of $ 48.6 million and $ 43.6 million as of December 31, 2025 and 2024, respectively, which may be used to offset future tax liabilities.

The federal NOL carryforward period is indefinite, while the tax credits will begin to expire in 2039.

The attributed carryforwards may become subject to annual limitations in the event of certain cumulative changes in the ownership interest of significant stockholders.

This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.

As of both December 31, 2025 and 2024, the Company had a capital loss carryforward of $ 52.5 million, which will expire in 2028.

The Company maintains a full valuation allowance on its net U.S.

deferred tax assets.

The assessment regarding whether a valuation allowance is required considers the evaluation of both positive and negative evidence when concluding whether it is more likely than not that deferred tax assets are realizable.

In making this assessment, significant weight is

The assessment regarding whether a valuation allowance is required considers the evaluation of both positive and negative evidence when concluding

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

given to evidence that can be objectively verified.

whether it is more likely than not that deferred tax assets are realizable.

In making this assessment, significant weight is given to evidence that can be objectively verified.

In its evaluation, the Company considered its cumulative loss in recent years and its forecasted losses in the near-term as significant negative evidence.

2 unchanged sentences

The valuation allowance relates primarily to net U.S.

deferred tax assets from net operating loss carryforwards, research and development tax credit carryforwards, research and development expenses capitalized and amortized for tax but deducted for GAAP and stock-based compensation.

deferred tax assets from net operating loss carryforwards, research and development tax credit carryforwards, research and development expenses and intangibles capitalized and amortized for tax but deducted for GAAP.

The Company will continue to assess the realizability of its deferred tax assets and adjust the valuation allowance as required by ASC 740.

In connection with the October 2024 acquisition of ImmPACT stock, the Company recorded U.S.

deferred tax assets of $ 39.6 million, which are mainly related to capitalized research costs and tax attribute carryforwards.

The deferred tax assets are considered not more likely than not to be realized and therefore are fully offset by a valuation allowance of $ 39.6 million.

ImmPACT has an Israeli subsidiary with deferred tax assets of $ 1.4 million, which are mainly related to tax attribute carryforwards.

These deferred tax assets are also fully offset by a valuation allowance of $ 1.4 million.

The Company will continue to assess the realizability of its deferred tax assets and adjust the valuation allowance as required by ASC 740.

The increase in the valuation allowance was $ 111.0 million and $ 68.3 million for the years ended December 31, 2024 and 2023, respectively.

The deferred tax assets were considered not more likely than not to be realized and therefore were fully offset by a valuation allowance of $ 39.6 million.

As of December 31, 2025 and 2024, the Company has an Israeli subsidiary with deferred tax assets of $ 1.8 million and $ 1.4 million, respectively, which are mainly related to tax attribute carryforwards.

These deferred tax assets are also fully offset by a valuation allowance.

Company is not dependent on repatriation from its foreign operations to support its liquidity needs.

The undistributed earnings of the Company’s foreign operations are intended to be permanently reinvested in those operations.

income taxes have not been recognized on any undistributed earnings that are intended to be permanently reinvested.

It is not practical at this time to estimate the additional tax that may become payable upon the eventual repatriation of these amounts, but it is not expected to be material.

The Company evaluates its uncertain tax positions based on a determination of whether it is more likely than not such position will be sustained based upon its technical merits and upon examination by the relevant income tax authorities with all facts known.

The Company applies judgment in its measurement of an uncertain tax position recorded in its consolidated financial statements and tax return.

As of December 31, 2024 and 2023, there are no penalties or accrued interest recorded in the consolidated financial statements.

The Company is generally subject to examination by the U.S.

federal and local income tax auth orities for all tax years in which a loss carryforward is available.

The Company is currently not under examination by the Internal Revenue Service or other jurisdictions for any tax years.

As of December 31, 2025 and 2024, the Company has an unrecognized tax benefit (“UTB”) of $ 3.5 million and $ 3.7 million, respectively, as a reduction to the deferred tax asset.

If recognized, it would have no impact to our effective tax rate as we have a full valuation allowance.

There are no penalties or accrued interest recorded in the consolidated financial statements.

The following tab le summarized changes to the Company’s unrecognized tax benefits (in thousands):

4 unchanged sentences

Ending balance

The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company files income tax returns in the U.S.

federal, various state jurisdictions and Israel.

The Company is generally subject to examination by the U.S.

federal and local income tax authorities for all tax years in which a loss carryforward is available.

The Company is currently not under examination by the Internal Revenue Service or other jurisdictions for any tax years.

Net Loss Per Share

Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.

The Company’s potentially dilutive shares, which include unvested RSAs, unvested RSUs, unvested PSUs and options to purchase common stock, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

Shares subject to options to purchase common stock, unvested RSAs, unvested RSUs and unvested PSUs were all excluded from consideration in the calculation of diluted net loss per share in all periods presented due to their anti-dilutive effects.

The Company’s potentially dilutive shares, which include unvested RSUs, unvested PSUs and options to purchase common stock, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

Shares subject to options to purchase common stock, unvested RSUs and unvested PSUs were all excluded from consideration in the calculation of diluted net loss per share in all periods presented due to their anti-dilutive effects.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

Employee Benefit Plan

2 unchanged sentences

Beginning in 2022, the Company sponsors a defined-contribution savings plan with matching 401(k) contributions based upon the amount of the employees’ contributions subject to certain limitations.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

made matching contributions to the 401(k) Plan on behalf of participants of $ 1.0 million, $ 1.2 million and $ 1.0 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

The Company made matching contributions to the 401(k) Plan on behalf of participants of $ 0.8 million, $ 1.0 million and $ 1.2 million for the years ended December 31, 2025, 2024 and 2023 , respectively.

Commitments and Contingencies

7 unchanged sentences

As a part of the Sonoma Sublease, a $ 4.6 million tenant improvement contribution payment was made by Sonoma, which is recognized over the term of the Sonoma Sublease.

As of both December 31, 2024 and 2023, there were accrued liabilities and other current liabilities of $ 0.5 million, a nd as of December 31, 2024 and 2023, other non-current lia bilities of $ 2.5 million and $ 3.0 million, respectively, in connection with the Sonoma Sublease.

As of December 31, 2025 and 2024, there were accrued liabilities and other current liabilities of $ 2.5 million and $ 0.5 million, respectively, a nd as of December 31, 2025 and 2024, there were other non-current lia bilities of zero and $ 2.5 million, respectively, in connection with the Sonoma Sublease.

Total operating income from Sonoma and income solely attributable to the Sonoma Sublease are shown in the table below (in thousands).

2 unchanged sentences

Year Ended December 31,

2024 2023 2022

Sonoma other operating income, net

Sonoma sublease income

The Company was party to the GSK Agreement, who is a holder of more than 10 % of the Company’s outstanding common stock.

See Note 4, License, Collaboration, and Success Payment Agreements .

Revenue recognized in connection with the GSK agreement was zero for both the years ended December 31, 2024 and 2023, and $ 84.7 million for the year ended December 31, 2022.

GSK terminated the GSK Agreement effective December 24, 2022.

See Note 4, License, Collaboration, and Success Payment Agreements, for additional details regarding the termination of the GSK Agreement.

In connection with the SPA, ARCH Venture XIII, L.P.

participated as a Purchaser by acquiring approximately 0.9 million shares of common stock for aggregate gross proceeds to the Company of $ 12.5 million at a purchase price of $ 13.32 per share.

ARCH Venture Fund XIII, L.P.

filed a Form 3 in July 2025 stating it beneficially owned greater than 10 % of the Company’s outstanding common stock as of that date.

See Note 13, Stockholders’ Equity , for additional information regarding the SPA.

The Company reports segment information in accordance with the management approach, which reflects the internal reporting utilized by the Chief Operating Decision Maker (“CODM”), the Company’s President and Chief Executive Officer.

1 unchanged sentence

The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.

The CODM evaluates the performance of the Company’s sole reportable segment based on net income or loss that also is reported on the Consolidated Statements of Operations and Comprehensive Loss as net income or loss.

The measure of segment assets is reported on the Consolidated Balance Sheets as total assets.

The Company’s sole reportable segment generates revenue by providing research and development services.

Prior period segment information has been recast to reflect the manner in which financial information is currently reviewed by the CODM to allocate resources and assess performance, conforming to the current period presentation.

Lyell Immunopharma, Inc.

Notes to Consolidated Financial Statements—(Continued)

The CODM evaluates the performance of the Company’s sole reportable segment based on net income or loss that also is reported on the consolidated statements of operations and comprehensive loss as net income or loss.

The table below details the Company’s segment net loss, significant expenses, and other segment items (in thousands).

The measure of segment assets is reported on the consolidated balance sheets as total assets.

Year Ended December 31,

2024 2023 2022

Revenue $ 61 $ 130 $ 84,683

Operating expenses:

Research and development

Technical operations

Clinical operations 39,783 31,802 19,191

Research activities 37,772 53,567 57,328

Facilities and technology 26,342 25,636 25,081

Clinical development

Support functions

Operations management

Total research and development expenses 171,603 182,945 159,188

General and administrative

Business support 33,973 47,428 84,500

Corporate expenses and outside services 14,450 15,575 27,717

Facilities and technology 3,618 3,980 5,090

Total general and administrative expenses 52,041 66,983 117,307

Other operating income, net ( 3,309 ) ( 2,790 ) ( 4,754 )

Acquired in-process research and development 87,184 — —

Impairment of long-lived assets

Total operating expenses 358,816 247,138 271,741

Loss from operations ( 358,755 ) ( 247,008 ) ( 187,058 )

Interest income, net 24,068 23,453 7,053

Other income, net 4,694 1,846 1,887

Impairment of other investments ( 13,001 ) ( 12,923 ) ( 5,000 )

Total other income, net 15,761 12,376 3,940

Net loss $ ( 342,994 ) $ ( 234,632 ) $ ( 183,118 )

Research activities

Other segment items (1)

Includes stock-based compensation, depreciation, other operating income, net, acquired in-process research and development, impairment of long-lived assets, interest income, net, other (expense) income, net, and impairment of other investments.

Total expenditures for additions to the Company’s property and equipment, net were $ 0.6 million, $ 0.6 million and $ 1.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.

For the year ended December 31, 2024, approximately 73 % of revenue is attributable to a single customer headquartered in the United States and approximately 27 % of revenue is attributable to a single customer headquartered in China.

The Company’s revenues for the year ended December 31, 2023 are attributed to a single customer headquartered in the United States.

For the year ended December 31, 2022, approximately 100 % of the Company’s revenues were attributable to a single customer headquartered in the United Kingdom.

The Company’s long-lived assets as of December 31, 2025 and 2024 are located in the United States.

Subsequent Events

Pursuant to the SPA, the Company exercised the Put Right following achievement of the applicable milestone and, on March 6, 2026, the Company sold and issued 1,952,360 shares of common stock at a purchase price per share of $ 25.61 at the Milestone Closing, for gross proceeds of approximately $ 50.0 million.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data