Rallybio Corp 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our chief executive officer and chief financial officer (our principal executive officer and principal financial and accounting officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company on the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including, our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgement in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Internal Control Over Financial Reporting Management's Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our management, under the supervision and with the participation of our chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the criteria in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on the results of its evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2024. Internal control over financial reporting includes policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and disposition of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with the authorization of its management and directors; and (3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on its financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 104 Table of Contents Changes in Internal Control over Financial Reporting. There has been no change in our internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Director and Officer Trading Arrangements During the fourth quarter of 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act, as amended) entered into, modified (as to amount, price or timing of trades) or terminated (i) contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information or (ii) non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K). Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not Applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item 10 will be included in our Definitive Proxy Statement to be filed with the Securities Exchange Commission with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this Item 11 will be included in our Definitive Proxy Statement to be filed with the Securities Exchange Commission with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item 12 will be included in our Definitive Proxy Statement to be filed with the Securities Exchange Commission with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item 13 will be included in our Definitive Proxy Statement to be filed with the Securities Exchange Commission with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information required by this Item 14 will be included in our Definitive Proxy Statement to be filed with the Securities Exchange Commission with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. PART IV Item 15. Exhibits, Financial Statement Schedules. (1) For a list of the financial statements included herein, see Index to the consolidated financial statements on page F-1 of this Annual Report on Form 10-K, incorporated into this Item by reference. (2) Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto. 105 Table of Contents (3) Exhibits: Exhibit Number Description 2.1 Form of Plan of Liquidation and Dissolution (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 3.1 Amended and Restated Certificate of Incorporation of Rallybio Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-40693), filed with the SEC on August 2, 2021). 3.2 Amended and Restated Bylaws of Rallybio Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-40693), filed with the SEC on August 2, 2021). 4.1 Specimen stock certificate evidencing shares of common stock (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 4.2 Registration Rights Agreement, dated July 28, 2021, among the Registrant and certain of its stockholders (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-40693), filed with the SEC on August 2, 2021). 4.3 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-40693), filed with the SEC on November 14, 2022) 4.4 Description of Registrant’s Securities. 4.5 Registration Rights Agreement, dated April 10, 2024, by and between Rallybio Corporation and Johnson & Johnson Innovation - JJDC, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-40693), filed with the SEC on August 8, 2024). 10.1+ Asset Purchase Agreement, by and between Rallybio IPA, LLC and Prophylix AS, dated June 28, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), filed with the SEC on July 2, 2021). 10.2+ Asset Transfer Agreement, by and between Swedish Orphan Biovitrum AB (PUBL) and IPC Research, LLC, dated March 15, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), filed with the SEC on July 2, 2021). 10.3+ Product License Agreement, by and between Affibody AB and Swedish Orphan Biovitrum AB (PUBL), dated March 9, 2012, and assigned to IPC Research, LLC on March 15, 2019 (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), filed with the SEC on July 2, 2021). 10.4+ Amendment No. 1 to Product License Agreement, by and between Affibody AB and Swedish Orphan Biovitrum AB (PUBL), dated January 1, 2018, and assigned to IPC Research, LLC on March 15, 2019 (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), filed with the SEC on July 2, 2021). 10.5+ Amendment No. 2 to Product License Agreement, by and between Affibody AB and IPC Research, LLC, dated December 22, 2020 (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), filed with the SEC on July 2, 2021). 10.6+ License Agreement, by and between Rallybio IPE, LLC and Kymab Limited, dated as of May 5, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-40693), filed with the SEC on August 8, 2022). 10.7+ Operating Agreement of RE Ventures I, LLC, by and between Rallybio IPB, LLC and Exscientia Limited, dated July 19, 2019 (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), filed with the SEC on July 2, 2021). 10.8# Form of Indemnification Agreement, between the Registrant and each of its directors and executive officers (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.13# Rallybio Corporation 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.14# Form of Non-Qualified Stock Option Award Agreement under the Rallybio Corporation 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 106 Table of Contents 10.15# Non-Qualified Stock Option Award Agreement for Non-Employee Directors under the Rallybio Corporation 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.16# Form of Incentive Stock Option Award Agreement under the Rallybio Corporation 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.17# Form of Restricted Stock Unit Award Agreement under the Rallybio Corporation 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.18# Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the Rallybio Corporation 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.19# Rallybio Corporation 2021 Cash Incentive Plan (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.20# Rallybio Corporation 2021 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.21# Second Amended and Restated Employment Agreement, by and between Rallybio, LLC, Rallybio Corporation and Stephen Uden, dated August 1, 2023 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-40693), filed with the SEC on August 8, 2023). 10.22# Second Amended and Restated Employment Agreement, by and between Rallybio, LLC, Rallybio Corporation and Martin Mackay, dated August 1, 2023 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (File No. 001-40693), filed with the SEC on August 8, 2023). 10.23# Amended and Restated Employment Agreement between Rallybio, LLC and Jeffrey M. Fryer (incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.24# Employment Agreement between Rallybio Corporation and Jonathan I. Lieber, dated as of February 1, 2023 (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K (File No. 001-40693), filed with the SEC on March 6, 2023). 10.25# Confidential Release and Separation Agreement between Rallybio Corporation and Jeffrey M. Fryer, dated as of February 15, 2023 (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K (File No. 001-40693), filed with the SEC on March 6, 2023). 10.26# Form of Equity Adjusted Notice (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form S-1 (File No. 333-257655), as amended, filed with the SEC on July 22, 2021). 10.27+ FNAIT Collaboration Agreement, dated April 9, 2024, by and between Momenta Pharmaceuticals, Inc. and Rallybio IPA, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-40693), filed with the SEC on August 8, 2024). 10.28 Sales Agreement, dated as of August 8, 2022, between Rallybio Corporation and TD Securities (USA) LLC (as successor to Cowen and Company, LLC) (incorporated by reference to Exhibit 1.2 to the Company’s Registration Statement on Form S-3 (File No. 333-266668), filed with the SEC on August 8, 2022). 19.1* Company Insider Trading Policy. 21.1 Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K (File No. 001-40693), filed with the SEC on March 12, 2024). 23.1* Consent of Deloitte & Touche LLP, independent registered public accounting firm. 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 107 Table of Contents 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97* Policy Relating to Recovery of Erroneously Awarded Compensation 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) ____________________________________ * Filed herewith. # Indicates management contract or compensatory plan + Portions of this exhibit (indicated by asterisks) have been redacted because they are both not material and the registrant customarily and actually treats such information as private or confidential. Item 16. Form 10-K Summary None. 108 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . RALLYBIO CORPORATION Date: March 13, 2025 By: /s/ Stephen Uden Stephen Uden, M.D. Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Stephen Uden Chief Executive Officer, President and Director (Principal Executive Officer) March 13, 2025 Stephen Uden, M.D. /s/ Jonathan I. Lieber Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer) March 13, 2025 Jonathan I. Lieber /s/ Martin W. Mackay Chairman March 13, 2025 Martin W. Mackay, Ph.D. /s/ Helen M. Boudreau Director March 13, 2025 Helen M. Boudreau /s/ Wendy K. Chung Director March 13, 2025 Wendy K Chung, M.D., Ph.D. /s/ Rob Hopfner Director March 13, 2025 Rob Hopfner, R.Ph., Ph.D., MBA /s/ Ronald M. Hunt Director March 13, 2025 Ronald M. Hunt /s/ Lucian Iancovici Director March 13, 2025 Lucian Iancovici, M.D. /s/ Hui Liu Director March 13, 2025 Hui Liu, Ph.D. /s/ Christine A. Nash Director March 13, 2025 Christine A. Nash, MBA /s/ Paula Soteropoulos Director March 13, 2025 Paula Soteropoulos 109 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) F- 2 Consolidated Balance Sheets F- 3 Consolidated Statements of Operations and Comprehensive Loss F- 4 Consolidated Statements of Changes in Stockholders' Equity F- 5 Consolidated Statements of Cash Flows F- 6 Notes to Consolidated Financial Statements F- 7 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Rallybio Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Rallybio Corporation and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Hartford, Connecticut March 13, 2025 We have served as the Company's auditor since 2018. F-2 Table of Contents RALLYBIO CORPORATION Consolidated Balance Sheets (in thousands, except share and per share amounts) DECEMBER 31, 2024 DECEMBER 31, 2023 Assets Current assets: Cash and cash equivalents $ 13,903 $ 24,494 Marketable securities 51,608 85,435 Prepaid expenses and other assets 2,330 4,860 Total current assets 67,841 114,789 Property and equipment, net 115 246 Operating lease right-of-use assets 152 346 Investment in joint venture — 239 Total assets $ 68,108 $ 115,620 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 278 $ 976 Accrued expenses 4,962 8,068 Operating lease liabilities 154 219 Deferred revenue 848 — Total current liabilities 6,242 9,263 Operating lease liabilities, noncurrent — 173 Deferred revenue, noncurrent 212 — Total liabilities 6,454 9,436 Commitments and contingencies (Note 10) Stockholders' equity Common stock, $ 0.0001 par value per share; 200,000,000 shares authorized as of December 31, 2024 and 2023; and 41,510,163 and 37,829,565 shares issued and outstanding as of December 31, 2024 and 2023, respectively 4 4 Preferred stock, $ 0.0001 par value per share; 50,000,000 shares authorized as of December 31, 2024 and 2023; no shares issued or outstanding as of December 31, 2024 and 2023 — — Additional paid-in capital 354,602 341,410 Accumulated other comprehensive gain 68 15 Accumulated deficit ( 293,020 ) ( 235,245 ) Total stockholders' equity 61,654 106,184 Total liabilities and stockholders' equity $ 68,108 $ 115,620 See accompanying notes to the consolidated financial statements F-3 Table of Contents RALLYBIO CORPORATION Consolidated Statements of Operations and Comprehensive Loss FOR THE YEAR ENDED DECEMBER 31, (in thousands, except share and per share amounts) 2024 2023 Revenue: Collaboration and license revenue $ 636 $ — Total revenue 636 — Operating expenses: Research and development 41,507 53,544 General and administrative 19,625 25,388 Total operating expenses 61,132 78,932 Loss from operations ( 60,496 ) ( 78,932 ) Other income: Interest income 4,216 6,147 Other income 744 262 Total other income, net 4,960 6,409 Loss before equity in losses of joint venture ( 55,536 ) ( 72,523 ) Loss on investment in joint venture 2,239 2,041 Net loss $ ( 57,775 ) $ ( 74,564 ) Net loss per common share, basic and diluted $ ( 1.33 ) $ ( 1.84 ) Weighted-average common shares outstanding, basic and diluted 43,544,824 40,447,388 Other comprehensive gain: Net unrealized gain on marketable securities 53 229 Other comprehensive gain 53 229 Comprehensive loss $ ( 57,722 ) $ ( 74,335 ) See accompanying notes to the consolidated financial statements F-4 Table of Contents RALLYBIO CORPORATION Consolidated Statements of Changes in Stockholders' Equity COMMON ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS) STOCKHOLDERS' EQUITY (in thousands, except share amounts) SHARES AMOUNT December 31, 2022 37,837,369 $ 4 $ 330,208 $ ( 160,681 ) $ ( 214 ) $ 169,317 Issuance of common stock from the stock purchase plan 79,283 — 282 — — 282 Issuance of common stock from the stock award plan 11,219 — — — — — Forfeiture of restricted common stock ( 98,306 ) — — — — — Share-based compensation expense — — 10,920 — — 10,920 Net loss — — — ( 74,564 ) — ( 74,564 ) Other comprehensive gain — — — — 229 229 Balance, December 31, 2023 37,829,565 $ 4 $ 341,410 $ ( 235,245 ) $ 15 $ 106,184 Issuance of common stock upon completion of a securities purchase agreement, net of offering costs of $ 268 3,636,363 $ — $ 5,137 $ — $ — $ 5,137 Issuance of common stock from the stock purchase plan 60,866 — 62 — — 62 Issuance of common stock from the stock award plan 1,925 — — — — — Forfeiture of restricted common stock ( 18,556 ) — — — — — Share-based compensation expense — — 7,993 — — 7,993 Net loss — — — ( 57,775 ) — ( 57,775 ) Other comprehensive gain — — — — 53 53 Balance, December 31, 2024 41,510,163 $ 4 $ 354,602 $ ( 293,020 ) $ 68 $ 61,654 See accompanying notes to the consolidated financial statements F-5 Table of Contents RALLYBIO CORPORATION Consolidated Statements of Cash Flows FOR THE YEAR ENDED DECEMBER 31, (in thousands) 2024 2023 Cash Flows Used in Operating Activities: Net loss $ ( 57,775 ) $ ( 74,564 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 131 150 Net accretion of discounts/premiums on debt securities ( 1,612 ) ( 3,089 ) Share-based compensation 7,993 10,920 Loss on investment in joint venture 2,239 2,041 Changes in operating assets and liabilities: Prepaid expenses, right-of-use assets and other assets 2,724 5,819 Accounts payable ( 698 ) ( 99 ) Accrued expenses and operating lease liabilities ( 3,344 ) ( 1,443 ) Deferred revenue 1,060 — Net cash used in operating activities $ ( 49,282 ) $ ( 60,265 ) Cash Flows Provided by Investing Activities: Purchases of marketable securities ( 48,933 ) ( 108,414 ) Proceeds from maturities of marketable securities 84,425 138,334 Purchase of property and equipment — ( 12 ) Investment in joint venture ( 2,000 ) ( 2,250 ) Net cash provided by investing activities $ 33,492 $ 27,658 Cash Flows Provided by Financing Activities: Proceeds from the issuance of common stock from a securities purchase agreement 5,405 — Proceeds from the issuance of common stock from the stock purchase plan 62 282 Payments of offering costs ( 268 ) ( 139 ) Net cash provided by financing activities $ 5,199 $ 143 Net decrease in cash and cash equivalents ( 10,591 ) ( 32,464 ) Cash and cash equivalents—beginning of year 24,494 56,958 Cash and cash equivalents—end of year $ 13,903 $ 24,494 See accompanying notes to the consolidated financial statements F-6 Table of Contents RALLYBIO CORPORATION Notes to Consolidated Financial Statements 1. BUSINESS Rallybio Corporation and subsidiaries ("Rallybio", the "Company", "we", "our", or "us") is a clinical-stage biotechnology company comprised of experienced biopharma industry leaders with extensive research, development, and rare disease expertise with a mission to develop and commercialize life-transforming therapies for patients with severe and rare diseases. Since the Company's launch in January 2018, the Company has built a broad pipeline of promising product candidates aimed at addressing diseases with unmet medical need in the areas of maternal fetal health, complement dysregulation, hematology, and metabolic disorders. The Company's two most advanced programs are in clinical development: RLYB212, an anti-HPA-1a antibody for the prevention of fetal and neonatal alloimmune thrombocytopenia (“FNAIT”) and RLYB116, an inhibitor of complement component 5 (“C5”), with the potential to treat several diseases of complement dysregulation. RLYB212 is currently in a Phase 2 clinical trial in pregnant women and the Company plans to initiate a confirmatory pharmacokinetics (“PK”) and pharmacodynamics ("PD") study of RLYB116 in the second quarter of 2025. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION Basis of Presentation— The accompanying consolidated financial statements have been prepared with accounting principles generally accepted in the United States of America (“GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). Principles of Consolidation— The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates —The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. While management believes that estimates and assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates. The most significant estimates are those used in the determination of the fair value of its common units and incentive units awarded to employees prior to the Company's initial public offering ("IPO"), for purposes of recording share-based incentive compensation, the fair value of stock options, as well as contracted research and development expenses incurred. Liquidity and Ability to Continue as a Going Concern —The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Management has evaluated whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Since its inception, the Company has incurred net losses and negative cash flows from operations. During the years ended December 31, 2024 and 2023, the Company incurred a net loss of $ 57.8 million and $ 74.6 million, respectively. In addition, as of December 31, 2024, the Company had an accumulated deficit of $ 293.0 million. The Company expects to continue to generate operating losses and negative cash flows in the foreseeable future. The Company currently expects that cash, cash equivalents and marketable securities of $ 65.5 million at December 31, 2024 will be sufficient to fund its operating expenses and capital requirements for more than 12 months from the date the consolidated financial statements are issued. However, we do not anticipate that the current cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient for us to fund any of our product candidates through regulatory approval, and we will need to raise substantial additional capital to complete the development and commercialization of our product candidates, if approved. We may satisfy our future cash needs through the sale of equity securities, debt financings, working capital lines of credit, corporate collaborations or license agreements, grant funding, interest income earned on invested cash balances or a combination of one or more of these sources. F-7 Table of Contents Collaboration Arrangements —The Company considers the nature and contractual terms of an arrangement to assess whether an arrangement involves a joint operating activity that expose two or more parties to significant risks and rewards dependent on the commercial success of the activity. If the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity, the Company accounts for such arrangement as a collaborative arrangement under ASC 808, Collaborative Arrangements ("ASC 808"). ASC 808 describes arrangements within its scope and considerations surrounding presentation and disclosure, with recognition matters subjected to other authoritative guidance, in certain cases by analogy. For arrangements determined to be within the scope of ASC 808 for certain research and development activities where a collaborative partner is not a customer following the guidance of ASC 606, Revenue Recognition ("ASC 606"), the Company accounts for payments due to a collaboration partner as research and development expense and for payments owed to us from our collaboration partner for the reimbursement of research and development costs as a contra-expense in the period such expenses are incurred. The Company classifies payments owed or receivables recorded as other current liabilities and other current assets, respectively, in the Company’s consolidated balance sheets. See Note 3, “Collaboration and License Agreements” for additional details. Asset Acquisitions —The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If this screen criteria is met, the transaction is accounted for as an asset acquisition. If not, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the definition of a business. The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs. In an asset acquisition, the cost allocated to acquire in-process research and development ("IPR&D") with no alternative future use is charged to research and development expense at the acquisition date. See Note 3, “Collaboration and License Agreements” for additional details. Variable Interest Entity —The Company evaluates its ownership, contractual, and other interests in entities to determine if it has any variable interest in a variable interest entity (“VIE”). These evaluations are complex, involve judgment, and the use of estimates and assumptions based on available historical information, among other factors. If the Company determines that an entity in which it holds a contractual, or ownership, interest is a VIE and that the Company is the primary beneficiary, the Company consolidates such entity in its consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively. The Company evaluated its investment in RE Ventures I, LLC, a limited liability company (“REV-I”), defined in Note 9, and concluded that it represented a VIE and the Company was not deemed the primary beneficiary. If the Company is not deemed to be the primary beneficiary in a VIE, the Company accounts for the investment or other variable interests in a VIE in accordance with the applicable GAAP. See Note 9, “Investment in Joint Venture” for additional details. Equity Method Investments —The Company accounts for investments for which it does not have a controlling interest in accordance with ASC 323, Investments – Equity Method and Joint Ventures ("ASC 323"). The Company recognizes its pro-rata share of income and losses in “loss on investment in joint venture” on the consolidated statements of operations and comprehensive loss, with a corresponding change to the investment in joint venture asset on the consolidated balance sheets. Financial Instruments —The Company’s principal financial instruments are comprised of cash, cash equivalents, available for sale marketable securities, accounts payable and accrued liabilities. The carrying value of all financial instruments approximates fair value. Concentrations of Credit Risk —Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company invests its excess cash in money market funds and marketable securities in government insured financial institutions that are subject to minimal credit and market risk. Management believes that the Company is not F-8 Table of Contents exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality, and the Company has not experienced any losses on these deposits. Cash and Cash Equivalents —The Company classifies amounts on deposit in banks and cash invested temporarily in various instruments, primarily money market funds, with original maturities of three months or less at the time of purchase as cash and cash equivalents. The carrying amounts reported on the consolidated balance sheets represent the fair values of cash and cash equivalents. Marketable Securities —We invest our excess cash balances in highly rated United States ("U.S.") government-backed debt securities and treasuries. We classify our marketable securities as available-for-sale and accordingly, record such securities at fair value. Debt securities with original maturities of greater than 90 days are classified as available-for-sale marketable securities and debt securities with original maturities of less than 90 days from the date of purchase are classified as cash equivalents. Unrealized gains and losses on our marketable debt securities that are deemed temporary are included in accumulated other comprehensive gain (loss) as a separate component of stockholders’ equity. If any adjustment to fair value reflects a significant decline in the value of the security, we evaluate the extent to which the decline is determined to be other-than-temporary and would mark the security to market through a charge to our consolidated statements of operations and comprehensive loss. Credit losses are identified when we do not expect to receive cash flows sufficient to recover the amortized cost basis of a security. In the event of a credit loss, only the amount associated with the credit loss is recognized in operating results, with the amount of loss relating to other factors recorded in accumulated other comprehensive gain (loss). Property and Equipment —Property and equipment are recorded at cost and consist of computer and other equipment, capitalized software, furniture and fixtures and leasehold improvements. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, or for leasehold improvements, over the remaining term of the lease, if shorter. The estimated useful life for each major asset classification are as follows: Asset Classification Estimated Useful Life Computer and other equipment 3 years Capitalized software 3 years Furniture and fixtures 6 years Leasehold improvements lesser of lease life or useful life Maintenance and repairs which do not extend the lives of the assets are charged directly to expense as incurred. Upon retirement or disposal, cost and related accumulated depreciation are removed from the related accounts, and any resulting gain or loss is recognized as a component of income or loss in the consolidated statements of operations and comprehensive loss. Impairment of Long-Lived Assets —When indications of potential impairments are present, the Company evaluates the carrying value of long-lived assets. The Company adjusts the carrying value of the long-lived assets if the sum of undiscounted expected future cash flows is less than the carrying value. No such impairments were recorded during the years ended December 31, 2024 or 2023. Leases —At the inception of an arrangement, we determine if an arrangement is, or contains, a lease based on the facts and circumstances present in that arrangement. Lease classification, recognition, and measurement are then determined at the lease commencement date. For arrangements that contain a lease we (i) identify lease and non-lease components, (ii) determine the consideration in the contract, (iii) determine whether the lease is an operating or financing lease; and iv) recognize lease right-of-use ("ROU") assets and liabilities. Lease liabilities and their corresponding ROU assets are recorded based on the present value of fixed, or in substance fixed, lease payments over the expected lease term. When the interest rate implicit in lease contracts is not readily determinable we use our incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. We have elected to combine lease components with non-lease components on our office real estate asset class. Fixed, or in substance fixed, lease payments on operating leases are recognized over the expected term of the lease on a straight-line basis. Variable lease expenses that are not considered fixed, or in substance F-9 Table of Contents fixed, are recognized as incurred. Fixed and variable lease expense on operating leases is recognized within operating expenses within our consolidated statements of operations and comprehensive loss. Some leases include options to extend or terminate the lease and the Company includes these options in the recognition of the Company’s ROU assets and lease liabilities when it is reasonably certain that the Company will exercise such options. We have elected the short-term lease exemption and, therefore, do not recognize a ROU asset or corresponding liability for lease arrangements with an original term of 12 months or less. Income Taxes —The Company uses the asset and liability method of accounting for income taxes, as set forth in ASC 740, Accounting for Income Taxes ("ASC 740"). Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequence of temporary differences between the carrying amounts and the tax basis of assets and liabilities and net operating loss carry forwards, all calculated using presently enacted tax rates. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company evaluates whether deferred tax assets are more likely than not of being realized in determining whether a valuation allowance is necessary. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. As of December 31, 2024 and 2023, the Company determined that it is more likely than not that deferred taxes will not be realized and as a result recorded a valuation allowance against its deferred tax assets. The Company files a consolidated U.S. federal income tax return and has elected to include all subsidiaries owned more than 80 %. Research and Development Expenses —Research and development expenses are comprised of costs incurred in performing research and development activities including personnel salaries, benefits, and equity-based compensation; external research and development expenses incurred under arrangements with third parties, such as contract research organization agreements, investigational sites, and consultants; the cost of developing and manufacturing clinical study materials, program regulatory costs, expenses associated with obligations under asset acquisitions, license agreements and other direct and indirect costs. Costs incurred in connection with research and development activities are expensed as incurred. Costs are considered incurred based on an evaluation of the progress to completion of each contract using information and data provided by the respective vendors, including the Company’s clinical sites. Depending upon the timing of invoicing by the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These prepaid expenses or accrued expenses are based on management’s estimates of the work performed under service agreements, milestones achieved, and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly. Deferred Offering Costs —The Company capitalizes incremental legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such equity financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders' equity as a reduction of additional paid-in-capital generated as a result of the offering. Should the planned equity financing no longer be considered probable of being consummated, the offering costs are expensed immediately as a charge to operating expense. Deferred offering costs are included in prepaid expenses and other assets on the consolidated balance sheets. There were no deferred offering costs as of December 31, 2024 and 2023. Stock Warrants —The Company accounts for stock warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance included in ASC 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Warrants that meet all of the criteria for equity classification are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance and remeasured each balance sheet date thereafter. Share-Based Compensation —The Company accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation ("ASC 718"). Generally, share-based compensation is measured at the grant date for all equity-based awards made to employees based on the fair value of the awards and is recognized over the requisite service period, which is generally the vesting period. Share-based compensation for awards with performance conditions are recognized over the service period when achievement of the F-10 Table of Contents performance condition is probable. The Company has elected to recognize the actual forfeitures by reducing the share-based compensation in the same period as the forfeitures occur. The Company classifies share-based compensation in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified. The Company estimates the fair value of options granted using the Black-Scholes option pricing model ("Black-Scholes") for stock option grants. The fair value of the Company’s common stock is used to determine the fair value of restricted stock awards. Black-Scholes requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the award, the risk-free interest rate and expected dividends. Due to the lack of a public market for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company and in 2024, the Company began to include its historical volatility rate in the computation. The historical volatility is calculated based on a period of time corresponding with expected term assumption. The Company uses the simplified method to calculate the expected term for options granted where the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date corresponding with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. Fair Value Measurements —ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the assets or liabilities and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered value hierarchy that distinguishes between the following: Level 1—Quoted market prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves. Level 3—Unobservable inputs for the asset or liability (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgement. Accordingly, the degree of judgement exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value. Segment Information —Operating segments are defined as components of an enterprise for which discrete financial information is regularly reviewed by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing operating performance. The Company manages its operations as a single segment for the purposes of allocating resources, assessing performance, and making operating decisions. All tangible assets of the Company are held in the U.S. See Note 12, “Segments” for additional details. Basic and Diluted Net Loss Per Share —The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of potential dilutive securities. Basic shares outstanding includes the weighted-average effect of the Company's pre-funded warrants to purchase shares of our common stock requiring little consideration upon exercise. Unvested restricted common shares as of December 31, 2024 and 2023 are not considered participating securities and as such are excluded from the weighted-average number of shares used for calculating basic F-11 Table of Contents and diluted net loss per share. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted-average number of common shares outstanding during the period plus the dilutive effects of potentially dilutive securities outstanding during the period. Potentially dilutive securities include restricted common shares and stock options. The Company has generated a net loss for all periods presented, therefore diluted net loss per share is the same as basic net loss per share since the inclusion of potentially dilutive securities would be anti-dilutive. Revenue Recognition —The Company recognizes revenue in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The Company recognizes revenue when the Company’s customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. The Company evaluates the promised goods or services in these agreements to determine which ones represent distinct performance obligations. These agreements may include the following types of promised goods or services: (i) grants of licenses and related transfer of know-how, (ii) performance of research and development services, and (iii) participation on joint research and/or development committees. They also may include options to obtain further research and development services and licenses to the Company’s intellectual property. The payment terms of these agreements may include nonrefundable upfront fees, payments based upon the achievement of certain milestones, and additional payments based on product sales derived from the collaboration. The Company exercises judgment in assessing those promised goods and services that are distinct and thus representative of performance obligations. To the extent the Company identifies multiple performance obligations in a contract or group of contracts signed together, the Company must develop assumptions that require judgment to determine the estimated standalone selling price for each performance obligation in order to allocate the transaction price among the identified performance obligations. The transaction is allocated on a relative standalone selling price basis. Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are reassessed at each reporting period as required. The Company then recognizes revenue in the amount of the transaction price that is allocated to the respective performance obligations when or as the performance obligations are satisfied. For performance obligations satisfied over time, the Company estimates the efforts needed to complete the performance obligations and recognizes revenue over the satisfaction of the performance obligations. Restructuring —The Company accounts for restructuring charges in accordance with ASC Subtopic 420-10, Exit or Disposal Cost Obligations . The charges related to the workforce reduction are cash-based expenditures related primarily to severance and benefit payments, with such amounts reflected in the Company's consolidated statements of operations and other comprehensive loss. See Note 13, “Restructuring” for additional details. Recently Adopted Accounting Pronouncements —In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). This ASU requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures. The amendments in ASU 2023-07 apply to public business entities, including those with a single reportable segment. This ASU is effective for all public companies for fiscal years beginning after December 15, 2023, and for interim periods beginning December 15, 2024. The Company adopted ASU 2023-07 during the year ended December 31, 2024. See Note 12, "Segments" for additional detail. Recently Issued Accounting Pronouncements —In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09") which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Public F-12 Table of Contents business entities must apply the ASU’s guidance to annual periods beginning after December 15, 2024. The company has chosen not to early adopt this standard and is currently evaluating the potential impact of adopting this standard on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ( "ASU 2024-03"). This ASU requires public entities to disclose additional transparency on certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The company has chosen not to early adopt this standard and is currently evaluating the potential impact of adopting this standard on its consolidated financial statements. 3. COLLABORATION AND LICENSE AGREEMENTS Johnson & Johnson Collaboration In April 2024, the Company entered into a two-year collaboration agreement (the "J&J Collaboration Agreement") with Johnson & Johnson, through its wholly-owned subsidiary, Momenta Pharmaceuticals, Inc. (“J&J”) to facilitate the advancement of research into products to address unmet needs relating to FNAIT. The Company has an ongoing multinational FNAIT natural history study to determine the frequency of women at higher FNAIT risk among pregnant women of different racial and ethnic characteristics, as well as the frequency of HPA-1a alloimmunization and pregnancy outcomes among these women. In this study, participants are screened to determine whether they are HPA-1a negative, positive for HLA-DRB3*01:01 and for the absence of HPA-1a alloantibodies. Subject to the results of the initial screenings, a final screening may be conducted to detect whether the fetus is HPA-1a positive. In addition, the Company is a sponsor of an ongoing Phase 2 FNAIT clinical trial that will include collection of certain natural history data. Pursuant to the J&J Collaboration Agreement, the Company received an upfront payment of $ 0.5 million from J&J for the information dissemination and data provision services under the agreement. In addition, the Company is eligible for payments upon the achievement of certain enrollment-related events, totaling up to $ 0.7 million. The Company is also eligible to receive additional payments upon certain triggers related to the companies' FNAIT studies. The Company evaluated the agreement and determined it was within the scope of ASC 606. The Company determined there were performance obligations as follows: (1) Data collection & submission revenue – derived from Rallybio’s ongoing management of the studies including the maintenance of a minimum site footprint, the license to utilize, and timely, semi-annual submission of the anonymized data, in the required formats. (2) Dissemination of J&J materials & participant revenue – derived from Rallybio’s dissemination of content, information or materials related to the J&J-Sponsored Studies that are developed by J&J and are provided by Rallybio for the purpose of disseminating such content, information, or materials to staff at Rallybio study sites to provide to potential eligible participants regarding J&J’s independent study. In April 2024, the Company also entered into a securities purchase agreement (the "JJDC Securities Purchase Agreement") with Johnson & Johnson Innovation – JJDC, Inc. ("JJDC"). Under the terms of the JJDC Securities Purchase Agreement, JJDC made an equity investment purchasing 3,636,363 shares of common stock with a par value of $ 0.0001 per share for a share purchase price of $ 1.82 per share which includes a 10 % premium for an aggregate purchase price of $ 6.6 million. The JJDC Securities Purchase Agreement contains provisions related to the registration of the shares and the restriction on the sale or transfer of the shares for a period of time. The Company determined the J&J Collaboration Agreement and the JJDC Securities Purchase Agreement represented combined agreements. In accordance with ASC 606 and ASC 820, total consideration of $ 1.2 million for the shares of common stock from the JJDC Securities Purchase Agreement, which represents the premium of $ 0.7 million and discount for lack of marketability of $ 0.5 million, has been allocated to revenue and will be recognized over the two year expected performance period. The Company valued the common stock issued to JJDC, in connection with the JJDC Securities Purchase Agreement at fair value. The resulting fair value of $ 5.4 million was determined by applying the discount due to lack of marketability during the registration and lock-up period to the public trading price of the common stock, which is a Level 1 input, on the date of sale. The Company determined the value of the lack of marketability F-13 Table of Contents during the registration and lock-up period by utilizing put option models, which are considered Level 3 inputs. Such option models included the Company’s historical volatility of 113.2 % and the risk-free rate of 5.28 % based on U.S. Treasury bond rates, as key inputs. The Company recognized $ 0.6 million, respectively, in revenue during the year ended December 31, 2024, related to data collection and data submission with the identified performance obligations, and the premium and discount allocated to revenue from the sale of the common stock to JJDC. The remaining revenue is included in deferred revenue as of December 31, 2024, and will be recognized as the performance obligations are satisfied. The Company determined that the J&J Collaboration Agreement is not in the scope of ASC 808. Asset Acquisition In May 2022, we obtained worldwide exclusive rights to RLYB331, with Kymab Limited ("Sanofi") a preclinical antibody. In 2024, we re-engineered RLYB331 to extend its half-life and renamed the program RLYB332. We believe RLYB332 has the potential to address a significant unmet need for patients with severe anemias with ineffective erythropoiesis and iron overload, including beta thalassemia and a subset of lower risk myelodysplastic syndromes. Under the terms of the license agreement, we made an upfront payment to Sanofi of $ 3.0 million in the second quarter of 2022 for the exclusive license to KY1066. We could also be required to pay up to an aggregate of $ 43.0 million in development and regulatory milestones and up to an aggregate of $ 150.0 million in commercial milestones for a product in its first indication, plus tiered low-to-mid double digit percentages of such milestone amounts for up to three additional indications, and mid to high single digit royalties on net sales. The license was accounted for as an asset acquisition as substantially all of the fair value of the asset acquired was concentrated in a single asset and thus the acquisition was deemed not to be a business combination. The acquired license rights represent an IPR&D asset