Spyre Therapeutics, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA SPYRE THERAPEUTICS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Audited Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (ID 238 PricewaterhouseCoopers LLP) 94 Consolidated Balance Sheets 97 Consolidated Statements of Operations 98 Consolidated Statements of Comprehensive Loss 99 Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity 100 Consolidated Statements of Cash Flows 102 Notes to Consolidated Financial Statements 104 93 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Spyre Therapeutics, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Spyre Therapeutics, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive loss, of changes in convertible preferred stock and stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the Company not designing and maintaining effective controls to evaluate the treatment of the Series A Preferred Stock and the Series B Preferred Stock for the purpose of calculating earnings per share under the two-class method. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that 94 Table of Contents a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Contingent Value Right (CVR) Liability As described in Notes 1, 2, and 3 to the consolidated financial statements, in connection with the asset acquisition of Pre-Merger Spyre, a non-transferable contingent value right was distributed to certain legacy stockholders of record as of the close of business on July 3, 2023 entitling holders of the contingent value right to receive certain cash payments from proceeds received by the Company related to the disposition or monetization of the Company’s legacy assets. Management determined that certain contingent payments under the Contingent Value Rights (CVR) Agreement qualified as derivatives, and as such, were recorded as a liability on the balance sheet. For derivative financial instruments accounted for as liabilities, the derivative instrument is initially recorded by management at its fair value and is then re-valued at each reporting date. The fair value of the CVR liability was determined using the probability weighted discounted cash flow method to estimate future cash flows associated with the sale of the legacy assets. The CVR liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated probabilities of regulatory success, estimated reimbursement rates compared to the reimbursement target, and risk-adjusted discount rates. The CVR liability as of December 31, 2024 was $61.7 million and the Company recognized an increase in the CVR liability of $19.0 million for the year ended December 31, 2024 related to the change in fair value between December 31, 2023 and December 31, 2024 of $20.4 million offset by payments of $1.4 million. The principal considerations for our determination that performing procedures relating to the valuation of the CVR liability is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the CVR liability; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the estimated probabilities of regulatory success, estimated reimbursement rates compared to the reimbursement target, and risk-adjusted discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. 95 Table of Contents Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of the contingent value rights liability, including controls over the significant assumptions and underlying data. These procedures also included, among others (i) evaluating the terms of the CVR agreement; (ii) testing management’s process for developing the fair value estimate of the CVR liability; (iii) evaluating the appropriateness of the probability weighted discounted cash flow method used by management; (iv) testing the completeness and accuracy of underlying data used by management in the probability weighted discounted cash flow method; and (v) evaluating the reasonableness of the significant assumptions used by management related to the estimated probabilities of regulatory success, estimated reimbursement rates compared to the reimbursement target, and risk-adjusted discount rates. Evaluating management’s assumptions related to estimated probabilities of regulatory success and estimated reimbursement rates compared to the reimbursement target involved evaluating whether the assumptions used by management were reasonable considering the consistency with (i) external market and industry data and (ii) evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the probability weighted discounted cash flow method and (ii) the reasonableness of the risk-adjusted discount rate assumption. /s/ PricewaterhouseCoopers LLP Austin, Texas February 27, 2025 We have served as the Company’s auditor since 2014. 96 Table of Contents Spyre Therapeutics, Inc. Consolidated Balance Sheets (In thousands, except share and per share amounts) December 31, 2024 2023 ASSETS CURRENT ASSETS Cash and cash equivalents $ 89,423 $ 188,893 Marketable securities 513,665 150,384 Prepaid expenses and other current assets 5,386 2,251 Total current assets 608,474 341,528 Restricted cash — 322 Other non-current assets 10 9 TOTAL ASSETS $ 608,484 $ 341,859 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 666 $ 896 CVR liability 25,080 1,390 Accrued and other current liabilities 27,711 13,108 Related party accounts payable 603 16,584 Total current liabilities 54,060 31,978 Non-current CVR liability 36,620 41,310 TOTAL LIABILITIES 90,680 73,288 Commitments and Contingencies (Note 8, Note 9) Series B non-voting convertible preferred stock, $ 0.0001 par value; 150,000 shares authorized, issued, and outstanding as of December 31, 2023. — 84,555 STOCKHOLDERS’ EQUITY Series A non-voting convertible preferred stock, $ 0.0001 par value; 1,086,341 shares authorized as of December 31, 2024 and December 31, 2023; 346,045 and 437,037 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively. 146,425 184,927 Series B non-voting convertible preferred stock, $ 0.0001 par value; 271,625 shares authorized and 16,667 shares issued and outstanding as of December 31, 2024. 9,395 — Preferred stock, $ 0.0001 par value; 8,642,034 shares and 8,763,659 shares authorized as of December 31, 2024 and December 31, 2023, respectively; no shares issued and outstanding as of December 31, 2024 and December 31, 2023. — — Common stock, $ 0.0001 par value; 400,000,000 shares authorized as of December 31, 2024 and December 31, 2023; 60,257,023 shares and 36,057,109 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively. 13 10 Additional paid-in capital 1,334,223 763,191 Accumulated other comprehensive income 180 302 Accumulated deficit ( 972,432 ) ( 764,414 ) TOTAL STOCKHOLDERS’ EQUITY 517,804 184,016 TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY $ 608,484 $ 341,859 The accompanying notes are an integral part of these consolidated financial statements. 97 Table of Contents Spyre Therapeutics, Inc. Consolidated Statements of Operations (In thousands, except share and per share amounts) Year Ended December 31, 2024 2023 2022 Revenue: Development fee and royalty — 886 2,329 Total revenue — 886 2,329 Operating expenses: Research and development (1) 162,790 89,504 58,579 General and administrative 45,776 39,946 28,531 Acquired in-process research and development — 130,188 — Gain on sale of in-process research and development asset — ( 16,449 ) — Total operating expenses 208,566 243,189 87,110 Loss from operations ( 208,566 ) ( 242,303 ) ( 84,781 ) Other income (expense): Interest income 21,312 6,147 837 Change in fair value of forward contract liability — ( 83,530 ) — Other expense, net ( 20,713 ) ( 19,130 ) ( 7 ) Total other income (expense) 599 ( 96,513 ) 830 Loss before income tax expense ( 207,967 ) ( 338,816 ) ( 83,951 ) Income tax (expense) benefit ( 51 ) 26 136 Net loss $ ( 208,018 ) $ ( 338,790 ) $ ( 83,815 ) Net loss per share, basic and diluted, Series A Preferred Stock $ ( 127.21 ) $ ( 550.28 ) $ — Weighted-average Series A non-voting convertible preferred stock outstanding, basic and diluted 374,387 434,612 — Net loss per share, basic and diluted, Series B Preferred Stock $ ( 127.21 ) $ ( 550.29 ) $ — Weighted-average Series B non-voting convertible preferred stock outstanding, basic and diluted 85,208 8,630 — Net loss per share, basic and diluted, common $ ( 3.18 ) $ ( 13.76 ) $ ( 24.86 ) Weighted-average common shares outstanding, basic and diluted 47,027,638 6,897,065 3,371,231 (1) Includes $ 41.2 million and $ 48.5 million in related party expenses for the years ended December 31, 2024 and December 31, 2023, respectively, and no related party expenses for the year ended December 31, 2022. The accompanying notes are an integral part of these consolidated financial statements. 98 Table of Contents Spyre Therapeutics, Inc. Consolidated Statements of Comprehensive Loss (In thousands) Year Ended December 31, 2024 2023 2022 Net loss $ ( 208,018 ) $ ( 338,790 ) $ ( 83,815 ) Other comprehensive income (loss): Foreign currency translation adjustment 4 37 ( 35 ) Unrealized (loss) gain on marketable securities ( 126 ) 313 7 Total comprehensive loss $ ( 208,140 ) $ ( 338,440 ) $ ( 83,843 ) The accompanying notes are an integral part of these consolidated financial statements. 99 Table of Contents Spyre Therapeutics, Inc. Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (In thousands) Series B Non-Voting Convertible Preferred Stock Series A Non-Voting Convertible Preferred Stock Series B Non-Voting Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Balances—December 31, 2021 — $ — — $ — — $ — 1,974 $ 5 $ 425,765 $ ( 20 ) $ ( 341,809 ) $ 83,941 Issuance of common stock and pre-funded warrants in connection with registered direct offering, net of offering costs — — — — — — 430 1 42,873 — — 42,874 Issuance of common stock in connection with exercise of pre-funded warrants — — — — — — 204 — — — — — Issuance of common stock in connection with employee stock purchase plan — — — — — — 6 — 222 — — 222 Stock-based compensation expense — — — — — — — — 7,111 — — 7,111 Foreign currency translation adjustment — — — — — — — — — ( 35 ) — ( 35 ) Unrealized gain on marketable securities — — — — — — — — — 7 — 7 Net loss — — — — — — — — — — $ ( 83,815 ) $ ( 83,815 ) Balances—December 31, 2022 — $ — — $ — — $ — 2,614 $ 6 $ 475,971 $ ( 48 ) $ ( 425,624 ) $ 50,305 Issuance of Series A non-voting convertible preferred stock in connection with private placement, net of financing costs — — 721 197,364 — — — — — — — 197,364 Issuance of Series A non-voting convertible preferred stock in connection with the asset acquisition of Spyre and settlement of related forward contract — — 365 189,741 — — — — — — — 189,741 Conversion of Series A non-voting convertible preferred stock into common stock — — ( 649 ) ( 202,178 ) — — 25,972 3 202,175 — — — Issuance of Series B non-voting convertible preferred stock in connection with private placement, net of financing costs 150 84,555 — — — — — — — — — — Issuance of common stock in connection with private placement, net of financing costs — — — — — — 6,000 — 84,555 — — 84,555 Issuance of common stock in connection with the asset acquisition of Spyre — — — — — — 518 1 3,767 — — 3,768 Issuance of common stock in connection with exercise of pre-funded warrants — — — — — — 905 — — — — — Issuance of common stock in connection with exercise of stock options and employee stock purchase plan — — — — — — 48 — 405 — — 405 CVR distribution to common stockholders — — — — — — — — ( 29,500 ) — — ( 29,500 ) Stock-based compensation expense — — — — — — — — 14,347 — — 14,347 Issuance of Parapyre Option Obligation warrants — — — — — — — — 11,471 — — 11,471 Foreign currency translation adjustment — — — — — — — — — 37 — 37 Unrealized gain on marketable securities — — — — — — — — — 313 — 313 Net loss — — — — — — — — — — ( 338,790 ) ( 338,790 ) Balances—December 31, 2023 150 $ 84,555 437 $ 184,927 — $ — 36,057 $ 10 $ 763,191 $ 302 $ ( 764,414 ) $ 184,016 100 Table of Contents Issuance of Series B non-voting convertible preferred stock in connection with private placement, net of financing costs 122 168,850 — — — — — — — — — — Stockholder approval of the issuance of common stock upon conversion of Series B convertible non-voting preferred stock ( 272 ) ( 253,405 ) — — 272 253,405 — — — — — 253,405 Exchange of Series A non-voting convertible preferred stock for common stock — — ( 91 ) ( 38,502 ) — — 3,640 1 38,501 — — — Conversion of Series B non-voting convertible preferred stock into common stock — — — — ( 255 ) ( 244,010 ) 10,198 1 244,009 — — — Issuance of common stock in connection with at-the-market offering program, net of financing costs — — — — — — 777 — 20,504 — — 20,504 Issuance of common stock in connection with follow-on offering, net of financing costs — — — — — — 8,366 1 215,673 215,674 Issuance of common stock in connection with exercise of pre-funded warrants — — — — — — 250 — 1 — — 1 Issuance of common stock in connection with exercise of stock options and employee stock purchase plan — — — — — — 931 — 7,511 — — 7,511 Stock-based compensation expense — — — — — — — — 30,374 — — 30,374 Issuance of Parapyre Option Obligation warrants — — — — — — — — — 14,459 — — 14,459 Vesting of restricted stock units — — — — — — — 38 — — — — — — — Foreign currency translation adjustment — — — — — — — — — 4 — 4 Unrealized gain on marketable securities — — — — — — — — — ( 126 ) — ( 126 ) Net loss — — — — — — — — — — ( 208,018 ) ( 208,018 ) Balances—December 31, 2024 — $ — 346 $ 146,425 17 $ 9,395 60,257 $ 13 $ 1,334,223 $ 180 $ ( 972,432 ) $ 517,804 The accompanying notes are an integral part of these consolidated financial statements. 101 Table of Contents Spyre Therapeutics, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 208,018 ) $ ( 338,790 ) $ ( 83,815 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization — 744 1,567 Stock-based compensation 44,833 25,675 7,111 Acquired in-process research and development — 130,188 — Change in fair value of CVR liability 20,430 18,986 — Change in fair value of forward contract liability — 83,530 — Gain on sale of in-process research and development asset — ( 16,449 ) — Lease ROU asset and leasehold improvement impairment loss — 2,580 — Loss on disposal of long-lived assets — 915 — Net (accretion of discount) amortization of premium on marketable securities ( 11,404 ) ( 2,318 ) ( 327 ) Interest proceeds from maturities of zero coupon debt securities 1,283 — — Amortization of operating lease assets — 220 397 Other — 15 426 Changes in operating assets and liabilities: Prepaid expenses and other assets ( 2,932 ) 3,245 ( 1,144 ) Accounts payable ( 230 ) 218 ( 2,641 ) Deferred revenue — 575 ( 880 ) Development receivables — 375 440 Operating lease liabilities — ( 2,326 ) ( 435 ) Accrued and other liabilities 14,609 ( 4,891 ) ( 843 ) Related party accounts payable ( 15,981 ) ( 2,402 ) — Net cash used in operating activities ( 157,410 ) ( 99,910 ) ( 80,144 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash assumed from asset acquisition of Spyre — 3,035 — Proceeds from sale of in-process research & development asset — 15,000 — Purchases of property and equipment — — ( 38 ) Proceeds from the sale of property plant and equipment — 475 — Purchases of marketable securities ( 599,252 ) ( 166,803 ) ( 39,500 ) Proceeds from maturities and sales of marketable securities 245,967 39,900 96,546 Net cash provided by (used in) investing activities ( 353,285 ) ( 108,393 ) 57,008 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of Series B non-voting convertible preferred stock in connection with private placement, net of placement and other offering costs 168,850 84,555 — Proceeds from issuance of common stock in connection with at-the-market offering program, net of issuance costs 20,521 — — Proceeds from issuance of common stock in connection with follow-on offering, net of issuance costs 215,860 — — Payment of deferred offering costs in connection with shelf registration ( 407 ) — — Proceeds from issuance of Series A non-voting convertible preferred stock in connection with private placement, net of placement and other offering costs — 197,364 — Proceeds from issuance of common stock in connection with private placement, net of placement and other offering costs — 84,555 — Payment of contingent value rights liability ( 1,430 ) ( 5,786 ) — Proceeds from issuance of common stock and pre-funded warrants in registered direct offering, net of offering costs 1 — 42,874 Proceeds from employee stock option exercises and employee stock plan purchases 7,511 405 222 Principal payments on finance lease obligation — ( 16 ) ( 418 ) Net cash provided by financing activities 410,906 361,077 42,678 Effect of exchange rate on cash, cash equivalents, and restricted cash ( 3 ) 25 ( 106 ) NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 99,792 ) 152,799 19,436 102 Table of Contents CASH, CASH EQUIVALENTS, AND RESTRICTED CASH Beginning of period 189,215 36,416 16,980 End of period $ 89,423 $ 189,215 $ 36,416 Supplemental Disclosure of Non-Cash Investing and Financing Information: Allocation of deferred offering costs against proceeds of issuance of common stock $ 204 $ — $ — Exchange of Series A non-voting convertible preferred stock for common stock $ 38,502 $ — $ — Conversion of Series B non-voting convertible preferred stock into common stock $ 244,010 $ — $ — Settlement of forward contract liability and issuance of Series A non-voting convertible preferred stock in connection with the asset acquisition of Spyre $ — $ 189,741 $ — Conversion of Series A non-voting convertible preferred stock into common stock $ — $ 202,178 $ — Leased assets obtained in exchange for lease obligations $ — $ — $ 21 Reconciliation of Cash, Cash Equivalents, and Restricted Cash Reported in the Statement of Financial Position Cash and cash equivalents 89,423 188,893 $ 34,863 Restricted cash $ — $ 322 $ 1,553 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 89,423 $ 189,215 $ 36,416 The accompanying notes are an integral part of these consolidated financial statements. 103 Table of Contents Spyre Therapeutics, Inc. Notes to Consolidated Financial Statements 1. The Company and Basis of Presentation Spyre Therapeutics, Inc., formerly Aeglea BioTherapeutics, Inc., (“Spyre” or the “Company”) is a clinical stage biotechnology company focused on developing next generation therapeutics for patients living with inflammatory bowel disease and other immune-mediated diseases. The Company was formed as a Limited Liability Company ("LLC") in Delaware on December 16, 2013 under the name Aeglea BioTherapeutics Holdings, LLC and was converted from a Delaware LLC to a Delaware corporation on March 10, 2015. On November 27, 2023, the Company completed its corporate rebranding, changing the name of the Company to Spyre Therapeutics, Inc. The Company operates in one segment and has its principal offices in Waltham, Massachusetts. On September 8, 2023, the Company effected a reverse stock split of its common stock at a ratio of 1-for-25 (the “Reverse Split”). Except as indicated otherwise, all share numbers related to the Company's common stock disclosed in these financial statements have been adjusted on a post-Reverse Split basis. On April 12, 2023, based on the review of the inconclusive interim results from the Company's Phase 1/2 clinical trial of pegtarviliase for the treatment of Classical Homocystinuria and other business considerations, the Company announced that it had initiated a process to explore strategic alternatives to maximize stockholder value and engaged an independent exclusive financial advisor to support this process. As a result, in April 2023, the Company implemented a restructuring plan resulting in an approximate 83 % reduction of the Company’s existing headcount. On June 22, 2023, the Company acquired, in accordance with the terms of the Agreement and Plan of Merger (the "Acquisition Agreement"), the assets of Spyre Therapeutics, Inc. (“Pre-Merger Spyre”) as disclosed in Note 7 and 8, a privately held biotechnology company advancing a pipeline of antibody therapeutics with the potential to transform the treatment of inflammatory bowel disease through a research and development option agreement ("Paragon Agreement") with Paragon Therapeutics ("Paragon"). The asset acquisition was accomplished through a two-step reverse triangular merger whereby Aspen Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company ("First Merger Sub"), merged with and into Pre-Merger Spyre, which existed at the time the Acquisition Agreement was entered into, became a wholly owned subsidiary of the Company in accordance with the terms of the Acquisition Agreement. Immediately following this merger, Pre-Merger Spyre merged with and into Sequoia Merger Sub II, LLC, a Delaware limited liability company and a wholly subsidiary of the Company (“Second Merger Sub”), in accordance with the terms of the Acquisition Agreement and Pre-Merger Spyre ceased to exist. Subsequently, Aeglea BioTherapeutics, Inc. was renamed Spyre Therapeutics, Inc. and is a different entity than Pre-Merger Spyre, which ceased to exist upon merging with Second Merger Sub. The transaction was structured as a stock-for-stock transaction pursuant to which all of Pre-Merger Spyre's outstanding equity interests were exchanged based on a fixed exchange ratio of 0.5494488 to 1 for consideration from the Company of 517,809 shares of common stock and 364,887 shares of Series A non-voting convertible preferred stock, par value of $ 0.0001 per share ("Series A Preferred Stock") (convertible on a 40 to 1 basis), in addition to the assumption of outstanding and unexercised stock options to purchase 2,734 shares of common stock from the Amended and Restated Spyre 2023 Equity Incentive Plan (the "Asset Acquisition"). The common stock and Series A Preferred Stock related to the Asset Acquisition were issued to the Pre-Merger Spyre stockholders on July 7, 2023. For additional information, see Note 7. In connection with the Asset Acquisition, on June 26, 2023, the Company completed a private placement of shares of Series A Preferred Stock (the “June 2023 PIPE” and, together with the Asset Acquisition, the "June 2023 Transactions") to a group of investors (the “June 2023 Investors”). The Company sold an aggregate of 721,452 shares of Series A Preferred Stock (the “June 2023 PIPE Securities”) at $ 291.08 per share for net proceeds of $ 197.3 million after deducting approximately $ 12.7 million of placement agent and other offering expenses. For additional information, see Note 12. In connection with the Asset Acquisition, a non-transferable contingent value right ("CVR") was distributed to stockholders of record of the Company as of the close of business on July 3, 2023 (the "Legacy Stockholders"), but was not distributed to the holders of shares of common stock or Series A Preferred Stock issued to the former stockholders of Pre-Merger Spyre or June 2023 Investors in the June 2023 Transactions. Holders of the CVRs will be entitled to receive cash payments from proceeds received by the Company for a 3 -year period related to the disposition or monetization of its legacy assets for a period of one-year following the closing of the Asset Acquisition. For additional information, see Note 3 . On November 21, 2023, the Company's stockholders approved the conversion of the Company's Series A non-voting convertible preferred stock to common stock. For additional information, see Note 12. On December 11, 2023, the Company completed a private placement of shares of common stock and Series B non-voting convertible preferred stock, par value of $ 0.0001 per share ("Series B Preferred Stock") (convertible on a 40 to 1 basis) (collectively, the “December 2023 PIPE”) to a group of investors (the “December 2023 PIPE Investors”). The Company sold an aggregate of 6,000,000 shares of its common stock at an offering price of $ 15.00 per share and 150,000 shares of Series B Preferred Stock (the “December 2023 PIPE Securities”) at $ 600.00 per share for net proceeds of approximately $ 169.1 million after deducting approximately $ 10.9 million of placement agent and other offering expenses. For additional information, see Note 12. On March 20, 2024, the Company completed a private placement of Series B Preferred Stock (convertible on a 40 to 1 basis) (the “March 2024 PIPE”) to a group of investors. The Company sold 121,625 shares of Series B Preferred Stock at $ 1,480 per share. The net proceeds from this offering were approximately $ 168.9 million after deducting placement and offering costs of $ 11.2 million. On April 23, 2024, the Company entered into an exchange agreement with Fairmount Healthcare Fund II L.P. (the “Stockholder”), pursuant to which the Stockholder agreed to exchange an aggregate of 90,992 shares of Series A Preferred Stock for an aggregate of 3,639,680 shares of the Company's common stock (the “April 2024 Exchange”). The common stock issued in connection with the April 2024 Exchange was issued without registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on the exemption from registration contained in Section 3(a)(9) of the Securities Act. The April 2024 Exchange closed on April 25, 2024, with 346,045 shares of Series A Preferred Stock remaining outstanding following the April 2024 Exchange. On May 14, 2024, the Company's stockholders approved the issuance of its common stock upon conversion of the Company's Series B Preferred Stock to common stock. A total of 254,958 shares of Series B Preferred Stock automatically converted to 10,198,320 shares of common stock; 16,667 shares of Series B Preferred Stock did not automatically convert and remained outstanding as of December 31, 2024. On September 6, 2024, the Company filed a new shelf registration statement on Form S-3 that was declared effective by the SEC for the potential offering, issuance and sale by the Company of up to $ 500.0 million of our common stock, preferred stock, debt securities, warrants and/or units consisting of all or some of these securities. Concurrent with the filing of the shelf-registration statement, the Company entered into a sales agreement with TD Securities (USA) LLC (“TD Cowen”), as its sales agent, pursuant to which the Company may issue and sell shares of its common stock for an aggregate offering price of up to $ 200.0 million under an at-the-market (“ATM") offering program included in the shelf registration. During the year ended December 31, 2024, the Company sold an aggregate of 777,432 shares of common stock under the ATM at an average price per share of $ 26.935 , resulting in aggregate net proceeds of approximately $ 20.5 million after deducting $ 0.4 million in commissions paid to TD Cowen as sales agent and other offering costs. On November 18, 2024, the Company entered into an underwriting agreement (the "Underwriting Agreement") with Jefferies LLC, Goldman Sachs & Co. LLC, Evercore Group L.L.C. and Guggenheim Securities, LLC as representatives of the several underwriters (collectively, the "Underwriters"), pursuant to which the Company sold an aggregate of 8,366,250 shares of its common stock, inclusive of 1,091,250 shares pursuant to the full exercise of an over-allotment option, at a public offering price per share of $ 27.50 , resulting in net proceeds of approximately $ 215.9 million after deducting approximately $ 14.2 million of underwriting discounts and other offering costs (the "November 2024 Offering"). The November 2024 Offering closed on November 20, 2024 and the over-allotment option was exercised in full on November 26, 2024 and closed on November 29, 2024. Liquidity The Company is a clinical stage biotechnology company with a limited operating history, and due to its significant research and development expenditures, the Company has generated operating losses since its inception and has not generated any revenue from the commercial sale of any products. There can be no assurance that profitable operations will ever be achieved, and, if achieved, whether profitability can be sustained on a continuing basis. Since its inception and through December 31, 2024, the Company has funded our operations by raising an aggregate of approximately $ 1.3 billion of gross proceeds from the sale and issuance of convertible preferred stock and common stock, pre-funded warrants, the collection of grant proceeds, and the licensing of its product rights for commercialization of pegzilarginase in Europe and certain countries in the Middle East. As of December 31, 2024, Spyre had an accumulated deficit of $ 972.4 million, and cash, cash equivalents, and marketable securities of $ 603.1 million. Based on current operating plans, the Company has sufficient resources to fund operations for at least one year from the issuance date of these financial statements with existing cash, cash equivalents, and marketable securities. The Company will need to secure additional financing in the future to fund additional research and development, and before a commercial drug can be produced, marketed and sold. If the Company is unable to obtain additional financing or generate license or product revenue, the lack of liquidity could have a material adverse effect on the Company. Basis of Presentation The consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) as defined by the Financial Accounting Standards Board (“FASB”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities, and equity and the amount of revenues and expenses. Actual results could differ significantly from those estimates. The most significant estimates and assumptions that management considers in the preparation of the Company's financial statements relate to the valuation of consideration transferred in acquiring in-process research & development ("IPR&D"); the discount rate, probabilities of success, and timing of estimated cash flows in the valuation of the CVR liability; inputs used in the Black-Scholes model for stock-based compensation expense; estimated future cash flows used in calculating the impairment of right-of-use lease assets; and estimated cost to complete performance obligations related to revenue recognition. The consideration transferred in acquiring IPR&D in connection with the acquisition of Pre-Merger Spyre was comprised of shares of the Company’s common stock and shares of Series A Preferred Stock. To determine the fair value of the equity transferred, the Company considered the per share value of securities sold in the June 2023 PIPE, which was a financing event involving a group of accredited investors. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash equivalents consist of money market funds and debt securities and are stated at fair value. 104 Table of Contents Marketable Securities All investments have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase. The Company may hold securities with stated maturities greater than one year until maturity. All available-for-sale securities are considered available to support current operations and are classified as current assets. The Company presents credit losses as an allowance rather than as a reduction in the amortized cost of the available-for-sale securities. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in other income (expense) in the results of operations. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, an allowance is recorded for the difference between the present value of cash flows expected to be collected and the amortized cost basis of the security. Impairment losses attributable to credit loss factors are charged against the allowance when management believes an available-for-sale security is uncollectible or when either of the criteria regarding intent or requirement to sell is met. Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit loss factors is recognized as a component of accumulated other comprehensive (loss) income, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in other income (expense) in the results of operations. The cost of securities sold is based on the specific-identification method. Restricted Cash Restricted cash consisted of cash balances related to the Company's operations in the United Kingdom for the period ended December 31, 2023. There were no restricted cash balances as of December 31, 2024. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, marketable securities, and restricted cash. The Company’s investment policy limits investments to high credit quality securities issued by the U.S. government, U.S. government-sponsored agencies, highly rated banks, and corporate issuers, subject to certain concentration limits and restrictions on maturities. The financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash deposits. Accounts at each of the Company's two U.S. banking institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per depositor. As of December 31, 2024 and 2023, balances at the Company's U.S. banking institutions exceeded the FDIC limits. The Company has not experienced any losses on its deposits of cash, cash equivalents, and restricted cash and its accounts are monitored by management to mitigate risk. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash, cash equivalents, and restricted cash, and bond issuers. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance that do not extend the life or improve an asset are expensed as incurred. Upon retirement or sale, the cost of disposed assets and their related accumulated depreciation and amortization are removed from the balance sheet. Any gain or loss is credited or charged to operations. 105 Table of Contents The useful lives of the property and equipment are as follows: Laboratory equipment 5 years Furniture and office equipment 5 years Computer equipment 3 years Software 3 years Leasehold improvements Shorter of remaining lease term or estimated useful life Impairment of Long-Lived Assets Long-lived assets are reviewed for indications of possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amounts to the future undiscounted cash flows attributable to these assets. An impairment loss is recognized to the extent an asset group is not recoverable, and the carrying amount exceeds the fair value. The Company recognized a $ 2.6 million impairment loss for the year ended December 31, 2023 related to its leased office space in Austin, Texas (see Note 11 and Note 17 for additional information). There were no impairments of long-lived assets for the years ended December 31, 2024 and 2022. Accrued Research and Development Costs The Company records the costs associated with research nonclinical studies, clinical trials, and manufacturing development as incurred. These costs are a significant component of the Company’s research and development expenses, with a substantial portion of the Company’s on-going research and development activities conducted by third-party service providers, including contract research organizations ("CROs") and contract manufacturing organizations ("CMOs"), and the Company's related-party Paragon. The Company accrues for expenses resulting from obligations under the Paragon Agreement and agreements with CROs, CMOs, and other outside service providers for which payment flows do not match the periods over which materials or services are provided to the Company. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements established with Paragon, CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. The Company makes significant judgments and estimates in determining the accrual balance in each reporting period. In the event advance payments are made to Paragon, a CRO, CMO, or outside service provider, the payments will be recorded as a prepaid asset which will be amortized as the contracted services are performed. As actual costs become known, the Company adjusts its accruals. Inputs, such as the services performed, the number of patients enrolled, or the study duration, may vary from the Company’s estimates, resulting in adjustments to research and development expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations. Historically, the Company has not experienced any material deviations between accrued and actual research and development expenses. License Agreements Contingent Milestone Payments The Company’s license agreements include specific development, regulatory, and clinical milestone payments that are payable upon the resolution of a contingency, such as upon the selection of a development candidate, first dosing of a human patient in clinical trials or receipt of the Food Drug and Administration’s (“FDA”) approval of a Spyre drug. The achievement of these milestone payments involves many factors outside of the Company’s control and therefore the associated likelihood cannot be considered probable until the related contingency is resolved. Based on the preceding, the Company accrues each milestone payment upon the achievement of the applicable milestone event. Leases The Company determines if an arrangement is a lease at inception. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The classification of the Company's 106 Table of Contents leases as operating or finance leases along with the initial measurement and recognition of the associated ROU assets and lease liabilities is performed at the lease commencement date. The measurement of lease liabilities is based on the present value of future lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. To determine the incremental borrowing rate, the Company uses the lease-term appropriate current treasury bond rates adjusted for collateral and inflation risks combined with quoted bank financing rates. The ROU asset is based on the measurement of the lease liability and also includes any lease payments made prior to or on lease commencement and excludes lease incentives and initial direct costs incurred, as applicable. The lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise any such options. Rent expense for the Company's operating leases is recognized on a straight-line basis over the lease term. Amortization expense for the ROU asset associated with its finance leases is recognized on a straight-line basis over the term of the lease and interest expense associated with its finance leases is recognized on the balance of the lease liability using the effective interest method based on the estimated incremental borrowing rate. As described in Note 11, the Company had lease agreements with lease and non-lease components prior to its restructuring. As allowed under Topic 842, the Company elected to not separate lease and non-lease components for any leases involving real estate and office equipment classes of assets and, as a result, accounted for the lease and non-lease components as a single lease component. The Company also elected to not apply the recognition requirement of Topic 842 to leases with a term of 12 months or less for all classes of assets. Fair Value of Financial Instruments The Company uses fair value measurements to record fair value adjustments to certain financial and non-financial assets and liabilities and to determine fair value disclosures. The accounting standards define fair value, establish a framework for measuring fair value, and require disclosures about fair value measurements. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the principal or most advantageous market in which the Company would transact are considered along with assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The accounting standard for fair value establishes a fair value hierarchy based on three levels of inputs, the first two of which are considered observable and the last unobservable, that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are as follows: Level 1: Observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Valuations based on unobservable inputs to the valuation methodology and including data about assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. Financial instruments carried at fair value include cash equivalents and marketable securities. The carrying amounts of accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. 107 Table of Contents Revenue Recognition Under ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”), an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company assesses its license arrangements within the scope of Topic 606 in accordance with this framework as follows: License revenue The Company assesses whether the goods or services promised within each contract are distinct to identify those that are performance obligations. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. In assessing whether a promised good or service is distinct, and therefore a performance obligation, the Company considers factors such as the research, stage of development of the licensed product, manufacturing and commercialization capabilities of the customer and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, the Company is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if these options provide a material right to the customer and if so, they are considered performance obligations. The transaction price is determined and allocated to the identified performance obligations in proportion to their stand-alone selling prices (“SSP”) on a relative SSP basis. SSP is based on observable prices of the performance obligations or, when such prices are not observable, are estimated. The estimation of SSP may include factors such as forecasted revenues or costs, development timelines, discount rates, probabilities of technical and regulatory success, and considerations such as market conditions and entity-specific factors. In certain circumstances, the Company may apply the residual method to determine the SSP of a good or service if the SSP is considered highly variable or uncertain. The Company validates the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations. If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the amount of estimated variable consideration in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment. If an arrangement includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered likely of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant cumulative revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are generally not considered likely of being achieved until those approvals are received. 108 Table of Contents In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensee and the transfer of the promised goods or services to the licensees will be one year or less. For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and if the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time or over time, and if over time, recognition is based on the use of an output or input method. The Company’s contracts may be modified for changes in the customer’s requirements. If contract modifications are for additional goods and services that are distinct from the existing contract, the modification will be accounted for as either a separate contract or a termination of the existing contract, depending on whether the additional goods or services reflects the SSP. If the additional goods or services in a contract modification are not distinct from the existing contract, they are accounted for as if they were part of the original contract. The effect of the contract modification on the transaction price and the measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue on a cumulative catch-up basis. The cumulative catch-up adjustment is calculated using an updated measure of progress applied to the sum of (1) the remaining consideration allocated to the partially satisfied performance obligation and (2) the revenue already recognized on that performance obligation. The revenue recognized for fully satisfied goods or services and distinct from the remaining performance obligations is not altered by the modification. Collaborative arrangements The Company analyzes its license arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of ASC Topic 808, Collaborative Arrangements (“Topic 808”). This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For arrangements within the scope of Topic 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of Topic 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and therefore within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, either by analogy to authoritative accounting literature or by applying a reasonable and rational policy election. For those elements of the arrangement that are accounted for pursuant to Topic 606, the Company applies the five-step model described above. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs include, but are not limited to, salaries, benefits, travel, stock-based compensation, consulting costs, contract research service costs, laboratory supplies and facilities, contract manufacturing costs, and costs paid to other third parties that conduct research and development activities on the Company’s behalf. Amounts incurred in connection with license agreements are also included in research and development expense. Advance payments for goods or services to be rendered in the future for use in research and development activities are recorded as a prepaid asset and expensed as the related goods are delivered or the services are performed. 109 Table of Contents Stock-Based Compensation The Company recognizes the cost of stock-based awards granted to employees and non-employees based on the estimated grant-date fair values of the awards. The fair values of stock options are estimated on the date of grant using the Black-Scholes option pricing model. 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 value of the award is recognized as compensation expense on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise. Compensation expense for employee and non-employee share-based payment awards with performance conditions is recognized when the performance condition is deemed probable. Convertible Preferred Stock Issued through PIPE The Company records shares of convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The Company classified the Series B Preferred Stock outside of stockholders’ equity at issuance because if conversion to common stock was not approved by the stockholders, the Series B Preferred Stock was redeemable at the option of the holders for cash equal to the closing price of the Company's common stock on the last trading day prior to the holder’s redemption request. The Company determined that the conversion and redemption was outside of the Company’s control. Additionally, the Company determined the Series B Preferred Stock did not contain any embedded derivatives and therefore the conversion and redemption features did not require bifurcation. Since the Series B Preferred Stock is no longer redeemable, the associated balances of the Series B Preferred Stock were reclassified from mezzanine equity to permanent equity during the second quarter of 2024. Contingent Milestone Proceeds The Company recognizes contingent milestone proceeds associated from the sale of in-process research and development assets in earnings once the achievement of the milestone becomes probable and payment to the Company is contractually required. Acquisitions The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the definition of a business. Significant judgment is required in the application of the test to determine whether an acquisition is a business combination or an acquisition of assets. Acquisitions meeting the definition of business combinations are accounted for using the acquisition method of accounting, which requires that the purchase price be allocated to the net assets acquired at their respective fair values. In a business combination, any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes pre-acquisition direct costs recorded in accrued professional and consulting fees. Goodwill is not recognized in asset acquisitions. When a transaction accounted for as an asset acquisition includes an IPR&D asset, the IPR&D asset is only capitalized if it has an alternative future use other than in a particular research and development project. Otherwise, the cost allocated to acquire an IPR&D asset with no alternative future use is charged to expense at the acquisition date. 110 Table of Contents Contingent Value Rights The Company evaluates its contracts to determine if those contracts qualify as derivatives under ASC 815, Derivatives and Hedging (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date. Any changes in fair value are recorded as other income or expense for each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date. The Company determined that certain contingent payments under the CVR Agreement qualified as derivatives under ASC 815, and as such, were recorded as a liability on the balance sheet. This value is then remeasured for future expected payout as well as the increase in fair value due to the time value of money. These gains or losses, if any, are recognized in the consolidated statements of operations and comprehensive loss within Other (expense) income, net. The Company applies a scenario-based method and weighs them based on the possible achievement of certain milestones. The milestone payments are contingent on formal reimbursement decisions by national authorities in key European markets and pegzilarginase approval by the U.S. Food and Drug Administration ("FDA"), among other events. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820, Fair Value Measurement. The key assumptions used include the discount rate, probability of regulatory success, and reimbursement rates from certain government agencies. The estimated value of the CVR consideration is based upon available information and certain assumptions which the Company's management believes are reasonable under the circumstances. The ultimate payout under the CVRs may differ materially from the assumptions used in determining the fair value of the CVR consideration. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statements and the tax bases of assets and liabilities. Additionally, any changes in income tax laws are immediately recognized in the year of enactment. A valuation allowance is established against the deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized. The deferred tax assets and liabilities are classified as noncurrent along with the related valuation allowance. Due to a lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance. The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on the technical merits, as the largest amount of benefits that is more likely than not to be realized upon the ultimate settlement. The Company’s policy is to recognize interest and penalties related to the unrecognized tax benefits as a component of income tax expense, if applicable. As of December 31, 2024 and 2023, the Company had no unrecognized tax benefits and there were no interest or penalties incurred by the Company in the years ended December 31, 2024, 2023, or 2022. Comprehensive Loss Comprehensive loss is the change in stockholders’ equity from transactions and other events and circumstances other than those resulting from investments by stockholders and distributions to stockholders. The Company’s other comprehensive income (loss) is currently comprised of changes in unrealized losses and gains on available-for-sale securities and foreign currency translation adjustments reflecting the cumulative effect of changes in exchange rates between the foreign entity’s functional currency and the reporting currency. Recently Adopted Accounting Pronouncements The Company early adopted the Financial Accounting Standards Board’s ("FASB") Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), effective as of January 1, 2023 using the modified retrospective method. Among other 111 Table of Contents amendments, ASU 2020-06 eliminates the cash conversion and beneficial conversion feature models in ASC 470-20 that required an issuer of certain convertible debt and preferred stock to separately account for embedded conversion features as a component of equity, as well as changes the accounting for diluted earnings‑per‑share for convertible instruments and contracts that may be settled in cash or stock. Additionally, ASU 2020-06 requires the if‑converted method, which is more dilutive than the treasury stock method, be used for all convertible instruments. The Company applied ASU 2020-06 to all Series A Preferred Stock and Series B Preferred Stock during fiscal year 2023, and, accordingly, the Company did not apply the cash conversion or beneficial conversion feature models in its analysis of the Series A Preferred Stock and Series B Preferred Stock. The adoption of ASU 2020-06 did not have a material impact on the Company's consolidated financial statements. The Company adopted the FASB Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07") effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Among other amendments, ASU 2023-07 requires issuers to provide enhanced disclosures about significant segment expenses and information used to assess segment performance on an annual and interim basis. The ASU also requires companies with a single reportable segment, such as the Company, to provide all disclosures required by Topic 280 - Segment Reporting. The Company adopted this ASU with the fiscal year ending December 31, 2024, and applied the amendments retrospectively to all prior periods presented in the consolidated financial statements. See Note 19, Segment Reporting. Not Yet Adopted Accounting Pronouncements I n December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding taxes paid both in the U.S. and foreign jurisdictions. This update is effective for fiscal years beginning after December 15, 2024. This ASU will have no impact on the Company’s consolidated financial condition or results of operations. The Company is currently evaluating the impact to its income tax disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to improve disclosures about public business entities’ expenses and to provide more detailed information around the types of expenses included in commonly presented expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods for fiscal years beginning after December 15, 2027, and can be applied on a prospective basis or on a retrospective basis to all periods presented. Early adoption is permitted. This ASU will have no impact on the Company’s consolidated financial condition or results of operations. The Company is currently evaluating the impact of adopting ASU 2024-03 on its disclosures. 112 Table of Contents 3. Fair Value Measurements The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring basis. The following tables set forth the fair value of the Company’s financial assets and liabilities at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands): December 31, 2024 Level 1 Level 2 Level 3 Total Financial Assets Money market funds $ 65,902 $ — $ — $ 65,902 U.S. government treasury securities 227,244 — — 227,244 U.S. government agency securities — 86,681 — 86,681 Commercial paper — 165,130 — 165,130 Corporate bonds — 56,448 — 56,448 Total financial assets $ 293,146 $ 308,259 $ — $ 601,405 Liabilities: CVR liability $ — $ — $ 61,700 $ 61,700 Total liabilities $ — $ — $ 61,700 $ 61,700 December 31, 2023 Level 1 Level 2 Level 3 Total Financial Assets Money market funds $ 150,648 $ — $ — $ 150,648 U.S. government treasury securities 32,843 — — 32,843 U.S. government agency securities — 16,257 16,257 Commercial paper — 104,141 — 104,141 Corporate bonds — 33,064 — 33,064 Total financial assets $ 183,491 $ 153,462 $ — $ 336,953 Liabilities: CVR liability $ — $ — $ 42,700 $ 42,700 Total liabilities $ — $ — $ 42,700 $ 42,700 The Company measures the fair value of money market funds on quoted prices in active markets for identical asset or liabilities. The Level 2 assets include U.S. government agency securities, commercial paper and corporate bonds, and are valued based on quoted prices for similar assets in active markets and inputs other than quoted prices that are derived from observable market data. The Company evaluates transfers in and out of Level 3 at the end of each reporting period. There were no transfers in or out of Level 3 during the periods presented. As of December 31, 2024 and 2023, the Company had $ 61.7 million and $ 42.7 million, respectively, of financial liabilities outstanding measured at fair value. Forward Contract Liability In connection with the Asset Acquisition, the Company entered into a contract for the issuance of 364,887 shares of Series A Preferred Stock as part of the consideration transferred. This forward contract was classified as a liability because the underlying preferred shares were contingently redeemable. Further, the forward contract liability was considered a Level 2 liability based on observable market data for substantially the full term of the liability and was initially measured at its estimated fair value on the transaction date based on the 113 Table of Contents underlying price per share on an as-converted basis of the June 2023 PIPE Securities issued in the June 2023 PIPE. Subsequent remeasurement of the fair value of the forward contract liability through its settlement date was based on the market price of the Company's common stock, which represents the redemption value of the Series A Preferred Stock. The fair value of the forward contract at the transaction date, June 22, 2023, was $ 106.2 million. The liability was settled with the issuance of the Series A Preferred Stock on July 7, 2023 for $ 189.7 million. For the year ended December 31, 2023, $ 83.5 million was recorded as Other income (expense) in the consolidated statements of operations in connection with the change in fair value of the forward contract liability. There was no similar expense for the year ended December 31, 2024 and 2022. The following table presents changes in the forward contract liability for the periods presented (in millions): Forward Contract Liability Beginning balance as of June 22, 2023 $ 106.2 Change in fair value 83.5 Issuance of Series A Preferred Stock on July 7, 2023 ( 189.7 ) Ending balance as of December 31, 2023 $ — CVR Liability In connection with the Asset Acquisition, a non-transferable contingent value right was distributed to the Legacy Stockholders, but was not distributed to holders of shares of the Company's common stock or Series A Preferred Stock issued to the June 2023 Investors or former stockholders of Pre-Merger Spyre in connection with the June 2023 Transactions. Holders of the CVR will be entitled to receive certain cash payments from proceeds received by the Company for a three-year period, if any, related to the disposition or monetization of the Company’s legacy assets for a period of one year following the closing of the Asset Acquisition. The fair value of the CVR liability was determined using the probability weighted discounted cash flow method to estimate future cash flows associated with the sale of the legacy assets. Analogous to a dividend being declared/approved in one period and paid out in another, the liability was recorded at the date of approval, June 22, 2023, as a common stock dividend, returning capital to the Legacy Stockholders. Changes in fair value of the liability will be recognized as a component of Other income (expense) in the consolidated statement of operations and comprehensive loss in each reporting period. The liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated probabilities of regulatory success, and discount rates, which represent a Level 3 measurement within the fair value hierarchy. The significant inputs used to estimate the fair value of the CVR liability were as follows: December 31, 2024 Estimated cash flow dates 5/28/25 - 06/22/26 Estimated probability of success 72 % - 100 % Estimated reimbursement rate compared to reimbursement target 81 % - 100 % Risk-adjusted discount rates 7.29 % - 7.50 % The change in fair value between December 31, 2023 and December 31, 2024 was a $ 20.4 million increase, and was primarily driven by changes in the expected timing of achievement of certain milestones, changes in the likelihood of certain milestones related to the approval received from the European Medicines Agency by Immedica Pharma AB ("Immedica"), partially offset by a change in the likelihood of a successful disposition of pegtarviliase and updates to expenses and deductions. 114 Table of Contents The following table presents changes in the CVR liability for the periods presented (in thousands): CVR Liability Beginning balance as of December 31, 2023 $ 42,700 Changes in the fair value of the CVR liability 20,430 Payments ( 1,430 ) Ending Balance as of December 31, 2024 $ 61,700 4. Cash Equivalents and Marketable Securities The following tables summarize the estimated fair value of the Company’s cash equivalents and marketable securities and the gross unrealized gains and losses (in thousands): December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash equivalents: Money market funds $ 65,902 $ — $ — $ 65,902 Commercial paper 21,832 6 — 21,838 U.S. government treasury securities — — — — Total cash equivalents $ 87,734 $ 6 $ — $ 87,740 Marketable securities: Commercial paper $ 143,265 $ 104 $ ( 77 ) $ 143,292 Corporate bonds 56,471 25 ( 48 ) 56,448 U.S. government treasury securities 227,155 385 ( 296 ) 227,244 U.S. government agency securities 86,616 137 ( 72 ) 86,681 Total marketable securities $ 513,507 $ 651 $ ( 493 ) $ 513,665 December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash equivalents: Money market funds $ 150,648 $ — $ — $ 150,648 Commercial paper 24,950 5 — 24,955 U.S. government treasury securities 10,965 1 — 10,966 Total cash equivalents $ 186,563 $ 6 $ — $ 186,569 Marketable securities: Commercial paper $ 79,124 $ 62 $ — $ 79,186 Corporate bonds 32,984 81 ( 1 ) 33,064 U.S. government treasury securities 21,846 31 — 21,877 U.S. government agency securities 16,147 110 — 16,257 Total marketable securities $ 150,101 $ 284 $ ( 1 ) $ 150,384 115 Table of Contents The following table summarizes the available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of December 31, 2024 and 2023, aggregated by major security type and length of time in a continuous unrealized loss position: December 31, 2024 Less Than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Commercial paper $ 67,200 $ ( 77 ) $ — $ — $ 67,200 $ ( 77 ) Corporate bonds 42,916 ( 48 ) — — 42,916 ( 48 ) U.S. government treasury securities 126,588 ( 296 ) — — 126,588 ( 296 ) U.S. government agency securities 12,560 ( 72 ) — — 12,560 ( 72 ) Total marketable securities $ 249,264 $ ( 493 ) $ — $ — $ 249,264 $ ( 493 ) December 31, 2023 Less Than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate bonds $ 9,907 $ ( 1 ) $ — $ — $ 9,907 $ ( 1 ) U.S. government treasury securities 4,831 — — — 4,831 — Total marketable securities $ 14,738 $ ( 1 ) $ — $ — $ 14,738 $ ( 1 ) The Company evaluated its securities for credit losses and considered the decline in market value to be primarily attributable to current economic and market conditions and not to a credit loss or other factors. Additionally, the Company does not intend to sell the securities in an unrealized loss position and does not expect they will be required to sell the securities before recovery of the unamortized cost basis. As of December 31, 2024 and 2023, an allowance for credit losses had not been recognized. Given the Company's intent and ability to hold such securities until recovery, and the lack of significant change in credit risk of these investments, the Company does not consider these marketable securities to be impaired as of December 31, 2024 and 2023. There were $ 0.1 million net unrealized losses on marketable securities for the year ended December 31, 2024. For the years ended December 31, 2023 and 2022, there were $ 0.3 million and de minimis, respectively, net unrealized gains. There were no realized gains on marketable securities for the years ended December 31, 2024, 2023 and 2022. Interest on marketable securities is included in interest income. Accrued interest receivable on available-for-sale debt securities totaled $ 3.4 million and $ 0.9 million as of December 31, 2024 and 2023, respectively, and is excluded from the estimate of credit losses. The following table summarizes the contractual maturities of the Company's marketable securities at estimated fair value (in thousands): December 31, 2024 2023 Due in one year or less $ 338,442 $ 115,784 Due in 1 - 2 years 175,223 34,600 Total marketable securities $ 513,665 $ 150,384 116 Table of Contents The Company may sell investments at any time for use in current operations even if they have not yet reached maturity. As a result, the Company classifies marketable securities, including securities with maturities beyond twelve months, as current assets. 5. Property and Equipment, Net The Company did not have any property, plant, and equipment assets as of December 31, 2024 and 2023. Depreciation and amortization expense for the years ended December 31, 2023 and 2022 was $ 0.7 million, and $ 1.4 million, respectively. There was no depreciation and amortization expense for the year ended December 31, 2024. All of the Company’s long-lived assets were located in the United States. Sale of Assets On April 12, 2023, based on the review of the inconclusive interim results from the Company's Phase 1/2 clinical trial of pegtarviliase for the treatment of classical homocystinuria and other business considerations, the Company announced that it had initiated a process to explore strategic alternatives to maximize stockholder value and engaged an independent exclusive financial advisor to support this process. As a result, the Company implemented a restructuring plan resulting in an approximate 83 % reduction of the Company’s existing headcount by June 30, 2023. During the second quarter of 2023, the Company sold various lab equipment, consumables, and furniture and fixtures for total consideration of $ 0.5 million. After recording the disposal of all the Company's property and equipment net of proceeds, the Company recorded a $ 0.7 million and $ 0.2 million loss on disposal of long-lived assets which is included in Research and development and General and administrative expenses, respectively. 6. Accrued and Other Current Liabilities Accrued and other current liabilities consist of the following (in thousands): December 31, 2024 2023 Accrued compensation $ 5,688 $ 4,054 Accrued contracted research and development costs 20,861 7,092 Accrued professional and consulting fees 661 1,474 Other 501 488 Total accrued and other current liabilities $ 27,711 $ 13,108 7. Asset Acquisition On June 22, 2023, the Company acquired Pre-Merger Spyre pursuant to the Acquisition Agreement, by and among the Company, First Merger Sub, Second Merger Sub and Pre-Merger Spyre. Pursuant to the Acquisition Agreement, First Merger Sub merged with and into Pre-Merger Spyre, pursuant to which Pre-Merger Spyre was the surviving corporation and became the Company's wholly owned subsidiary (the “First Merger”). Immediately following the First Merger, Pre-Merger Spyre merged with and into Second Merger Sub, pursuant to which Second Merger Sub became the surviving entity. Pre-Merger Spyre was a pre-clinical stage biotechnology company that was incorporated on April 28, 2023 under the direction of Peter Harwin, a Managing Member of Fairmount, for the purpose of holding rights to certain intellectual property being developed by Paragon. Fairmount is a founder of Paragon. With respect to the Asset Acquisition, the Company determined that Aeglea was the acquirer for accounting purposes under ASC 805. The primary factors considered were a) the relative voting rights in the combined entity not resulting in a change of control, b) legacy members of the Company's Board of Directors maintained control of the Board of Directors, and c) the only change in the composition of senior management 117 Table of Contents was the appointment of a new Chief Operating Officer. Next, the Company considered whether the Asset Acquisition should be defined as a business under ASC 805. ASC 805-10-55-5A through 55-5C describe a screen test to determine whether an acquired set of assets and activities is not a business. We determined that substantially all (greater than 90%) of the fair value of the assets acquired were concentrated in a single asset, Spyre’s Option to license intellectual property rights related to SPY001, SPY002, SPY003 and SPY004 pursuant to the Paragon Agreement. Accordingly, the Company treated the Asset Acquisition as an asset acquisition for accounting purposes. Even if the transaction would have failed the screen test, Pre-Merger Spyre lacked the financial resources to have inputs, processes, and outputs to constitute a business under ASC 805. The Company completed the Asset Acquisition of Pre-Merger Spyre, in accordance with the terms of the Acquisition Agreement. Under the terms of the Acquisition Agreement, the Company issued 517,809 shares of common stock and 364,887 shares of Series A Preferred Stock to former Pre-Merger Spyre security holders. In addition, outstanding and unexercised stock options to purchase 2,734 shares of common stock were assumed from the Amended and Restated Spyre 2023 Equity Incentive Plan. At the acquisition date, the Company recorded forward contracts to represent the obligation to issue shares of the Company's common stock and shares of Series A Preferred Stock. The forward contract related to the common stock was recorded as Additional paid-in capital as the instrument is indexed to the Company's common stock. The forward contract related to the Series A Preferred Stock was recorded as a liability, as the underlying stock has a cash redemption feature. On July 7, 2023, both the shares of common stock and Series A Preferred Stock were issued and the forward contract liability associated with the Series A Preferred Stock was settled accordingly. The Company concluded that the arrangement meets the definition of an asset acquisition rather than a business combination, as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, the Option to exclusively license IPR&D. The Company determined that the Option to license IPR&D was a single asset as the Company's strategy relies on developing the entire portfolio of individual treatments to create combination treatments that simultaneously address different mechanisms of irritable bowel disease with a single treatment. The Company also determined that the pipeline candidates within the portfolio are similar in nature and risk profile. In addition, the Company did not obtain any substantive processes, assembled workforce, or employees capable of producing outputs in connection with the Asset Acquisition. The Company determined that the cost to acquire the asset was $ 113.2 million which was recorded as acquired IPR&D. The fair value of the consideration issued consisted of the 364,887 shares of Series A Preferred Stock ( 14,595,480 shares of common stock on an as-converted basis) and 517,809 shares of common stock, valued at $ 291.08 per share and $ 7.277 per share, respectively. The Asset Acquisition costs are shown on the following table (in millions): June 22, 2023 Consideration transferred in Series A Preferred Stock and common stock $ 110.0 Transaction costs incurred by the Company 3.2 Total cost to acquire asset $ 113.2 The allocation of the purchase price to net assets acquired is as a follows: June 22, 2023 Acquired in-process research and development $ 130.2 Cash acquired 3.0 Assumed liabilities ( 20.0 ) Total cost to acquire asset $ 113.2 118 Table of Contents 8. Paragon Agreement In May 2023, Pre-Merger Spyre entered into the original Paragon Agreement with Paragon and Parapyre Holding LLC ("Parapyre"), which was subsequently amended and restated on September 29, 2023 and May 14, 2024. Pursuant to the Paragon Agreement, the Option provided for the right to acquire the intellectual property rights related to four research programs from Paragon in accordance with a license agreement to be entered into following each exercise of the Option. Under the Paragon Agreement, the terms of such license agreement would be consistent with the economics and other terms set out in the Paragon Agreement and, in the event of failure to reach an agreement on the definitive terms, the matter would be resolved via arbitration. In consideration for the Option granted under the Paragon Agreement, Pre-Merger Spyre was obligated to pay Paragon an upfront cash amount of $ 3.0 million in research initiation fees. In addition, Pre-Merger Spyre was obligated to compensate Paragon on a quarterly basis for its services performed under each research program based on the actual costs incurred with mark-up costs pursuant to the terms of the Paragon Agreement. As of the date of the Asset Acquisition, Pre-Merger Spyre had incurred total expenses of $ 19.0 million under the Paragon Agreement since inception, which included the $ 3.0 million research initiation fee and $ 16.0 million of historical reimbursable expenses owed to Paragon. As of June 22, 2023, $ 19.0 million was unpaid and was assumed by the Company through the Asset Acquisition. Furthermore, the Paragon Agreement provided for an annual equity grant of options to purchase 1 % of the then outstanding shares of Spyre’s common stock, on a fully diluted basis, on the last business day of each calendar year, during the term of the Paragon Agreement, at the fair market value determined by the board of directors of Spyre (the "Parapyre Option Obligation"). As a result of the Asset Acquisition, the Company assumed the rights and obligations of Pre-Merger Spyre under the Paragon Agreement, including the Parapyre Option Obligation. Pursuant to the Paragon Agreement, on a research program-by-research program basis following the finalization of the research plan for each respective research program, the Company is required to pay Paragon a nonrefundable fee in cash of $ 0.8 million. In September 2023, the Company amended the Paragon Agreement to amend and restate certain terms of the option grant pertaining to the Parapyre Option Obligation, including but not limited to (i) defining that the annual equity grant of warrants is based on the outstanding shares of the Company’s common stock on a fully-diluted basis, (ii) establishing the grant date as the last business day of 2023 and 2024, and (iii) defining the term of the warrants granted as ten years . In May 2024, the Company, Paragon and Parapyre entered into a second amended and restated antibody discovery and option agreement that amends and restates that certain amended and restated antibody discovery and option agreement, dated September 29, 2023, by and between Paragon, Parapyre and Spyre Therapeutics, LLC, in order to, among other things, (i) replace the Company’s subsidiary with the Company as a party to the agreement and (ii) amend certain terms related to the SPY003 research program, including without limitation, (a) establishing an SPY003 antibody selection process pursuant to which the Company and Paragon shall alternate in turn to select a project antibody to be included and excluded, respectively, from the Company’s rights under its option to license certain intellectual property rights related to SPY003 from Paragon until all project antibodies under the SPY003 research program have been selected; (b) reducing the development costs invoiced to the Company for the SPY003 research program incurred from and after April 1, 2024 through completion of the SPY003 antibody selection process by 50 %; (c) requiring Paragon to reimburse the Company for 50 % of the development costs for the SPY003 research program incurred prior to April 1, 2024; provided, that Paragon receives rights to at least one SPY003 project antibody following completion of the SPY003 antibody selection process; (d) obligating the Company to exercise its option to license the intellectual property rights to SPY003 project antibodies and technology following the completion of the SPY003 antibody selection process; and (e) establishing a license agreement term sheet for the SPY003 research program with substantially similar milestone payment terms and royalty payment terms as the SPY001 License Agreement. See Note 9 for disclosures related to the License Agreements entered into with Paragon. 119 Table of Contents 9. Licensing Agreements On July 12, 2023, December 14, 2023, and June 5, 2024, the Company exercised the Option available under the Paragon Agreement with respect to the SPY001, SPY002, and SPY003 research programs, respectively. On May 14, 2024, the Company and Paragon entered into (i) a license agreement (the “SPY001 License Agreement”), pursuant to which Paragon granted the Company a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize or otherwise exploit certain antibodies and products targeting α4ß7 integrin and (ii) a license agreement (the “SPY002 License Agreement”), pursuant to which Paragon granted the Company a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize or otherwise exploit certain antibodies and products targeting TL1A, respectively. On October 11, 2024, the Company and Paragon entered into a license agreement (the "SPY003 License Agreement" and, together with the SPY001 License Agreement and the SPY002 License Agreement, the "License Agreements"), pursuant to which Paragon granted the Company a royalty-bearing, world-wide, exclusive license to develop, manufacture, commercialize or otherwise exploit certain antibodies and products targeting IL-23 in the field of IBD. On February 24, 2025, the SPY003 License Agreement was amended and restated to, among other things, clarify each party's rights and obligations with respect to license exclusivity and patent prosecution and correct certain clerical errors. Under the terms of each License Agreement, the Company is obligated to pay Paragon up to $ 22.0 million based on specific development, regulatory and clinical milestones for the first product under each agreement, respectively, that achieves such specified milestones, including a milestone payment of $ 3.0 million upon the first dosing of a human patient in a Phase 2 trial. In addition, the following summarizes other key terms of each License Agreement: • Paragon will provide the Company with an exclusive license (such license, with respect to the SPY003 License Agreement only, being limited to the field of IBD) to its patents covering the related antibody, the method of use and its method of manufacture. • Paragon will not conduct any new campaigns that generate anti-α4ß7 or anti-TL1A monospecific antibodies in any field or anti-IL-23 monospecific antibodies in the field of IBD, in each case for at least 5 years. • The Company will pay Paragon a low single-digit percentage royalty for single antibody products and a mid single-digit percentage royalty for products containing more than one antibody from Paragon. • There is a royalty step-down of 1/3rd if there is no Paragon patent in effect during the royalty term. • The royalty term ends on the later of (i) the last-to-expire licensed patent or Company patent directed to the manufacture, use or sale of a licensed antibody in the country at issue or (ii) 12 years from the date of first sale of a Company product. • Agreement may be terminated on 60 days’ notice by the Company; on material breach without cure; and to the extent permitted by law, on a party’s insolvency or bankruptcy. • With respect to the SPY002 License Agreement only, on a product by product basis, the Company will pay sublicensing fees of up to approximately $ 20.0 million upon the achievement of mostly commercial milestones. The Company recognizes the expense associated with each milestone when the achievement of the milestone is deemed probable. During the years ended December 31, 2024, the Company recognized expense of $ 9.5 million related to Paragon license milestone payments recorded within Research and development expenses in the accompanying condensed statement of operations. There was no such expense for the years ended December 31, 2023 and 2022. 120 Table of Contents For the year ended December 31, 2024, the Company made cash milestone payments to Paragon totaling $ 9.5 million. There were no such payments for the years ended December 31, 2023 and 2022. As of December 31, 2024, there were no Paragon license milestone payments outstanding and payable to Paragon. Additionally, the Company recognized $ 0.7 million related to sublicensing fees and which was recorded as Research and development expenses in the accompanying statement of operations for the year ended December 31, 2024. For the year ended December 31, 2024, the Company made sublicensing fees payments to Paragon totaling $ 0.2 million. There were no such payments for the years ended December 31, 2023 and 2022. As of December 31, 2024, $ 0.5 million in sublicensing fees were outstanding and payable to Paragon. 10. Related Party Transactions Paragon and Parapyre each beneficially own less than 5 % of a class of the Company's voting securities through their respective holdings of the Company's common stock. Fairmount Funds Management LLC ("Fairmount") beneficially owns more than 5 % of a class of the Company's voting securities, has two seats on the Board (held by Peter Harwin and Tomas Kiselak) and beneficially owns more than 5 % of Paragon. Fairmount appointed Paragon's board of directors and has the contractual right to approve the appointment of any executive officers of Paragon. Parapyre is an entity formed by Paragon as a vehicle to hold equity in Spyre in order to share profits with certain employees of Paragon and will not perform any substantive role under the Paragon Agreement other than to receive warrants granted to Parapyre under the Paragon Agreement. The following is the summary of expenses related to the Paragon Agreement and License Agreements, which are ultimately settled in cash (in millions) and recorded within Research and development in the consolidated statement of operations for the periods presented: Year Ended December 31, 2024 2023 2022 Reimbursable costs under the Paragon Agreement $ 15.3 $ 37.1 $ — License Agreements milestone and sublicensing fees 10.2 — — Total related party expense (excludes stock comp) $ 25.5 $ 37.1 $ — The following is the summary of Related party accounts payable and other current liabilities (in millions): December 31, 2024 2023 Reimbursable costs under the Paragon Agreement $ 0.1 $ 16.6 License Agreements development milestone liability (see Note 9) 0.5 — Total related party accounts payable $ 0.6 $ 16.6 Paragon Agreement In connection with the Asset Acquisition, the Company assumed the rights and obligations of Pre-Merger Spyre under the Paragon Agreement. Under the Paragon Agreement, Spyre is obligated to compensate Paragon for its services performed under each research program based on the actual costs incurred with mark-up costs pursuant to the terms of the Paragon Agreement. As of the date of the Asset Acquisition, Pre-Merger Spyre had incurred total expenses of $ 19.0 million under the Paragon Agreement since inception, which included the $ 3.0 million research initiation fee and $ 16.0 million of reimbursable expenses under the Paragon Agreement for historical costs owed to Paragon. As of the acquisition date, $ 19.0 million was unpaid and was assumed by the Company through the Asset Acquisition. The Paragon Agreement was amended and restated on September 29, 2023 and May 14, 2024. Please refer to Note 8 for additional information on the Paragon Agreement. On July 12, 2023, December 14, 2023, and June 5, 2024, the Company exercised the Option available under the Paragon Agreement with respect to the SPY001, SPY002 and SPY003 research programs, 121 Table of Contents respectively. Our Option available under the Paragon Agreement with respect to the SPY004 program remains unexercised. Please refer to Note 9 for additional information on the License Agreements related to the exercised options. On May 14, 2024, the Company, Paragon and Parapyre entered into a second amended and restated antibody discovery and option agreement that amends and restates that certain amended and restated antibody discovery and option agreement, dated September 29, 2023, by and between Paragon, Parapyre and Spyre Therapeutics, LLC, in order to, among other things, (i) replace the Company’s subsidiary with the Company as a party to the agreement and (ii) amend certain terms related to the SPY003 research program, including without limitation, (a) establishing an SPY003 antibody selection process pursuant to which the Company and Paragon shall alternate in turn to select a project antibody to be included and excluded, respectively, from the Company’s rights under its option to license certain intellectual property rights related to SPY003 from Paragon until all project antibodies under the SPY003 research program have been selected; (b) reducing the development costs invoiced to the Company for the SPY003 research program incurred from and after April 1, 2024 through completion of the SPY003 antibody selection process by 50 %; (c) requiring Paragon to reimburse the Company for 50 % of the development costs for the SPY003 research program incurred prior to April 1, 2024; provided, that Paragon receives rights to at least one SPY003 project antibody following completion of the SPY003 antibody selection process; (d) obligating the Company to exercise its option to license the intellectual property rights to SPY003 project antibodies and technology following the completion of the SPY003 antibody selection process; and (e) establishing a license agreement term sheet for the SPY003 research program with substantially similar milestone payment terms and royalty payment terms as the SPY001 License Agreement. Please refer to Note 9 for additional disclosures. For the years ended December 31, 2024 and 2023, the Company recognized expenses related to services provided by Paragon subsequent to the Asset Acquisition totaling $ 29.8 million and $ 48.5 million, which included $ 14.5 million and $ 11.4 million of stock-based compensation expense, respectively, and were recorded as Research and development expenses in the consolidated statements of operations. I ncluded within the expenses recognized for services provided by Paragon for the year ended December 31, 2024, is a $ 5.9 million reduction in Research and development expenses related to the reimbursement of 50 % of the development costs for the SPY003 research program by Paragon. For the years ended December 31, 2024 and December 31, 2023, the Company made payments totaling $ 31.8 million and $ 39.5 million, respectively, to Paragon . There were no such payments for the year ended December 31, 2022. Parapyre Option Obligation Pursuant to the Paragon Agreement, the Company agreed to issue Parapyre an annual equity grant of warrants, on the last business day of each of the years ended December 31, 2023 and December 31, 2024, to purchase 1 % of the then outstanding shares of the Company's common stock, on a fully diluted basis, during the term of the Paragon Agreement. See Note 15 for disclosures related to the Parapyre Option Obligation. Paragon License Agreements See Note 9 for disclosures related to the License Agreements entered into with Paragon. December 2023 PIPE The December 2023 PIPE Investors included Fairmount, a related party. Fairmount's participation in the December 2023 PIPE was approved by the Company's board of directors. Fairmount's investment accounted for $ 10.0 million of the $ 180.0 million gross proceeds raised in the December 2023 PIPE. See Note 1 for disclosures related to the December 2023 PIPE. Mark McKenna Option Grant On February 1, 2024, the Board appointed Mark McKenna as a Class I director. Mr. McKenna and the Company are parties to a consulting agreement, pursuant to which Mr. McKenna agreed to continue to provide consulting services as an independent contractor to the Company, with an effective date of August 1, 2023 (the 122 Table of Contents “Vesting Commencement Date”). As compensation for Mr. McKenna’s consulting services, on November 22, 2023, he was granted non-qualified stock options to purchase 477,000 shares of the Company’s common stock under the Company's equity incentive plan with an exercise price of $ 10.39 per share, which vest as to 25 % on the one year anniversary of the Vesting Commencement Date and thereafter vest and become exercisable in 48 th equal monthly installments, subject to Mr. McKenna’s continued service to the Company through each applicable vesting date. For the years ended December 31, 2024 and December 31, 2023, the Company recognized $ 1.1 million and $ 0.1 million, respectively, in stock-based compensation expense related to Mr. McKenna's consulting agreement. There was no such expense for the year ended December 31, 2022. 11. Leases Prior to the Company's restructuring, as described in Note 17, the Company leased certain office space, laboratory facilities, and equipment. These leases required monthly lease payments that were subject to annual increases throughout the lease term. Certain of these leases also included renewal options at the election of the Company to renew or extend the lease for an additional three to five years . These optional periods were not considered in the determination of the right-of-use assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. The Company performed evaluations of its contracts and determined it has both operating and finance leases. Variable lease expense for these leases primarily consisted of common area maintenance and other operating costs. In April 2019, the Company entered into a lease agreement (the “Las Cimas Lease”) for its corporate headquarters and laboratory space located in Austin, Texas. The Las Cimas Lease included approximately 30,000 square feet and commenced on April 30, 2019, with an expiration on April 30, 2028. The Company posted a customary letter of credit in the amount of $ 1.5 million as security, which is subject to automatic reductions per the terms of the Las Cimas Lease. A tenant allowance of up to $ 1.0 million was provided by the lessor and fully reimbursed to the Company. In August 2023, the Company terminated its building lease in Austin, Texas. The negotiated termination agreement obligated the Company to pay the lessor a $ 2.0 million termination fee in exchange for releasing the Company of all further obligations under the lease including terminating the associated letter of credit. The following table summarizes the lease costs pertaining to the Company’s operating leases (in thousands): Year Ended December 31, 2024 2023 2022 Operating lease cost $ — $ 455 $ 910 Variable lease cost — 471 472 Total lease cost $ — $ 926 $ 1,382 Cash paid for amounts included in the measurement of operating lease liabilities during the years ended December 31, 2023 and 2022 was $ 0.5 million and $ 0.9 million, respectively, and was included within net cash used in operating activities in the cash flows. As of December 31, 2024 and December 31, 2023, the Company had no operating or finance lease obligations. 12. Convertible Preferred Stock and Stockholders’ Equity The Company is authorized to issue 410,000,000 shares of capital stock of which 400,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, all with a par value of $ 0.0001 per share. Each holder of common stock is entitled to one vote for each share of common stock held. The common stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to receive dividends out of funds legally available if the board 123 Table of Contents of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that the board of directors may determine. As of December 31, 2024 and 2023, no common stock dividends had been declared by the board of directors. Registered Direct Offering In May 2022, the Company issued and sold 430,107 shares of common stock at an offering price of $ 40.00 per share and pre-funded warrants to purchase up to 694,892 shares of common ctock at an offering price of $ 39.9975 per warrant (representing the price per share of common stock sold in the offering minus the $ 0.0025 exercise price per warrant) in a registered direct offering pursuant to a shelf registration statement on Form S-3. The net proceeds to the Company from this offering were approximately $ 42.9 million, after deducting placement agent fees and offering costs of $ 2.1 million. June 2023 PIPE In June 2023, in connection with the Asset Acquisition, the Company issued and sold 721,452 shares of Series A Preferred Stock at $ 291.08 per share through a private placement to a group of accredited investors. The net proceeds from this offering were approximately $ 197.3 million, after deducting placement agent fees and offering costs of $ 12.7 million. December 2023 PIPE In December 2023, the Company issued and sold 6,000,000 shares of common stock at an offering price of $ 15.00 per share and 150,000 shares of Series B Preferred Stock at $ 600 per share through a private placement to a group of accredited investors. The net proceeds from this offering were approximately $ 169.1 million, after deducting placement agent fees and offering costs of $ 10.9 million. March 2024 PIPE On March 18, 2024, in connection with the March 2024 PIPE, the Company filed a certificate of amendment to its Series B Certificate of Designation to increase the number of authorized shares of Series B Preferred Stock from 150,000 to 271,625 . On March 20, 2024, as part of the March 2024 PIPE, the Company completed a private placement of 121,625 shares of Series B Preferred Stock at an offering price of $ 1,480 per share. The net proceeds from this offering were approximately $ 168.9 million, after deducting placement agent fees and offering costs of $ 11.2 million. September 2024 ATM Facility On September 6, 2024, the Company filed a new shelf registration statement on Form S-3 that was declared effective by the SEC for the potential offering, issuance and sale by the Company of up to $ 500.0 million of the Company's common stock, preferred stock, debt securities, warrants and/or units consisting of all or some of these securities. Concurrent with the filing of the shelf-registration statement, the Company entered into a sales agreement (the "Sales Agreement") with TD Cowen, as its sales agent, pursuant to which the Company may issue and sell shares of its common stock for an aggregate offering price of up to $ 200.0 million under an ATM offering program included in the shelf registration. During the twelve months ended December 31, 2024, the Company sold an aggregate of 777,432 shares of common stock under the ATM at an average price per share of $ 26.935 resulting in net proceeds of $ 20.5 million, after deducting sales agent commissions and other offering costs of $ 0.4 million. As of February 27, 2025, $ 179.1 million remained available for sale under the Sales Agreement. November 2024 Underwritten Offering On November 18, 2024, the Company entered into the Underwriting Agreement with the Underwriters, pursuant to which the Company sold an aggregate of 8,366,250 shares of common stock, at a public offering 124 Table of Contents price per share of $ 27.50 , resulting in net proceeds of approximately $ 215.9 million, after deducting approximately $ 14.2 million of underwriting discounts and other offering costs. The November 2024 Offering closed on November 20, 2024 and the over-allotment option was exercised in full on November 26, 2024 and closed on November 29, 2024. Parapyre Warrants The Company settled its 2024 and 2023 obligations under the Parapyre Option Obligation by issuing Parapyre 848,184 and 684,407 warrants, respectively, to purchase the Company's common stock, at an exercise price per share per warrant of $ 23.28 and $ 21.52 , respectively. As of December 31, 2024, none of the warrants issued under the Parapyre Option Obligation have been exercised. See Note 15 for additional information on the Parapyre Option Obligation. Pre-Funded Warrants In May 2022, the Company issued pre-funded warrants to purchase shares of its common stock in underwritten public offerings at the offering price of the common stock, less the $ 0.0025 per share exercise price of each warrant. The warrants were recorded as a component of stockholders’ equity within additional paid-in capital and have no expiration date. Per the terms of the warrant agreements, the outstanding warrants to purchase shares of the Company's common stock may not be exercised if the holder’s ownership of the Company's common stock would exceed 4.99 % (“Maximum Ownership Percentage”) or 9.99 % for certain holders. By written notice to the Company, each holder may increase or decrease the Maximum Ownership Percentage to any other percentage (not in excess of 19.90 % for the majority of such warrants). The revised Maximum Ownership Percentage would be effective 61 days after the notice is received by the Company. As of December 31, 2024, all pre-funded warrants have been exercised and none remain outstanding. Series A Non-Voting Convertible Preferred Stock On June 22, 2023, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock with the Secretary of State of the State of Delaware (the “Series A Certificate of Designation”) in connection with the Asset Acquisition and the June 2023 PIPE. Pursuant to the Series A Certificate of Designation, holders of Series A Preferred Stock are entitled to receive dividends on shares of Series A Preferred Stock equal to, on an as-if-converted-to-common stock basis, and in the same form as, dividends actually paid on shares of the Company's common stock. Except as provided in the Series A Certificate of Designation or as otherwise required by law, the Series A Preferred Stock does not have voting rights. However, as long as any shares of Series A Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock: (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, or alter or amend the Series A Certificate of Designation, amend or repeal any provision of, or add any provision to, the Company’s Certificate of Incorporation or its Bylaws, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Preferred Stock, regardless of whether any of the foregoing actions will be by means of amendment to the Certificate of Incorporation or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (b) issue further shares of Series A Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series A Preferred Stock, (c) prior to the stockholder approval of the conversion of the Series A Preferred Stock into shares of common stock in accordance with Nasdaq Stock Market Rules (the “Series A Conversion Proposal”) or at any time while at least 30 % of the originally issued Series A Preferred Stock remains issued and outstanding, consummate (x) any Fundamental Transaction (as defined in the Series A Certificate of Designation) or (y) any merger or consolidation of the Company with or into another entity or any stock sale to, or other business combination in which our stockholders immediately before such transaction do not hold at least a majority of our capital stock immediately after such transaction or (d) enter into any agreement with respect to any of the foregoing. The Series A Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company. 125 Table of Contents The Company held a stockholders’ meeting to submit the following matters to its stockholders for their consideration: (i) the approval of the Series A Conversion Proposal, and (ii) if deemed necessary or appropriate by the Company or as otherwise required by law or contract, the approval of an amendment to the Certificate of Incorporation to authorize sufficient shares of common stock for the conversion of the Series A Preferred Stock issued pursuant to the Acquisition Agreement. In connection with these matters, the Company filed with the SEC a definitive proxy statement and other relevant materials. On June 26, 2023, the Company completed a private placement of 721,452 shares of June 2023 PIPE Securities at $ 291.08 per share in exchange for net proceeds of $ 197.3 million after deducting placement agent fees and offering costs of $ 12.7 million. On July 7, 2023, the Company issued 364,887 shares of Series A Preferred Stock as part of its consideration transferred in connection with the Asset Acquisition that closed on June 22, 2023 which settled the related forward contract liability. For additional information, see Note 3. On November 21, 2023, the Company's stockholders approved the Series A Conversion Proposal, among other matters, at a special meeting of stockholders. As a result of the approval of the Series A Conversion Proposal, all conditions that could have required cash redemption of the Series A Preferred Stock were satisfied. Since the Series A Preferred Stock is no longer redeemable, the associated balances of the Series A Preferred Stock were reclassified from mezzanine equity to permanent equity during the fourth quarter of 2023. Following stockholder approval of the Series A Conversion Proposal, each share of Series A Preferred Stock automatically converted into 40 shares of the Company's common stock, subject to certain limitations, including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (established by the holder between 0.0 % and 19.9 %) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion. 649,302 shares of Series A Preferred Stock automatically converted to 25,972,080 shares of common stock; 437,037 shares of Series A Preferred Stock did not automatically convert and remained outstanding following the conversion. This conversion was recorded as a reclassification between Series A Preferred Stock and common stock based on the historical per-share contributed capital amount of the Series A Preferred Stock. On April 23, 2024, in connection with the April 2024 Exchange, the Stockholder agreed to exchange an aggregate of 90,992 shares of Series A Preferred Stock for an aggregate of 3,639,680 shares of the Company's common stock. This exchange was recorded as a reclassification between Series A Preferred Stock and common stock based on the historical per-share contributed capital amount, inclusive of any forward-contract valuation adjustments, of the Series A Preferred Stock. Following the April 2024 Exchange, 346,045 shares of Series A Preferred Stock remained outstanding. Series B Non-Voting Convertible Preferred Stock On December 8, 2023, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series B Non-Voting Convertible Preferred Stock with the Secretary of State of the State of Delaware (the “Series B Certificate of Designation”) in connection with the December 2023 PIPE. Pursuant to the Series B Certificate of Designation, holders of Series B Preferred Stock are entitled to receive dividends on shares of Series B Preferred Stock equal to, on an as-if-converted-to-common stock basis, and in the same form as, dividends actually paid on shares of Company common stock. Except as provided in the Series B Certificate of Designation or as otherwise required by law, the Series B Preferred Stock does not have voting rights. However, as long as any shares of Series B Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series B Preferred Stock, alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock, or alter or amend the Series B Certificate of Designation, amend or repeal any provision of, or add any provision to, the Company’s Certificate of Incorporation or its Bylaws, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided 126 Table of Contents for the benefit of the Series B Preferred Stock, regardless of whether any of the foregoing actions will be by means of amendment to the Certificate of Incorporation or by merger, consolidation, recapitalization, reclassification, conversion or otherwise. The Series B Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company. On December 11, 2023, as part of the December 2023 PIPE, the Company completed a private placement of 150,000 shares of Series B Preferred Stock at $ 600 per share in exchange for net proceeds of $ 84.6 million after deducting placement and offering costs of $ 5.4 million. On March 18, 2024, in connection with the March 2024 PIPE, the Company filed a certificate of amendment to its Series B Certificate of Designation to increase the number of authorized shares of Series B Preferred Stock from 150,000 to 271,625 . On March 20, 2024, as part of the March 2024 PIPE, the Company completed a private placement of 121,625 shares of Series B Preferred Stock at $ 1,480 per share in exchange for net proceeds of approximately $ 168.9 million, after deducting placement agent fees and offering costs of $ 11.2 million. On May 14, 2024, the Company's stockholders approved the issuance of Company common stock upon the conversion of all issued and outstanding Series B Preferred Stock into shares of common stock in accordance with the Nasdaq Stock Market Rules (the "Series B Conversion Proposal"), among other matters, at its 2024 annual meeting of stockholders. As a result of the approval of the Series B Conversion Proposal, all conditions that could have required cash redemption of the Series B Preferred Stock were satisfied. Since the Series B Preferred Stock is no longer redeemable, the associated balances of the Series B Preferred Stock were reclassified from mezzanine equity to permanent equity during the second quarter of 2024. Following stockholder approval of the Series B Conversion Proposal, each share of Series B Preferred Stock will automatically convert into 40 shares of the Company's common stock, subject to certain limitations, including that a holder of Series B Preferred Stock is prohibited from converting shares of Series B Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (established by the holder between 0 % and 19.9 %) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion. 254,958 shares of Series B Preferred Stock automatically converted to 10,198,320 shares of common stock; 16,667 shares of Series B Preferred Stock did not automatically convert and remain outstanding as of December 31, 2024 due to beneficial ownership limitations. This conversion was recorded as a reclassification between Series B Preferred Stock and common stock based on the historical per-share contributed capital amount of the Series B Preferred Stock. 13. Strategic License Agreements Immedica Pharma AB License and Development Agreement On March 21, 2021, the Company entered into an exclusive license and supply agreement with Immedica Pharma AB (“Immedica”). By entering into this agreement, the Company agreed to provide Immedica the following goods and services: i. Deliver an exclusive, sublicensable, license and know-how (the “License”) to develop and commercialize pegzilarginase (the “Product”) in the territory comprising the members states of the European Economic Area, United Kingdom, Switzerland, Andorra, Monaco, San Marino, Vatican City, Turkey, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman (the “Territory”); ii. Complete the global pivotal PEACE (Pegzilarginase Effect on Arginase 1 Deficiency Clinical Endpoints) Phase 3 trial (“PEACE Trial”) and related Biologics License Application (“BLA”) package to file with the United States Food and Drug Administration (“FDA”), which will be leveraged by Immedica in obtaining the necessary regulatory approvals in the Territory; and iii. Perform a Pediatric Investigation Plan trial (“PIP Trial”) in order for Immedica to be able to receive certain regulatory approvals within the Territory. 127 Table of Contents In addition, the Company and Immedica formed a Joint Steering Committee (“JSC”) to provide oversight to the activities performed under the agreement; however, the substance of the Company’s participation in the JSC does not represent an additional promised service, but rather, a right of the Company to protect its own interests in the arrangement. Further, the Company agreed to supply to Immedica, and Immedica agreed to purchase from the Company, substantially all commercial requirements of the Product. The terms of the agreement do not provide for either (i) an option to Immedica to purchase the Product from the Company at a discount from the standalone selling price or (ii) minimum purchase quantities. Finally, Immedica will bear (i) all costs and expenses for any development or commercialization of the Product in the Territory subject to the License exclusive of the Company’s promised goods and services summarized above and (ii) all costs and fees associated with applying for regulatory approval of the Product in the Territory. In July 2021, the Company modified the agreement with Immedica to provide certain additional services in relation to the PEACE Phase 3 Trial and BLA package performance obligation in exchange for the reimbursement of up to $ 3.0 million of the actual costs incurred in relation to such incremental services. For the years ended December 31, 2023 and 2022, the Company recognized revenue of $ 0.9 million and $ 2.3 million, respectively, related to the PEACE Trial and BLA package performance obligation using a cost to cost model. On July 27, 2023, the Company announced that it had entered into an agreement to sell the global rights to pegzilarginase to Immedica for $ 15.0 million in upfront cash proceeds and up to $ 100.0 million in contingent milestone payments. The sale of pegzilarginase to Immedica superseded and terminated the previous license agreement between the Company and Immedica. On July 27, 2023, the carrying value of the asset was zero as it was internally developed. Accordingly, the Company recognized a $ 16.4 million gain within Gain on Sale of in-process research and development, which is comprised of $ 15.0 million in upfront cash proceeds and the reimbursement of $ 1.8 million in pre-paid manufacturing costs that was contingent upon a favorable opinion being received by the CHMP, net of transaction costs and the derecognition of pegzilarginase related nonfinancial assets and liabilities totaling $ 0.4 million. The milestone payments are contingent on formal reimbursement decisions by national authorities in key European markets and pegzilarginase approval by the FDA, among other events. The upfront payment and contingent milestone payments if paid, net of expenses and adjustments, will reduce the CVR liability and will be distributed to CVR holders pursuant to the CVR Agreement resulting from the Asset Acquisition. Contract Balances from Customer Contract The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities on the balance sheets. The Company recognizes license and development receivables based on billed services, which are derecognized upon reimbursement. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met. The Company had no contract assets or liabilities during the years ended December 31, 2024 and 2023. 14. Novation of Manufacturing Agreements Pursuant to a Novation Agreement dated September 19, 2023 (the “Novation Agreement”), by and between the Company, Paragon and WuXi Biologics (Hong Kong) Limited (“WuXi Biologics”), the Company novated (i) a Biologics Master Services Agreement (the “WuXi Biologics MSA”) and (ii) a Cell Line License Agreement (the “Cell Line License Agreement”). Biologics Master Services Agreement In April 2023, Paragon and WuXi Biologics entered into the WuXi Biologics MSA, which was subsequently novated to the Company by Paragon on September 19, 2023 pursuant to the Novation 128 Table of Contents Agreement. The WuXi Biologics MSA was subsequently amended and restated in October 2024. The WuXi Biologics MSA governs certain development activities and GMP manufacturing and testing for the SPY001 , SPY002, and SPY003 programs, as well as potential future programs, on a work order basis. Under the WuXi Biologics MSA, the Company is obligated to pay WuXi Biologics a service fee and all non-cancellable obligations in the amount specified in each work order associated with the agreement for the provision of services. The WuXi Biologics MSA terminates on the later of (i) October 14, 2029 or (ii) the completion of services under all work orders executed by the parties prior to October 14, 2029, unless terminated earlier. The term of each work order terminates upon completion of the services under such work order, unless terminated earlier. The Company can terminate the WuXi Biologics MSA or any work order at any time upon 30 days' prior written notice and immediately upon written notice if WuXi Biologics fails to obtain or maintain required material governmental licenses or approvals. The Company can also terminate the WuXi Biologics MSA, or any work order, in the event that any law is enacted that has, or could be reasonably expected to have, a material adverse effect on the Company or any of its products that is the subject of the WuXi Biologics MSA, in each case, as a result of WuXi Biologics providing services under the WuXi Biologics MSA or the Company being a party to the WuXi Biologics MSA. Either party may terminate a work order (i) at any time upon six months prior notice with reasonable cause, provided however that if WuXi Biologics terminates a work order in such manner, no termination or cancellation fees shall be paid by the Company and (ii) immediately for cause upon (a) the other party’s material breach that remains uncured for 30 days after notice of such breach, (b) the other party’s bankruptcy or (c) a force majeure event that prevents performance for a period of at least 90 days. Cell Line License Agreement In April 2023, Paragon and WuXi Biologics entered into the Cell Line License Agreement, which was subsequently novated to the Company by Paragon pursuant to the Novation Agreement. The Cell Line License Agreement was subsequently amended and restated in October 2024. Under the Cell Line License Agreement, the Company received a non-exclusive, worldwide, sublicensable license to certain of WuXi Biologics’s know-how, cell line, biological materials (the “WuXi Biologics Licensed Technology”) and media and feeds to make, have made, use, sell and import certain therapeutic products produced through the use of the cell line licensed by WuXi Biologics under the Cell Line License Agreement (the “WuXi Biologics Licensed Products”). Specifically, the WuXi Biologics Licensed Technology is used in certain manufacturing activities in support of the SPY001 , SPY002, and SPY003 programs. In consideration for the license, the Company agreed to pay WuXi Biologics a non-refundable license fee of $ 0.2 million . Additionally, if the Company manufactures all of its commercial supplies of bulk drug product with a manufacturer other than WuXi Biologics or its affiliates, the Company is required to make royalty payments to WuXi Biologics of less than one percent of global net sales of WuXi Biologics Licensed Products manufactured by a third-party manufacturer (the “Royalty”). If the Company manufactures part of its commercial supplies of the WuXi Biologics Licensed Products with WuXi Biologics or its affiliates, then the Royalty will be reduced accordingly on a pro rata basis. Subject to the terms of the Cell Line License Agreement, royalties owed under the Cell Line License Agreement may be bought out on a product-by-product basis for a lump-sum payment. The Cell Line License Agreement will continue indefinitely unless terminated (i) by the Company upon six months prior written notice and our payment of all undisputed amounts due to WuXi Biologics through the effective date of termination, (ii) by WuXi Biologics for a material breach by the Company that remains uncured for 60 days after written notice, (iii) by WuXi Biologics if the Company fails to make a payment and such failure continues for 30 days after receiving notice of such failure, or (iv) by either party upon the other party’s bankruptcy. 15. Stock-Based Compensation 2015 Equity Incentive Plan In March 2015, the Company adopted the 2015 Equity Incentive Plan (“2015 Plan”), administered by the board of directors, and provides for the Company to sell or issue shares of common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common 129 Table of Contents stock, to employees, members of the board of directors and consultants of the Company. Under the terms of the 2015 Plan, the exercise prices, vesting and other restrictions may be determined at the discretion of the board of directors, or their committee if so delegated, except that the exercise price per share of stock options may not be less than 100 % of the fair market value of the share of common stock on the date of grant, the term of stock options may not be greater than ten years for all grants, and for grantees holding more than 10 % of the total combined voting power of all classes of stock, the term may not be greater than five years . The Company granted options under the 2015 Plan until April 2016 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2015 Plan. As of December 31, 2024, a total of 952 shares of common stock are subject to options outstanding under the 2015 Plan and will become available under the 2016 Equity Incentive Plan (as amended and restated, the “2016 Plan”), to the extent the options are forfeited or lapse unexercised. 2016 Equity Incentive Plan The 2016 Plan became effective in April 2016 and serves as the successor to the 2015 Plan. Under the 2016 Plan, the Company may grant stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards, and stock bonuses. The 2016 Plan provides for an initial reserve of 44,000 shares of common stock, plus 20,395 shares of common stock remaining under the 2015 Plan, and any share awards that subsequently are forfeited or lapse unexercised under the 2015 Plan. The shares reserved exclude shares of common stock reserved for issuance under the 2015 Plan. In October 2018, the 2016 Plan was amended to increase the number of shares of common stock reserved for issuance thereunder by 70,384 shares, extend the term of the 2016 Plan through August 7, 2028, and provide for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each year for the remaining term of the plan equal to (a) 4.0 % of the number of issued and outstanding shares of common stock on December 31 of the immediately preceding year, or (b) a lesser amount as approved by the board each year (the "Evergreen Provision"). In November 2023, the 2016 Plan was amended to (i) increase the number of shares of common stock reserved for issuance thereunder by 4,481,152 shares, (ii) revise the annual limit on non-employee director compensation from 4,000 shares to (a) $ 750,000 in total value or (b) $ 1,000,000 in the year of the director’s initial service as a non-employee director or in any year a director serves as chairman of the Board of Directors, in either case, applicable to fees paid in both cash and equity, (iii) remove the fixed termination date of the 2016 Plan and, (iv) revise the Evergreen Provision from 4 % to 5 % of issued and outstanding shares of Company common stock on December 31 of the preceding calendar year and to include shares issuable upon the exercise of pre-funded warrants and the conversion of outstanding shares of non-voting convertible preferred stock in the calculation. As a result of the Evergreen Provision, on January 1, 2024, 2023, and 2022, an additional 3,023,650 , 104,561 , and 78,968 shares, respectively, became available for issuance under the 2016 Plan. As of December 31, 2024, the total number of shares reserved for issuance under the 2016 Plan was 7,193,219 , of which 3,145,248 shares were subject to outstanding option awards and restricted unit awards. 2018 Equity Inducement Plan In February 2018, the board of directors approved and adopted the 2018 Equity Inducement Plan (as amended, the “2018 Plan”), which became effective on the same date. The board of directors approved an initial reserve of 44,000 shares of common stock to be used exclusively for individuals who were not previously employees or directors, or following a bona fide period of non-employment, as an inducement material to the individual entering into employment with the Company. Nonqualified stock options or restricted stock units may be granted under the 2018 Plan at the discretion of the Compensation Committee or the board of directors. The Company did not seek stockholder approval of the 2018 Plan pursuant to Nasdaq Rule 5635(c)(4). The 2018 Plan was amended to increase the number of shares of common stock reserved for issuance by 1,000,000 and 6,000,000 during the years ended December 31, 2024 and 2023, respectively. 130 Table of Contents Under the 2016 Plan and 2018 Plan, the Company may grant stock-based awards with service conditions (“service-based” awards), performance conditions (“performance-based” awards), and market conditions (“market-based” awards). Service-based awards granted under the 2018 Plan, 2016 Plan, and 2015 Plan generally vest over four years and expire after ten years , although awards have been granted with vesting terms less than four years . As of December 31, 2024, the total number of shares reserved for issuance under the 2018 Plan was 6,895,602 , of which 6,219,622 shares were subject to outstanding awards. Spyre 2023 Equity Incentive Plan On June 22, 2023, in connection with the Asset Acquisition, the Company assumed the Amended and Restated Spyre 2023 Equity Incentive Plan (the "Spyre Equity Plan") and its outstanding and unexercised stock options, which were converted to options to purchase 2,734 shares of the Company's common stock. The acquisition-date fair value of these grants will be recognized as an expense on a pro-rata basis over the vesting period. Parapyre Option Obligation On June 22, 2023, in connection with the Asset Acquisition, the Company assumed the Parapyre Option Obligation which provided for an annual equity grant of warrants for Parapyre to purchase 1 % of the then outstanding shares of Pre-Merger Spyre's common stock, on a fully diluted basis, on the last business day of each calendar year during the term of the Paragon Agreement, at the fair market value determined by the board of directors of Pre-Merger Spyre. On September 29, 2023, the Company amended the Paragon Agreement to amend and restate certain terms of the option grant pertaining to the Parapyre Option Obligation, including but not limited to (i) defining that the annual equity grant of warrants is based on the outstanding shares of the Company’s common stock, on a fully-diluted basis, (ii) establishing the grant date as the last business day of 2023 and 2024, and (iii) defining the term of the warrants granted as ten years . The Company determined that the 2023 and 2024 grants are two separate grants, as there would be no obligation for the 2024 grant had the Company exercised or terminated all of the options under the Paragon Agreement prior to December 31, 2023. The service inception period for the grant precedes the grant date, with the full award being vested as of the grant date with no post-grant date service requirement. Accordingly, a liability related to the Parapyre Option Obligation was recorded pursuant to the amended Paragon Agreement during the 2023 and 2024 interim periods. The Company settled its 2024 and 2023 obligations under the Parapyre Option Obligation by issuing Parapyre 848,184 and 684,407 warrants, respectively, to purchase the Company's common stock at an exercise price per share per warrant of $ 23.28 and $ 21.52 , respectively. For the years ended December 31, 2024 and 2023, $ 14.5 million and $ 11.4 million, respectively, was recognized as stock compensation expense related to the Parapyre Option Obligation. There was no similar expense for the years ended December 31, 2022. As of December 31, 2024, the unamortized expense related to the Parapyre Option Obligation was nil . 131 Table of Contents The following table summarizes stock option activity for the year ended December 31, 2024: Shares Issuable Under Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in years) (in thousands) Outstanding as of December 31, 2023 8,497,395 $ 12.13 8.40 $ 98,928 Granted 2,521,853 28.39 Exercised ( 912,382 ) 7.90 Forfeited ( 853,708 ) 32.78 Outstanding as of December 31, 2024 9,253,158 $ 15.08 8.80 $ 90,016 Options vested and expected to vest as of December 31, 2024 9,253,158 $ 15.08 8.80 $ 90,016 Options exercisable as of December 31, 2024 2,529,495 $ 11.99 8.43 $ 31,518 The aggregate intrinsic value of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of the reporting date. For the years ended December 31, 2024, 2023, and 2022, the weighted-average grant date fair value of options granted was $ 28.39 , $ 9.67 , and $ 1.80 , per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 22.7 million, $ 0.4 million and $ 0.7 million, respectively. There were 10,000 and 477,000 stock options issued to non-employees during the years ended December 31, 2024 and 2023, respectively. There were no stock options issued to non-employees during the year ended December 31, 2022. For the year ended December 31, 2024 139,187 non-employee stock options vested in the period. There were no non-employee stock options vested during the years ended December 31, 2023 and 2022. 2016 Employee Stock Purchase Plan The 2016 Employee Stock Purchase Plan (“2016 ESPP”) became effective in April 2016. A total of 6,600 shares of common stock were reserved for issuance under the 2016 ESPP. Eligible employees may purchase shares of common stock under the 2016 ESPP at 85 % of the lower of the fair market value of the common stock as of the first or the last day of each offering period. Employees are limited to contributing 15 % of the employee’s eligible compensation and may not purchase more than $ 25,000 of stock during any calendar year. The 2016 ESPP will terminate ten years from the first purchase date under the plan, unless terminated earlier by the board of directors. In June 2018, the 2016 ESPP was amended to provide for an automatic annual increase in the number of shares reserved for issuance thereunder on January 1 of each year for the remaining term of the year equal to (a) 1.0 % of the number of issued and outstanding shares of common stock on December 31 of the immediately preceding year, or (b) a lesser amount as approved by the board of directors each year. As a result of the operation of this provision, on January 1, 2024, 2023 and 2022, an additional 360,571 , 26,140 , and 19,742 shares, respectively, became available for issuance under the 2016 ESPP. As of December 31, 2024, the reserve remaining and available for future issuance under the 2016 ESPP was 416,592 shares. In February 2023, the 2016 ESPP was amended to increase the maximum shares purchased during any one period from 80 shares to 400 shares or a lesser amount determined by the board of directors. For the years ended December 31, 2024, 2023 and 2022, stock-based compensation expense related to the 2016 ESPP plan was $ 0.3 million , $ 0.1 million and $ 0.2 million, respectively. 132 Table of Contents Restricted Stock Units The Company granted 153,865 service-based restricted stock units during the year ended December 31, 2023, of which 38,467 vested during the year ended December 31, 2024. There were no restricted stock units granted during the years ended December 31, 2024 and 2022. The following table summarizes employee restricted stock unit activity for the year ended December 31, 2024: Shares Weighted Average Grant Date Fair Value Unvested restricted stock units as of December 31, 2023 153,865 $ 18.17 Granted — — Vested ( 38,467 ) 18.17 Forfeited — — Unvested restricted stock units as of December 31, 2024 115,398 $ 18.17 There were no restricted stock units granted to non-employees during the years ended December 31, 2024, 2023, and 2022. Stock-Based Compensation Expense Total stock-based compensation expense recognized from the Parapyre Option Obligation, the Company’s equity incentive plans, 2018 Plan, and the 2016 ESPP for the years ended December 31, 2024, 2023, and 2022 was as follows (in thousands): Year Ended December 31, 2024 2023 2022 Employees Non- Employees Employees Non- Employees Employees Non- Employees Research and development (1) $ 9,112 $ 14,459 $ 2,910 $ 11,328 $ 2,591 $ — General and administrative 19,833 1,429 11,327 109 4,520 — Total stock-based compensation expense (2) $ 28,945 $ 15,888 $ 14,237 $ 11,437 $ 7,111 $ — (1) For the years ended December 31, 2024 and 2023, $ 14.5 million and $ 11.4 million, respectively, was recognized as stock compensation expense related to the Parapyre Option Obligation. There was no such expense for the year ended December 31, 2022. (2) Of the total $ 28.9 million, $ 14.2 million and $ 7.1 million of employee related stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively, $ 3.6 million, $ 8.3 million and $ 6.9 million is related to legacy Aeglea employees and directors who no longer served the Company as of the end of the respective period. No related tax benefits were recognized for the years ended December 31, 2024, 2023, and 2022 (see Note 18). The awards contain both performance and service-based vesting conditions. No expense was recognized for the unvested awards with only a performance condition for the years ended December 31, 2024, 2023, and 2022. The performance-based vesting conditions represent specific performance targets. Compensation expense for share-based payment awards with performance conditions is recognized when the performance condition is deemed probable of achievement. 133 Table of Contents As of December 31, 2024, the Company had an aggregate of $ 85.2 million of unrecognized stock-based compensation expense for options outstanding, which is expected to be recognized over a weighted average period of 2.9 years. In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. Expected Term The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method (based on the midpoint between the vesting date and the end of the contractual term). The Company utilizes this method due to lack of historical exercise data and the plain-vanilla nature of the Company’s stock-based awards. Expected Volatility Since the Company was privately held through April 2016 and transitioned from a clinical stage company to a pre-clinical stage company in 2023, it alone does not have the relevant company-specific historical data to support its expected volatility. As such, the Company has used an average of expected volatilities based on the volatilities of a representative group of publicly traded biopharmaceutical companies over a period equal to the expected term of the stock option grants. Subsequent to the Company’s initial public offering, it began to consider the Company’s own historic volatility. However, due to the transition from a clinical stage company to a pre-clinical stage company, the Company still uses peer company data to assist in this analysis. For purposes of identifying comparable companies, the Company selected companies with comparable characteristics to it, including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock-based awards. The Company intends to consistently apply this process using the same or similar comparable entities until a sufficient amount of historical information regarding the volatility of the Company’s own share price post transition becomes available. Risk-Free Interest Rate The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option. Expected Dividend The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero . 134 Table of Contents Valuation of Stock Options and 2016 ESPP The fair value of the stock options granted under the Company's equity incentive plans, as well as the shares available for purchase under the 2016 ESPP were determined using the Black-Scholes option-pricing model. The following table summarizes the weighted-average assumptions used in calculating the fair value of the awards: Year Ended December 31, 2024 2023 2022 Stock Options Granted Expected term (in years) 6.03 5.88 6.00 Expected volatility 105 % 107 % 84 % Risk-free interest 4.06 % 4.37 % 2.93 % Dividend yield 0 % 0 % 0 % 2016 ESPP Expected term (in years) 0.50 0.49 0.49 Expected volatility 84 % 181 % 84 % Risk-free interest 5.16 % 4.99 % 1.95 % Dividend yield 0 % 0 % 0 % 16. Defined Contribution Plan The Company sponsors a 401(k) retirement plan in which substantially all of its full-time employees are eligible to participate. Participants may contribute a percentage of their annual compensation to this plan, subject to statutory limitations. During the years ended December 31, 2024, 2023, 2022, the Company provided $ 0.5 million, $ 0.2 million, and $ 0.6 million, respectively, in contributions to the plan. 17. Restructuring Charges Severance and Stock Compensation On April 12, 2023, based on the review of the inconclusive interim results from the Company's Phase 1/2 clinical trial of pegtarviliase for the treatment of classical homocystinuria and other business considerations, the Company announced that it had initiated a process to explore strategic alternatives to maximize stockholder value and engaged an independent exclusive financial advisor to support this process. As a result, the Company implemented a restructuring plan resulting in an approximate 83 % reduction of the Company’s existing headcount by June 30, 2023. The Company recognized restructuring expenses consisting of cash severance payments and other employee-related costs of $ 6.4 million during the year ended December 31, 2023. Cash payments for employee related restructuring charges of $ 5.3 million were paid as of December 31, 2023. In addition, the Company recognized $ 1.0 million in non-cash stock-based compensation expense related to the accelerated vesting of stock-based awards for certain employees. The Company recorded these restructuring charges based on each employee’s role to the respective research and development and general and administrative operating expense categories on its consolidated statements of operations and comprehensive loss. Sale of Assets During the second quarter of 2023, the Company sold various lab equipment, consumables, and furniture and fixtures for total consideration of $ 0.5 million. After recording the disposal of all the Company's property and equipment net of proceeds, the Company recorded a $ 0.7 million and $ 0.2 million loss on disposal of long-lived assets which is included in Research and development and General and administrative expenses, respectively. 135 Table of Contents Lease Right-of-use Asset and Leasehold Improvement Impairment Effective June 30, 2023, the Company abandoned its leased office space in Austin, Texas. As a result, the Company recognized an impairment loss of $ 0.9 million related to the operating lease right-of-use asset and $ 1.7 million related to leasehold improvements. On August 7, 2023, the Company terminated its building lease in Austin, Texas. The negotiated termination agreement obligated the Company to pay the lessor a $ 2.0 million termination fee in exchange for releasing the Company of all further obligations under the lease. All charges related to the restructuring activities were recognized during the second quarter of 2023. No further restructuring charges will be incurred under the restructuring plan. A summary of the charges related to the restructuring activities is as follows (in thousands): Severance Related Expenses Stock Compensation Expenses Loss on Disposal of Long-Lived Assets Lease Asset Impairment Total Restructuring Costs Research and development $ 3,182 $ 123 $ 749 $ 1,405 $ 5,459 General and administrative 3,266 870 182 1,175 5,493 Total $ 6,448 $ 993 $ 931 $ 2,580 $ 10,952 As of December 31, 2024 and 2023, nil and $ 1.1 million of restructuring costs remained outstanding and unpaid, respectively, under the restructuring plan described above. 18. Income Taxes The following table summarizes the (loss) income before income tax expense by jurisdiction for the periods indicated: Year Ended December 31, 2024 2023 2022 Domestic $ ( 207,965 ) $ ( 338,942 ) $ ( 84,113 ) Foreign ( 2 ) 126 162 Loss before income tax expense $ ( 207,967 ) $ ( 338,816 ) $ ( 83,951 ) For the years ended December 31, 2024 and 2023, the Company recognized no provision or benefit from income taxes. For the year ended December 31, 2022, the Company recognized an income tax expense of $ 0.1 million related to foreign subsidiaries income tax expense. The difference between the Company’s provision for income taxes and the amounts computed by applying the statutory federal income tax rate to income before income taxes is as follows (in thousands): 136 Table of Contents Year Ended December 31, 2024 2023 2022 Tax provision derived by applying the federal statutory rate to income before income taxes $ ( 43,673 ) $ ( 71,151 ) $ ( 17,630 ) Loss on forward contract valuation — 17,541 — Acquired IPR&D — 27,340 — Loss on CVR revaluation 4,290 3,987 — Other permanent differences 1,865 4,472 1,042 Federal tax credits ( 91 ) ( 1 ) ( 3,559 ) State tax credits — — ( 640 ) Effect of tax rate on foreign jurisdiction ( 2 ) ( 53 ) 42 Other, net 191 — — Change in the valuation allowance 37,471 17,839 20,609 Income tax (benefit) expense $ 51 $ ( 26 ) $ ( 136 ) The components of the deferred tax assets and liabilities consist of the following (in thousands): December 31, 2024 2023 2022 Deferred tax assets Net operating loss carryforward $ 87,321 $ 74,454 $ 68,917 Capitalized 174 R&D costs 45,531 22,532 11,097 Intangible assets 2,117 47 52 Deferred revenue — — 566 Accrued expense 1,047 579 668 Stock-based compensation 7,114 4,246 3,293 Federal tax credits 18,196 21,914 21,914 State tax credits 1,631 1,631 1,631 Other 64 88 190 Total deferred tax assets 163,021 125,491 108,328 Deferred tax liabilities Unrealized gain ( 92 ) — — Depreciable assets — — ( 676 ) Total deferred tax liabilities ( 92 ) — ( 676 ) Less: Valuation allowance ( 162,929 ) ( 125,491 ) ( 107,652 ) Deferred tax assets, net $ — $ — $ — The Company has established a full federal and state valuation allowance equal to the net deferred tax assets due to uncertainties regarding the realization of the deferred tax asset based on the Company’s lack of earnings history. The valuation allowance increased by $ 37.4 million, $ 17.8 million, and $ 20.6 million during the years ended December 31, 2024, 2023, and 2022, respectively, primarily due to continuing loss from operations. As of December 31, 2024 and 2023, the Company had U.S. net operating loss carryforwards (“NOL”) of $ 415.8 million and $ 354.5 million, respectively. For the year ended December 31, 2024, the Company had U.S. tax credit carryforwards and state tax credit carryforwards of $ 18.2 million and $ 2.1 million, respectively. Of the net operating loss and tax credit carryforwards $ 58.4 million and $ 20.3 million will begin to expire in 2033 and 2034, respectively. 137 Table of Contents For the year ended December 31, 2023, the Company had U.S. tax credit carryforwards and state tax credit carryforwards of $ 21.9 million and $ 2.1 million, respectively. Of the net operating loss and tax credit carryforwards $58.4 million and $ 21.9 million will begin to expire in 2033 and 2034, respectively, if not utilized. Any remaining net operating loss will carry forward indefinitely and can be utilized to offset up to 80% of the taxable income in any tax year. The net operating loss and credit carryforwards are subject to Internal Revenue Service adjustments until the statute closes on the year the net operating loss or tax credits are utilized. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future. If the Company has experienced an ownership change at any time since its formation, utilization of the NOL or research and development credit carryforwards would be subject to an annual limitation under Section 382 or 383 of the Internal Revenue Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Additionally, the separate return limitation year (“SRLY”) rules may apply to losses of the Company’s eight wholly owned U.S. subsidiary corporations that have now been merged with the parent company. The SRLY rules limit the consolidated group’s use of a subsidiary corporation’s net operating losses to the amount of income generated by the subsidiary corporation after it becomes a member of the group. Any limitation may result in expiration of a portion of the NOL or research and development credit carryforwards before utilization. Further, until a study is completed and any limitation known, no amounts are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Additionally, the Company does not expect any unrecognized tax benefits to change significantly over the next twelve months. Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. The Company is subject to examination by taxing authorities in its significant jurisdictions for the year ended 2020 and subsequent years. However, due to NOL and tax attribute carryovers, the taxing authorities have the ability to adjust the NOLs and other tax attributes related to closed years. As of December 31, 2024 and 2023, there were no amounts recorded for uncertain tax positions. As of December 31, 2024, undistributed earnings of the Company’s incorporated foreign subsidiaries are immaterial. Under the Global Intangible Low-Taxed Income (“GILTI”) provisions of the 2017 Tax Cuts and Jobs Act, U.S. income taxes have been incurred on the undistributed earnings of the foreign subsidiaries and therefore, the tax impact upon distribution is limited to state income and withholding taxes and is not material. 19. Segment Reporting The Company operates under a single operating and reportable segment, which is the development of biopharmaceutical products for the treatment of patients with IBD and other immune-mediated diseases. The Company's Chief Operating Decision Maker ("CODM") is the Company's Chief Executive Officer. The Company's CODM uses consolidated Net loss as the measure of segment profit or loss and uses consolidated Total Assets as reported on the balance sheet as the measure of segment assets. The Company's CODM compares Net loss against budgeted and/or forecasted amounts to track the Company's financial performance against expectations and to inform, along with development timelines and scientific and commercial considerations, their decisions regarding resource allocations to fund the Company's development of its pipeline. 138 Table of Contents The following table sets forth the significant expenses provided to the CODM on a regular basis (in thousands): Year Ended December 31, 2024 2023 2022 Revenue $ — $ 886 $ 2,329 Less: Compensation $ 21,780 $ 22,590 $ 25,776 Share-based compensation (1) 44,833 25,675 7,111 Research and development, excluding compensation and share-based compensation (2) (3) 127,491 65,282 40,700 Other segment items (4) 13,914 226,129 12,557 Segment net loss $ 208,018 $ 338,790 $ 83,815 Reconciliation of net loss Adjustments and reconciling items — — — Consolidated net loss $ 208,018 $ 338,790 $ 83,815 (1) Includes $ 15.6 million and $ 11.4 million in related party expenses for the years ended December 31, 2024 and 2023, respectively, and no related party expenses for the year ended December 31, 2022. (2) Includes non-clinical study expenses, clinical trial expenses and manufacturing costs. (3) Includes $ 25.5 million and $ 37.1 million in related party expenses for the years ended December 31, 2024 and 2023, respectively, and no related party expenses for the year ended December 31, 2022. (4) Includes general and administrative expenses such as audit, legal, and other professional fees, interest income, and Other expense, net. For the year ended December 31, 2023, includes acquired IPR&D expense related to the Asset Acquisition, a gain on sale related to sale of Pegzilarginase to Immedica, and changes in the forward-contract liability related to the Asset Acquisition. 20. Net Loss Per Share The Company computes net loss per share of common stock, Series A Preferred Stock, and Series B Preferred Stock using the two-class method required for multiple classes of common stock and other participating securities. The two-class method is an earnings (loss) allocation method under which earnings (loss) per share is calculated for each class of common stock. The Company has determined that the Series A Preferred Stock and Series B Preferred Stock do not have preferential rights when compared to the Company's common stock and therefore it must allocate losses to these other classes of common stock, as illustrated in the table below. Basic and diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares and pre-funded warrants outstanding during the period, without consideration of potential dilutive securities. The pre-funded warrants are included in the computation of basic net loss per share as the exercise price is negligible and they are fully vested and exercisable. For periods in which the Company generated a net loss, the Company does not include potential shares of common stock in diluted net loss per share when the impact of these items is anti-dilutive. The Company has generated a net loss for all periods presented, therefore diluted net loss per share is the same as basic net loss per share since the inclusion of potential shares of common stock would be anti-dilutive. 139 Table of Contents The following table sets forth the computation of basic and diluted net loss per share of common stock, Series A Preferred Stock, and Series B Preferred Stock (in thousands, except share and per share amounts): Year Ended December 31, 2024 Series A Preferred Stock Series B Preferred Stock Common Stock Net loss per share, basic and diluted: Numerator Allocation of losses $ ( 47,624 ) $ ( 10,839 ) $ ( 149,555 ) Denominator Weighted-average shares outstanding 374,387 85,208 46,940,206 Weighted-average pre-funded warrants outstanding — — 87,432 Number of shares used in per share computation 374,387 85,208 47,027,638 Net loss per share, basic and diluted $ ( 127.21 ) $ ( 127.21 ) $ ( 3.18 ) Year Ended December 31, 2023 Series A Preferred Stock Series B Preferred Stock Common Stock Net loss per share, basic and diluted: Numerator Allocation of losses $ ( 239,158 ) $ ( 4,749 ) $ ( 94,883 ) Denominator Weighted-average shares outstanding 434,612 8,630 6,201,954 Weighted-average pre-funded warrants outstanding — — 695,111 Number of shares used in per share computation 434,612 8,630 6,897,065 Net loss per share, basic and diluted $ ( 550.28 ) $ ( 550.29 ) $ ( 13.76 ) Year Ended December 31, 2022 Series A Preferred Stock Series B Preferred Stock Common Stock Net loss per share, basic and diluted: Numerator Allocation of losses $ — $ — $ ( 83,815 ) Denominator Weighted-average shares outstanding — — 2,307,668 Weighted-average pre-funded warrants outstanding — — 1,063,563 Number of shares used in per share computation — — 3,371,231 Net loss per share, basic and diluted $ — $ — $ ( 24.86 ) The following weighted-average equity instruments were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented: Year Ended December 31, 2024 2023 2022 Options to purchase common stock 3,212,734 2,583,226 346,331 Unvested restricted stock units 68,027 4,240 6,983 Outstanding Parapyre Warrants 686,724 5,625 — 140 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.