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Item 2. Management’s Discussion and Analysis

2026-05-12 compared with 2025-11-13 · 84 added, 182 removed, 178 unchanged (60% of the section changed)

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As a result of many factors, including those factors set forth in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biotechnology company discovering and developing tumor-activated, or masked, immuno-oncology, or I-O, therapies with the goal of significantly improving outcomes for people living with cancer without the systemic side effects of current I-O treatments.

We are leveraging our proprietary platform to advance a pipeline of novel, tumor-activated I-O molecules that are designed to optimize the therapeutic index by localizing anti-tumor activity within the tumor microenvironment, including masked antibodies, bispecifics, cytokines and immune cell engagers.

Current I-O therapies have curative potential for patients with cancer.

However, their potential is significantly curtailed by systemic toxicity that results from activity of the therapeutic molecule outside the tumor microenvironment.

Our molecules are engineered to localize activity within the tumor microenvironment with minimal systemic effects, resulting in the potential to achieve enhanced anti-tumor activity and increasing the population of patients who may be eligible to receive our medicines.

To date, we have presented data across our clinical-stage programs showing clinical validation for our tumor-activation platform.

Our most advanced clinical-stage product candidates are vilastobart, a tumor-activated, Fc-enhanced anti-CTLA-4 monoclonal antibody, or mAb, and efarindodekin alfa (XTX301), a tumor-activated, engineered interleukin 12, or IL-12, therapy.

We are currently advancing clinical development for vilastobart in combination with atezolizumab (Tecentriq®) in a Phase 2 clinical trial in patients with microsatellite stable metastatic colorectal cancer, or MSS mCRC, under a co-funded clinical trial collaboration with F.

We are a clinical-stage biotechnology company discovering and developing masked immuno-oncology, or I-O, therapies with the goal of significantly improving outcomes for people living with cancer.

Leveraging our clinically-validated masking technology and capabilities, we are developing I-O therapies designed to selectively activate within the tumor microenvironment to achieve durable efficacy without the severe side effects associated with systemically active I-O agents.

Our integrated biology and protein engineering approach enables us to design and develop highly potent, masked biologics that are activated, or unmasked, by tumor-specific proteases within the tumor microenvironment.

We are currently advancing multiple programs in preclinical and clinical development, including masked multi-specifics, and our clinically-validated masking technology has enabled us to establish top-tier strategic partnerships, including with AbbVie Group Holdings Limited, or AbbVie, and Gilead Sciences, Inc., or Gilead.

Liquidity Overview

To date, we have financed our operations primarily from proceeds raised through private placements of equity securities, sales of common stock in our initial public offering, or IPO, and through “at-the-market” offerings;

the sale of prefunded warrants in our June 2025 and February 2026 follow-on offerings;

the exercise of certain common stock warrants issued in connection with our June 2025 follow-on offering;

development event payments under our co-funded clinical trial collaboration with F.

Hoffmann-La Roche Ltd., or Roche;

In November 2025, we announced new data from the ongoing Phase 2 clinical trial at the Society for Immunotherapy of Cancer (SITC) 40 th Annual Meeting in patients with MSS mCRC without liver metastases and high plasma tumor mutational burden, or TMB, and we anticipate reporting additional data from the Phase 2 trial in the first half of 2026.

Based on the promising clinical activity and safety profile demonstrated by vilastobart to date as a combination therapy, including in patients who had high plasma TMB, we are actively seeking a partner to develop vilastobart in combination with PD-(L)1 or PD1-VEGF in MSS mCRC and other tumor types.

For efarindodekin alfa, in the third quarter of 2025, we initiated a Phase 2 trial in patients with advanced solid tumors and achieved a $17.5 million development milestone under our exclusive license agreement with Gilead Sciences, Inc., or Gilead.

We have completed enrollment in the Phase 1A monotherapy dose escalation and Phase 1B monotherapy dose expansion portions of our ongoing Phase 1/2 clinical trial, and evaluation of patients is ongoing.

