What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-30 compared with 2025-03-27 · 173 added, 75 removed, 440 unchanged (36% of the section changed)

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generally accepted accounting principles.

The Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has incurred operating losses since inception and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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The communication of the critical audit matter 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.

Accrued research and development expenses

Valuation of modified stock-based compensation awards

Description of the Matter

As described in Note 2 to the financial statements under the caption “Research and development expenses and accrued research and development”, the Company records the cost of research and development activities as they are incurred.

The Company estimates preclinical studies and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalf.

Service fees are accrued based on the Company’s estimates of the time period over which services will be performed and the level of effort to be expended in each period.

These estimates are based on communications with the third-party service providers, the Company’s estimates of accrued expenses and on information available at each balance sheet date.

As of December 31, 2024, the Company’s accrued clinical trial liability was $1.4 million.

Auditing the Company’s accrual for research and development expenses was challenging because of the significant volume of transactions and the use of third-party data involved in determining the accrual balance, which was accumulated from multiple sources.

In certain circumstances, the determination of the nature and level of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing did not correspond to the level of services provided and invoicing from clinical study sites and other vendors may not yet be available to management.

As described in Note 8 to the financial statements under the caption “Stock-based compensation,” in the fourth quarter of 2025, the Company modified 416,005 stock options to extend the post-termination exercise period.

The modifications of current and former employees' stock option grants resulted in modification accounting under ASC 718, Compensation – Stock Compensation.

During the year ended December 31, 2025, the Company recognized $0.8 million in stock-based compensation expense due to modifications, a portion of which related to the modification of stock options in the fourth quarter.

Auditing the Company’s valuation of certain stock options modified in the fourth quarter, including the derived service period, was complex and required significant auditor judgment due to the subjectivity in estimating the fair value of the modified awards and the fair value of the original awards immediately before they were modified, including the adjustment to the stock price on the modification date for the fair value of the warrant dividend and the expected stock price volatility.

How We Addressed the Matter in Our Audit

To test the accrued research and development expenses, our audit procedures included, among others, testing the completeness and accuracy of the underlying data used in the estimate, including, but not limited to, estimated project duration, research and manufacturing services incurred to date and terms of contractual arrangements.

To assess the reasonableness of the data, we corroborated the progress of the clinical trials with Company research and development personnel and obtained third-party evidence supporting the activities performed to date.

We recalculated the accrual based on executed contracts with the clinical research organizations, contract manufacturing organizations, and clinical study sites.

We also tested subsequent invoicing received from third parties to assess the impact to the accrual at the balance sheet date and compared that to the Company’s estimates.

To test the valuation of certain stock options modified in the fourth quarter, our audit procedures included, among others, assessing the completeness of the awards modified, evaluating the key terms and conditions of the awards modified to assess the accounting treatment, and testing the clerical accuracy of the calculation related to the expense recorded.

Also, our procedures included evaluating the methodologies used to estimate the fair value of the modified awards and the original awards immediately before they were modified.

Additionally, we involved our internal valuation specialists to (i) calculate the adjustments to the stock price by assessing the fair value of the warrant dividend on the modification date, (ii) develop an independent estimate of the volatility by utilizing third party historical data of closing stock prices, and (iii) perform a Monte Carlo simulation to assess the fair value of the awards after modification and the derived service period over which the compensation expense will be attributed.

/s/ Ernst & Young LLP

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Accrued expenses

Current loan payable (net of discount and issuance costs of $ 74 and $ 112 , respectively)

Current loan payable (net of discount and issuance costs of nil and $ 74 , respectively)

Current operating lease liabilities

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Total current liabilities

Loan payable (net of discount and issuance costs of nil and $ 164 , respectively)

Operating lease liabilities, less current portion

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Total liabilities and stockholders’ equity

(1) Results, including shares issued and outstanding have been adjusted to reflect the one-for-thirteen stock split effected in April 2025.

See Note 1, Organization and Description of the Business, for details.

See accompanying Notes to Consolidated Financial Statements

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Weighted-average shares of common stock and pre-funded warrants outstanding, basic and diluted (1)

(1) Results, including shares of common stock, have been adjusted to reflect the one-for-thirteen stock split effected in April 2025.

See Note 1, Organization and Description of the Business, for details.

See accompanying Notes to Consolidated Financial Statements

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BALANCE — December 31, 2023

Exercise of stock options

Issuance of common stock for cash (net of issuance cost of $ 1,105 )

Exercise of pre-funded warrants

Share-based compensation

Issuance of common stock under equity plan awards

BALANCE — December 31, 2024

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Share-based compensation

Issuance of pre-funded warrants (net of issuance cost of $ 416 )

Issuance of common stock warrants (net of issuance cost of $ 165 )

Issuance of common stock under equity plan awards

BALANCE — December 31, 2025

(1) Results, including shares of common stock, have been adjusted to reflect the one-for-thirteen stock split effected in April 2025.

See Note 1, Organization and Description of the Business, for details.

See accompanying Notes to Consolidated Financial Statements

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Financing activities:

Proceeds from the issuance of common stock in connection with at the market offering, net of issuance costs

Proceeds from the issuance of common stock, net of issuance costs

Proceeds from the issuance of pre-funded warrants, net of issuance costs

Proceeds from the issuance of common stock warrants, net of issuance costs

Repayment of loan

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Tempest Therapeutics, Inc.

(“Tempest” or the “Company”) is a clinical-stage biotechnology company moving into late-stage development with a diverse portfolio of targeted and immune-mediated product candidates with the potential to be first-in-class treatments for a wide range of cancers.

Tempest’s novel programs range from early research to the lead program, amezalpat (previously known as TPST-1120), that is poised to begin a pivotal study in first-line liver cancer.

Tempest is also developing other potential product candidates in its Discovery Research group.

(“Tempest” or the “Company”) is a clinical-stage biotechnology company advancing a diverse portfolio of targeted and immune-mediated product candidates with the potential to be first-in-class to treat a wide range of cancers.

Tempest’s portfolio includes both cell therapy and small molecule product candidates spanning discovery through late-stage development.

The Company is headquartered in Brisbane, California.

Liquidity and Management Plans

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.

Reverse Stock Split

On December 3, 2024, the Company’s stockholders approved a proposal to effect an amendment to the Company’s Restated Certificate of Incorporation to implement a reverse stock split.

On April 4, 2025, the Company filed a certificate of amendment to the Company’s Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the one-for-thirteen ( 1 :13) reverse stock split of its outstanding common stock (the "Reverse Stock Split").

On April 8, 2025, the Company effected the Reverse Stock Split.

Pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under all of the Company’s outstanding options and warrants, and the number of shares authorized for issuance pursuant to the Company’s equity incentive plans have been reduced proportionately.

The Reverse Stock Split did not reduce the number of authorized shares of common stock and did not alter the par value.

No fractional shares were issued as a result of the Reverse Stock Split.

Stockholders of record who would have otherwise been entitled to receive a fractional share received a cash payment in lieu thereof.

The Reverse Stock Split affected all stockholders proportionately and did not affect any stockholder’s percentage ownership of the Company’s common stock (except to the extent that the Reverse Stock Split resulted in any stockholder owning only a fractional share).

Liquidity and Going Concern

The Company has incurred operating losses since inception.

As of December 31, 2024 , the Company had cash and cash equivalents of $ 30.3 million, which is sufficient to fund operations beyond 12 months from the issuance of the financial statements.

The Company’s ability to fund continued development, including its Phase 3 clinical trial for amezalpat, will require significant additional capital.

The Company intends to focus its short-term efforts on raising such capital through the issuance of additional equity or debt.

Adequate additional financing may not be available to us on acceptable terms, or at all.

If additional capital is not available to us on a timely basis, or at all, the Company will be required to take additional actions, including exploring potential merger opportunities and other strategic options, such as partnerships or collaborations for our programs, or may need to reduce operating expenses or delay, reduce the scope of, discontinue or alter the Company’s research and development activities, or may be forced to wind down its operations.

The Company’s ability to continue as a going concern in the absence of additional capital is dependent upon its ability to control its expenses over the next 12 months, which include de-prioritizing R&D programs, a reduction in its workforce, and controlling variable spend, while management secures sources of capital or another strategic opportunity.

As of December 31, 2025, the Company had $ 7.7 million of cash and cash equivalents.

While the Company implemented cost reductions in 2025, the Company has finite cash resources available to fund its operations.

In April 2025 , the Company announced plans to explore a full range of strategic alternatives to advance its promising clinical stage programs and maximize stockholder value.

The Company retained MTS Health Partners, L.P., an internationally recognized financial advisor with substantial experience in the biotechnology industry, to support it with the strategic evaluation process.

As part of the cost reductions, the Company reduced its workforce by 21 of 26 full-time employees, which became effective April 30, 2025 .

Further, in support of such efforts, on June 5, 2025, each of Stephen Brady, the Company’s Chief Executive Officer and President, Samuel Whiting, the Company’s Executive Vice President and Chief Medical Officer, and Nicholas Maestas, the Company’s Chief Financial Officer and Head of Corporate Strategy, transitioned to consulting arrangements with the Company, pursuant to which they continued to serve the Company in their respective executive roles.

