Vir Biotechnology, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of our Annual Report on Form 10-K for the year ended December 31, 2025. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company”, “Vir Bio,” “we,” “us” and “our” refer to Vir Biotechnology, Inc. and its consolidated subsidiaries. Overview We are a clinical-stage biopharmaceutical company focused on powering the immune system to transform lives by discovering and developing medicines for serious infectious diseases and cancer. At Vir Bio, we have a bold vision – powering the immune system to transform lives. Our clinical-stage portfolio includes programs for chronic hepatitis delta (CHD) and multiple dual-masked T-cell engagers (TCEs) across validated targets in solid tumor indications. We also have a preclinical portfolio of programs across a range of infectious diseases and oncologic malignancies. In HDV, our ECLIPSE registrational program is fully underway with all three trials initiated. Should the ECLIPSE program yield positive results that support regulatory approval and subsequent commercial launch, we believe the combination of elebsiran and tobevibart has the potential to be a new standard of care for hepatitis delta patients, for whom approved treatment options are either limited or unavailable. In oncology, we are advancing phase 1 clinical studies for our dual-masked TCEs: VIR-5500 in patients with PSMA-expressing metastatic castration-resistant prostate cancer (mCRPC), VIR-5818 in patients with HER2-expressing tumors, and VIR-5525 in patients with EGFR-expressing tumors. In addition, we are developing therapeutic candidates in HIV cure and other solid tumors, leveraging our expertise and platform strengths, and we have made available for external partnerships our next-generation preclinical influenza A and B antibodies and antibody-drug conjugates (ADCs) along with our next-generation COVID monoclonal antibodies (mAbs). We have an industry-leading management team and board of directors with significant immunology, infectious diseases, and oncology experience, including a proven track record of progressing product candidates from early-stage research through clinical development, and worldwide regulatory approval and commercialization experience. Given the global impact of infectious diseases and cancer, we are committed to developing transformative therapies that can make a meaningful difference in patients’ lives. Significant Developments Following is a summary of selected significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the period ended March 31, 2026. For additional developments or for a more comprehensive discussion of certain developments below, see our Annual Report on Form 10-K for the year ended December 31, 2025. CHD • We completed enrollment in the Phase 3 ECLIPSE 2 trial, and the entire ECLIPSE registrational program is now fully enrolled. ECLIPSE 2 evaluates the efficacy and safety of switching from bulevirtide to elebsiran and tobevibart in people with CHD who have not achieved viral suppression with bulevirtide therapy and is intended support medication transitions as appropriate. These data, along with data from ECLIPSE 1 and 3, will be part of a comprehensive global filing package. ◦ Topline data from the Phase 3 ECLIPSE 1 trial are expected in the fourth quarter of 2026. ◦ Topline data from the ECLIPSE 2 and ECLIPSE 3 trials are expected in the first quarter of 2027. • We presented complete Week 96 Phase 2 SOLSTICE data at the European Association for the Study of the Liver (EASL) Congress in May 2026. ◦ In the intent-to-treat (ITT) analysis, the data showed 88% (28/32) of participants treated with the combination of elebsiran and tobevibart achieved undetectable hepatitis delta virus RNA (HDV RNA Target Not Detected, TND) compared to 53% (17/32) of participants on antibody monotherapy. ◦ In the last-observation carried forward analysis, the data showed the combination regimen achieved HDV RNA TND in 97% (31/32) of participants. 24 Table of Contents ◦ The combination regimen continues to be generally well tolerated. Treatment-emergent adverse events were generally mild to moderate and transient, and there were no treatment-related serious adverse events or discontinuations. Solid Tumors VIR-5500 • We closed our global strategic collaboration with Astellas US LLC (together with its subsidiaries and affiliates (including its indirect parent, Astellas Pharma Inc.), Astellas) to advance PSMA-targeted, PRO-XTEN® dual-masked T-cell engager (TCE) VIR-5500 for the treatment of prostate cancer. We and Astellas have built a strong operational infrastructure for collaboration and rapidly worked together on Phase 1 trial design to advance the dose-expansion cohorts. • We initiated additional Phase 1 dose-expansion cohorts evaluating VIR-5500 at Q3W 800/2000/3500 µg/kg step-up dosing. The first patients were dosed in three monotherapy cohorts evaluating VIR-5500 in taxane naïve mCRPC, radioligand therapy naïve mCRPC and radioligand therapy exposed mCRPC, and one combination cohort evaluating VIR-5500 in combination with enzalutamide in early-line mCRPC. • We anticipate initiating two additional Phase 1 dose-expansion cohorts, including VIR-5500 in combination with docetaxel in early-line mCRPC and VIR-5500 in combination with darolutamide in metastatic hormone-sensitive prostate cancer. • We anticipate initiating pivotal Phase 3 trials in 2027. VIR-5818 • We expect to report updated dose-escalation data from our Phase 1 trial evaluating VIR-5818, a HER2-targeted PRO-XTEN ® dual-masked