In addition to our clinical-stage product candidates, we are leveraging our proprietary tumor-activation platform to advance multiple preclinical programs for XTX501, a bispecific PD-1/masked IL-2 and our masked T cell engager molecules, including wholly owned programs targeting the tumor-associated antigens for PSMA, CLDN18.2 and STEAP1 and an additional program under our collaboration, license and option agreement with AbbVie Group Holdings Limited, or AbbVie.

Liquidity and Going Concern Overview

To date, we have financed our operations primarily from proceeds raised through private placements of preferred units, convertible preferred stock, common stock and prefunded warrants;

sales of common stock in our initial public offering, or IPO, and through “at-the-market” offerings;

the sale of prefunded warrants and common stock warrants in a follow-on public offering;

and upfront payments under our collaboration and license agreements with AbbVie and Gilead.

We have not generated any revenue from product sales and do not expect to generate any revenue from product sales for at least the next several years, if at all.

and upfront payments and milestone payments under our collaboration and license agreements with AbbVie and Gilead.

All of our programs are in early clinical or preclinical development.

As a result, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for at least the next several years, if at all.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved.

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Even if we are able to generate revenue from product sales, we may not become profitable.

In June 2025, we closed a follow-on public offering of prefunded warrants and accompanying common stock warrants and received net proceeds of $47.0 million after deducting underwriting discounts and commissions and offering expenses payable by us.

In connection

with the offering, we issued prefunded warrants to purchase 66,676,000 shares of common stock, accompanied by Series A warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants), Series B warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants) and Series C warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants).

If all of the Series B warrants and Series C warrants are exercised in cash at their initial exercise price of $0.75 per warrant, we will receive up to $100.0 million of additional gross proceeds by the second half of 2026.

For more information, refer to Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Since inception, we have incurred significant operating losses, including net losses of $45.4 million and $45.1 million for the nine months ended September 30, 2025 and 2024, respectively, and a net loss of $58.2 million for the year ended December 31, 2024.

As of September 30, 2025, we had an accumulated deficit of $429.1 million.

Since inception, we have incurred significant operating losses, including net losses of $9.5 million and $13.3 million for the three months ended March 31, 2026 and 2025, respectively, and a net loss of $35.0 million for the year ended December 31, 2025.

As of March 31, 2026, we had an accumulated deficit of $428.3 million.

We expect to continue to incur significant expenses and operating losses for the foreseeable future, particularly to the extent we:

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As a result, we will need substantial additional capital to support our continuing operations and pursue our strategy.

As of September 30, 2025, we had cash and cash equivalents of $103.8 million.

In the fourth quarter of 2025, we received a $17.5 million development milestone under our license agreement with Gilead.

Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of September 30, 2025, together with the $17.5 million development milestone received under our license agreement with Gilead, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027.

However, we have based our estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we anticipate.

In addition, we expect our operating losses and negative operating cash flows to continue for the foreseeable future as we continue to advance our pipeline of novel, tumor-activated I-O molecules through preclinical and clinical development, maintain the infrastructure necessary to support these activities and continue to incur costs associated with operating as a public company.

These conditions raise substantial doubt about our ability to continue as a going concern.

In order to fund our operations, we will need to raise additional capital, which could be obtained through the cash exercise of the Series B warrants and Series C warrants issued in connection with our June 2025 follow-on public offering, the receipt of milestone payments, option-related fees or other contingent payments under our existing agreements with Gilead and AbbVie, additional public or private equity offerings, debt financings, additional collaborations, partnerships or licensing arrangements or other sources.

However, there can be no assurance that we will receive additional proceeds from the exercise of the common stock warrants or from contingent payments under our existing agreements with Gilead or AbbVie or that we will be able to complete any such transaction on acceptable terms or otherwise.

If we are not able to secure sufficient additional capital when needed, we may need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to our operations and research and development programs.

For more information regarding our liquidity and going concern, refer to “—Liquidity and Capital Resources—Capital Requirements and Going Concern” below and Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

For more information regarding the terms of the warrants we issued in our June 2025 follow-on public offering, refer to Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

As of March 31, 2026, we had cash and cash equivalents of $150.3 million.

In the second quarter of 2026, we achieved a $6.0 million development milestone related to the collaboration agreement with AbbVie.

Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of March 31, 2026, together with the development milestone achieved under the AbbVie collaboration in the second quarter of 2026, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into early 2028.

This estimate excludes any potential additional milestone payments, option-related fees or other contingent payments under our existing collaboration and partnership agreements with AbbVie and Gilead and excludes the potential receipt of up to $36.2 million in additional gross proceeds in the second half of 2026 if all outstanding Series C warrants are exercised at their current exercise price.

In addition, we have based our estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we anticipate.

We expect our operating losses and negative operating cash flows to continue for the foreseeable future as we continue to advance our pipeline of novel, masked I-O molecules through preclinical and clinical development, maintain the infrastructure necessary to support these activities and continue to incur costs associated with operating as a public company.

Financial Operations Overview

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A significant portion of our research and development costs have been, and will continue to be, external costs.

We track these external costs, such as fees paid to CDMOs, CROs,

preclinical study vendors and other third parties in connection with our manufacturing and manufacturing process development, clinical trials, preclinical studies and other research activities by program.

We track these external costs, such as fees paid to CDMOs, CROs, preclinical study vendors and other third parties in connection with our manufacturing and manufacturing process development, clinical trials, preclinical studies and other research activities by program.

Due to the number of ongoing programs and our ability to use resources across several projects, personnel-related expenses and indirect or shared operating costs incurred for our research and development programs are not recorded or maintained on a program-by-program basis.

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In addition, as we progress our most advanced product candidates in clinical development, we may incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into, or may enter into license, acquisition, option or other agreements to acquire the rights to future products and product candidates.

In the event we are unable to raise sufficient additional capital to fund our operations, we may need to implement cost reduction strategies that seek to maintain our ability to continue the development of our most advanced product candidates in clinical development while otherwise reducing our overall research and development expenses.

In the event we are unable to raise sufficient additional capital to fund our operations in the future, we may need to implement cost reduction strategies that seek to maintain our ability to continue the development of our most advanced product candidates in clinical development while otherwise reducing our overall research and development expenses.

At this time, we cannot reasonably estimate or know the nature, timing and projected costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates or programs.

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We also expect to continue to incur additional expenses related to intellectual property as we file patent applications to protect intellectual property arising from our research and development activities.

In the event we are unable to obtain sufficient additional capital, we may need to implement cost reduction strategies that seek to reduce our general and administrative expenses while maintaining sufficient infrastructure to support our planned research and development activities and operations as a public company.

Restructuring

In connection with the March 2024 strategic portfolio reprioritization and restructuring, we undertook efforts to reduce our expenses and streamline our operations, including a reduction in headcount of 15 employees, representing approximately 21% of our workforce immediately prior to the workforce reduction.

Restructuring expense consists of costs directly incurred as a result of restructuring initiatives, and includes employee severance payments, benefits continuation, outplacement services and related expenses.

Other Income (Expense), Net

In the event we are unable to obtain sufficient additional capital in the future, we may need to implement cost reduction strategies that seek to reduce our general and administrative expenses while maintaining sufficient infrastructure to support our planned research and development activities and operations as a public company.

Other Income, Net

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities consists of the change in the fair value of the common stock warrant liabilities from the issuance date of June 5, 2025 to September 30, 2025.

Other Income (Expense), Net

Other income (expense), net consists primarily of the portion of the issuance costs we incurred in connection with the issuance of the prefunded warrants and common stock warrants in June 2025 in connection with a follow-on public offering which were allocated to the common stock warrant liabilities, interest income earned from our cash and cash equivalents, interest expense principally on the note payable under our former debt arrangement with Pacific Western Bank, or PacWest, and amortization of the debt discount related to debt issuance costs.

The change in fair value of common stock warrant liabilities consists of the change in the fair value of the common stock warrant liabilities from December 31, 2025 to March 31, 2026.

Other Income, Net

Other income, net consists primarily of interest income earned from our cash and cash equivalents.