The Company incurred $ 3.2 million of one-time cash severance payments, benefits and other related costs (excluding non-cash charges associated with stock-based compensation), with the majority of such costs incurred in the second quarter of 2025.

On February 3, 2026, the Company closed the Asset Acquisition (as defined below).

See Note 13, Subsequent Events.

Pursuant to the Asset Purchase Agreement (as defined below), Factor (as defined below) has made the Funding Commitment (as defined below) to provide the Company with financial support for at least 18 months following the closing of the Asset Acquisition, up to a maximum amount of $ 20.0 million that is inclusive of any amounts raised and received by the Company after the date of the Asset Purchase Agreement, on the terms and subject to the conditions and other provisions of a funding commitment letter contemplated by and entered into concurrently with the Asset Purchase Agreement.

However, there is significant uncertainty as

to whether we will be able to satisfy the terms and conditions and other provisions set forth in the funding commitment letter, and, if we are unable to do so, we may be limited in the amount of funding that we are able to access under the Funding Commitment or we may not be able to access any funds under the Funding Commitment.

The timing of any additional funding from Factor is uncertain.

The Company expects that its existing cash and cash equivalents will fund the Company’s projected operating expense requirements through less than 12 months from the date our consolidated financial statements were available to be issued.

Accordingly, there is substantial doubt about the Company’s ability to continue to operate as a going concern for a period of 12 months from the date of issuance of these consolidated financial statements.

The accompanying financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

These financial statements do not include any separate adjustments relating to the recovery of recorded assets or the classification of liabilities;

however, such adjustments may be necessary in the future when the Company is unable to continue as a going concern.

On July 23, 2021, the Company entered into a sales agreement with Jefferies LLC (“Jefferies”), pursuant to which the Company may sell, from time to time at its sole discretion through Jefferies, as its sales agent, shares of its common stock having, up to an aggregate sales price of $ 100.0 million of its common stock through Jefferies (the “Prior ATM Program”).

As of June 20, 2024, the Company had sold an aggregate 9,017,110 shares of its common stock for gross proceeds of approximately $ 42.7 million ($ 41.5 million net of commissions and estimated expenses) under the Prior ATM Program.

As of June 20, 2024, the Company had sold an aggregate 9,017,110 shares of its common stock for gross proceeds of $ 42.7 million ($ 41.5 million net of commissions and estimated expenses) under the Prior ATM Program.

On June 20, 2024, the Company and Jefferies terminated the Prior ATM Program and entered a new Open Market Sale Agreement (the “Sales Agreement”) to sell shares of common stock from time to time through Jefferies acting as sales agent (the “ATM Program”).

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Pursuant to the prospectus supplement dated June 20, 2024 filed by the Company with the U.S.

Securities and Exchange Commission (“SEC”), the Company was able to offer and sell up to $ 205,000,000 of its shares of common stock pursuant to the Sales Agreement.

As of December 31, 2024, the Company has sold an aggregate of 21,626,191 shares of its common stock for gross proceeds of approximately $ 29.6 million, or $ 28.8 million after deducting commissions

and offering expenses, pursuant to the ATM Program.

As of December 31, 2024, approximately $ 175.4 million remained available for sale under the ATM Program.

Under current SEC regulations, if at any time the Company's public float is less than $ 75.0 million, and for so long as the Company’s public float remains less than $ 75.0 million, the amount the Company can raise through primary public offerings of securities in any 12-month period using shelf registration statements is limited to an aggregate of one-third of the Company's public float, which is referred to as the baby shelf rules.

Securities and Exchange Commission (“SEC”), the Company was able to offer and sell up to $ 205.0 million of its shares of common stock pursuant to the Sales Agreement.

On February 6, 2025, the Company filed a prospectus supplement with the SEC limiting the availability under the ATM Program to $ 14.5 million.

Between January 1, 2025 and March 21, 2025, we sold 1,464,321 shares of our common stock for gross and net proceeds of $ 1.3 million, pursuant to the ATM Program.

As of March 21, 2025, we have approximately $ 13.4 million available for sale under the ATM Program.

PIPE Financing

On April 29, 2022, the Company completed a private investment in public equity (“PIPE”) financing from the sale of 3,149,912 shares of its common stock at a price per share of $ 2.36 and, in lieu of shares of common stock, pre-funded warrants to purchase up to 3,206,020 shares of its common stock at a price per pre-funded warrant of $ 2.359 to EcoR1 Capital, LLC and Versant Venture Capital (the “PIPE Investors”).

Net proceeds from the PIPE financings totaled approximately $ 14.5 million, after deducting offering expenses.

