Passage BIO, Inc. 10-K

Item 8. Financial Statements and Supplementary Data PASSAGE BIO, INC. INDEX TO AUDITED FINANCIAL STATEMENTS ​ ​ ​ ​ Page ​ ​ ​ Report of Independent Registered Public Accounting Firm ( KPMG LLP , Philadelphia, PA , Auditor Firm ID: 185 ) ​ 106 Balance Sheets ​ 108 Statements of Operations and Comprehensive Loss ​ 109 Statements of Stockholders’ Equity ​ 110 Statements of Cash Flows ​ 111 Notes to Financial Statements ​ 112 ​ ​ ​ 105 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the Stockholders and Board of Directors Passage Bio, Inc.: Opinion on the Financial Statements We have audited the accompanying balance sheets of Passage Bio, Inc. (the Company) as of December 31, 2025 and 2024, the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, 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 these 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 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 a critical audit matter does not alter in any way our opinion on the 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. Evaluation of long-lived assets for impairment As discussed in Notes 3 and 10 to the financial statements, the Company assesses long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets or the asset group may not be recoverable. The Company’s property and equipment, net, and right of use assets – operating leases as of December 31, 2025 were $4.1 million and $10.2 million, respectively. The Company measures the recoverability of assets by comparing the carrying value of the asset groups to an estimate of the related total future undiscounted net cash flows. If an asset group’s carrying value is not recoverable through the related undiscounted net cash flows, the asset group is considered impaired. The Company measures the impairment by comparing the difference between the asset group’s carrying value and its fair value which is 106 Table of Contents estimated using either an income approach based on the present value of estimated future cash flows or a market approach based on industry and economic conditions including estimates on prevailing prices and rates for similar assets. The approaches are asset group specific and may incorporate a number of market participant assumptions in assessing fair value including future growth rates, discount rates, and market activity. The Company recognized impairment charges for long-lived assets of $6.1 million during the year ended December 31, 2025. We identified the evaluation of the impairment of an asset group related to the Company’s laboratory space as a critical audit matter. Challenging auditor judgment, and specialized skills and knowledge, were required to evaluate certain assumptions used in the determination of the fair value of the asset group, including sublease market activity and the discount rate. The following are the primary procedures we performed to address this critical audit matter. We involved valuation professionals with specialized skills and knowledge, who assisted in 1) evaluating sublease market activity used in determining the fair value of the asset group by comparing it to publicly available market data and 2) evaluating the discount rate used by management by comparing it to a range of independently developed discount rates. ​ /s/ KPMG LLP We have served as the Company’s auditor since 2019. Philadelphia, Pennsylvania March 3, 2026 107 Table of Contents Passage Bio, Inc. Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in thousands, except share and per share data) ​ ​ ​ 2025 ​ ​ ​ 2024 Assets ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 46,303 ​ $ 37,573 Marketable securities ​ ​ — ​ ​ 39,183 Prepaid expenses and other current assets ​ 629 ​ 838 Prepaid research and development ​ 830 ​ 1,221 Total current assets ​ 47,762 ​ 78,815 Property and equipment, net ​ 4,107 ​ 9,331 Right of use assets - operating leases ​ ​ 10,168 ​ 13,803 Other assets ​ 244 ​ 463 Total assets ​ $ 62,281 ​ $ 102,412 Liabilities and stockholders’ equity ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ Accounts payable ​ $ 1,113 ​ $ 742 Accrued expenses and other current liabilities ​ 4,653 ​ 6,707 Non-refundable sublicense and transition services payments ​ ​ 13,750 ​ ​ 8,226 Operating lease liabilities ​ ​ 3,567 ​ 3,688 Total current liabilities ​ 23,083 ​ 19,363 Operating lease liabilities - noncurrent ​ 20,443 ​ 21,788 Total liabilities ​ 43,526 ​ 41,151 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (note 11) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ Preferred stock, $ 0.0001 par value: 10,000,000 shares authorized; no shares issued and outstanding at both December 31, 2025 and December 31, 2024 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value: 300,000,000 shares authorized; 3,182,810 shares issued and outstanding at December 31, 2025 and 3,161,503 shares issued and outstanding at December 31, 2024 ​ — ​ — Additional paid‑in capital ​ 723,512 ​ 720,488 Accumulated other comprehensive income (loss) ​ ​ — ​ ​ 8 Accumulated deficit ​ ( 704,757 ) ​ ( 659,235 ) Total stockholders’ equity ​ 18,755 ​ 61,261 Total liabilities and stockholders’ equity ​ $ 62,281 ​ $ 102,412 ​ See accompanying notes to financial statements. ​ 108 Table of Contents Passage Bio, Inc. Statements of Operations and Comprehensive Loss ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands, except share and per share data) ​ 2025 ​ ​ ​ 2024 Operating expenses: ​ ​ ​ ​ ​ Research and development ​ $ 23,276 ​ $ 40,179 General and administrative ​ 19,875 ​ 24,988 Impairment of long-lived assets ​ ​ 6,145 ​ ​ 5,233 Loss from operations ​ ( 49,296 ) ​ ( 70,400 ) Other income (expense), net ​ 3,774 ​ 5,633 Net loss ​ $ ( 45,522 ) ​ $ ( 64,767 ) Per share information: ​ ​ ​ ​ Net loss per share of common stock, basic and diluted ​ $ ( 14.35 ) ​ $ ( 21.04 ) Weighted average common shares outstanding, basic and diluted ​ 3,172,870 ​ 3,078,665 Comprehensive loss: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 45,522 ) ​ $ ( 64,767 ) Unrealized gain (loss) on marketable securities ​ ​ ( 8 ) ​ ​ 51 Comprehensive loss ​ $ ( 45,530 ) ​ $ ( 64,716 ) ​ See accompanying notes to financial statements. ​ ​ 109 Table of Contents Passage Bio, Inc. Statements of Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock ​ ​ Additional ​ ​ Accumulated other ​ ​ Accumulated ​ ​ ​ (in thousands, except share data) ​ ​ ​ Shares ​ ​ Amount ​ ​ paid ‑ in capital ​ ​ comprehensive income (loss) ​ ​ ​ ​ deficit ​ ​ Total Balance at January 1, 2024 2,805,618 ​ $ — ​ $ 705,794 ​ $ ( 43 ) ​ $ ( 594,468 ) ​ $ 111,283 Issuance of common stock under the ATM Facility, net of offering costs ​ 300,000 ​ ​ — ​ ​ 8,742 ​ ​ — ​ ​ — ​ ​ 8,742 Exercise of stock options and vesting of restricted stock units ​ 45,649 ​ ​ — ​ ​ 35 ​ ​ — ​ ​ — ​ ​ 35 Issuance of shares in connection with employee stock purchase plan ​ 10,236 ​ ​ — ​ ​ 97 ​ ​ — ​ ​ — ​ ​ 97 Unrealized gain (loss) on marketable securities ​ — ​ ​ — ​ — ​ ​ 51 ​ ​ — ​ ​ 51 Share‑based compensation expense — ​ ​ — ​ ​ 5,820 ​ ​ — ​ ​ — ​ ​ 5,820 Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 64,767 ) ​ ​ ( 64,767 ) Balance at December 31, 2024 3,161,503 ​ $ — ​ $ 720,488 ​ $ 8 ​ $ ( 659,235 ) ​ $ 61,261 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock ​ ​ Additional ​ ​ Accumulated other ​ ​ Accumulated ​ ​ ​ (in thousands, except share data) ​ ​ ​ Shares ​ ​ ​ ​ Amount ​ ​ ​ ​ ​ ​ paid ‑ in capital ​ ​ comprehensive income (loss) ​ ​ ​ ​ deficit ​ ​ Total Balance at January 1, 2025 3,161,503 ​ $ — ​ $ 720,488 ​ $ 8 ​ $ ( 659,235 ) ​ $ 61,261 Exercise of stock options and vesting of restricted stock units 16,825 ​ — ​ — ​ — ​ — ​ — Issuance of shares in connection with employee stock purchase plan ​ 4,482 ​ ​ — ​ ​ 23 ​ ​ — ​ ​ — ​ ​ 23 Unrealized gain (loss) on marketable securities — ​ — ​ — ​ ( 8 ) ​ — ​ ( 8 ) Share‑based compensation expense — ​ — ​ 3,001 ​ — ​ — ​ 3,001 Net loss — ​ — ​ — ​ — ​ ( 45,522 ) ​ ( 45,522 ) Balance at December 31, 2025 3,182,810 ​ $ — ​ $ 723,512 ​ $ — ​ $ ( 704,757 ) ​ $ 18,755 ​ See accompanying notes to financial statements. ​ ​ 110 Table of Contents Passage Bio, Inc. Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Cash flows used in operating activities: ​ ​ ​ ​ Net loss ​ $ ( 45,522 ) ​ $ ( 64,767 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: ​ ​ ​ ​ Depreciation and amortization ​ 728 ​ 3,081 Share‑based compensation ​ 3,001 ​ 5,820 Amortization of premium and discount on marketable securities, net ​ ​ 129 ​ ​ ( 1,527 ) Impairment of long-lived assets ​ ​ 6,145 ​ 5,233 Other non-cash items ​ 14 ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ Prepaid expenses and other current assets, and other assets ​ 228 ​ 255 Prepaid research and development ​ 391 ​ 1,521 Non-refundable sublicense and transition services payments received ​ ​ 4,015 ​ ​ 8,226 Right of use assets and operating lease liabilities ​ ​ ( 464 ) ​ ​ ( 279 ) Accounts payable ​ 1,880 ​ ( 556 ) Accrued expenses and other current liabilities ​ ( 2,054 ) ​ ( 4,963 ) Net cash provided by (used in) operating activities ​ ( 31,509 ) ​ ( 47,956 ) Cash flows provided by (used in) investing activities: ​ ​ ​ ​ Purchases of marketable securities ​ — ​ ( 88,170 ) Sales or maturities of marketable securities ​ 39,046 ​ 143,150 Purchases of property and equipment and other assets ​ — ​ ( 34 ) Sales of property and equipment and other assets ​ 1,170 ​ — Net cash provided by (used in) investing activities ​ 40,216 ​ 54,946 Cash flows provided by (used in) financing activities: ​ ​ ​ ​ Proceeds from issuance of common stock under the ATM Facility, net of offering costs ​ ​ — ​ ​ 8,742 Proceeds from the exercise of stock options ​ — ​ 35 Proceeds from the issuance of common stock under employee stock purchase plan ​ ​ 23 ​ ​ 97 Net cash provided by (used in) financing activities ​ 23 ​ 8,874 Net increase (decrease) in cash and cash equivalents ​ 8,730 ​ 15,864 Cash and cash equivalents at beginning of year ​ 37,573 ​ 21,709 Cash and cash equivalents at end of year ​ $ 46,303 ​ $ 37,573 Supplemental disclosure of non‑cash activities: ​ ​ ​ ​ Unrealized gain (loss) on marketable securities ​ $ ( 8 ) ​ $ 51 Right of use assets recognized upon the commencement of sublease ​ $ — ​ $ ( 422 ) Operating lease liabilities recognized upon the commencement of sublease ​ $ — ​ $ 422 ​ See accompanying notes to financial statements. ​ ​ 111 Table of Contents Passage Bio, Inc. Notes to Financial Statements 1. Nature of Operations Passage Bio, Inc., or the Company, a Delaware corporation incorporated in July 2017, is a clinical stage genetic medicines company focused on improving the lives of patients with neurodegenerative diseases. The Company’s primary focus is the development and advancement of cutting-edge, one-time therapies designed to target critical underlying pathology in these conditions. The Company’s lead clinical product candidate is PBFT02 for the treatment of frontotemporal dementia, or FTD, caused by progranulin deficiency, or FTD- GRN , which seeks to elevate progranulin levels to restore lysosomal function and slow disease progression. 2. Risks and Liquidity The Company has incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $ 704.8 million as of December 31, 2025. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. Substantial additional capital will be needed by the Company to fund its operations and to develop its product candidates. The Company’s operations have consisted primarily of conducting preclinical studies, developing licensed technology, conducting clinical trials, and the development and manufacturing of clinical supply to support clinical trials. The Company faces risks associated with early-stage biotechnology companies whose product candidates are in development. Product candidates currently under development will require significant additional research and development efforts and establishing manufacturing capacity and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital for the Company to complete its research and development, achieve its regulatory objectives, defend its intellectual property rights, and recruit and retain skilled personnel, and key members of management. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. On March 5, 2021, the Company entered into a Sales Agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, relating to the applicable terms of at-the-market equity offerings, or the ATM Facility, pursuant to which the Company may, but is not obligated to, offer and sell, from time to time, shares of its common stock with an aggregate offering price up to $ 125.0 million through Cowen, as sales agent in the ATM Facility. The Company issued 300,000 shares of its common stock under the ATM Facility, resulting in net proceeds of $ 8.7 million, after deducting offering costs of $ 0.3 million in March 2024. The Company is currently limited in its capacity to offer and sell shares of its common stock under the Sales Agreement pursuant to the prospectus supplement to its shelf registration statement on Form S-3, filed on March 5, 2025. The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding or prospects of funding are unfavorable, the Company could be required to further delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects. In accordance with the Financial Accounting Standards Board’s, or FASB, Accounting Standards Codification, or ASC, Topic 205-40, Presentation of Financial Statements – Going Concern , the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. As of the issuance date of these financial statements, the Company expects that its cash and cash equivalents will be sufficient to fund its forecasted operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of these financial statements. 112 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) 3. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the ASC and Accounting Standard Updates, or ASUs, promulgated by the FASB. On July 14, 2025, the Company effected a 1 -for-20 reverse stock split of its common stock, or the Reverse Stock Split. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who were otherwise entitled to receive fractional shares received the number of shares of Common Stock as rounded up to the nearest whole share. All share and per share amounts in these financial statements and notes thereto, including the stock options, restricted stock units, and employee stock purchase plan activity, have been adjusted retroactively to reflect the Reverse Stock Split for all periods presented. Use of Estimates ​ The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed, and the effects of the revisions are reflected in the accompanying financial statements in the period they are determined to be necessary. Fair Value of Financial Instruments Management believes that the carrying amounts of the Company’s financial instruments, including cash equivalents, prepaid expenses, and accounts payable, approximate fair value due to the short-term nature of those instruments. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains a deposit account in a federally insured financial institution in excess of federally insured limits. The Company also maintains a portfolio of money market funds, which is diversified to limit exposure related to counterparty and industry risks. The Company maintains an investment policy which dictates the allocation of funds within its portfolio of money market funds. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash and cash equivalents beyond the normal credit risk associated with commercial banking relationships and money market funds. Cash and Cash Equivalents The Company considers all highly-liquid investments that have maturities of three months or less when acquired to be cash equivalents. Cash equivalents as of December 31, 2025 consisted of money market funds. Cash consists of cash deposits at banking institutions. Marketable Securities The Company classifies its marketable securities with original maturities of greater than three months as available-for-sale. The Company held no marketable securities as of December 31, 2025. Marketable securities as of December 31, 2024 consisted of various securities as described in Note 4. Marketable securities are carried at fair market 113 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive income (loss) within stockholders’ equity. Any premium or discount arising at purchase of debt securities is amortized and/or accreted over the term of the security to other income (expense), net. Gains or losses on marketable securities sold are recognized as a component of other income (expense), net in the statement of operations and comprehensive loss on the specific identification method. All marketable securities are available for use, as needed, to fund operations and therefore, the Company classifies all marketable securities as current assets within the balance sheet. Property and Equipment, Net Property and equipment, net consists of laboratory equipment, office equipment, computer hardware and software, furniture and fixtures, and leasehold improvements and is initially recorded at cost. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Property and equipment are depreciated on a straight-line basis over their estimated useful lives. The Company estimates useful life on an asset-by-asset basis, which generally consists of three years for computer hardware and software, five years for office equipment, five years for laboratory equipment, and seven years for furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset. When property and equipment are retired or otherwise disposed of, the costs and accumulated depreciation and amortization are removed from the respective accounts, with any resulting gain or loss recognized concurrently. The Company recognized de minimis losses on disposals of property and equipment for the year ended December 31, 2025. The Company did no t recognize any losses on disposals of property and equipment for the year ended December 31, 2024. The Company reviews long-lived assets, such as property and equipment, for impairment when events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. The Company recognized impairment expenses for property and equipment of $ 3.5 million for the year ended December 31, 2025, $ 2.5 million of which was for lab equipment, $ 0.9 of which was for leasehold improvements, and $ 0.1 million of which was for certain other assets. As a result of the Company’s January 2025 announcement to reduce its overall workforce and cease its lab operations, the Company reassessed asset groups at its lab in Hopewell, New Jersey, and evaluated such asset groups for impairment under FASB ASC Topic 360, Long-lived assets: Impairment or disposal of long-lived assets . The Company determined the laboratory equipment was a separate asset group based on management’s implemented plans to sell the laboratory equipment and estimated the fair value of the laboratory equipment based on the estimated future cash flows from the sale of such equipment, resulting in impairment of laboratory equipment and certain other assets of $ 2.6 million. Subsequent to recording the impairment, the Company sold substantially all the laboratory equipment and certain other assets for $ 1.2 million. In December 2025, the Company determined triggering events were present based on rental market activity. The Company determined whether an impairment indicator was present for each of the asset groups. Where an impairment indicator was present, the Company compared the estimated undiscounted cash flows to the carrying values, which includes ROU assets and leasehold improvements allocable to the laboratory space for those asset groups. The Company concluded the carrying value of one asset group was not recoverable as it exceeded the estimated undiscounted cash flows. With support from a valuation specialist, the Company estimated the fair value of that asset group by creating a discounted cash flow model which incorporated the net identifiable estimated cash flows for the remaining term of the Laboratory Lease Agreement and an estimated market participant subtenant borrowing rate and compared that to the carrying value of the asset group, resulting in impairment to leasehold improvements of $ 0.9 million. The impairment expense for the leasehold improvements relate to the proportional allocation of total impairment recognized for the asset group subject to impairment testing. 