Results of Operations

Comparison of the three months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands):

Comparison of the three months ended March 31, 2026 and 2025

The following table summarizes our results of operations for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended

September 30,

Collaboration and license revenue

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General and administrative

Restructuring

Total operating expenses

Loss from operations

Other income (expense), net

Other income, net

Change in fair value of common stock warrant liabilities

Other income (expense), net

Total other income (expense), net

Other income, net

Total other income, net

Collaboration and License Revenue

Collaboration and license revenue increased by $16.8 million from $2.3 million for the three months ended September 30, 2024 to $19.1 million for the three months ended September 30, 2025.

The increase was due to collaboration and license revenue recognized under the collaboration, license and option agreement and stock purchase agreement that we entered into in February 2025 with AbbVie and an increase in collaboration and license revenue recognized under the license agreement and stock purchase agreement with Gilead, which included a cumulative catch-up of collaboration and license revenue of $7.0 million related to the adjustment of the overall transaction price due to the achievement of the $17.5 million development milestone during the third quarter of 2025.

Collaboration and license revenue increased by $9.7 million from $2.9 million for the three months ended March 31, 2025 to $12.6 million for the three months ended March 31, 2026.

The increase was due to an increase in collaboration and license revenue recognized under our collaboration and license agreements with AbbVie and Gilead.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended September 30, 2025 and 2024 (in thousands):

The following table summarizes our research and development expenses for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended

September 30,

efarindodekin alfa (XTX301)

efarindodekin alfa

Other early programs and indirect research and development

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Total research and development expenses

Research and development expenses increased by $3.6 million from $10.8 million for the three months ended September 30, 2024 to $14.3 million for the three months ended September 30, 2025.

Research and development expenses increased by $11.6 million from $8.3 million for the three months ended March 31, 2025 to $19.8 million for the three months ended March 31, 2026.

The changes in research and development expenses were primarily due to the following:

• vilastobart costs decreased by $3.7 million, primarily driven by $3.5 million in aggregate development milestones

that we incurred during the three months ended September 30, 2024 under our CTLA-4 monoclonal antibody

license agreement with WuXi Biologics (Hong Kong) Limited, or WuXi Biologics, and our amended and restated

exclusive license agreement with City of Hope, for which there was no comparable cost during the three months ended September 30, 2025;

• efarindodekin alfa costs increased by $1.0 million, primarily driven by a $0.8 million increase in clinical development

activities related to initiation of our Phase 2 clinical trial evaluating efarindodekin alfa as a monotherapy in patients with certain advanced solid tumors and a $0.2 million increase in manufacturing activities;

• XTX501 costs for the three months ended September 30, 2025 consisted of manufacturing activities related to IND-enabling studies and pre-clinical development activities;

for the three months ended September 30, 2024, XTX501 costs were not separately tracked as we had not begun performing IND-enabling studies;

• XTX202 costs for the three months ended September 30, 2025 consisted of investigator costs invoiced during the final winddown process of the discontinued XTX202 study;

and XTX202 costs for the three months ended September 30, 2024 include the effect of invoiced investigator costs being lower than previously estimated amounts;

• other early programs and indirect research and development costs increased by $1.4 million, primarily driven by an increase in external expenses related to preclinical research and development activities;

• personnel-related costs increased by $1.4 million, primarily driven by an increase in salaries, bonuses and benefits due to higher research and development headcount.

• XTX501 costs increased by $5.7 million, primarily driven by an increase in manufacturing activities related to IND-enabling studies and preclinical development activities;

• other early programs and indirect research and development costs increased by $2.8 million, primarily driven by an increase in external expenses related to preclinical research and development activities, including costs related to our CLDN18.2 program, prostrate program and AbbVie collaboration;

• vilastobart costs increased by $1.3 million, primarily driven by a $2.0 million cost-sharing payment earned under our Roche clinical collaboration during the three months ended March 31, 2025, which we recorded as a reduction in research and development expenses and for which there was no corresponding cost-sharing payment during the three months ended March 31, 2026, partially offset by a $0.7 million decrease in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

• personnel-related costs increased by $1.4 million, primarily driven by a $1.0 million increase in salaries, bonuses and benefits due to higher research and development headcount, and a $0.4 million increase in stock-based compensation;

• efarindodekin alfa costs increased by $0.4 million, primarily driven by an increase in clinical development activities related to our ongoing our Phase 2 clinical trial evaluating efarindodekin alfa as a monotherapy in patients with certain advanced solid tumors.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended September 30, 2025 and 2024 (in thousands):

The following table summarizes our general and administrative expenses for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended

September 30,

Personnel-related

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Total general and administrative expenses

General and administrative expenses increased by $0.4 million from $6.3 million for the three months ended September 30, 2024 to $6.7 million for the three months ended September 30, 2025.