The Company entered into a registration rights agreement with the PIPE Investors pursuant to which the Company filed a registration statement with the SEC registering the resale of the 3,149,912 shares common stock and the 3,206,020 shares of common stock underlying the pre-funded warrants issued in the PIPE financing.

As of December 31, 2024 , all pre-funded warrants had been exercised.

On June 11, 2025, in connection with the RDO (as defined below), the Company delivered written notice to Jefferies that it was suspending and terminating the prospectus supplement, dated February 6, 2025, related to the ATM Program (the “ATM Prospectus”).

The Company will not make any sales of its securities pursuant to the Sales Agreement, unless and until a new prospectus, prospectus supplement or a new registration statement is filed.

Other than the termination of the ATM Prospectus, the Sales Agreement remains in full force and effect.

As of the year ended December 31, 2025, the Company has sold an aggregate of 312,830 shares of its common stock for proceeds of $ 2.8 million, pursuant to the ATM Program.

Registered Direct Offerings

On June 11, 2025, the Company sold an aggregate of 405,000 shares of the Company’s common stock and pre-funded warrants to purchase 334,000 shares of its common stock (the “June 2025 Pre-Funded Warrants”) in a registered direct offering (“June RDO”).

The offering price was $ 6.25 per share of common stock and $ 6.249 per June 2025 Pre-Funded Warrant , which is the price of each share of common stock sold in the RDO, minus the $ 0.001 exercise price per June 2025 Pre-Funded Warrant .

The net proceeds from the RDO were approximately $ 4.1 million, after deducting placement agent fees and offering expenses payable by the Company.

As of December 31, 2025, all June 2025 Pre-Funded Warrants had been exercised.

On November 24, 2025, the Company sold an aggregate of 487,000 shares of the Company's common stock, pre-funded warrants to purchase 685,414 shares of its common stock (the “November 2025 Pre-Funded Warrants”) and warrants to purchase an aggregate of 1,172,414 shares of common stock (the “Common Warrants”) in a registered direct offering (the “November RDO”).

The combined purchase price of each share of common stock and accompanying Common Warrant was $ 3.625 .

The combined purchase price of each November 2025 Pre-Funded Warrants and accompanying Common Warrant was $ 3.624 (equal to the combined purchase price per share of common stock and accompanying Common Warrant, minus $ 0.001 ) The exercise price of the Common Warrants is $ 3.50 per share.

The net proceeds from the RDO were approximately $ 3.8 million, after deducting placement agent fees and estimated offering expenses payable by the Company.

As of December 31, 2025, all November 2025 Pre-Funded Warrants and Common Warrants remained outstanding.

All November 2025 Pre-Funded Warrants were subsequently exercised in January and February 2026.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Risks and Uncertainties —The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, reliance on single-source vendors, availability of raw materials, patentability of the Company’s products and processes and clinical efficacy and safety of the Company’s products under development, compliance with government regulations and the need to obtain additional financing to fund operations.

candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies, clinical trials and regulatory approval, prior to commercialization.

Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies, clinical trials and regulatory approval, prior to commercialization.

These efforts will require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting.

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The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents to the extent recorded in the balance sheets.

While the Company has not experienced any losses in such accounts, the recent failure of Silicon Valley Bank (“SVB”), at which the Company held cash and cash equivalents in multiple accounts, exposed the Company to significant credit risk prior to the completion by the Federal Deposit Insurance Corporation of the resolution of SVB in a manner that fully protected all depositors.

The Company had subsequently transferred its accounts to one or more alternate depository institutions.

The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

The Company has no

off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

Cash and Cash Equivalents —The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisitions to be cash equivalents.

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When leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the lease term.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

The right-of-use (“ROU”) asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.

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Advance payments for goods or services for future research and development activities are deferred and expensed as the goods are delivered or the related services are performed.

Company’s behalf.

In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period.

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Interest and penalties related to unrecognized tax benefits are included within the provision for income tax.

Recently Adopted Accounting Standards —In November 2023, the FASB issued ASU 2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures, which amends guidance in ASC 280, Segment Reporting.

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

The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2023.

The Company adopted ASU 2023-07 for the year ended December 31, 2024 and the application of ASU 2023-07 did no t have a material impact on the Company’s Consolidated Financial Statements.

The adoption did result in enhanced disclosures as included in Note 12, Segment Reporting.

Recently Adopted Accounting Standards —In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires public entities to disclose specific tax rate reconciliation categories, as well as income taxes paid disaggregated by jurisdiction, amongst other disclosure enhancements.

The ASU is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted.

We adopted the ASU retrospectively for the period ending December 31, 2025, and it affects only our disclosures and does not impact our results of operations or financial condition.

FAIR VALUE MEASUREMENTS

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(in thousands)

2028 and beyond

Total minimum lease payments

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This amount is included in other noncurrent assets in the accompanying Consolidated Balance Sheets as of December 31, 2025 .

On January 15, 2021, the Company entered into a loan agreement with Oxford Finance LLC (the “Lender”) to borrow a term loan amount of $ 35,000 to be funded in three tranches.

On January 15, 2021, the Company entered into a loan agreement with Oxford Finance LLC (the “Lender”) to borrow a term loan amount of $ 35,000 to be funded in three tranches (as amended, the “Loan Agreement”).

Tranche A of $ 15,000 was wired to the Company on January 15, 2021.

Tranche B of $ 10,000 expired on March 31, 2022 .

Tranche C of $ 10,000 is available at the Lender’s option.

Tranche C of $ 10,000 was available at the Lender’s option.

On December 23, 2022, the Company entered into a First Amendment to the Loan Agreement.

The amendment modified the agreement as follows:

(i) each of the Company and Millendo, were joined as co-borrowers under the Loan Agreement;

The amendment modified the Loan Agreement as follows:

(i) each of the Company and Millendo Therapeutics US, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Millendo”), were joined as co-borrowers under the Loan Agreement;

(ii) the interest-only repayment period was extended through December 31, 2023 (which interest-only period may be further extended through June 30, 2024 under certain circumstances) ;

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In addition, the Lender permitted a one-time prepayment in the amount of $ 5.0 million, which the Company paid on December 23, 2022.

Following the amendment to the loan agreement, the term loan matures on August 1, 2025 and has an annual floating interest rate of 7.15 % which is an Index Rate plus 7.10 %.

Following the amendment to the Loan Agreement, the term loan had a maturity date of August 1, 2025 and an annual floating interest rate of 7.15 %, which is an Index Rate plus 7.10 %.

Index Rate is the greater of (i) 1-Month CME Term SOFR or (ii) 0.05 %.

In the fourth quarter of 2023, the Company achieved the circumstances necessary to extend the interest-only repayment period through June 30, 2024.

Monthly principal payments of $ 733 began on July 1, 2024 and the Company paid the first principal payment to the Lender in July 2024.

Monthly principal payments of $ 733 were required to begin on July 1, 2024.

Related to this borrowing, the Company recorded loan discounts totaling $ 898 and paid $ 95 of debt issuance costs.

These amounts would be amortized as additional interest expense over the life of the loan.

As of December 31,

2024 , the balance of the loan payable (net of debt issuance costs) was $ 6.4 million.

The carrying value of the loan approximates fair value (Level 2).

On April 8, 2025, using cash on hand, the Company made a repayment of $ 3.5 million in full satisfaction of the aggregate outstanding amount, including accrued interest and exit fees as of such date, under the Loan Agreement with the Lender.

The payoff amount paid by the Company in connection with the termination of the Loan Agreement was pursuant to a payoff letter with the Lender and included payment of $ 0.6 million as an exit fee.

Upon making the repayment, the Loan Agreement was terminated in accordance with its terms and all liens and security interests granted thereunder to secure the obligations were released.

For the years ended December 31, 2025 and 2024 , total interest expense was $ 207 and $ 1,316 , respectively.

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Authorized Stock

The Company is authorized to issue 100,000,000 shares of common stock, par value of $ 0.001 per share, and 5,000,000 shares of preferred stock, 100,000 of which have been designated as Series A Participating Preferred Stock (the “Series A Preferred Stock”), par value of $ 0.001 per share.

No shares of the Company’s Series A Participating Preferred Stock were outstanding as of December 31, 2025 and 2024.

Stockholders are entitled to dividends as declared by the Board of Directors, subject to rights of holders of all classes of stock outstanding having priority rights as to dividends.

There have been no dividends declared to date.

There have been no cash dividends declared to date.

The holders of each share of common stock are entitled to one vote and the holders of each share of Series A Preferred Stock, if issued, are entitled to 1,000 votes.

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As of December 31, 2025 , there were 47,745 shares available for future grant under the 2023 Plan.

In addition, on January 27, 2026, the Company's stockholders approved the amendment to increase the number of shares issuable under the 2023 Plan by 1,410,000 shares of common stock.

The 2023 Plan allows the Company to grant stock awards to employees, directors and consultants of the Company, including incentive stock options (“ISOs”), non-qualified stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock awards.

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Options to purchase the Company’s common stock may be granted at a price not less than the fair market value in the case of both NSOs and ISOs, except for an options holder who owns more than 10% of the voting power of all classes of stock of the Company, in which case the exercise price shall be no less than 110 % of the fair market value per share on the grant date.

options granted under the Plans generally vest over four years and expire no later than ten ( 10 ) years from the date of grant.

Stock options granted under the Plans generally vest over four years and expire no later than ten ( 10 ) years from the date of grant.

Vested options can be exercised at any time.

Prior to the merger with Millendo, the grant date fair market value of the shares of common stock underlying stock options was determined by the Company’s Board of Directors.

Up until the merger, there had been no public market for the Company’s common stock, and therefore the Board of Directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair market value, which included valuations performed by an independent third-party, important developments in the Company’s operations, sales of convertible preferred stock, actual operating results, financial performance, the conditions in the life sciences industry, the economy in general, the stock price performance and volatility of comparable public companies, and the lack of liquidity of the Company’s common stock.

Up until the merger, there had been no public market for the Company’s

common stock, and therefore the Board of Directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair market value, which included valuations performed by an independent third-party, important developments in the Company’s operations, sales of convertible preferred stock, actual operating results, financial performance, the conditions in the life sciences industry, the economy in general, the stock price performance and volatility of comparable public companies, and the lack of liquidity of the Company’s common stock.

The following shows the stock option activities for the years ended December 31, 2025 and 2024:

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These costs are expected to be recognized over a weighted-average period of approximately 1.5 years and 2.6 years, respectively.

The fair market value of stock options vested was $ 2,576 and $ 5,303 for the years ended December 31, 2025 and 2024, respectively.

The Company estimated the fair value of stock options using the Black-Scholes option pricing valuation model.

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3.5 % - 4.7 %

3.4 % - 4.5 %

Expected Term —The expected term of options granted represents the period of time that the options are expected to be outstanding.

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Consequently, an expected dividend yield of zero was used.

During the year ended December 31, 2025, the Company accelerated the vesting of approximately 266,108 time-based vesting stock options grants previously awarded to the Company's employees, pursuant to the separation agreements entered into with such employees.

The Company also extended the post-termination exercise period from 90 days to 180 days immediately following the separation date for any options that were vested, including the options that were accelerated in vesting, as described above.

Further, in the fourth quarter of 2025, approximately 416,005 of modified stock options were further modified to extend the post-termination exercise period from either (i) 180 days to December 31, 2026 or (ii) to the earlier of (a) the date that is 90 days following termination of continuous service, and (b) the expiration of the term of the options as set forth in the award agreements.

The above modifications to current and former employees stock options grants resulted in modification accounting under ASC 718, Compensation – Stock Compensation.

As a result, the Company recognized approximately $ 0.8 million of stock compensation expense during the year ended December 31, 2025.

For vested awards with no future service period required to be provided, the expense was measured on the modification date by calculating the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified with immediate expense recognition.

For unvested awards with no future service period required to be provided, the Company reversed any stock compensation expense previously recognized, remeasured the fair value of the modified award and immediately recognized stock compensation expense on the modification date.

For stock options that were further modified to extend the post-termination exercise period upon termination of continuous service, the Company measured the expense by calculating the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified.

The fair value of those awards included a reduction to the share price for the fair value of the warrant dividend as the holders of the modified stock options were not participants in the warrant dividend.

A portion of this modification was recorded as stock compensation expense in the fourth quarter and the remainder to be attributed over the derived service period.

Stock-Based Compensation Expense

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At December 31, 2025 and 2024 the Company concluded it was not more likely than not that it would realize its deferred tax assets, and therefore has recorded a full valuation allowance.

The Company paid no income taxes for the years ended December 31, 2025 and 2024, respectively.

For the years ended December 31, 2025 and 2024, income tax provision (benefit) related to continuing operations differ from the amounts computed by applying the statutory income tax rate of 21 % to pre-tax loss as follows (in thousands):

Year Ended December 31,

federal provision (benefit)

At statutory rate

Valuation allowance

Change in valuation allowance

Nontaxable or Nondeductible Items

Stock-based compensation

Permanent differences

Transaction costs

Nontaxable or nondeductible items

Research and development credit

State income taxes in California comprise the majority of the state income taxes, net of federal effect category for the years ended December 31, 2025 and 2024, respectively.

Significant components of the Company’s deferred tax assets at December 31, 2025 and 2024 are shown below.

13 unchanged sentences

The valuation allowance increased by $ 6.7 million from December 31, 2024 to December 31, 2025 due primarily to the generation of net operating losses and research and development credits.

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

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

Year Ended December 31,

Beginning Balance

Change related to continuing operations

Ending Balance

As of December 31, 2025 , the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $ 534.5 million and $ 501.9 million, respectively.

16 unchanged sentences

As of December 31, 2025 and 2024, none of the unrecognized tax benefits would impact the Company's effective tax rate due to the valuation allowance.

The Company does not anticipate the uncertain tax positions will materially change in the next 12 months.

The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company had no accrual for interest and penalties on the accompanying balance sheet as of December 31, 2024 and 2023,

respectively, and has not recognized penalties and/or interest in the accompanying statements of operations for the years ended December 31, 2024 and 2023, respectively.

The Company had no accrual for interest and penalties on the accompanying balance sheet as of December 31, 2025 and 2024, respectively, and has not recognized penalties and/or interest in the accompanying statements of operations for the years ended December 31, 2025 and 2024, respectively.

The Company is subject to taxation in the United States, California, Massachusetts, and Michigan.

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As the Company has not generated revenue, the CODM assesses Company performance through the achievement of research goals towards advancing the Company’s product candidates through stages of development.

As such, the CODM is regularly

provided with budgeted and forecasted expense information as well as the Company’s Consolidated Financial Statements which is used to determine the Company’s liquidity needs and pipeline resource allocation.

As such, the CODM is regularly provided with budgeted and forecasted expense information as well as the Company’s Consolidated Financial Statements which is used to determine the Company’s liquidity needs and pipeline resource allocation.

The CODM regularly reviews and evaluates research and development expenses and uses consolidated net loss, as reported on the Company’s Consolidated Statements of Operations, to assess the performance of the segment and to allocate resources.

3 unchanged sentences

All financial information required for segment reporting that is provided to the chief operating decision maker is contained within the financial statements and notes to financial statements.

SUBSEQUENT EVENTS

Acquisition of Erigen Assets

On November 19, 2025 , the Company executed an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Erigen LLC, a Delaware limited liability company (“Erigen”), and Factor Bioscience Inc., a Delaware corporation (together with Erigen, “Sellers”), pursuant to which Sellers agreed to sell and transfer to the Company all right, title and interest of Sellers in and to all

of the assets primarily related to (a) the autologous BCMA/CD19 dual-targeting CAR T-cell therapy known as ERI-2003, (b) the autologous CD70/CD70 dual-targeting CAR T-cell therapy known as ERI-2206, (c) the allogeneic BCMA/CD19 dual-targeting CAR T-cell therapy with a gene edit in the TRAC locus that inactivates the T cell receptor known as ERI-3003, and (d) the allogeneic CD70/CD70 dual-targeting CAR T-cell therapy with a gene edit in the TRAC locus that inactivates the T cell receptor known as ERI-3206 (collectively referred to herein as the “Erigen Assets”), in exchange for an aggregate purchase price of 8,268,495 shares of the Company’s common stock to be issued to Erigen on behalf of both Sellers.

On February 3, 2026 , the Company completed the acquisition of the Erigen Assets (the “Erigen Closing”) under the Asset Purchase Agreement (the “Asset Acquisition”) and issued to Erigen 8,268,495 shares of the Company’s common stock.

Based on an assumed common stock price of approximately $ 2.41 per share, the aggregate consideration related to the Asset Acquisition is approximately $ 19.9 million.

The Company incurred approximately $ 6.7 million of transaction costs in connection with the Asset Acquisition.

The Company expects to account for the Asset Acquisition as an asset acquisition.

Transaction costs are expected to be capitalized as part of the total cost of the Asset Acquisition.

The Company is in the process of evaluating the assets acquired and any liabilities assumed and has not finalized the allocation of the consideration.

Accordingly, the Company cannot reasonably estimate the financial statement impact of the transaction as of the date these consolidated financial statements were issued.

Pursuant to the Asset Purchase Agreement, Factor has made a funding commitment (the “Funding Commitment”) to provide the Company with financial support for at least 18 months following the Erigen Closing, up to a maximum amount of $ 20.0 million that is inclusive of any amounts raised and received by us after the date of the Asset Purchase Agreement, on the terms and subject to the conditions and other provisions of a funding commitment letter contemplated by and entered into concurrently with the Asset Purchase Agreement.

Warrant Dividend

On January 20, 2026, the Company’s Board of Directors declared a record date of January 30, 2026 (the “Record Date”), for the distribution of a dividend (the “Warrant Dividend”) in the form of a warrant to purchase a share of the Company’s common stock (collectively, the “Warrants”) for each share of common stock outstanding on the Record Date at an exercise price of $ 18.48 per share.

The Warrants were issued on the terms and conditions described in the Warrant Agreement, dated February 3, 2026, between the Company, Computershare Inc., and its affiliate, Computershare Trust Company, N.A., as Warrant Agent, on February 3, 2026.

In addition, on February 3, 2026, certain warrants that were outstanding on the Record Date also received Warrants on a one-for-one basis, pursuant to the terms of such warrants (together with the Warrant Dividend, the “Warrant Distribution”).

In the aggregate, 6,784,989 Warrants were issued pursuant to the Warrant Distribution.

Equity Plan Amendment

On January 27, 2026, the Company’s stockholders approved Amendment No.

1 to the 2023 Plan to increase the number of shares of the Company’s common stock issuable under such plan by 1,410,000 shares.

Rights Plan Approval

On January 27, 2026, the Company’s stockholders approved the Company’s Rights Agreement.

Such stockholder approval extended the final expiration date of the Rights Agreement until October 10, 2026, unless the rights thereunder are earlier redeemed or exchanged by the Company.

The Rights Agreement otherwise remains unmodified and in full force and effect in accordance with its terms.

Employment Agreements

In connection with his appointment as President and Chief Executive Officer of the Company, effective February 3, 2026, the Company entered into an employment agreement with Matthew Angel (the “Angel Employment Agreement”).

Pursuant to the

Angel Employment Agreement, Dr.

Angel is entitled to receive an annual base salary of $ 650,000 and will be eligible to receive an annual bonus equal to 50 % of his base salary, as determined by the Board in its sole discretion.

In addition, on February 3, 2026, Dr.

Angel received an option to purchase 269,621 shares of common stock, with an exercise price per share equal to the fair market value on the grant date (the “Option”).

The Option vests over a four-year period, with one quarter (1/4) of the shares subject to the Option vesting on the first anniversary of the grant date, and the remaining shares vesting equally over the following 36 months of continuous service.

On February 3, 2026, the Company entered into an employment agreement with Nicholas Maestas (the “Maestas Employment Agreement”), pursuant to which Mr.

Maestas is entitled to receive compensation consistent with his previously filed employment agreement.

Private Placement

On March 20, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with (a) two institutional investors (the “Institutional Investors”) and (b) Factor Bioscience Inc.

(together with the Institutional Investors, each, an “Investor” and, together, the “Investors”), pursuant to which the Company agreed to issue and sell in a private placement (the “Private Placement”) an aggregate of 462,964 shares (the “Shares”) of the Company’s common stock, and, in lieu of common stock, pre-funded warrants to purchase up to 462,963 shares of common stock (the “2026 Pre-Funded Warrants”), in each case accompanied by (i) Series A warrants to purchase up to 925,927 shares of common stock (the “Series A Warrants”) and (ii) Series B warrants to purchase up to 925,927 shares of common stock (the “Series B Warrants” and, together with the Series A Warrants, the “Common Warrants”).

The Shares and the Common Warrants are immediately separable and were issued separately.

The combined purchase price per Share and accompanying Common Warrants was $ 2.16 and the combined purchase price per Pre-Funded Warrant and accompanying Common Warrants was $ 2.159 .

The gross proceeds to us from the Private Placement were approximately $ 2.0 million (excluding up to approximately $ 4.0 million of aggregate gross proceeds that may be received in the future upon the cash exercise of the Common Warrants), before deducting placement agent fees and other offering expenses payable by the Company.

Pursuant to the Purchase Agreement, the Company agreed to seek approval from our stockholders for the issuance of the shares issuable upon exercise of the Common Warrants within 90 days following the date of the Purchase Agreement (the “Stockholder Approval”).

The Series A Warrants will become exercisable on the effective date of the Stockholder Approval (the “Stockholder Approval Date”) and have a term of five years from the later of the Stockholder Approval Date and the Effectiveness Date (as defined below).

The Series B Warrants will become exercisable on the Stockholder Approval Date and have a term of twenty-four months from the later of the Stockholder Approval Date and the Effectiveness Date.

The Common Warrants have an exercise price of $ 2.16 per share.

The Pre-Funded Warrants are exercisable immediately following the closing date of the Private Placement have an exercise price of $ 0.001 per share and may be exercised at any time until exercised in full.

In addition, pursuant to the Purchase Agreement, the Company agreed not to sell any shares of the Company’s common stock or any securities convertible into or exercisable or exchangeable into shares of common stock, subject to certain customary exceptions, for a period of thirty (30) days after the Effectiveness Date.

In connection with the Private Placement, the Company entered into a registration rights agreement with the Investors (the “Registration Rights Agreement”), pursuant to which the Company agreed to file registration statements under the Securities Act with the SEC covering the resale of the Shares to be issued in the Private Placement and the shares of the Company’s common stock underlying the Common Warrants and Pre-Funded Warrants no later than 15 calendar days following the date of the Purchase Agreement, and to use reasonable best efforts to have the registration statement declared effective by 45 calendar days following the date of the Purchase Agreement, and in any event no later than 75 calendar days following the date of the Purchase Agreement in the event of a “full review” by the SEC (the “Effectiveness Date”).

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data