TCE, as a monotherapy and in combination with pembrolizumab, in the second half of 2026. The dose-escalation parts of the Phase 1 trial have a basket design, enrolling across multiple tumor types. VIR-5525 • The Phase 1 trial of VIR-5525, an EGFR-targeted PRO-XTEN ® dual-masked TCE, as a monotherapy and in combination with pembrolizumab continues enrollment as expected. Preclinical Pipeline Candidates • We are currently progressing a number of PRO-XTEN ® masked TCEs in preclinical studies directed at clinically validated targets with potential applications across a variety of solid tumors. Corporate Update • On July 20, 2026, Jason O’Byrne, MBA, our Executive Vice President and Chief Financial Officer, informed us that he would be stepping down from his role, effective August 3, 2026. We have initiated a search for his successor. Additionally, on July 23, 2026, our Board of Directors appointed Brent Sabatini, CPA, MBA, our Senior Vice President and Chief Accounting Officer, as our interim “principal financial officer.” • On June 9, 2026, we appointed Timothy Coughlin, CPA to our Board of Directors and as Chair of the Audit Committee. • On May 25, 2026, we announced that Saira Ramasastry, M.S., M.Phil., a member of our Board of Directors and Chair of our Audit Committee, would be stepping down from her role as a member of our Board of Directors and the Audit Committee. • On April 16, 2026, we announced that Vicki Sato, Ph.D., the Chair of our Board of Directors, would not stand for reelection at our 2026 Annual Meeting of Stockholders on May 26, 2026. On May 26, 2026, Jeffrey S. Hatfield, MBA assumed the role of Chair of our Board of Directors. • On April 7, 2026, Mark Eisner, MD, M.P.H., our Executive Vice President and Chief Medical Officer, informed us that he would be stepping down from his role, effective April 24, 2026. We have initiated a search for his successor. 25 Table of Contents Our Collaboration, License and Grant Agreements We have entered into collaboration, license and grant arrangements with various third parties. For details regarding these and other agreements, see Note 4—Grant Agreements and Note 5—Collaboration and License Agreements to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, and Note 6—Collaboration and License Agreements to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Components of Operating Results Revenues We do not expect to generate any significant revenue from the sale of our product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever. Our revenues consist of the following: License and collaboration revenue includes revenues generated from license rights issued to Astellas, Norgine and GSK. Grant revenue is comprised of revenue derived from grant agreements with government-sponsored and private organizations. Other revenue includes recognition of revenue generated from research and development services under third-party contracts and from a third-party clinical supply agreement. Operating Expenses Cost of Revenue Cost of revenue currently represents royalties earned by third-party licensors on net sales of sotrovimab. We recognize these royalties as cost of revenue when we recognize the corresponding revenue that gives rise to payments due to our licensors. Research and Development To date, our research and development expenses have related primarily to discovery efforts and preclinical and clinical development of our product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. We do not track all research and development expenses by product candidate. Research and development expenses consist primarily of costs incurred for our product candidates in development and prior to regulatory approval, which include: • expenses related to license and collaboration agreements, and change in fair value of certain contingent consideration obligations arising from business acquisitions; • personnel-related expenses, including salaries, benefits and stock-based compensation for personnel contributing to research and development activities; • expenses incurred under agreements with third-party contract development and manufacturing organizations (CDMO), contract research organizations (CROs), and consultants; • clinical costs, including laboratory supplies and costs related to compliance with regulatory requirements; and • other allocated expenses, including expenses for rent and facilities maintenance, and depreciation and amortization. 26 Table of Contents We expect our research and development expenses to increase substantially in absolute dollars over time as we advance our product candidates into and through preclinical and clinical studies and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical programs, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability. In addition, under some of our license agreements , we may incur additional clinical, and regulatory milestone payments based on the development progress of certain clinical programs. We may also be required to pay commercial milestone payments and royalties in the event of a successful product launch and our receipt of commercial revenues. Therefore, we are unable to predict the timing or the final cost to complete our clinical programs or validation of our manufacturing and supply processes and delays may occur due to numerous factors. Factors that could cause or contribute to delays or additional costs include, but are not limited to, those discussed in the “Risk Factors” section of this Quarterly Report. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate significant revenue from the commercialization and sale of any of our product candidates. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical and clinical studies, regulatory developments, our ongoing assessments as to each product candidate’s commercial potential. We cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured (if at all) and to what degree such arrangements will affect our development plans and capital requirements. Our clinical development costs may vary significantly based on factors such as: • whether a collaborator is paying for some or all of the costs; • per patient trial costs; • the number of studies required for approval; • the number of sites included in the studies; • enrollment and retention of patients in studies in countries disrupted by geopolitical events, including civil or political unrest; • the length of time required to enroll eligible patients; • the number of patients that participate in the studies; • the number of doses that patients receive; • the drop-out or discontinuation rates of patients; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the studies and follow-up; • the cost and timing of manufacturing our product candidates; • the phase of development of our product candidates; and • the efficacy and safety profile of our product candidates. Selling, General and Administrative Our selling, general and administrative expenses consist primarily of personnel-related expenses for personnel in executive, finance and other administrative functions, facilities and other allocated expenses, other expenses for outside professional services, including legal, audit and accounting services, insurance costs and change in fair value of certain contingent consideration obligations arising from business acquisitions. Personnel-related expenses consist of salaries, benefits and stock-based compensation. In the long-term as we advance our research and development programs toward potential commercialization, we expect our selling, general, and administrative expenses to increase in absolute dollars to support commercialization activities and related expansion in research and development activities. 27 Table of Contents Restructuring, long-lived asset impairment and related charges Restructuring, long-lived asset impairment and related charges consist primarily of charges incurred in connection with our cost saving initiatives. Change in Fair Value of Equity Investments Change in fair value of equity investments consists of the remeasurement of our investment in Brii Biosciences Limited’s, or Brii Bio Parent, ordinary shares based on the quoted market price at each reporting date. Interest Income Interest income consists of interest earned on our cash, cash equivalents and investments. Other (Expense) Income, Net Other (expense) income, net consists of gains and losses from foreign currency transactions and investment management expenses. Provision for Income Taxes Provision for income taxes consists primarily of income taxes on our domestic and foreign operations. Results of Operations Comparison of the Three and Six Months Ended June 30, 2026 and 2025 The following table summarizes our results of operations for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 Change 2026 2025 Change Revenues: License and collaboration revenue $ 238,935 $ (495) $ 239,430 $ 238,894 $ (565) $ 239,459 Grant revenue 11 183 (172) 23 1,421 (1,398) Other revenue — 1,526 (1,526) — 3,390 (3,390) Total revenues 238,946 1,214 237,732 238,917 4,246 234,671 Operating expenses: Cost of revenue — 11 (11) — 11 (11) Research and development 135,283 97,509 37,774 244,205 216,154 28,051 Selling, general and administrative 30,196 22,283 7,913 53,535 46,227 7,308 Restructuring, long-lived assets impairment and related charges, net — (172) 172 — (182) 182 Total operating expenses 165,479 119,631 45,848 297,740 262,210 35,530 Income (loss) from operations 73,467 (118,417) 191,884 (58,823) (257,964) 199,141 Other income: Change in fair value of equity investments (1,723) (3,382) 1,659 (1,893) 3,000 (4,893) Interest income 8,966 10,785 (1,819) 16,155 23,073 (6,918) Other (expense) income, net (451) 226 (677) (705) 154 (859) Total other income 6,792 7,629 (837) 13,557 26,227 (12,670) Income (loss) before provision for income taxes 80,259 (110,788) 191,047 (45,266) (231,737) 186,471 Provision for income taxes (179) (170) (9) (349) (186) (163) Net income (loss) $ 80,080 $ (110,958) $ 191,038 $ (45,615) $ (231,923) $ 186,308 28 Table of Contents Revenues The increase in license and collaboration revenue for the three and six months ended June 30, 2026 compared to the same periods in 2025 was primarily due to the recognition of $239.3 million in license and collaboration revenue related to the upfront payment received under our collaboration and license agreement with Astellas (Astellas Collaboration Agreement). The decrease in other revenue for the three and six months ended June 30, 2026 compared to the same periods in 2025 was primarily due to lower revenue recognized in connection with option-expiration and the sale of clinical supply to Brii Biosciences Limited (Brii Bio Parent). Research and Development Expenses The following table shows the primary components of our research and development expenses for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 Change 2026 2025 Change Contract manufacturing $ 23,967 $ 14,063 $ 9,904 $ 59,974 $ 23,399 $ 36,575 Personnel 28,512 33,165 (4,653) 60,040 66,883 (6,843) Clinical costs 22,532 20,361 2,171 48,666 40,967 7,699 Licenses, collaborations and contingent consideration, net 41,211 11,301 29,910 38,402 47,892 (9,490) Other 19,061 18,619 442 37,123 37,013 110 Total research and development expenses $ 135,283 $ 97,509 $ 37,774 $ 244,205 $ 216,154 $ 28,051 The increase in research and development expenses for the three months ended June 30, 2026 compared to the same periods in 2025 was primarily due to: • higher license, collaborations and contingent consideration expenses primarily due to a $48.0 million payment to Sanofi made after the closing of the Astellas Collaboration Agreement, partially offset by lower contingent consideration expense for the potential future milestone payments in connection with our CHD program and cost reimbursements in connection with our collaboration with Astellas and Norgine; • higher contract manufacturing primarily attributable to process performance qualification (PPQ) batches for our CHD program and increased manufacturing activities supporting the advancement of our oncology program; • higher clinical costs due to the advancement of our CHD and oncology programs. partially offset by: • lower personnel expenses associated with headcount reductions. The increase in research and development expenses for the six months ended June 30, 2026 compared to the same periods in 2025 was primarily due to: • higher contract manufacturing attributable to PPQ batches for our CHD program and increased manufacturing activities supporting the advancement of our oncology program; • higher clinical costs due to the advancement of our CHD and oncology programs. partially offset by: • lower license, collaborations and contingent consideration expenses primarily due to a $30.0 million expense recognized in the first quarter of 2025 in connection with the Restated Alnylam Agreement and a milestone payment triggered by the enrollment of the first patient in the Phase 3 ECLIPSE registrational program for CHD, as well as lower contingent consideration expense in 2026 related to potential future milestone payments in connection with our CHD program. The decrease was partially offset by a $48.0 million milestone payment to Sanofi after the closing of the Astellas Collaboration Agreement in the second quarter of 2026; • lower personnel expenses associated with headcount reductions. 29 Table of Contents Selling, General and Administrative Expenses The increase in selling, general and administrative expenses for the three and six months ended June 30, 2026 compared to the same periods in 2025 was primarily due to higher one-time advisory and legal fees in connection with the Astellas Collaboration Agreement. Restructuring, long-lived assets impairment and related charges The change in restructuring, long-lived assets impairment and related charges for the three and six months ended June 30, 2026 compared to the same periods in 2025 was nominal. Change in Fair Value of Equity Investments Our equity investment consisted solely of shares of Brii Bio Parent, which is a marketable equity investment and remeasured to fair value at each reporting date. For the three and six months ended June 30, 2026, we recognized an unrealized loss of $1.7 million and $1.9 million due to the change in fair value, respectively, compared to an unrealized loss of $3.4 million and unrealized gain of $3.0 million for the same periods in 2025, respectively. Interest Income The decrease in interest income for the three and six months ended June 30, 2026 compared to the same periods in 2025 was primarily due to lower interest rates. Other (Expense) Income, Net The change in other (expense) income, net for the three and six months ended June 30, 2026 compared to the same periods in 2025 was nominal. Provision for Income Taxes The provision for income taxes for the three and six months ended June 30, 2026 compared to the same periods in 2025 was nominal. Liquidity, Capital Resources and Capital Requirements Sources of Liquidity To date, we have financed our operations primarily through sales of our common stock from our initial public offering and subsequent follow-on offering, sales of our convertible preferred securities, and payments received under our grant and collaboration agreements. As of June 30, 2026, we had approximately $1.01 billion in cash, cash equivalents, and investments and approximately $8.9 million in restricted cash and cash equivalents. As of June 30, 2026, our accumulated deficit was $1.2 billion. In November 2023, we filed an automatic shelf registration statement on Form S-3 and a related prospectus (the “2023 Shelf Registration Statement”) with the U.S. Securities and Exchange Commission (SEC) for the issuance of debt securities, common stock, preferred stock and warrants from time to time in one or more offerings. In November 2023, we entered into a sales agreement (Sales Agreement) with Cowen and Company, LLC, as sales agent (TD Cowen), pursuant to which we may from time to time offer and sell shares of our common stock for an aggregate offering price of up to $300.0 million, through or to TD Cowen, acting as sales agent or principal. The shares will be offered and sold under the 2023 Shelf Registration Statement. We will pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide TD Cowen with customary indemnification and contribution rights. As of June 30, 2026, no shares have been issued under the Sales Agreement. The Sales Agreement will expire in November 2026. In February 2026, we completed a follow-on public offering (2026 Public Offering) pursuant to the 2023 Shelf Registration Statement and issued 20,294,117 shares of our common stock (including the exercise by the underwriters of their option to purchase an additional 2,647,058 shares of common stock) at a price to the public of $8.50 per share. Net proceeds from the 2026 Public Offering were approximately $162.2 million, after deducting underwriting discounts and commissions, and other offering expenses of approximately $10.3 million. 30 Table of Contents During the second quarter of 2026, we received $315.0 million from Astellas, including a $240.0 million upfront payment following the closing of the Astellas Collaboration Agreement and another $75.0 million upon the closing of the Astellas stock purchase agreement. Funding Requirements and Conditions Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, manufacturing and in-licensing our technology platforms and product candidates, and conducting preclinical studies and clinical trials, and to a lesser extent, selling, general and administrative expenditures. We do not expect to generate significant revenue from the sale of our product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever. We may continue to incur net losses for the foreseeable future. Based upon our current operating plan, we believe that our existing cash, cash equivalents and investments as of June 30, 2026 as noted above will enable us to fund our operations for at least the next 12 months from the filing date of this Quarterly Report on Form 10-Q. Our operating plan may change as a result of many factors currently unknown to us, and we may need to raise additional capital to complete the development and commercialization of our product candidates and fund certain of our existing manufacturing and other commitments. We expect to finance our cash needs through public or private equity or debt financings, third-party (including government) funding, and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. See the sections titled “ Risk Factors—Risks Related to Our Financial Position and Capital Needs—Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates ” and “ Risk Factors—Risks Related to Our Financial Position and Capital Needs—We may require substantial additional funding to finance our operations. If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our research and development programs or other operations ” for a description of the risks that may be associated with any future capital raises. We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of biotechnology products, we are unable to estimate the exact amount of our operating capital requirements. See the section titled “ Risk Factors—Risks Related to Our Financial Position and Capital Needs ” for a description of certain risks that will affect our future capital requirements. Our primary operating lease arrangements are for office and laboratory spaces located in California and Switzerland with contractual lease periods expiring between 2033 and 2035. As of June 30, 2026, we expect to make total lease payments of approximately $114.2 million through 2035. To date, we have entered into collaboration, license and acquisition agreements where the payment obligations are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones, and we are required to make royalty payments in connection with the sale of products developed under those agreements. For additional information regarding these agreements, including our payment obligations thereunder, see Note 5—Collaboration and License Agreements to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, and Note 6—Collaboration and License Agreements to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. For information related to our future commitments under our facilities and manufacturing agreements. see Note 7—Commitments and Contingencies to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, and Note 10—Commitments and Contingencies to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements. 31 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Six Months Ended June 30, 2026 2025 Net cash (used in) provided by: Operating activities $ (9,060) $ (198,335) Investing activities (185,307) 183,274 Financing activities 240,899 2,644 Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents $ 46,532 $ (12,417) Operating activities Cash used in operating activities is derived by adjusting our net income (loss) for non-cash items and changes in operating assets and liabilities. Cash used in operating activities during the six months ended June 30, 2026 decreased compared to the same period in 2025 primarily due to $240.0 million upfront payment received under the Astellas Collaboration Agreement, partially offset by a $48.0 million payment to Sanofi after the closing of the Astellas Collaboration Agreement and increase in payments for contract manufacturing and clinical costs related to the advancement of our CHD and oncology programs. Investing activities Cash used in investing activities during the six months ended June 30, 2026 increased compared to the same period in 2025 primarily due to lower cash provided by maturities and sales of investment, net of investment purchases. Cash used in investing activities during the six months ended June 30, 2026 was primarily related to purchases of investments of $510.5 million, partially offset by $325.6 million in proceeds received from investments that matured or were sold. Cash provided by investing activities during the six months ended June 30, 2025 was primarily due to $553.2 million in proceeds received from investments that matured or were sold, partially offset by purchases of investments of $366.1 million. Financing activities Cash provided by financing activities during the six months ended June 30, 2026 increased compared to the same period in 2025 primarily due to the issuance of our common stock in connection with our follow-on public offering of $162.2 million, and issuance of our common stock in connection with the Astellas Collaboration Agreement of $75.7 million. Critical Accounting Policies and Estimates Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of our unaudited condensed consolidated financial statements requires us to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. For more details on our critical accounting policies, refer to Note 2 — Summary of Significant Accounting Policies to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in our critical accounting policies during the six months ended June 30, 2026, as compared with those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 other than disclosed below. 32 Table of Contents License and Collaboration Arrangements We enter into license and collaboration arrangements that may include upfront payments, equity investments, licenses to intellectual property, research and development activities, development cost-sharing arrangements, milestone payments, royalties, and profit- and loss-sharing arrangements. We evaluate these arrangements to determine whether they are within the scope of ASC 808, Collaborative Arrangements (ASC 808), and whether any units of account are within the scope of A SC 606, Revenue from Contracts with Customers (ASC 606). For units of account within the scope of ASC 606, revenue is recognized when control of the promised goods or services transfers to the customer. For units of account outside the scope of ASC 606, we apply an appropriate recognition method by analogy to other authoritative accounting guidance or through a reasonable and consistently applied accounting policy election. Accounting for these arrangements requires judgment, including identifying units of account, determining whether the collaboration partner is a customer for each unit of account, estimating the transaction price, assessing and constraining variable consideration, estimating standalone selling prices, allocating consideration among the units of account, and determining the timing and pattern of recognition. Variable consideration may include development milestones, sales milestones, sales royalties, profit- and loss-sharing amounts, and development cost-sharing settlements. We include variable consideration in the transaction price only to the extent it is probable that a significant reversal of cumulative revenue will not occur and reassess the transaction price, including estimates of variable consideration and related constraints, at each reporting date. When an arrangement includes multiple units of account, we allocate consideration to the respective units of account based on the underlying economics of the arrangement and in a manner consistent with the overall allocation objective. In making this determination, we consider the nature of the consideration, the underlying contractual payment terms, and whether the consideration is specifically attributable to a license, collaboration services, or other distinct units of account within the arrangement, as well as the standalone selling prices (“SSP”) of the respective units of account. We also assess whether the resulting allocation is consistent with the overall allocation objective. In certain circumstances, consideration may be allocated entirely to one or more, but not all, units of account when the terms of the consideration relate specifically to our efforts to satisfy the applicable unit of account or to a specific outcome resulting from the satisfaction of that unit of account, and such allocation is consistent with the overall allocation objective. This determination requires judgment and may affect the amount and timing of revenue recognition or recognition of amounts within research and development expense. We estimate standalone selling prices using methods appropriate for the nature of the related unit of account. For example, standalone selling prices for licenses to intellectual property may be estimated using income-based valuation approach, while standalone selling prices for research and development activities may be estimated using cost-plus-margin approach. These estimates require significant assumptions, including expected cash flows, development and commercialization timelines, probability of technical and regulatory success, market opportunity, expected costs, margins, and discount rates. Changes in these assumptions could affect the allocation of consideration and the amount and timing of revenue recognition or recognition of amounts within research and development expense. Payments to or reimbursements from collaboration partners related to collaborative research and development activities that are not transactions with a customer are generally recorded within research and development expense, based on the nature of the underlying activity. To the extent reimbursement from partners are received in advance of the related research and development activities being performed, such amounts are recorded in the balance sheets and recognized as a reduction of research and development expense as the underlying activities are incurred. Amounts expected to be recognized within twelve months of the balance sheet date are classified as current, with the remainder classified as non-current. 33 Table of Contents