that was determined to have no alternative future use. Accordingly, the Company recorded an IPR&D charge of $ 3.1 million to research and development expense, including transaction costs associated with this asset acquisition of $ 0.1 million, in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022. The Company did not record an IPR&D charge for the years ending December 31, 2024 and 2023 and did not achieve any milestones related to the terms of the license agreement. AbCellera Collaboration In December 2022, the Company entered into a multi-year, multi-target collaboration with AbCellera to discover, develop, and commercialize novel antibody-based therapeutics for rare diseases. Under the terms of the agreement, AbCellera and Rallybio will co-develop and share the development costs of up to five rare disease therapeutic targets, which will be chosen together by both companies. At the point one party in the collaboration opts-out of future co-development cost sharing, that party will be entitled to a share of future profit sharing from commercialization of the collaboration target, dependent on the proportion of their co-development contributions compared to the total development costs of a target as defined within the agreement. The agreement also has defined profit sharing floors that correspond to the stage of development at the time a collaboration party opts-out of co-developing a target. The Company concluded that the agreement with AbCellera will be accounted under the scope of ASC 808 as both parties will actively participate in joint operating activities and are exposed to significant risks and rewards that depend on the commercial success of those activities. Under ASC 808, certain transactions between collaborative arrangement participants should follow the accounting for revenue under ASC 606 when the collaborative arrangement participant is a customer. The Company determined that co-development arrangement as defined in our agreement with AbCellera does not meet the definition of a customer as defined by ASC 606. As a result, these activities will be accounted for as research and development costs. Payments due because of the co-development will be recorded as research and development expense in the period such expenses are incurred and for payments owed to us from our collaboration partner for the reimbursement of research and development costs will be recorded as a contra-research and development expense in the period such expenses are incurred. Costs related to the AbCellera collaboration were $ 0.4 million and $ 0.9 million for the years ended December 31, 2024 and 2023, respectively. F-14 Table of Contents 4. MARKETABLE SECURITIES The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of our marketable securities by type of security as of December 31, 2024 and 2023 was as follows: DECEMBER 31, 2024 (in thousands) Fair Value Hierarchy Level Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Money market funds Level 1 $ 8,705 $ — $ — $ 8,705 U.S. treasury securities Level 1 34,316 54 ( 15 ) 34,355 U.S. government agency securities Level 2 17,224 32 ( 3 ) 17,253 $ 60,245 $ 86 $ ( 18 ) $ 60,313 DECEMBER 31, 2023 (in thousands) Fair Value Hierarchy Level Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Money market funds Level 1 $ 14,538 $ — $ — $ 14,538 U.S. treasury securities Level 1 35,976 48 ( 6 ) 36,018 U.S. government agency securities Level 2 51,434 31 ( 58 ) 51,407 $ 101,948 $ 79 $ ( 64 ) $ 101,963 The fair values of marketable securities by classification on the consolidated balance sheets as of December 31, 2024 and 2023 was as follows: (in thousands) DECEMBER 31, 2024 DECEMBER 31, 2023 Cash and cash equivalents $ 8,705 $ 16,528 Marketable securities 51,608 85,435 $ 60,313 $ 101,963 The fair values of available-for-sale debt securities as of December 31, 2024 and 2023, by contractual maturity, are summarized as follows: (in thousands) DECEMBER 31, 2024 DECEMBER 31, 2023 Due in one year or less $ 51,357 $ 98,110 Due after one year through two years 8,956 3,853 $ 60,313 $ 101,963 The aggregate fair value of available-for-sale debt securities in an unrealized loss position as of December 31, 2024 and 2023 was $ 10.4 million and $ 40.0 million, respectively. As of December 31, 2024 and 2023, we did no t have any investments in a continuous unrealized loss position for more than twelve months. As of December 31, 2024, we believe that the cost basis of our available-for-sale debt securities is recoverable. No allowance for credit losses was recorded as of December 31, 2024 and 2023. 5. LEASES We have an operating lease for approximately nine thousand square feet of corporate office space. The weighted-average remaining lease term as of December 31, 2024 was 9 months. The weighted-average discount rate utilized on our operating lease liabilities as of December 31, 2024 was 4.00 %. F-15 Table of Contents Operating leases are included in operating lease ROU assets, operating lease liabilities, and operating lease liabilities, noncurrent in our consolidated balance sheets as of December 31, 2024 and 2023. The following table summarizes the presentation of the Company's operating lease as presented on the consolidated balance sheets: (in thousands) DECEMBER 31, 2024 DECEMBER 31, 2023 Assets: Operating lease right-of-use assets $ 152 $ 346 Liabilities: Operating lease liabilities $ 154 $ 219 Operating lease liabilities, noncurrent — 173 Total operating lease liabilities $ 154 $ 392 Future minimum lease payments from December 31, 2024 until the expiration of the operating lease are as follows: (in thousands) 2025 $ 156 Thereafter — Total lease payments 156 Less: imputed discount rate ( 2 ) Carrying value of operating lease liabilities $ 154 The Company incurred $ 0.2 million in operating lease rent expense for both years ended December 31, 2024 and 2023. Lease payments made were $ 0.3 million and $ 0.2 million for the years ended December 31, 2024 and 2023, respectively, with such amounts reflected on the consolidated statements of cash flows in operating activities. 6. BALANCE SHEET COMPONENTS Property and Equipment— Property and equipment consisted of the following as of December 31, 2024 and 2023: (in thousands) DECEMBER 31, 2024 DECEMBER 31, 2023 Computer and other equipment $ 191 $ 191 Capitalized software 89 89 Furniture and fixtures 151 151 Leasehold improvements 338 338 Total property and equipment 769 769 Less: accumulated depreciation ( 654 ) ( 523 ) Total property and equipment—net $ 115 $ 246 Depreciation expense totaled $ 0.1 million for both years ended December 31, 2024 and 2023. F-16 Table of Contents Prepaid Expenses and Other Assets— Prepaid expenses and other assets consisted of the following as of December 31, 2024 and 2023: (in thousands) DECEMBER 31, 2024 DECEMBER 31, 2023 Research and development $ 697 $ 2,067 Insurance 424 446 Other prepaids 214 293 Other current assets 995 2,054 $ 2,330 $ 4,860 Accrued Expenses— Accrued expenses consisted of the following as of December 31, 2024 and 2023: (in thousands) DECEMBER 31, 2024 DECEMBER 31, 2023 Research and development $ 1,197 $ 4,123 Compensation and related expenses 3,095 3,166 Professional fees 510 332 Other 160 447 $ 4,962 $ 8,068 7. STOCKHOLDERS' EQUITY Common Stock In April 2024, the Company entered into the JJDC Securities Purchase Agreement, pursuant to which the Company sold to JJDC, in an unregistered offering, 3,636,363 shares of its common stock, at a price of $ 1.82 per share, which represents a 10 % premium on the Company’s closing stock price on April 9, 2024, for aggregate gross proceeds of approximately $ 6.6 million, before deducting offering expenses. The Company had 200,000,000 shares of common stock authorized as of December 31, 2024 and 2023, of which 41,510,163 and 37,829,565 shares were issued and outstanding as of December 31, 2024 and 2023, respectively. Preferred Stock The Company had 50,000,000 shares of preferred stock authorized as of December 31, 2024 and 2023, of which no shares were outstanding as of December 31, 2024 and 2023. Pre-Funded Warrants In connection with the November 2022 follow-on offering, the Company entered into an agreement with certain investors for pre-funded warrants in lieu of common stock to purchase up to an aggregate of 3,333,388 shares of common stock at a price of $ 5.9999 , which represents the per share public offering price at the November 2022 follow-on offering for common stock less a $ 0.0001 per share exercise price for each pre-funded warrant. The Company may not effect the exercise of any pre-funded warrant, and a holder will not be entitled to exercise any portion of any pre-funded warrant if, upon giving effect to such exercise, the aggregate number of shares of common stock beneficially owned by the holder (together with its affiliates) would exceed 9.99 % of the number of shares of common stock outstanding immediately after giving effect to the exercise, which percentage may be increased or decreased at the holder’s election upon 61 days’ notice to the Company subject to the terms of such pre-funded warrants, provided that such percentage may in no event exceed 19.99 %. The Company's pre-funded warrant is a freestanding instrument that does not meet the definition of a liability pursuant to ASC 480 and does not meet the definition of a derivative pursuant to ASC 815. The pre-funded warrant is indexed to the Company’s common stock and meets all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the pre-funded warrant was classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. All of the pre-funded warrants related to our November 2022 follow-on offering remain outstanding and unexercised as of December 31, 2024. F-17 Table of Contents Share-based Compensation Share-based compensation which comprised of stock options, restricted stock awards, restricted stock units and the employee stock purchase plan is classified in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023 and was as follows: FOR THE YEAR ENDED DECEMBER 31, (in thousands) 2024 2023 Research and development $ 3,269 $ 4,606 General and administrative 4,724 6,314 $ 7,993 $ 10,920 2021 Equity Incentive Plan In 2021, the board of directors adopted the Rallybio Corporation 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan reserves 5,440,344 for shares of the Company's common stock that have been issued in respect of outstanding equity awards granted prior to the registrant’s IPO and for future issuances of shares to employees, directors and consultants in the form of stock options, SARs, restricted and unrestricted stock and stock units, performance awards and other awards that are convertible into or otherwise based on the Company's common stock. Dividend equivalents may also be provided in connection with awards under the 2021 Plan. The share pool will automatically increase on January 1st of each year from 2022 to 2031 by the lesser of (i) five percent of the number of shares of the Company's common stock outstanding as of such date and (ii) the number of shares of the Company's common stock determined by the board of directors on or prior to such date. On January 1, 2024 and January 1, 2023, the 2021 Plan share pool was automatically increased by 1,891,478 and 1,891,868 shares, respectively. As of December 31, 2024, the total number of shares of the Company's common stock that were issuable under the 2021 Plan was 8,683,135 shares, of which 3,383,211 shares remained available for future issuance. The following table summarizes stock option activity for the year ended December 31, 2024: Stock Options Number of Option Shares Weighted-Average Exercise Price Weighted-Average Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2023 4,270,544 $ 9.98 8.5 $ — Granted 1,119,039 $ 1.89 Forfeited ( 653,108 ) $ 8.94 Expired ( 501,292 ) $ 11.27 Exercised — $ — Outstanding at December 31, 2024 4,235,183 $ 7.85 7.8 $ — Options exercisable at December 31, 2024 2,314,572 $ 9.63 7.3 $ — The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company's common stock. Options outstanding and exercisable with an exercise price above the closing price as of December 31, 2024 are considered to have no intrinsic value. Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the years ended December 31, 2024 and 2023 was $ 1.47 per share and $ 4.93 per share, respectively. Options vested during the years ended December 31, 2024 and 2023 with an exercise price above the closing price are considered to have no intrinsic value. As of December 31, 2024, there was unrecognized share-based compensation expense related to unvested stock options of $ 7.8 million, which the Company expects to recognize over a weighted-average period of approximately 1.9 years. F-18 Table of Contents The fair value of the stock options granted during the years ended December 31, 2024 and 2023 was determined using the Black-Scholes option pricing model with the following assumptions: FOR THE YEAR ENDED DECEMBER 31, 2024 2023 Expected volatility 89.41 % - 94.48 % 88.38 % - 92.27 % Expected term (years) 5.50 - 6.02 5.50 - 6.08 Risk free interest rate 3.93 % - 4.35 % 3.58 % - 4.52 % Expected dividend yield — — Exercise price $ 1.86 - $ 2.40 $ 5.38 - $ 7.83 A summary of the status of the Company's nonvested restricted common stock awards at December 31, 2024 and changes during the year ended December 31, 2024 was as follows: Restricted Stock Awards Shares Weighted-Average Grant Date Fair Value Per Share Nonvested restricted stock awards at December 31, 2023 354,394 $ 4.10 Granted — $ — Vested ( 313,888 ) $ 3.32 Forfeited ( 18,556 ) $ 16.03 Outstanding nonvested restricted stock awards at December 31, 2024 21,950 $ 5.21 As of December 31, 2024, there was unrecognized share-based compensation expense related to unvested restricted stock awards of $ 0.1 million, which the Company expects to recognize over a weighted-average period of approximately 0.8 years. A summary of the status of the Company's nonvested restricted common stock units at December 31, 2024 and changes during the year ended December 31, 2024 was as follows: Restricted Stock Units Shares Weighted-Average Grant Date Fair Value Per Share Nonvested restricted stock units at December 31, 2023 220,250 $ 8.55 Granted 947,756 $ 1.49 Forfeited ( 101,340 ) $ 7.60 Vested ( 1,925 ) $ 7.68 Outstanding nonvested restricted stock units at December 31, 2024 1,064,741 $ 2.36 As of December 31, 2024, there was unrecognized share-based compensation expense related to unvested restricted stock units of $ 1.2 million, which the Company expects to recognize over a weighted-average period of approximately 1.5 years. 2021 Employee Stock Purchase Plan In connection with the Company's IPO, the board of directors adopted the Rallybio Corporation 2021 Employee Stock Purchase Plan (the "2021 ESPP"), which reserves 291,324 shares of the Company's common stock for future issuances under this plan. The share pool will automatically increase on January 1st of each year from 2022 to 2031 by the lesser of (i) one percent of the number of shares of the Company's common stock outstanding as of such date (ii) 582,648 shares of the Company's common stock, and (iii) the number of shares of the Company's common stock determined by the board of directors on or prior to such date. The 2021 ESPP share pool did not increase on January 1, 2024. On January 1, 2023, the 2021 ESPP share pool was automatically increased by 378,373 shares. As of December 31, 2024, the total number of shares of the Company's common stock that were available for future issuance under the 2021 ESPP was 812,012 shares. F-19 Table of Contents During the years ended December 31, 2024 and 2023, the Company issued 60,866 and 79,283 shares, respectively, of the Company's common stock under the 2021 ESPP. The 2021 ESPP allows eligible participants to purchase shares of our common stock through authorized payroll deductions. The purchase price of the shares will be not less than 85 % of the lower of the fair market value of our common stock on the first day of an offering or on the date of purchase. For the years ended December 31, 2024 and 2023, the total share-based compensation for the 2021 ESPP was $ 0.1 million and $ 0.2 million, respectively. 8. INCOME TAXES During each of the years ended December 31, 2024 and 2023, the Company did not record any income tax expense or benefits. The Company’s effective income tax rates are different from the federal statutory tax rates in 2024 and 2023 predominantly due to the valuation allowance, tax credits, and state taxes. A reconciliation of the effect of applying the federal statutory rate to the net loss and effective income tax rate are as follows: 2024 2023 U.S. federal statutory income tax rate 21.0 % 21.0 % State income taxes, net of federal income tax benefit 5.4 % 7.8 % Tax credits 10.7 % 9.9 % Other ( 2.9 ) % ( 1.1 ) % Valuation allowance ( 34.2 ) % ( 37.6 ) % Effective income tax rate 0.0 % 0.0 % Deferred income taxes represent the tax effect of transactions that are reported in different periods for financial and tax reporting purposes. The combined temporary differences and carryforwards of each tax paying component of the Company that give rise to a significant portion of the deferred income tax benefits and liabilities are as follows at December 31, 2024 and 2023: (in thousands) 2024 2023 Net operating loss carryforwards $ 45,973 $ 37,230 Intangible amortization 1,341 2,167 Section 174 capitalization 22,479 17,530 Research and development tax credits 24,047 17,729 Share-based compensation 2,654 2,706 Other 1,476 917 Gross deferred tax assets 97,970 78,279 Valuation allowance ( 97,970 ) ( 78,279 ) Net deferred tax assets $ — $ — At December 31, 2024, the Company has approximately $ 167.4 million of federal net operating loss carryforwards, which do not expire, and approximately $ 165.9 million of state net operating loss carryforwards, which begin expiring in 2038. At December 31, 2024, the Company has approximately $ 23.4 million of federal research and development tax credit carryforwards, which begin expiring in 2039, and approximately $ 0.8 million of state research and development tax credit carryforwards, which begin expiring in 2040. The Company has provided a valuation allowance against the Company’s deferred tax assets, since, in the opinion of management, based upon the history of losses by the Company and insufficient future federal and state taxable income; it is more likely than not that the benefits will not be realized. All or a portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits. F-20 Table of Contents Effective January 1, 2022, a provision of the Tax Cuts and Jobs Act ("TCJA") changed the treatment of research and experimental ("R&E") expenditures under Section 174 of the Internal Revenue Code ("Code"). Previous to the TCJA being effective, businesses have had the option of deducting Section 174 expenses in the year incurred or capitalizing and amortizing the costs over five years. The new TCJA provision, however, eliminates this option and will require Section 174 expenses associated with research conducted in the U.S to be capitalized and amortized over a five-year period. For expenses associated with research outside of the United States, Section 174 expenses will be capitalized and amortized over a 15-year period. Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to an annual limitation under Section 382 and Section 383 of the Code, and corresponding provisions of state law, due to ownership changes that may have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income and tax liabilities. In general, an ownership change, as defined by Section 382 of the Code, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 5% over a three-year period. The Company completed a Section 382 study and concluded that we underwent an ownership change as defined by the Code during the year ended December 31, 2021. We do not currently believe that the annual limitation will result in the expiration of any net operating losses or research and development tax credit carryforwards before utilization. Additional ownership changes which may have occurred after December 31, 2021 and any future ownership changes may limit our ability to utilize remaining tax attributes. Any carryforwards that will expire prior to utilization as a result of such additional limitations will be removed from deferred tax assets, with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate. ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company has no material uncertain tax positions that qualify for either recognition or disclosure in consolidated financial statements. It is the Company’s policy to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2024 and 2023, the Company has accrued no interest and penalties related to uncertain tax positions. The Company does not have any outstanding U.S. federal income tax or material state and local tax matters for periods through December 31, 2024. There are no federal or state and local income tax returns currently under examination. As of December 31, 2024, the statute remains open for years 2018 through 2024. These years are still considered open due to the Company generating net operating losses, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service or other authorities if they have or will be used in a future period. 9. INVESTMENT IN JOINT VENTURE The Company, through one of its wholly-owned subsidiaries, has a 50 % interest of the joint venture entity, REV-I. For the years ended December 31, 2024 and 2023 the Company funded $ 2.0 million and $ 2.3 million, respectively, associated with the Company's commitment and its share of REV-I development. The Company did not provide any additional financial support outside of capital contributions to REV-I during the years ended December 31, 2024 and 2023. However, in connection with the joint venture, the Company provides certain scientific and finance and accounting related support which was reimbursed by REV-I to the Company and included in other income on the consolidated statements of operations and comprehensive loss. For the years ended December 31, 2024 and 2023, the Company recorded $ 0.7 million and $ 0.3 million, respectively, related to such support. While the Company held a 50 % interest in the joint venture as of December 31, 2024, based on management’s analysis, the Company is not the primary beneficiary of REV-I and accordingly, the entity is not consolidated in the Company's consolidated financial statements. For the years ended December 31, 2024 and 2023, the Company recorded its allocable share of REV-I’s losses, which totaled $ 2.2 million and $ 2.0 million, respectively, as a loss on investment in joint venture in the consolidated statements of operations and comprehensive loss. After recognition of its share of losses for the period, the carrying value and maximum exposure to risk of the REV-I investment as of December 31, 2023 was $ 0.2 million, which was recorded in investment in joint venture on the consolidated balance sheets. There was F-21 Table of Contents no carrying value remaining of the REV-I investment as of December 31, 2024. During the period subsequent to December 31, 2024 and through the date of these consolidated financial statements, the Company funded the joint venture an additional $ 1.0 million. 10. COMMITMENTS AND CONTINGENCIES Purchase Commitments —The Company enters contracts in the normal course of business with contract research organizations and other third-party vendors for clinical trials and testing and manufacturing services. These contracts generally do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments that may be due upon cancellation consist of payments for services provided or expenses incurred prior to cancellation. As of December 31, 2024 and 2023 there were no amounts accrued related to termination charges. 11. NET LOSS PER COMMON SHARE Basic and diluted loss per common share were calculated as follows: FOR THE YEAR ENDED DECEMBER 31, (in thousands except share and per share amounts) 2024 2023 Net loss $ ( 57,775 ) $ ( 74,564 ) Weighted-average number of common shares outstanding, basic and diluted 43,544,824 40,447,388 Net loss per common share, basic and diluted $ ( 1.33 ) $ ( 1.84 ) Basic net loss per share of common stock is based on the weighted-average number of shares of common stock outstanding during the period. Pre-funded warrants to purchase 3,333,388 shares of common stock that were issued in connection with the November 2022 follow-on offering were included in the weighted-average number of common shares outstanding for the years ended December 31, 2024 and 2023, respectively. The weighted-average number of common shares outstanding diluted for the years ended December 31, 2024 and 2023 excludes approximately 5.3 million and 4.8 million stock options and unvested restricted stock awards and units, respectively, which were not dilutive. F-22 Table of Contents 12. SEGMENTS The Company defines its segments on the basis of the way in which internally reported financial information is regularly reviewed by the CODM to analyze financial performance, make decisions, and allocate resources. The Company’s CODM consists of its Chief Executive Officer, Chief Financial Officer and Chief Medical Officer. The Company manages its operations as a single operating and reportable segment and the measure of segment profit or loss is net loss and comprehensive loss. The CODM uses net loss in the budget and forecasting process and considers budget-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources. The following table summarizes the information about reported segment revenues and significant segment expenses presented on the Company's consolidated statements of operations and comprehensive loss: FOR THE YEAR ENDED DECEMBER 31, (in thousands) 2024 2023 Revenue $ 636 $ — Less: Research and development: RLYB212 21,287 25,685 RLYB116 4,841 8,791 Other program candidates 1,901 3,411 Personnel expenses (including share-based compensation) 12,488 14,160 Other expenses 990 1,497 Total research and development 41,507 53,544 General and administrative, excluding personnel expenses 6,654 10,313 General and administrative, personnel expenses (including share-based compensation) 12,971 15,075 Other segment items* ( 2,721 ) ( 4,368 ) Segment net loss $ ( 57,775 ) $ ( 74,564 ) *Other segment items includes total other income, net and loss on investment in joint venture. 13. RESTRUCTURING In February, 2024, the Company announced a prioritization of its portfolio and a workforce reduction to focus resources primarily on the continued development of RLYB212. As part of this effort, the Company eliminated approximately 45 % of its positions. As a result of these actions, the Company incurred charges of approximately $ 3.3 million of which $ 2.0 million was included in research and development expenses and $ 1.3 million was included in general and administrative expenses, with such amounts reflected in the consolidated statements of operations and comprehensive loss. The charges related to the workforce reduction are cash-based expenditures related primarily to severance and benefit payments. The Company recognized all such charges in the first quarter of 2024, with such amounts reflected in the consolidated statements of operations and comprehensive loss. The accrued restructuring liability is included in accrued expenses on the consolidated balance sheets as of December 31, 2024. Substantially all restructuring payments are expected to be completed by September 30, 2025. The following table summarizes the restructuring accrued expense activity as of December 31, 2024: (in thousands) DECEMBER 31, 2024 Beginning accrued severance $ — Severance incurred during the period 3,279 Severance paid and adjustments made during the period ( 3,076 ) Ending accrued severance $ 203 F-23