Nkarta, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Nkarta, Inc. Index to Financial Statements For the years ended December 31, 2025 and 2024 Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 104 Audited Financial Statements Balance Sheets 105 Statements of Operations and Comprehensive Loss 106 Statements of Stockholders' Equity 107 Statements of Cash Flows 108 Notes to Financial Statements 109 103 Report of Independent Regist ered Public Accounting Firm To the Stockholders and the Board of Directors of Nkarta, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Nkarta, Inc. (the Company) as of December 31, 2025 and 2024, the related statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025 , in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2019. San Mateo, California March 25, 2026 104 NKARTA, INC. Balance Sheets (In thousands, except par value and share data) December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 39,634 $ 27,873 Short-term investments 236,645 239,481 Prepaid expenses and other current assets 6,233 5,984 Total current assets 282,512 273,338 Long-term investments 16,107 110,392 Restricted cash 2,743 2,743 Property and equipment, net 66,721 74,658 Operating lease right-of-use assets 34,429 36,014 Other long-term assets 1,697 4,058 Total assets $ 404,209 $ 501,203 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 2,089 $ 638 Operating lease liabilities, current portion 6,889 6,050 Accrued and other current liabilities 13,288 12,229 Total current liabilities 22,266 18,917 Operating lease liabilities, net of current portion 69,531 74,223 Other long-term liabilities 87 87 Total liabilities 91,884 93,227 Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $ 0.0001 par value; 54,350,179 shares authorized; no shares issued and outstanding at December 31, 2025 and 2024 — — Common stock, $ 0.0001 par value; 200,000,000 shares authorized as of December 31, 2025 and 2024; 71,078,531 and 70,645,139 shares issued and outstanding at December 31, 2025 and 2024, respectively 7 7 Additional paid-in capital 960,219 951,519 Accumulated other comprehensive income 407 674 Accumulated deficit ( 648,308 ) ( 544,224 ) Total stockholders' equity 312,325 407,976 Total liabilities and stockholders' equity $ 404,209 $ 501,203 See accompanying notes to the financial statements. 105 NKARTA, INC. Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) Year Ended December 31, 2025 2024 Operating expenses: Research and development 90,429 96,744 General and administrative 31,568 31,450 Total operating expenses 121,997 128,194 Loss from operations ( 121,997 ) ( 128,194 ) Other income, net: Interest income 15,494 19,317 Other income, net 2,419 87 Total other income, net 17,913 19,404 Net loss $ ( 104,084 ) $ ( 108,790 ) Comprehensive loss: Net loss ( 104,084 ) ( 108,790 ) Other comprehensive loss: Net unrealized (loss) gain on investments ( 267 ) 666 Comprehensive loss $ ( 104,351 ) $ ( 108,124 ) Net loss per share, basic and diluted $ ( 1.41 ) $ ( 1.60 ) Weighted-average shares outstanding used in computing basic and diluted net loss per share 73,991,197 67,865,323 See accompanying notes to the financial statements. 106 NKARTA, INC. Statements of Stockholders’ Equity (In thousands, except share data) Common Stock Additional Accumulated Other Total Shares Amount Paid-In Capital Accumulated Deficit Comprehensive Income (Loss) Stockholders' Equity Balance at December 31, 2023 49,181,295 $ 5 $ 708,706 $ ( 435,434 ) $ 8 $ 273,285 Issuance of common stock and pre-funded warrants, net of issuance costs of $ 15,027 21,010,000 2 225,071 — — 225,073 Issuance of common stock upon exercise of stock options 144,128 — 668 — — 668 Issuance of common stock upon vesting of restricted stock units 165,667 — — — — — Issuance of common stock under employee stock purchase plan 144,049 — 343 — — 343 Share-based compensation expense — — 16,731 — — 16,731 Net unrealized gain on investments — — — — 666 666 Net loss — — — ( 108,790 ) — ( 108,790 ) Balance at December 31, 2024 70,645,139 $ 7 $ 951,519 $ ( 544,224 ) $ 674 $ 407,976 Issuance of common stock upon exercise of stock options 10,630 — — — — — Issuance of common stock upon vesting of restricted stock units 327,242 — — — — — Issuance of common stock under employee stock purchase plan 95,520 — 141 — — 141 Share-based compensation expense — — 8,559 — — 8,559 Net unrealized loss on investments — — — — ( 267 ) ( 267 ) Net loss — — — ( 104,084 ) — ( 104,084 ) Balance at December 31, 2025 71,078,531 $ 7 $ 960,219 $ ( 648,308 ) $ 407 $ 312,325 See accompanying notes to the financial statements. 107 NKARTA, INC. Statements of Cash Flows (In thousands) Year Ended December 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 104,084 ) $ ( 108,790 ) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation expense 8,559 16,731 Depreciation and amortization expense 9,193 9,152 Accretion of discount and amortization of premium on investments, net ( 4,580 ) ( 6,912 ) Non-cash lease expense 1,951 2,286 Realized gain on investments ( 94 ) — Impairment of right-of-use asset 791 — Changes in operating assets and liabilities: Prepaid expenses and other assets 2,113 ( 1,365 ) Operating lease liabilities ( 5,011 ) ( 6,416 ) Accounts payable and accrued and other liabilities 2,463 ( 4,469 ) Other long-term liabilities — 87 Net cash used in operating activities ( 88,699 ) ( 99,696 ) Cash flows from investing activities: Purchases of investments ( 238,565 ) ( 406,376 ) Proceeds from maturities of investments 340,092 281,230 Purchases of property and equipment ( 1,208 ) ( 4,409 ) Net cash provided by (used in) investing activities 100,319 ( 129,555 ) Cash flows from financing activities: Proceeds from issuance of common stock and pre-funded warrants, net of issuance costs — 225,073 Proceeds from employee stock purchase plan purchases 141 343 Proceeds from stock option exercises — 668 Net cash provided by financing activities 141 226,084 Net increase (decrease) in cash and cash equivalents 11,761 ( 3,167 ) Cash, cash equivalents and restricted cash at beginning of year 30,616 33,783 Cash, cash equivalents and restricted cash at end of year $ 42,377 $ 30,616 Reconciliation of cash, cash equivalents and restricted cash to the balance sheets: Cash and cash equivalents $ 39,634 $ 27,873 Restricted cash 2,743 2,743 Total cash, cash equivalents and restricted cash $ 42,377 $ 30,616 Supplemental disclosures of non-cash investing activities: Acquisitions of property and equipment recorded in accounts payable and accrued and other current liabilities $ 390 $ 343 Right-of-use assets recognized in exchange for operating lease liability $ 1,157 $ 579 Decrease in right-of-use asset and lease liability due to termination $ — $ 2,229 See accompanying notes to the financial statements. 108 NKARTA, INC. Notes to the Financial Statements 1. Description of Business Description of the Business Nkarta, Inc. ("Nkarta" or the "Company") was incorporated in the State of Delaware in July 2015. The Company is a biopharmaceutical company developing engineered natural killer ("NK") cell therapies to treat autoimmune diseases. The Company is focused on leveraging the natural potent power of NK cells to identify and kill abnormal cells and recruit adaptive immune effectors to generate responses that are specific and durable. Nkarta is combining its NK-cell expansion platform technology with proprietary cell engineering technologies to generate an abundant supply of NK cells, engineer enhanced NK-cell recognition of therapeutic targets, and improve persistence for sustained activity in the body. Nkarta’s goal is to develop off-the-shelf NK-cell therapy product candidates to improve outcomes for patients. The Company’s operations are based in South San Francisco, California, and it operates in one segment. Liquidity and Management Plans The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since inception, the Company has devoted substantially all of its efforts to organizing and staffing, business planning, raising capital, conducting preclinical studies and initiating clinical studies, and has not realized revenues from its planned principal operations. In addition, the Company has a limited operating history, has incurred operating losses since inception and expects that it will continue to incur net losses into the foreseeable future as it continues its research and development activities. As of December 31, 2025, the Company had an accumulated deficit of $ 648.3 million and cash, cash equivalents, restricted cash and short-term and long-term investments of $ 295.1 million. Management plans to continue to incur substantial costs to conduct research and development activities for which additional capital will be needed. The Company intends to raise such capital through d ebt or equity financings or other arrangements to fund operations. Management believes that the Company’s current cash, cash equivalents, and investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report. 2. Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including, but not limited to, accruals, fair value of assets and liabilities, impairment of assets, leases, share-based compensation and income taxes. Management bases its estimates on historical experience, knowledge of current events and actions it may undertake in the future that management believes to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash, cash equivalents and investments. The Company maintains cash, cash equivalents and investments with various high credit quality and are invested through banks and other financial institutions in the United States. Such deposits may be in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has not experienced any losses on deposits since inception. 109 Comprehensive Loss Comprehensive loss consists of net loss and unrealized gains or losses on investments. The Company displays comprehensive loss and its components as part of the statements of operations and comprehensive loss. Fair Value of Financial Instruments The accounting guidance defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts of prepaid expenses and other current assets, accounts payable, accrued liabilities and other current liabilities approximate their fair value due to the short-term nature of these accounts. Cash, Cash Equivalents, Investments and Restricted Cash Cash and Cash Equivalents The Company considers all highly liquid investments with insignificant interest rate risk and an original maturity of three months or less at the date of purchase to be cash equivalents. Cash includes demand deposits held in readily available checking accounts at a federally insured financial institution. Cash equivalents consist of money market funds, commercial paper, and U.S. Government securities. Investments Investments consist of corporate debt securities, commercial paper and Government securities, classified as available-for-sale securities and have maturities of greater than three months. The Company has classified its available-for-sale investment securities with maturities less than one year as current assets on the balance sheets because these are considered highly liquid securities and are available for use in current operations and its available-for-sale investment securities with maturities more than one year as non-current assets on the balance sheets. The Company carries these securities at fair value, and reports unrealized gains and losses as a separate component of accumulated other comprehensive income (loss). The cost of debt securities is adjusted for amortization of purchase premiums and accretion of discounts to maturity. Such amortization and accretion is included in interest income in the statements of operations and comprehensive loss. Realized gains and losses on sales of securities are determined using the specific identification method and recorded in other income, net in the statement of operations and comprehensive loss. We review our portfolio of available-for-sale securities, using both quantitative and qualitative factors, to determine if declines in fair value below amortized cost have resulted from a credit-related loss or other factors. If the decline in fair value is due to credit-related factors, we recognize a loss in the statement of operations, whereas if the decline in fair value is not due to credit-related factors, we recognize the loss in comprehensive loss. Restricted Cash The Company is required to maintain letters of credit related to its office and lab space leases in South San Francisco. This cash is the collateral for those letters of credit and per the terms of the leases, must remain in place until one to two months after the termination of the leases. As the remaining terms of the leases as of December 31, 2025 is greater than one year, the related restricted cash has been classified as non-current. 110 Property and Equipment, Net Property and equipment, which consist of leasehold improvements, furniture and fixtures, research equipment, computers and software and construction-in-progress are stated at cost less accumulated depreciation. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which ranges from three to five years . Leasehold improvements are amortized over the remaining life of the lease at the time the asset is placed into service. Impairment of Long-Lived Assets The carrying value of long-lived assets, including property and equipment and right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable. An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. During the third quarter of 2025, the Company identified an indicator of impairment of its long-lived assets due to a sustained decline in the trading price of its common stock, which resulted in the Company’s market capitalization falling below its net asset value. There were no changes in the continued intended use of its long-lived assets. The fair value of the right-of-use assets was determined by discounting the estimated cash flows using observed market lease rates for comparable properties and an estimated market participant borrowing rate of 8.5 %. The fair value of property and equipment was estimated using trend factors applied to historical cost data, together with estimates of economic depreciation and expected useful lives. Based on the results of the fair value analyses, the Company recognized an impairment charge of $ 0.8 million related to the right-of-use asset, which was recorded in the statements of operations for the year ended December 31, 2025. The impairment charge is included within general and administrative expenses. No additional impairment charges were recognized subsequent to the third quarter of 2025, and no impairment charge was recorded during 2024. Restructuring Emplo yee severance costs are recorded based on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement. The Company accounts for on-going termination benefit arrangements, such as those arising from employment agreements, applicable regulations or past practices, in accordance with Accounting Standards Codification (“ASC”) Topic 712, Compensation-Nonretirement Postemployment Benefits (“ASC 712”). Under ASC 712, liabilities for post-employment benefits related to past services and that vest or are accumulated over time are recorded at the time the obligations are probable of being incurred and can be reasonably estimated. The Company accounts for one-time employment benefit arrangements in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”). One-time termination benefits are expensed at the date the entity notifies the employee, unless the employee must provide future service over a period extending past the minimum notification period, in which case the benefits are expensed ratably over the future service period. Other associated costs are recognized in the period in which the liability is incurred. See Note 14 for additional information on the severance expense that the Company recognized for employees terminated in connection with the reduction in force. Collaborative Arrangements The Company analyzes its collaboration arrangements to assess whether they are within the scope of Accounting Standards Codification ("ASC") Topic 808, Collaborative Arrangements ("ASC 808"), to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the extent the arrangement is within the scope of ASC 808, the Company assesses whether aspects of the arrangement between the Company and its collaboration partner are within the scope of other accounting literature, including ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"). If it is concluded that some or all aspects of the arrangement represent a transaction with a customer, the Company will account for those aspects of the arrangement within the scope of ASC 606. ASC 808 provides guidance for the presentation and disclosure of transactions in collaborative arrangements, but it does not provide recognition or measurement guidance. Therefore, if the Company concludes a counterparty to a transaction is not a customer or otherwise not within the scope of ASC 606, the Company considers the guidance in other accounting literature as applicable or by analogy to account for such transaction. The classification of transactions under the Company’s arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs consist primarily of salaries and other benefits of research and development personnel, including associated share-based compensation, costs related to research activities, preclinical studies, clinical trial, drug manufacturing and allocated overhead and facility-related expenses. The Company 111 accounts for non-refundable advance payments for goods or services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made. Clinical trial costs are a component of research and development expenses. The Company expenses costs for its clinical trial activities performed by third parties, including clinical research organizations and other service providers, as they are incurred, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements. The Company uses information it receives from internal personnel and outside service providers to estimate the clinical trial costs incurred. Leases At the commencement date of a lease, the Company recognizes lease liabilities which represent its obligation to make lease payments, and right-of-use assets ("ROU assets") which represent its right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date. The ROU asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by the Company and excludes lease incentives. ROU assets are recorded in operating lease ROU assets and lease liabilities are recorded in operating lease liabilities, current and noncurrent in the balance sheets. We have elected the practical expedient to account for the lease and non-lease components, such as common area maintenance charges, as a single lease component for our facilities leases, and elected the short-term lease recognition exemption for our short-term leases, under which we do not recognize lease liabilities and ROU assets for leases with an original term of twelve months or less. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. The Company does not recognize lease liabilities and ROU assets for short-term leases with terms of twelve months or less. Share-Based Compensation Share-based compensation expense represents the cost of the grant-date fair value of employee, officer, director, and non-employee stock option, employee stock purchase plan, and restricted stock unit grants, estimated in accordance with the applicable accounting guidance, recognized using the straight-line method over the vesting period for service-based options, employee stock purchase plan rights and restricted stock units. The vesting period generally approximates the expected service period of the awards. Forfeitures are recognized and accounted for as they occur. The fair value of stock options and employee stock purchase plan rights are estimated using a Black-Scholes option pricing model on the date of grant. This method requires the use of the fair value of the underlying common stock and certain assumptions as inputs, including the expected term of the option before exercise, expected volatility of the Company’s common stock, expected dividend yield, and a risk-free interest rate. Options granted during the year have a maximum contractual term of ten years . The Company has limited historical stock option activity and therefore estimates the expected term of stock options granted using the simplified method, which represents the average of the contractual term of the stock option and its weighted-average vesting period. The expected term of the employee stock purchase plan rights equals the six-month look-back period. The expected volatility is determined by using a blended approach of the Company's historical stock price volatility and the historical stock price volatility for a select group of other publicly traded companies in the same industry. The Company has historically not declared or paid any dividends and does not currently expect to do so in the foreseeable future. The risk-free interest rates used are based on the U.S. Department of Treasury ("U.S. Treasury") yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the stock options. The fair value of restricted stock units is based on the closing price of the Company's common stock as reported on The Nasdaq Global Select Market on the date of grant. Income Taxes Income taxes have been accounted for using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance against deferred tax assets is recorded if, based upon the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. 112 Segment Reporting The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, manages its operations and business as one operating segment for the purposes of allocating resources, makes operating decisions and evaluates financial performance. No product revenue has been generated since inception and all assets are held in the United States. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Pre-funded warrants are considered outstanding for the purposes of computing basic and diluted net loss per share because shares may be issued for little or no additional consideration and are fully vested and exercisable after the original issuance date of the pre-funded warrants. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted average number of common shares plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include unvested common stock, unvested restricted stock options, and outstanding stock options under the Company’s equity incentive plans, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position. Recent Accounting Pronouncements Adopted Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. The Company adopted this standard in the fiscal year beginning January 1, 2025 and implemented the applicable disclosure requirements within this annual report on a prospective basis. Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03"). In January 2025, the FASB issued ASU 2025-0, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , to clarify the effective date of ASU 2024-03. These amendments require public entities to disclose specified information about certain costs and expenses on an interim and annual basis and is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The new standards are expected to be applied prospectively, but retrospective application is permitted. The Company is currently evaluating the impact on the financial statements and related disclosures. There were no other significant updates to the recently issued accounting standards other than as disclosed herewith. Although there are several other new accounting pronouncements issued or proposed by the FASB, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results. 113 3. Net Loss Per Share The following tables summarize the computation of the basic and diluted net loss per share (in thousands except share and per share data): Year Ended December 31, 2025 2024 Numerator: Net loss $ ( 104,084 ) $ ( 108,790 ) Denominator: Weighted average common shares outstanding 70,991,166 65,570,217 Add: weighted average of common stock to be issued upon exercise of pre-funded warrants 3,000,031 2,295,106 Weighted average shares used to compute net loss per share, basic and diluted 73,991,197 67,865,323 Net loss per share, basic and diluted $ ( 1.41 ) $ ( 1.60 ) The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive: December 31, 2025 2024 Common stock options 10,737,203 9,069,194 Restricted stock units 648,959 1,167,911 11,386,162 10,237,105 4. Fair Value of Financial Instruments The following tables summarize the fair value of the Company’s financial instruments (in thousands). Prior period amounts have been reclassified to conform to the current period presentation: Fair Value Measurements Using December 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents: Money market funds $ 33,869 $ 33,869 $ — $ — Commercial paper 5,264 — 5,264 — Total cash equivalents $ 39,133 $ 33,869 $ 5,264 $ — Short-term investments: Corporate debt securities $ 134,847 $ — $ 134,847 $ — Commercial paper 25,952 — 25,952 — U.S. Treasury securities 66,849 — 66,849 — U.S. government agency securities 8,997 — 8,997 — Total short-term investments $ 236,645 $ — $ 236,645 $ — Long-term investments: Corporate debt securities $ 11,759 $ — $ 11,759 $ — U.S. Treasury securities $ 4,029 $ — $ 4,029 $ — U.S. government agency securities 319 — 319 — Total long-term investments $ 16,107 $ — $ 16,107 $ — Total $ 291,885 $ 33,869 $ 258,016 $ — 114 Fair Value Measurements Using December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents: Money market funds $ 25,617 $ 25,617 $ — $ — Commercial paper 1,395 — 1,395 — U.S. government agency securities 300 — 300 — Total cash equivalents $ 27,312 $ 25,617 $ 1,695 $ — Short-term investments: Corporate debt securities $ 124,548 $ — $ 124,548 $ — Commercial paper 22,820 — 22,820 — U.S. Treasury securities 78,691 — 78,691 — U.S. government agency securities 13,422 — 13,422 — Total short-term investments $ 239,481 $ — $ 239,481 $ — Long-term investments: Corporate debt securities $ 86,262 $ — $ 86,262 $ — U.S. Treasury securities 18,088 — 18,088 — U.S. government agency securities 6,042 — 6,042 — Total long-term investments $ 110,392 $ — $ 110,392 $ — Total $ 377,185 $ 25,617 $ 351,568 $ — The market participant estimated borrowing rate of 8.5 % that was utilized in the discounted cash flow analysis for the impairment of the right-of-use assets is an unobservable Level 3 input. Cash Equivalents and Investments Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and investments. Cash equivalents consisted of money market funds, commercial paper, and Government securities and investments consisted of commercial paper, corporate debt securities and Government securities. The Company obtains pricing information from its investment manager and determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers. Investments are classified as Level 1 within the fair value hierarchy if their quoted prices are available in active markets for identical securities. Investments in money market funds of $ 33.9 million and $ 25.6 million included in cash equivalents as of December 31, 2025 and 2024, respectively, were classified as Level 1 instruments. Investments in corporate debt securities, commercial paper and Government securities included in short-term and long-term investments are valued using Level 2 inputs. Level 2 securities are initially valued at the transaction price and subsequently valued and reported upon utilizing inputs other than quoted prices that are observable either directly or indirectly, such as quotes from third-party pricing vendors. Fair values determined by Level 2 inputs, which utilize data points that are observable such as quoted prices, interest rates and yield curves, require the exercise of judgment and use of estimates, that if changed, could significantly affect the Company’s financial position and results of operations. The Company has classified its investment securities as current and non-current assets on the balance sheets based on each security's maturity date, and all investment securities are accounted for as available-for-sale because these investment securities are considered available for use in operations. All of our long-term investments as of December 31, 2025 had maturities between one and two years . 115 The following tables summarize the Company’s investments as of December 31, 2025 and 2024 (in thousands): December 31, 2025 Maturity (in years) Amortized Cost Unrealized Losses Unrealized Gains Estimated Fair Value Corporate debt securities 1 year or less $ 134,582 $ ( 4 ) $ 269 $ 134,847 Commercial paper 1 year or less 25,952 — — 25,952 U.S. Treasury securities 1 year or less 66,753 — 96 66,849 U.S. government agency securities 1 year or less 8,970 — 27 8,997 Corporate debt securities Greater than 1 year 11,757 ( 3 ) 5 11,759 U.S. Treasury securities Greater than 1 year 4,013 — 16 4,029 U.S. government agency securities Greater than 1 year 318 — 1 319 Total $ 252,345 $ ( 7 ) $ 414 $ 252,752 December 31, 2024 Maturity (in years) Amortized Cost Unrealized Losses Unrealized Gains Estimated Fair Value Corporate debt securities 1 year or less $ 124,283 $ ( 38 ) $ 303 $ 124,548 Commercial paper 1 year or less 22,820 — — 22,820 U.S. Treasury securities 1 year or less 78,593 ( 9 ) 107 78,691 U.S. government agency securities 1 year or less 13,420 ( 8 ) 10 13,422 Corporate debt securities Greater than 1 year 85,992 ( 62 ) 332 86,262 U.S. Treasury securities Greater than 1 year 18,074 ( 27 ) 41 18,088 U.S. government agency securities Greater than 1 year 6,017 ( 2 ) 27 6,042 Total $ 349,199 $ ( 146 ) $ 820 $ 349,873 The Company considers whether unrealized losses have resulted from a credit loss or other factors. The unrealized losses on the Company’s available-for-sale securities as of December 31, 2025 and 2024 were caused by fluctuations in market value and interest rates as a result of the economic environment and not credit risk. The Company concluded that an allowance for credit losses was unnecessary as of December 31, 2025 and 2024. It is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value. During the twelve months ended December 31, 2025, the Company received $ 37.0 million in proceeds from available-for-sale securities called prior to maturity, resulting in an immaterial realized gain and included within maturities of investments. The available-for-sale securities were called within 90 days of the stated maturity. No investments were sold or called prior to their original maturity date during 2024. Unrealized gains and losses are included in a ccumulated other comprehensive income (loss). The Company excludes accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities for the purposes of identifying and measuring an impairment and to not measure an allowance for expected credit losses for accrued interest receivables. Accrued interest receivable is written off through net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payment. It is the Company's policy to present the accrued interest receivable balance as part of prepaid expenses and other current assets in the balance sheets. Accrued interest receivable related to investments was $ 2.0 million and $ 2.5 million as of December 31, 2025 and 2024 , respectively. 5. Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets are comprised of the following (in thousands): December 31, 2025 2024 Prepaid expenses $ 3,819 $ 3,249 Other current assets 2,414 2,735 Total prepaid expenses and other current assets $ 6,233 $ 5,984 116 Property and Equipment, Net P roperty and equipment, net is comprised of the following (in thousands): December 31, 2025 2024 Leasehold improvements $ 66,487 $ 66,618 Furniture and fixtures 668 746 Research equipment 17,576 16,914 Computers and software 373 404 Construction-in-progress 10,568 10,821 Total property and equipment, gross 95,672 95,503 Less accumulated depreciation and amortization ( 28,951 ) ( 20,845 ) Total property and equipment, net $ 66,721 $ 74,658 Depreciation and amortization expense was $ 9.2 million for each of the years ended December 31, 2025 and 2024. Accrued and Other Current Liabilities Accrued and other current liabilities are comprised of the following (in thousands): December 31, 2025 2024 Accrued compensation $ 6,065 $ 7,918 Accrued research and development costs 6,443 3,633 Accrued property and equipment — 254 Other accrued and current liabilities 780 424 Total accrued and other liabilities $ 13,288 $ 12,229 6. Leases The Company has operating leases for its current corporate offices, laboratory space, manufacturing facility, and dedicated space in a vivarium in South San Francisco, California. The components of lease expense were as follows (in thousands): Year Ended December 31, 2025 2024 Operating lease expense $ 9,423 $ 10,578 Variable lease expense (1) 954 1,247 Total lease expense $ 10,377 $ 11,825 (1) Variable lease expense for the periods presented primarily included common area maintenance charges. Supplemental information related to operating leases were as follows (in thousands): Year Ended December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows used for operating leases $ 12,567 $ 14,680 The weighted-average remaining lease term was 8.1 years for the corporate office and laboratory space leases as of December 31, 2025. The corporate office lease includes an option to renew for an additional seven years. However, the renewal option was not included in the lease term for calculating the lease liability, as the renewal option allows the Company to maintain operational flexibility, and the Company was not reasonably certain that it would exercise the renewal option at the time of the lease commencement. The weighted-average discount rate was 9.7 % as of December 31, 2025. 117 Maturities of operating lease liabilities under existing operating leases as of December 31, 2025 were as follows (in thousands): Year ending December 31, Amount 2026 $ 13,039 2027 13,474 2028 13,924 2029 13,927 2030 12,960 2031 and thereafter 44,498 Total lease payments 111,822 Less imputed interest ( 35,402 ) Total operating lease liabilities $ 76,420 Operating lease liabilities: Current 6,889 Non-current 69,531 Total lease liability $ 76,420 Initial Lease Agreement In May 2018, the Company entered into a lease agreement for corporate office and laboratory space located in South San Francisco, California with an expiration date in May 2025 (the "Initial Lease Agreement"). In April 2019, the Company executed the first amendment to the Initial Lease Agreement for additional corporate space, laboratory space and manufacturing capabilities. In May 2020, the Company executed the second amendment to the Initial Lease Agreement for additional corporate space and laboratory space in the same building. The lease for this additional space commenced in January 2021. In January 2021, the Company signed a third amendment to the Initial Lease Agreement for additional space in the same building. The lease amendment for this additional space commenced in April 2021 and expired in March 2024 . In October 2021, the Company signed a fourth amendment to the Initial Lease Agreement for additional space in the same building , that commenced in April 2022. All space leased under the Initial Lease Agreement, together with the first amendment, second amendment, and fourth amendment to the Initial Lease Agreement, has a lease term through July 31, 2030, with an option to extend the lease for an additional seven-year term. This lease extension option was not considered in the right-of-use assets or the lease liability as the Company did not consider it reasonably certain the option would be exercised. In December 2024, the Company executed a sixth amendment to the Initial Lease Agreement, which updated the lease termination date for one of the spaces in the same building to July 31, 2025. In connection with the amendment, the Company agreed to pay the landlord a termination fee of $ 1.1 million, $ 0.6 million of which was paid in December 2024 and the remaining paid in July 2025. As a result of the modification, the Company decreased its right-of-use asset and lease liability each by $ 2.2 million. Additional Lease Agreement In July 2021, the Company entered into an additional lease agreement for corporate office, manufacturing and laboratory space located in South San Francisco, California with an expiration date approximately twelve years after the lease commencement date (as amended from time to time, the "Additional Lease Agreement"). The lease for this additional space and the Company's obligation to pay rent commenced in January 2 022. In addition to ba se rent, the Company is responsible for payment of direct expenses, which include operating, insurance and tax expenses. The Additional Lease Agreement provided for certain tenant improvement allowances that were fully utilized and reimbursed to the Company, and an additional tenant improvement allowance to be utilized at the option of the Company. In June 2023, the Company entered into an amendment to utilize the additional tenant improvement allowance of $ 4.4 million and under this amendment the Company is required to repay the tenant improvement costs in equal monthly payments at an annual rate of 8.5 % over the remainder of the lease term starting in July 2023. Vivarium Lease Agreement In October 2025, the Company entered into a lease modification agreement for dedicated space in a vivarium in South San Francisco, California, with an expiration date of December 31, 2028 . As a result of the modification agreement in 2025, the Company increased its right-of-use asset and lease liability each by $ 1.1 million. Sublease Agreements In September 2024 and November 2024, the Company entered into agreements to sublease a portion of the Company's leased corporate office space through November 2027 and July 2030, respectively. The sublease agreements both commenced during the 118 fourth quarter of 2024 and rent payments commenced in 2025. The Company accounts for the sublease agreements in accordance with ASC 842, Leases. Sublease income during the years ended December 31, 2025 and 2024 , was not material. 7. Commitments and Contingencies Guarantee Agreement The Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and enables the Company to recover a portion of any future amounts under certain circumstances and subject to deductibles and exclusions. The Company had no liabilities recorded for these agreements as of December 31, 2025 and 2024. Letters of Credit The Company has $ 2.7 million in letter of credit agreements with a financial institution that are used as collateral for the Company’s corporate headquarters’ operating leases. The letters of credit automatically renew annually without amendment unless cancelled by the financial institutions within 30 to 60 days of the annual expiration date. The letters of credit are presented as restricted cash in the balance sheets. Contingencies The Company, from time to time, may be involved in litigation arising in the ordinary course of business. The Company assesses its potential liability in such situations by analyzing potential outcomes, assuming various litigation, regulatory and settlement strategies. If the Company determines a loss is probable and its amount can be reasonably estimated, the Company accrues an amount equal to the estimated loss. No losses and no provision for a loss contingency have been recorded to date. Purchase Commitments The Company enters into contracts in the normal course of business for clinical trials, preclinical studies, manufacturing and other services and products for operating purposes. These contracts generally provide for termination following a certain period after notice and therefore the Company believes that non-cancelable obligations under these agreements are not material. 8. Collaboration and License Agreements CRISPR Collaboration Agreement On May 5, 2021, the Company entered into a Research Collaboration Agreement with CRISPR (as amended, the "CRISPR Agreement") to co-develop and co-commercialize an allogeneic, off-the-shelf CAR NK product candidate targeting the CD70 tumor antigen and an allogeneic, off-the-shelf product candidate that comprises both engineered NK cells and engineered T cells. The Company and CRISPR have entered into a number of amendments to the CRISPR Agreement to, among other things, revise the transfer of materials, nomination provisions, permit the Company's advancement of CRISPR-licensed product candidates targeting a specified tumor antigen (the "Specified TA"), and incorporate associated development and regulatory approval milestones and sales based royalties. In addition, the Company has received licenses from CRISPR for five CRISPR-Cas9 gene editing targets that can be engineered into an unlimited number of its own NK cell products. CRISPR also has an option to co-develop and co-commercialize a future CAR NK program. Subsequently, pursuant to terms of the CRISPR Agreement, CRISPR elected to exercise its right to opt-out of continuing the research of the initial collaboration product, NKX070. The opt-out became effective in September 2025. The Company retains a license to the initial collaboration product, subject to the same potential future milestone and royalty payments owed to CRISPR as described below for non-collaboration products. Currently, the Company is not performing any work on this initial collaboration product and no milestones have been achieved or are probable. Under the terms of the CRISPR Agreement now, the Company and CRISPR share equally in all research and development costs and potential profits worldwide related to the NK+T product candidate and the potential future CAR NK program. The Company has deprioritized further development of NKX070 and NK+T. For each non-collaboration product candidate incorporating a genome editing target licensed from CRISPR (a "CRISPR-Licensed Product Candidate"), other than those targeting the Specified TA, the Company would retain worldwide rights and may be 119 required to make potential future payments based on the achievement of development and regulatory approval milestones totaling less than mid-twenty million dollars , as well as tiered royalties up to the mid-single digits on net product sales of such product candidate. For each CRISPR-Licensed Product Candidate targeting the Specified TA, the Company would retain worldwide rights and may be required to make potential future payments based on the achievement of development and regulatory approval milestones totaling less than high-forty million dollars, as well as tiered royalties up to the mid-single digits on net product sales of such product candidate. As of December 31, 2025 , the Company has no t paid any amounts no r are any amounts owed by the Company under the CRISPR Agreement, and no milestones have been achieved or are probable. MaxCyte License Agreement On October 26, 2021, the Company entered into a license agreement (the "MaxCyte