114 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) The Company recognized impairment expenses for property and equipment and certain other assets of $ 2.7 million for the year ended December 31, 2024, which primarily relates to the proportional allocation of total impairments recognized for asset groups subject to impairment testing as further described in Note 10. Leasing The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease. As of December 31, 2025, the Company has classified all leases with terms greater than one year, as operating leases. The Company recognizes assets and liabilities for operating leases at their inception, based on the present value of all payments due under the lease agreement. The Company uses its incremental borrowing rate to determine the present value of operating leases, which is determined by referencing collateralized borrowing rates for debt instruments with terms similar to the respective lease. The Company utilizes the accounting policy election to not separate lease and non-lease components and the accounting policy election to not apply the recognition requirement to leases with a term of 12 months or less. The Company reviews long-lived assets, such as right of use assets, or ROU assets, for impairment when events or changes indicate the carrying amount of the ROU assets may not be recoverable. The Company recognized impairment expenses for ROU assets of $ 2.6 million and $ 2.5 million in the years ended December 31, 2025 and 2024, respectively. These impairment expenses include the proportional allocation of total impairments recognized for the asset groups subject to impairment testing as further described in Note 10. Research and Development Research and development costs are expensed as incurred and consist primarily of expenses incurred with the University of Pennsylvania’s Gene Therapy Program, or GTP, and Gemma Biotherapeutics, Inc., or Gemma, contract research organizations, contract manufacturing organizations, internal analytical and testing activities, and employee-related expenses, including salaries, benefits, and share-based compensation. Management makes estimates of the Company’s external accrued research and development expenses, which primarily relates to contract research organizations and contract manufacturing organizations, as of each balance sheet date in the Company’s financial statements based on an estimate of progress to completion of specific tasks using facts and circumstances known to the Company at that time. The Company determines the estimates by reviewing contracts, vendor agreements, change orders, and through discussions with the Company’s internal clinical personnel and external service providers as to the progress to completion of services and the agreed-upon fee to be paid for such services. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual and related expenses accordingly. Other Income (Expense), Net Other income (expense), net consists of interest earned on cash equivalents and marketable securities, amortization of premium and discount on marketable securities, income from subleases, and the sale of certain tax credits. The Company recorded $ 3.8 million to other income (expense), net for the year ended December 31, 2025, which consisted of $ 2.3 million attributable to interest income and the amortization of premium and discount on the Company’s marketable securities and $ 1.5 million from sublease income. The Company recorded $ 5.6 million to other income (expense), net for the year ended December 31, 2024, which consisted of $ 4.3 million attributable to interest income and the amortization of premium and discount on the Company’s marketable securities, $ 1.0 million from sublease income, and $ 0.3 million related to the sale of certain tax credits. 115 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) Share-Based Compensation The Company measures share-based awards at grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. The Company’s share-based compensation consists of restricted stock units, or RSUs, and options to purchase common stock, or stock option awards. The Company uses the Black-Scholes option pricing model to value its stock option awards. Estimating the fair value of stock option awards requires the input of assumptions, including the expected term of stock options and stock price volatility. The assumptions used in estimating the fair value of share-based awards represent management's estimate and involve inherent uncertainties and the application of management's judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards. The expected term of the stock options is estimated using the “simplified method,” as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For stock price volatility, the Company uses a composite of comparable public company data as a basis for its expected volatility and considers the historic volatility of its common stock from its initial public offering to date to calculate the fair value of option grants. The selection of comparable public company data requires the application of management’s judgement. The Company accounts for forfeitures of RSUs and stock option awards as they occur. License and Other Revenue The Company may enter into license agreements and transition services agreements (see Note 8) under which it may license rights to research, develop, manufacture, and commercialize its product candidates to third parties, and provide transition services for such licenses. Payments under these arrangements may include non-refundable, upfront fees, reimbursement of certain costs, payments upon the achievement of certain milestones, and royalties on product sales. The Company applies FASB ASC Topic 606,  Revenue from Contracts with Customers , or ASC 606, when all of the following criteria are met, to determine a valid contract exists: (i) the parties have approved the contract and are committed to perform their respective obligations; (ii) the Company can identify each party’s rights regarding the goods or services to be transferred; (iii) the Company can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance; and (v) the Company will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Once it is determined that a valid contract exists, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including consideration of the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations on a relative stand-alone selling price basis; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting for these arrangements, the Company must use its judgment to determine the number of performance obligations, the transaction price, the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price, the contract term and pattern of satisfaction of the performance obligations. The Company uses judgment to determine whether milestones or other variable consideration, except for certain sales-based milestone payments and royalties, should be included in the transaction price as described further below. 116 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method set forth in ASC 606. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as those subject to regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the statements of operations and comprehensive loss in the period of adjustment. For customer contracts in the scope of ASC 606, amounts due to the Company are recorded as accounts receivable on the Company’s balance sheet when the Company’s right to consideration is unconditional. Amounts received prior to satisfying the related performance obligations are classified on the Company’s balance sheet as current deferred revenue if expected to be recognized as revenue within 12 months following the balance sheet date and as deferred revenue, net of current portion, if amounts are not expected to be recognized as revenue within the 12 months following the balance sheet date. The Company does not evaluate a contract for a significant financing component if payment is expected within one year or less from the transfer of promised items to the customer. Income Taxes Income taxes are accounted for under the asset-and-liability method as required by FASB ASC Topic 740, Income Taxes , or ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement 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 expected to apply 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 corresponding to the enactment date. Under ASC 740, a valuation allowance is required when it is more likely than not all or some portion of the deferred tax assets will not be realized through generating sufficient future taxable income. FASB ASC Subtopic 740-10, Accounting for Uncertainty of Income Taxes , or ASC 740-10, defines the criterion an individual tax position must meet for any part of the benefit of the tax position to be recognized in financial statements prepared in conformity with GAAP. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not such tax position will be sustained on examination by the taxing authorities, based solely on the technical merits of the respective tax position. The tax benefits recognized in the financial statements from such a tax position should be measured based on the largest benefit having a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. In accordance with the disclosure requirements of ASC 740-10, the Company’s policy on statement of operations classification of interest and penalties related to income tax obligations is to include such items as part of total interest income, net, within other income (expense), net. Net Loss Per Share Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. 117 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 Stock options ​ 658,973 577,581 Unvested restricted stock units ​ 50,000 ​ 7,093 Employee stock purchase plan ​ 696 ​ 2,636 ​ ​ 709,669 587,310 ​ Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses , or ASU 2024-03, which requires entities to provide disclosures to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. ASU 2024-03 is effective for the Company’s first fiscal year beginning after December 15, 2026, and for interim periods within the Company’s first fiscal year beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 may be applied retrospectively or prospectively. The Company is currently evaluating the impact of this guidance on its disclosures. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software , or ASU 2025-06. ASU 2025-06 is intended to increase the operability of the accounting for internal-use software costs by removing all references to software development project stages. ASU 2025-06 requires capitalization of software costs to start when management has authorized and committed to funding the software project, it is probable that the project will be completed, and the software will be used to perform the function intended. ASU 2025-06 is effective for the Company’s first fiscal year beginning after December 15, 2027, and for interim periods within that year with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements , or ASU 2025-11. The amendments reorganize and clarify the interim disclosure requirements in U.S. GAAP and establish a single, principles based framework for determining the information that should be disclosed in interim periods. ASU 2025-11 is effective for the Company for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025-11 on its interim financial statement disclosures. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , or ASU 2023-09, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024 with early adoption permitted. The Company adopted this new accounting pronouncement retrospectively during the year ended December 31, 2025. Refer to Note 14 for additional disclosures. 118 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) 4. Cash, Cash Equivalents, and Marketable Securities The following table provides details regarding the Company’s portfolio of cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost or ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ Amortized cost ​ ​ ​ Unrealized gains ​ ​ ​ Unrealized losses ​ ​ ​ Fair value December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ Cash accounts in banking institutions ​ $ 2,500 ​ $ — ​ $ — ​ $ 2,500 Money market funds ​ ​ 43,803 ​ ​ — ​ ​ — ​ ​ 43,803 Total ​ $ 46,303 ​ $ — ​ $ — ​ $ 46,303 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ Cash accounts in banking institutions ​ $ 3,527 ​ $ — ​ $ — ​ $ 3,527 Money market funds ​ ​ 29,058 ​ ​ — ​ ​ — ​ ​ 29,058 Commercial paper ​ ​ 4,988 ​ ​ — ​ ​ — ​ ​ 4,988 Total ​ $ 37,573 ​ $ — ​ $ — ​ $ 37,573 ​ The following table provides details regarding the Company’s portfolio of marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ Amortized cost ​ ​ ​ Unrealized gains ​ ​ ​ Unrealized losses ​ ​ ​ Fair value December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ Certificates of deposit ​ $ — ​ $ — ​ $ — ​ $ — Commercial paper ​ ​ — ​ ​ — ​ ​ — ​ ​ — Corporate debt securities ​ ​ — ​ ​ — ​ ​ — ​ ​ — U.S. government securities ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total ​ $ — ​ $ — ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ Certificates of deposit ​ $ 5,970 ​ $ 1 ​ $ — ​ $ 5,971 Commercial paper ​ ​ 25,433 ​ ​ 6 ​ ​ — ​ ​ 25,439 Corporate debt securities ​ ​ 1,864 ​ ​ 1 ​ ​ — ​ ​ 1,865 U.S. government securities ​ ​ 5,908 ​ ​ 1 ​ ​ ( 1 ) ​ ​ 5,908 Total ​ $ 39,175 ​ $ 9 ​ $ ( 1 ) ​ $ 39,183 ​ As of December 31, 2025, all of the Company’s marketable securities matured and the proceeds were invested into money market funds, which are included in cash and cash equivalents on the Company’s balance sheet. ​ 5. Fair Value of Financial Instruments and Non-Financial Instruments Financial Instruments Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short-term nature of 119 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement , for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories: ● Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities. ● Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following fair value hierarchy table presents information about the Company’s assets measured at fair value on a recurring basis. Included within cash and cash equivalents on the balance sheet, but excluded from the fair value hierarchy table, are cash deposits held at financial institutions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value measurement at ​ ​ reporting date using ​ ​ Quoted prices ​ ​ ​ ​ ​ ​ ​ in active Significant ​ ​ markets for other Significant ​ identical observable unobservable ​ assets inputs ​ inputs (in thousands) ​ ​ ​ (Level 1) ​ ​ ​ (Level 2) ​ ​ ​ (Level 3) December 31, 2025: ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 43,803 ​ $ — ​ $ — Total cash equivalents ​ ​ 43,803 ​ ​ — ​ ​ — Total financial assets ​ $ 43,803 ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 29,058 ​ $ — ​ $ — Commercial paper ​ ​ — ​ ​ 4,988 ​ ​ — Total cash equivalents ​ ​ 29,058 ​ ​ 4,988 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Certificates of deposit ​ ​ — ​ ​ 5,971 ​ ​ — Commercial paper ​ ​ — ​ ​ 25,439 ​ ​ — Corporate debt securities ​ ​ — ​ ​ 1,865 ​ ​ — U.S. government securities ​ ​ — ​ ​ 5,908 ​ ​ — Total marketable securities ​ ​ — ​ ​ 39,183 ​ ​ — Total financial assets ​ $ 29,058 ​ $ 44,171 ​ $ — ​ ​ Non-Financial Instruments ​ Long-lived non-financial assets are measured at fair value on a nonrecurring basis for purposes of calculating impairment using Level 3 inputs as defined in the fair value hierarchy. The fair value of long-lived assets using Level 3 120 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest. Significant increases or decreases in actual cash flows may result in valuation changes. ​ The following long-lived assets were measured at fair value, on a nonrecurring basis, during the years ended December 31, 2025 and 2024. Assets remeasured in 2024 or sold in 2025 are not included in the fair value presented as of December 31, 2025. The significant assumptions utilized are further described in Notes 3 and 10: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements as of December 31, 2025 of assets remeasured during 2025 ​ Year ended December 31, 2025 (in thousands) ​ Level 1 ​ Level 2 ​ Level 3 ​ Impairment Losses Property and equipment, net $ — $ — $ 3,155 $ 3,373 Right of use assets ​ — ​ — ​ 9,489 ​ 2,633 Other assets ​ — ​ — ​ — ​ 139 Total $ — $ — $ 12,644 $ 6,145 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements as of December 31, 2024 of assets remeasured during 2024 ​ Year ended December 31, 2024 (in thousands) ​ Level 1 ​ Level 2 ​ Level 3 ​ Impairment Losses Property and equipment, net $ — $ — $ 1,668 $ 2,279 Right of use assets ​ — ​ — ​ 1,642 ​ 2,516 Other assets ​ — ​ — ​ 200 ​ 438 Total $ — $ — $ 3,510 $ 5,233 ​ ​ ​ ​ ​ 6. Property and Equipment, Net Property and equipment, net, consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ December 31, 2025 ​ December 31, 2024 Laboratory equipment ​ $ — ​ $ 10,020 Office equipment ​ ​ 107 ​ ​ 119 Computer hardware and software ​ ​ 988 ​ ​ 1,111 Furniture and fixtures ​ ​ 419 ​ ​ 419 Leasehold improvements ​ ​ 6,510 ​ ​ 7,386 Total property and equipment ​ ​ 8,024 ​ ​ 19,055 Accumulated depreciation and amortization ​ ​ ( 3,917 ) ​ ​ ( 9,724 ) ​ ​ $ 4,107 ​ $ 9,331 ​ ​ ​ ​ In connection with the Company’s January 2025 announcement to reduce its overall workforce by 55 % and cease its lab operations in Hopewell, New Jersey, management implemented plans to sell substantially all the laboratory equipment and certain other assets and estimated the fair value of the assets based on the estimated future cash flows from the sale of such assets. Subsequent to recording the impairment of $ 2.6 million, the Company sold substantially all the laboratory equipment and certain other assets for $ 1.2 million. As a result, the Company did no t record any depreciation on the impaired and disposed laboratory equipment during the year ended December 31, 2025 as the equipment was considered held-for-sale in January 2025. Neither laboratory equipment nor accumulated depreciation related to such equipment are recorded on the balance sheet as of December 31, 2025. ​ Depreciation and amortization expense was $ 0.7 million and $ 3.1 million for the years ended December 31, 2025 and 2024, respectively. ​ 121 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) ​ 7. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 Professional fees ​ $ 347 ​ $ 406 Compensation and related benefits ​ 2,740 ​ 4,405 Research and development ​ 642 ​ 1,896 Divestiture fee due to Catalent ​ 924 ​ — ​ ​ $ 4,653 ​ $ 6,707 ​ ​ 8. Gemma License Agreement On July 31, 2024, the Company entered into a series of sublicense agreements with Gemma in connection with the outlicense of PBGM01 for the treatment of GM1 gangliosidosis, or GM1, PBKR03 for the treatment of Krabbe disease, or Krabbe, and PBML04 for the treatment of metachromatic leukodystrophy, or MLD, collectively the Outlicensed Programs, and such agreements, the Gemma Sublicenses. On May 7, 2025, the Company agreed to amend each of the Gemma Sublicenses to revise certain financial terms related to the Outlicensed Programs, or the Amended Gemma Sublicenses. Pursuant to the Amended Gemma Sublicenses, the Company is entitled to receive (i) an aggregate total of $ 15.0 million in initial payments for licenses and clinical product supply, of which $ 7.5 million was previously received, $ 2.5 million of which was due in May 2025, and $ 5.0 million of which is due in March 2026; (ii) an additional $ 5.0 million contingent on Gemma completing certain business milestones; (iii) up to an additional $ 114.0 million in development and commercial milestone payments; and (iv) single digit royalties as a percentage of annual worldwide net sales, in exchange for sublicenses to relevant intellectual property, transfer of regulatory dossiers and transfer of clinical trial materials and product supply related to the Outlicensed Programs. Gemma will be responsible for all payments due to the Trustees of the University of Pennsylvania’s, or Penn, under the Company’s research, collaboration and licensing agreement with Penn, or the Penn License Agreement, related to the Outlicensed Programs. On July 31, 2024, the Company also entered into a transition services agreement with Gemma, or the Transition Services Agreement, as amended by the First Amendment to the Transition Services Agreement, dated January 31, 2025, pursuant to which, the Company provided transitional services at cost to Gemma through May 31, 2025, and is entitled to reimbursement