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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-03-03 · 232 added, 165 removed, 114 unchanged (78% of the section changed)

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This section discusses 2025 and 2024 items and year-to-year comparisons between the years ended December 31, 2025 and 2024.

Discussions of the year ended December 31, 2022 and year-to-year comparisons between the years ended December 31, 2023 and 2022 have been excluded from this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024.

Discussions of the year ended December 31, 2023 and year-to-year comparisons between the years ended December 31, 2024 and 2023 have been excluded from this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 3, 2025.

Overview and Recent Developments

We are a biopharmaceutical company focused on discovering, developing, and commercializing potential best-in-class medicines for serious and rare diseases.

We target disease areas where marketed therapies often leave room for improvements in efficacy, safety, and/or dosing convenience.

We believe that first-generation medicines rarely represent optimal solutions, especially in rare disease areas, and that there is potential to develop differentiated, best-in-class medicines that could lead to improved patient outcomes, reduced side effects, improved quality of life, expanded market access, and augmented market competition.

Our business model is designed to identify and evaluate product opportunities in disease areas where trial data

establishes proof-of-concept for a drug target in the clinic, but the competitive evolution of the product life cycle management and number of entrants appears incomplete.

We intend to prioritize indications where a fast-follower and a potentially differentiated drug candidate, or overall product profile, could create significant medical benefit for patients.

We are engineering product candidates to address unmet medical needs for patients and further advance drug innovation.

Our goal is to identify and evaluate product concepts leveraging clinically validated molecular targets using established therapeutic modalities.

We prioritize product concepts that are aligned with clinical and commercial hypotheses, which we expect will provide an attractive balance of risk and opportunity, thereby representing a compelling allocation of our resources.

We focus on advancing therapeutic proteins that we either in-license or discover internally, incorporating proprietary therapeutic protein and antibody discovery and optimization platforms to advance clinical candidates with unique characteristics.

We have built relevant expertise in protein and antibody discovery and engineering, biologics manufacturing, nonclinical and clinical development, and commercialization for thyroid eye disease (“TED”), development of anti-neonatal Fc receptor (“FcRn”) therapies, and nonclinical and clinical development for indications in rare and autoimmune diseases.

Our approach to rapidly discovering and developing novel therapeutics relies on our scientific expertise in evaluating pre-existing clinical proof-of-concept data for the drug targets we are pursuing, and opportunities to improve upon existing investigational and/or approved therapies.

This approach informs how we design, select, and develop our product candidates, including in critical areas such as pharmacokinetics, pharmacodynamics, clinical trial design, trial endpoints, and the selection and recruitment of patients.

We believe this strategy reduces the risks associated with discovering and developing novel therapeutics.

Development of Therapies to Treat Thyroid Eye Disease (TED)

We are developing two product candidates, veligrotug (formerly known as VRDN-001) for intravenous and VRDN-003 for subcutaneous administration, to treat patients who suffer from TED.

We target therapeutic areas in which current treatments leave room for improvements in efficacy, safety, and/or dosing convenience.

We believe there is significant potential in these areas for better medicines that address unmet needs, improve outcomes, and expand treatment options for patients.

We aim to develop differentiated, potential best-in-class medicines that could lead to improved patient outcomes, reduced side effects, improved quality of life, and expanded market access.

Our pipeline targets validated pathways and disease-driving mechanisms in autoimmune and rare diseases.

These include product candidates directed at the IGF‑1R for the treatment of TED, inhibitors of the FcRn with potential application across multiple autoimmune disorders, and a TSHR inhibitor program with potential in TED and Graves’ disease.

We develop therapeutics through internal research and discovery, as well as through in-licensing opportunities that align with our strategic focus.

Our capabilities span protein and antibody discovery and engineering, biologics manufacturing, nonclinical and clinical development, commercial planning, and commercialization in these therapeutic areas.

As we prepare for the anticipated launch of our first commercial product, if approved, we are building the infrastructure we believe is required to support a successful transition to a commercial organization.

This includes establishing sales and marketing, market access, patient services, and commercial operations functions, and expanding our medical, clinical, regulatory, quality, and supply chain and distribution capabilities.

Our commercial readiness efforts focus on enabling reliable access for patients, supporting physicians, and engaging effectively with payors.

Our strategy combines clear scientific, clinical, and commercial rationale with excellence in execution to rapidly discover, develop, and commercialize better medicines for patients.

We rely on our scientific, clinical, and commercial expertise to identify opportunities to improve upon existing investigational or approved therapies and to apply these insights to designing, selecting, developing, and commercializing potential best-in-class product candidates.

We bring potential improvements to critical areas such as molecular design, dose selection, pharmacokinetics, pharmacodynamics, clinical trial design, trial endpoints, and the selection and recruitment of patients.

We believe this strategy enables efficient product development and reduces the risk when developing novel therapeutics.

Development of IGF-1R Therapies to Treat Thyroid Eye Disease (TED)

We are developing therapies for the treatment of TED, a serious and debilitating rare autoimmune disease that causes inflammation within the orbit of the eye that can cause bulging of the eyes, redness and swelling, double vision, pain, and potential blindness.

TED significantly impacts quality of life, imposing a high burden on activities of daily living and mental health for patients suffering from the disease.

TED is a progressive disease consisting of an initial active phase (“active TED”), followed by a transition to a secondary chronic phase (“chronic TED”).

The only medicine approved by the FDA for TED is Tepezza® (teprotumumab), which is an intravenously administered monoclonal antibody that targets IGF-1R.

Tepezza is marketed in the United States (“U.S.”) by Amgen Inc.

Amgen gained approval for Tepezza in Japan in 2024 and from the European Commission in 2025.

We are developing two anti-IGF-1R product candidates, veligrotug for intravenous (“IV”) administration and elegrobart (formerly known as VRDN-003) for subcutaneous (“SC”) administration, to treat patients who suffer from TED.

Our most advanced program, veligrotug, is a differentiated humanized monoclonal antibody targeting IGF-1R intravenously administered for the treatment of TED.

In previously presented in vitro nonclinical data, we showed that veligrotug is a potentially differentiated full antagonist of IGF-1R, compared to teprotumumab’s incomplete antagonism of IGF-1R.

VRDN-003 has the same binding domain as veligrotug, and was engineered to have a longer half-life.

VRDN-003 is designed to be a low-volume, infrequently-dosed subcutaneous IGF-1R for TED, which we plan to launch commercially with an auto-injector to enable at-home patient self-administration.

We believe VRDN-003 has the potential to be the best-in-class subcutaneous anti-IGF-1R product candidate by preserving the efficacy of anti-IGF-1Rs in TED, improving safety and maximizing convenience for patients.

We conducted phase 1/2 clinical trials of veligrotug in patients with active or chronic TED.

In the active TED portion of the phase 1/2 clinical trials, data reported from all three dose cohorts of veligrotug (n=21) showed significant and rapid improvement in both the signs and symptoms of TED after two infusions of veligrotug compared to placebo.

Across all veligrotug treated patients in the active TED trial, 71% were proptosis responders, 67% were overall responders, 62% achieved a clinical activity score (“CAS”) of 0 or 1, and 54% had complete resolution of their diplopia.

In the chronic TED portion of the phase 1/2 clinical trials, data reported from both dose cohorts of veligrotug (n=12) showed significant and rapid improvement in the signs and symptoms of TED after two infusions of veligrotug compared to placebo.

Across all veligrotug treated patients in the chronic TED trial, 42% were proptosis responders, 40% achieved a CAS of 0 or 1, and no patients had complete resolution of their diplopia.

In the phase 1/2 clinical trials of both active and chronic TED, veligrotug had a favorable safety profile and was well-tolerated by all patients treated in all dose cohorts.

We are conducting a global pivotal program for veligrotug, including evaluating its efficacy and safety in two global well-controlled phase 3 clinical trials, THRIVE and THRIVE-2, for the treatment of active and chronic TED, respectively.

THRIVE and THRIVE-2 are each designed to compare a five-dose IV treatment arm of veligrotug at 10 mg/kg, dosed three weeks apart, to placebo.

Elegrobart has the same binding domain as veligrotug, and was engineered to have a longer half-life.

Elegrobart is designed to be a low-volume, infrequently-dosed subcutaneous IGF-1R for TED, which we plan to launch commercially with an auto-injector to enable at-home patient self-administration.

We believe elegrobart has the potential to be the best-in-class anti-IGF-1R product candidate by preserving the efficacy of anti-IGF-1Rs in TED, improving safety, and maximizing convenience for patients with subcutaneous delivery.

We conducted a global pivotal clinical program for veligrotug, evaluating its efficacy and safety in two global well-controlled phase 3 clinical trials, THRIVE and THRIVE-2, for the treatment of active and chronic TED, respectively.

THRIVE and THRIVE-2 were each designed to compare a five-dose IV treatment arm of veligrotug at 10 mg/kg, dosed three weeks apart, to placebo.

This five-dose veligrotug regimen features fewer infusions and a shorter time per infusion compared to teprotumumab, the currently marketed IGF-1R inhibitor.

On September 10, 2024, we announced topline data from the THRIVE study, which enrolled 113 patients, randomized to veligrotug (n=75) and placebo (n=38).

THRIVE achieved all primary and secondary endpoints with a high level of statistical significance (p < 0.0001) and was generally well-tolerated, with no treatment-related serious adverse events (“SAEs”).

In September 2024, we announced topline data from the THRIVE study, which enrolled 113 patients, randomized to veligrotug (n=75) and placebo (n=38).

THRIVE achieved its primary and all secondary endpoints with a high level of statistical significance (p < 0.0001) and was generally well-tolerated, with no treatment-related serious adverse events (“SAEs”).

Veligrotug additionally showed a rapid onset of treatment effect, with the majority (53%) of veligrotug-treated patients achieving a proptosis response as early as three weeks.

On December 16, 2024, we announced topline data from the THRIVE-2 study, which enrolled 188 patients, randomized to veligrotug (n=125) and placebo (n=63).

THRIVE-2 achieved all primary and secondary endpoints with statistical significance and was generally well-tolerated.

Veligrotug continued to demonstrate a rapid onset of treatment effect, with a statistically significant proptosis response as early as three weeks and a statistically significant reduction and resolution of diplopia as early as six weeks.

In December 2024, we announced topline data from the THRIVE-2 study, which enrolled 188 patients, randomized to veligrotug (n=125) and placebo (n=63).

THRIVE-2 achieved its primary and all secondary endpoints with statistical significance and was generally well-tolerated.

Veligrotug demonstrated a rapid onset of treatment effect in THRIVE-2, with a statistically significant proptosis response as early as three weeks and a statistically significant reduction and resolution of diplopia as early as six weeks.

THRIVE-2 is the first global phase 3 study in patients with chronic TED to demonstrate a statistically significant and clinically meaningful diplopia responder rate and rate of diplopia complete resolution.

To meet the 300 patient standard safety database

requirements for the veligrotug biologics license application (“BLA”), we are conducting our STRIVE clinical trial (safety database inclusive of patients from the THRIVE and THRIVE-2 trials).

STRIVE is a global study of veligrotug in TED patients that utilizes broad inclusion criteria (e.g., any severity or duration of disease) and is randomized 3:1 (10 mg/kg IV with an active control of 3 mg/kg IV).

In January 2025, we completed enrollment in STRIVE with a total of 231 patients, exceeding the enrollment target of 212 due to patient demand.

We have also completed enrollment of the open label extension study for non-responding patients in THRIVE and THRIVE-2.

We anticipate submitting a BLA for veligrotug in the second half of 2025 and an MAA to the EMA in the first half of 2026.

In addition to our intravenous veligrotug program, VRDN-003 is our subcutaneous product candidate currently in pivotal development in TED, which we selected in December 2023 following positive data in a phase 1 clinical trial in healthy volunteers.

The VRDN-003 phase 1 clinical study showed VRDN-003 to have a prolonged half-life of 40 to 50 days, which is four to five times that of veligrotug.

Because of the healthy volunteer data and the similarities between the veligrotug and VRDN-003 antibodies, we expect VRDN-003 to have similar clinical responses at the exposure levels of veligrotug that led to robust clinical activity in its clinical trials to date in TED.

Further, pharmacokinetic modeling of VRDN-003 based on the healthy volunteer data predicted that exposure levels of VRDN-003 could be achieved that are equivalent to exposure levels of veligrotug that produced clinically meaningful results with multiple dosing regimens of VRDN-003, i.e., subcutaneous injection every two, four, or eight weeks.

We are conducting a global pivotal program for VRDN-003, including evaluating its efficacy and safety in two global well-controlled phase 3 clinical trials, REVEAL-1 and REVEAL-2, for the treatment of active and chronic TED, respectively.

Both studies will evaluate subcutaneous VRDN-003 administered every four weeks or every eight weeks and will assess outcomes versus placebo.

Patient enrollment and dosing continues in both studies.

In addition, to enable BLA submission for VRDN-003, we have initiated a safety study to meet the 300 patient standard safety database requirement (to also include patients from the REVEAL-1 and REVEAL-2 trials) and plan to initiate an auto-injector study in 2025 to enable launching VRDN-003 in an auto-injector device, if approved.

We anticipate topline data for REVEAL-1 and REVEAL-2 in the first half of 2026, and we anticipate submitting a BLA for VRDN-003 for the treatment of TED by the end of 2026.

Veligrotug demonstrated durability at 52 weeks in THRIVE, showing that 70% of patients who were proptosis responders at week 15 maintained their response at week 52.

To meet the 300 patient safety database requirement for the veligrotug BLA, we are conducting STRIVE, a global phase 3 clinical trial.

STRIVE enrolled 231 TED patients, utilized broad inclusion criteria (e.g., any severity or duration of disease), and randomized patients 3:1 (10 mg/kg IV with an active control of 3 mg/kg IV).

We are also conducting an open label extension study for non-responding patients in THRIVE and THRIVE-2 which has completed enrollment.

In May 2025, the FDA granted Breakthrough Therapy designation to veligrotug.

We submitted a BLA for veligrotug to the FDA in October 2025, which was accepted for filing and granted Priority Review in December 2025 with a PDUFA target action date of June 30, 2026.

We additionally submitted an MAA to the EMA in January 2026.

We are also developing elegrobart, our subcutaneous anti-IGF-1R product candidate currently in pivotal clinical studies in TED, which we selected in December 2023 following positive data in a phase 1 clinical trial in healthy volunteers.

In its phase 1 clinical study in healthy volunteers, elegrobart was shown to have a prolonged half-life of 40 to 50 days, which is four to five times that of veligrotug.

Based on this data and the similarities between the veligrotug and elegrobart antibodies, we selected Q4W and Q8W dosing of elegrobart to advance to phase 3 pivotal studies.

PK modeling showed Q4W and Q8W subcutaneous elegrobart dosing could achieve the range of modeled veligrotug exposures based on a two-infusion phase 2 TED study at 3 mg/kg and 10 mg/kg IV, once every three weeks.

Both dosing regimens of veligrotug showed robust clinical activity.

We are conducting a global pivotal program for elegrobart, including evaluating its efficacy and safety in two global well-controlled phase 3 clinical trials, REVEAL-1 and REVEAL-2, for the treatment of active and chronic TED, respectively.

Both studies are evaluating elegrobart administered subcutaneously every four weeks or every eight weeks and will assess outcomes versus placebo.

In September 2025, we announced that REVEAL-1 and REVEAL-2 completed enrollment, enrolling 132 and 204 patients, respectively, each exceeding its target enrollments of 117 and 195 patients, respectively, due to demand.

67% of REVEAL-1 patients were enrolled from the U.S., and 56% of REVEAL-2 patients were enrolled from the U.S.

In addition, to enable BLA submission for elegrobart, we are conducting a safety study to meet the 300 patient safety database requirement (to also include patients from the REVEAL-1 and REVEAL-2 trials).

We completed enrollment of this safety study in October 2025, enrolling 321 patients, exceeding the target enrollment of 284 patients due to demand.

Additionally, we are conducting an auto-injector study to enable launching elegrobart in an auto-injector device, if approved.

We completed enrollment in the autoinjector study in December 2025, enrolling 87 patients, exceeding the target enrollment of 75 patients.

We anticipate topline data for REVEAL-1 in the first quarter of 2026 and REVEAL-2 in the second quarter of 2026.

Development of FcRn Inhibitors

In addition to developing therapies for TED, we are also developing a portfolio of engineered FcRn inhibitors, including VRDN-006 and VRDN-008.

We are also developing a portfolio of engineered FcRn inhibitors, including VRDN-006 and VRDN-008.

FcRn inhibitors have the potential to treat a broad array of autoimmune diseases, representing a possible significant commercial market opportunity.

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In our head-to-head NHP studies, VRDN-006 demonstrated comparable potency and IgG reductions to efgartigimod, which is the current standard of care in FcRn inhibition, as well as a similar safety profile.

We submitted an Investigational New Drug Application (“IND”) for VRDN-006 in December 2024, which cleared in January 2025, and we expect proof-of-concept IgG reduction data in healthy volunteers in the third quarter of 2025.

We submitted an IND for VRDN-006 in December 2024, which cleared in January 2025.

In September 2025, we announced that data from an ongoing phase 1 clinical trial in healthy volunteers showed that VRDN-006 led to IgG reductions that are consistent with the FcRn inhibitor class, and that VRDN-006 was sparing of albumin and LDL and was generally well-tolerated with no dose-limiting toxicities or serious adverse events.

VRDN-008 is a half-life extended bispecific FcRn inhibitor comprising an Fc fragment and an albumin-binding domain designed to prolong IgG suppression and provide a potentially best-in-class subcutaneous option for patients.

In a single, high-dose, head-to-head study in NHPs, VRDN-008 demonstrated three times the half-life of efgartigimod.

Additionally, VRDN-008 showed a deeper and more sustained IgG reduction with peak IgG reductions that were 20% deeper than efgartigimod while not showing decreases in albumin or increases in LDL levels.

NHP studies are ongoing to generate additional data for VRDN-008.

Once completed, we plan to use the totality of VRDN-008’s NHP data to build a robust pharmacokinetic and pharmacodynamic model to predict potential human dosing regimens for VRDN-008.

We anticipate submitting an IND for VRDN-008 by the end of 2025.

Additionally, VRDN-008 showed a deeper and more sustained IgG reduction with peak IgG reductions that were 20% deeper than efgartigimod, and IgG levels returned to baseline 35 days after VRDN-008 dosing, more than twice as long as efgartigimod, which returned to baseline 14 days after dosing.

VRDN-008 spared albumin and LDL, consistent with efgartigimod.

We submitted an IND for VRDN-008 in December 2025 and received IND clearance from the FDA in January 2026.

We expect healthy volunteer data in the second half of 2026.

Development of TSHR Inhibitors

In January 2026, we announced that we are developing an anti-TSHR candidate with potential use in the treatment of Graves’ disease and TED.

This product candidate is a half‑life extended monoclonal antibody designed to inhibit activation of TSHR.

It is being developed for subcutaneous administration via autoinjector, with the goal of enabling extended dosing intervals intended to support patient convenience.

We anticipate submitting an IND for this program in the fourth quarter of 2026.

We believe inhibiting TSHR has the potential to treat both TED and Graves’ disease.

TED pathophysiology potentially stems from the activation of the TSHR and IGF-1R signaling complex on orbital fibroblasts, leading to hyaluronan secretion and expansion of orbital fat and muscle.

Autoantibodies that stimulate TSHR can activate pathways that promote inflammation, fibroblast proliferation, and tissue remodeling relevant to TED.

We believe inhibiting TSHR could complement the inhibition of IGF-1R in the treatment of TED.

In addition to TED, blocking TSHR could also be effective to treat Graves’ disease.

Graves’ disease is an autoimmune disease in which autoantibodies form against the TSHR, stimulating and activating the receptor.

These TSH receptor antibodies (“TRAb”) can drive a heightened activation of TSHR, resulting in excessive thyroid hormone production and hyperthyroidism.

Graves’ disease is one of the most prevalent autoimmune conditions, affecting more than 2 million people in the United States, and is the leading cause of hyperthyroidism.

Current treatments—including antithyroid drugs, radioactive iodine (“RAI”), and surgery—lower thyroid hormone levels but do not entirely address the underlying autoimmune drivers of the disease and are often associated with relapse or the development of permanent hypothyroidism.

Blocking TSHR activation through a TSHR antagonist represents a differentiated therapeutic approach aimed at targeting disease-driving mechanisms in TED and in Graves’ disease.

Global Economic Considerations

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Our revenue has historically consisted primarily of up-front payments for licenses, milestone payments, and payments for other research and development services earned under license and collaboration agreements as well as for amounts earned under certain grants we have been awarded.

In October 2020, we became party to a license agreement with Zenas BioPharma.

Since February 2021, we have entered into several letter agreements with Zenas BioPharma in which we agreed to provide assistance to Zenas BioPharma with certain development activities, including manufacturing (collectively with the license agreement, the “Zenas Agreements”).

Under the terms of the Zenas Agreements, we granted Zenas BioPharma an exclusive license to develop, manufacture, and commercialize certain IGF-1R directed antibody products for non-oncology indications in the greater area of China in exchange for upfront non-cash consideration and non-refundable milestone payments upon achieving specific milestone events during the contract term.

Zenas BioPharma announced that it had obtained IND approval in China in July 2022.

Under the license agreement, we received a $1.0 million milestone payment from Zenas BioPharma.

Additionally, we are eligible to receive royalty payments based on a percentage of the annual net sales of any licensed products sold on a country-by-country basis in the greater area of China.

In October 2020, we entered into a license agreement with Zenas BioPharma.

Subsequently, we entered into several letter agreements to assist Zenas BioPharma with certain development activities, including manufacturing (collectively with the license agreement, the “Zenas Agreements”).

Under the Zenas Agreements, we granted Zenas BioPharma an exclusive license to develop, manufacture, and commercialize certain IGF-1R directed antibody products for non-oncology indications in the greater area of China in exchange for upfront non-cash consideration and non-refundable milestone payments upon achieving specific milestone events during the contract term.

In July 2022, Zenas BioPharma announced that it had obtained IND approval in China.

Additionally, we are eligible to receive royalty payments based on a percentage of the annual net sales of any licensed products sold on a country-by-country basis in the greater area of China throughout the royalty term.

The royalty percentage may vary based on different tiers of annual net sales of the licensed products made.

Zenas BioPharma is obligated to make royalty payments to us for the royalty term in the Zenas Agreements.

In May 2022, we entered into a manufacturing development and supply agreement with Zenas BioPharma to manufacture and supply, or have manufactured and supplied, clinical drug product for development purposes.

In January 2025, Zenas BioPharma sublicensed their rights under the license agreement to Zai Lab and assigned the manufacturing development and supply agreement to Zai Lab in connection with the sublicense transaction.

In the future, we expect to continue to generate revenue from a combination of license fees and other up-front payments, payments for research and development services, milestone payments, product sales, and royalties in connection with strategic alliances.

In July 2025, the Company entered into a side agreement with Zai Lab (the “Side Agreement”), with Zenas BioPharma as countersigner, pursuant to which the Company agreed to provide certain services directly to Zai Lab to support development and commercialization activities.

In August 2025, the Company entered into a material transfer agreement (“MTA”) with Zai Lab, to supply certain materials for clinical trial use.

We have concluded that Zenas Biopharma and Zai Lab are related parties to us.

In July 2025, we entered into a Collaboration and License Agreement pursuant to which we granted to Kissei an exclusive license to develop and commercialize products containing veligrotug and elegrobart including for the treatment of TED, in Japan, and, under certain circumstances, a non-exclusive license to manufacture such licensed products worldwide for use in Japan.

As consideration for the Kissei Agreement, the transaction price included an upfront cash payment of $70.0 million, which was recognized as revenue during the year ended December 31, 2025.

Additionally, we are eligible to receive up to an additional $315.0 million of non-refundable milestone payments upon achieving specific milestone events during the contract term, as well as tiered royalty payments ranging from percentages in the twenties to the mid-thirties based on the annual net sales of any licensed products sold in Japan.

In the future, we expect to continue to generate revenue from a combination of license fees and other upfront payments, payments for research and development services, milestone payments, product sales, and royalties in connection with strategic alliances and from customers.

We expect that any revenue we generate could fluctuate from quarter to quarter as a result of the timing of our achievement of development and commercial milestones, the timing and amount of payments relating to such milestones and the extent to which any of our product candidates are approved and successfully commercialized by us or our strategic alliance collaborators, if any.

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These payments are recorded as expense in the period in which we receive or take ownership of the goods or when the services are performed.

We record up-front and milestone payments to acquire and retain contractual rights to in-licensed technology and intellectual property rights as research and development expenses when incurred if there is uncertainty in our receiving future economic benefit from the acquired contractual rights.

We record upfront and milestone payments to acquire and retain contractual rights to in-licensed technology and intellectual property rights as research and development expenses when incurred if there is uncertainty in our receiving future economic benefit from the acquired contractual rights.

We consider future economic benefits from acquired contractual rights to licensed technology to be uncertain until such a drug candidate is approved by the FDA or other regulatory authorities, or when other significant risk factors are abated.

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Completion dates and completion costs can vary significantly for each future product candidate and are difficult to predict.

We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to our ability to maintain or enter into new strategic alliances with respect to each program or potential product candidate, the scientific and clinical success of each future product candidate, and ongoing assessments as to each future product candidate’s commercial potential.

We will need to raise additional capital and may seek additional strategic alliances in the future in order to advance the various clinical trials that are part of our clinical development program described above.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related benefits, including share-based compensation, and severance and retention benefits related to our finance, accounting, human resources, legal, business development, and other support functions, professional fees for auditing, tax, and legal services, market research and other professional and consulting fees to prepare for commercial activities, as well as insurance, board of director compensation, consulting, and other administrative expenses.

Other Income, net

Other income, net consists primarily of interest income, net of fees, and various income items of a non-recurring nature.

Interest expense consists of cash and non-cash interest expense on our long-term debt.

We earn interest income from interest-bearing accounts, money market funds, and short-term investments.

We anticipate we

will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to our ability to maintain or enter into new strategic alliances with respect to each program or potential product candidate, the scientific and clinical success of each future product candidate, and ongoing assessments as to each future product candidate’s commercial potential.

We may need to secure additional capital and could seek additional strategic alliances in the future in order to advance the various clinical trials that are part of our clinical development program described above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries and related benefits, including share-based compensation, and severance and retention benefits related to our executive, commercial, finance, human resources, legal, business development, and other support functions, professional fees for auditing, tax, and legal services, market research and other professional and consulting fees to prepare for commercial activities, as well as insurance, board of director compensation, consulting, and other administrative expenses.

Other Income (Expense), net

Other income (expense), net consists primarily of interest income, interest expense and various items of a non-recurring nature.

We earn interest income from interest-bearing accounts, money market funds and marketable securities.

Interest expense consists of cash and non-cash interest expense related to our DRI Purchase and Sale Agreement and Hercules Loan and Security Agreement.

Critical Accounting Policies and Estimates

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Actual results may differ materially from these estimates.

We believe that the accounting policy discussed below is critical to understanding our historical and future performance, as this policy relates to the more significant areas involving our judgments and estimates.

We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving our judgments and estimates.

Liability Related to the Sale of Future Revenue

We account for the liability related to the sale of future revenue, pursuant to the Purchase and Sale Agreement entered into with DRI Healthcare Acquisitions LP (“DRI”), as a debt financing, as we have significant continuing involvement in the generation of the future cash flows.

The liability related to the sale of future revenue and the related interest expense are based on our current estimates of future royalties and commercial milestones expected to be paid over the life of the arrangement.

Interest accretion on the liability related to the sale of future revenue is recognized using the effective interest rate method over the life of the related royalty stream.

We periodically assess the expected payments using a combination of internal projections and forecasts from external sources.

To the extent the amount or timing of future estimated payment is materially different than our previous estimates, we will account for any such change by prospectively adjusting the effective interest rate and related non-cash interest expense.

Derivative Liability

The Purchase and Sale Agreement with DRI contains an embedded derivative that requires bifurcation as a compound financial instrument separate from the liability related to the sale of future revenue.

The derivative liability is recorded at fair value using Monte Carlo simulation models which require the use of certain unobservable inputs, including estimates relating to the amount and timing of expected future revenue, the estimated volatility of these revenues, meeting certain conditional milestones, the discount rate corresponding to the risk of future cash flows, and the probability of a change in control.

The derivative liability is remeasured each reporting period with any change in fair value recorded in other expense, net on the consolidated statements of operations and comprehensive loss.

Clinical Trial and Nonclinical Study Accruals

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Our accrued expenses for nonclinical studies and clinical trials are based on estimates of costs incurred for services provided by external service providers and for other trial-related activities.

and amount of expenses we incur through our external service providers depend on a number of factors, such as site initiation, patient screening, enrollment, delivery of reports, and other events.

The timing and amount of expenses we incur through our external service providers depend on a number of factors, such as site initiation, patient screening, enrollment, delivery of reports, and other events.

In accruing for these activities, we obtain information from various sources and estimate the level of effort or expense allocated to each period.

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(in thousands)

Revenue $ 302 $ 314 $ (12)

License revenue $ 70,000 $ — $ 70,000

Collaboration revenue - related parties 849 302 547

Research and development expenses 338,929 238,254 100,675

General and administrative expenses 61,083 94,999 (33,916)

Other income (expense), net 29,086 16,716 12,370

Selling, general and administrative expenses 95,315 61,083 34,232

Other income, net 20,794 29,086 (8,292)

Net loss $ (342,601) $ (269,949) $ (72,652)

Revenue was $0.3 million for the years ended December 31, 2024 and 2023.

Revenue for both periods was attributable to our collaboration agreement with Zenas BioPharma.

License revenue for the year ended December 31, 2025 was attributable to the collaboration and license agreement with Kissei.

Collaboration revenue - related parties for the years ended December 31, 2025 and 2024 was attributable to our collaboration agreement with Zenas BioPharma and the Side Agreement and MTA with Zai Lab.

Research and Development Expenses

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FcRn inhibitor portfolio 46,394 41,941 4,453

Other nonclinical and research and development costs 3,001 13,540 (10,539)

Other research programs and expenses 7,036 3,001 4,035

Unallocated expenses

Personnel related expense (including share based compensation) 55,237 39,608 15,629

Facility and other operating costs 6,942 4,998 1,944

Personnel-related (including share-based compensation) 69,555 55,237 14,318

Facility and other expenses 6,464 6,942 (478)

Total research and development expenses $ 338,929 $ 238,254 $ 100,675

Direct costs related to the TED portfolio increased by $59.5 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily attributable to:

• $50.5 million increase in clinical trial costs and a $10.9 million increase in chemistry, manufacturing and controls costs to support the veligrotug and VRDN-003 clinical trials.

Direct costs related to the TED portfolio increased by $78.3 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily driven by the progression of our portfolio, including the following:

• $55.6 million increase in clinical trial costs and an $8.7 million increase in chemistry, manufacturing and controls costs to support multiple ongoing phase 3 clinical trials for veligrotug and elegrobart clinical trials;

• $11.4 million increase in milestone, license and option fees due under our license agreement with ImmunoGen.

Direct costs related to the FcRn inhibitor portfolio increased by $4.5 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily attributable to:

• $14.0 million increase in nonclinical research to advance the FcRn inhibitor portfolio;

• $7.0 million increase in clinical trial costs to support a phase 1 clinical trial for VRDN-006;

• $5.2 million increase in chemistry, manufacturing and controls costs to support IND-enabling activities;

These increases were partially offset by a $16.3 million decrease in milestone, license and option fees as a result expenses incurred during the year ended December 31, 2023, primarily due to a $15.0 million upfront payment related to the development of subcutaneous delivery systems.

Direct costs related to other nonclinical research and development decreased by $10.5 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily attributable to:

• $5.7 million decrease in milestone, license and option fees as a result of an upfront payment for an exclusive license and collaboration agreement during the year ended December 31, 2023;

• $3.9 million decrease in other nonclinical research expenses due to prioritization of the FcRn inhibitor portfolio.

Personnel-related costs increased $15.6 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily attributable to:

• $11.3 million increase in personnel related costs, due primarily to increased headcount to support our ongoing research and development efforts, including share-based compensation and other employee compensation and recruiting costs;

• $4.3 million increase in severance costs primarily related to separation agreements with former executive officers, including a $3.2 million increase in share-based compensation related to the acceleration of stock option vesting during the year ended December 31, 2024.

Facility and other operating costs increased $1.9 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily attributable to an increase in professional services fees for consultants and contractors, as well as an increase in facility and information technology costs to support our ongoing research and development efforts.

We expect our research and development expenses to continue to increase as we work to progress our clinical and nonclinical programs.

General and Administrative Expenses

General and administrative expenses were $61.1 million during the year ended December 31, 2024, compared to $95.0 million during the year ended December 31, 2023.

The $33.9 million decrease in general and administrative expenses is primarily attributable to the following:

• $27.2 million decrease in severance costs, due primarily to separation agreements with former executive officers, including a $22.7 million decrease in share-based compensation related to the modification and acceleration of stock option vesting for former executives.

Share-based compensation costs for the year ended December 31, 2024 included $3.4 million in costs related to the modification and acceleration of vesting for former executive officers as compared to $26.1 million for the year ended December 31, 2023;

• $8.4 million decrease in personnel-related costs, primarily due to a decrease in headcount and a decrease in share-based compensation and other employee compensation and recruiting costs.

These decreases were partially offset by a $2.9 million increase in legal services, market research and other professional and consulting fees to prepare for commercial activities.

partially offset by

• $8.3 million decrease in nonclinical research due to timing and stage of development of the FcRn inhibitor portfolio.

Direct costs related to other nonclinical research and development increased by $4.0 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily attributable to an increase in nonclinical research and chemistry, manufacturing and controls costs to support the development of the TSHR program.

Personnel-related costs increased $14.3 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily attributable to increased headcount to support our ongoing research and development efforts.

Selling, General and Administrative Expenses

2025 2024 Increase (Decrease)

(in thousands)

Personnel-related (including share-based compensation) $ 52,115 $ 36,832 $ 15,283

Legal, consulting and professional services 38,475 20,419 18,056

Facility and other expenses 4,725 3,832 893

Total selling, general and administrative expenses $ 95,315 $ 61,083 $ 34,232

Selling, general and administrative expenses were $95.3 million during the year ended December 31, 2025, compared to $61.1 million during the year ended December 31, 2024.

The $34.2 million increase in selling, general and administrative expenses is primarily attributable to the following:

• $15.3 million increase in personnel-related costs, primarily due to an increase in headcount to support preparatory commercial activities for veligrotug and our growing organization;

• $18.1 million increase in legal services, market research and other professional and consulting fees primarily for preparatory commercial activities for veligrotug.

Other Income, net

Other income, net was $29.1 million during the year ended December 31, 2024 compared to $16.7 million during the year ended December 31, 2023.

Other income, net for the year ended December 31, 2024 is comprised of $31.6 million of interest income earned on short-term investments as well as $0.3 million of sub-lease income, offset by $2.2 million in interest expense related to our Hercules Loan and Security Agreement, and $0.6 million in other losses.

Other income, net for the year ended December 31, 2023 is comprised of $18.2 million of interest income earned on short-term investments as well as $0.3 million of sub-lease income, offset by $1.3 million in interest expense related to our Hercules Loan and Security Agreement and $0.5 million in other losses.

The increase in interest income is primarily attributable to higher interest rates and higher average short-term investments balances during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Liquidity and Capital Resources

Other income, net was $20.8 million during the year ended December 31, 2025 compared to $29.1 million during the year ended December 31, 2024, primarily comprised of interest income earned on marketable securities, partially offset by interest expense related to our DRI Purchase and Sale Agreement and Hercules Loan and Security Agreement.

Additional Capital Resources

We have funded our operations to date principally through proceeds received from the sale of our common stock, our Series A convertible preferred stock, our Series B convertible preferred stock and other equity securities, debt financings, license fees, and reimbursements received under collaboration agreements.

As of December 31, 2024, we had $717.6 million in cash, cash equivalents, and short-term investments.

We expect that our current cash, cash equivalents and short-term investments will be sufficient to fund our planned operations, including our clinical development plan described elsewhere in this Annual Report, into the second half of 2027.

In addition, as of December 31, 2024, the Company has access to additional undrawn funds under the Hercules Amended Term Loan, as described below.

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

Since our inception and through December 31, 2025, we have generated an accumulated deficit of $1,338.5 million.

Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

We will continue to require substantial additional capital to continue the development of our product candidates, and potential commercialization activities, and to fund our ongoing operations, including our clinical development plan described above.

The amount and timing of future funding requirements will depend on many factors, including the pace and results of our clinical development efforts, equity financings, securing additional license and collaboration agreements, and issuing debt or other financing vehicles.

Our ability to secure capital is dependent upon a number of factors, including success in developing our technology and product candidates.

Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidates.

Changing circumstances, such as changes in the scope and timing of our clinical studies, may cause us to consume capital significantly faster or slower than we currently anticipate.

If we are unable to acquire additional capital or resources, we will be required to modify our operational plans to complete future milestones.

We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available financial resources sooner than we currently anticipate.

We may be forced to reduce our operating expenses and raise additional funds to meet our working capital needs, principally through the additional sales of our securities or debt financings or entering into strategic collaborations.

Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations.

In addition, we may continue to incur additional operating losses as a result of planned expenditures for research and development activities, our drug development programs, including clinical trial and manufacturing costs, and the continued build-out of clinical, manufacturing, commercial, and compliance capabilities.

Our ability to generate revenues from sales of

veligrotug and elegrobart in the U.S., if regulatory approval is granted, depends on us being able to establish sales and marketing capabilities and gain acceptance in the marketplace, which we may be unable to do in a timely manner or at all.

In addition, we cannot predict with any certainty whether and to what extent the timing or availability of additional funds under the DRI Purchase and Sale Agreement or the Hercules Loan and Security Agreement, if at all.

Our ability to achieve milestones under the DRI Purchase and Sale Agreement or drawdown on the remaining tranches under the Hercules Loan and Security Agreement are subject to our achievement of certain regulatory and commercial milestones on or before certain dates or, for certain milestones, on mutual agreement of the applicable party.

As of December 31, 2025, we had $874.7 million in cash, cash equivalents and marketable securities.

We expect that our current cash, cash equivalents and marketable securities will enable the Company to fund our planned operations for at least twelve months from the date of the issuance of these consolidated financial statements.

Based on our current business plans, we believe that our existing current cash, cash equivalents, marketable securities, the $115.0 million in potential near-term milestones anticipated under the DRI Purchase and Sale Agreement and the anticipated revenue from veligrotug and elegrobart sales, if each is approved on our anticipated timelines, will be sufficient to fund our planned operations to break even where our anticipated revenues fund our anticipated operating expenses.

Our material cash requirements include obligations as of December 31, 2025, as well as resources required to fulfill our research and development activities and the effects that such obligations and activities are expected to have on our liquidity and cash flows in future periods.

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As of December 31, 2025, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales.

For additional information regarding our agreements, see Note 7 and Note 8 to our condensed consolidated financial statements included elsewhere in this report.

For additional information regarding our agreements, see Note 8, Collaboration and License Agreements, to our consolidated financial statements included elsewhere in this report.

Our operating lease obligations primarily consist of lease payments on our office space in Waltham, Massachusetts and our lab and office facilities in Boulder, Colorado.

For additional information regarding our lease obligations, see Note 8 to our condensed consolidated financial statements included elsewhere in this report.

For additional information regarding our lease obligations, see Note 9, Commitments and Contingencies, to our consolidated financial statements included elsewhere in this report.

Additionally, we have entered into agreements with third-party contract manufacturers for the manufacture and processing of certain of our product candidates for clinical testing purposes, and we have entered and will enter into other contracts in the normal course of business with contract research organizations for clinical trials and other vendors for other services and products for operating purposes.

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If we raise additional funds through the issuance of debt, the obligations related to such debt could be senior to rights of holders of our capital stock and could contain covenants that may restrict our operations.

Should additional capital not be available to us in the near term, or not be available on acceptable terms, we may be unable to realize value from our assets and discharge our

liabilities in the normal course of business, which may, among other alternatives, cause us to further delay, substantially reduce, or discontinue operational activities to conserve our cash resources.

Should additional capital not be available to us in the near term, or not be available on acceptable terms, we may be unable to realize value from our assets and discharge our liabilities in the normal course of business, which may, among other alternatives, cause us to further delay, substantially reduce, or discontinue operational activities to conserve our cash resources.

Loan and Security Agreement with Hercules Capital, Inc.

On April 1, 2022, we entered into the Hercules Loan and Security Agreement among the Company, certain of our subsidiaries from time to time party thereto (together with the Company, collectively, the “Borrower”), Hercules and certain other lenders party thereto (the “Lenders”).

Under the Hercules Loan and Security Agreement, the Lenders provided us with access to a term loan with an aggregate principal amount of up to $75.0 million, in four tranches (collectively the “Term Loan”), including an initial tranche of $25.0 million, which was available to us through June 15, 2023.

In April 2022, we entered into the Hercules Loan and Security Agreement among the Company, certain of our subsidiaries from time to time party thereto (together with the Company, collectively, the “Borrower”), Hercules and certain other lenders party thereto (the “Lenders”).

Under the Hercules Loan and Security Agreement, the Lenders provided us with access to a term loan with an aggregate principal amount of up to $75.0 million, in four tranches, including an initial tranche of $25.0 million.

Upon signing, we drew an initial principal amount of $5.0 million.

Per the terms of the Hercules Loan and Security Agreement, we were originally obligated to make interest-only payments through April 1, 2024, which was extended to October 1, 2024 upon the achievement of a development milestone in August 2022.

We were required to repay the Term Loan amount in equal monthly installments of the principal amount and interest between the end of the interest-only period and the maturity date of October 1, 2026.

In addition, we were required to pay an end-of-term fee equal to 6% of the principal amount of funded Term Loan Advances (as defined in the Hercules Loan and Security Agreement) at maturity, which were being accreted as additional interest expense over the term of the loan.

In August 2023, we executed an amendment to the Hercules Loan and Security Agreement (the “Hercules Amendment”).

The Hercules Amendment was determined to substantially alter the Hercules Loan and Security Agreement and therefore was accounted for as a debt extinguishment.

We recognized a loss on debt extinguishment of $0.2 million in August 2023 related to unamortized debt discount and debt issuance costs.

Under the Hercules Amendment, the Lenders provided the Company access to an increased term loan with an aggregate principal amount of up to $150 million, in four tranches (collectively the “Amended Term Loan”), consisting of (1) an initial tranche of $50.0 million, $5.0 million of which was drawn at closing of the Hercules Loan and Security Agreement in April 2022, $15.0 million of which was drawn at closing of the Hercules Amendment in August 2023, $5.0 million of which was available through December 15, 2023, and $25.0 million of which was available from July 1, 2024 through December 15, 2024;

(2) a second tranche of $20.0 million, subject to achievement of certain regulatory milestones, available through February 15, 2025;

(3) a third tranche of $20.0 million, subject to achievement of certain regulatory milestones, available through March 31, 2025;

and (4) a fourth tranche of $60.0 million subject to approval by the Lenders’ investment committee(s), available through June 15, 2025.

As of December 31, 2024, the milestones for the second and third tranches have been achieved.

The obligations of the Borrower under the Hercules Amendment agreement are secured by substantially all of the assets of the Borrower, excluding the Borrower’s intellectual property.

The Amended Term Loan has a maturity date of October 1, 2026.

The Amended Term Loan bears interest at a floating per annum rate equal to the greater of (i) 7.45% and (ii) 4.2% above the Prime Rate (as defined therein), provided that the Term Loan interest rate shall not exceed a per annum rate of 8.95%.

In August 2023, we executed the first amendment to the Hercules Loan and Security Agreement (the “Hercules First Amendment”).

The Hercules First Amendment was determined to substantially alter the Hercules Loan and Security Agreement and therefore was accounted for as a debt extinguishment.

Under the Hercules First Amendment, the maturity date was extended to October 1, 2026 and the Lenders provided the Borrower access to an increased term loan with an aggregate principal amount of up to $150 million, in four tranches, consisting of (i) an initial tranche of $50.0 million, $25.0 million of which was available through December 15, 2023, and $25.0 million of which was available from July 1, 2024 through December 15, 2024;

(ii) a second tranche of $20.0 million, subject to achievement of certain regulatory milestones, which was available through February 15, 2025;

(iii) a third tranche of $20.0 million, subject to achievement of certain regulatory milestones, which was available through March 31, 2025;

and (iv) a fourth tranche of $60.0 million subject to approval by the Lenders’ investment committee(s), which was available through June 15, 2025.

Upon execution of the Hercules First Amendment, the Borrower drew an additional principal amount of $15.0 million, increasing the cumulative amount drawn to $20.0 million.

The obligations of the Borrower under the Hercules First Amendment agreement were secured by substantially all of the assets of the Borrower, excluding the Borrower’s intellectual property.

In October 2025, we executed a second amendment (the “Hercules Second Amendment”) to the Hercules Loan and Security Agreement.

Under the Hercules Second Amendment, the term loan facility was amended to extend the maturity date to October 1, 2030 and provide an aggregate principal amount of up to $300.0 million (the “New Term Loan”), consisting of (i) an initial tranche of $100.0 million (“Tranche 1”), comprised of $30.0 million drawn upon execution of the Hercules Second Amendment, increasing the cumulative amount drawn to $50.0 million, $25.0 million (“Tranche 1B”) available through September 15, 2026, and $25.0 million available from the earlier to occur of the expiration or full funding of Tranche 1B through December 15, 2026, ii) a second tranche of $50.0 million (“Tranche 2”), subject to achievement of certain regulatory milestones, available from (A) the earlier to occur of the full draw of Tranche 1 and December 15, 2025 through (B) the earlier to occur of June 15, 2027 and the date that is 60 days following such achievement of such regulatory milestones (the “Tranche 2 Expiration Date”), (iii) a third tranche of $50.0 million (“Tranche 3”), subject to achievement of certain regulatory milestones, available from (A) the earlier to occur of the full draw of Tranche 2 and the Tranche 2 Expiration Date through (B) the earlier to occur of June 15, 2027 and the date that is 60 days following such achievement of such regulatory milestones (the “Tranche 3 Expiration Date”), (iv) a fourth tranche of $50.0 million, subject to achievement of a certain revenue milestone, available from (A) the earlier to occur of the full draw of Tranche 3 and the Tranche 3 Expiration Date through (B) March 15, 2028, and (v) a fifth tranche of $50.0 million, subject to approval by the Lenders’ investment committee(s), available through October 1, 2030.

The milestones for Tranche 2, Tranche 3 and Tranche 4 have not yet been achieved.

The obligations of the Borrower under the Hercules Second Amendment are secured by substantially all of the assets of the Borrower.

The amended term loan facility bears interest at a floating per annum rate equal to the greater of 8.95% and 1.45% above the Prime Rate (as defined therein), provided that the interest rate shall not exceed a per annum rate of 9.45%.

Interest is payable monthly in arrears on the first day of each month.

The interest rate as of December 31, 2025 was 8.95%.

Per the terms of the Hercules Amendment, we were originally obligated to make interest-only payments through April 1, 2025.

Upon achievement of certain development milestones related to our topline results for our phase 3 THRIVE trial in September 2024, the interest-only period was extended to October 1, 2025.

Upon achievement of certain development milestones related to topline results for the Company’s phase 3 THRIVE-2 trial in December 2024, the interest-only period was further extended to April 1, 2026.

The Borrower is required to repay the Amended Term Loan amount in equal monthly installments of the principal amount and interest between the end of the interest-only period and the maturity date of October 1, 2026.

In addition, the Borrower is required to pay an end-of-term fee equal to 6% of the principal amount of funded Amended Term Loan advances at maturity, which are being accreted as additional interest expense over the term of the loan.

ATM Agreement

Under the Hercules Second Amendment, we are obligated to make interest-only payments through October 1, 2029.

If certain regulatory milestones are met, then the interest-only period will be extended to October 1, 2030.

We are required to repay the outstanding amount of the term loan facility in equal monthly installments of the principal amount and interest between the end of the interest-only period and the maturity date of October 1, 2030.

In addition, we are required to pay an end-of-term fee equal to 4.25% of the principal amount of funded advances if the term loan facility is repaid on or prior to October 17, 2027 or 6.00% of the principal amount of funded advances at maturity if the term loan facility is repaid after October 17, 2027.

Purchase and Sale Agreement with DRI Healthcare Acquisitions LP

In October 2025, we entered into a Purchase and Sale Agreement of revenue participation rights with DRI Healthcare Acquisitions LP (“DRI”), (the “DRI Purchase and Sale Agreement”), pursuant to which DRI purchased rights to certain revenue streams in the U.S.

from us in exchange for up to $300.0 million in consideration, including $55.0 million paid at signing and conditional payments of up to $245.0 million for which we will become eligible to receive upon achieving certain regulatory and sales-based milestones.

The DRI Purchase and Sale Agreement contains customary representations, warranties and indemnities of the Company and DRI and customary covenants on the part of the Company, as well as a limit on the amount of incurrence of certain types of indebtedness, which limit automatically terminates a certain period of time following receipt of marketing approval for veligrotug in the U.S.

The DRI Purchase and Sale Agreement requires us to pay tiered royalties to DRI based on net sales of veligrotug, elegrobart and certain other related products (the “Net Sales Royalties”).

The royalties consist of (i) 7.5% of annual U.S.

net sales up to and including $600 million, which royalties could increase to low-double digits if marketing approval for elegrobart is not received prior to a speciﬁed date, (ii) 0.8% of annual U.S.

net sales above $600 million and up to and including $900 million, (iii) 0.25% of annual U.S.

net sales above $900 million and up to $2 billion, and (iv) no royalty owed for annual

net sales in excess of $2 billion.

The DRI Purchase and Sale Agreement may only be terminated upon repayment by us of a certain multiplier of the consideration paid to us by DRI (less payments by us to DRI to date) on or prior to a certain date or repayment by an acquirer of us of a certain multiplier of the consideration paid by DRI to us (less payments by us to DRI to date) following a change of control of the Company.

We determined that the DRI Purchase and Sale Agreement is considered a sale of future revenues and is treated as a financing liability according to Accounting Standards Codification (“ASC”) 470, Debt , based on the specific facts and circumstances including our significant continuing involvement in the generation of the cash flows due to DRI.

The sale of future revenue liability is accounted for as debt and is recorded at cost.

After initial recognition of the debt instrument, we will use the effective interest method to account for the amount recorded as debt on its balance sheet.

The effective interest rate is the rate that equates the present value of the estimated future cash flows with the carrying amount of the liability related to the sale of future revenue.

The estimate of future cash flows includes estimated future Net Sales Royalties to be paid to DRI and the receipt of conditional payments from DRI that were deemed probably of achievement at inception.

The interest rate on this financing liability may vary during the term of the agreement depending on a number of factors, including our net sales forecast and the probability of achieving certain milestones.

We will evaluate the interest rate used to amortize the liability related to the sale of future revenue quarterly based on its expectations of future net sales and current market conditions using the prospective method.

A significant increase or decrease in actual or forecasted net sales or changes in expected achievement of certain milestones may materially impact the liability, interest expense, and the time period for repayment.

The conditional payments represent loan commitments that are not treated as freestanding financial instruments and qualify for the derivative scope exception under ASC 815, Derivatives and Hedging , and therefore have not been bifurcated and accounted for separately.

Upon receipt of the $55.0 million payment from DRI at the close of the DRI Purchase and Sale Agreement, we recorded a liability related to the sale of future revenue of $32.4 million, net of the proportionate debt issuance costs allocated to it and the initial fair value of the bifurcated derivative liability.

We accrued $1.8 million in interest expense during the year ended December 31, 2025.

As of December 31, 2025, no payments of Net Sales Royalties to DRI have been made or accrued.

As of December 31, 2025, the net carrying amount of the liability related to the sale of future revenue was $34.2 million.

The imputed effective annual interest rate for the liability related to the sale of future revenue was 21.2% as of December 31, 2025.

Derivative Liability

In the event of a change of control of the Company at, or prior to, January 1, 2035, the DRI Purchase and Sale Agreement provides us an option to repurchase, and DRI an option to require us to repurchase, the revenue participation right from DRI (the “Put/Call Option”).

Upon exercise of the Put/Call Option by us or DRI, the DRI Purchase and Sale Agreement will terminate, and we will become obligated to pay the applicable multiplier of the consideration paid to us by DRI to date, less the payments of Net Sales Royalties paid to DRI by us to date.

The Put/Call Option is an embedded derivative pursuant to ASC 815, Derivatives and Hedging , that must be bifurcated and measured at fair value initially and at each subsequent reporting period.

We estimated the fair value of the derivative liability using a “with-and-without” method, which involves determining the fair value of the entire financial liability instrument, inclusive of all terms, features, and conditions, and separately determining the fair value of the financial liability instrument excluding the derivative.

The difference between the fair value of the entire financial liability instrument including the derivative and the fair value of the financial liability instrument excluding the derivative represents the fair value of the derivative liability.

The estimated probability and timing of a change in control event that triggers the exercisability of the Put/Call Option, the estimated cash flows and the discount rate used are Level 3 significant unobservable inputs used to determine the fair value of the derivative liability.

Management concluded the probability of exercise of the Put/Call Option to be remote.

The estimated market yield used to measure the fair value of the derivative was 9.3% and 11.5% as of inception and December 31, 2025, respectively.

The initial fair value allocated to the derivative liability as of the close of the DRI Purchase and Sale Agreement was $19.3 million.

Issuance costs of $1.8 million allocated to the derivative were recorded to expense as a component of other expense, net in the consolidated statements of operations and comprehensive loss.

The derivative liability is subsequently remeasured at fair value each reporting period, with changes in fair value being recorded as a component of other expense, net in the consolidated statements of operations and comprehensive loss.

As of December 31, 2025, the fair value of the derivative liability was $20.0 million and we recognized expense of $0.7 million relating to the change in fair value of the derivative liability from inception to December 31, 2025.

ATM Agreements

In September 2022, we entered into the September 2022 ATM Agreement with Jefferies pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $175.0 million from time to time at prices and on terms to be determined by market conditions at the time of offering, with Jefferies acting as the sales agent.

Jefferies will receive a commission of 3.0% of the gross proceeds of any shares of common stock sold under the September 2022 ATM Agreement.

During the year ended December 31, 2022, 964,357 shares were sold under the September 2022 ATM Agreement at a weighted average price of $26.01 per share, for aggregate net proceeds of approximately $24.2 million, including commissions to Jefferies as a sales agent.

During the year ended December 31, 2023, the Company sold 684,298 shares under

the September 2022 ATM Agreement with Jefferies at a weighted average price of $22.30 per share, for aggregate net proceeds of approximately $14.8 million, including commissions to Jefferies as a sales agent.

During the year ended December 31, 2024, 3,058,751 shares were sold under the September 2022 ATM Agreement at a weighted average price of $22.86 per share, for aggregate net proceeds of approximately $67.7 million, including commissions to Jefferies as a sales agent.

During the quarter ended December 31, 2024, the Company sold 1,497,181 shares under the September 2022 ATM Agreement with Jefferies at a weighted average price of $22.47 per share, for aggregate net proceeds of approximately $32.6 million, including commissions to Jefferies as a sales agent.

During the year ended December 31, 2023, the Company sold 684,298 shares under the September 2022 ATM Agreement with Jefferies at a weighted average price of $22.30 per share, for aggregate net proceeds of approximately $14.8 million, including commissions to Jefferies as a sales agent.

During the year ended December 31, 2024, the Company sold 3,058,751 shares under the September 2022 ATM Agreement with Jefferies at a weighted average price of $22.86 per share, for aggregate net proceeds of approximately $67.7 million, including commissions to Jefferies as a sales agent.

During the year ended December 31, 2025, the Company sold 245,388 shares under the September 2022 ATM Agreement at a weighted average price of $20.14 per share, for aggregate net proceeds of approximately $4.8 million, including commissions to Jefferies as a sales agent.

The September 2022 ATM Agreement was terminated in March 2025 and no further offerings or sales of common stock will be conducted under the September 2022 ATM Agreement.

In March 2025, the Company entered into an Open Market Sale Agreement SM (the “March 2025 ATM Agreement”) with Jefferies, pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $300.0 million from time to time at prices and on terms to be determined by market conditions at the time of offering, with Jefferies acting as its sales agent.

Jefferies will receive a commission of up to 3.0% of the gross proceeds of any shares of common stock sold under the March 2025 ATM Agreement.

During the year ended December 31, 2025, the Company sold 1,971,476 shares under the March 2025 ATM Agreement at a weighted average price of $29.52 per share, for aggregate net proceeds of approximately $57.0 million, including commissions to Jefferies as a sales agent.

Public Offerings

In January 2024, we entered into an underwriting agreement with Jefferies and Leerink Partners LLC relating to the offer and sale of 7,142,858 shares of our common stock at a public offering price of $21.00 per share.

The aggregate gross proceeds to us were approximately $150.0 million, before deducting underwriting discounts and commissions and other offering expenses payable by us.

In September 2024, we entered into an underwriting agreement with Jefferies, Goldman Sachs & Co.

LLC and Stifel, Nicolaus & Company, Incorporated related to the offer and sale (the “September 2024 Public Offering”) of 12,466,600 shares of our common stock, which includes 1,800,000 shares of common stock issued in connection with the exercise in full by the underwriters of their option to purchase additional shares at a public offering price of $18.75 per share, and 20,000 shares of our Series B Convertible Preferred Stock at a price per share of $1,250.0625 per share.

The aggregate gross proceeds to us from the September 2024 Public Offering, including the exercise of the option, were approximately $258.8 million, before deducting underwriting discounts and commissions and other offering expenses payable by us.

In January 2024, we entered into an underwriting agreement with Jefferies LLC (“Jefferies”) and Leerink Partners LLC relating to the offer and sale (the “January 2024 Public Offering”) of 7,142,858 shares of our common stock at a public offering price of $21.00 per share.

The aggregate gross proceeds to us from the January 2024 Public Offering were approximately $150.0 million, before deducting underwriting discounts and commissions and other offering expenses payable by us.

Private Placements

In November 2023, we issued and sold in private placement transactions an aggregate of 8,869,797 shares of our common stock at a price per share of $12.38 and 92,312 shares of our Series B Convertible Preferred Stock at a price per share of $825.3746, pursuant to securities purchase agreements with certain institutional and accredited investors.

We received aggregate gross proceeds of approximately $186.0 million, before deducting offering expenses payable by us.

LLC and Stifel, Nicolaus & Company, Incorporated related to the offer and sale of 12,466,600 shares of our common stock, which includes 1,800,000 shares of common stock issued in connection with the exercise in full by the underwriters of their option to purchase additional shares at a public offering price of $18.75 per share, and 20,000 shares of our Series B Convertible Preferred Stock at a price per share of $1,250.06 per share.

The aggregate gross proceeds to us, including the exercise of the option, were approximately $258.8 million, before deducting underwriting discounts and commissions and other offering expenses payable by us.

In October 2025, we entered into an underwriting agreement with Jefferies LLC, Leerink Partners LLC, Evercore Group L.L.C.

and Stifel, Nicolaus & Company, Incorporated related to the offer and sale of 13,138,750 shares of our common stock, which includes 1,713,750 shares of common stock issued in connection with the exercise in full by the underwriters of their option to purchase additional shares at a public offering price of $22.00 per share.

The aggregate gross proceeds to us were approximately $289.1 million, before deducting underwriting discounts and commissions and other offering expenses payable by us.

Summarized cash flows for the year ended December 31, 2025 and 2024 are as follows:

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Operating Activities

Net cash used in operating activities was $276.4 million for the year ended December 31, 2025, and primarily consisted of a net loss of $342.6 million, adjusted for non-cash items of $43.2 million, primarily driven by share-based compensation of $44.3 million, and working capital adjustments of $23.0 million.

The change in working capital was primarily related to an increase of $22.8 million in accounts payable, accrued liabilities and other liabilities due to the timing of payments and prepayments to vendors for ongoing clinical trial and manufacturing activities.

Net cash used in operating activities was $232.3 million for the year ended December 31, 2024, and primarily consisted of a net loss of $269.9 million, adjusted for non-cash items of $28.0 million, including share-based compensation of $42.2 million, partially offset by accretion and amortization of premiums and discounts on available-for-sale securities of $15.7 million, and working capital adjustments of $9.6 million.

The change in working capital was primarily related to an increase of $21.5 million in accounts payable and accrued and other liabilities, partially offset by an increase of $11.8 million in prepaid expenses and other current assets due to the timing of payments and prepayments to vendors for ongoing clinical trial and manufacturing activities.

Net cash used in operating activities was $184.2 million for the year ended December 31, 2023, and primarily consisted of a net loss of $237.7 million, adjusted for non-cash items of $63.0 million, including share-based compensation of $67.2 million and working capital adjustments of $9.4 million.

The change in working capital was primarily related to a decrease of $7.0 million

in accounts payable and accrued and other liabilities and an increase of $2.1 million in prepaid expenses and other current assets due to the timing of payments and prepayments to vendors for ongoing clinical trial and manufacturing activities.

The change in working capital was primarily related to an increase of $21.5 million in accounts payable, accrued liabilities and other liabilities, partially offset by an increase of $11.8 million in prepaid expenses and other current assets due to the timing of payments and prepayments to vendors for ongoing clinical trial and manufacturing activities.

Investing Activities

Net cash used in investing activities was $228.7 million during the year ended December 31, 2024.

Net cash used in investing activities in 2024 primarily consisted of net purchases of investments of $228.1 million and property and equipment purchases of $0.5 million.

Net cash used in investing activities was $94.3 million during the year ended December 31, 2023.

Net cash used in investing activities in 2023 primarily consisted of net purchases of investments of $93.4 million and property and equipment purchases of $0.9 million.

Net cash used in investing activities was $37.6 million during the year ended December 31, 2025 and primarily consisted of $37.1 million in net purchases of marketable securities.

Net cash used in investing activities was $228.7 million during the year ended December 31, 2024 and primarily consisted of $228.1 million in net purchases of marketable securities.

Financing Activities

Net cash provided by financing activities was $457.7 million during the year ended December 31, 2024.

Net cash provided by financing activities in 2024 was primarily driven by net proceeds of $451.7 million from the 2024 Public Offerings and the September 2022 ATM Agreement, as well as $5.3 million in proceeds from the exercise of stock options and $0.7 million in proceeds from the issuance of common stock under our employee stock purchase plan.

Net cash provided by financing activities was $225.7 million for the year ended December 31, 2023.

Net cash provided by financing activities in 2023 was primarily driven by net proceeds of $189.5 million from the 2023 Private Placement and the September 2022 ATM Agreement, as well as $19.3 million in proceeds from the exercise of stock options, $14.5 million in net proceeds from the Hercules Amendment, $1.9 million in proceeds from the exercise of warrants and $0.6 million in proceeds from the issuance of common stock under our employee stock purchase plan.

Net cash provided by financing activities was $426.7 million during the year ended December 31, 2025, and consisted primarily of net proceeds of $333.5 million from the issuance of common stock in our public offering and at-the-market offerings, net proceeds of $50.0 from the DRI Purchase and Sale Agreement, net proceeds of $28.4 from the Hercules Second Amendment, as well as $12.1 million in proceeds from the exercise of stock options.

Net cash provided by financing activities was $457.7 million for the year ended December 31, 2024, and consisted primarily of net proceeds of $451.7 million from the issuance of common and preferred stock in our public offerings and at-the-market offerings, as well as $5.3 million in proceeds from the exercise of stock options.

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