Agreement") with MaxCyte, Inc. ("MaxCyte") to obtain non-exclusive clinical and commercial rights to use MaxCyte's cell loading technology to develop and commercialize in up to ten licensed products. In connection with the MaxCyte Agreement, the Company must pay to MaxCyte annual research license fees and commercialization license fees, ranging from $ 0.1 million to $ 0.3 million, for each instrument licensed by the Company. Further, the Company could be required to make milestone payments to MaxCyte upon completion of certain regulatory and commercial milestones related to the clinical development and commercialization of certain of the Company’s licensed products. The aggregate potential milestone payments range from $ 10 million to $ 13 million per licensed product. Additionally, the Company may be required to make net sales milestone payments totaling between $ 61.9 million to $ 116.8 million per licensed product. As of December 31, 2025, no milestones have been achieved. University of Singapore and St. Jude Children’s License Agreement In August 2016, the National University of Singapore ("NUS") and St. Jude Children’s Research Hospital ("St. Jude") and the Company entered into a license agreement under which NUS and St. Jude (the "Licensors") granted the Company an exclusive, royalty-bearing, worldwide license to its patent rights related to a method for expanding NK cells; a chimeric receptor with NKG2D specificity; and a method for supporting autonomous NK cell function ("NUS and St. Jude License Agreement"). The NUS and St. Jude License Agreement provides the Company with the rights to grant and authorize sublicenses to make, have made, use, sell, offer for sale and import products and otherwise exploit the patent rights. As consideration for the license, the Company made an upfront payment of $ 31,800 and issued NUS 250,000 shares of the Company’s common stock. The Company determined that the upfront payment ( 42,750 Singapore Dollars (“SGD”)) and value of the common stock issued ($ 2,500 based on fair value at time of issuance) as part of the license agreement would be expensed upon execution of the contract as the license was acquired for research and development purposes which does not have alternative future uses, and the underlying technology has not reached technological feasibility, hence the Company expensed these costs during 2016. In addition, the Company is required to pay an annual license maintenance fee of SGD 25,000 , increasing to SGD 50,000 after year two of the agreement. Further, the Company could be required to make milestone payments to the Licensors upon completion of certain regulatory and commercial milestones related to the clinical development and commercialization of certain of the Company’s product candidates. The aggregate potential milestone payments are approximately SGD 5 million. The Company has also agreed to pay the Licensors royalties of 2.5 % of net sales of products sold by the Company or through a sublicense. Additionally, the Company agreed to pay the Licensors a tiered percentage of sublicensing income (ranging from 7.5 % to 20 %) based on the timing of capital raised and stage of clinical trials. The NUS and St. Jude License Agreement also includes certain performance objectives which obligate the Company to meet various milestones related to the clinical development and commercialization of certain of the Company’s product candidates over time for up to 120 months after the effective date of the NUS and St. Jude License Agreement. The Company recorded $ 37,000 of license maintenance fees included as part of research and development expenses for each of the years ended December 31, 2025 and 2024. As of December 31, 2025, no milestones have been achieved. 9. Employee Benefits On January 1, 2018, the Company adopted a defined contribution 401(k) plan that is available to eligible employees. Under the terms of the plan, employees may make voluntary contributions as a percent of compensation, limited to the maximum amount allowable under federal tax regulations. As part of the plan, the Company elected to make non-matching contributions via mandatory 3 % of compensation safe harbor nonelective contributions. The Company recognized $ 1.0 million and $ 0.9 million for expense related to the nonelective 401(k) contributions for the years ended December 31, 2025 and 2024 , respectively. 120 10. Stockholders’ Equity Common Stock On June 13, 2024, the stockholders approved an amendment to the Company's Restated Certificate of Incorporation to increase the number of total authorized shares of the Company's common stock, $ 0.0001 par value per share, from 100,000,000 to 200,000,000 shares. Common stockholders are entitled to dividends if and when declared by the Company’s Board of Directors subject to the prior rights of the preferred stockholders. As of December 31, 2025 and 2024 , no dividends on common stock had been declared by the Company’s Board of Directors. Follow-on Offerings In March 2024, the Company completed an underwritten public offering utilizing the Shelf Registration Statement, pursuant to which it sold an aggregate of (i) 21,010,000 shares of its common stock at a price of $ 10.00 per share, and (ii) pre-funded warrants to purchase 3,000,031 shares of its common stock at a price of $ 9.9999 per pre-funded warrant. The pre-funded warrants can be exercised at any time after issuance for an exercise price of $ 0.0001 per share, subject to certain ownership limitations. As of December 31, 2025, none of the pre-funded warrants have been exercised. The Company raised $ 240.1 million in gross proceeds before underwriting discounts and commissions of $ 14.4 million and other offering expenses of $ 0.6 million . In accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity and ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, the Company determined that the pre-funded warrants should be equity classified because they are freestanding financial instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of common stock upon exercise, are indexed to the Company’s common stock and meet the equity classification criteria. 11. Share-Based Compensation Equity Incentive Plan The Company’s 2020 Performance Incentive Plan (the "2020 Plan") which was adopted by the Company’s board of directors in June 2020 and approved by the Company’s stockholders in July 2020, became effective upon the consummation of the IPO in July 2020. Upon the effectiveness of the 2020 Plan, no further grants may be made under the Company’s prior equity incentive plan, the 2015 Equity Incentive Plan (the "2015 Plan"). The 2020 Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards to its officers, directors, employees, consultants and advisors. As of December 31, 2025 , a total of 14,380,237 shares of the Company’s common stock were authorized for issuance with respect to awards granted under the 2020 Plan (this number of shares gives effect to the annual increases in the 2020 Plan share limit, as described in the next sentence). The share limit will automatically increase on the first trading day in January of each year by an amount equal to the lesser of (1) 5 % of the total number of outstanding shares of the Company’s common stock on the last trading day in December in the prior year, or (2) such lesser number as determined by the Company’s board of directors. Any shares subject to awards granted under the 2020 Plan or the 2015 Plan that are not paid, delivered or exercised before they expire or are canceled or terminated, or otherwise fail to vest, as well as shares used to pay the purchase or exercise price of such awards or related tax withholding obligations, will become available for new award grants under the 2020 Plan. A total of 3,914,097 shares were available for new award grants under the 2020 Plan as of December 31, 2025. 121 The following table summarizes the stock option activity during the year ended December 31, 2025 (in thousands, except number of shares, exercise prices and contractual term): Number of shares Weighted-average exercise price Weighted-average remaining contractual term (in years) Aggregate Intrinsic Value Outstanding at December 31, 2024 9,069,194 $ 10.55 7.0 $ 263 Granted 4,614,869 2.12 Exercised ( 10,630 ) 0.02 Forfeited ( 2,936,230 ) 5.88 Outstanding at December 31, 2025 10,737,203 $ 8.22 6.6 $ 134 Exercisable at December 31, 2025 6,073,982 $ 12.12 4.7 $ 2 Vested and expected to vest at December 31, 2025 10,737,203 $ 8.22 6.3 $ 134 The aggregate intrinsic value represents the difference between the exercise price of stock options and the quoted closing market price of the Company’s common stock on the applicable date for all in-the-money stock options. Additional information related to the Company’s stock options is summarized below (in thousands, except per share amounts): Year Ended December 31, 2025 2024 Weighted-average grant-date fair value of stock option grants per share $ 1.72 $ 5.02 Intrinsic value of options exercised $ 22 $ 798 The following table summarizes the restricted stock unit activity during the year ended December 31, 2025: Number of shares Weighted-average grant date fair value per share Weighted- average remaining contractual term (in years) Outstanding at December 31, 2024 1,167,911 $ 6.71 1.4 Granted 778,078 2.50 Forfeited ( 969,788 ) 4.86 Vested ( 327,242 ) 6.87 Outstanding at December 31, 2025 648,959 $ 4.34 1.2 The weighted-average grant-date fair values of restricted stock units granted during the years ended December 31, 2025 and 2024 were $ 2.50 and $ 6.04 , respectively. The fair value of restricted stock units that vested in the years ended December 31, 2025 and 2024 totaled $ 0.7 million and $ 1.4 million, respectively. Employee Stock Purchase Plan The Company’s 2020 Employee Stock Purchase Plan (the "ESPP"), which was adopted by the Company’s board of directors in June 2020 and approved by the Company’s stockholders in July 2020, became effective upon the consummation of the IPO. The 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 eligible compensation, subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, 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 trading day of the offering period or on the last trading day of the offering period. During 2025 and 2024 , 95,520 and 144,049 shares were issued under the ESPP resulting in aggregate cash proceeds of $ 0.1 million and $ 0.3 million, respectively. As of December 31, 2025 , 2,173,680 shares remained available for issuance under the ESPP (after giving effect to share purchases made under the ESPP through and including the ESPP offering period that ended on November 30, 2025). 122 Common Stock Reserved for Future Issuance As of December 31, 2025, the Company had reserved the following shares of common stock for future issuance: December 31, 2025 Common stock options and restricted stock units granted and outstanding 11,386,162 Reserved for future equity award grants 3,914,097 Reserved for future ESPP issuances 2,173,680 17,473,939 Share-Based Compensation Expense Share-based compensation expense for the years ended December 31, 2025 and 2024 were as follows (in thousands): Year Ended December 31, 2025 2024 Research and development $ 3,202 $ 7,955 General and administrative 5,357 8,776 Total share-based compensation expense $ 8,559 $ 16,731 The total unrecognized compensation cost related to stock options was $ 10.7 million, which is expected to be recognized over a weighted-average remaining service period of 2.3 years as of December 31, 2025 . The total unrecognized compensation cost related to restricted stock units was $ 1.7 million, which is expected to be recognized over a weighted-average remaining service period of 2.4 years as of December 31, 2025. Fair Value Disclosures The fair value of stock options was estimated on the date of grant using the quoted market price for the Company’s common stock on the applicable grant date and the Black-Scholes option pricing model with the following range of assumptions: Year Ended December 31, 2025 2024 Options Risk-free interest rate 3.7 % - 4.5 % 3.5 % - 4.5 % Expected volatility 100.3 % - 103.8 % 100.4 % - 117.3 % Expected term (in years) 5.5 - 6.1 5.5 - 6.1 Expected dividend yield — — ESPP Risk-free interest rate 3.8 % - 4.4 % 4.4 % - 5.4 % Expected volatility 63.5 % - 90.3 % 83.2 % - 152.7 % Expected term (in years) 0.5 0.5 Expected dividend yield — — The Company recognizes compensation costs related to stock options granted to employees and nonemployees based on the estimated fair value of the awards on the date of grant, net of forfeitures. The Company generally recognizes grant-date fair value of stock options granted to employees and non-employee service providers on a straight-line basis over the requisite service period, which is generally the vesting term of the respective awards. The Company determines the fair value of stock options with a service condition as described above. The Company accounts for the impact of forfeitures as they occur. The determination of the fair value of share-based payment awards utilizing the Black-Scholes option-pricing model is affected by the Company’s stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. Expected term. The Company opted to use the “simplified method” for estimating the expected term of employee options, whereby the expected term equals the average of the vesting term and the original contractual term of the option (generally 10 years). The expected term of the employee stock purchase plan rights equals the six-month look-back period. Expected volatility. Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, since inception and prior to 2023, the Company based its estimate of expected volatility on an average of the historical volatilities of the common stock of comparable publicly traded biopharmaceutical companies over a period equal to the expected term 123 of the stock option grants. For the grants after 2023, the expected volatility was determined by using a blended approach of the Company’s historical stock price volatility and the historical stock price volatility for a select group of other publicly traded companies in the same industry. The comparable companies were chosen based on their similar size, stage in the life cycle, and financial leverage to the Company. Risk-free interest rate. The risk-free rate assumption is based on the U.S. Treasury instruments with maturities similar to the expected term of the stock options. Expected dividend yield. The Company has no t issued any dividends and does no t expect to issue dividends over the life of the options, as a result the estimated dividend yield is zero . 12. Income Taxes Due to the Company’s net losses for the years ended December 31, 2025 and 2024 , and since the Company has a full valuation allowance against deferred tax assets, there was no tax provision or benefit for income taxes recorded in the years presented. As further described in Note 2, we have elected to prospectively adopt the guidance in ASU 2023-09 . The following table is a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2025 in accordance with ASU 2023-09 (in thousands, except percent): Year Ended December 31, 2025 Amount Percent U.S. federal statutory income tax rate $ ( 21,858 ) 21.0 % State and local income taxes, net of federal income tax effect (1) ( 273 ) 0.3 Tax credits: Research and development tax credits ( 3,022 ) 2.9 Change in valuation allowance 22,337 ( 21.5 ) Nondeductible items: Share-based compensation 1,721 ( 1.7 ) Other 369 ( 0.3 ) Changes in unrecognized tax benefits 726 ( 0.7 ) Income tax expense $ — 0.0 % (1) The majority of the state and local income taxes, net of federal effect, category is California. The following table is a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2024, in accordance with the guidance prior to the adoption of ASU 2023-09 (in thousands): Year Ended December 31, 2024 Income tax benefit at statutory rates $ ( 22,846 ) State income tax, net of federal benefit ( 1,701 ) Permanent items 2,877 Research and development credits ( 3,640 ) Change in valuation allowance 25,310 Income tax expense $ — 124 Significant components of the Company’s deferred tax assets are shown below (in thousands): December 31, 2025 2024 Deferred tax assets: Net operating loss carry forwards $ 67,146 $ 53,520 Depreciation and amortization 341 338 Research and development credits 29,238 25,123 Share-based compensation 5,016 5,122 Accrued expenses 1,770 1,535 Operating lease liability 16,048 16,857 Other, net 22 62 Capitalized research and development expenditures 44,865 39,385 Total deferred tax assets 164,446 141,942 Valuation allowance for deferred tax assets ( 151,363 ) ( 127,479 ) Deferred tax assets, net of valuation allowance 13,083 14,463 Deferred tax liabilities: Operating lease right-of-use asset ( 7,259 ) ( 7,644 ) Depreciation and amortization ( 5,824 ) ( 6,819 ) Net deferred tax assets $ — $ — Public Law No. 119–21 was enacted on July 4, 2025, as H.R. 1 during the 119th Congress and formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” ("2025 Reconciliation Act"). The 2025 Reconciliation Act includes several significant tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company evaluated the impact of the 2025 Reconciliation Act and determined that it did not have a material impact on the Company’s financial statements for the year ended December 31, 2025. The Company has a net operating loss and has provided a valuation allowance against net deferred tax assets due to uncertainties regarding the Company’s ability to realize these assets. The valuation allowance increased by $ 23.9 million and $ 25.3 million as of December 31, 2025 and 2024, respectively. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences representing net future deductible amounts become deductible. Due to the Company’s history of losses, and lack of other positive evidence, the Company has determined that it is more likely than not that its net deferred tax assets will not be realized, and therefore, the net deferred tax assets are substantially offset by a valuation allowance as of December 31, 2025 and 2024. The deferred tax assets were primarily comprised of federal and state tax net operating losses, capitalized research and development expenditures, and tax credit carryforwards. As of December 31, 2025 , the Company had net operating loss ("NOL") carryforwards of approximately $ 298.1 million and $ 65.1 million, available to reduce future taxable income, if any, for federal and California state income tax purposes, respectively. Of the $ 298.1 million federal NOL carryforwards, $ 3.2 million will begin expiring in 2035 , if not utilized, while $ 294.9 million can be carried forward indefinitely. The state NOL carryforwards will begin expiring in 2036 , if not utilized. The Company also had federal and state research and development credit carry forwards of approximately $ 25.1 million and $ 11.8 million, respectively, as of December 31, 2025 . The federal credits will begin expiring in 2035 if not utilized. The California credits have no expiration date. Utilization of the NOL and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), as well as similar state provisions. The future utilization of the Company’s NOL and tax credit carryforwards to offset future taxable income may be subject to a substantial annual limitation as a result of changes in ownership by stockholders that hold 5 % or more of the Company’s common stock. An assessment of such ownership changes under Section 382 was not completed through December 31, 2025. To the extent that an assessment is completed in the future, the Company’s ability to utilize tax attributes could be restricted on a year-by-year basis and certain attributes could expire before they are utilized. The Company will examine the impact of any potential ownership changes in the future. 125 The balance of gross unrecognized tax benefits as of December 31, 2025 and 2024 was approximately $ 5.5 million and $ 4.7 million, respectively, of which none would affect the Company’s effective tax rate if recognized due to the Company's full valuation allowance position . The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. No interest or penalties were recorded for the years ended December 31, 2025 and 2024. The following table summarizes the changes in the Company’s gross unrecognized tax benefits (in thousands): December 31, 2025 2024 Balance at the beginning of the year $ 4,748 $ 3,738 Increases related to tax positions taken in prior years 24 — (Decreases) related to tax positions taken in prior years ( 98 ) ( 83 ) Increases related to tax positions taken in current year 872 1,093 Balance at the end of the year $ 5,546 $ 4,748 As of December 31, 2025, the federal and state returns for the years ended 2015 through the current period remain subject to examination by taxing authorities due to the tax attribute carryforwards. The Company is currently under examination by the Internal Revenue Service ("IRS") for the Company's 2023 United States ("U.S.") income tax return. The Company is not currently under examination by any state income or franchise tax agency. In March 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law, providing numerous tax provisions and other stimulus measures. Among these was the Employee Retention Credit ("ERC"), a refundable tax credit against certain employment taxes for qualifying businesses that retained employees on their payroll during the COVID-19 pandemic. In the third quarter of 2025, the Company received approval and payment from the IRS for ERC claims submitted. The Company received $ 1.7 million, including interest, in payments related to calendar years 2020 and 2021. This amount, due to the uncertainty of eventual receipt following claims made, was not recognized until receipt. For the twelve months ended December 31, 2025, $ 1.5 million was recognized within other income and $ 0.2 million was recognized in interest income in the statement of operations. 13. Segment Reporting The Company operates as a single reporting segment, focused on the research and development of cell therapies for patients with autoimmune diseases. The Company's measure of segment profit or loss is net loss. The Chief Executive Officer , as the CODM, manages and allocates resources to the operations of the Company on a total company basis. The Company monitors its cash, cash equivalents, and investments as reported on the Company's Balance Sheets to determine funding for its research and dev elopment. The measure of segment assets is reported as total assets on the Company’s balance sheet. As the Company is not yet generating revenue, the CODM evaluates its performance based on progress in pre-clinical and clinical research objectives. Along with the Company’s Statement of Operations and Comprehensive Loss, the CODM regularly reviews budgeted and forecasted expenses to assess liquidity requirements and allocate cash accordingly. The following table is representative of the significant expense categories regularly provided to the CODM when managing the Company's single reporting segment. A reconciliation to the net loss for the years ended December 31, 2025 and 2024 is included at the bottom of the table below. 126 December 31, 2025 2024 Segment expenses: Personnel related expenses, excluding share-based compensation (1) $ 39,762 $ 41,129 Facilities expenses 18,884 19,403 Direct external development program expenses 23,302 21,431 Other segment expenses (2) 21,506 20,348 Total segment expenses: 103,454 102,311 Segment loss ( 103,454 ) ( 102,311 ) Reconciling items: Depreciation and amortization ( 9,193 ) ( 9,152 ) Share-based compensation ( 8,559 ) ( 16,731 ) Impairment of ROU asset ( 791 ) Interest income 15,494 19,317 Other income, net 2,419 87 Net loss $ ( 104,084 ) $ ( 108,790 ) (1) Personnel related expenses include $ 4.9 million of severance and other benefits expense for the year ended December 31, 2025 . (2) Other segment items include consultants and contractor, lab supplies, and general business expenses. 14. Reduction in Force On March 26, 2025 , the Company announced a reduction in force (the "Reduction") that resulted in a reduction of 53 positions, representing approximately 34 % of the Company’s workforce. The Company undertook the Reduction to decrease its costs and create a more streamlined organization to focus on upcoming clinical data updates. Employees affected by the Reduction were entitled to receive severance payments and certain Company-funded benefits totaling approximately $ 5.4 million in costs. The Company recognized severance and benefit expense in full for employees who were notified of their termination in March 2025 and had no requirements for future service. The Company recognized expense for employees who were required to render services to receive their severance and benefits ratably over the service period from April 2025 to October 31, 2025. These charges were recorded pursuant to ASC 712 or ASC 420, depending on the agreements with the impacted employees. The expense was recognized in general and administrative operating expenses in the statements of operations and comprehensive loss. The following table provides details of the severance and other termination benefit expense with the remaining balance of the liability recorded in accrued and other current liabilities on the condensed balance sheets for the year ended December 31, 2025 (in thousands): No Future Service Period Required Future Service Period Required Total Total severance and other benefits, at fair value $ 5,118 $ 250 $ 5,368 Liability balance, January 1, 2025 $ — $ — $ — Expense recognized during the period 4,802 145 4,947 Payments made during the period ( 4,802 ) — ( 4,802 ) Liability balance, December 31, 2025 $ — $ 145 $ 145 127 Item 9. Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure. None.