The changes in general and administrative expenses were primarily due to the following:

• personnel-related costs decreased by $0.3 million, primarily driven by a $0.4 million decrease in stock-based compensation and a $0.2 million decrease in recruiting and other personnel-related costs, partially offset by a $0.3 million increase in salaries, bonuses and benefits due to higher general and administrative headcount;

• professional and consulting fees increased by $0.7 million, primarily driven by an increase in legal fees and other professional costs;

• facility-related and other general and administrative expenses decreased by $0.1 million, primarily driven by a decrease in costs related to directors’ and officers’ liability insurance.

Restructuring

We did not recognize any restructuring expenses for the three months ended September 30, 2025.

We recognized a credit of $41,000 in restructuring expenses for the three months ended September 30, 2024 related to a change in estimate for costs of continuation of certain employee benefits related to the workforce reduction announced in March 2024.

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities for the three months ended September 30, 2025 was due to a loss of $15.4 million due to the increase in the fair value of the common stock warrant liabilities between June 30, 2025 and September 30, 2025, which was primarily driven by an increase in the price per share of our common stock.

Other Income (Expense), Net

Other income (expense), net, increased by $0.3 million from $0.7 million for the three months ended September 30, 2024 to $1.0 million for the three months ended September 30, 2025.

The increase in other income (expense), net was primarily due to an increase in interest income due to a higher average cash balance.

Comparison of the nine months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):

Nine Months Ended

September 30,

Collaboration and license revenue

Total revenue

Operating expenses

Research and development

General and administrative

Restructuring

Total operating expenses

Loss from operations

Other income (expense), net

Change in fair value of common stock warrant liabilities

Other income (expense), net

Total other income (expense), net

Collaboration and License Revenue

Collaboration and license revenue increased by $25.5 million from $4.6 million for the nine months ended September 30, 2024 to $30.1 million for the nine months ended September 30, 2025.

Research and Development Expenses

The following table summarizes our research and development expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

Nine Months Ended

September 30,

efarindodekin alfa (XTX301)

Other early programs and indirect research and development

Personnel-related

Total research and development expenses

Research and development expenses increased by $5.5 million from $32.4 million for the nine months ended September 30, 2024 to $37.9 million for the nine months ended September 30, 2025.

The changes in research and development expenses were primarily due to the following:

• vilastobart costs decreased by $1.6 million, primarily driven by $4.5 million in aggregate development milestones that we incurred during the nine months ended September 30, 2024 under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics and our amended and restated exclusive license agreement with City of Hope, for which there was no comparable costs during the nine months ended September 30, 2025, partially offset by a $2.8 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

• efarindodekin alfa costs increased by $0.7 million, primarily driven by an increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating efarindodekin alfa as a monotherapy in patients with certain advanced solid tumors;

• XTX501 costs for the nine months ended September 30, 2025 consisted of manufacturing activities related to IND-enabling studies and pre-clinical development activities;

for the nine months ended September 30, 2024, XTX501 costs were not separately tracked as we had not begun performing IND-enabling studies;

• XTX202 costs decreased by $3.3 million, primarily driven by a decrease in clinical development activities as a result of discontinuing further investment in XTX202;

• other early programs and indirect research and development costs increased by $3.1 million, primarily driven by an increase in external expenses related to preclinical research and development activities;

• personnel-related costs increased by $2.3 million, primarily driven by a $2.4 million increase in salaries, bonuses and benefits due to higher research and development headcount and a $0.1 million increase in recruiting and other personnel-related costs, partially offset by a $0.2 million decrease in stock-based compensation.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

Nine Months Ended

September 30,

Personnel-related

Professional and consulting fees

Facility-related and other general and administrative expenses

Total general and administrative expenses

General and administrative expenses increased by $4.0 million from $18.3 million for the nine months ended September 30, 2024 to $22.3 million for the nine months ended September 30, 2025.

General and administrative expenses decreased by $1.6 million from $8.5 million for the three months ended March 31, 2025 to $6.9 million for the three months ended March 31, 2026.

The changes in general and administrative expenses were primarily due to the following:

• personnel-related costs increased by $1.1 million, primarily driven by a $1.4 million increase in salaries, bonuses and benefits due to higher general and administrative headcount and a $0.4 million increase in recruiting and other personnel-related costs, partially offset by a $0.7 million decrease in stock-based compensation;

• professional and consulting fees increased by $3.3 million, primarily driven by an increase in legal fees and other professional costs;

• facility-related and other general and administrative expenses decreased by $0.3 million, primarily driven by a decrease in costs related to directors’ and officers’ liability insurance.

Restructuring

We did not recognize any restructuring expenses for the nine months ended September 30, 2025.

We recognized $0.9 million in restructuring expenses for the nine months ended September 30, 2024.

The restructuring expenses were associated with the workforce reduction announced in March 2024 and consisted of employee severance, benefits continuation and outplacement service costs.

• personnel-related costs decreased by $0.3 million, primarily driven by a decrease in severance costs and discretionary bonus costs;

• professional and consulting fees decreased by $1.2 million, primarily driven by a decrease in legal fees and other professional costs.

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities for the nine months ended September 30, 2025 was due to a loss of $15.4 million due to an increase in the fair value of the common stock warrant liabilities between the issuance date of June 5, 2025 and September 30, 2025, which was primarily driven by an increase in the price per share of our common stock.

Other Income (Expense), Net

Other income (expense), net of $0.2 million for the nine months ended September 30, 2025 included $2.3 million of the issuance costs we incurred in connection with the sale and issuance of the prefunded warrants and common stock warrants in June 2025 in connection with our follow-on public offering, which were allocated to the common stock warrant liabilities and were partially offset by $2.5 million of interest income.

Other income (expense), net of $1.8 million for the nine months ended September 30, 2024 consisted of interest income.

The change in fair value of common stock warrant liabilities for the three months ended March 31, 2026 was due to a gain of $3.3 million due to the decrease in the fair value of the common stock warrant liabilities between December 31, 2025 and March 31, 2026, which was primarily driven by a decrease in the price per share of our common stock.

Other Income, Net

Other income, net, increased by $0.7 million from $0.6 million for the three months ended March 31, 2025 to $1.3 million for the three months ended March 31, 2026.

The increase in other income, net was primarily due to an increase in interest income due to a higher average cash balance.

Liquidity and Capital Resources

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We have not yet commercialized any of our product candidates, which are in preclinical or early clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all.

To date, we have financed our operations primarily from proceeds raised through private placements of preferred units, convertible preferred stock, common stock and prefunded warrants;

To date, we have financed our operations primarily from proceeds raised through private placements of equity securities;

sales of common stock in our IPO, and through “at-the-market” offerings;

the sale of prefunded warrants and common stock warrants in a follow-on public

and upfront payments under our collaboration and license agreements with AbbVie and Gilead.

Through September 30, 2025, we have received an aggregate of $531.8 million in gross proceeds from such transactions, including $224.5 million in gross proceeds from the sale and issuance of preferred units and convertible preferred stock, $129.9 million in gross proceeds from our IPO, $72.0 million in upfront cash payments under our collaboration and license agreements with AbbVie and Gilead, $46.3 million in gross proceeds from the sale and issuance of common stock and prefunded warrants in private placements with certain existing accredited investors, Gilead and AbbVie, $9.1 million in gross proceeds from the sale and issuance of common stock through at-the-market offerings and $50.0 million in gross proceeds from the sale of prefunded warrants and common stock warrants through a follow-on public offering.

As of September 30, 2025, we had cash and cash equivalents of $103.8 million.

In the fourth quarter of 2025, we received a $17.5 million development milestone under our license agreement with Gilead.

In March 2025, we filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $250.0 million of our common stock, preferred stock, debt securities, units and warrants, which we may issue and sell from time to time in one or more offerings, which became effective on May 8, 2025 (333-285703), or the S-3 Shelf.

In March 2025, we entered into a sales agreement with Leerink Partners, LLC, under which we may issue and sell shares of our common stock from time to time at an aggregate offering price of up to $50.0 million.

Please see Note 8 to our condensed consolidated financial statements appearing elsewhere in our Quarterly Report on Form 10-Q for additional information about our at-the-market offering program.

the sale of prefunded warrants in our June 2025 and February 2026 follow-on offerings;

the exercise of certain common stock warrants issued in

connection with our June 2025 follow-on offering;

development event payments under our co-funded clinical trial collaboration with Roche;

and upfront and milestone payments under our collaboration and license agreements with AbbVie and Gilead.

All of our programs are in early clinical or preclinical development.

As a result, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for at least the next several years, if at all.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve profitability.

Even if we are able to generate revenue from product sales, we may not become profitable.

At-the-Market Offering Program

In March 2025, we entered into a sales agreement with Leerink Partners, LLC, under which we could initially issue and sell shares of our common stock from time to time at an aggregate offering price of up to $50.0 million.

In February 2026, we filed a prospectus supplement to our prospectus dated May 8, 2025 (333-285793) to reduce the amount of common stock we may offer and sell under the sales agreement to an aggregate offering price of up to $9.5 million.

The following table provides information regarding our cash flows for each period presented (in thousands):

Nine Months Ended

September 30,

Net cash provided by (used in):

Three Months Ended

Net cash (used in) provided by:

Operating activities

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The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges, which are generally due to stock-based compensation, depreciation and amortization, as well as changes in components of operating assets and liabilities, which are generally due to increased expenses and timing of vendor payments.

During the nine months ended September 30, 2025, net cash used in operating activities of $3.0 million was primarily driven by net changes in operating assets and liabilities of $19.5 million, which includes the $49.1 million received from AbbVie under the collaboration, license and option agreement and stock purchase agreement that was recorded as deferred revenue at the outset of the arrangement, and net non-cash expenses of $22.9 million, which includes the $15.4 million loss recorded on the change in fair value of our common stock warrant liabilities, partially offset by our net loss of $45.4 million.

During the nine months ended September 30, 2024, net cash used in operating activities of $4.2 million was primarily driven by our net loss of $45.1 million, partially offset by changes in operating assets and liabilities of $34.8 million, which includes the $39.1 million received from Gilead under the license agreement and stock purchase agreement that was recorded as deferred revenue at the outset of the arrangement, and net non-cash expenses of $6.2 million.

During the three months ended March 31, 2026, net cash used in operating activities of $22.3 million was primarily driven by net changes in operating assets and liabilities of $12.1 million, our net loss of $9.5 million and the $3.3 million gain recorded on the change in fair value of our common stock warrant liabilities, partially offset by $2.2 million of stock-based compensation expense and $0.3 million of depreciation and amortization expense.

During the three months ended March 31, 2025, net cash provided by operating activities of $29.0 million was primarily driven by changes in operating assets and liabilities of $40.2 million, which includes the $49.1 million recorded as deferred revenue in connection with our collaboration, license and option agreement and stock purchase agreement with AbbVie, and net non-cash expenses of $2.0 million, partially offset by our net loss of $13.3 million.

Investing Activities

During the nine months ended September 30, 2025 and 2024, net cash used in investing activities consisted of purchases of property and equipment.

During the three months ended March 31, 2026 and 2025, net cash used in investing activities consisted of purchases of property and equipment.

Financing Activities

During the nine months ended September 30, 2025, net cash provided by financing activities of $51.9 million consisted of proceeds from the sale of prefunded warrants and common stock warrants through a follow-on public offering, proceeds from the sale and issuance of common stock to AbbVie in a private placement and proceeds from the sale and issuance of common stock through ATM offerings.

During the nine months ended September 30, 2024, net cash provided by financing activities of $21.0 million consisted of proceeds from the sale and issuance of common stock and prefunded warrants in private placements with certain existing accredited investors and Gilead and proceeds from the sale and issuance of common stock under our at-the-market offering program, partially offset by repayments of debt principal under our loan agreement with PacWest and payments on our finance lease for certain lab equipment.

Capital Requirements and Going Concern

During the three months ended March 31, 2026, net cash provided by financing activities of $35.7 million primarily consisted of proceeds from the sale of prefunded warrants through a follow-on offering.

During the three months ended March 31, 2025, net cash provided by financing activities of $4.8 million consisted of proceeds from the sale and issuance of common stock to AbbVie in a private placement and proceeds from the sale and issuance of common stock through ATM offerings.

Capital Requirements

We expect our future capital requirements to increase substantially over time in connection with our ongoing research and development activities, particularly as we advance our current and planned clinical development of our product candidates and maintain the research efforts and preclinical activities associated with our other existing programs and discovery platform.

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Additionally, the biotechnology industry is subject to a competitive wage environment that may also increase our operating costs in the future.

As of September 30, 2025, we had cash and cash equivalents of $103.8 million.

However, we have based our estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we anticipate.

These conditions raise substantial doubt about our ability to continue as a going concern.

For more information regarding our liquidity and going concern, refer to Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

The accompanying condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of

business for the foreseeable future.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

As of March 31, 2026, we had cash and cash equivalents of $150.3 million.

In the second quarter of 2026, we achieved a $6.0 million development milestone related to the collaboration agreement with AbbVie.

In addition, we have based our estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we anticipate.

In addition, we expect our operating losses and negative operating cash flows to continue for the foreseeable future as we continue to advance our pipeline of novel, masked I-O molecules through preclinical and clinical development, maintain the infrastructure necessary to support these activities and continue to incur costs associated with operating as a public company.

Because of the numerous risks and uncertainties associated with product development, and because the extent to which we may enter into additional collaborations with third parties for the development of our product candidates is unknown, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with advancing the research and development of our product candidates.

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• our ability to maintain our collaboration and license agreements with AbbVie and Gilead;

• the timing and amount of milestones, option-related fees and other contingent payments under our collaboration, license and option agreement with AbbVie for tumor-activated immunotherapies and our license agreement with Gilead for efarindodekin alfa, as well as the scope, costs and timing of our development obligations under these agreements;

• our ability to maintain our co-funded clinical trial collaboration with Roche to further develop vilastobart in combination with atezolizumab, including the timing and amount of cost-sharing payments under the collaboration;

• the potential receipt of up to $100.0 million in additional gross proceeds, if all of the Series B and Series C common stock warrants issued in connection with our June 2025 follow-on public offering are exercised;

• our ability to secure sufficient additional capital or implement other strategies needed to alleviate the substantial doubt about our ability to continue as a going concern;

• the timing and amount of milestones, option-related fees and other contingent payments under our collaboration, license and option agreement with AbbVie for masked immunotherapies and our license agreement with Gilead for efarindodekin alfa, as well as the scope, costs and timing of our development obligations under these agreements;

• the potential receipt of up to $36.2 million in additional gross proceeds in the second half of 2026 if all of the outstanding Series C common stock warrants issued in connection with our June 2025 follow-on offering are exercised at their current exercise price of $10.50 per warrant;

• our ability to secure additional capital in the future;

• the scope, prioritization and number of our research and development programs;

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Contractual Obligations

During the nine months ended September 30, 2025, there have been no material changes to our contractual obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2024.

During the three months ended March 31, 2026, there have been no material changes to our contractual obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2025.

Critical Accounting Policies and Use of Estimates

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Actual results may differ materially from these estimates under different assumptions or conditions.

Except as described in Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no changes to our critical accounting policies appearing in our Annual Report on Form 10-K for the year ended December 31, 2024, other than the estimates required in determining the fair value of the common stock warrant liabilities that are described in Note 3 to the condensed consolidated financial statements appearing elsewhere in our Quarterly Report on Form 10-Q.

Emerging Growth Company and Smaller Reporting Company Status

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As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We expect to remain classified as an EGC until December 31, 2026.

We are also a “smaller reporting company,” as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis