Xilio Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2021, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control over Financial Reporting This Annual Report on Form 10-K does not include a report of management’s assessment regarding our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Annual Report on Form 10-K that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Officers, and Corporate Governance Except to the extent provided below, the information required by this Item 10 will be included in our definitive proxy statement to be filed with the Securities and Exchange Commission, or the SEC, with respect to our 2022 Annual Meeting of Stockholders within 120 days of the end of the fiscal year to which this report relates, which information is incorporated herein by reference. We post our Code of Business Conduct and Ethics, which applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, in the “Corporate Governance” sub-section of the “Investor Relations” section (ir.xiliotx.com) of our corporate website https://xiliotx.com/. We intend to disclose on our website any amendments to, or waivers from, the Code 142 Table of Contents of Business Conduct and Ethics that are required to be disclosed pursuant to the disclosure requirements of Item 5.05 of Form 8-K. Our website is not incorporated by reference into this Annual Report on Form 10-K and you should not consider any information contained in or accessible from our website to be a part of this Annual Report on Form 10-K. Item 11. Executive Compensation The information required by this Item 11 will be included in the section captioned “Executive Compensation” in our definitive proxy statement for our 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates, which information is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item 12 will be included in the section captioned “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for our 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates, which information is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item 13 will be included in the sections captioned “Related Person Transactions,” “Policies and Procedures for Related Person Transactions” and “Board Determination of Independence” in our definitive proxy statement for our 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates, which information is incorporated herein by reference. Item 14. Principal Accountant’s Fees and Services The information required by this Item 14 will be included in the section captioned “Audit Fees and Services” our definitive proxy statement for our 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates, which information is incorporated herein by reference. Part IV Item 15. Exhibits and Financial Statement Schedules (1) Financial Statements ​ The following documents are included on pages set forth in Part II, Item 8 of this Annual Report on Form 10-K and are filed as part of this Annual Report on Form 10-K. ​ Index to Consolidated Financial Statements ​ Report of Independent Registered Public Accounting Firm (PCAOB ID 42 ) F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Loss F-4 Consolidated Statements of Preferred Units and Convertible Preferred Stock and Members’ and Stockholders’ Equity (Deficit) F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 ​ 143 Table of Contents (2) Financial Statement Schedules ​ All financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the financial statements or the notes thereto. ​ (3) Exhibits ​ The following is a list of exhibits filed as part of this Annual Report on Form 10-K. ​ EXHIBIT INDEX ​ ​ ​ ​ ​ ​ Incorporated by Reference ​ ​ Exhibit Number Description of Exhibit Form File No. Exhibit Number Filing Date ​ ​ ​ ​ ​ ​ ​ ​ ​ 3.1 ​ Restated Certificate of Incorporation of the Registrant ​ 8-K ​ 001-40925 ​ 3.1 ​ October 26, 2021 3.2 ​ Amended and Restated Bylaws of the Registrant ​ 8-K ​ 001-40925 ​ 3.2 ​ October 26, 2021 4.1 ​ Specimen Stock Certificate evidencing the shares of common stock ​ S-1 ​ 333-259973 ​ 4.1 ​ October 1, 2021 4.2 ​ Amended and Restated Registration Rights Agreement, dated as of February 23, 2021, by and among the Registrant and the other parties thereto ​ S-1 ​ 333-259973 ​ 10.1 ​ October 18, 2021 4.3 ​ Description of the Registrant’s securities registered pursuant to Section 12 of the Securities and Exchange Act of 1934, as amended ​ ​ ​ ​ ​ ​ ​ * 10.1 ​ 2020 Stock Incentive Plan, as amended ​ S-1 ​ 333-259973 ​ 10.2 ​ October 1, 2021 10.2 ​ Form of Stock Option Agreement under 2020 Stock Incentive Plan ​ S-1 ​ 333-259973 ​ 10.3 ​ October 1, 2021 10.3 ​ Form of Restricted Stock Agreement under 2020 Stock Incentive Plan ​ S-1 ​ 333-259973 ​ 10.4 ​ October 1, 2021 10.4 ​ 2021 Stock Incentive Plan ​ S-1 ​ 333-259973 ​ 10.5 ​ October 18, 2021 10.5 ​ Form of Stock Option Agreement under the 2021 Stock Incentive Plan ​ S-1 ​ 333-259973 ​ 10.6 ​ October 18, 2021 10.6 ​ Form of Non-Employee Director Stock Option Agreement under the 2021 Stock Incentive Plan ​ S-1 ​ 333-259973 ​ 10.7 ​ October 18, 2021 10.7 ​ 2021 Employee Stock Purchase Plan ​ S-1 ​ 333-259973 ​ 10.8 ​ October 18, 2021 10.8 ​ Loan and Security Agreement, dated as of November 21, 2019, as amended, by and between the Registrant and Pacific Western Bank ​ S-1 ​ 333-259973 ​ 10.10 ​ October 1, 2021 10.9# ​ Letter Agreement, dated September 30, 2021, by and between the Registrant and René Russo ​ S-1 ​ 333-259973 ​ 10.15 ​ October 1, 2021 10.10# ​ Letter Agreement, dated September 30, 2021, by and between the Registrant and Martin Huber ​ S-1 ​ 333-259973 ​ 10.17 ​ October 1, 2021 10.11 ​ Form of Indemnification Agreement between the Registrant and each of its Executive Officers and Directors ​ S-1 ​ 333-259973 ​ 10.20 ​ October 1, 2021 10.12 ​ Director Compensation Policy ​ S-1 ​ 333-259973 ​ 10.9 ​ October 1, 2021 10.13† ​ Cross-License Agreement, dated as of December 16, 2020, by and between the Registrant and AskGene Pharma, Inc. ​ S-1 ​ 333-259973 ​ 10.11 ​ October 1, 2021 10.14† ​ Amended and Restated Exclusive License Agreement, dated as of August 16, 2016, by and between the Registrant and City of Hope ​ S-1 ​ 333-259973 ​ 10.12 ​ October 1, 2021 10.15† ​ License Agreement, dated as of September 26, 2016, as amended, by and between the Registrant and WuXi Biologics (Hong Kong) Limited ​ S-1 ​ 333-259973 ​ 10.13 ​ October 1, 2021 144 Table of Contents 10.16 ​ Lease, dated as of August 26, 2019, as amended, by and between the Registrant and PPF off 828-830 Winter Street, LLC ​ S-1 ​ 333-259973 ​ 10.14 ​ October 1, 2021 10.17 ​ Service Agreement, dated June 11, 2020, as amended, by and between the Registrant and Daniel S. Lynch ​ S-1 ​ 333-259973 ​ 10.19 ​ October 1, 2021 10.18 ​ Letter Agreement, dated May 24, 2019, by and between the Registrant and Joseph Farmer ​ S-1 ​ 333-259973 ​ 10.16 ​ October 1, 2021 10.19 ​ Separation Agreement, dated March 12, 2021, by and between the Registrant and Joseph Farmer ​ S-1 ​ 333-259973 ​ 10.18 ​ October 1, 2021 10.20# ​ Letter Agreement, dated September 30, 2021, by and between the Registrant and Salvatore Giovine ​ ​ ​ ​ ​ ​ ​ * 21.1 ​ Subsidiaries of the Registrant ​ S-1 ​ 333-259973 ​ 21.1 ​ October 1, 2021 23.1 ​ Consent of Ernst & Young LLP, independent registered public accounting firm ​ ​ ​ ​ ​ ​ ​ * 31.1 ​ Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ​ ​ ​ ​ ​ ​ ​ * 31.2 ​ Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ ​ ​ * 32.1 ​ Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ​ ​ ​ ​ ​ ​ ​ ​ 101.INS ​ XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document ​ ​ ​ ​ ​ ​ ​ * 101.SCH ​ Inline XBRL Taxonomy Extension Calculation Linkbase Document ​ ​ ​ ​ ​ ​ ​ * 101.CAL ​ Inline XBRL Taxonomy Extension Definition Linkbase Document ​ ​ ​ ​ ​ ​ ​ * 101.DEF ​ Inline XBRL Taxonomy Extension Label Linkbase Document ​ ​ ​ ​ ​ ​ ​ * 101.LAB ​ Inline XBRL Taxonomy Extension Presentation Linkbase Document ​ ​ ​ ​ ​ ​ ​ * 104 ​ Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) ​ ​ ​ ​ ​ ​ ​ ​ ​ * Filed herewith. # Indicates management contract or compensatory plan or arrangement. † Portions of this exhibit have been omitted pursuant to Item 601 of Regulation S-K promulgated under the Securities Act because the information is not material and is a type of information that the registrant treats as private or confidential. Item 16. Form 10-K Summary None. ​ 145 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ ​ ​ ​ ​ ​ XILIO THERAPEUTICS, INC. ​ ​ ​ Date: March 1, 2022 ​ By: /s/ René Russo ​ ​ ​ René Russo ​ ​ ​ President and Chief Executive Officer ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. ​ ​ ​ ​ ​ ​ ​ Signature ​ Title ​ Date ​ ​ ​ ​ ​ ​ /s/ René Russo ​ President and Chief Executive Officer ​ ​ March 1, 2022 René Russo ​ (Principal Executive Officer) ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Salvatore Giovine ​ Chief Financial Officer ​ ​ March 1, 2022 Salvatore Giovine ​ (Principal Financial and Accounting Officer) ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Daniel S. Lynch ​ Chairman of the Board ​ ​ March 1, 2022 Daniel S. Lynch ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Paul Clancy ​ Director ​ ​ March 1, 2022 Paul Clancy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Dan Curran ​ Director ​ ​ March 1, 2022 Dan Curran ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Michael Ross ​ Director ​ ​ March 1, 2022 Michael Ross ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Christina Rossi ​ Director ​ ​ March 1, 2022 Christina Rossi ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Sara Bonstein ​ Director ​ ​ March 1, 2022 Sara Bonstein ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Yuan Xu ​ Director ​ ​ March 1, 2022 Yuan Xu ​ ​ ​ ​ ​ ​ ​ ​ 146 Table of Contents ​ Xilio Therapeutics, Inc. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID 42) F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Loss F-4 Consolidated Statements of Preferred Units and Convertible Preferred Stock and Members’ and Stockholders’ Equity (Deficit) F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 ​ ​ ​ ​ F-1 Table of Contents ​ ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Xilio Therapeutics, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Xilio Therapeutics, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, preferred units and convertible preferred stock and members’ and stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. 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 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 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. 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 audits, 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 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 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. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020. Boston, Massachusetts March 1, 2022 ​ ​ ​ ​ ​ F-2 Table of Contents XILIO THERAPEUTICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 ASSETS ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 198,053 ​ $ 19,238 Prepaid expenses and other current assets ​ 4,464 ​ 1,352 Total current assets ​ 202,517 ​ 20,590 Restricted cash ​ 1,553 ​ 1,551 Property and equipment, net ​ 7,620 ​ 7,367 Operating lease right-of-use asset ​ 5,977 ​ 6,309 Other non-current assets ​ 393 ​ 500 Total assets ​ $ 218,060 ​ $ 36,317 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 3,144 ​ $ 5,444 Accrued expenses ​ 8,751 ​ 13,732 Operating lease liability, current portion ​ 801 ​ 564 Notes payable, current portion ​ — ​ 2,333 Other current liabilities ​ 82 ​ 82 Total current liabilities ​ 12,778 ​ 22,155 Notes payable, net of current portion ​ 9,628 ​ 7,412 Operating lease liability, net of current portion ​ 10,107 ​ 10,908 Other liabilities, long-term ​ 118 ​ 1,127 Total liabilities ​ 32,631 ​ 41,602 Commitments and contingencies (Note 8) ​ ​ Convertible preferred stock (Series A, A-1, A-2(A), A-2(A-1), B and C), $ 0.0001 par value, no shares authorized and no shares issued and outstanding at December 31, 2021; 133,602,056 shares authorized and 66,788,528 shares issued and outstanding at December 31, 2020; aggregate liquidation preference of $ 0 and $ 80,250 at December 31, 2021 and December 31, 2020, respectively ​ — ​ 78,002 Stockholders’ equity (deficit) ​ ​ Preferred stock, $ 0.0001 par value; 5,000,000 shares authorized, no shares issued or outstanding at December 31, 2021; no shares authorized, issued or outstanding at December 31, 2020 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value; 200,000,000 shares authorized, 27,468,950 shares issued and 27,358,375 shares outstanding at December 31, 2021; 126,000,000 shares authorized, 973,898 shares issued and 689,929 shares outstanding at December 31, 2020 ​ 3 ​ — Additional paid-in capital ​ 346,312 ​ 1,799 Accumulated deficit ​ ( 160,886 ) ​ ( 85,086 ) Total stockholders’ equity (deficit) ​ 185,429 ​ ( 83,287 ) Total liabilities, convertible preferred stock and stockholders’ equity (deficit) ​ $ 218,060 ​ $ 36,317 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-3 Table of Contents XILIO THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Operating expenses ​ ​ Research and development ​ $ 51,188 ​ $ 43,910 General and administrative ​ 23,856 ​ 10,653 Total operating expenses ​ 75,044 ​ 54,563 Loss from operations ​ ( 75,044 ) ​ ( 54,563 ) Other income (expense), net ​ ​ Other expense, net ​ ( 756 ) ​ ( 656 ) Total other income (expense), net ​ ( 756 ) ​ ( 656 ) Net loss and comprehensive loss ​ $ ( 75,800 ) ​ $ ( 55,219 ) Net loss per share, basic and diluted ​ $ ( 13.52 ) ​ $ ( 105.42 ) Weighted average common shares outstanding, basic and diluted ​ 5,606,308 ​ 523,786 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-4 Table of Contents ​ XILIO THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF PREFERRED UNITS AND CONVERTIBLE PREFERRED STOCK AND MEMBERS’ AND STOCKHOLDERS’ EQUITY (DEFICIT) (In thousands, except unit and share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Series A-1 ​ Series B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Series A ​ Series A ‑ 1 ​ Series B ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Members’ and ​ ​ Preferred Units ​ Preferred Units ​ Preferred Units ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Units ​ Common Stock ​ Additional ​ Accumulated ​ Stockholders’ ​ Units Amount Units Amount Units Amount Shares Amount Shares Amount Shares Amount Units Amount Shares Amount Paid-In Capital Deficit Deficit Balance at December 31, 2019 ​ 7,500,000 ​ $ 7,309 ​ 19,565,216 ​ $ 20,740 ​ 31,818,174 ​ $ 39,984 ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ ​ 409,303 ​ $ — ​ — ​ $ — ​ $ 344 ​ $ ( 29,867 ) ​ $ ( 29,523 ) Issuance of Series B Preferred units, net of issuance costs of $ 31 ​ — ​ — — ​ — 7,905,138 ​ 9,969 — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ — ​ — ​ — Effect of reorganization ( 7,500,000 ) ​ ( 7,309 ) ​ ( 19,565,216 ) ​ ( 20,740 ) ( 39,723,312 ) ​ ( 49,953 ) 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 39,723,312 ​ $ 49,953 ​ ( 409,303 ) ​ — 409,303 ​ — ​ — ​ — ​ — Vesting of restricted common stock — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — 251,732 ​ — ​ — ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — 28,894 ​ — ​ 159 ​ — ​ 159 Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ 1,296 ​ — ​ 1,296 Net loss — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ — ​ ( 55,219 ) ​ ( 55,219 ) Balance at December 31, 2020 — ​ $ — — ​ $ — — ​ $ — 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 39,723,312 ​ $ 49,953 ​ — ​ $ — 689,929 ​ $ — ​ $ 1,799 ​ $ ( 85,086 ) ​ $ ( 83,287 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Series A ‑ 1 ​ Series B ​ Series C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ Additional ​ ​ ​ ​ Members’ and ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Stockholders’ ​ Shares Amount Shares ​ Amount Shares Amount ​ Shares Amount ​ ​ Shares Amount Capital Deficit Equity (Deficit) Balance at December 31, 2020 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 39,723,312 ​ $ 49,953 ​ — ​ $ — ​ 689,929 ​ $ — ​ $ 1,799 ​ $ ( 85,086 ) ​ $ ( 83,287 ) Issuance of Series B convertible preferred stock, net of issuance costs of $ 50 — ​ — — ​ — 39,723,312 ​ 50,200 ​ — ​ — ​ — ​ — ​ — ​ — ​ — Issuance of Series C convertible preferred stock, net of issuance costs of $ 314 ​ — ​ — — ​ — — ​ — ​ 68,271,641 ​ 94,686 ​ — ​ — ​ — ​ — ​ — Conversion of convertible preferred stock into common stock upon initial public offering ​ ( 7,500,000 ) ​ ( 7,309 ) ( 19,565,216 ) ​ ( 20,740 ) ( 79,446,624 ) ​ ( 100,153 ) ​ ( 68,271,641 ) ​ ( 94,686 ) ​ 18,398,248 ​ 2 ​ 222,886 ​ — ​ 222,888 Issuance of common stock upon initial public offering, net of issuance costs of $ 13,547 ​ — ​ — — ​ — — ​ — ​ — ​ — ​ 8,119,106 ​ 1 ​ 116,358 ​ — ​ 116,359 Conversion of warrant liability to equity upon initial public offering ​ — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ 28 ​ — ​ 28 Vesting of restricted common stock — ​ — — ​ — — ​ — ​ — ​ — ​ 103,192 ​ — ​ — ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — ​ — ​ — ​ 47,900 ​ — ​ 283 ​ — ​ 283 Equity-based compensation expense — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ 4,958 ​ — ​ 4,958 Net loss — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ — ​ ( 75,800 ) ​ ( 75,800 ) Balance at December 31, 2021 — ​ $ — — ​ $ — — ​ $ — ​ — ​ $ — ​ 27,358,375 ​ $ 3 ​ $ 346,312 ​ $ ( 160,886 ) ​ $ 185,429 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-5 Table of Contents XILIO THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss $ ( 75,800 ) $ ( 55,219 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ Depreciation and amortization ​ 1,499 ​ 1,065 Non-cash interest expense ​ 173 ​ 39 Equity-based compensation expense ​ 4,958 ​ 1,296 Loss on disposal of property and equipment ​ ​ 19 ​ ​ — Change in fair value of warrant and derivative liabilities ​ 203 ​ 126 Changes in operating assets and liabilities: ​ ​ ​ ​ Prepaid and other assets ​ ( 3,136 ) ​ 2,282 Operating lease right-of-use asset ​ 332 ​ 299 Accounts payable ​ ( 2,818 ) ​ 2,926 Accrued expenses and other liabilities ​ ( 5,617 ) ​ 11,510 Operating lease liability ​ ( 564 ) ​ ( 415 ) Net cash used in operating activities ​ ( 80,751 ) ​ ( 36,091 ) Cash flows from investing activities: ​ ​ Purchases of property and equipment ​ ( 1,100 ) ​ ( 2,188 ) Net cash used in investing activities ​ ( 1,100 ) ​ ( 2,188 ) Cash flows from financing activities: ​ ​ Repayments of debt principal ​ ​ ( 1,000 ) ​ ​ — Proceeds from debt issuance, net of issuance costs ​ 975 ​ — Payments of finance lease ​ ( 85 ) ​ ( 99 ) Payment of success fee ​ ​ ( 750 ) ​ ​ — Proceeds from issuance of Series B preferred units, net of issuance costs ​ — ​ 9,969 Proceeds from issuance of convertible preferred stock, net of issuance costs ​ ​ 144,886 ​ ​ — Proceeds from initial public offering, net of issuance costs ​ ​ 116,359 ​ ​ — Proceeds from exercise of stock options ​ 283 ​ 159 Net cash provided by financing activities ​ 260,668 ​ 10,029 Increase (decrease) in cash, cash equivalents & restricted cash ​ 178,817 ​ ( 28,250 ) Cash, cash equivalents and restricted cash, beginning of period ​ 20,789 ​ 49,039 Cash, cash equivalents and restricted cash, end of period $ 199,606 $ 20,789 Supplemental cash flow disclosure: ​ ​ Cash paid for interest $ 492 $ 536 Supplemental disclosure of non-cash activities: ​ ​ ​ Conversion of convertible preferred stock into common stock upon initial public offering ​ $ 222,888 ​ ​ — Capital expenditures included in accounts payable or accrued expenses ​ $ 539 ​ $ — Recognition of derivative liability in connection with long-term debt facility $ 250 $ — Conversion of warrant liability to equity upon initial public offering ​ $ 28 ​ ​ — Right-of-use assets obtained in exchange for operating lease liabilities $ — $ 39 Right-of-use assets obtained in exchange for finance lease liabilities $ — $ 423 Tenant improvements funded by landlord $ — $ 2,827 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-6 Table of Contents XILIO THERAPEUTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business, Organization and Liquidity Description of Business Xilio Therapeutics, Inc., incorporated in Delaware in June 2020, is a clinical-stage biotechnology company focused on harnessing the immune system to achieve deep and durable clinical responses to improve the lives of patients with cancer. For purposes of these consolidated financial statements, the “Company” refers to Xilio Therapeutics LLC (formerly Akriveia Therapeutics Inc., Akriveia Therapeutics LLC and Akrevia Therapeutics LLC) prior to the reorganization described below, and Xilio Therapeutics, Inc. after such reorganization. The Company’s headquarters are based in Waltham, Massachusetts. Organization Akriveia Therapeutics Inc. was incorporated in Delaware in June 2015. In May 2016, Akriveia Therapeutics Inc. completed its first tax free reorganization and the parent entity became Akriveia Therapeutics LLC. Akriveia Therapeutics LLC subsequently changed its name to Akrevia Therapeutics LLC in May 2018 and then to Xilio Therapeutics LLC in February 2020. In June 2020, the Company completed a series of transactions pursuant to which Xilio Therapeutics LLC became a direct, wholly owned subsidiary of Xilio Therapeutics, Inc., and all of the outstanding membership interests of Xilio Therapeutics LLC were exchanged for equity securities of Xilio Therapeutics, Inc. and Xilio Therapeutics, Inc. became the parent entity (the “Reorganization”). The purpose of the transaction was to reorganize the corporate structure so that existing investors would own capital stock in a corporation rather than equity interests in a limited liability company. Upon consummation of the Reorganization, the historical consolidated financial statements of Xilio Therapeutics LLC became the historical consolidated financial statements of Xilio Therapeutics, Inc. Liquidity Since inception, the Company has devoted substantially all of its financial resources and efforts to research and development activities. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with completing research programs and conducting additional research programs, advancing the Company’s current and future product candidates into preclinical and clinical development, seeking marketing approvals for any product candidates that successfully complete clinical trials, obtaining, expanding, maintaining and defending the Company’s intellectual property, and hiring additional clinical, regulatory, and scientific personnel. Programs currently under development will require significant additional research and development efforts, including preclinical and clinical testing and will need to obtain regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. On October 26, 2021, the Company completed its initial public offering (“IPO”) of common stock and issued and sold an aggregate of 7,353,000 shares of its common stock at a public offering price of $ 16.00 per share, and on November 1, 2021, the Company issued and sold an additional 766,106 shares of common stock at a public offering price of $ 16.00 per share pursuant to the partial exercise by the underwriters of their option to purchase additional shares. The Company received aggregate gross proceeds of $ 129.9 million or aggregate net proceeds of $ 116.4 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. Upon the closing of the IPO, all shares of the Company’s then outstanding preferred stock automatically converted into an aggregate of 18,398,248 shares of common stock (see Note 11). F-7 Table of Contents Prior to its IPO, the Company primarily funded its operations with proceeds from the sale of convertible preferred units and convertible preferred stock and a debt financing. As of December 31, 2021, the Company had cash and cash equivalents of $ 198.1 million. The Company expects that its cash and cash equivalents will be sufficient to meet the projected operating requirements and capital expenditures for at least twelve months from the date of issuance of these consolidated financial statements. The Company expects to continue to generate negative cash flows from operations and net losses for the foreseeable future as it continues to invest significantly in research and development of its product candidates, including preclinical, clinical and manufacturing process development. Management’s conclusion with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties that may prove to be incorrect. If actual results differ from management’s estimates, the Company may be required to seek additional funding or curtail planned activities to reduce operating expenses, which may have an adverse impact on the Company’s ability to achieve its business objectives. 2. Summary of Significant Accounting Policies Basis of Presentation These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”). In April 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107(b) of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that the Company either (1) irrevocably elects to “opt out” of such extended transition period or (2) no longer qualifies as an emerging growth company. The Company may take advantage of these exemptions up until December 31, 2026, or such earlier time that it is no longer an emerging growth company. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Following the Reorganization, the accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Xilio Therapeutics LLC, Xilio Concerto LLC (“Concerto”), Xilio Development, Inc. (“Xilio Development”) and Xilio Securities Corp., which is a Massachusetts subsidiary created to buy, sell and hold securities. All intercompany accounts and transactions have been eliminated. Reverse Stock Split The Company’s board of directors and stockholders approved an amendment to the Company’s certificate of incorporation, which became effective on October 15, 2021. The amendment effected a 1-for-9.5 reverse stock split of the Company’s issued and outstanding common stock and eliminated the minimum price per share of common stock for an underwritten public offering that would result in the automatic conversion of the Company’s outstanding convertible preferred stock. Accordingly, all common share and per share amounts in the consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital. F-8 Table of Contents Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments that may affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the related reporting of expenses during the reporting period. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. Factors that may affect estimates include expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Significant estimates of accounting reflected in these consolidated financial statements include, but are not limited to, estimates related to accrued expenses, contingent amounts payable to third parties upon the consummation of specified transactions, including an initial public offering, the valuation of equity-based compensation, including incentive units, stock options and restricted common stock, useful life of long-lived assets and income taxes. Actual results could differ from those estimates. Segment Information The Company has 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 assess performance. The Company’s chief operating decision-maker is its chief executive officer. The Company and its chief operating decision-maker view the Company’s operations and manage its business as a single operating segment. All of the Company’s long-lived assets are held in the United States. Cash Equivalents and Restricted Cash The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents. Cash equivalents, which consist of money market accounts, are stated at fair value. Restricted cash primarily represents a letter of credit issued to the landlord of the Company’s facility lease and is reflected in non-current assets on the accompanying consolidated balance sheets. Cash, cash equivalents and restricted cash consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2021 2020 Cash and cash equivalents ​ $ 198,053 ​ $ 19,238 Restricted cash ​ 1,553 ​ 1,551 Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flows ​ $ 199,606 ​ $ 20,789 ​ Concentrations of Credit Risk and Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company holds all cash and cash equivalents at accredited financial institutions. Bank accounts in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2021 and 2020, certain of the Company’s primary operating accounts significantly exceeded the FDIC limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company is dependent on a third-party manufacturer to supply material and manufacturing process development services for its product candidates and related research and development activities. These research and development programs and activities could be adversely affected by a significant interruption in the supply of such products and services which could have a material adverse effect on the Company’s business, financial position and results of operations. F-9 Table of Contents Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1— Quoted prices in active markets for identical assets or liabilities. ● Level 2— Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3— Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying values of the Company’s cash, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to their short-term nature. The carrying value of the Company’s outstanding debt as of December 31, 2021 and 2020 approximates fair value based on the variable interest rate for the borrowings as well as the short duration of the term of the note. Items measured at fair value on a recurring basis include cash equivalents, the preferred warrant and contingent liabilities associated with the consummation of specified transactions, including an initial public offering. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets, which are as follows: ​ ​ ​ ​ ​ Estimated Useful Life Computers and software ​ 3 years Laboratory equipment ​ 5 years Furniture and fixtures ​ 5 years Leasehold improvements ​ Shorter of the useful life or the remaining term of the lease ​ Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred, while costs of major additions and betterments are capitalized. Impairment of Long-Lived Assets The Company periodically evaluates its long-lived assets, which consist of property and equipment, and any leased assets, for impairment whenever events or changes in circumstances indicate that a potential impairment may have occurred. If such events or changes in circumstances arise, the Company compares the carrying amount of the long-lived assets to the F-10 Table of Contents estimated future undiscounted cash flows expected to be generated by the long-lived assets. If the estimated aggregate undiscounted cash flows are less than the carrying amount of the long-lived assets, an impairment charge, calculated as the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets, is recorded. The estimated fair value of the long-lived assets is determined based on the estimated discounted cash flows expected to be generated from the long-lived assets. The Company did not recognize impairment charges during the years ended December 31, 2021 and 2020, respectively. Leases The Company determines if an arrangement is or contains a lease at inception. Operating leases are included in right-of-use lease assets (“ROU assets”) and in both the current portion of lease obligations and long-term lease obligations on the Company’s consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. Assets subject to finance leases are included in other non-current assets and the related lease obligation is included in other current liabilities and other long-term liabilities on the Company’s consolidated balance sheets. Lease expense for finance leases is recognized as depreciation expense and interest expense using the effective interest method. The Company has elected the short-term lease recognition exemption for short-term leases, which allows the Company not to recognize lease liabilities and ROU assets on the consolidated balance sheets for leases with an original term of twelve months or less. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities and their corresponding ROU assets are initially recorded based on the present value of lease payments over the expected remaining lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Certain adjustments to the ROU asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the fixed rate at which the Company could borrow, on a collateralized basis, the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the ROU assets for straight-line rent expense or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date. The Company has lease agreements with lease and non-lease components, which are accounted for as a combined element. Research and Development Costs and Accruals Research and development expenses are expensed as incurred and consist of costs incurred in performing research and development activities, including compensation related expenses for research and development personnel, preclinical and clinical activities including cost of supply and manufacturing process development activities, overhead expenses including facilities expenses, materials and supplies, amounts paid to consultants and outside service providers, and depreciation of equipment. Upfront payments made for the licensing of technology are expensed as research and development expenses in the period in which they are incurred. In general, contingent payments are recognized when it becomes probable the payment will be required. Any contingent payments that qualify as a derivative liability are recognized at fair value on the Company’s consolidated balance sheets. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed. The Company records accruals for estimated ongoing research and development costs, including costs associated with contracts with third-party contract research organizations and contract manufacturing organizations. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the preclinical studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs. F-11 Table of Contents Acquired In-Process Research and Development (“IPR&D”) If the Company acquires an asset or group of assets under an in-licensing arrangement that does not meet the definition of a business under ASC Topic 805, Business Combinations , and the acquired IPR&D does not have an alternative future use, it is expensed on its acquisition date in accordance with guidance in ASC Topic 730, Research and Development . Contingent payments for the assets acquired are expensed or capitalized based on the nature of the associated asset at the date the payment is recognized. Patent Costs All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. Equity-Based Compensation The Company accounts for equity awards, including grants of incentive units, common units, restricted stock and stock options, in accordance with ASC 718, Compensation—Stock Compensation (“Topic 718”). Topic 718 requires all equity-based payments to employees, which includes grants of employee equity awards, to be recognized in the consolidated statements of operations and comprehensive loss based on their grant date fair values. There are significant judgments and estimates inherent in the determination of the fair value of the common securities. After the completion of the Company’s IPO, the Company considers the fair value of common stock to be equal to its current share price. If applicable, the current share price is adjusted to reflect material nonpublic information known to the company but unavailable to market participants. Prior to the completion of the Company’s IPO, the Company determined the fair value of the underlying common stock based on input from management and approved by the Company’s board of directors, which utilized the valuation of the Company’s enterprise value determined utilizing various methods including the market adjusted equity value method, guideline initial public offering method, transactions method, recent transactions method, option-pricing method, or a hybrid method. The total enterprise value was then allocated to the various outstanding equity instruments, including the underlying common stock, utilizing the option-pricing method. The Company estimates the fair value of stock options using the Black-Scholes option pricing model, which uses as inputs the estimated fair value of common stock, and certain management estimates, including the expected stock price volatility, the expected term of the award, the risk-free rate, and expected dividends. Expected volatility is calculated based on reported volatility data for a representative group of publicly traded companies for which historical information is available. The Company selects companies with comparable characteristics with historical share price information that approximates the expected term of the equity-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period that approximates the calculated expected term of the stock options. The Company will continue to apply this method until a sufficient amount of historical information regarding the volatility of its stock price becomes available. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. The Company uses the simplified method, under which the expected term is presumed to be the midpoint between the vesting date and the end of the contractual term. The Company utilizes this method due to lack of historical exercise data. The expected dividend yield is assumed to be zero as the Company has no current plans to pay any dividends on common stock. For awards with service-based vesting conditions, the Company recognizes equity-based compensation expense on a ratable basis over the vesting period. For awards subject to performance conditions, the Company recognizes equity-based compensation expense using an accelerated recognition method over the remaining service period when the Company determines the achievement of the performance condition is probable. The Company uses judgement to determine whether and, if so, how many awards are deemed probable of vesting at each reporting period. The Company recognizes forfeitures as they occur. The Company classifies equity-based compensation expense in its consolidated statements of operations and comprehensive loss consistent with the classification of the award recipient’s compensation expense. F-12 Table of Contents Convertible Preferred Stock The Company records all shares of convertible preferred stock at their respective fair values on the dates of issuance less issuance costs. The Company classifies its convertible preferred stock outside of stockholders’ deficit when the redemption of such shares is outside the Company’s control. The Company does not adjust the carrying values of the convertible preferred stock to the liquidation preferences of such stock until such time as a deemed liquidation event is probable of occurring. Comprehensive Loss Comprehensive loss is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss includes net loss and the change in accumulated other comprehensive loss for the period. The Company did not have any items of comprehensive income or loss other than net loss for the years ended December 31, 2021 and 2020. Net Loss Per Share The Company applies the two-class method to compute basic and diluted net loss per share because it has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires losses available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all losses for the period had been distributed. During periods of loss, there is no allocation required under the two-class method since the participating securities do not have a contractual obligation to fund the losses of the Company. The Company calculates basic net loss per share attributable to common stockholders by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, which excludes shares of restricted common stock that are not vested. Diluted net loss per share is calculated by dividing net loss by the weighted average number of shares of common stock outstanding, as applicable, after giving consideration to the dilutive effect of preferred units, convertible preferred stock, incentive units, stock options, restricted common stock and warrants that are outstanding during the period. The Company has generated a net loss in all periods presented, so the basic and diluted net loss per share are the same, as the inclusion of the potentially dilutive securities would be anti-dilutive. Income Taxes Prior to the Reorganization, Xilio Therapeutics LLC elected to be treated under the partnership provisions of the Internal Revenue Code. Accordingly, all income and deductions of Xilio Therapeutics LLC were recorded on its members’ individual tax returns and no taxes were recorded by Xilio Therapeutics LLC. Xilio Development and Concerto, the wholly owned subsidiaries of Xilio Therapeutics LLC, were taxed as C-corporations for federal income tax purposes and filed separate corporate income tax returns from the LLC entity. Upon the consummation of the Reorganization, Xilio Therapeutics, Inc. became the 100 % owner of Xilio Therapeutics LLC, creating a new corporate parent company and a consolidated group for income tax reporting. The Reorganization and change in tax status of the reporting entity did not have an impact on the consolidated tax provision. Income taxes for Xilio Therapeutics, Inc. are recorded in accordance with ASC Topic 740, Income Taxes , which provides for deferred taxes using an asset and liability approach. Under this method, deferred income tax assets and liabilities are recognized based on future income tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities, and their respective income tax basis. Deferred income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in income tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that a valuation allowance for any income tax benefits of which future realization is not more likely than not. F-13 Table of Contents The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions. The tax benefits recorded are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is “more likely than not” to be realized following resolution of any uncertainty related to the tax benefit, assuming that the matter in question will be raised by the tax authorities. At December 31, 2021 and 2020, the Company had not identified any significant uncertain tax positions. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted ASU 2019-12 on October 1, 2021, and the implementation of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, which has been subsequently amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11, and ASU No. 2020-03 (“ASU 2016-13”). The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for the Company on January 1, 2023, with early adoption permitted. The Company is currently evaluating the potential impact that ASU 2016-13 may have on its consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock as well as amends the derivatives scope exception for contracts in an entity’s own equity. ASU 2020-06 is effective for the Company on January 1, 2024, with early adoption permitted. The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures. ​ F-14 Table of Contents 3. Fair Value Measurements The Company measures the following financial assets and liabilities at fair value on a recurring basis. The fair value of these assets and liabilities was determined as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Active ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Markets for ​ Other ​ Significant ​ ​ ​ ​ ​ Identical ​ Observable ​ Unobservable ​ ​ ​ December 31, ​ Assets ​ Inputs ​ Inputs ​ 2020 Level 1 Level 2 Level 3 Financial assets: ​ ​ ​ ​ ​ Cash equivalents—money market funds ​ $ — ​ $ — ​ $ — ​ $ — Total financial assets ​ $ — ​ $ — ​ $ — ​ $ — Financial liabilities: ​ ​ ​ ​ Debt derivative liability ​ $ 396 ​ $ — ​ $ — ​ $ 396 Other derivative liability ​ ​ 407 ​ ​ — ​ ​ — ​ ​ 407 Warrant to purchase Series A convertible preferred stock ​ 22 ​ — ​ — ​ 22 Total financial liabilities ​ $ 825 ​ $ — ​ $ — ​ $ 825 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Active ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Markets for ​ Other ​ Significant ​ ​ ​ ​ ​ Identical ​ Observable ​ Unobservable ​ ​ December 31, ​ Assets ​ Inputs ​ Inputs ​ 2021 Level 1 Level 2 Level 3 Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents—money market funds ​ $ 8,534 ​ $ 8,534 ​ $ — ​ $ — Total financial assets ​ $ 8,534 ​ $ 8,534 ​ $ — ​ $ — ​ During the years ended December 31, 2021 and 2020, the Company did not hold any investments and there were no transfers between Level 1, Level 2, and Level 3. In May 2016, the Company issued to a consultant a warrant to purchase 25,000 Series A preferred units at a price of $ 1.00 per unit. Effective upon the Reorganization, the preferred unit warrant was converted into a warrant to purchase 25,000 shares of Series A convertible preferred stock at a price of $ 1.00 per share. The fair value of the warrant liability utilized the Black-Scholes option-pricing model which incorporated significant inputs not observable in the market, and thus represented a Level 3 measurement within the fair value hierarchy. Based on the terms and conditions of the warrant, upon the completion of the Company’s IPO the warrant to purchase 25,000 shares of Series A convertible preferred stock automatically became a warrant to purchase 2,631 shares of common stock. Upon conversion into a warrant to purchase common stock, the Company concluded that the warrant met the definition of an equity instrument and the fair value of the warrant at the time of conversion, determined using the Black-Scholes option pricing model, was reclassified from other liabilities, long-term to additional paid-in capital. The fair values of the debt derivative liability and the other derivative liability that were contingently payable upon the consummation of specified transactions, including an initial public offering, were based on significant inputs not observable in the market, including estimates regarding the probability of certain potential future events and outcomes and estimates regarding timing of those events and outcomes, with an applied discount rate representative of time value that represents a Level 3 measurement within the fair value hierarchy. The debt derivative liability and other derivative liability were paid during the year ended December 31, 2021 subsequent to the completion of the Company’s IPO. Accordingly, there was no amount recorded for the debt derivative liability and other derivative liability in the Company’s consolidated balance sheet as of December 31, 2021. F-15 Table of Contents The following table summarizes the changes in the fair market value of the Company’s warrant liability, debt derivative liability and other derivative liability, which are classified within the Level 3 fair value hierarchy (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ Debt ​ Other ​ level 3 ​ ​ Warrant ​ derivative ​ derivative ​ financial ​ liability liability liability liabilities Balance at December 31, 2019 ​ $ 17 ​ $ 357 ​ $ — ​ $ 374 Recognition of other derivative liability ​ — ​ — ​ 325 ​ 325 Change in fair value of liability ​ 5 ​ 39 ​ 82 ​ 126 Balance at December 31, 2020 ​ $ 22 ​ $ 396 ​ $ 407 ​ $ 825 Change in fair value of liability ​ ​ 6 ​ ​ 354 ​ ​ 93 ​ ​ 453 Settlement of liability ​ — ​ ( 750 ) ​ ( 500 ) ​ ( 1,250 ) Conversion of warrant liability to equity upon initial public offering ​ ​ ( 28 ) ​ ​ — ​ ​ — ​ ​ ( 28 ) Balance at December 31, 2021 ​ $ — ​ $ — ​ $ — ​ $ — ​ 4. Property and Equipment, Net Property and equipment, net consists of the following as of December 31, 2021 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 Laboratory equipment ​ $ 3,805 ​ $ 2,925 Computers and software ​ 228 ​ 228 Furniture and fixtures ​ 636 ​ 482 Leasehold improvements ​ 5,124 ​ 5,092 Construction in process ​ 539 ​ — Total property and equipment ​ $ 10,332 ​ $ 8,727 Less accumulated depreciation ​ ( 2,712 ) ​ ( 1,360 ) Property and equipment, net ​ $ 7,620 ​ $ 7,367 ​ The Company incurred depreciation and amortization expense related to property and equipment, net of $ 1.4 million and $ 1.1 million for the years ended December 31, 2021 and 2020, respectively. ​ ​ ​ 5. Accrued Expenses Accrued expenses consist of the following as of December 31, 2021 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 External research and development ​ $ 2,794 ​ $ 11,060 Personnel-related ​ 5,145 ​ 2,013 Professional and consulting fees ​ 491 ​ 481 Other ​ ​ 321 ​ ​ 178 Total accrued expenses ​ $ 8,751 ​ $ 13,732 ​ 6. Loan and Security Agreement Initial Loan Agreement In November 2019, the Company entered into a loan and security agreement with Pacific Western Bank (“PacWest”), as amended by a first amendment, dated March 12, 2021, and a second amendment, dated May 10, 2021 (the “Initial Loan Agreement”). Pursuant to the Initial Loan Agreement, the Company borrowed $ 10.0 million under a term loan. Interest on F-16 Table of Contents the outstanding initial loan balance accrued at a variable annual rate equal to the greater of (i) the prime rate, as defined in the Loan Agreement, plus 0.25 % or (ii) 5.00 %. The Company was required to make interest-only payments on the loan on a monthly basis through May 21, 2021. Subsequent to the interest-only period, the Company was required to make equal monthly payments of principal plus interest until the scheduled loan maturity on November 21, 2023. In addition, under the Initial Loan Agreement, the Company was obligated to pay a one-time $ 0.5 million fee to PacWest upon the occurrence of specified liquidation events, including an initial public offering. The fee represented a derivative instrument that the Company bifurcated from the debt arrangement and carried at fair value with any changes in such fair value recorded to other income (expense), net in the Company’s consolidated statements of operations and comprehensive loss. This debt derivative is recorded as a component of other liabilities, long-term on the Company’s consolidated balance sheets. Upon the closing of the loan, the fair value of the debt derivative liability was $ 0.4 million that, together with certain legal and other fees incurred by the Company and associated with the Loan Agreement, was recognized as a debt discount and reflected as a reduction in the carrying value of the debt. The debt discount has been accreted and recognized as additional interest expense over the term of the Loan Agreement using the effective interest method. Amended Loan Agreement On September 17, 2021, the Company entered into a third amendment to the Initial Loan Agreement (as amended, the “Amended Loan Agreement” and together with the Initial Loan Agreement, the “Loan Agreement”), pursuant to which the Company borrowed $ 10.0 million under a new term loan and used the proceeds of such new term loan to repay the outstanding balance on the prior term loan. In addition, as a result of the amendment, prior to December 31, 2022, the Company has the ability to request one or more additional term loans in an aggregate principal amount of $ 10.0 million. Interest on amounts outstanding under the Loan Agreement accrue at a variable annual rate equal to the greater of (i) the prime rate plus 0.25 % or (ii) 4.75 %. As a result of the amendment, the Company is required to make interest-only payments on any outstanding balances through December 31, 2022. Subsequent to the interest-only period, the Company will be required to make equal monthly payments of principal plus interest until the loan matures on June 30, 2024. In addition, under the Amended Loan Agreement, the one-time fee the Company was obligated to pay to PacWest upon the occurrence of specified liquidation events, including an initial public offering, was increased from $ 0.5 million to an amount between $ 0.8 million and $ 1.0 million, depending on the timing and occurrence of specified events, including the closing of the IPO. The Company paid the one-time fee of $ 0.8 million to PacWest in October 2021 upon the closing of the IPO. As a result of the amendment, the Company is also obligated to pay PacWest a fee of 1.0 % of the aggregate principal amounts then outstanding if any term loans are repaid prior to September 17, 2022, which is approximately one year from the date of the amendment to the loan and security agreement. Using the net present value method, the Company concluded the amendment should be accounted for as a debt modification as the present value of the remaining cash flows of the amended term loan are not substantially different from the present value of the remaining cash flows of the initial term loan. The Loan Agreement contains customary representations, warranties and covenants and also includes customary terms covering events of default, including payment defaults, breaches of covenants, a change of control provision and occurrence of a material adverse effect. As security for its obligations under the Loan Agreement, the Company granted PacWest a first priority security interest on substantially all of the Company’s assets (other than intellectual property), subject to certain exceptions. The Company has determined that the risk of subjective acceleration under the material adverse effect clause is not probable and therefore has classified the long-term portion of the outstanding principal in non-current liabilities. Upon the occurrence and continuation of an event of default, a default interest rate of an additional 5 % per annum may be applied to the outstanding loan balance, and the administrative agent, collateral agent, and lender may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the Loan Agreement and under applicable law. As of December 31, 2021, the Company was in compliance with all covenants under the Loan Agreement. F-17 Table of Contents The Company has the following minimum aggregate future loan payments under the Loan Agreement at December 31, 2021 (in thousands): ​ ​ ​ ​ ​ Minimum Loan ​ ​ Payments 2022 ​ $ — 2023 ​ 6,667 2024 ​ ​ 3,333 Total future principal payments ​ 10,000 Less: unamortized discount ​ ( 372 ) Total notes payable ​ $ 9,628 ​ The Company recognized $ 0.6 million of interest expense related the Loan Agreement during each of the years ended December 31, 2021 and 2020, respectively, which is reflected in other income (expense), net on the consolidated statements of operations and comprehensive loss. 7. Intellectual Property Licenses Cross-License Agreement with AskGene In December 2020, Xilio Development entered into a cross-license agreement with AskGene Pharma, Inc. (“AskGene”) pursuant to which AskGene granted Xilio Development certain exclusive licenses for AskGene patent rights related to non-antigen binding IL-2 products in the field of oncology and certain co-exclusive licenses for AskGene patent rights related to antigen binding IL-2 products in all fields. In addition, subject to the terms of the agreement and during the time period specified, AskGene granted Xilio Development an option to certain exclusive licenses for AskGene patent rights related to non-antigen binding IL-15 products in the field of oncology and certain co-exclusive licenses for AskGene patent rights related to antigen binding IL-15 products in all fields. Under the agreement, AskGene retains rights to the AskGene patent rights in Singapore, Thailand, Malaysia, Vietnam, the People’s Republic of China, Taiwan, Macau, Hong Kong, Korea and India (the “AskGene territory”), and granted licenses to Xilio Development for the AskGene patent rights worldwide, excluding the AskGene territory (the “Xilio Development territory”). Under the agreement, Xilio Development was required to pay AskGene an upfront payment of $ 6.0 million, and for each licensed product, Xilio Development is obligated to pay AskGene up to $ 13.0 million in the aggregate upon the achievement of specified regulatory milestones. If Xilio Development exercises its option for the IL-15 licenses during the option period, Xilio Development will be obligated to pay AskGene a $ 4.0 million option exercise fee. In addition, subject to specified conditions, for any IL-2 licensed product, Xilio Development is obligated to pay AskGene percentage royalties in the mid-single digits on aggregate annual net sales of IL-2 licensed products in the Xilio Development territory during the applicable royalty term, and if Xilio Development exercises its option for AskGene’s IL-15 patent rights, then for any IL-15 licensed product, Xilio Development is obligated to pay AskGene percentage royalties in the low single digits on aggregate annual net sales of IL-15 licensed products in the Xilio Development territory during the applicable royalty term. During the term of the agreement, AskGene has agreed not to exploit the following in the field of oncology in the Xilio Development territory: (i) any non-antigen binding IL-2 product, and (ii) if Xilio Development exercises its option for AskGene’s IL-15 patent rights, any non-antigen binding IL-15 product. In addition, under the agreement, Xilio Development granted a non-exclusive, royalty-free, non-transferable, worldwide license to AskGene for specified Xilio Development patent rights related to non-antigen binding IL-2 products in the field of immunology and for specified Xilio Development patent rights related to antigen binding IL-2 products in all fields. In addition, subject to the terms of the agreement and during the time period specified, Xilio Development granted AskGene an option to obtain an exclusive, royalty-bearing, non-transferable, worldwide license for specified Xilio Development patent rights related to non-antigen binding IL-2 products in the field of immunology and an option to obtain a co-exclusive, royalty-bearing, non-transferable, worldwide license for specified Xilio Development patent rights related to antigen binding IL-2 products in all fields. If AskGene exercises its option, the parties would negotiate and enter into a F-18 Table of Contents license agreement, and AskGene would be obligated to pay Xilio Development up to $ 17.0 million in aggregate upfront and milestone payments for each licensed product. In addition, subject to specified conditions, for any IL-2 licensed product, AskGene is obligated to pay Xilio Development percentage royalties in the low single digits on aggregate annual net sales of IL-2 licensed products in the AskGene territory during the applicable royalty term. The Company accounted for the agreement as an asset acquisition, as the Company only acquired licenses to specified patents from AskGene (an input) and no additional processes or outputs as a part of the agreement. The $ 6.0 million upfront payment was recorded as research and development expense in the consolidated statement of operations and comprehensive loss during the year ended December 31, 2020, as the acquired licenses were determined to have no alternative future use and the technological feasibility of the intellectual property has not yet been reached. The upfront payment was paid in installments between December 2020 and February 2021, with $ 1.0 million paid as of December 31, 2020. The remaining $ 5.0 million was paid during the three months ended March 31, 2021 and was recorded within accrued expenses in the accompanying consolidated balance sheets as of December 31, 2020. Any additional payments that are contingent upon achievement of development and regulatory milestones or upon sales of licensed products will not be recognized until it becomes probable that the Company will be required to make such payments. Amended and Restated Exclusive License Agreement with City of Hope In August 2016, the Company entered into an amended and restated exclusive license agreement with City of Hope pursuant to which City of Hope granted the Company an exclusive worldwide license to specified patent rights related to the Company’s anti-CTLA-4 monoclonal antibody program. Under the agreement, the Company issued 24,019 common units to City of Hope. For the first three licensed products or licensed services to achieve specified development and regulatory milestones, the Company is obligated to pay City of Hope up to $ 10.3 million in the aggregate per licensed product or licensed service. In addition, subject to specified conditions, the Company is obligated to pay City of Hope tiered royalties in the low single digits on aggregate annual net sales of licensed products or licensed services on a country-by-country basis until the expiration of the last-to-expire patent or patent application licensed from City of Hope covering the applicable licensed product or licensed service in such country. The Company is also obligated to pay City of Hope a portion of any consideration the Company receives for the grant of sublicenses under the agreement ranging from a low double digit to mid-twenties percentage of such consideration to low double digit percentage of such consideration, subject to specified conditions under that agreement at the time that the Company grants any such sublicense. The Company incurred $ 0.3 million in costs related to the payment of specified development milestones under the agreement during the year ended December 31, 2021. The Company incurred no costs related to the payment of specified development milestones under the agreement during the year ended December 31, 2020. In each of the years ended December 31, 2021 and 2020, the Company incurred $ 10,000 under this agreement, which was recognized as research and development expense in the consolidated statements of operations and comprehensive loss. In addition, the Company was obligated to pay $ 0.5 million to City of Hope in connection with the consummation of specified transactions, including an initial public offering. The Company accounted for the $ 0.5 million contingent payment as a derivative liability. The derivative liability was initially recognized at fair value with any changes in such fair value recorded to other income (expense), net in the accompanying consolidated statement of operations and comprehensive loss. The derivative liability was included in other liabilities, long term on the consolidated balance sheet as of December 31, 2020, and was paid during the fourth quarter of the year ended December 31, 2021 subsequent to the completion of the Company’s IPO. Any additional payments that are contingent upon achievement of development and regulatory milestones or upon sales of licensed products will not be recognized until it becomes probable that the Company will be required to make such payments. CTLA-4 Monoclonal Antibody License Agreement with WuXi Biologics In September 2016, the Company entered into a license agreement with WuXi Biologics (Hong Kong) Limited (“WuXi Biologics”), as amended in December 2017, pursuant to which WuXi Biologics granted the Company an exclusive worldwide license to specified monoclonal antibodies and patent rights and know-how controlled by WuXi Biologics, including certain patent rights related to the Company’s anti-CTLA-4 monoclonal antibody program. F-19 Table of Contents For each product that exploits the rights licensed under the agreement, the Company is obligated to pay WuXi Biologics up to approximately $ 25.8 million in the aggregate for specified development and regulatory milestones. In addition, subject to specified conditions, the Company is obligated to pay WuXi Biologics tiered royalties in the low to mid-single digits on aggregate annual worldwide net sales of licensed products during the applicable royalty term. The Company incurred $ 0.8 million and $ 1.0 million in costs related to the payment of specified development milestones under the agreement during the years ended December 31, 2021 and 2020, respectively. Any additional payments that are contingent upon the achievement of development and regulatory milestones or sales of licensed products will not be recognized until it becomes probable that the Company will be required to make such payments. 8. Commitments and Contingencies Purchase Commitments In the normal course of business, the Company enters into agreements with contract research organizations for clinical trials and clinical supply manufacturing and with vendors for preclinical research studies and other services and products for operating purposes, and such contracts are generally cancellable by the Company for convenience by providing up to 90 days notice. The Company may be subject to certain termination fees or wind down costs upon termination of these agreements. Leases The Company has an operating lease for its headquarters and a finance lease for certain lab equipment. In August 2019, the Company entered into a facility lease agreement with a landlord providing funding for tenant improvements and occupancy of approximately 27,830 square feet of office and laboratory space (the “premises”) at 828 Winter Street, Waltham, Massachusetts. The initial term of the lease expires in March 2030, unless terminated earlier in accordance with the terms of the lease. The Company has a right to a five-year option to extend at then-market rates. The Company took possession of the premises in August 2019 and began tenant improvement, toward which the landlord agreed to fund a maximum of $ 4.9 million of such improvements. The Company included the expected landlord reimbursement amount of $ 4.9 million as a reduction to the amount of future minimum lease payments used to calculate the lease liability at lease commencement. The Company received reimbursement for tenant improvements in the amount of $ 2.0 million during the year ended December 31, 2019 and $ 2.9 million during the year ended December 31, 2020. Any reimbursement payments either received from the landlord, or due to be received from the landlord, have been recorded as an increase to the operating lease liability. The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement, and management of the new leased premises, which it began paying simultaneous with the rent commencement date in March 2020. As of December 31, 2021 and 2020, the Company has a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market fund, which is recorded as restricted cash on the consolidated balance sheets. The components of lease expense were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2021 ​ 2020 Operating lease cost ​ $ 1,225 ​ $ 1,225 Variable lease cost ​ ​ — ​ ​ — Total lease costs ​ $ 1,225 ​ $ 1,225 Finance lease cost: ​ ​ Amortization of right of use asset ​ $ 85 ​ $ 35 Interest on lease liability ​ 16 ​ 8 ​ F-20 Table of Contents Supplemental balance sheet information related to the leases was as follows (in thousands, except for remaining lease term and discount rates): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ ​ 2021 ​ 2020 ​ Operating Lease: ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use asset $ 5,977 ​ $ 6,309 ​ Operating lease liability, current portion $ 801 ​ ​ $ 564 ​ Operating lease liability, net of current portion $ 10,107 ​ ​ $ 10,908 ​ Finance Lease: ​ ​ ​ Other non-current assets $ 303 ​ ​ $ 388 ​ Other current liabilities 82 ​ ​ 82 ​ Other liabilities, long-term 118 ​ ​ 187 ​ Weighted-average remaining lease term (in years): ​ ​ ​ Operating lease 8.17 ​ ​ 9.17 ​ Finance lease 2.70 ​ ​ 3.70 ​ Weighted-average discount rate: ​ ​ ​ Operating lease 8.0 % ​ 8.0 % Finance lease 6.9 % ​ 6.9 % ​ Supplemental cash flow information related to leases was as follows (in thousands): ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2021 ​ 2020 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ Operating cash flows from operating leases $ 1,392 $ 1,343 Financing cash flows from finance leases 85 99 ​ Future minimum lease payments under non-cancellable leases as of December 31, 2021 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Operating Lease Finance Lease 2022 ​ $ 1,634 ​ $ 85 2023 ​ 1,683 ​ 85 2024 ​ 1,733 ​ 49 2025 ​ 1,785 ​ — 2026 ​ 1,839 ​ — Thereafter ​ 6,361 ​ — Total future minimum lease payments ​ $ 15,035 ​ $ 219 Present value adjustment ​ ( 4,127 ) ​ ( 19 ) Present value of lease liabilities ​ $ 10,908 ​ $ 200 ​ Legal Proceedings From time to time, the Company may be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the years ended December 31, 2021 and 2020. Guarantees and Indemnifications In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential F-21 Table of Contents amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors that may require the Company to indemnify its directors against liabilities that may arise by reason of their status or service as directors to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance. 9. Member Units Prior to the Reorganization, all interests of members in distributions and other amounts were represented by their units of membership in the Company as specified in its LLC Agreement. There were two classes of units, capital units and incentive units. Capital units were comprised of common units and preferred units, which represented a capital interest in the Company, while incentive units represented profits interests within the meaning of IRS Revenue Procedures 93-27 and 2001-43. The various classes of capital units are described below. Common Units As part of the Reorganization in June 2020, all common units were converted to common stock. As a result, as of December 31, 2021 and 2020, there were no outstanding common units. Preferred Units Prior to the Reorganization in June 2020, the Company had sold Series A, A‑1, and B preferred units, including a tranche of 7,905,138 Series B Convertible Preferred Units issued in February 2020 that resulted in proceeds of $ 10.0 million net of issuance costs, which were collectively considered the preferred units. As part of the Reorganization in June 2020, all preferred units were converted to preferred stock. As a result, as of December 31, 2021 and 2020, there were no outstanding preferred units. 10. Reorganization In connection with the Reorganization: ● Holders of Xilio Therapeutics LLC outstanding Series A preferred units received one share of Xilio Therapeutics, Inc. Series A convertible preferred stock for each Series A preferred unit held immediately prior to the Reorganization, with an aggregate of 7,500,000 shares of Xilio Therapeutics, Inc. Series A convertible preferred stock issued in the Reorganization; ● Holders of Xilio Therapeutics LLC outstanding Series A-1 preferred units received one share of Xilio Therapeutics, Inc. Series A-1 convertible preferred stock for each Series A-1 preferred unit held immediately prior to the Reorganization, with an aggregate of 19,565,216 shares of Xilio Therapeutics, Inc. Series A-1 convertible preferred stock issued in the Reorganization; ● Holders of Xilio Therapeutics LLC outstanding Series B preferred units received one share of Xilio Therapeutics, Inc. Series B convertible preferred stock for each Series B preferred unit held immediately prior to the Reorganization, with an aggregate of 39,723,312 shares of Xilio Therapeutics, Inc. Series B convertible preferred stock issued in the Reorganization; ● Holders of Xilio Therapeutics LLC outstanding common units received one share of Xilio Therapeutics, Inc. common stock for each outstanding common unit held immediately prior to the Reorganization, with an aggregate of 409,303 shares of common stock issued in the Reorganization; ● Holders of Xilio Therapeutics LLC outstanding incentive units received shares of Xilio Therapeutics, Inc. restricted common stock in an amount equal in value of such incentive units as determined by the applicable provisions of the Xilio Therapeutics LLC Agreement in effect immediately prior to the Reorganization, with an F-22 Table of Contents aggregate of 552,546 shares of common stock and restricted stock issued in the Reorganization. The restricted common stock awards in Xilio Therapeutics, Inc. were issued with the same vesting terms as the incentive units held immediately prior to the Reorganization; and ● The outstanding warrant to purchase 25,000 Series A preferred units of Xilio Therapeutics LLC at $ 1.00 per unit was converted to a warrant to purchase 25,000 shares of Xilio Therapeutics, Inc. Series A convertible preferred stock at the same purchase price. In evaluating the Reorganization, the Company considered that (i) with the exception of holders of incentive units, there were no changes in ownership interest held by each stockholder as a result of the Reorganization, (ii) the changes in the overall ownership interest of the Company resulting from the changes in ownership interest related to the holders of incentive units as a result of the Reorganization is not significant and (iii) the Reorganization occurred between a parent and wholly owned subsidiary, where the parent, Xilio Therapeutics LLC, had no substantive operations. Based on this evaluation, the Company determined that the Reorganization lacked economic substance and should be accounted for in a manner consistent with a common control transaction. Similarly, there was no significant change in fair value between the stockholders, individually or as a class, and the Company determined that the exchange of shares occurring in the Reorganization should be accounted for as a modification of equity securities. 11. Preferred Stock and Common Stock Undesignated Preferred Stock On October 26, 2021, in connection with the closing of the Company’s IPO, the Company amended and restated its Certificate of Incorporation authorizing the Company to issue 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share. Convertible Preferred Stock Upon the closing of the IPO in October 2021, all shares of the Company’s then outstanding convertible preferred stock automatically converted into an aggregate of 18,398,248 shares of common stock. There was no convertible preferred stock outstanding as of December 31, 2021. As of December 31, 2020, the Company had authorized 126,000,000 shares of common stock and 133,602,056 shares of convertible preferred stock, which consisted of the following: 7,525,000 shares of Series A convertible preferred stock, 19,565,216 shares of Series A-1 convertible preferred stock, 7,500,000 shares of Series A-2(A) convertible preferred stock, 19,565,216 shares of Series A-2(A-1) convertible preferred stock, and 79,446,624 shares of Series B convertible preferred stock (collectively, the “Convertible Preferred Stock”). On January 20, 2021, the Company issued 39,723,312 shares of Series B convertible preferred stock to existing Series B convertible preferred stockholders at $ 1.265 per share for cash proceeds of $ 50.2 million, net of issuance costs. On February 22, 2021, the Company amended and restated its certificate of incorporation to authorize 174,808,481 shares of Convertible Preferred Stock, of which 7,525,000 shares are designated as Series A convertible preferred stock, 19,565,216 shares are designated as Series A-1 convertible preferred stock, 79,446,624 shares are designated as Series B convertible preferred stock, and 68,271,641 shares are designated as Series C convertible preferred stock. On February 23, 2021, the Company entered into a stock purchase agreement with existing and new investors whereby the Company issued and sold 68,271,641 shares of Series C convertible preferred stock to investors at $ 1.3915 per share for cash proceeds of $ 94.7 million, net of issuance costs. The Company evaluated the convertible preferred stock and determined that they should be considered an “equity host” and not a “debt host.” The evaluation was necessary to determine if any embedded features required bifurcation and separate accounting as a derivative financial instrument. The Company’s analysis was based on a consideration of the economic characteristics and risks and more specifically, evaluated all the stated and implied substantive terms and features F-23 Table of Contents including (i) whether the convertible preferred stock included redemption features, (ii) how and when any redemption features could have been exercised, (iii) whether the convertible preferred stock were entitled to dividends, (iv) the voting rights of the convertible preferred stock and (v) the existence and nature of any conversion rights. As a result of its evaluation that the convertible preferred stock is an “equity host,” the various embedded conversion options are not considered a separate, embedded derivative. As of December 31, 2020, Convertible Preferred Stock consisted of the following (in thousands, except share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020 ​ ​ ​ ​ Preferred ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ Common Shares ​ ​ Preferred Shares Issued and ​ Carrying ​ Liquidation Issuable Upon ​ Authorized Outstanding Value Preference Conversion Series A convertible preferred stock 7,525,000 7,500,000 ​ $ 7,309 ​ $ 7,500 789,473 Series A‑1 convertible preferred stock 19,565,216 19,565,216 ​ 20,740 ​ 22,500 2,059,496 Series A‑2(A) convertible preferred stock 7,500,000 — ​ — ​ — — Series A‑2(A‑1) convertible preferred stock 19,565,216 — ​ — ​ — — Series B convertible preferred stock 79,446,624 39,723,312 ​ 49,953 ​ 50,250 4,181,390 ​ 133,602,056 66,788,528 ​ $ 78,002 ​ $ 80,250 7,030,359 ​ The terms of the Convertible Preferred Stock prior to the conversion to common stock were as follows: Liquidation In the event of any liquidation, dissolution or winding up of affairs of the Company (including a change of control), distributions would have first been made to holders of the Series B convertible preferred stock until, on a share by share basis, each share of Series B convertible preferred stock has been distributed its original issuance price ($ 1.265 ) plus any declared but unpaid dividends. After distribution to the Series B convertible preferred stock holders, the holders of Series A, Series A-1, Series A-2(A) and Series A-2(A-1) convertible preferred stock would have received a distribution until, on a share by share basis, each share of Series A, Series A-1, Series A-2(A) and Series A-2(A-1) convertible preferred stock had been distributed an amount equal to the Series A, Series A-1, Series A-2(A) and Series A-2(A-1) convertible preferred stock original issuance price plus any declared but unpaid dividends. The Series A, Series A-1, Series A-2(A) and Series A-2(A-1) convertible preferred stock issuance prices were $ 1.00 , $ 1.15 , $ 1.00 , and $ 1.15 per stock, respectively. After distribution to the Series A, Series A-1, Series A-2(A) and Series A-2(A-1) holders, the holders of all securities as if all such securities had been converted to common stock, would have received a distribution until, on a share by share basis, each share of Convertible Preferred Stock holder had been distributed an amount equal to two and one-half times the sum of its respective original issuance price and declared but unpaid dividends after which the holders of common stock would have received a distribution until, on a common stock by common stock basis, each share of common stock had been distributed a catch-up amount such that the aggregate distributions made to the common stock were the same as the average aggregate distributions made to the Convertible Preferred Stock. Any remaining amounts would have been distributed to the holders of the common stock and Convertible Preferred Stock in proportion to the number of shares of stock held by each (on an as-converted basis). Conversion Shares of Convertible Preferred Stock may have been converted by the holder at any time into a number of shares of common stock equal to such number of shares as determined by dividing the original issue price by the conversion price in effect at the time. The conversion price of the Series A convertible preferred stock was equal to $ 9.50 , the conversion price of the Series A-1 convertible preferred stock was equal to $ 10.93 and the conversion price of the Series B convertible preferred stock was equal to $ 12.02 , in each case as of December 31, 2020. The conversion price was subject to adjustments in the event of any stock dividend, stock split, combination or other similar recapitalization and other adjustments as set forth in the Company’s certificate of incorporation. Upon the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, F-24 Table of Contents in which the aggregate gross proceeds to the Company are at least $ 50 million, all outstanding Convertible Preferred Stock were to be automatically converted into a number of shares of common stock at the then applicable conversion rate. If a defaulting purchaser failed to purchase the Series B convertible preferred stock it was required to purchase pursuant to the Series B Agreement, then each share of Convertible Preferred Stock held by such defaulting purchaser (and by any of such defaulting purchaser’s affiliates or any predecessor, transferor or assignor, successor, transferee or assign of such defaulting purchaser or such defaulting purchaser’s affiliates) would have automatically converted as follows: each 10 shares of Series B convertible preferred stock would have converted into 0.1053 shares of common stock, each share of Series A convertible preferred stock would have converted into one share of Series A-2(A) convertible preferred stock and each share of Series A-1 convertible preferred stock would have converted into one share of Series A-2(A-1) convertible preferred stock. Voting Holders of Convertible Preferred Stock vote together with the holders of common stock as a single class. Any action to be taken by the stockholders requires the approval of stockholders holding a majority of the outstanding shares of Convertible Preferred Stock and common stock, voting together as a single class on an as-converted basis, unless a different threshold is specifically required by law or by the Company’s certificate of incorporation. Dividends If any dividends were declared by the board of directors on the Convertible Preferred Stock, such dividends would have been at an annual rate of $ 0.060 per share of Series A convertible preferred stock, $ 0.069 per share of Series A-1 convertible preferred stock and $ 0.0759 per share of Series B convertible preferred stock, subject in each case to appropriate adjustment in the event of any dividend, split, combination or other similar recapitalization with respect to the applicable series of Convertible Preferred Stock, and were to be non-cumulative. Holders of Series A-2(A) and A-2(A-1) convertible preferred stock were not entitled to receive any dividends. Since inception, the Company has not declared any dividends. Common Stock Prior to the completion of the Company’s IPO, the voting, dividend and liquidation rights of the holders of shares of common stock were subject to and qualified by the rights, powers and preferences of the holders of shares of the Company’s convertible preferred stock. The rights, preferences and privileges of the Company’s common stock were as follows: Voting The holders of shares of common stock were entitled to one vote for each share of common stock held at any meeting of stockholders and at the time of any written action in lieu of a meeting of stockholders. Dividends The holders of shares of common stock were entitled to receive dividends, if and when declared by the Company’s board of directors. Cash dividends could not be declared or paid to holders of shares of common stock until all unpaid dividends on Preferred Stock had been paid in accordance with their terms. Subsequent to the completion of the Company’s IPO, the voting, dividend and liquidation rights of the holders of shares of common stock are subject to and qualified by the rights, powers and preferences of the holders of shares of the Company’s undesignated preferred stock, if and when such shares are issued. The rights, preferences and privileges of the Company’s common stock are as follows: F-25 Table of Contents Voting The holders of shares of common stock are entitled to one vote for each share of common stock held at any meeting of stockholders and at the time of any written action in lieu of a meeting of stockholders. Dividends The holders of shares of common stock are entitled to receive dividends, if and when declared by the Company’s board of directors. No dividends have been declared by the Company’s board of directors or paid by the Company to the holders of common stock since the issuance of the common stock. Liquidation Upon the dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, holders of the common stock will be entitled to receive, pro rata based on the number of shares held by each such holder, all assets of the Company available for distribution to its stockholders, subject to any preferential or other rights of any then outstanding preferred stock. Shares Reserved for Future Issuance As of December 31, 2021 and 2020, the Company had reserved shares of common stock for the conversion of outstanding Convertible Preferred Stock and for future issuance under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the 2021 Stock Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Shares of common stock reserved for conversion of convertible preferred stock outstanding — 7,030,359 Shares of common stock reserved for exercise of a warrant 2,631 2,631 Shares of common stock reserved for exercise of outstanding stock options under the 2021 and 2020 Stock Incentive Plans 4,088,456 810,358 Shares of common stock reserved for future awards under the 2021 and 2020 Stock Incentive Plans 2,349,875 151,769 Shares of common stock reserved for purchase under the 2021 Employee Stock Purchase Plan ​ 292,031 ​ — Total shares reserved for future issuance 6,732,993 7,995,117 ​ ​ 12. Equity-Based Compensation Equity Incentive Plans 2020 Stock Incentive Plan In July 2020, the Company’s stockholders approved the 2020 Plan. Under the 2020 Plan, the Company was initially authorized to issue up to 991,021 shares of common stock to the Company’s employees, officers, directors, consultants, and advisors in the form of options, restricted stock awards or other stock-based awards. The 2020 Plan is administered by the board of directors, which has the power to determine the terms of the awards agreements, including the vesting requirements, provided that generally the exercise price per share of stock options granted could not be less than 100 % of the fair market value of a share of the Company’s common stock on the date of grant, and the term of stock options granted could not exceed ten years . Vesting of stock options and restricted stock is subject to the recipient’s continued employment or service. The Company has the right to repurchase any unvested shares of restricted stock held by a recipient during the vesting period if the relationship between the recipient and the Company has terminated. For any awards under the 2020 F-26 Table of Contents Plan that expire or are terminated, surrendered, or canceled without having been fully exercised, if forfeited in whole or in part (including as the result of shares of common stock subject to such award being repurchased by the Company), the unused common stock subject to such award shall again be available for the grant of future awards. Shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for future awards. Shares of common stock may be withheld to satisfy applicable federal, state or local employment tax withholding obligations related to equity awards. Upon stock option exercise, the Company issues new shares and delivers them to the participant. As of December 31, 2020, the Company had issued service-based and performance-based stock options under the 2020 Plan. Stock options issued comprise awards granted to employees, non-employees, and directors. During the year ended December 31, 2021, the Company amended its 2020 Plan to increase the common stock issuable under the 2020 Plan from 991,021 shares to 3,773,235 shares, plus up to 364,120 of additional shares of common stock equal to the number of shares of unvested restricted stock issued in exchange for incentive units as part of the Reorganization, to the extent such shares have been or will be forfeited. 2021 Stock Incentive Plan In September 2021, the Company’s board of directors adopted, and in October 2021, the Company’s stockholders approved, the 2021 Plan, which became effective on October 21, 2021, immediately prior to the effectiveness of the Company’s registration statement on Form S-1 filed with the SEC on October 1, 2021, as amended (the “Registration Statement”). Upon effectiveness of the 2021 Plan, the Company ceased granting awards under the 2020 Plan. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares of the Company’s common stock initially reserved for issuance under the 2021 Plan is the sum of (1) 2,654,828 ; plus (2) the number of shares (up to 3,967,038 shares) as is equal to the sum of (x) the number of shares of the Company’s common stock reserved for issuance under the 2020 Plan that remained available for grant under the 2020 Plan immediately prior to the effectiveness of the Registration Statement and (y) the number of shares of the Company’s common stock subject to outstanding awards whether granted under the 2020 Plan or outside of the 2020 Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right and that, prior to the effectiveness of the 2021 Plan, would have become available for issuance under the 2020 Plan; plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year, commencing on January 1, 2022 and continuing until, and including, January 1, 2031, equal to the lesser of (i) 5 % of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (ii) the number of shares of common stock determined by the Company’s board of directors. Effective January 1, 2022, the number of shares reserved for issuance under the 2021 Plan increased by 1,373,447 shares. As of December 31, 2021, there were 2,349,875 shares available for future issuance under the 2021 Plan. 2021 Employee Stock Purchase Plan In September 2021, the Company’s board of directors adopted, and in October 2021, the Company’s stockholders approved the 2021 ESPP, which became effective on October 21, 2021, immediately prior to the effectiveness of the Registration Statement. The 2021 ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 292,031 shares of the Company’s common stock. The number of shares of common stock reserved for issuance under the 2021 ESPP will automatically increase on each January 1, beginning on January 1, 2022 and ending on January 1, 2031, by the lesser of (i) 584,062 shares of common stock, (ii) 1 % of the number of shares of the Company’s common stock outstanding on such date, and (iii) a number of shares of common stock as determined by the Company’s board of directors. Effective January 1, 2022, the number of shares reserved for issuance under the 2021 ESPP increased by 274,689 shares. As of December 31, 2021, no offering periods have commenced under the 2021 ESPP. F-27 Table of Contents Total Equity-Based Compensation Expense During the years ended December 31, 2021 and 2020, the Company recorded compensation expense related to incentive units, stock options and restricted common stock for employees and non-employees, which was allocated as follows in the consolidated statements of operations and comprehensive loss (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Research and development expense ​ $ 1,290 ​ $ 332 General and administrative expense ​ 3,668 ​ 964 Total equity-based compensation expense ​ $ 4,958 ​ $ 1,296 ​ Stock Options A summary of stock option activity under the Company’s Stock Incentive Plans is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Remaining ​ Aggregate ​ ​ ​ ​ Weighted ​ Contractual ​ Intrinsic ​ ​ Number of ​ Average ​ Term ​ Value ​ Stock Options Exercise Price (In years) (In thousands) Outstanding as of December 31, 2020 810,358 $ 5.51 9.52 ​ $ — Granted 3,786,967 ​ ​ 8.93 ​ Exercised ( 47,900 ) ​ 5.90 ​ Cancelled/forfeited ( 460,969 ) ​ 6.22 ​ Outstanding as of December 31, 2021 4,088,456 ​ 8.59 9.13 ​ $ 30,291 Exercisable as of December 31, 2021 717,562 ​ 6.22 8.08 ​ $ 7,019 Vested and expected to vest as of December 31, 2021 4,088,456 ​ 8.59 9.13 ​ $ 30,291 ​ Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the years ended December 31, 2021 and 2020 was $ 6.28 per share and $ 3.60 per share, respectively. The Company satisfies stock option exercises with newly issued shares of common stock. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021 and 2020 was $ 0.5 million and none , respectively. The following assumptions were used in determining the fair value of options granted to employees during the years ended December 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2021 ​ 2020 ​ Risk-free interest rate ​ ​ 0.63  –  1.39 % ​ 0.16  –  0.36 % Expected dividend yield ​ ​ 0 % ​ 0 % Expected term (in years) ​ ​ 5.52  –  10.00 ​ ​ 2.25  –  6.08 ​ Expected volatility ​ ​ 80.55  – 85.26 % ​ 78.84  – 96.73 % ​ The performance conditions underlying the performance-based awards are not probable of achievement as of December 31, 2021. Therefore, no compensation expense has been recorded for these awards. At December 31, 2021, total unrecognized compensation expense related to performance-based awards was insignificant. F-28 Table of Contents As of December 31, 2021, the Company had unrecognized equity-based compensation expense of $ 19.7 million related to stock options issued to employees and directors, excluding performance-based awards for which vesting is not considered probable, which is expected to be recognized over a weighted average period of 3.11 years. During the year ended December 31, 2021, the Company entered into separation agreements with two former employees. Pursuant to the separation agreements, the former employees terminated their employment with the Company and agreed to provide certain consulting services to the Company through October 15, 2021 and November 30, 2021, respectively, during which the former employees’ equity awards continued to vest. In addition, the Company extended the former employees’ periods to exercise their vested options until 90 days from the termination date of the respective consulting periods. Because the services to be performed during the consulting period were considered non-substantive, the Company concluded that the former employees’ equity awards were modified. As a result of these modifications, the Company recognized $ 0.2 million in equity-based compensation expense in the statement of operations and comprehensive loss during the year ended December 31, 2021. Restricted Stock A summary of the Company’s restricted stock activity and related information is as follows: ​ ​ ​ ​ ​ ​ ​ ​ Number Weighted ​ ​ of Shares ​ Average ​ ​ of Restricted ​ Grant Date ​ Stock Fair Value Unvested as of December 31, 2020 ​ 283,969 ​ $ 5.51 Vested ​ ( 103,192 ) ​ ​ 5.51 Canceled/Forfeited ( 70,202 ) ​ 5.51 Unvested as of December 31, 2021 110,575 ​ 5.51 ​ The Company had granted 552,546 shares of common stock underlying restricted stock awards as of June 30, 2020 in connection with the Reorganization. No restricted stock awards were granted during the year ended December 31, 2021. The Company recorded equity-based compensation expense for restricted stock granted to employees, directors and non-employees of $ 0.5 million and $ 0.3 million for the years ended December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, the aggregate fair value of the restricted stock awards that vested was $ 1.0 million. As of December 31, 2021, total unrecognized compensation cost related to unvested restricted stock awards was approximately $ 0.7 million, which is expected to be recognized over a weighted-average period of 1.76 years. Incentive Units Prior to the Reorganization, the Company periodically granted incentive units to employees, directors and non-employees. The incentive units represented a separate substantive class of equity with defined rights within the LLC Agreement then in effect. The incentive units represented profits interests in the Company, which was an interest in the increase in the value of the Company over the strike price, or threshold dollar amount, determined at the time of grant. The holder, therefore, had the right to participate in distributions of profits only in excess of the threshold dollar amount. The threshold dollar amount was based on the valuation of the Company’s common units on or around the grant date. The Company determined that incentive units issued to employees, directors and non-employees were analogous to share-based payments and, as such, the Company measured and recognized the related compensation expense in a manner consistent with its accounting policy for its other equity-based awards. Pursuant to the LLC Agreement, the board of directors established a threshold dollar amount with respect to each incentive unit grant equal to the value of each common unit, determined by the amount of distributions that the holder of such a common unit would be entitled to receive in a hypothetical liquidation of the Company on the date of issuance of such incentive unit. Incentive unit grants generally vested over a four-year period. Certain grants vested upon the achievement of specific performance based milestones. If there was a liquidation or sale of the Company or one of the Company’s subsidiaries, a fair market value analysis would have been performed to determine the value of the common unit. If the value of the common unit was to be determined to have been greater than the threshold set upon the date of grant, then the holder of the common incentive unit would have been entitled to receive F-29 Table of Contents proceeds from such liquidation or sale. Unvested incentive units were automatically cancelled and forfeited without any consideration upon termination of the participant’s continuous service to the Company. At December 31, 2018, 3,570,000 incentive units were authorized to be granted. In June 2019, the Company amended and restated its LLC Agreement and increased the total number of incentive units authorized for issuance to 5,830,000 incentive units. In December 2019 the Company amended its LLC Agreement to increase the authorized number of incentive units available for issuance to 14,669,430 . As of December 31, 2019, the Company had issued 585,777 incentive units, of which 571,712 units were outstanding. A summary of the Company’s incentive units through the date of the Reorganization was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average ​ Weighted-average ​ ​ Number of ​ threshold price ​ fair value ​ units per unit per unit Outstanding at December 31, 2019 571,712 ​ $ 0.95 ​ $ 1.05 Granted 512,095 ​ 1.43 ​ 3.61 Forfeited ( 2,949 ) ​ 0.86 ​ 0.57 Exchanged for restricted common stock pursuant to the Reorganization ( 1,080,858 ) ​ 1.14 ​ 2.28 Outstanding at December 31, 2020 — ​ ​ ​ The weighted average grant date fair value for incentive units granted during the year ended December 31, 2020 was $ 3.61 per unit. There were no incentive units granted during the year ended December 31, 2021. A summary of incentive units vested immediately prior to the date of the Reorganization is as follows: ​ ​ ​ ​ ​ Number of ​ ​ units Vested at December 31, 2019 187,773 Vested immediately prior to the Reorganization 118,099 Vested as of the Reorganization 305,872 ​ Prior to the Reorganization, the Company recorded equity-based compensation expense for incentive units granted to employees, directors and non-employees of approximately $ 0.2 million for the year ended December 31, 2020. The fair value of the incentive units issued was determined using a Black-Scholes option pricing model with the following assumptions (weighted-average): ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2020 ​ Grant date price per common unit ​ $ 4.47 ​ Threshold price per incentive unit ​ $ 1.43 ​ Risk-free interest rate ​ 0.74 % Expected dividend yield ​ 0.00 % Expected term (years) ​ 6.0 ​ Expected volatility ​ 69.30 % ​ Reorganization Pursuant to the Reorganization, outstanding vested and unvested incentive units of Xilio Therapeutics LLC were converted into restricted stock awards in Xilio Therapeutics, Inc. based upon a determined conversion ratio. The restricted common stock awards in Xilio Therapeutics, Inc. were issued with the same vesting terms as the vested and unvested incentive units F-30 Table of Contents held immediately prior to the Reorganization. An aggregate of 552,546 shares of restricted common stock were issued to holders of incentive units in connection with the Reorganization. The Company accounted for the exchange of incentive units in Xilio Therapeutics LLC for restricted common stock of Xilio Therapeutics, Inc. as a modification in accordance with the requirements of ASC Topic 718. Accordingly, the Company determined the fair value of the replacement awards was less than the fair value of the incentive units exchanged in connection with the Reorganization and therefore no incremental compensation expense will be recognized related to the modification. As the vesting and service period of the replacement awards did not change from the originally issued incentive awards, the Company will continue to recognize the grant date fair value of the incentive units as compensation expense over the remaining vesting period. 13. Net Loss Per Share The following table sets forth the outstanding common stock equivalents, presented based on amounts outstanding at each period end, that were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have been anti-dilutive. ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2021 ​ 2020 Convertible preferred stock — 7,030,359 Unvested restricted common stock 110,575 283,969 Outstanding stock options 4,088,456 810,358 Warrants 2,631 2,631 Total common stock equivalents 4,201,662 8,127,317 ​ ​ 14. Income Taxes The Company has no t recorded a current or deferred tax provision for the years ended December 31, 2021 and 2020. The effective income tax rate differed from the amount computed by applying the federal statutory rate to the Company’s loss before income taxes as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2020 Tax effected at statutory rate 21.0 % 21.0 % State taxes 6.7 ​ 6.9 ​ Equity-based compensation ( 0.5 ) ( 0.4 ) ​ Non-deductible expenses ( 0.3 ) — ​ Federal research and development credits 1.7 1.7 ​ Change in valuation allowance ( 28.6 ) ( 29.2 ) ​ Effective income tax rate 0.0 % 0.0 % ​ F-31 Table of Contents Deferred tax assets consist of the following at December 31, 2021 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2020 Deferred tax assets: ​ ​ Federal net operating loss carryforwards ​ $ 31,387 ​ $ 16,376 State net operating loss carryforwards ​ ​ 8,910 ​ ​ 4,400 Research and development credit carryforwards ​ 3,873 ​ 2,101 Lease liability ​ 2,980 ​ 3,134 Accruals and reserves ​ 340 ​ 765 Intangible assets ​ 2,061 ​ 1,912 Equity-based compensation ​ 733 ​ 105 Total deferred tax assets: ​ 50,284 ​ 28,793 Valuation allowance ​ ( 46,745 ) ​ ( 25,064 ) Subtotal ​ 3,539 ​ 3,729 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Property and equipment ​ ( 1,883 ) ​ ( 1,944 ) Right of use asset ​ ( 1,633 ) ​ ( 1,724 ) Debt discount ​ ( 23 ) ​ ( 61 ) Total deferred tax liabilities ​ ​ ( 3,539 ) ​ ​ ( 3,729 ) Net deferred tax assets ​ $ — ​ $ — ​ The Company has had no income tax expense due to operating losses incurred since inception. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on this, the Company has provided a valuation allowance for the full amount of the net deferred tax assets as the realization of the deferred tax assets is not determined to be more likely than not. During the year ended December 31, 2021, the valuation allowance increased by $ 21.7 million primarily due to the increase in the Company’s book loss reported in the period and the generation of additional research and development credits. As of December 31, 2021, the Company had $ 149.5 million and $ 141.0 million of federal and state operating loss carryforwards, respectively. Of the federal net operating loss carryovers, $ 144.6 million are not subject to expiration and the remaining federal and state net operating loss carryovers begin to expire in 2035. These loss carryforwards are available to reduce future federal taxable income, if any. As of December 31, 2021, the Company had $ 2.8 million and $ 1.4 million of federal and state credit carryovers which begin to expire in 2033. These loss and credit carryforwards are subject to review and possible adjustment by the appropriate taxing authorities. Utilization of the Company’s net operating loss (“NOL”) carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”) as well as similar state provisions. These ownership changes may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income and taxes, respectively. In general, an ownership change as defined by Section 382 results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. Since its formation, the Company has raised capital through the issuance of capital stock on several occasions. These financings could result in a change of control as defined by Section 382. The Company has not yet completed a detailed study of its inception to date ownership change activity. The Company follows the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes , which specifies how tax benefits for uncertain tax positions are to be recognized, measured, and recorded in financial statements; requires certain disclosures of uncertain tax matters; specifies how reserves for uncertain tax positions should be classified on the balance sheet; and provides transition and interim period guidance, among other provisions. As of December 31, 2021, and 2020, the Company has not recorded tax reserves associated with any unrecognized tax benefits. The Company’s F-32 Table of Contents policy is to recognize interest and penalties accrued on any uncertain tax positions as a component of income tax expense, if any, in its statements of income. As of December 31, 2021, and 2020, the Company had no reserves for uncertain tax positions. For the years ended December 31, 2021 and 2020, no estimated interest or penalties were recognized on uncertain tax positions. The Company has not recorded any interest or penalties on any unrecognized tax benefits since its inception. The Company has not conducted a study of its research and development credit carryforwards. This study may result in an adjustment to research and development credit carryforwards; however, until a study is completed, and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated balance sheets or statements of operations and comprehensive loss if an adjustment were required. The Company’s tax returns remain open to examination by the Internal Revenue Service and the Commonwealth of Massachusetts for the years ended December 31, 2018 to December 31, 2020. In addition, the Company’s tax carryover attributes such as net operating losses or credits from earlier periods are also subject to examination. The Company is currently not subject to any examinations by the Internal Revenue Service or any other tax authorities for any tax years. 15. 401(k) Plan In 2018, the Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code, as amended, the Xilio Therapeutics, Inc. 401(k) Plan (the “401(k) Plan”). The 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company is not required to make and has not made any contributions to the 401(k) Plan through December 31, 2021. ​ ​ ​ F-33