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Item 8. Financial Statements and Supplementary Data

2025-03-18 compared with 2024-06-06 · 315 added, 580 removed, 563 unchanged (61% of the section changed)

2 unchanged sentences

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm ( Marcum LLP , Chicago, IL , PCAOB ID 688 )

Report of Independent Registered Public Accounting Firm ( KPMG LLP , Chicago, IL , PCAOB ID 185 )

Report of Independent Registered Public Accounting Firm ( Marcum LLP , PCAOB ID 688 )

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations for the years ended December 31, 2024 and 2023

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023 and 20 2 2

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2024 and 2023

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Exicure, Inc.

(the “Company”) as of December 31, 2023, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

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

As more fully described in Note 1 to the consolidated financial statements, the Company has incurred significant expenses and negative cash flows since inception and its current liquidity is not sufficient to fund operations over the next twelve months.

We have audited the accompanying consolidated balance sheets of Exicure, Inc.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

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

As more fully described in Note 1 , the Company has incurred significant losses and negative cash flows since inception, and may need to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

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

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

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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New York, New York

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Exicure, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Exicure, Inc.

and subsidiary (the Company) as of December 31, 2022, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Going Concern

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

As discussed in Note 1 to the consolidated financial statements, the Company has incurred significant expenses and negative cash flows since inception and its current liquidity is not sufficient to fund operations over the next twelve months, which raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

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

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2014 to 2023.

Chicago, Illinois

March 18, 2025

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Current assets:

Cash and cash equivalents $ 816 $ 8,577

Cash, cash equivalents and restricted cash $ 12,508 $ 816

Other receivable 521 15

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Additional paid-in capital 206,035 192,594

Accumulated other comprehensive loss — —

Accumulated deficit ( 199,264 ) ( 189,563 )

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$ 15,056 $ 11,580

* reflects a one-for-five (1:5) reverse stock split effected on August 27, 2024

See Accompanying Notes to Consolidated Financial Statements.

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(in thousands, except share and per share data)

Collaboration revenue $ — $ 28,826

Revenue $ 500 $ —

Total revenue 500 —

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General and administrative expense 5,449 11,715

Litigation legal expense 1,562 938

Right-of-use asset impairment loss 5,721 —

Loss from sale of property and equipment — 920

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Interest expense ( 18 ) —

Other expense, net ( 2 ) ( 40 )

Total other expense, net ( 1,918 ) ( 542 )

Gain on settlement of accounts payables 407 —

Other income (expense), net 2,137 ( 2 )

Total other income (expense), net 2,539 ( 1,918 )

Net loss before provision for income taxes ( 9,693 ) ( 16,914 )

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Weighted-average basic and diluted common shares outstanding * 2,043,278 1,602,790

See Accompanying Notes to Consolidated Financial Statements.

EXICURE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, except share and per share data)

Net loss $ ( 16,914 ) $ ( 2,582 )

Other comprehensive (loss) income, net of taxes

Unrealized gains on available for sale securities, net of tax — 2

Other comprehensive income — 2

Comprehensive loss $ ( 16,914 ) $ ( 2,580 )

* reflects a one-for-five (1:5) reverse stock split effected on August 27, 2024

See Accompanying Notes to Consolidated Financial Statements.

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(in thousands, except shares)

Shares $ Additional Paid-in- Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity

Shares * $ Additional Paid-in- Capital Accumulated Deficit Total Stockholders’ Equity

Balance at January 1, 2023 1,096,017 $ — $ 187,571 $ ( 172,649 ) $ 14,922

Exercise of options 124 — — — — —

Reclassification of common stock warrants to liability — — ( 800 ) — ( 800 )

Equity-based compensation — — 1,348 — 1,348

Vesting of restricted stock units and related repurchases 56,971 — ( 122 ) — ( 122 )

Issuance of common stock-ESPP 1,851 — 5 — — 5

Issuance of common stock and warrants, net 1,334,035 — 4,900 — — 4,900

Other comprehensive loss, net — — — — 2 2

Issuance of common stock, net 680,000 — 4,597 — 4,597

Net loss — — — ( 16,914 ) ( 16,914 )

Balance at December 31, 2023 1,832,988 $ — $ 192,594 $ ( 189,563 ) $ 3,031

Reclassification of common stock warrants to liability — — ( 800 ) — — ( 800 )

Equity-based compensation — — 22 — 22

Vesting of restricted stock units and related repurchases 166 — — — —

Issuance of common stock and warrants, net 3,400,000 — 4,597 — — 4,597

Issuance of common stock, debt to equity conversion 339,214 — 1,018 1,018

Sale of common stock, financings 3,854,473 1 12,401 — 12,402

Net loss — — — ( 9,701 ) ( 9,701 )

Balance at December 31, 2024 6,026,841 $ 1 $ 206,035 $ ( 199,264 ) $ 6,772

* reflects a one-for-five (1:5) reverse stock split effected on August 27, 2024

See Accompanying Notes to Consolidated Financial Statements.

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Equity-based compensation 22 1,348

Amortization of long-term debt issuance costs and fees — 477

Amortization of investments — ( 2 )

Right-of-use asset impairment loss 5,721 —

Gain on settlement of accounts payables ( 407 ) —

Changes in fair value of investment in convertible notes receivable — 2,000

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Changes in operating assets and liabilities:

Accounts receivable ( 506 ) —

Prepaid expenses and other current assets 977 733

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Accrued expenses 1,180 ( 399 )

Deferred revenue — ( 28,826 )

Other liabilities ( 827 ) ( 728 )

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Purchase of available-for-sale securities — ( 2,000 )

Proceeds from sale or maturity of available-for-sale securities — 6,000

Capital expenditures — ( 10 )

Proceeds from sale of property and equipment — 922

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Cash flows from financing activities:

Proceeds from common stock offering 5,440 5,040

Proceeds from sale of common stock 12,402 5,440

Payment of common stock financing costs — ( 843 )

Payment of long-term debt fees and issuance costs — ( 506 )

Repayment of long-term debt — ( 7,500 )

Proceeds from issuance of employee stock purchase plan — 5

Proceeds from exercise of common stock warrants — 14

Proceeds from short term debt 1,000 —

Payment of exercise of common stock warrants — ( 800 )

Payments for minimum statutory tax withholding related to net share settlement of equity awards — ( 123 )

Net cash provided by (used in) financing activities 3,674 ( 3,105 )

Net cash provided by financing activities 13,402 3,674

Net (decrease) in cash, cash equivalents, and restricted cash 10,492 ( 7,761 )

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Cash, cash equivalents, and restricted cash - end of year $ 12,508 $ 2,016

See Accompanying Notes to Consolidated Financial Statements.

EXICURE, INC.

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(in thousands)

Year Ended December 31,

Supplemental disclosure of cash flow information

Non-cash operating activities:

Reclass prepaid expenses from noncurrent to current $ 428 $ —

Non-cash financing activities:

Equity effect of debt to equity conversion $ 1,018 $ —

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the amounts shown in the consolidated statements of cash flows:

Year Ended December 31,

Cash and cash equivalents $ 816 $ 8,577

Cash, cash equivalents and restricted cash $ 12,508 $ 816

Restricted cash included in other noncurrent assets — 1,200

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In September 2022, the Company announced a significant reduction in force, suspension of preclinical activities and halting of all research and development, and that the Company was exploring strategic alternatives to maximize stockholder value.

While the foregoing efforts are continuing, with respect to the Company’s historical assets, the Company does not expect they will generate significant value for stockholders.

Therefore, the Company is engaging in a broader exploration of strategic alternatives.

In the first quarter, the Company entered into a licensing agreement for patents related to one of our historical drug candidates, and received a small, one-time payment and an entitlement to only modest royalties on future sales of the licensed technology that we do not believe will be material.

In the second quarter, the Company sold some of our samples related to the licensed product.

In the third quarter, the Company entered into a sale agreement to sale our historical biotechnology intellectual property and other assets pursuant to the purchase agreement.

The Company continues to engage in a broader exploration of strategic alternatives.

This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.

The Company is exploring transactions in industries unrelated to its historical operations.

On January 19, 2025, we entered into a Share Purchase Agreement with GPCR Therapeutics Inc, a Korean corporation, (“GPCR”) pursuant to which we acquired from GPCR all of the issued and outstanding equity securities of GPCR Therapeutics USA Inc., a California corporation (“GPCR USA”).

In connection with the closing of the Share Purchase Agreement, the Company and GPCR entered into a License and Collaboration Agreement to further develop and commercialize GPCR’s technologies related to certain intellectual property and patents.

GPCR USA has an ongoing Phase 2 clinical trial focused on blood cancer patients, particularly those eligible for hematopoietic stem cell transplantation.

Its current clinical trial involves the combined administration of G-CSF, GPC-100 (Burixafor) and propranolol.

GPCR USA plans to complete the administration of GPC-100 to 20 patients by the end of April and aims to announce the clinical trial results by September.

Throughout these consolidated financial statements, the terms the “Company,” and “Exicure” refer to Exicure, Inc.

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All intercompany transactions and accounts are eliminated in consolidation.

Reclassification

Certain accounts in the prior period consolidated financial statements have been reclassified to conform to the presentation of the current year consolidated financial statements.

These reclassifications had no effect on the previously reported operating results.

Reverse Stock Split

At the Company’s Special Meeting of Stockholders held on August 15, 2024, the Company’s stockholders approved a proposal to approve and adopt an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of its shares of common stock, issued and outstanding or reserved for issuance, at a ratio within the range from 1-for-2 to 1-for-15, with such ratio to be determined in the discretion of the Board of Directors.

On August 20, 2024, the Company’s Board of Directors adopted resolutions to effect as soon as reasonably practicable the reverse split of the issued and outstanding shares of the Common Stock at a ratio of 1-for-5.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

The Company effected a reverse stock split of its Common Stock at a ratio of 1-for-5 as of 5:00 p.m.

Eastern Time on August 27, 2024.

No fractional shares were issued in connection with the reverse stock split.

Stockholders of record who would otherwise be entitled to receive a fractional share received a full share in lieu thereof.

An additional 102,837 shares were issued as a result of the fractional shares rounded up.

All information presented in the accompanying unaudited condensed consolidated financial statements, unless otherwise indicated herein, assumes a 1-for-5 reverse stock split of the Company’s outstanding shares of Common Stock, and unless otherwise indicated, all such amounts and corresponding conversion price or exercise price data set forth herein have been adjusted to give effect to such assumed reverse stock split.

Going Concern

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Management believes that given the Company’s current cash position, operating plans and forecasted negative cash flows from operating activities over the next twelve months, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

The Company has no committed sources of additional capital at this time and substantial additional financing will be needed by the Company to fund its operations.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Management believes that the Company’s existing cash and cash equivalents are insufficient to continue to fund its operating expenses and additional funding is needed in the very near term.

The Company has already engaged in significant cost reductions, so our ability to further cut costs and extend the Company’s operating runway is limited.

As a result, substantial additional financing will be needed by the Company in the very near term to pay expenses, fund the ongoing exploration of strategic alternatives and pursue any alternatives that may be identified.

Additional financing will be needed to fund our ongoing operations, support of GPCR USA’s operations, and exploration of strategic alternatives and pursuing any alternatives that we identify.

Management believes that the Company’s existing cash and cash equivalents are insufficient to continue to fund its operating expenses and additional funding is needed.

There can be no assurance that such additional financing will be available and, if available, can be obtained on acceptable terms.

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Actual results in future periods could differ from those estimates.

Reclassification

Certain accounts in the prior period consolidated statement of operations have been reclassified to conform to the presentation of the current year consolidated financial statements.

These reclassifications had no effect on the previously reported operating results.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Significant Accounting Policies

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The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

The Company classifies its marketable debt security investments as available-for-sale (“AFS”) and carries them at fair market value based upon prices on the last day of the fiscal period for identical or similar items.

The Company records unrealized gains and losses on marketable debt securities in other comprehensive income (loss) as a component of stockholders’ equity until realized.

Any premium or discount arising at purchase is amortized and/or accreted to interest income and/or interest expense over the life of the of the underlying security.

Realized gains and losses are included in other income, net.

The Company uses the specific identification method to determine the cost of securities sold.

As of December 31, 2024, cash equivalents represented funds held in a money market account.

Restricted cash

The Company secures a standby letter of credit with a restricted certificate of deposit account as part of its Chicago lease agreement.

The Company considers the restricted certificate of deposit account in the amount of $ 1,200 to be restricted cash because its use to the Company is contractually limited and presents the balance within other noncurrent assets on the accompanying consolidated balance sheet at December 31, 2023 and 2022.

The Company secures a standby letter of credit with a restricted certificate of deposit account as part of its Chicago lease agreement, which was used to pay the lease during 2024.

The Company considers the restricted certificate of deposit account in the amount of $ 109 to be restricted cash because its use to the Company is contractually limited and presents the balance within current assets on the accompanying consolidated balance sheet at December 31, 2024 and 2023.

Fair value of financial instruments

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The Company records short-term investments at their estimated fair value based on quoted market prices for identical or similar instruments.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Investment in Convertible Notes Receivable

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Concentrations of credit risk and other risks and uncertainties

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments, and accounts receivable.

The Company places its cash, cash equivalents, and short-term investments with reputable financial institutions.

The Company primarily invests its excess cash in debt instruments of corporations, the U.S.

Treasury, financial institutions, and U.S.

government agencies with strong credit ratings and an investment grade rating at or above a long-term rating of Aa3/AA- and a short-term rating of P1/A1.

The Company has established guidelines relative to diversification and maturities that maintain safety and liquidity.

The Company periodically reviews and modifies these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity.

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents.

The Company places its cash and cash equivalents with reputable financial institutions.

The Company’s cash accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per financial institution in the United States.

The Company's cash equivalent securities are insured by the Securities Investor Protection Corp.

(“SIPC”) up to $500,000 per account, with a limit of $250,000 in cash.

The Company has not experienced any credit losses in such accounts.

The Company has no financial instruments with off-balance sheet risk of loss.

For the year ended December 31, 2022, the Company’s revenue was generated from its collaborations with Ipsen and AbbVie, which were terminated in the fourth quarter of 2022 resulting in no revenue for 2023.

The Company is currently not profitable and no assurance can be provided that it will ever be profitable.

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See also Note 1, Going Concern , for more information.

The Company is subject to risks associated with its exploration of strategic alternatives including, but not limited, the inability to identify any transactions that will generate value for stockholders, incurrence of excessive costs in seeking to identify and pursue transactions and the possibility that any transaction the Company does pursue will not provide anticipated benefits.

Property and equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the various classes of property and equipment, which range from three to seven years .

Leasehold improvements are amortized using the straight-line method over the shorter of the remaining terms of the respective leases or the estimated lives of the assets.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

improvements are amortized using the straight-line method over the shorter of the remaining terms of the respective leases or the estimated lives of the assets.

Depreciation begins at the time the asset is placed in service.

Property and equipment are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

No impairment losses were recorded recorded for the years ended December 31, 2023 and 2022.

An impairment loss for the year ended December 31, 2024 resulted from an analysis of the Company’s right-of-use asset related to its office lease.

No impairment losses were recorded for the year ended December 31, 2023.

The Company accounts for freestanding warrants within stockholder’s equity or as liabilities based on the characteristics and provisions of each instrument.

The Company evaluates outstanding warrants in accordance with ASC 480, Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging .

If none of the criteria in

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

the evaluation in these standards are met, the warrants are classified as a component of stockholders’ equity and initially recorded at their grant date fair value without subsequent remeasurement.

If none of the criteria in the evaluation in these standards are met, the warrants are classified as a component of stockholders’ equity and initially recorded at their grant date fair value without subsequent remeasurement.

Warrants that meet the criteria are classified as liabilities and remeasured to their fair value, estimated using the Black-Scholes option-pricing model, at the end of each reporting period with changes in the fair value of the liability recorded in other income (expense), net in the consolidated statements of operations.

Revenue recognition

Under ASC 606, Revenue from Contracts with Customers , the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that are within the scope of ASC 606, the Company performs the following five steps:

Identify the contract with the customer.

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights and obligations regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract has commercial substance, and (iii) the Company determines that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

The Company applies judgment in determining the customer’s intent and ability to pay, which is based on a variety of factors including the customer’s historical payment experience, or in the case of a new customer, published credit and financial information pertaining to the customer.

Identify the performance obligations in the contract.

Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract.

To the extent a contract includes multiple promised goods and services, the Company must apply judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract.

If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.

Determine the transaction price.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer.

To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration.

Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes.

Determining the transaction price requires significant judgment.

Allocate the transaction price to performance obligations in the contract.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation.

The consideration to be received is allocated among the separate performance obligations based on relative standalone selling prices.

Recognize revenue when or as the Company satisfies a performance obligation.

The Company satisfies performance obligations either over time or at a point in time.

Revenue is recognized over time if either (i)

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

the customer simultaneously receives and consumes the benefits provided by the entity’s performance, (ii) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.

If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer.

Examples of control are using the asset to produce goods or services, enhance the value of other assets, or settle liabilities, and holding or selling the asset.

Revenue allocated to performance obligations relating to provision of research and development activities is recognized as the performance obligations are satisfied using an input method to measure progress, based on an estimate of the percentage of completion of the project based on the actual hours incurred on the project as a percentage of the total expected project hours.

The determination of the percentage of completion requires management to estimate the total expected project hours.

A detailed estimate of the total expected project hours is re-assessed every reporting period based on the latest project plan and discussions with project teams.

If a change in facts or circumstances occurs, the estimate will be adjusted and the revenue will be recognized based on the revised estimate.

The difference between the cumulative revenue recognized based on the previous estimate and the revenue recognized based on the revised estimate would be recognized as an adjustment to revenue in the period in which the change in estimate occurs.

Determining the estimate of total project hours requires significant judgment and may have a significant impact on the amount and timing of revenue recognition.

Licenses of intellectual property :

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from consideration allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the licenses.

For licenses that are combined with other promises, the Company utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone payments:

At the inception of each arrangement that includes development milestone payments, the Company evaluates the probability of reaching the milestones and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur in the future, the associated milestone value is included in the transaction price.

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore revenue recognized is constrained as management is unable to assert that a reversal of revenue would not be possible.

The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment.

To date, the Company has not recognized any milestone payment revenue from any of its collaboration agreements.

For arrangements that include sales-based royalties, including milestone payments based on levels of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue resulting from any of its collaboration agreements.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

The core principle of ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

The Company allocates the transaction price to all contractual performance obligations included in the contract.

If a contract has more than one performance obligation, we allocate the transaction price to each performance obligation based on standalone selling price, which depicts the amount of consideration we expect to be entitled in exchange for satisfying each performance obligation.

The Company recognizes revenue when it was satisfied or fulfilled it’s obligation to the customer.

Equity-based compensation

4 unchanged sentences

Segments and geographic information

The Company has determined it has one reporting segment.

Disaggregating the Company’s operations is impracticable because the Company’s research and development activities and its assets overlap and management reviews its business as a single operating segment.

Thus, discrete financial information is not available by more than one operating segment.

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, in deciding how to allocate resources and in assessing performance.

The Company views its operations and manages its business as one operating segment.

All long-lived assets of the Company are located in the United States.

2 unchanged sentences

Operating lease assets and liabilities are recognized on the balance sheet at the commencement date of the lease based upon the present value of lease payments over the lease term.

When determining the lease term, the Company includes options to extend or to terminate the lease when it is reasonably certain that the Company will exercise that option.

When determining the lease term, the Company includes options to extend or to terminate the lease when it is

EXICURE, INC.

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(in thousands, except share and per share data)

reasonably certain that the Company will exercise that option.

The Company uses the implicit interest rate when readily determinable and uses the Company’s incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at the commencement date in determining the present value of the lease payments.

9 unchanged sentences

The costs include employee‑related expenses including salaries, benefits, and stock‑based compensation expense, costs of funding research performed by third parties that conduct research and development and preclinical and clinical activities on the Company’s behalf, the cost of purchasing lab supplies and non‑capital equipment used in preclinical and clinical activities and in manufacturing preclinical and clinical study materials, consultant fees, facility costs including rent, depreciation and maintenance expenses, fees for acquiring and maintaining licenses under third party licensing agreements, including any sublicensing or success payments made to the Company’s licensors, and overhead and other expenses directly related to research and development operations.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the accrual or prepaid is adjusted accordingly.

5 unchanged sentences

At December 31, 2024 and 2023, the Company established a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized.

Recent Accounting Pronouncements Adopted

Financial Instruments - Credit Losses

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) (“ASU 2016-13”).

This ASU changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The standard replaces the “incurred loss” approach with an “expected loss” model.

The new model, referred to as the current expected credit loss (“CECL”) model, will apply to:

(1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures.

ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for credit losses.

2016-13 was effective for the Company beginning on January 1, 2020.

The Company adopted this ASU in January 2023.

There was no material impact on the consolidated financial statements.

EXICURE, INC.

1 unchanged sentence

(in thousands, except share and per share data)

Collaborative Research and License Agreements

Ipsen Collaboration Agreement

Summary of Agreement

On July 30, 2021 (the “Ipsen Effective Date”), the Company entered into a Collaboration, Option and License Agreement with Ipsen (the “Ipsen Collaboration Agreement”).

Pursuant to the Ipsen Collaboration Agreement, the Company granted to Ipsen exclusive access and options to license SNA-based therapeutics arising from two collaboration programs related to the treatment of Huntington’s disease and Angelman syndrome (each, an “Ipsen Collaboration Program”), respectively.

Each such license (obtained in connection with the exercise of an Ipsen Option, as defined and discussed further below) would grant to Ipsen exclusive, royalty-bearing, sublicensable, worldwide rights to develop, manufacture, use and commercialize such SNA therapeutics.

Upon written notice to the Company, Ipsen may exercise its option during the corresponding collaboration program’s applicable option exercise period, (each, an “Ipsen Option Exercise Period”).

On December 12, 2022 (the “Ipsen Termination Agreement Effective Date”), the Company and Ipsen entered into a Mutual Termination Agreement (the “Ipsen Termination Agreement”), pursuant to which the parties mutually agreed to terminate the Ipsen Collaboration Agreement.

Following such termination, the parties will jointly own R&D Term IP (as defined in the Ipsen Collaboration Agreement) and Patents Covering the R&D Term IP (as defined in the Ipsen Collaboration Agreement), with each party owning an equal, undivided interest in and to such R&D Term IP and patents.

As a result of the termination of the Ipsen Collaboration Agreement, the Company regained the ability to independently develop medicines targeting Angelman syndrome and Huntington’s disease while Ipsen retains the right to re-enter into the collaboration with the Company in Huntington’s disease and Angelman’s syndrome.

As of the Ipsen Effective Date and through the Ipsen Termination Agreement Effective Date, the Company and Ipsen had agreed upon a development plan for each Ipsen Collaboration Program that describes the development activities and timelines required to advance each such Ipsen Collaboration Program through its first IND filing (each, an “Ipsen Development Plan”).

The activities described in the Ipsen Development Plans were conducted under the supervision of the Ipsen Joint Steering Committee (the “Ipsen JSC”) consisting of three members from each of the Company and Ipsen.

Under the terms of the Ipsen Collaboration Agreement, the Company was to use commercially reasonable efforts to conduct discovery and development in two collaboration programs for Huntington’s disease (the “HD Program”) and Angelman syndrome (the “AS Program”) (the “Ipsen Development Activities”) respectively.

The Company was solely responsible for all costs and expenses of conducting each Ipsen Collaboration Program through the selection of SNA therapeutic candidates for further development (“Ipsen Selection”), and Ipsen was responsible for all costs and expenses of all activities that were necessary to enable the first filing of an IND for each proposed product candidate.

In the event that Ipsen exercised an option, Ipsen would have been responsible for further development from the license effective date and commercialization of the corresponding licensed product.

In the event of completion of all Ipsen Development Activities for the Ipsen Selection (the “Ipsen First R&D Term Activities”), the Company was required to deliver to Ipsen a report that described the results of the Ipsen First R&D Term Activities and identified at least one SNA-based compound that satisfies certain criteria for such Ipsen Collaboration Program as determined by the Ipsen JSC (the “Ipsen First Option Data Package”).

Following the delivery of the Ipsen First Option Data Package for an Ipsen Collaboration Program, Ipsen would have had the ability for a defined period of time (the “Ipsen First Option Exercise Period”) to exercise an option (each a “First Ipsen Option”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any product (each an “Ipsen Licensed Product”) that resulted from such Ipsen Collaboration Program during the term of the Ipsen Collaboration Agreement.

In the event Ipsen (i) did not exercise the First Ipsen Option with respect to an Ipsen Collaboration Program, (ii) the Ipsen Collaboration Agreement had not expired or been terminated with respect to such Ipsen Collaboration

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Program, and (iii) Ipsen agreed to fully fund additional research activities for an Ipsen Collaboration Program through IND filing, the Company would have been responsible for research and development activities for such Ipsen Collaboration Program through IND filing (the “Ipsen Second R&D Term Activities”).

In the event of completion of the Ipsen Second R&D Term Activities, the Company would have been required to deliver to Ipsen a report that described the results of the Ipsen Second R&D Term Activities (the “Ipsen Second Option Data Package”).

Following the delivery of the Ipsen Second Option Data Package for an Ipsen Collaboration Program, Ipsen would have had the ability for a defined period of time (the “Ipsen Second Option Exercise Period”) to exercise an option (each a “Second Ipsen Option” and together with the First Ipsen Option, the “Ipsen Options”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any Ipsen Licensed Product” that results from such Ipsen Collaboration Program during the term of the Ipsen Collaboration Agreement.

In the event of Ipsen’s exercise of an Ipsen Option for an Ipsen Collaboration Program, the Company would have been required to supply to Ipsen the licensed SNAs under current Good Manufacturing Practice, at the Company’s manufacturing cost pursuant to a clinical supply agreement to be negotiated by the Company and Ipsen in good faith following the Ipsen Effective Date and executed within twelve (12) months after the Ipsen Effective Date (the “Ipsen Supply Agreement”).

The Ipsen Supply Agreement would have provided for the transfer by the Company to Ipsen of all documents and information, and the provision by the Company of technical assistance and support, for Ipsen to manufacture or have manufactured by a third party contractor engaged by Ipsen the applicable licensed SNA to the extent it is intended to be actually used in the development and manufacture of the applicable licensed products.

Under the terms of the Ipsen Collaboration Agreement, the Company received a nonrefundable upfront payment of $ 20,000 (the “Ipsen Upfront Payment”).

If Ipsen exercised a First Ipsen Option, Ipsen was required to pay the Company the First Ipsen Option exercise fee of $ 10,000 for each Ipsen Collaboration Program.

If Ipsen exercised a Second Ipsen Option, Ipsen was required to pay the Company the Second Ipsen Option exercise fee of $ 25,000 for each Ipsen Collaboration Program.

Ipsen would have been required to pay a preclinical milestone payment of $ 5,000 for each Ipsen Collaboration Program upon achievement of such milestone regardless of whether an Ipsen Option was exercised.

In addition to the option exercise fees and the preclinical milestones described above, if Ipsen exercised an Ipsen Option for an Ipsen Collaboration Program, development and regulatory milestones would have been payable for that program upon the initiation of certain clinical trials and the filing for processing by the United States Food and Drug Administration (“FDA”) in the United States and by two additional regulators outside the United States of a marketing application for review, per the Ipsen Collaboration Program, with an aggregate total of up to $ 180,000 if both Ipsen Options were exercised.

Commercial milestones would have been payable for that Ipsen Collaboration Program upon first commercial sale of a licensed product in certain jurisdictions and the achievement of specified aggregate sales thresholds for all licensed products from that program, with an aggregate total of up to $ 762,000 if both Ipsen Options were exercised.

In the event a therapeutic candidate subject to the Ipsen Collaboration Agreement resulted in commercial sales, the Company was eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net product sales of such commercialized therapeutic candidates.

A percentage of the aforementioned payments would have been due to Northwestern University upon receipt, pursuant to the terms of the Company’s existing license agreements with Northwestern University (see Note 15, Commitment and Contingencies, for more information on the Northwestern University License Agreements (as defined below)).

In connection with the receipt of the Ipsen Upfront Payment, the Company paid a $ 3,000 license fee to Northwestern University under the terms of the Northwestern License Agreements.

The Company’s obligations to conduct activities defined in the Ipsen Development Plan under the Ipsen Collaboration Agreement commenced on July 30, 2021 and continued through the Ipsen Termination Agreement effective date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Accounting Analysis

The Company concluded that Ipsen was a customer in this arrangement, and as such the arrangement falls within the scope of the revenue recognition guidance.

Under the Ipsen Collaboration Agreement, the Company has identified two performance obligations, as follows:

(1) the performance obligation related to the HD Program that includes (i) the Ipsen First R&D Term Activities related to the HD Program (the “Ipsen HD Program R&D Services”), (ii) Ipsen JSC services related to the HD Program during the Ipsen First Term (the “Ipsen HD Program JSC Services”), and (iii) activities related to the negotiation of the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date;

and (2) the performance obligation related to the AS Program that includes (i) the Ipsen First R&D Term Activities related to the AS Program (the “Ipsen AS Program R&D Services”), (ii) Ipsen JSC services related to the AS Program during the Ipsen First Term (the “Ipsen AS Program JSC Services”), (iii) and activities related to the negotiation of the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date.

The Company has concluded that the Ipsen HD Program R&D Services and the Ipsen AS Program R&D Services are not distinct from the Ipsen HD Program JSC Services and the Ipsen AS Program JSC Services, respectively.

The Company has also concluded that the Ipsen HD Program JSC Services and the Ipsen AS Program JSC Services are not distinct from the activities related to entering the Ipsen Supply Agreements for each respective program.

The Ipsen JSC provided oversight and management of the overall Ipsen Collaboration Agreement, and the members of the Ipsen JSC from the Company have specialized industry knowledge, particularly as it relates to SNA technology.

The Ipsen JSC was meant to facilitate the early stage research being performed and coordinate the activities of both the Company and Ipsen.

Further, the Ipsen JSC services were critical to the ongoing evaluation of the Ipsen Collaboration Programs and the drafting and evaluation of the Ipsen First Option Data Package.

The Ipsen JSC would also have provided oversight and management of the activities to enter into the Ipsen Supply Agreement.

Accordingly, the Company’s participation on the Ipsen JSC was essential to Ipsen receiving value from the Ipsen HD Program R&D Services and the Ipsen AS Program R&D Services, and as such, (i) the Ipsen HD Program JSC Services, along with the Ipsen HD Program R&D Services and the activities related to entering the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date for that program are considered a single performance obligation (the “Ipsen HD Program Services”) and (ii) the Ipsen AS Program JSC Services along with the Ipsen AS Program R&D Services and the activities related to entering the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date for that program are considered a single performance obligation (the “Ipsen AS Program Services”).

As of the Ipsen Effective Date, the total transaction price was determined to be $ 20,000 , consisting solely of the Ipsen Upfront Payment.

The Company also utilized the most likely amount method to estimate any development and regulatory milestone payments to be received.

As of the Ipsen Effective Date, there were no milestones included in the transaction price.

The preclinical, development, regulatory, and commercial milestones were fully constrained due to the significant uncertainties surrounding such payments.

The Company considered the stage of development and the risks associated with the remaining development required to achieve the milestone, as well as whether the achievement of the milestone is outside the control of the Company or Ipsen.

The Company has determined that any commercial milestones and sales-based royalties will be recognized when the related sales occur and therefore, they have also been excluded from the transaction price.

The Company re-evaluated the transaction price at the end of each reporting period and as uncertain events were resolved or other changes in circumstances occurred.

As of the Ipsen Termination Agreement Effective Date, the Company determined that the total transaction price was $ 20,000 .

The Company allocated the total transaction price to each of the two identified performance obligations under the Ipsen Collaboration Agreement based on an expected cost plus a margin approach, as follows:

$ 10,793 of the transaction price allocated to the Ipsen HD Program Services and $ 9,207 of the transaction price allocated to the Ipsen AS Program Services.

The Company recognized revenue related to each of Ipsen HD Program Services and the Ipsen AS Program Services as those performance obligations were satisfied using an input method to measure progress for each of those performance obligations.

The Company believes the input method that most accurately depicts the measure of progress is the actual hours incurred to date relative to projected hours to complete the activities for the Ipsen HD Program Services and the Ipsen AS Program Services.

In connection with the Ipsen Termination Agreement, the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Company recognized as revenue any remaining deferred revenue associated with the Ipsen Collaboration Agreement in the fourth quarter of 2022.

During the year ended December 31, 2022, the Company recognized revenue under the Ipsen Collaboration Agreement of $ 17,691 .

AbbVie Collaboration Agreement

Summary of Agreement

On November 13, 2019 (the “AbbVie Effective Date”), the Company entered into a Collaboration, Option and License Agreement (the “AbbVie Collaboration Agreement”), with a wholly-owned subsidiary of Allergan plc, Allergan.

On May 8, 2020, Allergan plc, including Allergan was acquired by AbbVie.

Pursuant to the AbbVie Collaboration Agreement, the Company granted to AbbVie exclusive access and options to license SNA-based therapeutics arising from two collaboration programs related to the treatment of hair loss disorders (each, an “AbbVie Collaboration Program”).

Under each such license (obtained in connection with the exercise of an AbbVie Option, as defined and discussed further below), the Company would grant to AbbVie exclusive, royalty-bearing, sublicensable, nontransferable, worldwide rights to develop, manufacture, use and commercialize such SNA therapeutics.

Under the AbbVie Collaboration Agreement, the Company was to use commercially reasonable efforts to conduct the AbbVie Collaboration Programs, each focused on one or more hair loss disorders to discover one or more SNA products that are directed to, bind to or inhibit one or more specific AbbVie Collaboration Program targets.

On December 13, 2022 (the “AbbVie Termination Agreement Effective Date”), the Company and Allergan entered into a letter agreement (the “AbbVie Termination Agreement”), pursuant to which the parties mutually agreed to terminate the AbbVie Collaboration Agreement.

Following such termination, the Company transferred to Allergan all data, information, and reports made or generated by the Company in the course of performing activities under the Development Plan (as defined in the AbbVie Collaboration Agreement), and granted to Allergan all rights to transfer, publish, present, or otherwise publicly disclose any Collaboration Technology (as defined in the AbbVie Collaboration Agreement) and data made or generated by the Company in the course of performing activities under the Development Plan.

As a result of the termination of the AbbVie Collaboration Agreement, the Company regained the ability to independently develop medicines targeting hair loss disorders.

As of the AbbVie Effective Date and through the AbbVie Termination Agreement Effective Date, the Company and AbbVie had agreed upon a development plan for each AbbVie Collaboration Program that described the development activities and timelines required to advance such AbbVie Collaboration Program through its first IND filing (each, an “AbbVie Development Plan”).

The activities described in the AbbVie Development Plan were conducted under the supervision of the AbbVie Joint Development Committee (the “AbbVie JDC”) consisting of three members from each of the Company and AbbVie.

The Company was primarily responsible for performing early-stage discovery and preclinical activities (the “AbbVie Collaboration Program Initial Development Activities”) set forth in the AbbVie Development Plan for each AbbVie Collaboration Program and would have been solely responsible for all costs and expenses related to the AbbVie Collaboration Program Initial Development Activities.

AbbVie had the right to elect, in its sole discretion and at its sole cost and expense, to conduct formulation assessment and in vivo testing as set forth in an AbbVie Development Plan.

In the event of completion of all AbbVie Initial Development Activities, the Company would have been required to deliver to AbbVie a report that described the results of the AbbVie Initial Development Activities and identified at least one SNA-based compound that satisfies certain criteria for such AbbVie Collaboration Program as determined by the AbbVie JDC (the “AbbVie Initial Development Report”).

Following the delivery of the AbbVie Initial Development Report for an AbbVie Collaboration Program, AbbVie would have had the ability for a defined period of time (the “AbbVie Initial Option Exercise Period”) to exercise an option (each an “AbbVie Option”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any product (each an “AbbVie

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Licensed Product”) that resulted from such AbbVie Collaboration Program during the term of the AbbVie Collaboration Agreement.

At AbbVie’s sole option, AbbVie had the right to extend the AbbVie Initial Option Exercise Period (the “AbbVie Option Extension”) and require the Company to perform IND-enabling activities described in the AbbVie Development Plan (the “AbbVie IND-Enabling Activities”), subject to the payment of additional consideration (“AbbVie Extension Exercise”).

If AbbVie exercised the AbbVie Option Extension, the Company would have been responsible for conducting the AbbVie IND-Enabling Activities and would have been solely responsible for all costs and expenses associated with such activities.

In the event of completion of the AbbVie IND-Enabling Activities, the Company would have been required to deliver a report that describes the results of the AbbVie IND-Enabling Activities (the “AbbVie IND-Enabling Activities Data Package”) to AbbVie.

Following the delivery of AbbVie IND-Enabling Activities Data Package, AbbVie would have had the ability for a defined period of time (the “AbbVie Extended Option Exercise Period”) to exercise an AbbVie Option with respect to such AbbVie Collaboration Program.

After the exercise of an AbbVie Option with respect to an AbbVie Collaboration Program, AbbVie would have been responsible for all development, manufacturing and commercialization activities, and costs and expense associated with such activities in connection with AbbVie Licensed Products arising from such AbbVie Collaboration Program.

The Company’s obligation to conduct the activities defined in the AbbVie Development Plan under the AbbVie Collaboration Agreement commenced on November 13, 2019 and continued through the AbbVie Termination Agreement Effective Date.

Under the terms of the AbbVie Collaboration Agreement, the Company received a $ 25,000 upfront, non-refundable, non-creditable cash payment (the “AbbVie Upfront Payment”) related to the Company’s research and development costs for conducting the AbbVie Development Plan for two AbbVie Collaboration Programs, each focused on one or more targets, and certain options to obtain exclusive, worldwide licenses under certain intellectual property rights owned or controlled by the Company to develop, manufacture and commercialize certain products resulting from each such AbbVie Collaboration Programs.

The option exercise fee during the AbbVie Initial Option Exercise Period was $ 10,000 per AbbVie Collaboration Program.

If AbbVie elected to extend the AbbVie Initial Option Exercise Period, AbbVie would have been required to pay an additional fee of $ 10,000 .

If AbbVie elected to exercise its option during the AbbVie Extended Option Exercise Period, AbbVie would have been required to pay the Company the option exercise fee of $ 15,000 .

Following the exercise by AbbVie of an AbbVie Option with respect to an AbbVie Collaboration Program, AbbVie would have been required to make certain milestone payments to the Company upon the achievement of specified development, product approval and launch, and commercial events, on an AbbVie Licensed Product by AbbVie Licensed Product basis.

On an AbbVie Licensed Product by AbbVie Licensed Product basis, for the first AbbVie Licensed Product to achieve the associated milestone event, the Company was eligible to receive up to an aggregate of $ 55,000 for development milestone payments and $ 132,500 for product approval and launch milestone payments.

The Company was also eligible for up to $ 175,000 in sales milestone payments on an AbbVie Collaboration Program by AbbVie Collaboration Program basis, associated with aggregate worldwide sales.

Certain product approval milestones were subject to certain reductions under specified circumstances, including for payments required to be made by AbbVie to obtain certain third-party intellectual property rights.

In addition, to the extent there was any AbbVie Licensed Product, the Company would have been entitled to receive tiered royalty payments of mid-single digits to the mid-teens percentage on future net worldwide product sales of such AbbVie Licensed Products, subject to certain reductions under specified circumstances.

Royalties were due on a AbbVie Licensed Product by AbbVie Licensed Product and country by country basis from the date of the first commercial sale of each AbbVie Licensed Product in a country until the latest to occur of:

(i) the expiration date in such country of the last to expire valid claim within the licensed intellectual property covering the manufacture, use or sale of such AbbVie Licensed Product in such country, (ii) the tenth anniversary of the first commercial sale of such AbbVie Licensed Product in such country, and (iii) the expiration of regulatory exclusivity for such AbbVie Licensed Product in such country.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Accounting Analysis

The Company concluded that AbbVie was a customer in this arrangement, and as such the arrangement falls within the scope of the revenue recognition guidance.

Under the AbbVie Collaboration Agreement, the Company has identified a single performance obligation that includes (i) the research and development activities during the AbbVie Research Term (the “AbbVie R&D Services”), and (ii) AbbVie Joint Development Committee services during the AbbVie Research Term (the “AbbVie JDC Services”).

The Company has concluded that the AbbVie R&D Services is not distinct from the AbbVie JDC Services during the AbbVie Research Term.

The AbbVie JDC provided oversight and management of the overall AbbVie Collaboration Agreement, and the members of the AbbVie JDC from the Company have specialized industry knowledge, particularly as it relates to SNA technology.

The AbbVie JDC was meant to facilitate the early-stage research being performed and coordinate the activities of both the Company and AbbVie.

Further, the AbbVie JDC services were critical to the ongoing evaluation of an AbbVie Collaboration Program and the drafting and evaluation of the AbbVie Initial Development Report and the AbbVie IND-Enabling Data Package.

Accordingly, the Company’s participation on the AbbVie JDC was essential to AbbVie receiving value from the AbbVie R&D Services and as such, the AbbVie JDC Services along with the AbbVie R&D Services are considered one performance obligation (the “AbbVie Collaboration Program Services”).

In addition, the Company has concluded that the option to purchase two development and commercialization licenses was considered a marketing offer as the options did not provide any discounts or other rights that would be considered a material right in the arrangement, and thus, not a performance obligation at the onset of the agreement.

The consideration for these options would have been accounted for when they are exercised.

As of the AbbVie Effective Date, the total transaction price was determined to be $ 25,000 , consisting solely of the AbbVie Upfront Payment.

The Company also utilized the most likely amount method to estimate any development and regulatory milestone payments to be received.

As of the AbbVie Effective Date, there were no milestones included in the transaction price.

The milestones were fully constrained due to the significant uncertainties surrounding such payments.

The Company has determined that any commercial milestones and sales-based royalties will be recognized when the related sales occur and therefore they have also been excluded from the transaction price.

The Company re-evaluated the transaction price at the end of each reporting period and as uncertain events were resolved or other changes in circumstances occurred.

As of the AbbVie Termination Agreement Effective Date, the Company determined the total transaction price was $ 25,000 .

The Company recognized revenue related to the AbbVie Collaboration Program Services as the performance obligation is satisfied using an input method to measure progress.

The Company believes the input method that most accurately depicts the measure of progress is the actual hours incurred to date relative to projected hours to complete the research service.

During the third quarter of 2021, the AbbVie JDC revised the AbbVie Initial Development Plan for each AbbVie Collaboration Program.

As a result, the Company had increased its estimate of total hours to complete the research services, requiring an adjustment to cumulative revenue recognized (considered a change in estimate pursuant to ASC 606), which led to a full year revenue reversal of $( 2,792 ) in the prior year.

In connection with the AbbVie Termination Agreement, the Company recognized as revenue any remaining deferred revenue associated with the AbbVie Collaboration Agreement in the fourth quarter of 2022.

During the year ended December 31, 2022, the Company recognized revenue under the AbbVie Collaboration Agreement of $ 11,135 .

Recent Accounting Pronouncements Adopted

Segment Reporting Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No.

2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures which will require companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”).

The pronouncement is effective for annual filings for the year ended December 31, 2024.

The Company adopted this standard for our fiscal year 2024 annual financial statements and interim financial statements thereafter and have applied this standard retrospectively for all prior periods presented in the financial statements.

See Note 9 – Segment Reporting for further information.

Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” The standard requires that public business entities disclose additional information about specific expense categories in the notes to financial statements for interim and annual reporting periods.

The standard will become effective for us for our fiscal year 2027 annual financial statements and interim financial statements thereafter and may be applied prospectively to periods after the adoption date or retrospectively for all prior periods presented in the financial statements, with early adoption permitted.

The Company plans to adopt the standard when it becomes effective in our fiscal year 2027 annual financial statements, and the Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the Consolidated Financial Statements.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

2023-09 aims to enhance the transparency and decision usefulness of income tax disclosures.

2023-09 modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state, and foreign).

Update 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

2023-09 is effective for fiscal years beginning after December 15, 2024.

The Company has not yet adopted this standard for our fiscal year 2024 annual financial statements and is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the Consolidated Financial Statements.

See Note 10 – Income Taxes for further information.

EXICURE, INC.

3 unchanged sentences

Prepaid expenses and other current assets

Prepaid clinical, contract research and manufacturing costs $ — $ 213

Prepaid insurance $ 444 $ 508

1 unchanged sentence

Lease costs 37 235

Other 191 519

Prepaid professional fees 70 95

Prepaid software 61 72

Prepaid expenses and other current assets $ 644 $ 1,193

12 unchanged sentences

During the year ended December 31, 2023, the Company sold scientific equipment with a net book value of $ 1,834 and recognized a loss of $ 920 in the accompanying statement of operations for the year ended December 31, 2023.

There were no sales in 2024.

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2 unchanged sentences

Accrued expenses and other current liabilities

Accrued clinical, contract research and manufacturing costs $ — $ 48

Accrued restructuring costs — 48

Lease liability, current 626 539

Current lease liability $ 722 $ 626

Accrued payroll-related expenses — 71

Accrued litigation legal fee 1,138 —

Accrued other expenses 180 182

11 unchanged sentences

AFS securities are recorded at fair value.

During the year ended December 31, 2023, management does not believe these AFS investments are recoverable and booked a change in fair value to record them at a fair value of $ 0 .

The Company held no AFS debt securities as of December 31, 2022.

MidCap Credit Agreement

On March 15, 2022, pursuant to the terms of the Company’s Credit and Security Agreement, dated as of September 25, 2020, as amended on October 21, 2020, July 30, 2021, September 30, 2021, and December 10, 2021 with MidCap Financial Trust, as agent, and the lenders party thereto from time to time (as amended, the “MidCap Credit Agreement”), the Company repaid all remaining outstanding obligations under the MidCap Credit Agreement, including the outstanding principal balance of $ 7,500 and an exit fee of $ 506 .

The MidCap Credit Agreement provided for a secured term loan facility in an aggregate principal amount of up to $ 25,000 (the “MidCap Credit Facility”).

The Company borrowed the first advance of $ 17,500 (“Tranche 1”) on September 25, 2020 (the “Closing Date”).

Amendment No.

4 terminated the availability of the second advance of $ 7,500 (“Tranche 2”), effective as of December 9, 2021, that was previously available under the MidCap Credit Agreement subject to certain conditions.

Tranche 1 bore interest at a floating rate equal to 6.25 % per annum, plus the greater of (i) 1.50 % or (ii) one-month LIBOR.

Interest on each loan advance is due and payable monthly in arrears.

Principal on each loan advance was payable in 36 equal monthly installments beginning October 1, 2022 until paid in full on October 1, 2025 (the

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

“Maturity Date”).

Prepayments of the loans under the MidCap Credit Agreement, in whole or in part, were subject to early termination fees in an amount equal to 3.0 % of principal prepaid if prepayment occurs on or prior to the first anniversary of the Closing Date and 1.0 % of principal prepaid if prepayment occurs after the first anniversary of the Closing Date and prior to the maturity date.

Pursuant to Amendment No.

4, the early termination fee associated with the prepayment of $ 10,000 made in December 2021 was waived and, since the remaining principal amount was repaid on or prior to March 31, 2022, the associated early termination fee for that prepayment was also waived.

In connection with execution of the MidCap Credit Agreement, the Company paid MidCap a $ 125 origination fee.

At the Maturity Date or on any earlier date on which all amounts advanced to the Company become due and payable in full, or are otherwise paid in full, the Company was required to pay an exit fee equal to 3.75 % of the principal amount of all loans advanced to the Company under the MidCap Credit Agreement.

Upon the advance of Tranche 1, the Company accrued $ 656 for the related exit fee.

Pursuant to Amendment No.

4, since the remaining principal amount was repaid on or prior to March 31, 2022, a portion of the related exit fee that had not been earned by MidCap was waived.

The Company’s obligations under the MidCap Credit Agreement were secured by a security interest in substantially all of its assets, excluding intellectual property (which is subject to a negative pledge).

Additionally, the Company’s future subsidiaries, if any, may have been required to become co-borrowers or guarantors under the MidCap Credit Agreement.

The MidCap Credit Agreement contained customary affirmative covenants and customary negative covenants limiting the Company’s ability and the ability of the Company’s subsidiaries, if any, to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to certain exceptions.

The MidCap Credit Agreement also contained customary events of default relating to, among other things, payment defaults, breaches of covenants, a material adverse change, delisting of the Company’s common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties.

Upon an event of default, the agent and the lenders may declare all or a portion of the Company’s outstanding obligations to be immediately due and payable and exercise other rights and remedies provided for under the agreement.

During the existence of an event of default, interest on the obligations could have been increased by 2.0 %.

Total proceeds, net of fees and issuance costs, borrowed under Tranche 1 were $ 16,512 .

Fees and issuance costs of $ 332 , as well as fees of $ 656 that were payable to MidCap at maturity of Tranche 1, were recorded as a reduction to the carrying amount of long-term debt on the Company’s balance sheet and, prior to the repayment of all remaining outstanding obligations under the MidCap Credit Agreement on March 15, 2022, were amortized to interest expense through the maturity date of October 1, 2025 using the effective interest method.

Fees and issuance costs of $ 73 attributed to the amount available to be borrowed under Tranche 2 were paid and recorded as deferred financing costs (other assets) and were amortized and recorded to interest expense in 2021 when it was determined that amounts under Tranche 2 would not be borrowed.

The Company paid interest on the MidCap Credit Agreement of $ 194 during the year ended December 31, 2022.

During the year ended December 31, 2023, management did not believe these AFS investments are recoverable and booked a change in fair value to record them at a fair value of $ 0 and believes their fair value is still $ 0 as of December 31, 2024.

The Company’s lease arrangements at December 31, 2024 consist of (i) a lease for office space at its headquarters in Chicago, Illinois that commenced in July 2020 (the “Chicago Lease”) and (ii) leases for office equipment (the “Office Equipment Leases”).

The Chicago Lease and the Office Equipment Leases are classified as operating leases.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

See the subsequent event footnote for information on the early termination of the Chicago lease that terminated in February 2025.

Chicago Lease

5 unchanged sentences

The Company must also pay its proportionate share of certain operating expenses and taxes for each calendar year during the term.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

During the first 12-month period of the Original Term, the base rent and the Company's proportionate share of operating expenses and taxes are subject to certain abatements.

1 unchanged sentence

The Company also paid the landlord a net amount of $ 697 toward tenant improvements.

As part of the agreement for the Chicago Lease, the Company is required to maintain a standby letter of credit during the term of the lease, currently in the amount of $ 1,200 and subject to reduction over time, which is secured by a restricted certificate of deposit account and presented within other noncurrent assets on the Company’s consolidated balance sheet at December 31, 2023.

As part of the agreement for the Chicago Lease, the Company is required to maintain a standby letter of credit during the term of the lease, which had a balance of $ 109 at December 31, 2024, and was secured by a restricted certificate of deposit account and presented within current assets on the Company’s consolidated balance sheet at December 31, 2024.

The Company recognized a right of use asset of $ 8,931 and a lease liability of $ 8,147 on the Commencement Date.

1 unchanged sentence

The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease.

As of December 31, 2023, the Company determined it is not reasonably certain that the renewal option would not be exercised.

Information related to the Company’s operating lease asset and related operating lease liabilities were as follows:

Weighted-average remaining lease term 6.5 years 7.5 years

Weighted-average discount rate 8.3 % 8.3 %

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

The weighted-average discount rate related to the Company’s operating lease asset and related operating lease liabilities was 8.3 %.

See Footnote 17 - Subsequent Events for details on the early termination of the Chicago Lease.

The following table summarizes lease costs in the Company’s consolidated statement of operations:

4 unchanged sentences

The Company made cash payments for operating leases of $ 1,217 and $ 1,808 during the years ended December 31, 2024 and 2023, respectively.

Currently, the Company is several months past due with its lease payments.

On June 11, 2024, the Company received a formal notice from its landlord indicating the landlord will draw on the restricted cash account designated for the lease as a result of past due rent for December 2023 through June 2024.

The landlord continued to make monthly withdrawals from the restricted cash account and the Company is current on its rent payments.

These draws are within the terms and conditions of the lease and the related restricted cash account.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Maturities of the Company’s lease liability as of December 31, 2024 were as follows:

13 unchanged sentences

Beginning August 15, 2023, the Company began charging the Subtenant for 57 % of the base rent under the Chicago Lease, and the subtenant is responsible for its pro rata share of operating expenses and taxes payable.

The following table summarizes sublease receipts in the Company’s consolidated statement of operations:

Sublease receipts $ 550 $ —

Total $ 550 $ —

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Restructuring

September 2022 Restructuring

On September 26, 2022, the Company announced its commitment to a plan to wind down the Company’s R&D activities (the “September 2022 Restructuring”).

This plan resulted in a reduction in force where the Company reduced approximately 66 % of the Company’s existing workforce in early fourth quarter of 2022.

Notified employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance, the majority of which were paid in October 2022 as a lump sum payment.

All of the severance costs associated with the September 2022 Restructuring represented cash expenditures and were recorded within research and development expense within the accompanying consolidated statement of operations.

December 2021 Restructuring

On December 10, 2021, the Company announced its commitment to a plan to wind down the Company’s immuno-oncology program for cavrotolimod (AST-008) and the Company’s XCUR-FXN preclinical program for the treatment of Friedreich’s ataxia.

The Company intended at the time to realign its research and development resources to support (i) the development of its preclinical program targeting SCN9A for neuropathic pain, (ii) the continued advancement of its partnered programs with Ipsen Biopharm Limited to develop SNA-based treatments in neuroscience targeting Huntington’s disease and Angelman syndrome, (iii) its continued advancement of its partnered program with AbbVie to develop SNA-based treatments for hair loss disorders, as well as (iv) the continued research and development of other undisclosed therapeutic product candidates.

This plan resulted in a reduction in force where the Company eliminated approximately 50 % of the Company’s existing workforce on a staggered basis through January 2022 as well as other cost-cutting measures.

Notified employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance.

In most cases, the separation benefits were paid as a lump sum in January 2022.

Certain of the notified employees had employment agreements which provided for separation benefits in the form of salary continuation;

these benefits were paid between February 2022 and January 2023.

All of the severance costs represent cash expenditures.

The following table presents changes in the accrued restructuring liability balance for the periods presented (in thousands):

December 2021 Restructuring September 2022

Restructuring Total

Balance at December 31, 2021 $ 1,191 $ — $ 1,191

Payments ( 1,154 ) ( 489 ) ( 1,643 )

Additions — 488 488

Adjustments (non-cash) 11 1 12

Balance at December 31, 2022 $ 48 $ — $ 48

Payments ( 48 ) — ( 48 )

Balance at December 31, 2023 $ — $ — $ —

In 2024, the Company did not receive payments from the Subtenant as the Subtenant paid $ 584 directly to the Company’s landlord.

In 2023, the Subtenant paid the Company $ 550 .

On October 21, 2024, the Subtenant provided notice that it is exercising its right to termination under the Sublease, effective as of November 30, 2024.

However, the Company sent a formal notice disputing the subtenant’s right to terminate the Sublease as the provisions for termination were not met and has $ 121 in other receivables related to the Subtenant’s past due rent.

On May 3, 2024, the Company executed a promissory note (“Note”) and subsequently received a loan in the amount of $ 300 from an individual investor.

All principal and accrued interest were due and payable on the earlier of (i) May 3, 2025 or (ii) upon an event of default, at such time, such amounts declared by the investor would become due and payable by Company.

Interest accrued on this Note at 6.0 % and was payable at maturity.

On June 3, 2024, the Company executed another promissory note (“DGP Note”) and subsequently received a loan in the amount of $ 700 from DGP, a related party.

All principal and accrued interest were due and payable on the earlier of (i) March 25, 2025 or (ii) upon an event of default, at such time, such amounts declared by the investor would become due and payable by Company.

Interest accrued on this DGP Note at 6.0 % and was payable at maturity.

On September 11, 2024, the Company executed two Debt for Equity Exchange Agreements converting the existing debt and related interest described above into shares of its common stock.

The Company exchanged in full satisfaction of the principal and accrued interest obligations on the Note into 101,991 of its common stock shares.

The Company exchanged in full satisfaction of the principal and accrued interest obligations on the DGP Note into 237,223 shares of its common stock.

As this was considered a troubled debt restructuring with a related party, the difference between fair value and book value was recognized within additional paid in capital.

EXICURE, INC.

12 unchanged sentences

The outstanding shares of the Company’s common stock are fully paid and non-assessable.

Common Stock Purchase Agreements

In an agreement dated November 6, 2024 and executed on November 12, 2024, the Company entered into a common stock purchase agreement (the “Initial Common Stock Purchase Agreement”) with HiTron Systems Inc.

(“HiTron”), pursuant to which the Company agreed to issue and sell to HiTron 433,333 shares (the “Initial Shares”) of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”), at a purchase price of $ 3.00 per share (the “Initial Purchase”).

On November 13, 2024, in a subsequent agreement (the “Subsequent Common Stock Purchase Agreement”), the Company agreed to sell and issue to HiTron 2,900,000 additional shares of Common Stock (the “Subsequent Shares” and together with the Initial Shares, the “Shares”), for $ 8.7 million, at a purchase price of $ 3.00 per share (the “Subsequent Purchase”).

The Subsequent Common Stock Purchase Agreement provides HiTron with the right to nominate additional members of the Board in proportion to its equity interest, subject to approval by the Board and compliance with SEC and Nasdaq rules.

On December 9, 2024, the Company entered into a Common Stock Purchase Agreement with SangSangIn Investment & Securities Co., Ltd.

(“SangSang”), pursuant to which the Company agreed to issue and sell to SangSang 433,332 shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”), at a purchase price of $ 4.61 per share.

On December 10, 2024, the Company entered into a common stock purchase agreement (the “MIRTO Purchase Agreement”) with MIRTO Co., LTD.

(“MIRTO”), pursuant to which the Company agreed to issue and sell to MIRTO 87,808 shares of our Common Stock, for an aggregate purchase price of approximately $ 0.5 million, at a purchase price per share of $ 4.61 .

The transactions under the MIRTO Purchase Agreement closed on December 24, 2024.

Registration Rights Agreements

In connection with the HiTron Common Stock Purchase Agreements and SangSang Common Stock Purchase Agreement, the Company entered into registration rights agreements (the “Registration Rights Agreements”) with HiTron and SangSang, pursuant to which the Company agreed to register the resale of the Shares.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Registration Rights Agreements, the Company has agreed to file registration statements covering the resale of the Shares no later than the sixth ( 60 th ) day following the applicable closing (the “Filing Deadline”).

The Company has agreed to use reasonable best efforts to cause such registration statement to become effective as promptly as practicable after the filing thereof but in any event on or prior to the Effectiveness Deadline (as defined in these Registration Rights Agreements), and to keep such registration statement continuously effective until the earlier of (i) the date the Shares covered by such registration statement have been sold or may be resold pursuant to Rule 144 without restriction, or (ii) the date that is two (2) years following the applicable closing date.

The Company has also agreed, among other things, to pay all reasonable fees and expenses (excluding any underwriters’ discounts and commissions and all fees and expenses of legal counsel, accountants and other advisors for HiTron or SangSang except as specifically provided in these Registration Rights Agreements) incident to the performance of or compliance with these Registration Rights Agreements by the Company.

In the event a registration statement has not been filed within 90 days following the closing date, subject to certain limited exceptions, then the Company has agreed to make pro rata payments to HiTron as liquidated damages in an amount equal to 0.5 % of the aggregate amount invested by HiTron in the Shares per 30-day period or pro rata for any portion thereof for each such month during which such event continues, subject to certain caps set forth in the Registration Rights Agreements.

The Filing Deadline has passed for both of these agreements, however, the Company is making its best efforts to file such registration statements as soon as reasonably possible.

September 2022 PIPE

Securities Purchase Agreement

On September 26, 2022, the Company entered into a securities purchase agreement (the “September 2022 Securities Purchase Agreement”) with CBI USA, pursuant to which the Company agreed to issue and sell to CBI USA in a private placement an aggregate of 3,400,000 shares of Common Stock, at a purchase price of $ 1.60 per share.

On September 26, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with CBI USA, pursuant to which the Company agreed to issue and sell to CBI USA in a private placement an aggregate of 680,000 shares of Common Stock, at a purchase price of $ 8.00 per share.

The private placement closed on February 24, 2023 (the “Closing Date”).

2 unchanged sentences

On June 23, 2023, DGP exercised its the option pursuant to the loan and acquired the 680,000 shares of Common Stock initially acquired by CBI USA pursuant to the Securities Purchase Agreement.

DGP subsequently agreed to sell its shares to a third party, with the closing of 10 % ( 340,000 shares) occurring in February 2024 and the remainder to close by or on June 30, 2024.

The Securities Purchase Agreement, as confirmed and clarified by that certain letter agreement, dated October 31, 2022, between the Company and CBI USA, provided CBI USA together with its affiliates and any “group” of which it or they are a member with the right to designate directors to the Company’s board of directors in proportion to the ownership of CBI USA and its affiliates and any such group.

CBI USA and DGP have announced they expect to exercise such rights as a group.

Together, they beneficially own 45 % of the outstanding shares of Common Stock based on their most recent Schedule 13D amendment.

As noted above, DGP has entered into an agreement to sell its remaining shares to a third party by or on June 30, 2024.

DGP subsequently agreed to sell its shares to a third party, with the closing of 10 % ( 68,000 shares) occurring in February 2024, and sold 424,611 to another third party on February 24, 2025.

CBI USA and DGP, collectively, beneficially own 9 % of the outstanding shares of Common Stock based on information available to the Company.

September 2022 Registration Rights Agreement

1 unchanged sentence

CBI USA assigned its rights under the Registration Rights Agreement to DGP when DGP acquired the 680,000 shares of Common Stock initially sold to CBI USA.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

such registration statement to become effective as promptly as practicable, and to keep such registration statement continuously effective until the earlier of (i) the date the shares covered by such registration statement have been sold or may be resold pursuant to Rule 144 without restriction, or (ii) the date that is two (2) years following the Closing Date.

In the event the registration statement was not filed within 90 days following the Closing Date, subject to certain limited exceptions, the Company agreed to make payments as liquidated damages in an amount equal to 0.5 % of the aggregate amount invested in the shares of Common Stock pursuant to the Securities Purchase Agreement per 30-day period or pro rata for any portion thereof for each such month during which such event continues, subject to certain caps set forth in the Registration Rights Agreement.

We have paid $ 27 to CBI USA and accrued $ 191 to DGP pursuant to this provision.

May 2022 PIPE

Securities Purchase Agreement

On May 9, 2022, the Company entered into a securities purchase agreement (the “May 2022 Securities Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement an aggregate of 867,369 shares (the “May 2022 PIPE Shares”) of the Company’s Common Stock, par value $ 0.0001 per share, at a purchase price of $ 5.81 per share (the “May 2022 PIPE”).

The May 2022 PIPE closed on May 18, 2022 (the “May 2022 PIPE Closing Date”).

The Company received aggregate net proceeds from the May 2022 PIPE of approximately $ 4,886 after deducting transaction-related expenses.

Registration Rights Agreement

Also, on May 9, 2022, the Company entered into a registration rights agreement (the “May 2022 Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to register the resale of the May 2022 PIPE Shares.

Under the May 2022 Registration Rights Agreement, the Company agreed to file a registration statement covering the resale of the Shares no later than July 18, 2022.

On July 11, 2022, the Company filed a registration statement on Form S-3 with the SEC for the resale of the Shares and caused the registration statement to become effective on July 20, 2022.

The Company has granted the Investors customary indemnification rights in connection with the registration statement.

The Investors have also granted the Company customary indemnification rights in connection with the registration statement.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Registered Direct Offering

On December 16, 2021, the Company completed a securities purchase agreement (the “Purchase Agreement”) with certain institutional purchasers (the “Purchasers”) entered into on December 14, 2021, pursuant to which the Company offered to the Purchasers, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “Registered Direct Offering”), (i) an aggregate of 433,553 shares (the “Shares”) of the Company’s common stock, $ 0.0001 par value per share, (ii) pre-funded warrants to purchase up to an aggregate of 718,981 shares of Common Stock (the “Pre-Funded Warrants”), and (iii) warrants to purchase up to 576,261 shares of Common Stock (the “Warrants”).

The combined purchase price of each share of Common Stock and accompanying Warrant is $ 9.9780 per share.

The combined purchase price of each Pre-Funded Warrant and accompanying Warrant is $ 9.9480 (equal to the combined purchase price per share of Common Stock and accompanying Warrant, minus $ 0.03 ).

The per share exercise price for the Warrants is $ 8.1031 , the closing bid price of the Company’s Common Stock on December 13, 2021 (and as adjusted for the reverse stock split referenced in Note 1).

The Warrants will be exercisable immediately from the closing December 16, 2021, and will expire on the five-year anniversary of the date of issuance, or December 16, 2026.

The Pre-Funded Warrants and Warrants, which met equity classification, were recognized as a component of permanent stockholders’ equity within additional paid-in-capital together with the net proceeds from the Registered Direct Offering.

The gross proceeds to the Company from the Registered Direct Offering (excluding effect of subsequent exercises of pre-funded warrants) were $ 11,478 and net proceeds after deducting the placement agent’s fees and other offering expenses paid or payable by the Company were $ 10,226 .

The securities were offered by the Company pursuant to an effective shelf registration statement on Form S-3 (File No.

333-251555) previously filed with the Securities and Exchange Commission (the “SEC”) on December 21, 2020, and which was declared effective by the SEC on January 7, 2021 (the “Registration Statement”).

Each Warrant is exercisable for one share of Common Stock at an exercise price of $ 8.1031 per share.

The Warrants are immediately exercisable as of the date of issuance of December 16, 2021 and will expire on the five-year anniversary of the date of issuance, or December 16, 2026.

The Pre-Funded Warrants were offered in lieu of shares of Common Stock to one of the Purchasers whose purchase of shares of Common Stock in the Registered Direct Offering would otherwise result in said Purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99 % (or, at the election of the Purchaser, 9.99 %) of the Company’s outstanding Common Stock immediately following the consummation of the Registered Direct Offering.

Each Pre-Funded Warrant is exercisable for one share of Common Stock at an exercise price of $ 0.030 per share.

The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

A holder (together with its affiliates) of the Warrant or Pre-Funded Warrant may not exercise any portion of the Warrant or Pre-Funded Warrant, as applicable, to the extent that the holder would own more than 4.99 % (or, at the holder’s option upon issuance, 9.99 %) of the Company’s outstanding Common Stock immediately after exercise, as such percentage ownership is determined in accordance with the terms of the Warrant or Pre-Funded Warrant, as applicable.

In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a Warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Warrants, provided that such cashless exercise shall only be permitted if the Registration Statement is not effective at the time of such exercise or if the prospectus to which the Registration Statement is a part is not available for the issuance of shares of Common Stock to the Warrant holder.

In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a Pre-Funded Warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Pre-Funded Warrants.

Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement covering the resale of the shares of Common Stock sold pursuant to the Securities Purchase Agreement, to use reasonable best efforts to cause such registration statement to become effective as promptly as practicable, and to keep such registration statement continuously effective until the earlier of (i) the date the shares covered by such registration statement have been sold or may be resold pursuant to Rule 144 without restriction, or (ii) the date that is two (2) years following the Closing Date.

EXICURE, INC.

1 unchanged sentence

(in thousands, except share and per share data)

continues, subject to certain caps set forth in the Registration Rights Agreement.

The Company paid $ 27 to CBI USA and accrued $ 191 to DGP pursuant to this provision.

On February 19, 2025, the Company received a waiver letter from DGP confirming they agreed to waive the outstanding $ 191 penalty amount owed to DGP.

On February 24, 2025, DGP sold 424,611 of their shares to an unaffiliated company.

Common Stock Warrants

In January 2022, Pre-Funded Warrants were exercised for a total exercise price of $ 14 , resulting in the issuance of 466,666 shares of common stock.

As of December 31, 2023, there are no unexercised pre-funded warrants that are outstanding.

Warrants to purchase 115,253 shares of common stock at a price of $ 40.5155 per share that were acquired in the December 2021 registered-direct offering transaction remained outstanding.

28 unchanged sentences

Each offering period is approximately six-months in duration and the first offering period began on November 16, 2020 and ended on May 14, 2021.

During 2022, the Company issued 1,851 shares of common stock that were purchased under the ESPP.

No shares were issued during 2023.

No shares were issued during 2024 or 2023.

The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2018 and each January 1 thereafter through January 1, 2027, by the least of (i) 2,000 shares;

7 unchanged sentences

General and administrative expense 22 1,194

$ 1,348 $ 1,369

Unamortized equity-based compensation expense at December 31, 2024 was $ 10 , which is expected to be amortized over a weighted-average period of 0.9 years.

4 unchanged sentences

Expected term 5.8 to 5.8 years

5.3 to 6.1 years

Risk-free interest rate 3.83 % to 3.83 %;

weighted avg.

2.86 % to 3.56 %;

weighted avg.

Expected volatility 100.9 % to 100.9 %;

weighted avg.

95.2 % to 95.8 %;

weighted avg.

Forfeiture rate 5 %

12 unchanged sentences

The dividend yield was based on expected dividends at the time of grant.

The fair value of the underlying common stock and the exercise price for the common stock options granted during the years ended December 31, 2023 and 2022 are summarized in the table below:

The fair value of the underlying common stock and the exercise price for the common stock options granted during the year ended December 31, 2023 is summarized in the table below.

No options were granted during 2024.

Common Stock Options Granted During Period Ended:

3 unchanged sentences

weighted avg.

Year ended December 31, 2022 $ 3.46 to $ 5.51 ;

weighted avg.

$ 3.46 to $ 5.51 ;

weighted avg.

The weighted-average grant date fair value of common stock options granted in the years ended December 31, 2023 and 2022 was $ 1.26 and $ 2.52 per common stock option, respectively.

The weighted-average grant date fair value of common stock options granted in the years ended December 31, 2023 was $ 6.30 per common stock option, respectively.

A summary of common stock option activity as of the periods indicated is as follows:

Options Weighted-Average Exercise Price (1)

Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands)

Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands)

Outstanding - December 31, 2022 44,567 $ 23.70 7.5 $ —

Granted 2,000 7.90

Settled ( 124 ) 5.51

Forfeited ( 44,140 ) 27.00

Outstanding - December 31, 2023 2,427 $ 21.40 5.4 $ —

Granted 10,000 1.58

Forfeited ( 84 ) 27.55

3 unchanged sentences

December 31, 2024 2,343 $ 27.55 4.4 $ —

(1) On March 24, 2022, the Company’s Board of Directors unanimously approved the repricing of all outstanding and unexercised stock options granted under our 2015 Equity Incentive Plan and 2017 Equity Incentive Plan and held by its current employees, executive officers, and directors.

Effective April 1, 2022, the exercise price of the eligible stock options was reduced to $ 5.51 , the closing price of our common stock on April 1, 2022.

See below section titled “Repricing of Outstanding and Unexercised Options” for more information.

EXICURE, INC.

8 unchanged sentences

Unvested balance - December 31, 2023 609 $ 52.05

Granted 295,992 1.02

Vested ( 237 ) 92.94

7 unchanged sentences

Unvested balance - December 31, 2022 97,643 $ 3.45

Granted 97,643 3.45

Unvested balance - December 31, 2022 97,643 $ 3.45

Settled ( 97,643 ) 1.91

Unvested balance - December 31, 2023 — $ —

Unvested balance - December 31, 2024 — $ —

The grant date fair value of performance-based restricted stock units is based on the Company’s closing stock price at the date of grant.

7 unchanged sentences

Pursuant to the Plans, the Board, as the administrator of the Plans, has discretionary authority, exercisable on such terms and conditions that it deems appropriate under the circumstances, to reduce the exercise price in effect for outstanding options under the Plans.

In approving the repricing, the Board considered the impact of the current

In approving the repricing, the Board considered the impact of the current exercise prices of outstanding stock options on the incentives provided to employees and directors, the lack of retention value provided by the outstanding stock options to employees and directors, and the impact of such options on the capital structure of the Company.

As of March 24, 2022, there were 46,645 stock options outstanding under

EXICURE, INC.

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(in thousands, except share and per share data)

exercise prices of outstanding stock options on the incentives provided to employees and directors, the lack of retention value provided by the outstanding stock options to employees and directors, and the impact of such options on the capital structure of the Company.

As of March 24, 2022, there were 233,224 stock options outstanding under the Plans, and all of the Company’s outstanding stock options had exercise prices in excess of the current fair market value of the Company’s common stock as of March 24, 2022, which is why the Board made the determination to deem all outstanding and unexercised stock options held by current employees, executive officers, and directors as Eligible Stock Options.

The option repricing resulted in incremental stock-based compensation of $ 213 recorded as expense in the year ended December 31, 2022.

Most of the individuals holding stock options left the Company in early 2023 resulting in minimal expense recognition in 2023 as their options were forfeited upon departure.

the Plans, and all of the Company’s outstanding stock options had exercise prices in excess of the current fair market value of the Company’s common stock as of March 24, 2022, which is why the Board made the determination to deem all outstanding and unexercised stock options held by current employees, executive officers, and directors as Eligible Stock Options.

Segment Reporting

The Company manages our business activities on a consolidated basis and operate as a single operating segment:

Biotechnology.

Our revenue this year was solely from one patent license agreement with a private clinical stage biopharmaceutical company.

Under the terms of the agreement, this biopharmaceutical company will receive an exclusive license in the field of hepatitis to all of the Company’s relevant patents for $ 500 , see Note 16 for further details.

The accounting policies of the Biotechnology segment are the same as those described in Note 2 – Summary of Significant Accounting Policies.

Our CODM is our President and Chief Executive Officer, Andy Yoo.

The CODM uses net loss, as reported on our Consolidated Statements of Comprehensive Income, in evaluating performance of the Biotechnology segment and determining how to allocate resources of the Company as a whole.

The CODM does not review assets in evaluating the results of the Biotechnology segment, and therefore, such information is not presented.

The following table provides the operating financial results of our Biotechnology segment:

Total revenues $ 500 $ —

Significant segment expenses:

Research and development expense — 1,423

General and administrative expense 5,449 11,715

Litigation legal expense 1,562 938

Right-of-use asset impairment loss 5,721 —

Loss from sale of property and equipment — 920

Total operating expenses 12,732 14,996

Interest and dividend income 13 84

Interest expense ( 18 ) —

Other income (expense) 2,544 ( 2 )

Total other income (expense) 2,539 ( 1,918 )

Segment net loss $ ( 9,701 ) $ ( 16,914 )

Pre-tax loss before income taxes was $ 9,693 and $ 16,914 for the years ended December 31, 2024 and 2023, respectively, which consists entirely of losses in the U.S.

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Components for the provision for income taxes consist of the following:

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Federal $ — $ —

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Total current tax expense $ 8 $ —

Federal $ — $ —

State and local — —

Total deferred tax expense $ — $ —

Provision for income tax expense $ 8 $ —

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

The differences between income taxes computed using the U.S.

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Permanent differences 14 ( 0.1 ) 285 ( 1.7 )

Research and development credit — — ( 31 ) 1.3

Federal and state rate differential 72 ( 0.5 ) ( 16 ) 0.7

State rate differential 25 ( 0.3 ) 72 ( 0.5 )

Change in valuation allowance 2,670 ( 27.6 ) ( 39,891 ) 236.9

Other 6 — — —

Reduction of worthless attributes — — 44,253 ( 262.6 )

$ 8 ( 0.1 ) % $ — — %

The effective tax rate for the year ended December 31, 2023 is attributable to the fact that the Company is subject to the IRC Sec.

174 regulations requiring companies to capitalize certain research and experimental expenditures and IRC Sec.

382 loss limitation rules on the Company's ability to utilize net operating losses to offset the capitalization requirement.

The effective tax rate for the year ended December 31, 2024 is attributable to the fact that the Company is subject to state income taxes.

The effective income tax rate for the year ended December 31, 2024 was ( 0.1 )% because the Company generated tax losses and provided a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized.

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Net operating losses $ 3,957 $ 3,145

Tax credits — 472

Capitalized R&D expenses 556 741

Intangibles — 117

Accrued expenses 318 41

Operating lease liability 1,661 1,900

Equity-based compensation — 1,874

Investment Loss Adjustment 560 570

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At December 31, 2024, the Company had $ 13,951 of state net operating loss carryforwards, which will begin to expire in 2044.

We experienced an “ownership change” within the meaning of Section 382(g) (“Section 382”) of the Internal Revenue Code of 1986, as amended, during the fourth quarter of 2022.

The Company experienced an “ownership change” within the meaning of Section 382(g) (“Section 382”) of the Internal Revenue Code of 1986, as amended, during the fourth quarter of 2022.

In general, the annual use limitation equals the aggregate value of our stock at the time of the ownership change multiplied by a specified tax-exempt interest rate.

We determined that at the date of the 2022 ownership change, we had a net unrealized built-in loss (“NUBIL”).

The Company determined that at the date of the 2023 ownership change, we had a net unrealized built-in loss (“NUBIL”).

The NUBIL was determined based on the difference between the fair market value of our assets and their tax basis as the ownership change date.

Because of the NUBIL, certain deductions recognized during the five-year period beginning on the date of the IRC Section 382 ownership change (the “recognition period”) are subject to the same limitation as the net operating loss carryforwards or certain other deductions.

As of 2023, the business model has

As of 2023, the business model has substantially changed which fully limits our ability to recognize these deductions.

As the Company disposed of the majority of their operating business, they are subject to a zero limitation under Section 382 of the Internal Revenue Code which makes the net operating losses unusable.

Accordingly, the Company has not recorded federal and state net operating losses from prior to ownership change.

In December 2024, the Company had another

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substantially changed which fully limits our ability to recognize these deductions.

Accordingly, the Company has not recorded federal and state net operating losses from prior to ownership change.

ownership change and a formal analysis was not performed as any further limitation would not have a material impact on the financial statements due to the valuation allowance.

At December 31, 2024 and 2023, the Company had no unrecognized tax benefits.

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Warrants to purchase common stock 10,022 10,022

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Fair Value Measurements

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and Level 3 Inputs - unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Assets measured at fair value on a recurring basis as of December 31, 2023 are as follows:

Total Level 1 Level 2 Level 3

Cash equivalents:

Money market funds $ 418 $ 418 $ — $ —

Short-term investments:

Investment in convertible notes receivable — — —

Total financial assets $ 418 $ 418 $ — $ —

Assets measured at fair value on a recurring basis as of December 31, 2022 are as follows:

Total Level 1 Level 2 Level 3

Cash equivalents:

Money market funds $ 1,612 $ 1,612 $ — $ —

Total financial assets $ 1,612 $ 1,612 $ — $ —

The Company uses the market approach and Level 1 and Level 2 inputs to value its cash equivalents and Level 2 inputs to value its short-term investments.

The Company uses the market approach and Level 3 inputs to value its liabilities.

There were no liabilities measured at fair value on a recurring basis as of December 31, 2022.

Warrant Liability

A summary of the warrant liability activity for the year ended December 31, 2023 is as follows:

Warrants Outstanding Fair Value Per Share Fair Value

(in thousands, except per share data)

Balance at December 31, 2022 — $ — $ —

Option to exercise 526 $ 1.52 $ 800

Payment to warrant holder ( 526 ) $ 1.52 $ ( 800 )

Balance at December 31, 2023 — 0 $ — —

EXICURE, INC.

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Investment in convertible notes receivable

A summary of the AFS securities activity for the year ended December 31, 2023 is as follows:

Balance at December 31, 2022 $ —

Investment in available for sale securities 2,000

Change in fair value of investment in convertible notes receivable ( 2,000 )

Balance at December 31, 2023 $ —

As of December 31, 2023, management does not believe these AFS investments are recoverable and recorded a change in fair value of $ 2,000 .

There were no transfers between Level 1, 2, or 3, during the years ended December 31, 2023, and 2022.

Both observable and unobservable in puts were used to determine fair value of the positions that the Company classified within the Level 3 category.

Unrealized gains and losses associated with the liabilities within the Level 3 category include changes in fair value that were attributable to both observable and unobservable inputs.

Cash and cash equivalents were measured using level 1 inputs as of December 31, 2024 and 2023.

The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period.

There were no transfers within the hierarchy during the December 31, 2024 and year ended December 31, 2023.

The carrying amount of the Company’s receivables and payables approximate their fair value due to their maturity.

Defined Contribution Plan

Exicure maintains a defined contribution savings plan for the benefit of its employees.

The Company maintains a defined contribution savings plan for the benefit of its employees.

Company contributions are determined under various formulas.

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The second amended complaint does not quantify any alleged damages but, in addition to attorneys’ fees and costs, lead plaintiff seeks to recover damages on behalf of himself and others who acquired the Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result.

The parties filed a joint status report noting the mediation efforts taken by the parties.

The report also proposes a litigation schedule going forward, which the Court adopted:

plaintiff’s third amended complaint is due on or before June 28, 2024, and any motion to dismiss is due on or before August 27, 2024, with response due on or before October 8, 2024 and any reply due on or before November 5, 2024.

Accordingly, the status hearing set for May 22, 2024 is reset to July 23, 2024.

On March 1, 2022, Kapil Puri filed a shareholder derivative lawsuit on behalf of the Company in the United States District Court for the Northern District of Illinois, against Dr.

On October 8, the court granted preliminary approval of the settlement in the securities class action and set a schedule for final approval proceedings, including a final approval hearing on January 13, 2025.

On January 13, 2025, the court entered final judgment approving the settlement.

The settlement described above will be fully covered by insurance.

However, the settlement will include a reservation of rights by the insurers against the Company for the unsatisfied portion of its self-insured retainer.

As a result, the Company recorded an accrual as of September 30, 2024 for the amount of the unsatisfied retainer of approximately $ 1.1 million needed to bridge the $ 2.5 million retainer that the Company is liability for under its self-insured retention.

In March and April 2022, three different stockholders filed separate shareholder derivative lawsuits on behalf of the Company against Dr.

Giljohann and Mr.

Bock, Jeffrey L.

Cleland, Elizabeth Garofalo, Bosun Hau, Bali Muralidhar, Andrew Sassine, Matthias Schroff, James Sulat and Timothy Walbert, captioned Puri v.

Cleland, Elizabeth Garofalo, Bosun Hau, Bali Muralidhar, Andrew Sassine, Matthias Schroff, James Sulat and Timothy Walbert.

The cases in the ordered filed are captioned Puri v.

Giljohann, et al., Case No.

1:22-cv-01083;

On March 8, 2022, Yixin Sim filed a similar shareholder derivative lawsuit in the same court against the same individuals, captioned Sim v.

Giljohann, et al., Case No.

1:22-cv-01217;

On April 25, 2022, Stourbridge Investments LLC filed a similar shareholder derivative lawsuit against the same individuals in the United States District Court for the District of Delaware, captioned Stourbridge Investments LLC v.

and Stourbridge Investments LLC v.

Exicure, Inc.

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1:22-cv-00526.

Based on similar factual allegations presented in the Colwell complaint, described above, the Puri, Sim, and Stourbridge complaints (collectively, the

Complaints in these cases (collectively, the “Derivative Complaints”) assert, among other things, that the Company included false or misleading statements in its proxy statement for its 2021 Annual Meeting of Stockholders, also alleging certain breaches of fiduciary duties.

The Derivative Complaints seek contribution from Dr.

Giljohann and Mr.

Bock under federal securities laws.

The Puri and Stourbridge complaints further assert for a variety of related state law claims, including unjust enrichment, abuse of control, gross mismanagement, and corporate waste.

Plaintiffs seek restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well stockholder adoption of certain board oversight measures.

On March 18, 2022, James McNabb, through counsel, sent a written demand to the Company (the “Demand Letter”) demanding that the Board of Directors investigate certain allegations and commence proceedings on the Company’s behalf against certain of the Company’s officers and directors for alleged breaches of fiduciary duties

EXICURE, INC.

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“Derivative Complaints”) allege that the defendants caused the Company to issue false and/or misleading statements in the proxy statement for its 2021 Annual Meeting of Stockholders regarding risk oversight, code of conduct, clinical program and compensation matters, among other things, in violation of federal securities law, and committed breaches of fiduciary duties.

The Derivative Complaints also assert that Dr.

Giljohann and Mr.

Bock are liable for contribution under the federal securities laws.

The Puri and Stourbridge complaints further assert state law claims for unjust enrichment, and the Puri complaint additionally asserts state law claims for abuse of control, gross mismanagement and corporate waste.

The plaintiffs do not quantify any alleged damages in the Derivative Complaints, but seek restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well as an order directing that certain proposals for strengthening board oversight be put to a vote of the Company’s shareholders.

All of the Derivative Cases have been stayed pending a decision on any motion to dismiss that may be filed in the Colwell case.

In addition, the Stourbridge case has been administratively closed pending the decision on motion to dismiss that may be filed in the Colwell case.

Further, pursuant to agreement, the Demand Letter is being held in abeyance and any related statute of limitations tolled pending such motion and decision.

and corporate waste.

The Derivative Complaints and Demand Letter are currently stayed, and the Company is engaged in settlement discussions with plaintiffs’ counsel regarding these matters.

On October 3, 2023, a former employee filed a complaint against the Company and its executives related to the former employee’s separation from the Company.

The parties will proceed with paper discovery and an in-person settlement conference is scheduled for June 26, 2024.

The parties proceeded with paper discovery and this matter did not settle at an in-person settlement conference on July 17, 2024.

As a result, we are in the discovery phase of this litigation.

The parties exchanged discovery and a status conference was held on February 11, 2025, wherein opposing counsel asserted alleged various discovery deficiencies.

The parties are working through these alleged discovery deficiencies and anticipate deposing the plaintiff as well as witnesses on behalf of the Company and the individual defendants themselves in the coming months.

Refer to Note 7, Leases , for a discussion of the commitments associated with the Company’s lease agreements.

Northwestern University License Agreements

On December 12, 2011, (1) AuraSense, LLC, the Company’s former parent, assigned to the Company all of its worldwide rights and interests under AuraSense, LLC’s 2009 license agreement with Northwestern University (“NU”) in the field of the use of nanoparticles, nanotechnology, microtechnology or nanomaterial-based constructs as therapeutics or accompanying therapeutics as a means of delivery, but expressly excluding diagnostics (the “assigned field”);

(2) in accordance with the terms and conditions of this assignment, the Company assumed all liabilities and obligations of AuraSense, LLC as set forth in its license agreement in the assigned field;

and (3) in order to secure this assignment and the patent rights from NU, the Company agreed (i) to pay NU an annual license fee, which may be credited against any royalties due to NU in the same year, (ii) to reimburse NU for expenses associated with the prosecution and maintenance of the license patent rights, (iii) to pay NU royalties based on any net revenue generated by the Company’s sale or transfer of any licensed product, (iv) to pay NU, in the event the Company grants a sublicense under the licensed patent rights, the greater of a percentage of all sublicensee royalties or a percentage of any net revenue generated by a sublicensee’s sale or transfer of any licensed product, and (v) to pay NU a percentage of all other sublicense payments received by the Company.

In August 2015, the Company entered into a restated license agreement with NU (the “Restated License Agreement”).

In February 2016, the Company obtained exclusive license as to NU’s rights in certain SNA technology it jointly owns with NU (the “Co-owned Technology License”).

The Company’s license to NU’s rights is limited to the assigned field, however the Company has no such limitation as to its own rights in this jointly owned technology.

The Company’s rights and obligations in the Co-owned Technology License agreement is substantially the same as in the Restated License Agreement from August 2015 (collectively referred to as “the Northwestern University License Agreements”).

As of December 31, 2023, the Company has paid to NU an aggregate of $ 11,567 in consideration of each of the obligations described above.

Related-Party Transactions

Pursuant to a Consulting Agreement, effective as of September 25, 2022, between the Company and Alta Companies LTD (“Alta”), the Company paid Alta $ 218 on February 27, 2023 for a consulting fee earned as a result of the September 2022 PIPE closing.

Paul Kang, a director of the Company since February 2023 and former CEO of the Company, is the President of Alta.

There were no related party transactions with Alta in 2024.

Refer to the subsequent event in Footnote 17.

Also, refer to the Note and the DGP Note in Footnote 6.

License and Purchase Agreements

License Agreement

On February 5, 2024, the Company entered into a patent license agreement to develop cavrotolimod for potential treatment for hepatitis with a private clinical stage biopharmaceutical company.

Under the terms of the agreement, this biopharmaceutical company will receive an exclusive license in the field of hepatitis to all of the Company’s relevant patents.

$ 500 was paid to the Company after the execution of this agreement.

This payment was recognized as revenue in accordance with ASC 606, Revenue from Contracts with Customers .

The Company will also be entitled to modest royalties on future net sales on all licensed technology during the term of the licensed patents.

The Company determined that the amount of variable consideration would be constrained until the period the uncertainty related to the consideration is relieved.

This patent license agreement was assigned to, and assumed by, the purchaser pursuant to this purchase agreement, but any royalties would be passed through to the Company.

Purchase Agreement

On September 27, 2024, the Company entered into and closed the sale of certain assets pursuant to an Asset Purchase Agreement (the “Purchase Agreement”).

The assets sold to the purchaser consist of the Company’s historical biotechnology intellectual property and other assets and include the Company’s spherical nucleic acid-related technology, research and development programs, and clinical assets (the “Sold Assets”).

The Company will receive gross proceeds of $ 1,500 from the sale of the Sold Assets.

The gross proceeds were recognized as other income.

The Company will be entitled to royalties and license fees in connection with future sales or licenses derived from the Sold Assets for a period of 10 years as set out in further detail in the purchase agreement.

The Company determined that the amount of variable consideration would be constrained until the period the uncertainty related to the consideration is relieved.

The Company received $ 150 in September, $ 550 in October, and $ 400 in December.

The remaining $ 400 will be received in March.

Licenses of intellectual property :

EXICURE, INC.

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On August 3, 2023, the company received a notice letter (the “Letter”) from counsel for NU alleging the Company breached the Northwestern University License Agreements.

The Letter alleges that a lack of development required under the Northwestern University License Agreements is a breach.

The Northwestern University License Agreements were subsequently terminated on September 10, 2023 and October 3, 2023, respectively.

Related-Party Transactions

Paul Kang, a director of the Company since February 2023 and the CEO of the Company since August 2023, is the President of Alta.

use and benefit from the licenses.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone payments:

If it is probable that a significant revenue reversal would not occur in the future, the associated milestone value is included in the transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment.

To date, the Company has not recognized any milestone payment revenue from any of its collaboration agreements.

To date, the Company has not recognized any royalty revenue resulting from any of its collaboration agreements.

Subsequent Events

On February 5, 2024, the Company entered into a patent license agreement to develop cavrotolimod for potential treatment for hepatitis with a private clinical stage biopharmaceutical company.

Under the terms of the agreement, this biopharmaceutical company will receive an exclusive license in the field of hepatitis to all of Exicure’s relevant patents.

An initial payment of $ 500 was paid to Exicure after the execution of this agreement that was recorded as other income.

Exicure will also be entitled to modest royalties on future net sales on all licensed technology during the term of the licensed patents.

Exicure will be responsible for, and make all decisions concerning, the preparation, filing, prosecution, and maintenance for each patent and patent application included within the licensed patents.

On May 3, 2024, the Company executed a promissory note (“Note”) and subsequently received a loan in the amount of $ 300 from an individual investor.

All principal and accrued interest will be due and payable on the earlier of (i) the 1st anniversary of the date of this Note or (ii) upon an event of default, at that time, such amounts declared by the investor will become due and payable by Company.

Interest will accrue on this Note at 6.0 % and is payable at maturity.

On June 3, 2024, the Company executed another promissory note (“DGP Note”) and subsequently received a loan in the amount of $ 700 from DGP, a related party.

All principal and accrued interest will be due and payable on the earlier of (i) ten months from the date of this DGP Note or (ii) upon an event of default, at that time, such amounts declared by the investor will become due and payable by Company.

Interest will accrue on this DGP Note at 6.0 % and is payable at maturity.

GPCR Share Purchase Agreement

On January 19, 2025, the Company entered into a Share Purchase Agreement with GPCR Therapeutics Inc, a Korean corporation, (“GPCR”) pursuant to which the Company acquired from GPCR all of the issued and outstanding equity securities of GPCR Therapeutics USA Inc., a California corporation (“GPCR USA”).

The transactions contemplated under the Share Purchase Agreement closed concurrently with execution.

GPCR USA was, until immediately prior to closing under the Share Purchase Agreement, a wholly owned subsidiary of GPCR.

The Company purchased GPCR USA’s six million common shares outstanding for $ 1.6 million.

It is not yet known how much goodwill versus intangibles will be recognized.

It is also not yet known the acquisition date fair value of the major classes of consideration transferred.

In connection with the closing of the Share Purchase Agreement, the Company and GPCR entered into a License and Collaboration Agreement (“L&C Agreement”) to further develop and commercialize GPCR’s technologies related to certain intellectual property and patents.

The L&C Agreement requires the Company to make milestone payments to GPCR upon the achievement of specific milestone events relating to clinical trials, marketing authorizations, and net sales, as well as for the Company to pay a recurring royalty payment based on 10 % of net sales, as set forth in the L&C Agreement.

Termination of Chicago Lease Agreement

On February 14, 2025, the Company executed a Lease Termination Agreement with its landlord effective as of January 31, 2025.

As a result of this early termination for the Chicago lease that expired in June 2030, the Company vacated the Chicago office and stopped any further amounts owed to its landlord.

There were no additional fees or costs related to the early termination.

The Company expects to recognize a $ 6 million gain in the first quarter of 2025 related to this early termination.

EXICURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

Common Stock Purchase Agreement

On February 14, 2025, the Company entered into a Common Stock Purchase Agreement with Shin Chang Partners and RMS0718 Co., Ltd.

(the “Purchasers”), pursuant to which the Company agreed to issue and sell to each of the Purchasers 145,454 shares of the Company’s common stock, par value $ 0.0001 per share, at a purchase price of $ 5.50 per share for gross proceeds of approximately $ 2 million.

Consulting Agreement

Pursuant to a Consulting Agreement, effective as of February 27, 2025, between the Company and Alta, the Company entered into a Consulting Agreement with Paul Kang, a director of the Company since February 2023, and the former CEO of the Company,

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data