What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-03 compared with 2025-03-17 · 254 added, 188 removed, 991 unchanged (31% of the section changed)

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We view engineered cells as having the potential to be as therapeutically disruptive as biologic drugs to clinical practice, enabling us to repair cells in the body when possible and replace them when needed.

We are developing ex vivo and in vivo cell engineering platforms to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including type 1 diabetes, B cell mediated autoimmune diseases, and oncology.

We have developed ex vivo and in vivo cell engineering platforms to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including type 1 diabetes, oncology, and B cell mediated autoimmune diseases.

For our ex vivo platform, we have made focused investments in our hypoimmune platform technology, which we refer to as our HIP technology, with the twin goals of engineering allogeneic cells that can "hide" from the patient's immune system to overcome the fundamental challenge of immune rejection and cell persistence and that we can manufacture at scale.

A successful therapeutic requires cells that can engraft, function, and persist in the body, and we believe our approach can unlock a wave of disruptive therapeutics.

For in vivo therapies that aim to repair and control genes in the body, a successful product candidate requires both gene modification and in vivo delivery of the therapeutic payload.

Of these, we view effective in vivo delivery as the greatest current limitation to dramatically expanding the impact of this class of therapeutics.

To this end, our initial focus is on cell-specific delivery of genetic payloads that integrate into the genome of the target cells.

We currently focus our efforts across three areas and have three ongoing clinical trials across multiple disease types and therapeutic areas, including type 1 diabetes (T1D), B cell mediated autoimmune diseases, and B cell malignancies.

A successful therapeutic requires cells that can engraft, function, and persist in the body, and we believe our approach can unlock a wave of disruptive therapeutics, starting in type 1 diabetes.

For in vivo therapies that aim to repair or control genes in the body, a successful product candidate requires both gene modification and in vivo delivery of the therapeutic payload.

Our initial focus is on cell-specific delivery of genetic payloads, known as chimeric antigen receptors (CARs), to a patient’s T cells, resulting in the generation and proliferation of CAR T cells, which have been shown to deplete a patient’s disease-causing B cells.

We are currently focused on advancing two distinct therapeutics, each of which leverages one of these platform technologies.

SC451 is our HIP-edited product candidate for the treatment of type 1 diabetes.

SG293 is our in vivo CAR T product candidate for the treatment of B cell malignancies and B cell mediated autoimmune diseases.

We retain worldwide rights to each of these product candidates.

• Type 1 Diabetes :

Approximately nine million people suffer from T1D worldwide, and there have been no major novel medicines for the disease since insulin.

We are developing SC451, a HIP-modified, stem cell derived pancreatic islet cell therapy, for the treatment of type 1 diabetes.

Almost ten million people suffer from type 1 diabetes (T1D) worldwide, and there has been limited progress in treatments for this disease since the advent of insulin injections over 100 years ago.

We are developing SC451, a HIP-modified, stem cell-derived pancreatic islet cell therapy, for the treatment of T1D.

The goal of this therapy is euglycemia, or normal blood glucose, without the need for exogenous insulin injections or immunosuppression.

We currently have an ongoing investigator-sponsored first-in-human study (IST) evaluating UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, in patients with T1D.

We expect to share additional data in 2025 and file an investigational new drug application (IND) for SC451 as early as 2026.

• Allogeneic CAR T cells :

We are developing SC291, our HIP-modified allogeneic CD19-directed allogeneic CAR T cell product candidate, in patients with B cell mediated autoimmune diseases.

The GLEAM study is a Phase 1 clinical trial evaluating SC291 in patients with lupus nephritis (LN), extrarenal lupus (ERL), and antineutrophil cytoplasmic antibody (ANCA)-associated vasculitis.

If successful, SC291 has the potential to benefit patients in a number of additional B cell-mediated autoimmune diseases.

We are also studying SC262, our HIP-modified allogeneic CD22-directed CAR T cell product candidate.

The VIVID study is a Phase 1 clinical trial evaluating SC262 in patients with relapsed and/or refractory (R/R) B cell malignancies who have received prior CD19-directed CAR T therapy.

We are enrolling patients in both the GLEAM and VIVID trials and expect to share data from each study in 2025.

Through a first-in-human investigator-sponsored study (IST), we have shown that UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, can survive and function for twelve months post-transplant in a patient with T1D without the need for immunosuppression.

We have incorporated this HIP technology into a more scalable manufacturing platform with SC451 and expect to file an investigational new drug application (IND) as well as begin a Phase 1 clinical trial for this therapy as early as this year.

• In vivo CAR T cells :

Using our fusogen platform, which allows for cell-specific, in vivo delivery of various payloads, we are developing our SG299 product candidate, which is a CD8-targeted fusosome that delivers to CD8+ T cells the genetic material to make CD19-directed CAR T cells while avoiding delivery to potentially troublesome tissues such as the liver and gonadal tissue.

We plan to develop SG299 in a range of B cell cancers and B cell mediated autoimmune diseases and expect to file an IND for SG299 as early as 2026.

We believe the time is right to develop engineered cell therapies across a broad range of therapeutic areas.

Using our fusogen platform, which enables cell-specific, in vivo delivery of various payloads, we are developing SG293, a CD8-targeted fusosome.

SG293 delivers genetic material to CD8+ T cells, which enables them to become CD19-targeting CAR T cells while avoiding potentially problematic delivery to tissues such as the liver and gonads.

In vivo CAR T cells have the potential to provide the clinical benefit of autologous, ex vivo manufactured CAR T cells while avoiding the need for lymphodepleting chemotherapy as well as significant complexity and bottlenecks related to manufacturing.

SG293 builds on data from our prior lead in vivo CAR T product candidate, SG299.

We plan to develop SG293 in a range of B cell cancers and B cell mediated autoimmune diseases and expect to generate initial clinical data as early as this year.

In November 2025, in order to prioritize our resources and pursue promising data in the SC451 and fusogen programs, we announced our prioritization of further development of our SC451 and SG293 programs, and suspended development of our two allogeneic cell therapy CAR T programs – SC291 in B cell mediated autoimmune diseases and SC262 in oncology.

As part of these efforts, we are winding down the GLEAM Phase 1 clinical trial evaluating SC291 in B cell mediated autoimmune diseases and the VIVID Phase 1 clinical trial evaluating SC262 in oncology.

We believe the time is right to develop engineered cell therapies in various therapeutic areas.

Substantial progress in the understanding of genetics, gene editing, protein engineering, stem cell biology, immunology, process analytics, and computational biology have converged to create an opportunity to markedly increase the breadth and depth of the potential impact of cellular medicines.

We continue to make progress developing our ex vivo cell engineering platforms – our hypoimmune allogeneic CAR T cell platform and our stem-cell derived platform that also leverages our HIP technology – and our in vivo cell engineering platform.

We are in the early stages of development across a broad pipeline of product candidates, which are summarized below:

1 Investigator sponsored trial.

Abbreviations:

AAV, ANCA-associated vasculitis;

NHL, non-Hodgkin's lymphoma;

SLE, systemic lupus erythematosus;

T1D, type 1 diabetes;

WW, worldwide.

We continue to make progress developing our ex vivo cell engineering platform that leverages our HIP technology and our in vivo cell engineering platform.

Each of our programs provides the potential for meaningful standalone value while also supporting our potential ability to further exploit our platforms in a manner that leads to the development of broadly applicable medicines.

Based on our current timelines for our lead programs, we believe our cash runway will enable multiple data readouts across our programs in 2025.

In early 2025, we announced positive four-week results from the UP421 IST demonstrating that all primary and secondary endpoints were met.

Results of the study at four weeks and preliminary results at 12 weeks after cell transplantation demonstrate the survival and function of pancreatic beta cells as measured by the presence of circulating C-peptide, a biomarker indicating that transplanted beta cells are producing insulin.

C-peptide levels also increase with a mixed meal tolerance test (MMTT) during testing at these timepoints, consistent with insulin secretion in response to a meal.

Magnetic resonance imaging (MRI) scanning also demonstrated a sustained signal at the site of transplanted cells over time, which is consistent with graft survival.

The study identified no safety issues, and the HIP-modified islet cells evaded immune detection.

The trial continues to evaluate safety, persistence, and function of the transplanted cells.

The 12-week data remain subject to source data verification, after which we and our collaborators at Uppsala University Hospital expect to publish in scientific journals and/or present at scientific conferences more details and longer follow-up from this study in 2025 and beyond.

We continue to make progress on advancing our research- and preclinical-stage product candidates into and through preclinical development and toward potential IND submissions.

As certain of our product candidates advance toward potential IND submissions, we are conducting good laboratory practices toxicity studies and establishing necessary scale-up for our manufacturing processes.

Given the depth and breadth of our portfolio, we expect to continue to assess and prioritize our programs on an ongoing basis based on various factors, including internal and external opportunities and constraints, which may result in our decision to advance certain programs ahead or instead of others.

With respect to our ex vivo cell engineering efforts, in January 2026, we announced positive 12-month results from the UP421 IST demonstrating that all primary and secondary endpoints were met.

The study showed no drug product-related adverse events.

Additionally, there was evidence of graft survival and function with positron emission tomography and magnetic resonance imaging (PET/MRI) as well as with detectable C-peptide production through 12 months following transplantation.

C-peptide levels increased, as expected, during a mixed meal tolerance test, showing appropriate function of the transplanted islet cells.

Immunological analysis revealed comprehensive immune evasion of HIP-modified pancreatic islet cells.

In August 2025, The New England Journal of Medicine published a journal article titled "Survival of Transplanted Allogeneic Beta Cells with No Immunosuppression," which discusses the 12-week results of the trial.

We continue preclinical development of SC451, and the results of recent regulatory interactions, including FDA INTERACT and Pre-IND meetings, increase our confidence in our manufacturing process, manufacturing controls, nonclinical testing plan, and clinical trial plan.

With respect to our in vivo cell engineering research efforts, in January 2026, we shared data from a preclinical study using a surrogate for SG293 that delivers a CD20 CAR capable of targeting non-human primate (NHP) B cells in cynomolgus macaques in the absence of lymphodepletion.

A single intravenous injection of the SG293 surrogate to these NHPs resulted in robust in vivo generation of CAR T cells and deep B-cell depletion in the peripheral blood and lymph nodes.

The B cell depletion was further confirmed by lymph node biopsies showing clearance of B cells as well as by “reset” of the NHPs’ B cell repertoire toward naïve B cells.

We believe that deep B cell depletion in this preclinical model is the most significant biomarker for potential efficacy in patients with B cell cancers and B cell mediated autoimmune diseases.

Separately, in vitro studies using SG293 have shown selective gene delivery to CD8+ T cells with minimal or undetectable off-target transduction in tissues such as the liver and gonadal tissue, supporting the specificity of SG293.

We continue to make progress on advancing our product candidates into and through preclinical development and toward potential IND submissions.

As our product candidates advance toward potential IND submissions, we are conducting good laboratory practices toxicology studies and establishing necessary scale-up for our manufacturing processes.

We expect to continue to assess and prioritize our programs on an ongoing basis based on various factors, including internal and external opportunities and constraints, which may result in our decision to advance certain programs ahead or instead of others or suspend, discontinue, or divest certain programs that represent our current development focus.

For details regarding our product candidates, see the section titled “Business—Overview” in Part I, Item 1 included elsewhere in this Annual Report.

In November 2024, we announced a portfolio prioritization to prioritize clinical and preclinical development in type 1 diabetes, B-cell mediated autoimmune diseases, refractory B-cell malignancies, and the fusogen platform for generating in vivo CAR T cells.

We suspended development of SC291, our HIP-modified CD19 allogeneic CAR T therapy, in oncology, and SC379, our glial progenitor cell program, as we seek partnerships for these programs.

As part of these efforts, we are winding down the ARDENT Phase 1 clinical trial evaluating SC291 in B-cell malignancies, including non-Hodgkin’s lymphoma and chronic lymphoblastic leukemia.

In connection with the portfolio prioritization, we expect to incur approximately $5.8 million of cash-based expenses related to employee severance, benefits, and related costs.

We anticipate that the portfolio update and associated workforce reduction will be substantially complete in the first quarter of 2025.

Our ex vivo and in vivo technologies represent an aggregation of years of innovation and technology from multiple academic institutions and companies, including hypoimmune technology licensed from the President and Fellows of Harvard College (Harvard) and The Regents of the University of California, fusogen technology acquired from Cobalt Biomedicine Inc.

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Our net losses resulted primarily from our research and development programs, and, to a lesser extent, general and administrative costs associated with our operations.

In March 2026, we entered into an amended and restated sales agreement (the Sales Agreement) with TD Securities (USA) LLC (TD Cowen), acting as sales agent, pursuant to which we may offer and sell through TD Cowen shares of our common stock from time to time in a series of one or more at the market equity offerings.

We initially intend to offer and sell up to $150.0 million of shares of our common stock under the Sales Agreement pursuant to a prospectus supplement to be filed with the SEC (collectively, the ATM facility).

The Sales Agreement amends and restates our prior sales agreement with TD Cowen entered into in May 2025 (the Prior Sales Agreement).

During the quarter and year ended December 31, 2025, we sold an aggregate of 3.9 million shares and 11.3 million shares of our common stock, respectively, under the Prior Sales Agreement, for net proceeds of approximately $17.0 million and $45.8 million, respectively, after deducting commissions and expenses.

In August 2025, we completed an underwritten public offering (the Offering) pursuant to which we sold 24.3 million shares of our common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of our common stock for net proceeds of approximately $80.6 million, after deducting underwriting discounts and commissions and offering expenses.

As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $138.4 million.

We will need to raise additional financing in the near-term and in the future to fund our operations, including the commercialization of any approved product candidates.

We will need to raise additional financing within the next 12 months and in the future to fund our operations, including conducting clinical trials and the commercialization of any approved product candidates.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and milestone, royalty, and other payments received under any future licenses, collaborations, or other arrangements.

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We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

If we are unable to obtain such financing, we may be required to significantly modify our operational plans by delaying, reducing the scope of, or ceasing our research and development programs.

We expect our operating losses and expenses to decrease in 2025 compared to 2024 as a result of our portfolio prioritization announced in November 2024.

Operating expenses may increase over the longer term if our clinical trials are successful and if we expand our research and development efforts.

If we are unable to obtain such financing, we may be required to pursue alternative sources of capital which may not be available to us on favorable terms, significantly modify our operational plans by delaying, reducing the scope of, or ceasing some or all of our research and development programs, or pursue strategic alternatives.

Although our historical portfolio prioritizations have enabled reduced operating expenses, our operating expenses may increase over the longer term if our future clinical trials are successful and if we expand our research and development efforts.

Cost increases would be driven in large part by commencing and advancing our current and future product candidates through clinical trials;

identifying additional product candidates;

continuing to establish our manufacturing capabilities, including through third-party contract development and manufacturing organizations (CDMOs) and our internal manufacturing capabilities;

continuing to establish our manufacturing capabilities, including through third-party contract development and manufacturing organizations (CDMOs);

initiating and advancing preclinical development of our current and future product candidates;

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Our investments also include scaled research solutions, scaled infrastructure, and novel technologies to improve efficiency, characterization, and scalability of manufacturing.

Macroeconomic Considerations

Our business and operations may be negatively affected by worldwide economic conditions, which may continue to be impacted by global macroeconomic challenges such as changes in trade policies, including sanctions, treaties, tariffs, regulatory requirements, and other limitations on cross-border operations, changes in inflation and fluctuations in interest rates, instability in the banking and financial services sector, declines in consumer confidence, declines in economic growth, uncertainty in the markets, geo-political and economic instability, and tensions in U.S.-China relations.

Macroeconomic and Other Considerations

Our business and operations may be negatively affected by local and global economic, political, and regulatory developments and conditions, such as changes in trade policies (including sanctions, treaties, tariffs, regulatory requirements, and other limitations on cross-border operations and international trade), changes in inflation and fluctuations in interest rates, instability in the banking and financial services sector, declines in consumer confidence, declines in economic growth, uncertainty in the markets, geo-political and economic instability, changes in regulatory agencies having oversight of our operations, and tensions in ex-U.S.

Further, it is possible that government policy changes and related uncertainty could increase market volatility.

The extent, severity, and duration of the impact of these events and conditions on our business cannot be predicted and may not be fully reflected in our results of operations until future periods.

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We have completed various acquisitions since inception.

For details regarding our acquisitions, see the section titled “Business—Key Intellectual Property Agreements” and Note 4, Acquisitions, to our consolidated financial statements included elsewhere in this Annual Report.

For details regarding acquisitions involving technologies that we are currently developing, see the section titled “Business—Key Intellectual Property Agreements” and Note 4, Acquisitions, to our consolidated financial statements included elsewhere in this Annual Report.

License and collaboration agreements

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Research and development activities account for a significant portion of our operating expenses.

As a result of our portfolio prioritization and associated workforce reduction announced in November 2024, we expect our research and development expenses to decrease in 2025 compared to 2024.

Research and development expenses may increase over the longer term if our clinical trials are successful and if we expand our research and development efforts.

Excluding any one-time items, we expect our research and development expenses to be materially flat in 2026 compared to 2025.

Research and development expenses may increase over the longer term due to a variety of factors, including if our future clinical trials are successful and if we expand our research and development efforts.

Cost increases, if they occur, would be driven in large part by advancing our current and future product candidates into and through clinical trials;

identifying additional product candidates;

continuing to establish our manufacturing capabilities, including through third-party CDMOs and our internal manufacturing capabilities;

continuing to establish our manufacturing capabilities, including through CDMOs;

initiating and advancing preclinical development of our current and future product candidates;

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A change in the outcome of any of these factors could result in a significant change in the costs and timing associated with the development of our product candidates.

In addition, recent and potential future developments in international trade, including tariffs imposed on imports from other countries, could cause unanticipated increases in our research and development costs, primarily through increased CDMO costs and costs of our laboratory and manufacturing supplies, and we may not be able to accurately forecast their impacts on our business.

Research and development related success payments and contingent consideration

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General and administrative

General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation for our employees in finance, legal, executive, human resources, and information technology functions, legal and consulting fees, insurance fees, restructuring expenses, and facility costs not otherwise included in research and development expenses.

Legal fees include those related to corporate and patent matters.

General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation for our employees in finance, legal, executive, human resources, and information technology functions, legal and consulting fees, insurance fees, and facility costs not otherwise included in research and development expenses.

Legal fees include those related to corporate, patent, and litigation matters.

Included in general and administrative expenses for the year ended December 31, 2023, are costs incurred for the early termination of the lease (Fremont lease) for our previously planned manufacturing facility in Fremont, California (Fremont facility).

As a result of our portfolio prioritization and associated workforce reduction commenced in November 2024, we expect our general and administrative expenses to decrease in 2025 compared to 2024.

Excluding any one-time items, we expect our general and administrative expenses to be materially flat in 2026 compared to 2025.

General and administrative expenses may increase over the longer term to support potential expanded research and development activities.

Impairment of long-lived assets

Impairment of long-lived assets in 2025 consists of non-cash losses recognized for the impairment of the right-of-use (ROU) asset, construction in progress, and laboratory equipment for our manufacturing facility in Bothell, Washington (the Bothell facility), and the ROU asset, leasehold improvements, and laboratory equipment for certain office and laboratory space in Seattle, Washington (the Seattle facility).

We also recognized additional non-cash impairment losses for other long-lived assets.

The losses were recorded in operating expenses in the statement of operations in the second quarter of 2025.

Impairment of long-lived assets in 2024 and 2023 consists of non-cash losses recognized for the impairment of certain laboratory equipment and leasehold improvements as a result of the portfolio prioritizations in 2024 and 2023.

Refer to Note 11, Impairment of long-lived assets to our consolidated financial statements included elsewhere in this Annual Report for details on the impairment.

Results of operations

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General and administrative

Impairment of long-lived assets

Total operating expenses

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Interest income, net

Other expense, net

Other income (expense), net

Research and development expenses

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(in thousands)

Research and laboratory

Third-party manufacturing

Research, development, and laboratory

Facility and other allocated costs

Impairment of lab equipment and leasehold improvements

Clinical development

Third-party manufacturing

Total research and development expense

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The decrease of $83.7 million was primarily due to:

• a decrease of $20.6 million in research expenses primarily due to lower research and development activities;

• a net decrease of $20.1 million in personnel-related expenses due to lower research and development headcount related to the portfolio prioritizations in the fourth quarters of 2023 and 2024;

• a decrease of $9.7 million in third-party manufacturing costs for CDMOs;

• a decrease of $5.8 million in facility and other allocated costs;

• a decrease of $5.1 million for impairment of lab equipment and leasehold improvements recorded in 2024 compared to 2023.

These decreases were partially offset by an increase of $11.8 million in clinical development costs.

• a decrease of $32.3 million in personnel-related expenses due to lower research and development headcount primarily related to the portfolio prioritization in the fourth quarter of 2024;

• a decrease of $31.0 million in research, development, and laboratory expenses primarily due to reduced scope of research and development activities related to the portfolio prioritization in the fourth quarter of 2024;

• a decrease of $14.1 million in facility and other allocated costs primarily due to the portfolio prioritization in the fourth quarter of 2024;

• a decrease of $3.6 million in third-party manufacturing costs at CDMOs.

Research and development related success payments and contingent consideration

The following table summarizes the gains associated with research and development related success payments and contingent consideration for the periods presented:

The following table summarizes the expenses and gains associated with research and development related success payments and contingent consideration for the periods presented:

Year Ended December 31,

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Total research and development related success payments and contingent consideration

The gains related to the change in the estimated fair value of our Cobalt Success Payment were $6.9 million and $7.9 million for the years ended December 31, 2024 and 2023, respectively.

The changes in value were primarily due to changes in our market capitalization during the relevant periods, and for 2023, the reduction of our near-term investment in our fusogen program in connection with our portfolio prioritization in the fourth quarter of 2023.

The gains related to the change in the estimated fair value of our Harvard Success Payments were $1.3 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.

The expense related to the change in the estimated fair value of our Cobalt Success Payment was $13.6 million compared to a gain of $6.9 million for the years ended December 31, 2025 and 2024, respectively.

The changes in value were primarily due to changes in our market capitalization during the relevant periods.

The expense related to the change in the estimated fair value of our Harvard Success Payments was $1.1 million compared to a gain of $1.3 million for the years ended December 31, 2025 and 2024, respectively.

The changes in value were primarily due to changes in our common stock price during the relevant periods.

The gains related to the change in the estimated fair value of our Cobalt Contingent Consideration were $0.6 million and $40.8 million for the years ended December 31, 2024 and 2023, respectively.

The expense related to the change in the estimated fair value of our Cobalt Contingent Consideration was $14.7 million compared to a gain of $0.6 million for the years ended December 31, 2025 and 2024, respectively.

The changes in value were due primarily to changes in the timing and probability of the achievement of milestones during the relevant periods and the discount rates used in the calculations.

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General and administrative expenses were $44.3 million and $64.0 million for the years ended December 31, 2025 and 2024, respectively.

The decrease of $9.3 million was primarily due to a decrease in legal fees of $3.1 million, a loss on lease termination of $2.7 million associated with the Fremont facility recorded in 2023, a decrease in personnel costs of $2.6 million, a decrease in facility costs of $1.9 million, and a decrease in insurance and consulting fees of $1.1 million.

These decreases were partially offset by an increase in non-cash stock-based compensation of $2.0 million.

The decrease of $19.7 million was primarily due to a decrease in personnel costs, including non-cash stock-based compensation of $9.5 million, costs of $5.5 million incurred in 2024 related to the portfolio prioritization in the fourth quarter of 2024 that did not recur in 2025, a decrease in legal fees of $1.9 million, and a decrease in consulting fees of $1.6 million.

Impairment of long-lived assets

Impairment of long-lived assets was $44.6 million and $1.9 million for the years ended December 31, 2025 and 2024, respectively.

See Note 11, Impairment of long-lived assets to our consolidated financial statements included elsewhere in this Annual Report for details on the impairments.

Interest income, net

Interest income, net, was $3.8 million and $10.5 million for the years ended December 31, 2025 and 2024, respectively, and consisted primarily of interest earned on our cash and marketable securities balances.

Other expense, net

Other expense, net, was $4.5 million and immaterial for the years ended December 31, 2024 and 2023, respectively.

The change in value of $4.5 million was due to other-than-temporary impairments of other assets.

Other income (expense), net

Other income, net, was $2.3 million and other expense, net, was $4.5 million for the years ended December 31, 2025 and 2024, respectively.

The change in value of $6.8 million was due to cash received in 2025 related to the sale of equipment and other-than-temporary impairments of other assets recorded in 2024 that did not recur in 2025.

Comparison of the years ended December 31, 2024 and 2023

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General and administrative

Impairment of long-lived assets

Total operating expenses

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(in thousands)

Research, development, and laboratory

Research and laboratory

Third-party manufacturing

Licensing of technology

Impairment of lab equipment and leasehold improvements

Facility and other allocated costs

Clinical development

Total research and development expense

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The decrease of $46.1 million was primarily due to:

• a decrease of 10.3 million in research and laboratory costs, primarily due to our portfolio prioritizations in 2022 and 2023, partially offset by an increase in clinical development costs as more programs moved into the clinic;

• a decrease of $7.1 million in third-party manufacturing costs for CDMOs, including pass-through costs for materials;

• a decrease of $5.8 million in costs to license technology for our CD22 and BCMA programs;

• a decrease of $4.3 million in personnel-related costs, including $3.3 million in non-cash stock-based compensation expense.

These decreases were partially offset by $7.0 million for the impairment of certain lab equipment and leasehold improvements, primarily related to the portfolio prioritization in October 2023.

• a decrease of $20.6 million in research and laboratory expenses primarily due to reduced scope of research and development activities;

• a decrease of $20.1 million in personnel-related expenses due to reduced scope of research and development activities related to the portfolio prioritizations in the fourth quarters of 2024 and 2023;

• a decrease of $9.7 million in third-party manufacturing costs for CDMOs;

• a decrease of $5.8 million in facility and other allocated costs.

These decreases were partially offset by an increase of $11.8 million in clinical development costs.

Research and development related success payments and contingent consideration

The following table summarizes the expenses (gains) associated with research and development related success payments and contingent consideration for the periods presented:

The following table summarizes the gains associated with research and development related success payments and contingent consideration for the periods presented:

Year Ended December 31,

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The gains related to the change in the estimated fair value of our Cobalt Contingent Consideration were $0.6 million and $40.8 million for the years ended December 31, 2024 and 2023, respectively.

The changes in value were primarily due to the reduction of our near-term investment in our fusogen programs, including delaying the IND for SG299, which impacted the timing and probability of the achievement of milestones.

The changes in value were primarily due to changes in the timing and probability of the achievement of milestones during the relevant periods and the discount rates used in the calculations.

General and administrative expenses

General and administrative expenses were $64.0 million and $73.3 million for the years ended December 31, 2024 and 2023, respectively.

The increase of $1.7 million was primarily due to an increase in patent and other legal fees of $4.3 million, a loss on lease termination of $2.7 million associated with the Fremont facility, and increased facility costs of $1.0 million.

These increases were partially offset by the write-off of $4.5 million of construction in progress costs in 2022 for the Fremont facility and a decrease of $2.1 million in insurance costs.

These decreases were partially offset by an increase in non-cash stock-based compensation of $2.0 million.

Impairment of long-lived assets

Impairment of long-lived assets was $1.9 million and $7.0 million for the years ended December 31, 2024 and 2023, respectively.

See Note 11, Impairment of long-lived assets to our consolidated financial statements included elsewhere in this Annual Report for details on the impairments.

Interest income, net

Interest income, net, was $10.5 million and $9.9 million for the years ended December 31, 2024 and 2023, respectively, and consisted primarily of interest earned on our cash and marketable securities balances.

Other expense, net

Other expense, net, was $4.5 million and immaterial for the years ended December 31, 2024 and 2023, respectively.

The change in value of $4.5 million was due to other-than-temporary impairments of other assets.

Liquidity, capital resources, and capital requirements

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As of December 31, 2025, we had $138.4 million in cash, cash equivalents, and marketable securities.

To date we have raised an aggregate of approximately $1.5 billion in net proceeds from sales of common stock and private placements of our convertible preferred stock.

In February 2024, we completed an underwritten public offering pursuant to which we sold 21.8 million shares of our common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of our common stock for net proceeds of approximately $180.0 million, after deducting underwriting discounts and commissions and offering expenses.

In August 2022, we entered into a sales agreement with Cowen, acting as sales agent, pursuant to which we may offer and sell through Cowen, up to $150.0 million in shares of our common stock under the ATM facility.

To date, we have sold an aggregate of 4.9 million shares of our common stock under the ATM facility for net proceeds of $28.6 million, after deducting commissions and expenses.

Since inception through December 31, 2025, we have raised an aggregate of approximately $1.7 billion in net proceeds from sales of our equity securities.

In March 2026, we entered into the Sales Agreement, pursuant to which we may offer and sell shares of our common stock from time to time under the ATM facility.

The Sales Agreement amends and restates the Prior Sales Agreement.

In August 2025, we completed the Offering, pursuant to which we sold 24.3 million shares of our common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of our common stock for net proceeds of approximately $80.6 million, after deducting underwriting discounts and commissions and offering expenses.

Since our inception, we have not generated any revenue from product sales or any other sources, and we have incurred significant operating losses.

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Future funding requirements

We expect to incur additional losses for the foreseeable future as we conduct our research and development efforts, including conducting clinical trials and preclinical studies, developing new product candidates, continuing to establish internal and external manufacturing capabilities, and funding our operations generally.

We expect to incur additional losses for the foreseeable future as we conduct our research and development efforts, including conducting preclinical studies and clinical trials, developing new product candidates, continuing to establish our external manufacturing capabilities, and funding our operations generally.

We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.

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We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

If we are unable to obtain such financing, we may be required to significantly modify our operational plans by delaying, reducing the scope of, or ceasing our research and development programs.

Our future capital requirements will depend on many factors, including:

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• the costs, timing, and outcome of regulatory review of our current or future product candidates and any companion diagnostics to such product candidates;

• the cost, timing, and scope of our manufacturing capabilities, as well as costs associated with the manufacturing of clinical and commercial supplies of our current and future product candidates;

• the cost, timing, and scope of our manufacturing capabilities and our uses of our existing facilities, as well as costs associated with the manufacturing of clinical and commercial supplies of our current and future product candidates;

• the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval;

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In the event that additional financing is required, we may not be able to raise it on terms that are acceptable to us or at all.

Our ability to raise additional financing may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from public health crises, the escalation in conflict in Ukraine and the Middle East, or other regions, changes in inflation, interest rate uncertainty, disruptions in global trade caused by political tensions and conflicts between countries, and other factors creating market risk.

Our ability to raise additional financing may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from public health crises, the conflicts in Ukraine and the Middle East, or other regions, changes in inflation, interest rate uncertainty, disruptions in global trade caused by political tensions and conflicts between countries, and other factors creating market risk.

Bank failures have also caused increased concerns about liquidity in the broader financial services industry, and our business, business partners, or industry as a whole may be adversely impacted in ways that we cannot predict at this time.

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If we raise funds through strategic collaborations or licensing or other arrangements, we may have to relinquish significant rights or grant licenses on terms that are not favorable to us.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from various factors beyond our control.

If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected.

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During the year ended December 31, 2025, net cash used in operating activities was $143.8 million, consisting primarily of net loss of $244.2 million and the change in net operating assets and liabilities of $10.1 million, offset by non-cash charges of $110.5 million.

The non-cash charges of $44.8 million consisted of non-cash stock-based compensation expense of $37.7 million and depreciation expense of $17.4 million, offset by gains of $8.2 million and $0.6 million for revaluation of our success payment liabilities and contingent consideration, respectively, and other non-cash charges of $1.5 million.

During the year ended December 31, 2023, net cash used in operating activities was $253.6 million, consisting primarily of net loss of $283.3 million, the change in net operating assets and liabilities of $18.6 million, and non-cash charges of $11.1 million.

The non-cash charges of $11.1 million consisted of non-cash stock-based compensation expense of $35.5 million and depreciation expense of $24.6 million, which includes $7.0 million for the impairment of certain lab equipment and leasehold improvements which were primarily related to the portfolio prioritization in the fourth quarter of 2023, partially offset by gains of $40.8 million and $8.2 million for revaluation of our success payment liabilities and contingent consideration, respectively.

During the year ended December 31, 2022, net cash used in operating activities was $290.1 million, consisting primarily of net loss of $269.5 million, the change in net operating assets and liabilities of $7.5 million, and non-cash charges of $28.1 million.

The non-cash charges of $28.1 million consisted of gains of $81.5 million and $3.4 million for revaluation of our success payment liabilities and contingent consideration, respectively, non-cash stock-based compensation expense of $38.3 million, depreciation expense of $15.6 million, and other non-cash charges of $2.9 million.

The non-cash charges of $110.5 million consisted of $44.6 million for impairment of long-lived assets, non-cash stock-based compensation expense of $25.5 million, $14.7 million for the revaluation of our contingent consideration, $14.7 million for the revaluation of our success payment liabilities, and depreciation expense of $12.8 million, partially offset by other non-cash charges of $1.8 million.

During the year ended December 31, 2024, net cash used in operating activities was $223.2 million, consisting primarily of net loss of $266.8 million and the change in net operating assets and liabilities of $1.2 million, offset by non-cash charges of $44.8 million.

The non-cash charges of $44.8 million consisted of non-cash stock-based compensation expense of $37.7 million, depreciation expense of $15.5 million, and $1.9 million for the impairment of certain laboratory equipment and leasehold improvements which were primarily related to the portfolio prioritization in the fourth quarter of 2024, offset by gains of $8.2 million and $0.6 million for revaluation of our success payment liabilities and contingent consideration, respectively, and other non-cash charges of $1.5 million.

During the year ended December 31, 2023, net cash used in operating activities was $253.6 million, consisting primarily of net loss of $283.3 million, offset by the change in net operating assets and liabilities of $18.6 million and non-cash charges of $11.1 million.

The non-cash charges of $11.1 million consisted of non-cash stock-based compensation expense of $35.5 million, depreciation expense of $17.6 million, and $7.0 million for the impairment of certain laboratory equipment and leasehold improvements which were primarily related to the portfolio prioritization in the fourth quarter of 2023, partially offset by gains of $40.8 million and $8.2 million for revaluation of our success payment liabilities and contingent consideration, respectively.

Investing activities

Cash provided by investing activities was $17.5 million, $172.0 million, and $210.6 million during the years ended December 31, 2024, 2023, and 2022, respectively.

For the years ended December 31, 2024, 2023, and 2022, this consisted of net purchases and maturities of marketable securities of $50.9 million, $192.0 million, and $231.5 million, respectively, offset by the purchase of property and equipment of $33.4 million, $20.0 million, and $20.9 million, respectively.

Cash used in investing activities was $40.2 million for the year ended December 31, 2025, and cash provided by investing activities was $17.5 million, and $172.0 million during the years ended December 31, 2024, and 2023, respectively.

For the year ended December 31, 2025, this consisted of net purchases and maturities of marketable securities of $40.7 million, offset by net sales of property and equipment of $0.5 million.

For the years ended December 31, 2024 and 2023, this consisted of net maturities of marketable securities of $50.9 million and $192.0 million, respectively, offset by the purchase of property and equipment of $33.4 million and $20.0 million, respectively.

Financing activities

During the year ended December 31, 2024, cash provided by financing activities was $199.7 million, consisting primarily of net proceeds from issuance of common stock of $181.0 million, $11.0 million in proceeds from our employee stock purchase program and the exercise of stock options, and net proceeds of $7.7 million from a loan to fund tenant improvements for our manufacturing facility in Bothell, Washington.

During the year ended December 31, 2025, cash provided by financing activities was $128.7 million, consisting primarily of net proceeds from issuance of common stock of $126.4 million and $2.6 million in proceeds from our employee stock purchase program and the exercise of stock options, partially offset by net principal payments of $0.3 million from a loan to fund tenant improvements for the Bothell facility.

During the year ended December 31, 2023, cash provided by financing activities was $31.6 million, consisting primarily of net proceeds from issuance of common stock of $27.0 million and $4.6 million in proceeds from our employee stock purchase program and the exercise of stock options.

During the year ended December 31, 2022, cash provided by financing activities was $4.9 million, consisting primarily of proceeds from our employee stock purchase program and the exercise of stock options.

Contractual obligations and commitments

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As of December 31, 2025, the estimated aggregate fair value of the success payment liabilities was $19.2 million.

For the twelve months ended December 31, 2024, we recorded a gain of $8.2 million related to the aggregate change in the estimated fair value of our success payment liabilities.

For the twelve months ended December 31, 2025, we recorded an expense of $14.7 million related to the aggregate change in the estimated fair value of our success payment liabilities.

Changes in our market capitalization and the fair value of our common stock as of each balance date may have a relatively large change in the estimated valuation of the success payment liabilities and resulting expense or gain.

For example, for the Cobalt Success Payment, keeping all other variables constant, a hypothetical 20% increase in our market capitalization as of December 31, 2024 from $365.0 million to $438.0 million would have decreased the gain recorded in the year ended December 31, 2024 by $1.1 million to $8.1 million.

A hypothetical 20% decrease in our market capitalization from $365.0 million to $292.0 million would have increased the gain recorded in the year ended December 31, 2024 by $1.0 million to $10.2 million.

For the Harvard Success Payments, keeping all other variables constant, a hypothetical 20% increase in our common stock price as of December 31, 2024 from $1.63 per share to $1.96 per share would have decreased the gain recorded in the year ended December 31, 2024 by $0.1 million to $1.2 million.

A hypothetical 20% decrease in the common stock price from $1.63 per share to $1.30 per share would have increased the gain recorded in the year ended December 31, 2024 by $0.1 million to $1.4 million.

For example, for the Cobalt Success Payment, keeping all other variables constant, a hypothetical 20% increase in our market capitalization as of December 31, 2025 from $1.1 billion to $1.3 billion would have increased the expense recorded in the three months ended December 31, 2025 by $4.7 million to $9.8 million.

A hypothetical 20% decrease in our market capitalization from $1.1 billion to $0.9 billion would have decreased the expense recorded in the three months ended December 31, 2025 by $4.4 million to $0.7 million.

For the Harvard Success Payments, keeping all other variables constant, a hypothetical 20% increase in our common stock price as of December 31, 2025 from $4.07 per share to $4.88 per share would have increased the expense recorded in the three months ended December 31, 2025 by $0.5 million to $0.9 million.

A hypothetical 20% decrease in the common stock price from $4.07 per share to $3.26 per share would have decreased the expense recorded in the three months ended December 31, 2025 by $0.5 million to a gain of $0.1 million.

Foreign currency sensitivity

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Operating lease liabilities

Contingent consideration

Total current liabilities

Operating lease liabilities, net of current portion

Contingent consideration

Contingent consideration, net of current portion

Success payment liabilities

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Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

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General and administrative

Impairment of long-lived assets

Total operating expenses

1 unchanged sentence

Interest income, net

Other expense, net

Other income (expense), net

Net loss per common share – basic and diluted

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Year Ended December 31,

Other comprehensive income (loss):

Unrealized gain (loss) on marketable securities, net

Other comprehensive income:

Unrealized gain on marketable securities, net

Total comprehensive loss

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Stock-based compensation expense

Unrealized loss on marketable securities, net

Unrealized gain on marketable securities, net

Balance as of December 31, 2023

Issuance of common stock from at the market offering, net of issuance costs of $ 158

Issuance of common stock from follow-on offering and accompanying pre-funded warrants, net of issuance costs of $ 9,741

Vesting of restricted stock

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Issuance of common stock from at the market offering, net of issuance costs of $ 1,598

Issuance of common stock from follow-on offering and accompanying pre-funded warrants, net of issuance costs of $ 9,741

Issuance of common stock from common stock financings and accompanying pre-funded warrants, net of issuance costs of $ 5,625

Exercise of pre-funded warrants

Vesting of restricted stock

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

Depreciation and impairment of long-lived assets

Stock-based compensation expense

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Non-cash expense for operating lease right-of-use assets

Impairment of long-lived assets

Other non-cash items, net

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Purchases of property and equipment

Net cash provided by investing activities

Proceeds from disposal of assets

Net cash provided by (used in) investing activities

FINANCING ACTIVITIES:

Proceeds from employee stock purchase plan and exercise of stock options

Proceeds from issuance of common stock from equity financings, net

Proceeds from tenant improvement loan, net

Proceeds related to common stock financings, net

Proceeds (principal payments), net for tenant improvement loan

Net cash provided by financing activities

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Restricted cash

Long-term restricted cash

Total cash, cash equivalents, and restricted cash

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Cash received for tenant improvement allowances

Derecognition of operating lease right-of-use asset for lease termination

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

Derecognition of operating lease right-of-use assets for lease termination and modification

See accompanying notes.

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Liquidity and capital resources

The Company is subject to a number of risks and uncertainties similar to other biotechnology companies in the development stage, including, but not limited to, those related to the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, building out internal and external manufacturing capabilities, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, the need to protect the Company’s intellectual property and proprietary technologies, and the need to attract and retain key scientific and management personnel.

The Company is subject to a number of risks and uncertainties similar to other biotechnology companies in the development stage, including, but not limited to, those related to the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, building its manufacturing capabilities, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, the need to protect the Company’s intellectual property and proprietary technologies, and the need to attract and retain key scientific and management personnel.

If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability.

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In the event that additional financing is required, the Company may not be able to raise capital on terms acceptable to it or at all.

In March 2026, the Company entered into an amended and restated sales agreement (the Sales Agreement) with TD Securities (USA) LLC (TD Cowen), acting as sales agent, pursuant to which it may offer and sell through TD Cowen shares of the Company's common stock from time to time in a series of one or more at the market equity offerings.

The Company initially intends to offer and sell up to $150.0 million of shares of the Company's common stock under the Sales Agreement pursuant to a prospectus supplement to be filed with the SEC (collectively, the ATM facility).

The Sales Agreement amends and restates the Company's prior sales agreement with TD Cowen entered into in May 2025 (the Prior Sales Agreement).

During the quarter and year ended December 31, 2025, the Company sold an aggregate of 3.9 million shares and 11.3 million shares of the Company's common stock, respectively, under the Prior Sales Agreement, for net proceeds of approximately $ 17.0 million and $ 45.8 million, respectively, after deducting commissions and expenses.

In August 2025, the Company completed an underwritten public offering pursuant to which it sold 24.3 million shares of its common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of its common stock for net proceeds of approximately $ 80.6 million, after deducting underwriting discounts and commissions and offering expenses.

In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock for net proceeds of approximately $ 180.0 million, after deducting underwriting discounts and commissions and offering expenses.

In August 2022, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), acting as sales agent, pursuant to which it may offer and sell through Cowen up to $ 150.0 million in shares of the Company’s common stock from time to time in a series of one or more at the market equity offerings (collectively, the ATM facility).

As of December 31, 2024, the Company sold an aggregate of 4.9 million shares of the Company's common stock under the ATM facility for net proceeds of $ 28.6 million, after deducting commissions and expenses.

In November 2024, the Company announced a portfolio prioritization to prioritize clinical and preclinical development in type 1 diabetes, B-cell mediated autoimmune diseases, refractory B-cell malignancies, and the fusogen platform for generating in vivo CAR T cells.

The Company suspended development of SC291, the Company's HIP-modified CD19 allogeneic CAR T therapy, in oncology and SC379, its glial progenitor cell program, as it seeks partnerships for these programs.

The portfolio prioritization resulted in a workforce reduction of approximately 45 %.

During the year ended December 31, 2024, the Company recognized $ 5.8 million of cash-based expenses related to employee severance, benefits, and related costs.

The Company anticipates that the portfolio update and associated workforce reduction will be substantially complete in the first quarter of 2025.

The Company has incurred operating losses each year since inception and expects such losses to continue for the foreseeable future.

As of December 31, 2025, the Company had cash, cash equivalents, and marketable securities of $ 138.4 million, and an accumulated deficit of $ 1.8 billion, which includes cumulative non-cash charges related to the revaluation of the success payment liabilities and contingent consideration of $ 16.8 million and $ 72.5 million, respectively.

Management has determined that the Company's current capital resources may not be sufficient to fund its planned operations for at least one year from the date of this Annual Report, and there is substantial doubt as to the Company's ability to continue as a going concern .

Management has determined that the Company's current c apital resources may not be sufficient to fund its planned operations for at least one year from the date of this Annual Report, and there is substantial doubt as to the Company's ability to continue as a going concern .

The Company's ability to continue as a going concern will depend on, among other things, its ability to obtain additional funding and appropriately manage the amount of cash used to fund its operations.

The Company plans to address this condition through proceeds from additional equity or debt financings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

If the Company is unable to obtain such financing, it may be required to modify its operational plans by delaying, reducing the scope of, or ceasing its research and development programs.

The Company plans to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

If the Company is unable to obtain such financing, it may be required to pursue alternative sources of capital which may not be available to it on favorable terms, significantly modify its operational plans by delaying, reducing the scope of, or ceasing some or all of its research and development programs, or pursue strategic alternatives.

Summary of significant accounting policies

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When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is recorded in research and development expenses in the period realized.

During the fourth quarters of 2024 and 2023, the Company recognized $ 1.9 million and $ 7.0 million, respectively, in research and development expenses for the impairment of certain lab equipment and leasehold improvement as a result of the portfolio prioritization s in the fourth quarters of 2024 and 2023.

Repairs and maintenance are expensed as incurred.

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The Company reviews the carrying value and estimated lives of its long-lived assets whenever events or circumstances indicate the carrying values may not be recoverable.

Should an impairment exist, the impairment loss would be measured based on the excess of the asset’s carrying amount over its fair value.

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

If a change in circumstance occurs that indicates long-lived assets may be impaired, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows.

The long-lived asset evaluation is performed at the asset group level, which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

If this review indicates that the carrying amount of the asset group may not be recoverable, an impairment loss is measured as the amount by which the carrying amount of an asset group exceeds its estimated fair value.

To measure impairment, the Company uses market participant assumptions to determine the estimated fair value of the asset based on anticipated future cash flows.

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

Calculating the fair value of a reporting unit, an asset group, and an individual asset involves significant estimates and assumptions.

These estimates and assumptions include, among others, projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.

Changes in these factors and assumptions used can materially affect the amount of impairment loss recognized in the period the asset was impaired.

Impairment of long-lived assets was $ 44.6 million for the year ended December 31, 2025.

The non-cash impairment, recorded in the second quarter of 2025, was primarily related to Sana’s manufacturing facility in Bothell, Washington and certain laboratory and office space in Seattle, Washington.

During the fourth quarters of 2024 and 2023, the Company recognized $ 1.9 million and $ 7.0 million, respectively, for the impairment of certain laboratory equipment and leasehold improvements as a result of the portfolio prioritizations in the fourth quarters of 2024 and 2023, previously included in research and development expense in the statement of operations.

The Company accounts for business combinations using the acquisition method of accounting, which requires the assets acquired, including in-process research and development (IPR&D), and liabilities assumed be recorded at fair value as of the acquisition date.

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Pursuant to the terms and conditions of the Cobalt acquisition agreement, we are obligated to pay to certain former Cobalt stockholders contingent consideration (Cobalt Contingent Consideration).

See Note 4, Acquisitions for more details on the Cobalt Consideration.

See Note 4, Acquisitions for more details on the Cobalt Contingent Consideration.

Success payments

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Claims and contingencies

From time to time, the Company may become involved in litigation and proceedings relating to claims arising in the ordinary course of business.

From time to time, the Company has and may in the future become involved in litigation and proceedings relating to claims arising in the ordinary course of business.

The Company accrues a liability if the likelihood of an adverse outcome is probable, and the amount can be reasonably estimated.

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Legal fees include those related to corporate and patent matters.

Included in general and administrative expenses for the year ended December 31, 2023 are costs incurred for the early termination of the Company's lease (Fremont lease) for its previously planned manufacturing facility in Fremont, California (Fremont facility).

The Company determines its deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

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however, the Company may adopt new or revised accounting standards early if the standard allows for early adoption.

In addition, the Company will utilize other exemptions and reduced reporting requirements provided to EGCs by the JOBS Act.

In addition, the Company will utilize other exemptions and reduced reporting requirements provided to EGCs by the JOBS Act until the Company no longer qualifies as an EGC.

Subject to certain conditions set forth in the JOBS Act, an EGC is not required to, among other things, (i) provide an auditor’s attestation report on the company’s system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, (ii) provide all of the compensation disclosure that may be required of non-EGC public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), or (iv) disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

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Unless otherwise discussed, the Company does not believe that the adoption of any recently issued standards has had or may have a material impact on its consolidated financial statements or disclosures.

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures.

The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment, among other disclosure requirements.

The Company adopted the guidance in the fiscal year 2024.

In November 2024, the FASB issued ASU 2024-03 Income Statement (Subtopic 220-40) Reporting Comprehensive Income – Expense Disaggregation Disclosures, which requires disclosure of disaggregated information about specific income statement expense categories.

This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

Early adoption is permitted.

There was no impact on the Company's reportable segment identified and additional required disclosures have been included in Note 3, Segment reporting, to the Company's consolidated financial statements included in this Annual Report.

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Early adoption is permitted.

The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

There was no material impact and the additional required disclosures have been included in Note 13, Income taxes, to the Company's consolidated financial statements included in this Annual Report.

Segment reporting

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Operating expenses:

Research and laboratory

Technical operations and manufacturing

Clinical development

Research, development, and laboratory

Facility costs

1 unchanged sentence

Stock-based compensation

Technical operations and manufacturing

Portfolio prioritization costs

Research and development related success payments and contingent consideration

Impairment of long-lived assets

Total operating expenses

1 unchanged sentence

Interest income, net

Other expense, net

(1) Other segment expenses includes licensing costs, consulting fees, business taxes, insurance costs, impairment of certain lab equipment and leasehold improvements for the years ended December 31, 2024 and 2023, and costs incurred for the early termination of the Fremont lease for the year ended December 31, 2023.

Other income (expense), net

(1) Other segment expenses include licensing costs, consulting fees, business taxes, and insurance costs for the years ended December 31, 2025, 2024, and 2023, and costs incurred for the early termination of the Fremont lease for the year ended December 31, 2023.

Cobalt Biomedicine, Inc.

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Amortization will begin when regulatory approval of a product candidate developed using the fusogen technology is obtained in a major market, typically either the United States or the European Union.

The Company recognized $ 140.6 million of goodwill as a result of the Cobalt acquisition, which is primarily attributable to the value the acquisition provides the Company by complementing the Company’s ex vivo portfolio with in vivo fusogen cell engineering technology and furthering the Company’s research in using engineered cells as medicines.

The Company recognized $ 140.6 million of goodwill as a result of the Cobalt acquisition, which is primarily attributable to the value the acquisition provides the Company by complementing the Company’s ex vivo cell therapy technology with in vivo fusogen cell engineering technology and furthering the Company’s research in using engineered cells as medicines.

The goodwill is not deductible for income tax purposes.

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As of December 31, 2025 and 2024, the estimated fair value of the Cobalt Success Payment liability was $ 17.9 million and $ 4.2 million, respectively, and was recorded in long-term liabilities.

In connection with the change in estimated fair value of the Cobalt Success Payment, the Company recognized gains of $ 6.9 million, $ 7.9 million, and $ 69.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2024 and 2023, the estimated fair value of the Cobalt Contingent Consideration was $ 109.0 million and $ 109.6 million, respectively, and was recorded in long-term liabilities.

In connection with the change in estimated fair value of the Cobalt Contingent Consideration, the Company recognized gains of $ 0.6 million, $ 40.8 million, and $ 3.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.

In connection with the change in estimated fair value of the Cobalt Success Payment, the Company recognized an expense of $ 13.6 million compared to gains of $ 6.9 million and $ 7.9 million for the years ended December 31, 2025, 2024, and 2023, respectively.

As of December 31, 2025, the estimated fair value of the Cobalt Contingent Consideration was $ 123.7 million, of which $ 40.2 million was recorded in short-term liabilities and $ 83.5 million was recorded in long-term liabilities.

As of December 31, 2024, the estimated fair value of the Cobalt Contingent Consideration was $ 109.0 million, and was recorded in long-term liabilities.

In connection with the change in estimated fair value of the Cobalt Contingent Consideration, the Company recognized an expense of $ 14.7 million compared to gains of $ 0.6 million and $ 40.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.

License and collaboration agreements

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In October 2021, the Company entered into an option and license agreement with Beam Therapeutics Inc.

(Beam), pursuant to which the Company was granted a non-exclusive license to use Beam’s proprietary CRISPR Cas12b nuclease editing technology to research, develop, and commercialize engineered cell therapy products that (i) are directed to certain antigen targets, with respect to the Company’s allogeneic T cell programs, or (ii) comprise certain human cell types, with respect to the Company’s stem cell-derived programs.

(Beam), pursuant to which the Company was granted a non-exclusive license to use Beam’s proprietary CRISPR Cas12b nuclease editing technology to research, develop, and commercialize engineered cell therapy products that (i) are directed to certain antigen targets, with respect to allogeneic T cell products, or (ii) comprise certain human cell types, with respect to stem cell-derived products.

The Company made an upfront payment of $ 50.0 million to Beam, which was recorded in research and development expense for the year ended December 31, 2021.

Additionally, under the terms of the agreement, the Company may be obligated to pay up to $ 65.0 million in specified developmental and commercial milestone payments and royalties on licensed products for each licensed product.

Additionally, under the terms of the agreement, the Company may be obligated to pay, with respect to each licensed product, up to $ 65.0 million in specified developmental and commercial milestone payments as well as royalties.

At the time of the entry into the option and license agreement, a member of the Company’s board of directors was a beneficial owner of greater than 10 % of the outstanding shares of Beam.

This director is also affiliated with a member of the board of directors of Beam.

In 2024, this director was also affiliated with a member of the board of directors of Beam.

President and Fellows of Harvard College

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The Harvard Success Payment liabilities are carried at fair value, with the initial value and changes in fair value recognized in research and development related success payments and contingent consideration.

As of December 31, 2024 and December 31, 2023, the estimated fair value of the Harvard Success Payment liability was $ 0.3 million and $ 1.6 , respectively, and was recorded in long-term liabilities.

In connection with the change in the estimated fair value of the Harvard Success Payment liability, the Company recognized gains of $ 1.3 million, $ 0.3 million, and $ 12.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2025 and December 31, 2024, the estimated fair value of the Harvard Success Payment liability was $ 1.4 million and $ 0.3 million, respectively, and was recorded in long-term liabilities.

In connection with the change in the estimated fair value of the Harvard Success Payment liability, the Company recognized an expense of $ 1.1 million compared to gains of $ 1.3 million and $ 0.3 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Restricted cash

The Company maintains standby letters of credit that are collateralized with a bank account at a financial institution in accordance with certain lease agreements.

The aggregate amount of such standby letters of credit was $ 3.8 million as of December 31, 2024 and 2023, respectively.

The aggregate amount of such standby letters of credit was $ 4.2 million and $ 3.8 million as of December 31, 2025 and 2024, respectively.

Fair value measurements

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Financial liabilities:

Short-term financial liabilities:

Contingent consideration

Total short-term financial liabilities

Long-term financial liabilities:

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government and agency securities

Corporate debt securities

Total cash equivalents

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Total financial assets

Financial liabilities:

Long-term financial liabilities:

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Balance as of December 31, 2024

Changes in fair value – expense

Changes in fair value – expense (gain)

Balance as of March 31, 2025

Changes in fair value – gain

Changes in fair value – expense

Balance as of June 30, 2025

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Balance as of September 30, 2025

Changes in fair value – gain

Changes in fair value – expense

Balance as of December 31, 2025

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The Company utilizes significant estimates and assumptions it believes would be made by a market participant in determining the estimated fair value of the Cobalt Contingent Consideration at each balance sheet date.

The fair value of the Cobalt Contingent Consideration was determined by calculating the probability-weighted estimated value of the pre-specified development milestone payments based on the assessment of the likelihood and estimated timing that the milestones would be achieved and the applicable discount rates.

The fair value of the Cobalt Contingent Consideration was determined by calculating the probability-weighted estimated value of the pre-specified development milestone payments, which are payable in cash or stock based on the assessment of the likelihood and estimated timing that the milestones would be achieved and the applicable discount rates.

The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due.

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The estimated fair value of the Cobalt Success Payment and Harvard Success Payment liabilities was determined using a Monte Carlo simulation methodology, which models the estimated fair value of the liability based on several key assumptions, including the expected volatility, remaining term, risk-free interest rate, estimated number and timing of valuation measurement dates on the basis of which payment may be triggered, and, for the Cobalt Success Payment, the Company’s market capitalization, and for the Harvard Success Payments, the per share fair value of the Company’s common stock.

The potential Cobalt Success Payment is payable in cash or stock, and the potential Harvard Success Payments are payable in cash.

The fair values of the Cobalt Success Payments and Harvard Success Payments were calculated using the following unobservable inputs:

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Depreciation expense was $ 12.8 million, $ 15.5 million, and $ 17.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Depreciation expense for the years ended December 31, 2024 and 2023 includes $ 1.9 million and $ 7.0 million, respectively, for the impairment of certain lab equipment and leasehold improvements which were primarily related to the portfolio prioritization s in the fourth quarters of 2024 and 2023.

In the second quarter of 2025, the Company recognized non-cash impairment losses related to construction in progress, laboratory equipment, and leasehold improvements for the Company's manufacturing facility in Bothell, Washington (the Bothell facility) and a portion of the Company's laboratory and office space in Seattle, Washington (the Seattle facility).

The losses were recorded as a reduction in the cost of the assets and related accumulated depreciation in the second quarter of 2025.

Refer to Note 11, Impairment of long-lived assets for further information.

Accrued liabilities

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Accrued professional fees

Accrued property and equipment

Other accrued current liabilities

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Certain leases provide the Company with the right to make tenant improvements, including the addition of laboratory space or build-out of manufacturing capabilities, and include a lease incentive allowance.

In June 2022, the Company entered into a lease agreement for 79,565 square feet of office, laboratory, and manufacturing space located in Bothell, Washington (the Bothell facility).

In June 2022, the Company entered into a lease agreement for 79,565 square feet of office, laboratory, and manufacturing space located in Bothell, Washington.

The initial term of the lease expires in February 2039, with the option to extend the lease for up to three additional five-year terms.

The lease agreement also provides for up to $ 19.9 million for reimbursement of tenant improvements, as well as an additional $ 8.0 million loan for tenant improvements, available at the Company’s election, which the Company would be obligated to repay to the landlord monthly over the initial term of the lease with interest at a rate of 6.5 % per year (the Tenant Improvement Loan).

The Company elected to receive the Tenant Improvement Loan in the second quarter of 2024.

The Company elected to receive the Tenant Improvement Loan in the second quarter of 2024 and is obligated to repay to the landlord monthly over the initial term of the lease with interest at a rate of 6.5 % per year .

As of December 31, 2025, $ 0.4 million was included in accrued expenses and other current liabilities and $ 7.0 million was included in other non-current liabilities.

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In accordance with the lease agreement, the Company has obtained a letter of credit in the amount of $ 1.6 million.

In April 2024, the Company amended the terms of certain agreements for its vivarium spaces in Cambridge, Massachusetts and South San Francisco, California, which resulted in these agreements no longer requiring recognition on the balance sheet.

In the second quarter of 2024, the Company derecognized the remaining balances related to the right-of-use asset and lease liability of $ 6.4 million and $ 6.2 million, respectively.

In the second quarter of 2025, the Company recognized non-cash impairment losses for the operating lease ROU asset, construction in progress, and laboratory equipment for the Bothell facility, and for the operating lease ROU asset, leasehold improvements, and laboratory equipment for the Seattle facility.

The Company also recognized additional non-cash impairment losses for other long-lived assets.

Refer to Note 11, Impairment of long-lived assets for further information.

The following table contains additional information related to the Company’s operating leases:

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Operating lease liabilities, net of current portion

Impairment of long-lived assets

As a result of changes in business plans and the Company's intention to pursue potential subleases for the Bothell facility and the Seattle facility, due in part to the Company’s decision to suspend further build-out of its internal manufacturing capabilities at the Bothell facility in the-near term due to increased availability of manufacturing capacity at third-party contract development and manufacturing organizations for cell and gene therapy products, as well as progress in understanding its near-term manufacturing needs, and other factors, the Company determined that during the second quarter of 2025 a triggering event occurred and performed an impairment analysis.

For the Bothell facility, the Company determined that the combined operating lease ROU asset and construction in progress were not fully recoverable as the carrying value exceeded the estimated fair value and recorded a non-cash impairment loss of $ 34.2 million for this asset group.

For the Seattle facility, the Company determined that the combined operating lease ROU asset and leasehold improvements were not fully recoverable as the carrying value exceeded the estimated fair value and recorded a non-cash impairment loss of $ 3.8 million for this asset group.

In addition, in connection with the Bothell facility and the Seattle facility, the Company recognized non-cash impairment losses related to laboratory equipment of $ 3.8 million and $ 2.0 million, respectively.

The Company also recognized an additional $ 0.8 million non-cash impairment loss for other long-lived assets.

The losses were recorded in operating expenses in the statement of operations in the second quarter of 2025.

Stockholders’ equity

In March 2026, the Company entered into the Sales Agreement with TD Cowen, acting as sales agent, pursuant to which it may offer and sell through TD Cowen shares of the Company’s common stock from time to time under the ATM facility.

The Sales Agreement amends and restates the Prior Sales Agreement.

During the quarter and year ended December 31, 2025, the Company sold an aggregate of 3.9 million shares and 11.3 million shares of its common stock, respectively, under the Prior Sales Agreement, for net proceeds of $ 17.0 million and $ 45.8 million, respectively, after deducting commissions and expenses.

The pre-funded warrants have an exercise price of $ 0.0001 per share of common stock.

As the pre-funded warrants are indexed to the Company’s common stock and otherwise meet the requirements to be classified in equity, the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on its consolidated balance sheet.

The pre-funded warrants are exercisable at any time;

however, the holders of pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise.

The holders of pre-funded warrants may increase or decrease such percentages not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company.

The pre-funded warrants do not expire.

During the twelve months ended December 31, 2025, no pre-funded warrants sold in this offering were exercised.

In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock, for net proceeds of approximately $ 180.0 million, after deducting underwriting discounts and commissions and offering expenses.

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The pre-funded warrants do not expire.

During the twelve months ended December 31, 2024, no pre-funded warrants were exercised.

In August 2022, the Company entered into a sales agreement with Cowen, acting as sales agent, pursuant to which it may offer and sell through Cowen up to $ 150.0 million in shares of the Company's common stock from time to time in a series of one or more at the market equity offerings.

As of December 31, 2024, the Company sold an aggregate of 4.9 million shares of the Company's common stock under the ATM facility, and received $ 28.6 million in net proceeds, after deducting commissions and expenses.

During the twelve months ended December 31, 2025, 4.4 million pre-funded warrants sold in this offering were exercised.

Stock-based compensation

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72.5 % – 75.0 %

70.0 % – 72.5 %

Expected term (years)

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Unvested as of December 31, 2025

No RSAs vested during the year ended December 31, 2024.

The fair value of vested RSAs was immaterial for the year ended December 31, 2023, and $ 1.8 million for the year ended December 31, 2022.

The fair value of vested RSUs was $ 6.4 million, $ 1.9 million, and $ 0.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

No RSAs vested during the years ended December 31, 2025 and 2024, and the fair value of RSAs that vested during the year ended December 31, 2023 was immaterial .

The fair value of RSUs that vested during the years ended December 31, 2025, 2024, and 2023 was $ 4.1 million, $ 6.4 million, and $ 1.9 million, respectively.

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

1 unchanged sentence

As of December 31, 2025, the Company also had federal and state research tax credits of $ 64.9 million and $ 30.2 million, respectively, which may be used to offset future liabilities.

The Tax Cuts and Jobs Act enacted on December 22, 2017, altered the carryforward period for federal net operating losses and as a result, all net operating losses generated in 2018 and forward have an indefinite life.

Of the federal net operating losses reported, we have accumulated $ 182.4 million with an indefinite life as of December 31, 2024.

The Tax Cuts and Jobs Act enacted on December 22, 2017, altered the carryforward period for federal NOLs and as a result, all NOLs generated in 2018 and forward have an indefinite life.

Of the federal NOLs reported, we have accumulated $ 243.6 million with an indefinite life as of December 31, 2025.

The state NOL will begin to expire in 2036 .

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Effective income tax rate

The Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures for the year ended December 31, 2025.

Year Ended December 31, 2025

(in thousands)

Federal statutory tax

Valuation allowance

Non-taxable or non-deductible items:

Stock-based compensation

Contingent consideration

Success payment liabilities

Other non-deductible items

Research and development credits

Effective income tax rate

The principal components of the Company’s net deferred tax assets are as follows:

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Net deferred taxes assets

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

Internal Revenue Code, including immediate expensing of domestic research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique.

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

With the enactment of OBBBA, the Company began deducting domestic research and development costs in 2025.

The valuation allowance relates primarily to net U.S.

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The Company will continue to assess the realizability of its deferred tax assets going forward and will adjust the valuation allowance as needed.

As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the rate reconciliation.

The following table presents a reconciliation of the total change in the valuation allowance:

(in thousands)

Beginning balance

Change charged to income tax expense

Ending balance

The Company determines its uncertain tax positions based on a determination of whether and how much of the tax benefit the Company takes in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities.

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Options to purchase common stock

Unvested restricted common stock

Unvested RSUs

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The 401(k) Plan allows employees to make pre- and post-tax contributions up to the maximum allowable amount set by the IRS.

The Company matches each participant’s 401(k) contributions, up to $ 4,000 per year per participant.

The Company matches each participant’s 401(k) contributions in cash, up to $ 4,000 per year per participant through December 31, 2025 and, effective January 1, 2026, up to $ 4,500 per year per participant.

Subsequent event

The Sales Agreement amends and restates the Prior Sales Agreement.

Changes in and Disagreements with Accoun tants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis