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Item 7. Management’s Discussion and Analysis

2026-03-04 compared with 2025-03-05 · 63 added, 73 removed, 259 unchanged (34% of the section changed)

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As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biotechnology company focused on developing a robust pipeline of T cell receptor (TCR)-engineered T cell, or TCR-T, therapies for the treatment of patients with cancer.

Our approach is based on the central premise that we can learn from patients who are winning their fight against cancer to treat those who are not.

Over the past several years, we have built our ImmunoBank, a repository of therapeutic TCRs that recognize diverse targets and are associated with multiple human leukocyte antigen, or HLA, types.

We then use these TCRs to manufacture enhanced TCR-T therapies to treat a broad population of patients with both hematologic, or heme, and solid tumor malignancies.

Every TCR in our ImmunoBank has come from our proprietary platform technologies, and we are continuing to expand our ImmunoBank.

We are advancing a robust pipeline of TCR-T therapy product candidates for the treatment of patients with heme malignancies and solid tumors.

Our lead product candidates, TSC-100 and TSC-101, are in development for the treatment of patients with acute myeloid leukemia (AML), myelodysplastic syndrome (MDS), and acute lymphoblastic leukemia (ALL), who are undergoing allogeneic hematopoietic cell transplantation (HCT).

The products are designed to eliminate residual disease and promote complete donor chimerism, thereby preventing relapse.

TSC-100 and TSC-101 target the antigens HA-1 and HA-2, respectively, which are well-recognized TCR targets that were first identified in patients with exceptional responses to HCT-associated immunotherapy.

We are currently conducting a multi-arm Phase 1 "umbrella" clinical study of TSC-100 and TSC-101, the ALLOHA Phase 1 heme trial, with 15 clinical sites activated, and we plan to open additional sites before the end of 2025.

In addition, we are developing multiple TCR-T therapy product candidates for the treatment of solid tumors.

One of the challenges of treating solid tumors is that they are heterogeneous – not every tumor cell expresses a given target and some tumor cells lose half their HLA genes.

To address this challenge, we are developing what we refer to as multiplex TCR-T therapy, or T-Plex, in which we treat a patient with more than one TCR-T therapy product candidate at a time.

We are designing these multiplex therapies to be a simultaneous administration of up to three highly active TCR-T therapy product candidates, selected from our ImmunoBank, that are customized for each patient based on which targets are expressed in their tumors and which HLA genes are still intact.

We continue to prioritize expanding the ImmunoBank with TCRs for additional targets and multiple HLA types for each target.

We have now advanced seven TCR-T therapy product candidates into Phase 1 development for solid tumors:

TSC-203-A0201 (PRAME, HLA-A*02:01);

TSC-200-A0201 (HPV16, HLA-A*02:01);

TSC-201-B0702 (MAGE-C2, HLA-B*07:02);

TSC-202-A0201 (MAGE-A4, HLA-A*02:01);

TSC-204-A0201 (MAGE-A1, HLA-A*02:01);

TSC-204-C0702 (MAGE-A1, HLA-C*07:02);

and TSC-204-A0101 (MAGE-A1, HLA-A*01:01).

In addition to clearing these seven solid-tumor investigational new drug (IND) applications, the U.S.

Food and Drug Administration (FDA) has cleared our IND application for T-Plex, enabling us to treat patients with multiplex TCR-T therapy.

We plan to further expand the ImmunoBank by filing IND applications for additional TCR-T therapy product candidates.

We have initiated a Phase 1 solid tumor clinical trial, the PLEXI-T trial, with 15 clinical sites activated, and we plan to open additional sites before the end of 2025.

We are a fully integrated clinical-stage biotechnology company focused on developing a robust pipeline of T cell receptor (TCR)-engineered T cell, or TCR-T, therapies for the treatment of patients with cancer.

Our lead product candidate, TSC-101, is in development for the treatment of patients with acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS) who are undergoing allogeneic hematopoietic cell transplantation (HCT).

The product is designed to eliminate residual disease and promote complete donor chimerism, thereby preventing relapse.

TSC-101 targets HA-2, an antigen that is present on all blood cells, malignant or benign, in patients with the HLA type A*02:01.

We are currently conducting a Phase 1 clinical study of TSC-101 (the ALLOHA trial, NCT05473910) and during the fourth quarter of 2025, following a productive End-of-Phase meeting with the U.S.

Food and Drug Administration (FDA), we reached agreement on a registrational path forward for the TSC-101 program as a potential treatment for patients with AML and MDS.

The pivotal study will mirror our ongoing Phase 1 ALLOHA study, using a biologically-assigned (genetically randomized) control arm to support relapse-free survival as the primary endpoint.

We are further expanding our hematologic (heme) malignancies program with the addition of TCRs targeting other HLA types.

TSC-102-A01 and TSC-102-A03 are allogeneic, donor-derived TCR-T therapy candidates targeting epitopes derived from CD45.

Like TSC-101, these candidates are designed to eliminate residual cancer cells and prevent relapse in patients undergoing HCT.

TSC-102-A01 and TSC-102-A03 are designed for patients with HLA types A*01:01 and A*03:01, respectively.

We are also developing multiple TCR-T therapy product candidates for the treatment of solid tumors.

One of the challenges of treating solid tumors is that they are heterogeneous – not every tumor cell expresses a given target.

To address this challenge, we are developing what we refer to as multiplex TCR-T therapy, in which we treat a patient with more than one TCR-T therapy product candidate at a time.

We are designing these multiplex therapies to be a simultaneous administration of up to three highly active TCR-Ts that are customized for each patient based on which targets are expressed in their tumors.

On November 3, 2025, following our alignment with the U.S.

Food and Drug Administration (FDA) on the registrational path forward for the TSC-101 program, we made the strategic decision to prioritize clinical development of our heme program and pause further enrollment in our solid tumor Phase 1 trial (PLEXI-T), while focusing our preclinical efforts on in vivo engineering for solid tumors.

We believe an in vivo approach represents a promising and more cost-efficient way to deliver off-the-shelf, multiplexed TCR-T therapy for solid tumors.

While primarily focused on oncology, we believe our target discovery platform is well suited to identify targets that cause T cell-driven autoimmune disorders.

We have identified a set of indications in which T cells play a key role and are currently identifying targets and developing potential treatment options for these disorders.

Initial indications include ankylosing spondylitis, ulcerative colitis and scleroderma.

In addition, the Company is continuing to discover targets for Crohn's disease in partnership with Amgen.

Since our inception in 2018, we have devoted our efforts to raising capital, obtaining financing, filing, prosecuting and maintaining intellectual property rights, organizing and staffing our Company and incurring research and development costs related to the identification of novel targets for TCRs and development of TCR-T therapy product candidates to target and eliminate cancer cells.

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We have not generated any revenue from the sale of therapies to date, nor do we expect to generate revenues therefrom in the near future, if at all.

additional revenue in the future from sales of our therapies, payments from license or collaboration agreements that we may enter into with third parties, or any combination thereof.

If our development efforts for our product candidates are successful and result in regulatory approval or if we enter into additional license or collaboration agreements with third parties, we may generate additional revenue in the future from sales of our therapies, payments from license or collaboration agreements that we may enter into with third parties, or any combination thereof.

However, there can be no assurance as to when we will generate such revenue, if at all.

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Collaboration Revenue

In March 2020, we entered into a Collaboration and License Agreement (the Novartis Agreement) with Novartis Institutes for BioMedical Research, Inc.

(Novartis), to collaborate on their research efforts to discover and develop novel TCR-T therapies.

Under the Novartis Agreement, we identified and characterized TCRs in accordance with a research plan and transferred data arising from the research plan.

The collaboration included an upfront fee and research funding together totaling $30.0 million.

During the year ended December 31, 2023, we recognized $5.8 million of revenue associated with the Novartis Agreement, of which $1.9 million related to cost reimbursements under the Novartis Agreement that offset costs incurred within research and development expenses in the statements of operations.

In March 2023, all performance obligations were considered fulfilled, and the arrangement was completed.

On May 8, 2023, the Company entered into a Collaboration Agreement with Amgen Inc.

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Upfront payments under license agreements are expensed upon receipt of the license, and annual maintenance fees under license agreements are expensed in the period in which they are incurred.

Milestone payments under license

agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Our direct external research and development expenses consist of costs that include fees, reimbursed materials, direct material costs, and other costs paid to consultants, contractors, CDMOs and CROs in connection with our development and manufacturing activities.

We do not allocate employee costs, general laboratory supplies, and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform technology and, as such, are not separately classified.

Product candidates in later stages of clinical development generally have higher development costs than those in preclinical and earlier stages of clinical development, primarily due increased size and duration of later stage clinical trials.

We expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and in the future.

At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates.

Product candidates in later stages of clinical development generally have higher development costs than those in preclinical and earlier stages of clinical development, primarily due to increased size and duration of later stage clinical trials.

At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical

development of any of our product candidates.

The successful development and commercialization of our product candidates is highly uncertain.

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General and administrative expenses consist primarily of salaries and personnel expenses, including stock-based compensation, for our personnel in executive, legal, finance and accounting, human resources, and other administrative functions.

administrative expenses also include legal fees relating to corporate matters;

General and administrative expenses also include legal fees relating to corporate matters;

professional fees paid for accounting, auditing, consulting, and tax services;

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and facility costs not otherwise included in research and development expenses.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates.

We have incurred significantly increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company and anticipate these expenses to increase in 2025 as we continue to expand the business.

In addition, if we obtain regulatory approval for a product candidate and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support sales, marketing and distribution activities.

As of December 31, 2024, the unrecognized compensation cost related to outstanding options, inclusive of research and development and general and administrative, was $24.0 million, which is expected to be recognized over a weighted-average period of 2.66 years.

Restructuring Charges

On November 3, 2025, following our alignment with the U.S.

Food and Drug Administration (FDA) on the registrational path forward for the TSC-101 program, we made the strategic decision to prioritize clinical development of our heme program and pause further enrollment in our solid tumor Phase 1 trial, while focusing our preclinical efforts on in vivo engineering for solid tumors and target discovery in autoimmunity.

Pursuant to this strategy, we also implemented a workforce reduction of approximately 30%, or 66 roles.

As part of this strategic restructuring, we incurred expenses of approximately $2.0 million for severance-related benefits and other costs, of which $1.6 million is included in research and development expenses and $0.4 million is included in general and administrative expenses in the accompanying consolidated statements of operations.

The strategic prioritization is expected to produce annual cost savings of $45.0 million in 2026 and 2027.

These expected savings are based on our current operating plan and may vary depending on the timing and scope of our development activities and other operational factors.

Since our inception, we have not recorded any U.S.

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Revenue for the years ended December 31, 2025 and 2024 was $10.3 million and $2.8 million, respectively.

The decrease was primarily due to the timing of research activities performed pursuant to our collaboration agreements.

Revenue for the 2024 period was related solely to our collaboration agreement with Amgen which commenced in May 2023.

Revenue for the 2023 period was primarily driven by $14.2 million related to our collaboration agreement with Amgen, and $5.8 million related to our collaboration agreement with Novartis, which concluded in March 2023.

The increase was primarily due to the timing of research activities performed pursuant to our collaboration agreement with Amgen which commenced in May 2023.

Research and Development Expenses

The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024 (in thousands):

Personnel expenses

Laboratory supplies, research materials and studies

Clinical studies

Personnel expenses

Facility-related and other

Clinical studies

Stock-based compensation

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Total research and development expenses

Research and development expenses increased $19.2 million and was primarily attributable to a $9.0 million increase in clinical studies expense driven by enrollment in the ALLOHA Phase 1 heme clinical trial as well as start-up activities and enrollment in the PLEXI-T Phase 1 solid tumor clinical trial.

There was also a $7.6 million increase in personnel expenses due to additional headcount in support of expanded research and development activities, a $1.4 million increase in laboratory supplies, research materials and studies due to start-up activities with a global contract development and manufacturing organization, or CDMO, a $0.4 million increase in facility-related expenses, and a $1.1 million decrease in depreciation expense.

Research and development expenses included non-cash stock compensation of $4.8 million and $2.9 million for the years ended December 31, 2024 and 2023, respectively.

Research and development expenses increased $6.8 million and was primarily attributable to a $3.7 million increase in laboratory supplies, research materials and studies expenses driven by timing of manufacturing activities.

There was also a $3.4 million increase in facility-related expenses due to the commencement of rent payments for the 830 Winter Street expansion space in December 2024, as well as a $2.2 million increase in personnel expenses which was primarily incurred prior to our enacted strategy in November 2025 to prioritize the clinical development of our heme program.

Clinical expenses decreased by $2.4 million due to timing of ongoing trial activities, and depreciation expense decreased by $1.2 million as certain assets became fully depreciated.

Research and development expenses included non-cash stock compensation expense of $6.0 million and $4.8 million for the years ended December 31, 2025 and 2024, respectively.

General and Administrative Expenses

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Total general and administrative expenses

General and administrative expenses increased by $3.9 million and was primarily due to a $1.8 million increase in personnel expenses due to additional headcount.

There was also a $0.3 million increase in legal and professional fees, a $0.4 million decrease in facility-related expenses, and a $0.1 million decrease in depreciation expense.

General and administrative expenses increased by $1.7 million and was primarily due to a $0.5 million increase in personnel expenses.

There was also a $0.4 million increase in facility-related and other expenses, a $0.2 million decrease in legal and professional fees, and a $0.1 million decrease in depreciation expense.

General and administrative expenses included non-cash stock compensation expense of $5.7 million and $4.7 million for the years ended December 31, 2025 and 2024, respectively.

Other (Expense) Income

Other income has increased $3.1 million primarily due to a $4.1 million increase in interest income attributable to higher cash balances available for investment, offset by a $1.1 million non-recurring charge for loss on extinguishment of debt related to the K2HV Loan Agreement repayment.

Other income decreased $1.3 million primarily due to a $3.2 million decrease in interest income attributable to lower cash balances available for investment.

This decrease was offset by a $1.1 million non-recurring charge for loss on extinguishment of debt in 2024 related to the K2HV Loan Agreement repayment and a $0.9 million decrease in interest expense due to more favorable rates in 2025 under the SVB Loan Agreement.

Liquidity and Capital Resources

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Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures.

Under the terms of the Amgen Agreement, we received an upfront payment of $30.0 million in July 2023.

In addition, we are eligible to earn success-based milestone payments of over $500 million, based upon the

achievement of certain clinical development and commercial milestones, as well as tiered single-digit royalty payments on net sales of products developed from the collaboration, subject to reductions set forth in the Amgen Agreement.

On June 1, 2023, we completed an underwritten public offering of (a) 23,287,134 shares of the Company's Voting Common Stock, inclusive of the underwriters’ 30-day option to purchase 297,660 additional shares of Voting Common Stock, at a price of $2.00 per share, and (b) the Pre-Funded Warrants to purchase up to 47,010,526 shares of the Voting Common Stock, at a price of $1.9999 per warrant with an exercise price of $0.0001 per share.

Under the terms of the Amgen Agreement, we received an upfront payment of $30.0

million in July 2023.

In addition, we are eligible to earn success-based milestone payments of over $500 million, based upon the achievement of certain clinical development and commercial milestones, as well as tiered single-digit royalty payments on net sales of products developed from the collaboration, subject to reductions set forth in the Amgen Agreement.

On June 1, 2023, we completed an underwritten public offering of (a) 23,287,134 shares of the Company's Voting Common Stock, inclusive of the underwriters’ 30-day option to purchase 297,660 additional shares of Voting Common Stock, at a price of $2.00 per share, and (b) the Pre-Funded Warrants to purchase up to 47,010,526 shares of the Voting Common Stock, with a purchase price of $1.9999 per warrant and an exercise price of $0.0001 per warrant.

The Company received aggregate net proceeds from the offering of $134.7 million after deducting underwriting discounts, commissions and other offering expenses.

On April 24, 2024, we completed an underwritten public offering resulting in the issuance and sale of (a) 4,958,068 shares of Voting Common Stock, including the partial exercise of the underwriters’ option to purchase 2,485,487 additional shares of Voting Common Stock, at the closing market price on April 16, 2024, of $7.13 per share, and (b) Pre-Funded Warrants to purchase up to 18,577,419 shares of the Voting Common Stock, at a price of $7.1299 per warrant with an exercise price of $0.0001 per share.

On April 24, 2024, we completed an underwritten public offering resulting in the issuance and sale of (a) 4,958,068 shares of Voting Common Stock, including the partial exercise of the underwriters’ option to purchase 2,485,487 additional shares of Voting Common Stock, at the closing market price on April 16, 2024, of $7.13 per share, and (b) Pre-Funded Warrants to purchase up to 18,577,419 shares of the Voting Common Stock, with a purchase price of $7.1299 per warrant and an exercise price of $0.0001 per warrant.

We received aggregate net proceeds of approximately $161.4 million after deducting underwriting discounts, commissions and other estimated offering expenses.

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We have the option to draw a second tranche of $20.0 million at the lender's sole discretion on or prior to June 30, 2026.

See “Notes to Condensed Consolidated Financial Statements” and “Item 1A.

See “Notes to Consolidated Financial Statements” and “Item 1A.

Risk factors—The terms of our loan agreement place restrictions on our operating and financial flexibility.

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The Pre-Funded Warrants were issued at a purchase price of $4.00 per warrant, resulting in gross proceeds of approximately $30.0 million, before deducting offering expenses of $0.2 million.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $290.1 million, excluding restricted cash of $5.0 million.

As of December 31, 2025, we had cash and cash equivalents of $152.4 million, excluding restricted cash of $5.0 million.

Funding requirements

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• the costs of continuing to operate as a public company.

We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our planned operating expenses and capital expenditure requirements into the first quarter of 2027.

We believe that our existing cash and cash equivalents will enable us to fund our planned operating expenses and capital expenditure requirements into the second half of 2027.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

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Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Operating Activities

During the year ended December 31, 2025, net cash used in operating activities of $135.3 million was primarily driven by our net loss of $129.8 million, partially offset by non-cash charges of $12.6 million related to depreciation expense, accretion of marketable securities, stock-based compensation, and non-cash interest expense related to note payable.

During 2025, working capital changes resulted in a use of $18.2 million.

The change in working capital was primarily driven by revenue recognition related to the Amgen Agreement and changes in accrued expenses.

During the year ended December 31, 2024, net cash used in operating activities of $110.8 million was primarily driven by our net loss of $127.5 million, partially offset by non-cash charges of $11.6 million related to depreciation expense, accretion of marketable securities, stock-based compensation, non-cash interest expense related to note payable, and loss on extinguishment of debt.

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The change in working capital was primarily driven by the timing of payments to our vendors.

During the year ended December 31, 2023, net cash used in operating activities of $61.4 million was primarily driven by our net loss of $89.2 million, partially offset by non-cash charges of $10.3 million related to depreciation expense, accretion of marketable securities, stock-based compensation, and non-cash interest expense related to note payable.

During 2023, working capital changes contributed $17.6 million to our cash flows.

The change in working capital was primarily driven by changes in deferred revenue arising from the Amgen and Novartis arrangements as well as the timing of payments to our vendors.

Investing Activities

During the years ended December 31, 2024 and 2023, net cash used in investing activities was $52.6 million and $60.8 million, respectively, primarily related to the purchases of property and equipment, and purchases and maturities of marketable securities.

During the year ended December 31, 2025, net cash provided by investing activities was $109.4 million, primarily related to the purchases and maturities of marketable securities, and the purchases of property and equipment.

During the year ended December 31, 2024, net cash used in investing activities was $52.6 million, primarily related to the purchases and maturities of marketable securities, and the purchases of property and equipment.

Financing Activities

During the year ended December 31, 2024, net cash provided by financing activities was $208.8 million, consisting of net proceeds of $161.4 million from our follow-on public offering in April 2024, cash proceeds of $32.5 million from borrowings under SVB Loan Agreement, cash proceeds of $30.0 million from our direct offering in December 2024, $1.7 million of proceeds from the exercise of

stock options, and $0.3 million of proceeds from the issuance of common stock under 2021 ESPP.

During the year ended December 31, 2025, net cash used in financing activities was $0.3 million, consisting of cash paid for debt issuance and financing costs previously accrued, offset by proceeds from the issuance of common stock under the employee stock purchase plan.

These proceeds are partially offset by $17.1 million of repayments of the K2HV Loan Agreement.

During the year ended December 31, 2023, net cash provided by financing activities was $135.4 million, consisting of net proceeds of $134.7 million from our follow-on public offering in June 2023 and $0.7 million of proceeds from the exercise of stock options.

Critical Accounting Policies and Estimates

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

What changed 10-K

Item 7. Management’s Discussion and Analysis