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Item 7. Management’s Discussion and Analysis

2026-03-05 compared with 2025-03-27 · 116 added, 90 removed, 181 unchanged (53% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements and related notes appearing in this Annual Report on Form 10-K.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Annual Report on Form 10-K.

This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions.

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Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors.” You should carefully read the “Cautionary Note About Forward-Looking Statements” and “Risk Factors” sections of this Annual Report on Form 10-K to gain an understanding of the important factors that could cause actual results to differ materially from the results described below.

We are a biotechnology company specializing in the development of potential treatments for inflammatory and immune-mediated diseases.

We are developing a potentially first-in-class antibody for the treatment of inflammatory bowel disease ("IBD") and other inflammatory and immune-mediated diseases.

Our expertise in protein engineering and the development of novel tumor necrosis factor ("TNF") receptor therapeutics come together in our lead program, SL-325, which we believe could be a first-in-class death receptor 3 ("DR3") antagonist antibody.

We are a clinical-stage biotechnology company pioneering the development of potentially first-in-class monoclonal and bispecific Death Receptor 3 (“DR3”) blocking antibodies for the treatment of patients with inflammatory and immune-mediated diseases.

Our expertise in protein engineering and the development of novel tumor necrosis factor (“TNF”) receptor therapeutics come together in our lead program, SL-325, a potentially first-in-class DR3 blocking antibody designed to achieve a more complete blockade of the clinically validated DR3/TL1A pathway than TL1A blocking antibodies.

SL-325 is a high-affinity DR3 blocking monoclonal antibody.

DR3 is the sole known receptor for tumor necrosis factor like ligand 1A (“TL1A”).

In our head-to-head preclinical studies, SL-325 blocked TL1A binding to DR3 better than sequence equivalents of leading TL1A blocking antibodies.

We believe that the underlying biological differences in the expression of DR3 and TL1A, and the design characteristics of SL-325, may allow SL-325 to achieve best-in-class clinical remission rates in patients with IBD due to a more complete and durable blockade of the clinically validated DR3/TL1A pathway.

Additionally, we expect that SL-325 has the potential to demonstrate a superior immunogenicity profile in comparison to TL1A blocking antibodies.

By targeting DR3 instead of TL1A, we expect to avoid the formation of immune complexes, which we believe are the primary source of immunogenicity for all TL1A blocking antibodies, and lead to high rates of anti-drug antibody (“ADA”) formation toward TL1A targeting antibodies.

ADA to TL1A targeting antibodies has been shown to reduce efficacy in IBD patients.

We are currently conducting a single ascending dose (“SAD”) and multiple ascending dose (“MAD”) Phase 1 clinical trial evaluating SL-325 in healthy volunteers.

We expect this Phase 1 clinical trial to be completed in the second quarter of 2026.

We expect to initiate a randomized, placebo-controlled Phase 2 clinical trial evaluating SL-325 in patients with Crohn’s Disease (“CD”) in the third quarter of 2026.

TL1A is the sole known signaling ligand for DR3, and TL1A does not signal through any other receptors.

Thus, we believe that the clinical safety profile of TL1A blocking antibodies generated to date in clinical trials conducted by other parties derisks the clinical safety profile for DR3 blockade.

The lack of toxicity of SL-325 in our recently completed non-human primate (“NHP”) toxicology study also suggests a potentially favorable clinical safety profile.

We engineered SL-325 to lack any Fc gamma receptor binding function, and SL-325 has not shown any evidence to date of antibody dependent cellular cytotoxicity or cellular phagocytosis, which further supports a potentially derisked safety profile.

We have demonstrated that SL-325 binds an epitope on DR3 that does not trigger receptor-mediated endocytosis, and the binding of SL-325 to DR3 was

shown to be highly durable in our preclinical assays.

Because DR3 is expressed on circulating, peripheral blood lymphocytes, we are able to directly measure DR3 receptor occupancy (“RO”), and our preclinical studies suggest that blockade may last for at least one month as a result of the properties of SL-325 and the stable expression of DR3.

The RO and pharmacokinetic (“PK”) profile of SL-325 suggests extended dosing intervals, which we intend to further characterize in our upcoming Phase 1 clinical trial.

Finally, the human protein decoy receptor 3 (“DcR3”) neutralizes soluble TL1A, Fas Ligand and LIGHT, which all induce a proinflammatory immune response.

DcR3 serves as a sink for these proteins, tempering the proinflammatory immune signaling.

Thus, it is desirable to block DR3, but not DcR3, to preserve the natural anti-inflammatory role of DcR3.

SL-325 binds to DR3 but not to DcR3.

The lack of toxicity of SL-325 in our recently completed non-human primate (“NHP”) acute toxicology study also suggests a potentially favorable clinical safety profile.

We engineered SL-325 to lack any Fc gamma receptor binding function, and SL-325 has not shown any evidence in our preclinical studies to date of antibody dependent cellular cytotoxicity or cellular phagocytosis, which further supports a potentially derisked safety profile.

We have demonstrated that SL-325 binds an epitope on DR3 that does not trigger receptor-mediated endocytosis, and the binding of SL-325 to DR3 was shown to be highly durable in our preclinical assays and in our NHP studies.

Because DR3 is expressed on circulating, peripheral blood lymphocytes, we are able to directly measure DR3 receptor occupancy (“RO”), and

our nonclinical studies suggest that blockade is durable for at least two months as a result of the properties of SL-325 and the stable expression of DR3.

In our preclinical studies, including our acute NHP toxicology study, the RO and pharmacokinetic (“PK”) profile of SL-325 suggest extended dosing intervals, which are being further characterized in our ongoing Phase 1 clinical trial.

DR3 has a distinct expression pattern from TL1A, and, consequently, blocking the receptor may allow a more complete and durable blockade of the axis, which we believe will translate to improved efficacy in patients with IBD.

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Because inflammation observed in UC and CD can wax and wane in different areas of the bowel over time, stable blockade of DR3 may reduce the spread of inflammation and may contribute to higher rates of clinical and endoscopic remission than what TL1A blocking antibodies have achieved to date.

We are planning initial clinical development of SL-325 for patients with IBD, including UC and CD.

A source of immunogenicity shared by all TL1A blocking antibodies is the formation of immune complexes between soluble TL1A in the blood and the anti-TL1A antibodies.

Binding of soluble TL1A in the blood by anti-TL1A antibodies leads to a significant increase in the concentration of total TL1A in the blood.

These immune complexes have contributed to ADA formation in more than 64% of subjects treated with afimkibart, tulisokibart, or duvakitug in third-party clinical trials.

A third-party Phase 2 trial testing the efficacy of afimkibart in CD patients demonstrated that ADA caused accelerated clearance of afimkibart, which reduced efficacy in an ADA titer dependent manner.

Because DR3 is a membrane-restricted receptor, and SL-325 was engineered to bind an epitope on DR3 that is not found on DcR3, immune complex formation is not expected with SL-325.

Data generated from our GLP acute NHP toxicology study, along with in silico assessment of immunogenicity risk, consistently suggest that SL-325 may have single digit ADA rates in humans.

Thus, we expect that SL-325 has the potential to demonstrate a best-in-mechanism immunogenicity profile, and we expect that this superior immunogenicity profile alone will lead to improved efficacy as a monotherapy, at both the induction and maintenance time points.

Additionally, there is a high degree of sequence identity between certain third-party anti-TL1A antibodies, including tulisokibart, afimkibart, and duvakitug, and potential third-party combination agents, including vedolizumab, risankizumab, mirikizumab, and guselkumab.

This overlap in sequence identity introduces a risk that ADAs generated against TL1A antibodies may cross-bind to these potential combination agents and could cause accelerated clearance of both the anti-TL1A antibody and other antibodies included in a coformulation, and that this may impact the efficacy of each agent.

Because of this, we believe that SL-325 may allow for improved efficacy in combination with other agents, compared to TL1A targeting antibodies.

We are planning initial clinical development of SL-325 in patients with CD.

The clinical success of several TL1A blocking antibodies to date suggests that SL-325 may have monotherapy disease modifying activity early in clinical development.

As described above, we believe that targeting DR3 may be more efficacious than targeting TL1A in patients with IBD.

We expect to file an Investigational New Drug ("IND") application for SL-325 in the third quarter of 2025, and we expect to complete enrollment in the full Phase 1 clinical trial in the second quarter of 2026.

Future clinical trials may explore the efficacy of SL-325 in other inflammatory and immune-mediated diseases where the DR3/TL1A axis is implicated.

We expect to complete enrollment in the ongoing Phase 1 clinical trial for SL-325 in healthy volunteers in the second quarter of 2026, and initiate our Phase 2 clinical trial in patients with CD in the third quarter of 2026.

We also plan to evaluate SL-325 in other inflammatory and immune-mediated diseases where the DR3/TL1A axis is implicated.

In addition to SL-325 and SL-425 (a half-life extended version of SL-325), we are developing bispecific antibodies which co-target DR3 and other clinically validated targets in immune mediated and inflammatory diseases.

Inhibition of the TL1A/DR3 axis may be mechanistically distinct from the IL-23/IL-23R, IL-17/IL-17R, TSLP/TSLP-R or α4β7/MADCAM-1 axes (as examples).

Thus, dual inhibition of the TL1A/DR3 axis with coformulated or bispecific antibodies may provide additive clinical benefit in a variety of immune mediated and inflammatory diseases.

As seen with TL1A directed antibodies, two third-party TL1A-directed bispecific antibodies, AMG966 and RO7837195, have also demonstrated nearly 100% ADA formation following a single dose in Phase 1 clinical trials.

The mechanism of ADA formation was reported to be secondary to large immune complex formation for AMG966, which we believe is also true for RO7837195.

The emerging clinical data from TL1A-directed bispecific antibodies is similar to the prior failure of TNFα-directed bispecific antibodies, which we believe is because both TNFα and TL1A are soluble trimeric proteins found in the blood, and cause immunogenicity secondary to large immune complex formation.

We expect that our DR3-directed bispecific antibodies to be less immunogenic than TL1A-directed bispecifics.

DR3 may thus provide a differentiated target in a bispecific antibody format, providing advantages over

TL1A-directed bispecific antibodies.

Additionally, development of bispecific antibodies may enable more efficient clinical development than is expected for multi-antibody coformulations, and may avoid some of the challenges associated with potential immunogenicity in certain coformulations, as described above.

For the years ended December 31, 2025 and 2024, our net loss was $48.8 million and $75.4 million, respectively.

We have not been profitable since inception, and as of December 31, 2024, we had an accumulated deficit of $381.7 million and $73.0 million in cash and cash equivalents and investments.

We have not been profitable since inception, and as of December 31, 2025, we had an accumulated deficit of $430.5 million and $78.1 million in cash and cash equivalents and short-term investments.

We expect to continue to incur significant expenses and operating losses in the near term in connection with our ongoing activities, as we:

• continue to advance the preclinical development and initiate Phase 1 clinical development of our product candidate, SL-325;

• initiate nonclinical studies and clinical trials for additional product candidates that we may identify in the future, including potential bispecific DR3 antagonist antibody product candidates;

• continue Phase 1 clinical development of our lead product candidate, SL-325;

• initiate nonclinical studies and clinical trials for additional product candidates that we may identify in the future, including potential DR3 based bispecific antibodies targeting DR3 together with another biologically relevant target;

• manufacture sufficient quantities of bulk drug substance and drug product to support our ongoing and planned nonclinical studies and clinical trials;

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We may never succeed in achieving regulatory and marketing approval for our product candidates.

We may obtain unexpected

results from our nonclinical studies and clinical trials.

We may obtain unexpected results from our nonclinical studies and clinical trials.

We may elect to discontinue, delay, or modify nonclinical studies and clinical trials of our product candidates.

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Global Economic Considerations

The global macroeconomic environment is uncertain, and could be negatively affected by, among other things, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, instability in the global capital and credit markets, supply chain weaknesses, financial institution instability, and instability in the geopolitical environment.

The global macroeconomic environment is uncertain, and could be negatively affected by, among other things, inflation, slower growth or recession, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, instability or volatility in the global capital and credit markets, supply chain weaknesses, financial institution instability, changes to fiscal and monetary policy or government budget dynamics and instability in the geopolitical environment.

Such challenges have caused, and may continue to cause, recession fears, high interest rates, foreign exchange volatility, and inflationary pressures.

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Components of our Results of Operations

Collaboration Revenue

We have no products approved for commercial sale, and we have not generated any revenue from commercial product sales.

Our total revenue to date has been generated from our collaboration and research agreements with various third parties.

Related Party License Revenue

Revenue recognized in 2025 was a result of an exclusive license agreement (the "Kayak Agreement") with Kayak Therapeutics, Inc.

(“Kayak”) for our oncology-focused TRIM7 program, which we entered into in August 2026.

Pursuant to the Kayak Agreement, we received preferred stock of Kayak with a fair market value of $1.0 million as upfront consideration for entering into the agreement and recognized the consideration as license revenue.

Collaboration Revenue

Revenue recognized in 2024 was a result of collaboration agreements with Ono Pharmaceutical Co., Ltd ("Ono") and ImmunoGen, Inc.

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In February 2024, we entered into a collaboration and license agreement with Ono (the "Ono Agreement") pursuant to which we and Ono collaborated in the research and preclinical development of certain compounds selected by Ono from our pipeline of bifunctional fusion proteins directed toward a pair of prespecified targets for potential treatment of autoimmune and inflammatory diseases.

Under the terms of the Ono Agreement, we were primarily responsible for carrying out research activities in accordance with a mutually agreed upon research plan.

Pursuant to the Ono Agreement, we granted Ono an exclusive option (the “Option”) to obtain an exclusive, sublicensable license to further research, develop, manufacture and commercialize products containing these specified bifunctional fusion proteins in any therapeutic area worldwide.

On September 30, 2024, we and Ono mutually agreed to terminate the Ono Agreement and Option pursuant to the terms of the agreement.

We have completed all obligations under the agreement and have accordingly recognized $5.4 million in revenue pursuant to terms of the Ono Agreement including the $2.0 million paid for the Option.

As of December 31, 2024, we completed our obligations under the collaboration agreement with ImmunoGen (the “ImmunoGen Agreement”), and have recognized all revenue pursuant to the terms of that agreement.

We have completed all obligations under the agreement and have accordingly recognized $5.4 million in revenue pursuant to terms of the Ono Agreement including the $2.0 million paid for the option to enter into an exclusive license with us.

On September 30, 2024, we and Ono mutually agreed to terminate the Ono Agreement and the related option pursuant to the terms of the agreement.

As of December 31, 2024, we completed our obligations under the collaboration agreement with ImmunoGen, and have recognized all revenue pursuant to the terms of that agreement.

Operating Expense

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(in thousands) 2025 2024

$ 10,777 $ 4,574

SL-172154 2,637 27,608

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Total research and development costs $ 35,273 $ 67,211

1 Expenses for SL-325 that were incurred prior to it being nominated a product candidate are included

1 Expenses for SL-325 that were incurred prior to its nomination as product candidate are included

in “other pipeline compounds” in the table above.

Research and development activities are central to our business model.

We are focused on the preclinical and clinical development of SL-325 and other DR3 targeted assets, and conducting additional research on other potential product candidates.

Product candidates in earlier stages of development generally have lower development costs than those in later stages of development.

We have discontinued clinical development of SL-172154 and are no longer conducting research activities performed under the Ono Agreement.

We are now focused on the preclinical development and future clinical trials of SL-325 and other DR3 targeted assets and conducting additional research on other potential product candidates.

As a result of our discontinuing the clinical development of SL-172154 and resulting organizational changes, we expect a decrease in operating expense year-over-year, primarily associated with a reduction in clinical development, manufacturing, process development, and headcount-related costs.

In 2026, we anticipate initiating Phase 2 clinical trial(s) for SL-325.

Accordingly, we expect an increase in research and development and expense year-over-year, as we incur incremental clinical trial expense and additional costs

associated with commensurate increases in our workforce to support these efforts.

In October 2024, we discontinued clinical development of SL-172154.

The process of conducting the necessary nonclinical and clinical research to obtain regulatory approval is costly and time consuming.

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General and administrative expense also includes corporate facility costs, including rent, utilities, depreciation, and maintenance, not otherwise included in research and development expense, as well as legal fees related to intellectual property, corporate, and litigation matters and fees for accounting and tax services.

We expect that our general and administrative expense may decrease in the future due to workforce reductions that occurred as a result of our discontinuing the clinical development of SL-172154.

If any of our current or future product candidates advances to clinical development or obtains regulatory approval, we expect that we would incur increased expenses associated with building out the appropriate general and administrative support for our increased research and development activities, or building out a sales and marketing team.

Other income consists of interest earned on our cash, cash equivalents and investments, which consists of amounts held in a money market fund and government obligations as well as investment fees and realized gain or losses on investments (if any).

If any of our current or future product candidates, including SL-325, continues to advance through clinical development, or obtains regulatory approval, we expect that we would incur increased expenses associated with building the appropriate general and administrative support for our increased research and development activities, or building a sales and marketing team.

Other income consists of interest earned on our cash, cash equivalents and short-term investments, which consists of amounts held in a money market fund and government obligations as well as investment fees and realized gain or losses on short-term investments (if any).

Since our inception, we have not recorded any income tax benefits for the net operating losses ("NOLs") we have incurred or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized.

Our NOLs and tax credit carryforwards began to expire in 2024.

Our capital loss and tax credit carryforwards as of December 31, 2024 began to expire in 2025..

We have recorded a full valuation allowance against our deferred tax assets at each balance sheet date.

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(in thousands) 2025 2024 Dollar Percentage

Related party license revenue

$ 1,000 $ — $ 1,000 100.0 %

Collaboration revenue

— 5,721 (5,721) (100.0) %

Total revenue

1,000 5,721 (4,721) (472.1) %

Operating expenses:

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Net loss $ (48,809) $ (75,410) $ 26,601 (35.3) %

Related Party License Revenue

Related party license revenue increased by $1.0 million, or 100.0%, for the year ended December 31, 2025 from $0.0 million for the year ended December 31, 2024.

The increase in related party license revenue was a result of license revenue recognized pursuant to the Kayak Agreement of $1.0 million.

Collaboration Revenue

Collaboration revenue increased by $4.1 million, or 245.3%, to $5.7 million for the year ended December 31, 2024 from $1.7 million for the year ended December 31, 2023.

The increase in collaboration revenue was attributable to the research activities conducted pursuant to the Ono Agreement of $3.4 million, recognition of the $2.0 million Option pursuant to the termination of the Ono Agreement, offset by a decrease in revenue recognized pursuant to the Immunogen Agreement of $1.3 million in 2024.

As of December 31, 2024 we have completed our obligations under the Ono and Immunogen Agreements and do not expect to recognize additional revenue pursuant to those agreements.

Collaboration revenue decreased by $5.7 million, or 100.0%,for the year ended December 31, 2025 from $5.7 million for the year ended December 31, 2024.

The decrease in collaboration revenue was a result of completing all obligations and recognizing all revenues associated with the Ono and ImmunoGen collaboration agreements in 2024.

Research and Development Expense

Research and development expenses decreased by $7.1 million, or 9.6%, to $67.2 million for the year ended December 31, 2024 from $74.3 million for the year ended December 31, 2023.

The decrease in research and development expense was primarily due to a decrease in the cGMP manufacture of clinical trial material and other manufacturing related charges of $4.3 million, a decrease in materials consumed in our lab of $2.4 million and a decrease of $2.3 million associated with our reduction in headcount, partially offset by an increase of $2.1 million in preclinical costs associated with our development of SL-325 and other potential pipeline product candidates in 2024.

Research and development expense decreased by $31.9 million, or 47.5%, to $35.3 million for the year ended December 31, 2025 from $67.2 million for the year ended December 31, 2024.

The decrease in research and development expense was primarily due to a decrease of $31.5 million as a result of the discontinuation of the SL-172154 program and related workforce reductions and a decrease of $6.6 million in other pipeline compounds cost, partially offset by an increase of $6.2 million in SL-325 expenses primarily as a result of moving SL-325 into clinical development in 2025.

General and Administrative Expense

General and administrative expenses decreased by $0.2 million, or 1.2%, to $19.1 million for the year ended December 31, 2024 from $19.3 million for the year ended December 31, 2023 and remained relatively flat between periods.

General and administrative expenses decreased by $1.8 million, or 9.7%, to $17.2 million for the year ended December 31, 2025 from $19.1 million for the year ended December 31, 2024.

The decrease is primarily the result of a $1.2 million decrease in compensation and related benefit expenses as a result of workforce reductions in 2024 as well as a decrease of $0.6 million in legal fees.

Liquidity and Capital Resources

Since our inception, our primary sources of liquidity have been generated by sales of our common stock, pre-funded warrants, convertible preferred stock, and convertible notes, and through collaboration agreements.

As of December 31, 2024, we had an accumulated deficit of $381.7 million and $73.0 million of cash and cash equivalents and investments.

On December 26, 2023, we sold 4,651,163 shares of common stock through an underwritten public offering, and concurrently completed a private placement of 3,100,823 pre-funded warrants for net proceeds of $47.6 million.

The purchase price per share of common stock was $6.45, and the purchase price per pre-funded warrant was $6.4499 which was the purchase price per share of common stock, minus the $0.0001 per share exercise price of such pre-funded warrant.

Each pre-funded warrant may be exercised for one share of common stock, is immediately exercisable, does not expire, and is subject to a beneficial ownership limitation of 9.99% post-exercise.

As of December 31, 2024, no pre-funded warrants have been exercised and 3,100,823 pre-funded warrants remain outstanding.

In July 2022, we entered into a sales agreement (the “Sales Agreement”), with SVB Securities LLC (the “Sales Agent”), pursuant to which we may offer and sell up to $75.0 million of shares of our common stock from time to time through an at the

market offering facility (the “ATM Facility”).

The Sales Agent is generally entitled to compensation at a commission equal to 3.0% of the aggregate gross sales price per share sold under the Sales Agreement.

As of December 31, 2024 there were no sales pursuant to the ATM Facility.

Since our inception, our primary sources of liquidity have been generated by sales of our common stock, pre-funded warrants, common stock warrants, convertible preferred stock, and convertible notes, and through collaboration agreements.

As of December 31, 2025, we had an accumulated deficit of $430.5 million and $78.1 million of cash and cash equivalents and short-term investments.

In August 2025, we issued and sold 15,225,158 shares of common stock, pre-funded warrants to purchase up to 37,410,188 shares of common stock, and accompanying common stock warrants to purchase up to 52,635,346 shares of common stock for gross proceeds of $45.7 million.

In January 2026, 4,866,055 common stock warrants were exercised for gross proceeds of $5.3 million and we may receive an additional $51.7 million in gross proceeds if the remaining common stock warrants are exercised.

In January 2026, we entered into a sales agreement (the “Sales Agreement”) with Leerink Partners LLC (the “Sales Agent”), pursuant to which we may offer and sell up to $75.0 million of shares of our common stock from time to time through our ATM Facility.

The Sales Agent is generally entitled to compensation at a commission equal to up to 3.0% of the aggregate

gross sales price per share sold under the Sales Agreement.

We sold 5,000,000 shares of common stock at $4.28 per share for gross proceeds of $21.4 million in January 2026.

Capital Resources and Funding Requirements

Our primary uses of cash and cash equivalents and investments are to fund our operations, which consist primarily of research and development expenditures related to our programs, product development costs, research expenses, administrative support, capital expenditures related to bringing in-house certain process development and manufacturing capabilities, and working capital requirements.

We anticipate that we will continue to incur additional net losses and negative cash flows from operations in the near future until such time, if ever, that we can generate significant sales of our product candidates currently in development.

Our primary uses of cash, cash equivalents and short-term investments are to fund our operations, which consist primarily of research and development expenditures related to our programs, product development costs, research expenses, administrative support, capital expenditures related to bringing in-house certain process development and manufacturing capabilities, and working capital requirements.

We anticipate incurring additional net losses and negative cash flows from operations in the near future until such time, if ever, that we can generate significant sales of our product candidates currently in development.

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

• the scope, timing, progress and results of discovery, nonclinical development, laboratory testing, and clinical trials for our product candidates;

• the costs of process development and manufacturing our product candidates for preclinical studies and clinical trials, and in preparation for marketing approval and commercialization;

• the costs of process development and scale up of a commercially ready manufacturing process to support registrational clinical trials;

• the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;

• the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates;

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Additionally, if additional funding is not secured when required, we may need to delay or curtail our operations until such funding is received, which would have a material and adverse impact on our business prospects and results of operations.

We believe that our cash and cash equivalents and investments as of December 31, 2024 are sufficient to fund projected operations into 2027.

We believe that our cash, cash equivalents and short-term investments as of December 31, 2025 and the potential future proceeds assuming the full exercise of all outstanding common stock warrants will be sufficient to fund projected operations into 2029.

The following table shows a summary of our cash flows for the periods indicated:

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Net cash used in operating activities $ (39,882) $ (60,515)

Net cash (used in) provided by investing activities (8,511) 110,859

Net cash used in investing activities (7,887) (8,511)

Net cash provided by financing activities 44,574 787

Net (decrease) increase in cash and cash equivalents $ (68,239) $ 78,247

Decrease in cash and cash equivalents $ (3,195) $ (68,239)

Net Cash Used in Operating Activities

During the year ended December 31, 2025, net cash used in operating activities was $39.9 million and primarily reflected our net loss of $48.8 million, partially offset by noncash charges of $9.7 million and a net change in our operating assets and liabilities of $0.8 million.

We expect to continue to use cash in our operating activities as we conduct our clinical trials and

nonclinical studies, incur costs of manufacturing clinical trial and nonclinical study materials and continue process development activities to optimize our manufacturing processes.

During the year ended December 31, 2023, net cash used in operating activities was $81.2 million and primarily reflected by our net loss of $87.3 million and a $4.1 million net change in our operating assets and liabilities, and was offset by noncash charges of $10.2 million related to stock-based compensation expense, depreciation expense, amortization of investments, non-cash operating lease expense and impairment losses.

We expect to continue to use cash in our operating activities as we conduct our clinical trials and nonclinical studies, incur costs of manufacturing clinical trial and nonclinical study materials and continue process development activities to optimize our manufacturing processes.

During the year ended December 31, 2024, net cash used in operating activities was $60.5 million and primarily reflected by our net loss of $75.4 million, partially offset by noncash charges of $11.9 million and a net change in our operating assets and liabilities of $3.0 million.

Net Cash Provided by Investing Activities

During the year ended December 31, 2024, net cash used investing activities was $8.5 million, due primarily to purchases of government securities, net of maturities.

During the year ended December 31, 2023, net cash provided by investing activities was $110.9 million, due to a $111.3 million increase of cash due to maturities of investments, net of purchases, offset by $0.4 million in purchases of equipment.

During the year ended December 31, 2025, net cash used in investing activities was $7.9 million due primarily to purchases of government securities, net of sales and maturities of investments.

During the year ended December 31, 2024, net cash used in investing activities was $8.5 million due primarily to purchases of government securities, net of sales and maturities of investments.

Net Cash Provided by Financing Activities

During the year ended December 31, 2025, net cash provided by financing activities was $44.6 million due to the sale of common stock, pre-funded warrants and common stock warrants, the exercise of stock options and common stock warrants and purchases pursuant to our employee stock purchase plan.

During the year ended December 31, 2024, net cash provided by financing activities was $0.8 million due to the exercise of stock options and purchases pursuant to our employee stock purchase plan.

During the year ended December 31, 2023, net cash provided by financing activities was $48.6 million and was from the sale of common stock and pre-funded warrants, the exercise of stock options and purchases pursuant to our employee stock purchase plan.

Contractual Obligations and Other Commitments

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Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements.

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Revenue Recognition

We have and may continue to enter into collaboration agreements with other companies.

Arrangements with collaborators may include licenses to intellectual property, research and development services, manufacturing services for clinical and commercial supply, and participation on joint steering and patent committees.

We have and may continue to enter into license and collaboration agreements with other companies.

Arrangements with other companies may include licenses to intellectual property, research and development services, manufacturing services for clinical and commercial supply, and participation on joint steering and patent committees.

We evaluate the promised goods or services in the contract to determine which promises, or group of promises, represent performance obligations.

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When accounting for an arrangement that contains multiple performance obligations, we develop judgmental assumptions, which may include market conditions, reimbursement rates for personnel costs, development timelines, and probabilities of regulatory success to determine the stand-alone selling price for each performance obligation identified in the contract.

Upon the amendment of an existing agreement, we evaluate whether the amendment represents a modification to an existing contract that would be recorded through a cumulative catch-up to revenue, prospective modification, or a separate contract.

If it is determined that it is a separate contract, we will evaluate the necessary revenue recognition through the five-step process described below.

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We then consider any constraints on the variable consideration and includes variable consideration in the transaction price to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

We then allocate the transaction price to each performance obligation based on the relative standalone selling price and recognize revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied.

We then allocate the transaction price to each performance obligation based on the relative standalone selling price and recognize revenue in the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied.

For performance obligations that consist of licenses and other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress.

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We accrue expenses for manufacturing, process development, nonclinical studies and clinical trial activities performed by vendors based upon estimates of the proportion of work completed.

We determine the estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with our internal personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

However, actual

costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan.

We determine the estimates by reviewing contracts,

vendor agreements and purchase orders, and through discussions with our internal personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

However, actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan.

We make estimates of our prepaid and accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known at that time.

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We use the Black-Scholes option pricing model to value our stock option awards.

The fair values of restricted stock units (“RSUs”) are based on the fair value of the Company’s common stock on the date of the grant.

The fair values of restricted stock units are based on the fair value of the Company’s common stock on the date of the grant.

We recognize compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period of the award.

We also grant stock options that vest upon achievement of certain market-based conditions.

We also grant stock options that vest upon achievement of certain market-based conditi ons.

We use the Monte Carlo pricing model to estimate the fair value of options that have market-based conditions.

The Black-Scholes and Monte Carlo option-pricing models require the use of subjective assumptions that include the expected stock price volatility and, for options granted prior to our IPO, the fair value of the underlying common stock on the date of grant.

See Note 10 to our audited financial statements included elsewhere in this Annual Report on Form 10-K for information concerning certain of the specific assumptions we used in applying the Black-Scholes and Monte Carlo option pricing models to determine the estimated fair value of our stock options granted during the year ended December 31, 2024.

The Black-Scholes option-pricing model requires the use of subjective assumptions that include the expected stock price volatility and, for options granted prior to our IPO, the fair value of the underlying common stock on the date of grant.

See Note 10 to our financial statements included elsewhere in this Annual Report on Form 10-K for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted during the year ended December 31, 2025.

Recent Accounting Pronouncements

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Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company as defined in the JOBS Act.

Under the JOBS Act, an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards and delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected to avail ourselves of this exemption from complying with new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We have evaluated the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act.

Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions, including without limitation exemptions to the requirements for (1) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying 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, known as the auditor discussion and analysis.

We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our IPO, (ii) in which we have total annual gross revenues of at least $1.235 billion or (iii) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a “smaller reporting company” as defined under the Exchange Act.

The Company was previously an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended ("JOBS Act").

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.

Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

As of December 31, 2025, the Company ceased to qualify as an emerging growth company.

The Company continues to qualify as a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act and thus will continue to be permitted to make certain reduced disclosures in this Annual Report on Form 10-K and other periodic reports.

We will continue to be a smaller reporting company so long as (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

As long as we remain a smaller reporting company we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934.

as amended, and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934, as amended, and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

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