for transitional services performed retroactively from March 1, 2024, related to the transfer of the Outlicensed Programs. As of December 31, 2025, the Company has collected $ 7.5 million in initial payments, $ 4.8 million in transition services payments, and applied $ 1.5 million in amounts owed to Gemma for the Huntington’s disease program against amounts due to the Company for transition services under these agreements. As Gemma has a limited history of operations, the Company will not recognize revenue under ASC 606 until the Company either (i) has received payment and there are no remaining obligations to transfer goods and services under the Amended Gemma Sublicenses and Transition Services Agreement (as payments received by Gemma are nonrefundable), or (ii) concludes that substantially all of the transaction price is collectible. As of December 31, 2025, the Company has received initial payments of $ 7.5 million associated with the aggregate $ 15.0 million of initial payments to be made under the Amended Gemma Sublicenses for licenses and clinical product supply and $ 4.8 million associated with the Transition Services Agreement and applied $ 1.5 million in amounts owed to Gemma for the Huntington’s disease program against amounts due to the Company for transition services under these agreements. The Company recorded these amounts ($ 13.8 million) as non-refundable sublicense and transition services payments on the balance sheet as of December 31, 2025, as the criteria set forth above have not yet been met. 122 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) 9. Severance In January 2025, the Company announced a workforce reduction to reduce operating expenses and to extend its cash runway. In connection with the announcement, the Company reduced headcount by approximately 55 % . In accordance with ASC 420, Exit and Disposal Activities , the Company recorded severance and termination-related costs of $ 0.4 million in general and administrative expenses and $ 1.3 million in research and development expenses for the year ended December 31, 2025. During the year ended December 31, 2024, the Company recorded no severance and termination-related costs. As of December 31, 2025, there were no unpaid severance and termination-related costs. 10. Leases 2005 Market Street Lease Agreement The Company is party to a lease agreement for office space, or the 2005 Market Street Lease Agreement, in Philadelphia, Pennsylvania. Under the 2005 Market Street Lease Agreement, the Company leased approximately 37,000 square feet. The 2005 Market Street Lease Agreement commenced in February 2021 and is expected to expire in December 2031. The Company has an option to extend the term of the 2005 Market Street Lease Agreement by two additional terms of five years each. The Company has an option to early terminate the 2005 Market Street Lease Agreement as of April 2029, given notice is provided to the landlord no less than fifteen months prior to April 2029. The optional extension and termination terms were not recognized as part of the Company’s measurement of the ROU asset and operating lease liability as of December 31, 2025. During 2023 the Company subleased all of the space at 2005 Market Street as further described in Sublease Agreement A and Sublease Agreement B below. Sublease Agreement A On August 7, 2023, the Company entered into a sublease agreement with a counterparty, or Sublessee A, to sublease approximately 8,000 square feet of the 2005 Market Street Lease Agreement, or Sublease Agreement A. This sublease term began on November 1, 2023, and continues through March 31, 2029. In the event the Company does not elect its early termination option under the 2005 Market Street Lease Agreement, Sublessee A has an option to extend the sublease agreement through November 30, 2031. The base sublease rent is $ 0.1 million per year and increases by 2.75 % annually through the expiration of the agreement. Additionally, Sublessee A is required to pay the portion of the common area maintenance expenses, operating expenses, and use and occupancy taxes which the Company is required to pay under the 2005 Market Street Lease Agreement. Pursuant to ASC Topic 842, Leases , or ASC 842, the Company concluded the sublease is a separate lease, as the Company was not relieved of the primary obligation under the 2005 Market Street Lease Agreement. The Company continues to account for the 2005 Market Street Lease Agreement as a lessee and in the same manner as prior to the execution of Sublease Agreement A. The Company accounted for Sublease Agreement A as the lessor, and concluded the lease qualified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease. Sublease Agreement B On September 29, 2023, the Company entered into a sublease agreement with a counterparty, or Sublessee B, to sublease approximately 29,000 square feet of the 2005 Market Street Lease Agreement, or Sublease Agreement B. This sublease term began on March 1, 2024, and continues through August 2026. Sublessee B has an option to extend the term of the sublease agreement through March 31, 2029. The base sublease rent is $ 0.9 million per year for the entire term of the sublease. Additionally, Sublessee B is required to pay applicable use and occupancy taxes but is not obligated to make payments for operating expenses and common area maintenance expenses which the Company is required to pay under the 2005 Market Street Lease Agreement. 123 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) Pursuant to ASC 842, the Company concluded the sublease is a separate lease, as the Company was not relieved of the primary obligation under the 2005 Market Street Lease Agreement. The Company continues to account for the 2005 Market Street Lease Agreement as a lessee and in the same manner as prior to the execution of the Sublease Agreement B. The Company accounted for Sublease Agreement B as the lessor, and concluded the lease qualified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease. 1835 Market Street Sublease Agreement On February 20, 2024, the Company entered into a sublease agreement with a counterparty, or the 1835 Market Street Sublease Agreement. Under the 1835 Market Street Sublease Agreement, the Company subleased approximately 16,000 square feet of office space in Philadelphia, Pennsylvania. The sublease term began on March 26, 2024 and expired on September 30, 2025. The Company had the option but did not elect to extend the term of the sublease agreement through February 28, 2029. The base sublease rent was $ 0.3 million per year for the original 18-month term of the sublease. Additionally, the Company was required to pay utility costs associated with the subleased premises. Laboratory Lease Agreement The Company is also party to a lease agreement for laboratory space, or the Laboratory Lease Agreement, in Hopewell, New Jersey. The Laboratory Lease Agreement commenced in March 2021 and is expected to expire in March 2036. The Company has an option to early terminate the Laboratory Lease Agreement as of March 2032 given notice is provided to the landlord no less than twelve months prior to March 2032. The Company has an option to extend the term of the Laboratory Lease Agreement by up to two five-year terms. These options were not recognized as part of the Company’s measurement of the ROU asset and operating lease liability as of December 31, 2025. In January 2025, the Company implemented a restructuring plan which included ceasing lab operations. As a result, the Company is no longer using any of the space covered by the Laboratory Lease Agreement and is actively pursuing opportunities to sublease all remaining space in the Laboratory Lease Agreement as well as discussing with the landlord potential alternatives. Hopewell Sublease Agreement On September 4, 2024, the Company entered into a sublease agreement with a counterparty, or Sublessee C, to sublease approximately 3,200 square feet, or 5 % of its approximately 62,000 square feet of leased laboratory space under the Laboratory Lease Agreement, or Hopewell Sublease Agreement. This sublease term began on September 11, 2024 and expires on December 31, 2029. Sublessee C has the option to extend the term of the sublease through December 2032. The base sublease rent is $ 0.1 million per year and increases by 2.5 % annually through the expiration of the Hopewell Sublease Agreement. Additionally, Sublessee C is required to pay the portion of the common area maintenance expenses, operating expenses, and use and occupancy taxes that the Company is required to pay under the Laboratory Lease Agreement. Pursuant to ASC 842, the Company concluded the sublease is a separate lease, as the Company was not relieved of the primary obligation under the Laboratory Lease Agreement. The Company continues to account for the Laboratory Lease Agreement as a lessee and in the same manner as prior to the execution of the Hopewell Sublease Agreement. The Company accounted for the Hopewell Sublease Agreement as the lessor, and concluded the lease qualified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease. In 2024, the Company determined triggering events were present and reassessed the asset groups related to its laboratory space under the Laboratory Lease Agreement, which resulted in changes to the Company’s identified asset groups. The Company determined whether an impairment indicator was present for each of the new asset groups. Where an impairment indicator was present, the Company compared the estimated undiscounted cash flows to the carrying values, which includes ROU assets, leasehold improvements, and other property and equipment allocable to the laboratory space 124 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) for those asset groups. The Company concluded the carrying values of certain asset groups were not recoverable as they exceeded the estimated undiscounted cash flows. The Company calculated the amount of impairment on those asset groups using a discounted cash flow model to calculate the fair value of the asset group which incorporated the net identifiable cash flows for the term of the Hopewell Sublease Agreement, including an estimate for cash flows in the residual period, and an estimated borrowing rate of a market participant subtenant. As a result, certain asset groups were impaired and the Company recognized impairment expense of $ 5.2 million, including $ 2.5 million for the ROU assets, $ 2.3 million for the property and equipment, net, and $ 0.4 million for certain other assets during the year ended December 31, 2024. In connection with the January 2025 announcement to reduce its overall workforce by 55 % and cease its lab operations in Hopewell, New Jersey, the Company determined triggering events were present and reassessed its asset groups related to its laboratory space under the Laboratory Lease Agreement. Laboratory equipment was separated from the ROU assets and leasehold improvements allocable to the laboratory space as the equipment was no longer being used in operations and the Company had implemented a plan to sell those assets. For the ROU assets and allocable leasehold improvements, the Company compared the estimated undiscounted cash flows from subleasing to the carrying value and determined there was no impairment. In December 2025, the Company determined triggering events were present based on rental market activity. The Company determined whether an impairment indicator was present for each of the asset groups. Where an impairment indicator was present, the Company compared the estimated undiscounted cash flows to the carrying values, which includes ROU assets and leasehold improvements allocable to the laboratory space for those asset groups. The Company concluded the carrying value of one asset group was not recoverable as it exceeded the estimated undiscounted cash flows. With support from a valuation specialist, the Company estimated the fair value of that asset group by creating a discounted cash flow model which incorporated the net identifiable estimated cash flows for the remaining term of the Laboratory Lease Agreement based upon sublease market activity and an estimated market participant subtenant borrowing rate and compared that to the carrying value of the asset group. As a result, the Company recognized impairment expense of $ 3.5 million, including $ 2.6 million for the ROU assets and $ 0.9 million for the leasehold improvements during the year ended December 31, 2025. The following table summarizes future minimum lease payments for the Company’s lessee operating leases, which comprises of the 2005 Market Street Lease Agreement and the Laboratory Lease Agreement. The below table does not include expected cash inflows related to Sublease Agreement A, Sublease Agreement B, and the Hopewell Sublease Agreement as the Company was not relieved of its primary obligation under the 2005 Market Street Lease Agreement and Laboratory Lease Agreement: ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ 2026 ​ $ 3,757 2027 ​ 3,863 2028 ​ 3,973 2029 ​ 4,085 2030 ​ 4,200 Thereafter ​ 17,421 Total undiscounted lease payments ​ ​ 37,299 Less: imputed interest ​ ​ ( 13,289 ) Total lease liabilities ​ $ 24,010 ​ ​ ​ ​ 125 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) The following table summarizes lease expense by lease type that was recognized during the years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (in thousands) ​ December 31, 2025 ​ December 31, 2024 Operating lease cost ​ $ 3,419 ​ $ 3,505 Variable lease cost ​ ​ 2,103 ​ ​ 2,127 ​ ​ $ 5,522 ​ $ 5,632 ​ ​ ​ ​ ​ The following table shows the weighted average discount rate and weighted average remaining lease term of the operating leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, 2025 ​ December 31, 2024 Weighted-average discount rate ​ ​ 9.7 % ​ ​ 9.7 % Weighted-average remaining lease term (years) ​ ​ 9.3 ​ ​ 10.2 ​ The cash paid for amounts included in the measurement of the Company’s operating lease liabilities for the years ended December 31, 2025 and 2024 were $ 3.9 million and $ 3.8 million, respectively, recorded in operating cash flows. ​ The following table summarizes sublease income that was recognized in other income (expense), net during the years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (in thousands) ​ December 31, 2025 ​ December 31, 2024 Sublease rental income ​ $ 1,467 ​ $ 987 ​ ​ 11. Commitments and Contingencies Amended and Restated Research, Collaboration and License Arrangement with Penn In connection with the transfer of the Outlicensed Programs (GM1, Krabbe, and MLD), the Company restructured its research, collaboration and license agreement with Penn, as amended, previously the Penn Agreement and now referred to as the Penn License Agreement. Pursuant to the Penn License Agreement, as of July 31, 2024, the Company (i) terminated the funding of discovery research programs; (ii) terminated the research and exploratory research programs; (iii) terminated the remaining eight options it had for future central nervous system, or CNS, indications; (iv) terminated the transaction fee payable to Penn in the event of certain corporate transactions; and (v) retained its current exclusive and non-exclusive licenses to its programs in FTD, GM1, Krabbe, and MLD and certain platform technologies resulting from the discovery programs that it funded. For the Company’s licensed programs in FTD, GM1, Krabbe, and MLD, the Penn License Agreement requires that it make payments of up to $ 16.5 million per product candidate. Each payment will be due upon the achievement of specific development milestone events by such licensed product for a first indication, reduced development milestone payments for the second and third indications, and no development milestone payments for subsequent indications. In addition, on a product-by-product basis, the Company is obligated to make up to $ 55.0 million in sales milestone payments on each licensed product based on annual worldwide net sales of the licensed product in excess of defined thresholds. Pursuant to the Amended Gemma Sublicenses, Gemma is responsible for the payments to Penn related to the Outlicensed Programs. Upon successful commercialization of a product using the licensed technology, the Company is obligated to pay to Penn, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary 126 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) reductions) in the mid-single digits percentage on annual worldwide net sales of such licensed product. In addition, other than the Amended Gemma Sublicenses, the Company is obligated to pay to Penn a percentage of sublicensing income, ranging from the mid-single digits to low double digits, for sublicenses under the Penn License Agreement. The agreement will expire on a licensed product-by-licensed product and country-by-country basis upon the later of (i) the expiration of the last valid claim of the licensed patent rights that covers the exploitation of such licensed product in such country, and (ii) the expiration of the royalty period. Pursuant to the Amended Gemma Sublicenses, Gemma is responsible for the payments to Penn related to the Outlicensed Programs. Gemma - Research, Collaboration and License Agreement In connection with the transfer of the Outlicensed Programs, on July 31, 2024, the Company entered into a research, collaboration and license agreement with Gemma, or the Gemma Collaboration Agreement. Pursuant to the Gemma Collaboration Agreement, (i) Gemma will conduct certain preclinical and Investigational New Drug-enabling work for the Company’s active research program in Huntington’s disease and a currently paused research program in Temporal Lobe Epilepsy, or TLE, which were previously being conducted by Penn under the Penn Agreement and (ii) Gemma will grant the Company options to conduct mutually-agreed research programs in four new CNS indications. The Gemma Collaboration Agreement requires the Company to make payments of up to (i) $ 16.5 million per product candidate in the aggregate for Huntington’s disease and any future CNS indications available to the Company under its four options and (ii) $ 39.0 million per product candidate in the aggregate arising from the research program for TLE. Each payment will be due upon the achievement of specific development milestone events by such licensed product for a first indication, reduced development milestone payments for the second and third indications and no development milestone payments for subsequent indications. In addition, on a product-by-product basis, the Company is obligated to make up to $ 55.0 million in sales milestone payments on each licensed product based on annual worldwide net sales of the licensed product in excess of defined thresholds. Upon successful commercialization of a product using the licensed technology, the Company is obligated to pay to Gemma, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary reductions) in the mid-single digits percentage on annual worldwide net sales of such licensed product. In addition, the Company is obligated to pay to Gemma a percentage of sublicensing income, ranging from the mid-single digits to low double digits, for sublicenses under the Gemma Collaboration Agreement. The agreement will expire on a licensed product-by-licensed product and country-by-country basis upon the later of (i) the expiration of the last valid claim of the licensed patent rights that covers the exploitation of such licensed product in such country, and (ii) the expiration of the royalty period. If the Company was to exercise any of the four options under the Gemma Collaboration Agreement, it would owe Gemma a non-refundable aggregate fee of $ 1.0 million per product indication, with $ 0.5 million due upfront and another $ 0.5 million fee owed upon a further developmental milestone. The Company has also entered into the Amended Gemma Sublicenses and Transition Services Agreement as described in Note 8. The Amended Gemma Sublicenses, the Transition Services Agreement, and the Gemma Collaboration Agreement are collectively referred to as the Outlicense Transaction Agreements. Catalent Agreements The Company has entered into a collaboration agreement, and a development services and clinical supply agreement, or the Amended Catalent Agreements, with Catalent Maryland, a unit of Catalent, Inc. acquired by Novo Holdings A/S, or Catalent, to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for the 127 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) Company’s gene therapy product candidates. Under the terms of the Amended Catalent Agreements, Catalent agreed to manufacture batches of drug product for the Company’s gene therapy product candidates. The Amended Catalent Agreements remain in effect until November 6, 2030, and establish a limited exclusive relationship between the Company and Catalent for the manufacture of bulk drug substance and drug product for the Company’s adeno-associated virus delivery therapeutic product candidates for the treatment of FTD and GM1. The limited exclusive relationship under the Amended Catalent Agreements converts to a non-exclusive relationship (i) in the event Catalent fails to meet certain performance standards and (ii) following certain conditional events related to the divestiture by the Company of either FTD or GM1, in which case, if such events occur, the Company would pay Catalent certain fees. In the event of certain transactions, the Company may terminate the Amended Catalent Agreements for convenience with respect to such products, in which case, the Company would pay Catalent a certain termination fee. The outlicense and completed transition of GM1 to Gemma under the Outlicense Transaction Agreements, is deemed by Catalent to be a divestiture under the Amended Catalent Agreements. As such, the Company is required to make payment of $ 0.9 million to Catalent which has been accrued as of and during the year ended December 31, 2025. Litigation In the normal course of business, the Company from time to time is named as a party to legal claims and actions. The Company records a loss contingency reserve for a legal proceeding when the potential loss is considered probable and can be reasonably estimated. The Company has no t recorded any amounts for loss contingencies as of December 31, 2025. The Company is the defendant in litigation with a former employee, who filed a lawsuit in the Court of Common Pleas of Philadelphia County asserting claims for breach of contract and violation of the Pennsylvania Wage Payment and Collection Law. The plaintiff, who was terminated from their employment in 2019, contended that the Company entered into a binding settlement agreement in February 2020 under which he was to receive shares of company stock and additional compensation. Specifically, he contended that before the announcement of the Company’s initial public offering in February 2020, he was promised 150,000 shares of stock as part of the settlement, and that those shares were not subject to the reverse stock split that was implemented for all shareholders. The Company responded that the shares offered in settlement negotiations in 2020 were to be subject to the reverse split, and that had the settlement been finalized, the plaintiff would have been entitled to 33,836 shares ( 1,692 shares adjusted for the Reverse Stock Split effected in 2025). A trial in this case was held in October 2024. The jury found that an agreement was reached, but it agreed with the Company that any shares to be awarded to the plaintiff were subject to the reverse split. The jury awarded damages in an amount that was roughly equal to what the Company contended had been offered to the plaintiff before the initial public offering. Both sides then challenged the verdict, and on December 12, 2024, the judge who presided over the trial delivered a judgment in the Company’s favor, finding that no binding agreement was reached and that the plaintiff was not entitled to recover any damages. On December 23, 2024, the plaintiff filed an appeal with the Superior Court of Pennsylvania. On September 25, 2025, the appellate court affirmed the entry of judgment in favor of the Company and on October 7, 2025, the plaintiff filed an Application for Reargument to the Superior Court of Pennsylvania. In December 2025, the Superior Court of Pennsylvania denied the Application for Reargument. In December 2025, the plaintiff petitioned for review of their appeal to the Pennsylvania Supreme Court which is currently pending. The Company intends to continue to defend against this claim. Other than the above, we are not presently a party to any legal proceedings that, in the opinion of management, would, if decided against us, have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors. 128 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) Employment Agreements The Company has employment agreements with certain key personnel providing for up to 18 months of salary continuation, up to 150 % of target annual bonus amounts, and acceleration of vesting in stock-based compensation awards in certain circumstances. 12. Common Stock On March 5, 2021, the Company entered into a Sales Agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, relating to the applicable terms of at-the-market equity offerings, or the ATM Facility, pursuant to which the Company may, but is not obligated to, offer and sell, from time to time, shares of its common stock with an aggregate offering price up to $ 125.0 million through Cowen, as sales agent in the ATM Facility. The Company issued 300,000 shares of common stock under the ATM Facility, resulting in net proceeds of $ 8.7 million, after deducting offering costs of $ 0.3 million in March 2024. The Company is currently limited in its capacity to offer and sell shares of its common stock under the Sales Agreement pursuant to the prospectus supplement to its shelf registration statement on Form S-3, filed on March 5, 2025. ​ On July 14, 2025, the Company effected the Reverse Stock Split. The Reverse Stock Split did not reduce the number of authorized shares of the common stock and did not change the par value of the common stock. In addition, proportionate adjustments were made to the number of shares of common stock available for issuance under the Company’s equity inducement and incentive plans; the number of shares underlying, and the exercise prices of outstanding equity awards under such plans. All share information in these financial statements has been adjusted for this Reverse Stock Split. ​ 13. Share-Based Compensation Equity Incentive Plan The Company has three equity incentive plans: the 2018 Equity Incentive Plan, as amended, or the 2018 Plan, the 2020 Equity Incentive Plan, or the Incentive Plan, and the 2021 Equity Inducement Plan, or the Inducement Plan. New awards can only be granted under the Incentive Plan and the Inducement Plan. The total number of shares authorized under the Incentive Plan as of December 31, 2025 was 947,598 . Additionally, 204,732 shares previously issued under the 2018 Plan which were forfeited are available for issuance under the Incentive Plan. As of December 31, 2025, 433,624 shares were available for future grants under the Incentive Plan. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Incentive Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021 and continuing for ten years , in an amount equal to five percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors to determine a lesser number of shares shall be added for such year. As a result, the number of shares reserved for issuance under the Incentive Plan increased by 159,141 and 155,155 shares in January 2026 and 2025, respectively. The Incentive Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options awarded to date under the Incentive Plan vest based on a requisite service period, generally over four-year periods, and have a term of ten years . The Inducement Plan was approved by the Company’s board of directors in July 2021. The total number of shares authorized under the Inducement Plan as of December 31, 2025 was 125,000 . Of this amount, 87,166 shares were available for future grants as of December 31, 2025. The Inducement Plan provides for the granting of nonqualified stock options and restricted stock awards to employees hired by the Company, as determined by the Company’s board of directors. The Company’s stock options awarded to date under the Inducement Plan vest based on requisite service 129 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) period and have a term of ten years . The Company’s restricted stock units awarded to date under the Inducement Plan vest based on requisite service period and have a term based on each award agreement. The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. The Company recorded share-based compensation expense in the following expense categories in its accompanying statements of operations and comprehensive loss for the period presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2025 ​ ​ ​ 2024 Research and development ​ $ 842 ​ $ 2,529 General and administrative ​ 2,159 ​ 3,291 ​ ​ $ 3,001 ​ $ 5,820 ​ The following table summarizes stock option activity for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ average ​ ​ ​ ​ average ​ remaining ​ ​ Number of ​ exercise price ​ contractual ​ ​ shares ​ per share ​ term (years) Outstanding at January 1, 2025 577,581 $ 77.56 7.5 Granted 248,208 ​ ​ 7.78 ​ Exercised — ​ ​ — ​ Forfeited ( 125,526 ) ​ ​ 82.56 ​ Expired ​ ( 41,290 ) ​ ​ 175.24 ​ ​ Outstanding at December 31, 2025 658,973 ​ $ 44.20 7.1 Vested and exercisable at December 31, 2025 357,766 ​ $ 78.82 5.6 Vested or expected to vest at December 31, 2025 658,973 ​ $ 44.20 7.1 ​ The weighted-average grant date fair value of options granted was $ 6.07 and $ 20.20 for the years ended December 31, 2025 and 2024, respectively. The aggregate intrinsic value of options outstanding was $ 0.9 million at December 31, 2025 and was de minimis at December 31, 2024. The aggregate intrinsic value of options exercisable was $ 0.2 million at December 31, 2025 and was de minimis at December 31, 2024. There were no options exercised during the year ended December 31, 2025 and the aggregate intrinsic value of options exercised during the year ended December 31, 2024 was de minimis. As of December 31, 2025, the total unrecognized compensation expense related to unvested stock option awards was $ 3.0 million, which the Company expects to recognize over a weighted-average period of 2.2 years. 130 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ 2024 Expected volatility ​ 93.7 % ​ 88.4 % Risk‑free interest rate ​ 4.1 % ​ 4.2 % Expected term ​ 5.9 years ​ 6.0 years Expected dividend yield ​ — ​ ​ — ​ ​ Restricted Stock Units The Company issues restricted stock units, or RSUs, to employees that vest over periods of time as determined by the board of directors. Any unvested shares are forfeited upon termination of services. The fair value of the RSUs is equal to the fair market value of the Company’s common stock on the date of grant. Compensation expense is recognized on a straight-line basis over the vesting period of the RSUs. ​ The following table summarizes activity related to RSU awards during the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average ​ ​ Number of shares ​ grant date fair value Unvested balance at January 1, 2025 ​ 7,093 $ 44.80 Granted ​ 60,000 ​ 11.70 Vested ​ ​ ( 16,825 ) ​ ​ 27.92 Forfeited ​ ( 268 ) ​ 90.40 Unvested balance at December 31, 2025 ​ 50,000 $ 10.52 ​ As of December 31, 2025, the total unrecognized expense related to all RSUs was $ 0.3 million, which the Company expects to recognize over a weighted-average period of 1.0 years. ​ Employee Stock Purchase Plan The Company’s 2020 Employee Stock Purchase Plan, or the ESPP, became effective on February 28, 2020. The ESPP authorizes the issuance of up to 99,088 shares of the Company’s common stock. Of this amount, 59,103 were available for future grants as of December 31, 2025. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year and continuing for ten years , in an amount equal to one percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors to determine a lesser number of shares shall be added for such year. As a result, on January 1, 2026 and 2025, subject to the discretion of the board of directors, the shares authorized for issuance under the ESPP was not increased. Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the board of director’s Compensation Committee. Eligible employees may purchase the Company’s common stock at 85 % of the lower of the fair market value of the Company’s common stock on the first day of the offering period or on the last day of the offering period. The offering periods under the ESPP have a duration of six months, with periods ending in May and November of each calendar year. Eligible employees may contribute up to 15 % of their eligible compensation. Under the ESPP, a participant may not accrue rights to purchase more than $ 25,000 worth of the Company’s common stock for each calendar year in which such right is outstanding or purchase more than 200 shares of the Company’s common stock in any single offering period. Beginning in May 2026, 131 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) the limit will increase from 200 shares to 2,000 shares in any single offering period, not to exceed $ 25,000 in any calendar year. In accordance with the guidance in ASC Topic 718-50, Compensation – Stock Compensation , the ability to purchase shares of the Company’s common stock at 85 % of the lower of the price on the first day of the offering period or the last day of the offering period (i.e. the purchase date) represents an option and , therefore, the ESPP is a compensatory plan under this guidance. Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period. No share-based compensation expense related to the ESPP was recorded during the years ended December 31, 2025 and 2024. 14. Income Taxes The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Deferred tax assets: ​ ​ ​ ​ Net operating loss carryforwards ​ $ 105,425 ​ $ 94,923 Research and development credits ​ 55,020 ​ 50,842 Collaboration and license agreement ​ 2,832 ​ 3,422 Capitalized research and development ​ ​ 46,041 ​ ​ 59,803 Share-based compensation ​ 4,329 ​ 5,863 Accrued expenses and other ​ 4,581 ​ 1,404 Operating lease liabilities ​ ​ 6,520 ​ ​ 7,560 Depreciation and amortization ​ ​ 1,048 ​ ​ 461 Total gross deferred tax assets before valuation allowance ​ 225,796 ​ 224,278 Valuation allowance ​ ( 222,752 ) ​ ( 219,833 ) Net deferred tax assets ​ ​ 3,044 ​ ​ 4,445 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Right of use assets - operating leases ​ ​ ( 3,044 ) ​ ​ ( 4,445 ) Total deferred tax liabilities ​ ( 3,044 ) ​ ( 4,445 ) Net deferred taxes ​ $ — ​ $ — ​ In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to allow for the realization of deferred tax assets. Based upon the historical and anticipated future losses, management has determined the deferred tax assets do not meet the more-likely-than-not threshold for realizability. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of December 31, 2025 and 2024. The valuation allowance increased by $ 2.9 million and $ 19.1 million during the years ended December 31, 2025 and 2024, respectively. 132 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) During the year ended December 31, 2025, the Company adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures retrospectively. A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ 2024 (in thousands) ​ ​ Amount ​ Percent ​ ​ ​ Amount ​ Percent ​ US federal statutory tax rate $ ( 9,560 ) ​ 21.0 % ​ $ ( 13,601 ) ​ 21.0 % Federal: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax credits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development tax credits ​ ( 175 ) ​ 0.4 ​ ​ ​ ( 626 ) ​ 1.0 ​ Orphan drug tax credits ​ ​ ( 4,003 ) ​ 8.8 ​ ​ ​ ( 4,896 ) ​ 7.6 ​ Changes in valuation allowances ​ ​ 12,334 ​ ( 27.2 ) ​ ​ ​ 17,422 ​ ( 27.0 ) ​ Nontaxable or nondeductible items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share-based payment awards ​ ​ 241 ​ ( 0.5 ) ​ ​ ​ 459 ​ ( 0.7 ) ​ Expiration of share-based payment awards ​ ​ 1,159 ​ ( 2.5 ) ​ ​ ​ 1,233 ​ ( 1.9 ) ​ Other ​ ​ 4 ​ 0.0 ​ ​ ​ 9 ​ 0.0 ​ State and local income taxes, net of federal income tax effect 1 ​ — ​ — ​ ​ ​ — ​ — ​ Effective tax rate ​ $ — ​ — % ​ $ — ​ — % 1 In 2025 and 2024, state and local income taxes in Pennsylvania and Philadelphia comprise the majority of the state and local income taxes, net of federal income tax effect category. ​ During the years ended December 31, 2025 and 2024, the Company made no income tax payments. Additionally, the Company generated no foreign pre-tax income or losses during these periods, as all operations were conducted within the United States. ​ The following table summarizes carryforwards of federal, state and local net operating losses, or NOL, and research and development and orphan drug tax credits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Federal ​ $ 398,039 ​ $ 339,055 State ​ 398,035 ​ 339,051 Local ​ 277,828 ​ 218,844 Research tax credits ​ 55,020 ​ 50,842 ​ For federal income tax purposes, $ 0.3 million of NOL carryforwards expire in 2037. The remaining federal NOL carryforwards were generated subsequent to January 1, 2018, and therefore, are able to be carried forward indefinitely. For state income tax purposes, NOL carryforwards begin expiring in 2037, and expire through 2045. For local income tax purposes related to the city of Philadelphia, NOL carryforwards begin expiring in 2042, and expire through 2045. As of December 31, 2025, the Company also had $ 11.6 million of federal research and development and $ 43.4 million orphan drug tax credit carryforwards that will begin to expire in 2038 and 2040, respectively, unless previously utilized. The NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state 133 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not done an analysis to determine whether or not ownership changes have occurred since inception. Certain state NOL carryforwards may also be limited, including Pennsylvania, which limits NOL utilization as a percentage of apportioned taxable income. The Company will recognize interest and penalties related to uncertain tax positions as a component of interest income, net. As of December 31, 2025, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations. Tax years from 2022 and after remain subject to examination by the taxing jurisdictions. The NOL and tax credit carryforwards remain subject to review until utilized. 15. Segment Reporting Operating segments are defined as components of an enterprise which engages in business activities from which it may recognize revenues and incur expenses about which separate discrete information is available for evaluation by the chief operating decision maker, or CODM, in deciding how to allocate resources and in assessing performance. The Company operates in a single reportable segment, developing and advancing genetic medicines designed to target critical underlying pathology of neurodegenerative diseases. The accounting policies of the single segment are the same as those described in the summary of significant accounting policies. The Company’s CODM is its chief executive officer. The measure of segment assets is reported on the balance sheet as total assets. All assets are located within the United States. The CODM uses net loss as reported on the Company’s statement of operations to assess the Company’s performance. The CODM also uses cash forecasts in deciding where to invest or expand operations within the business. In these cash forecasts, research and development expenses and general and administrative expenses exclude certain non-cash items such as share-based compensation and depreciation and amortization expenses. ​ ​ 134 Table of Contents Passage Bio, Inc. Notes to Financial Statements (cont.) The following table summarizes significant segment expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2025 ​ ​ ​ 2024 Research and development ​ ​ ​ ​ ​ ​ Wages, benefits, and other payroll ​ $ 7,462 ​ $ 12,265 Third-party costs ​ ​ 14,532 ​ ​ 22,691 Share-based compensation ​ ​ 842 ​ ​ 2,529 Depreciation and amortization ​ ​ 440 ​ ​ 2,694 Total research and development expenses ​ ​ 23,276 ​ ​ 40,179 General and administrative ​ ​ ​ ​ ​ ​ Wages, benefits, and other payroll ​ ​ 7,784 ​ ​ 9,255 Third-party costs ​ ​ 9,644 ​ ​ 12,055 Share-based compensation ​ ​ 2,159 ​ ​ 3,291 Depreciation and amortization ​ ​ 288 ​ ​ 387 Total general and administrative expenses ​ ​ 19,875 ​ ​ 24,988 Impairment of long-lived assets ​ ​ 6,145 ​ ​ 5,233 Loss from operations ​ ​ 49,296 ​ ​ 70,400 Other (income) expense, net ​ ​ ( 3,774 ) ​ ​ ( 5,633 ) Net loss ​ $ 45,522 ​ $ 64,767 ​ The components of Other (income) expense, net are further described in note 3 to the financial statements. ​ ​ 16. Subsequent Events None. ​ ​ ​ 135 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.