What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-11 compared with 2024-04-01 · 265 added, 149 removed, 643 unchanged (39% of the section changed)

3 unchanged sentences

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 Chief Executive Officer (our principal executive officer) and our Senior Vice President, Finance and Accounting (our principal financial and accounting officer) evaluated the effectiveness of our disclosure controls and procedures as of

December 31, 2023.

Based upon such evaluation, our Chief Executive Officer and Senior Vice President, Finance and Accounting have concluded that, as of December 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.

Our chief executive officer (our principal executive officer) and our chief financial and operating officer (our principal financial officer) evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024.

Based upon such evaluation, our chief executive officer and chief financial and operating officer have concluded that, as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control over Financial Reporting

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Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of the financial reporting process.

However, these inherent limitations are known features of

the financial reporting process.

Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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Other Information

On March 30, 2024, Tomas Heyman notified us of his resignation as a Class I director, effective as of our 2024 annual meeting of stockholders, which is currently expected to be held in June 2024.

Heyman’s resignation did not result from any disagreement with us on any matter relating to our operations, policies or practices.

Director and Officer Trading Arrangements

12 unchanged sentences

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 2024 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.

The information required by this Item 11 will be included in the section captioned “Executive Compensation” in our definitive proxy statement for our 2025 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.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

47 unchanged sentences

October 18, 2021

2022 Inducement Stock Incentive Plan

March 2, 2023

Amended and Restated 2022 Inducement Stock Incentive Plan

Form of Stock Option Agreement under the 2022 Inducement Stock Incentive Plan

2 unchanged sentences

March 2, 2023

Sales Agreement, dated September 9, 2022, by and between the Registrant and Cowen and Company, LLC

November 9, 2022

Employment Agreement, dated September 30, 2021, by and between the Registrant and René Russo

October 1, 2021

Amended and Restated Employment Agreement, dated June 15, 2022, by and between the Registrant and Martin Huber, M.D.

June 16, 2022

Consulting Agreement, dated September 8, 2023, by and between the Registrant and Martin Huber, M.D.

November 9, 2023

Second Amended and Restated Employment Agreement, dated August 3, 2023, by and between the Registrant and Christopher Frankenfield

Third Amended and Restated Employment Agreement, dated August 3, 2024, by and between the Registrant and Christopher Frankenfield

August 8, 2024

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Employment Agreement, dated September 5, 2023, by and between the Registrant and Katarina Luptakova, M.D.

April 1, 2024

Form of Indemnification Agreement between the Registrant and each of its Executive Officers and Directors

1 unchanged sentence

Amended and Restated Non-Employee Director Compensation Policy

August 14, 2023

Cross-License Agreement, dated as of December 16, 2020, by and between the Registrant and AskGene Pharma, Inc.

October 1, 2021

Amended and Restated Exclusive License Agreement, dated as of August 16, 2016, by and between the Registrant and City of Hope

8 unchanged sentences

March 28, 2024

License Agreement, dated March 27, 2024, between Xilio Development, Inc.

and Gilead Sciences, Inc.

Investor Rights Agreement, dated March 27, 2024, between the Registrant and Gilead Sciences, Inc.

Xilio Therapeutics Insider Trading Policy

Subsidiaries of the Registrant

April 1, 2024

Consent of Ernst & Young LLP, independent registered public accounting firm

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Executive Compensation Clawback Policy

April 1, 2024

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

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XILIO THERAPEUTICS, INC.

April 1, 2024

March 11, 2025

/s/ René Russo

3 unchanged sentences

President, Chief Executive Officer and Director

April 1, 2024

March 11, 2025

(Principal Executive Officer)

/s/ Christopher Frankenfield

Chief Financial Officer and Chief Operating Officer

March 11, 2025

Christopher Frankenfield

(Principal Financial Officer)

/s/ Kevin Brennan

Senior Vice President, Finance and Accounting

April 1, 2024

March 11, 2025

Kevin Brennan

(Principal Financial and Accounting Officer)

(Principal Accounting Officer)

Chair of the Board

April 1, 2024

March 11, 2025

/s/ Aoife Brennan

March 11, 2025

Aoife Brennan

/s/ Daniel Curran

April 1, 2024

March 11, 2025

Daniel Curran

April 1, 2024

/s/ Robert Ross

April 1, 2024

March 11, 2025

/s/ Christina Rossi

April 1, 2024

March 11, 2025

Christina Rossi

April 1, 2024

/s/ James Shannon

March 11, 2025

James Shannon

March 11, 2025

Xilio Therapeutics, Inc.

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(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “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, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended in conformity with U.S.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024 in conformity with U.S.

generally accepted accounting principles.

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Boston, Massachusetts

April 1, 2024

March 11, 2025

XILIO THERAPEUTICS, INC.

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Accrued expenses

Deferred revenue, current portion

Operating lease liability, current portion

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Total current liabilities

Note payable, net of current portion

Deferred revenue, net of current portion

Operating lease liability, net of current portion

Other non-current liabilities

Total liabilities

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200,000,000 shares authorized at December 31, 2024 and December 31, 2023;

27,613,263 shares issued and 27,607,646 shares outstanding at December 31, 2023;

45,756,773 shares issued and outstanding at December 31, 2024;

27,613,263 shares issued and 27,607,646 shares outstanding at December 31, 2023

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Year Ended December 31,

License revenue

Total revenue

Operating expenses

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General and administrative

Restructuring

Total operating expenses

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Balance at December 31, 2022

Issuance of common stock under employee stock purchase plan

Vesting of restricted common stock

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Balance at December 31, 2023

Issuance of common stock and prefunded warrants in connection with the Gilead stock purchase agreement, net of issuance costs

Issuance of common stock and prefunded warrants in connection with a private placement, net of issuance costs

Issuance of common stock in connection with at-the-market offerings, net of issuance costs

Issuance of common stock under employee stock purchase plan

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Depreciation and amortization

Non-cash interest expense

Non-cash interest (income) expense

Stock-based compensation expense

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Accrued expenses and other liabilities

Deferred revenue

Operating lease liability

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Proceeds from exercise of stock options

Net cash used in financing activities

Decrease in cash, cash equivalents and restricted cash

Proceeds from issuance of common stock and prefunded warrants in connection with the Gilead stock purchase agreement, net of issuance costs

Proceeds from issuance of common stock and prefunded warrants in connection with a private placement, net of issuance costs

Proceeds from issuance of common stock in connection with at-the-market offerings, net of issuance costs

Net cash provided by (used in) financing activities

Increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

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Supplemental disclosure of non-cash activities:

Capital expenditures included in accounts payable or accrued expenses

Transfer of finance lease asset to property and equipment

Reconciliation to amounts within the consolidated balance sheets:

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As of December 31, 2024, the Company had cash and cash equivalents of $ 55.3 million.

The Company anticipates that its cash and cash equivalents as of December 31, 2023, together with (i) the $ 30.0 million upfront payment under the exclusive license agreement with Gilead Sciences, Inc.

(“Gilead”), (ii) the approximately $ 13.5 million in proceeds from the initial private placement with Gilead, which closed on March 28, 2024, and (iii) the approximately $ 11.3 million in gross proceeds from the Company’s private placement, which is expected to close on April 2, 2024 (subject to customary closing conditions), and after giving effect to (a) one-time costs and anticipated future cost savings associated with the Company’s strategic portfolio reprioritization and workforce reduction announced in March 2024 and (b) the repayment in the first quarter of 2024 of the outstanding loan balance under the Company’s loan and security agreement with Pacific Western Bank (“PacWest”), will be sufficient to fund the Company’s operating expenses and capital expenditure requirements into the second quarter of 2025.

For further information regarding these transactions and other subsequent events, please see Note 14, Subsequent Events .

Based on its current operating plans, the Company anticipates that its cash and cash equivalents as of December 31, 2024, together with the $ 52.0 million in upfront payments received in connection with the collaboration, license and option agreement with AbbVie Group Holdings Limited (“AbbVie Group Holdings”), will be sufficient to fund the Company’s operating expenses and capital expenditure requirements into the first quarter of 2026.

However, the Company has based this estimate on assumptions that may prove to be wrong, and the Company could exhaust its available capital resources sooner than it anticipates.

In addition, since these amounts may not be sufficient to fund its operations for at least twelve months from the date of issuance of the consolidated financial statements, there is substantial doubt about the Company’s ability to continue as a going concern.

In addition, since these amounts are not expected to be sufficient to fund its operations for at least twelve months from the date of issuance of the consolidated financial statements, there is substantial doubt about the Company’s ability to continue as a going concern.

To continue to fund the operations of the Company, management has developed plans, which in the near term primarily consist of raising additional capital through one or more of the following:

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However, there can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise, and the Company may be unable to obtain sufficient additional capital.

If the Company is not able to secure sufficient additional capital in the near term, the Company may in the future need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to its operations and research and development programs.

If the Company is not able to secure sufficient additional capital in the near term, the Company will need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to its operations and research and development programs.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

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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.

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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, the valuation of stock-based compensation, including stock options and restricted common stock, useful life of long-lived assets and income taxes.

Significant estimates of accounting reflected in these consolidated financial statements include, but are not limited to, estimates related to revenue, accrued expenses, the valuation of stock-based compensation, including 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.

The Company has one operating and reportable segment, the consolidated Company operations, reflecting the integrated nature of its business focused on discovering and developing tumor-activated I-O therapies.

The Company’s chief operating decision maker (“CODM”) is its chief executive officer.

The CODM allocates resources and assesses performance on a consolidated basis, focused on the Company’s cash resources and an assessment of the probability of success of its ongoing research and development activities.

Resource allocation decisions are informed by forecasted cash expenditures and actual expenses incurred to date.

The CODM is not regularly provided with disaggregated actual expense information, other than the actual expense information included in the consolidated statements of operations and comprehensive loss, as the Company’s integrated operating model emphasizes shared resources and centralized decision-making.

All of the Company’s license revenue is generated in the United States and all of the Company’s long-lived assets are held in the United States.

Cash Equivalents and Restricted Cash

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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, 2023 and 2022 approximates fair value based on the variable interest rate for the borrowings as well as the short duration of the term of the note.

The carrying value of the Company’s outstanding debt as of December 31, 2023 approximates fair value based on the variable interest rate for the borrowings as well as the short duration of the term of the note.

Property and Equipment

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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, 2023 and 2022, respectively.

The Company did not recognize impairment charges during years ended December 31, 2024 and 2023, respectively.

The Company determines if an arrangement is or contains a lease at inception.

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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 Costs, Accruals and Prepaid Expenses

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.

9 unchanged sentences

The Company’s historical accrual estimates have not been materially different from the actual costs.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

The Company has entered into, and may in the future enter into, collaboration and licensing agreements that are within the scope of ASC 606, under which the Company has granted licenses to certain of the Company’s product candidates and performs research, development and other services in connection with such arrangements.

The terms of these arrangements may include payment of one or more of the following:

non-refundable upfront fees;

reimbursement of research and development costs;

development, regulatory and sales-based milestone payments;

and royalties on annual net sales of licensed products.

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

To determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

(i) identification of the contract with the customer;

(ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

● Performance Obligations .

The promised goods or services in the Company’s arrangements typically consist of a license, or option to license, rights to the Company’s intellectual property or research and development services.

The Company may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer.

Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract.

In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on its own or whether the required expertise is

readily available and whether the goods or services are integral or dependent to other goods or services in the contract.

● Customer Options.

If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options that are not determined to be material rights are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise.

The Company evaluates the customer options for material rights, or options to acquire additional goods or services for free or at a discount.

If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.

The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option.

Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised or the option expires.

● Transaction Price .

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract.

The consideration may include fixed consideration or variable consideration.

At the inception of each arrangement that includes variable consideration, the Company evaluates the amount of potential payments and the likelihood that the payments will be received.

The Company utilizes either the most likely amount method or expected value method to estimate the amount expected to be received based on which method best predicts the amount expected to be received.

The amount of variable consideration that is included in the transaction price may be constrained and is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all variable consideration subject to constraint, and if necessary, adjusts its estimate of the overall transaction price.

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

The Company allocates the transaction price to the identified performance obligations based on the estimated standalone selling price.

The Company must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract.

The Company utilizes key assumptions to determine the standalone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs.

Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts the Company would expect to receive for the satisfaction of each performance obligation.

● Milestone Payments.

At the inception of each arrangement that includes development or regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

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

Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment.

There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur.

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

To date, the Company has not recognized any royalty revenue resulting from any of the Company’s collaboration or licensing arrangements.

● Recognition.

The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services.

For performance obligations that consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress.

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

The Company receives payments from its customers based on billing schedules established in each contract.

Non-refundable upfront payments are included in the estimation of the transaction price, allocated to the performance obligation(s) based upon relative standalone selling price and recognized for each performance obligation based upon the measure of progress (point in time or over time) for each performance obligation.

Payments received for goods and services not yet provided are recorded as deferred revenue.

Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Collaboration Agreements

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Stock-Based Compensation

The Company issues stock-based awards to employees, directors and non-employees, generally in the form of stock options.

The Company measures employee stock-based compensation based on the grant date fair value of the stock-based awards and recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the awards, which is generally the vesting period of the respective award, in accordance with ASC 718, Compensation—Stock

Compensation (“ASC 718”).

The Company issues stock-based awards to employees, directors and non-employees, generally in the form of stock options or restricted stock units.

ASC 718 requires all stock-based payments to employees, which includes grants of employee stock 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.

There are significant judgments and estimates inherent in the determination of the fair value of stock-based awards.

The Company considers the fair value of common stock to be equal to its current share price.

The grant date fair value of restricted stock units is estimated to be equal to the closing price of the Company’s common stock on the date of grant.

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.

Expected volatility is calculated based on reported volatility data for a representative group of publicly traded companies for which historical information is

The Company selects companies with comparable characteristics with historical share price information that approximates the expected term of the stock-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 Company will continue to apply this method until a sufficient amount of historical information regarding the volatility of its stock price becomes available or until circumstances change, such that the identified entities are no longer representative companies.

In the latter case, more suitable, similar entities whose share prices are publicly available would be utilized in the calculation.

The Company weighs the historical volatility of its own stock price and the historical volatility of a representative group of public companies for the computation of expected volatility used for estimating the fair value of option grants.

Annually, the Company will increase the weighting on the historical volatility of its own stock price over the historical volatility of a representative group of public companies until such time as the Company has a sufficient amount of historical information regarding the volatility of its own stock.

The risk-free interest rate is based on the U.S.

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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, 2023 and 2022.

The Company did not have any items of comprehensive income or loss other than net loss for years ended December 31, 2024 and 2023.

Net Loss Per Share

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 includes prefunded warrants to purchase common stock and excludes shares of restricted common stock that were not vested during the year ended December 31, 2023 and through the final vesting period that occurred during the year ended December 31, 2024.

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 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 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.

Income taxes are recorded in accordance with ASC 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.

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At December 31, 2024 and 2023, the Company had not identified any significant uncertain tax positions.

Recent Accounting Pronouncements Not Yet Adopted

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update No.

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Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

The Company adopted ASU 2023-07 during the year ended December 31, 2024, and the implementation of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update No.

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ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

This Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

In November 2024 the FASB issued Accounting Standards Update No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses.

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

Property and Equipment, Net

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Leasehold improvements

Construction in process

Total property and equipment

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Property and equipment, net

The Company incurred depreciation and amortization expense related to property and equipment of $ 1.8 million and $ 1.7 million for the years ended December 31, 2023 and 2022, respectively.

The Company incurred depreciation and amortization expense related to property and equipment of $ 1.6 million and $ 1.8 million for years ended December 31, 2024 and 2023, respectively.

Accrued Expenses

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Loan and Security Agreement

In November 2019, the Company’s wholly owned subsidiary, Xilio Development, entered into a loan and security agreement (as amended and restated in May 2023, the “Loan Agreement”) with PacWest, with the Company as a guarantor.

Under the Loan Agreement, in November 2019, Xilio Development borrowed $ 10.0 million under a term loan.

Interest on amounts outstanding under the Loan Agreement accrued at a variable annual rate equal to the greater of (i) the prime rate plus 0.25 % or (ii) 4.75 %.

As of December 31, 2023, the interest rate on the term loan was 8.75 %.

Xilio Development was required to make interest-only payments on any outstanding balances through December 31, 2022.

Xilio Development commenced making equal monthly payments of principal plus interest in January 2023.

As of December 31, 2023, the Company and Xilio Development were in compliance with all covenants under the Loan Agreement.

Xilio Development had the following future loan principal payments under the Loan Agreement at December 31, 2023:

Total future principal payments

unamortized discount

Total note payable

The Company recognized $ 0.7 million and $ 0.8 million of interest expense related to the Loan Agreement for the years ended December 31, 2023 and 2022, respectively, which is reflected in other income, net on the consolidated statements of operations and comprehensive loss.

In the first quarter of 2024, Xilio Development repaid all amounts outstanding under the Loan Agreement, and PacWest released all security interests in Xilio Development’s and its affiliates’ assets.

Collaboration Agreements and Intellectual Property Licenses

The Company recognized $ 0.1 million and $ 0.7 million of interest expense related to the Loan Agreement for years ended December 31, 2024 and 2023, respectively, which is reflected in other income, net on the consolidated statements of operations and comprehensive loss.

Collaboration and License Agreements

License Agreement with Gilead Sciences, Inc.

In March 2024, Xilio Development entered into a license agreement with Gilead Sciences, Inc.

(“Gilead”), pursuant to which it granted Gilead an exclusive global license to develop and commercialize XTX301, the Company’s tumor-activated IL-12 product candidate, and specified other molecules directed to IL-12.

Xilio Development is responsible for conducting clinical development for XTX301 in the ongoing Phase 1 clinical trial through an initial planned Phase 2 dose expansion clinical trial.

Following the delivery by Xilio Development of a specified clinical data package for XTX301 related to the Phase 1 clinical trial and planned Phase 2 clinical trial, Gilead can elect to transition responsibilities for the development and commercialization of XTX301 to Gilead, subject to the terms of the license agreement and payment by Gilead of a $ 75.0 million transition fee.

In connection with the execution of the license agreement, in March 2024, the Company also entered into a stock purchase agreement with Gilead.

Under the stock purchase agreement, Gilead purchased an aggregate of $ 25.0 million of the Company’s common stock and prefunded warrants in three private placements.

In March 2024, the Company initially issued and sold 6,860,223 shares of common stock to Gilead at a purchase price of $ 1.97 per share, and the Company received approximately $ 13.5 million in aggregate gross proceeds.

In April 2024, the Company issued and sold an additional 485,250 shares of its common stock at a purchase price of $ 0.76 per share and prefunded warrants to purchase up to an aggregate of 3,882,450 shares of its common stock at a purchase price of $ 0.7599 per prefunded warrant, and the Company received approximately $ 3.3 million in aggregate gross proceeds.

In December 2024, the Company issued and sold an additional 1,759,978 shares of its common stock at a purchase price of $ 1.04 per share and prefunded warrants to purchase up to an aggregate of 6,092,816 shares of its common stock at a purchase price of $ 1.0399 per prefunded warrant, and the Company received approximately $ 8.2 million in aggregate gross proceeds.

The prefunded warrants are exercisable any time at an exercise price of $ 0.0001 per share, subject to Gilead not being deemed a beneficial owner of greater than 19.9 % of the Company’s common stock upon the exercise of the prefunded warrants.

As of December 31, 2024, the Company has received $ 55.0 million in payments under the Gilead agreements, consisting of the $ 30.0 million upfront cash payment under the license agreement and $ 25.0 million in gross proceeds from private placements under the stock purchase agreement.

As of December 31, 2024, the Company is eligible to receive up to $ 592.5 million in additional contingent payments, which consist of the $ 75.0 million transition fee and up to $ 517.5 million in specified development, regulatory and sales-based milestones.

Prior to the potential transition fee, $ 17.5 million of the total additional contingent payments are related to a near-term development milestone.

In addition, the Company is eligible to receive tiered royalties ranging from high single digits to mid-teens on annual global net product sales.

The Company considered the ASC 606 criteria for combining contracts and determined the license agreement and the stock purchase agreement should be combined into a single contract because they were negotiated and entered into in contemplation of one another.

The Company concluded the initial private placement and the additional private placements do not represent freestanding financial instruments as such instruments are not legally detachable due to contractual transfer restrictions.

The Company accounted for the common stock issued to Gilead in the initial private placement based on the fair market value of the common stock on the date of issuance.

The fair market value of the common stock issued to Gilead in the initial private placement was $ 4.4 million, based on the closing price of the Company’s common stock on the date of issuance, resulting in a $ 9.1 million premium.

The Company determined that the premium paid by Gilead for the common stock purchased in the initial private placement should be attributed to the transaction price of the license agreement.

The Company determined that the license agreement represents a contract with a customer within the scope of ASC 606 and identified two promises under the license agreement:

(i) the exclusive licenses granted to Gilead related to the Company’s IL-12 program and (ii) the provision by Xilio Development and its affiliates of development services related to ongoing and planned clinical trials for XTX301 through an initial planned Phase 2 clinical trial.

The Company determined that the exclusive license and development services were not capable of being distinct on the basis that the development services to be provided by Xilio Development are specialized in nature, specifically with respect to its specialized expertise related to XTX301, the IL-12 program and the Company’s proprietary platform for tumor-activated biologics.

Accordingly, the Company concluded that there is a single identified combined performance obligation consisting of the exclusive license and the development services.

For purposes of ASC 606, the transaction price of the license agreement at the outset of the arrangement was determined to be $ 39.1 million, which consisted of the upfront cash payment of $ 30.0 million under the license agreement and the $ 9.1 million premium on the sale of common stock to Gilead in the initial private placement, which was allocated to the single combined performance obligation.

The Company used the most likely amount method to estimate variable consideration.

All contingent payments are fully constrained as of December 31, 2024, as the achievement of the milestones underlying such contingent payments is uncertain and highly susceptible to factors outside of the Company’s control.

Accordingly, all such contingent payments are excluded from the transaction price.

The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and may adjust the transaction price as necessary.

Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate.

The Company plans to recognize such revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Revenue associated with the combined performance obligation is recognized as services are provided as control is transferred over time.

The Company measures progress based on the amount of costs incurred relative to the total costs expected to fulfill the combined performance obligation.

In management’s judgment, this input method is the best measure of progress towards satisfying the combined performance obligation and reflects a faithful depiction of the transfer of goods and services.

During the year ended December 31, 2024, the Company recognized license revenue of $ 6.3 million under the license agreement and the stock purchase agreement.

As of December 31, 2024, the Company recorded deferred revenue of $ 32.8 million, of which $ 13.5 million was recorded as a current liability on the Company’s consolidated balance sheet.

The deferred revenue is expected to be recognized as license revenue through at least 2027 depending on the timing of certain clinical development activities.

Summary of Contract Assets and Liabilities

The following table presents changes in the balances of the Company’s contract liabilities:

Deferred revenue as of December 31, 2023

License revenue recognized

Deferred revenue as of December 31, 2024

Clinical Trial Collaboration with F.

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Hoffmann-La Roche Ltd.

(“Roche”) entered into a clinical trial collaboration (the “Roche Clinical Collaboration”) pursuant to a clinical supply agreement to evaluate XTX101 in combination with atezolizumab (Tecentriq®) in a Phase 1/2 clinical trial consisting of a Phase 1 dose escalation cohort assessing the combination in patients with advanced solid tumors and a planned Phase 2 clinical trial assessing the combination in patients with microsatellite stable colorectal cancer.

(“Roche”) entered into a clinical trial collaboration (the “Roche Clinical Collaboration”) pursuant to a clinical supply agreement to evaluate vilastobart (XTX101) in combination with atezolizumab (Tecentriq®) in a Phase 1/2 clinical trial consisting of a Phase 1 dose escalation cohort assessing the combination in patients with advanced solid tumors and a Phase 2 clinical trial assessing the combination in patients with microsatellite stable colorectal cancer.

Under the clinical supply agreement, the Company is eligible to receive specified cost-sharing payments from Roche, and each company will supply its respective anti-cancer agent to support the Phase 1/2 clinical trial.

The Company is responsible for conducting the Phase 1/2 clinical trial and retains global development and commercialization rights to XTX101.

The Company is responsible for conducting the Phase 1/2 clinical trial and retains global development and commercialization rights to vilastobart.

The Company concluded that the cost-sharing payments from the Roche Clinical Collaboration are not in the scope of ASC 606 because the Company does not consider performing research and development services for reimbursement to be part of its ongoing major or central operations.

Therefore, the Company applied a reasonable, rational, and consistently applied accounting policy election to record the cost-sharing payments from the Roche Clinical Collaboration as a reduction of research and development expenses in the consolidated statements of operations and comprehensive loss for the period in which a study development event is achieved.

During the year ended December 31, 2023, the Company recognized a reduction of research and development expenses of $ 2.0 million.

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.

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 paid AskGene an upfront payment of $ 6.0 million, and for any licensed IL-2 product, Xilio Development is obligated to pay AskGene up to $ 13.0 million in the aggregate upon the achievement of specified regulatory milestones.

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.

During the term of the agreement, AskGene has agreed not to exploit any non-antigen binding IL-2 product comprised of specified masking technology in the field of oncology in the Xilio Development territory.

In addition, Xilio Development granted a non-exclusive, royalty-free, non-transferable, worldwide license to AskGene for specified Xilio patent rights related to non-antigen binding IL-2 products in the field of immunology and for specified Xilio patent rights related to antigen binding IL-2 products in all fields.

Subject to the terms of the agreement and during the time period specified, Xilio Development also granted AskGene an option to obtain a license in the AskGene territory to develop and commercialize IL-2 licensed products.

If AskGene exercises its option to develop and commercialize IL-2 licensed products in the AskGene territory, then the parties will negotiate and enter into a license agreement for AskGene’s exclusive development and commercialization of such products in the AskGene territory, and AskGene would be obligated to pay Xilio Development percentage royalties in the mid-single digits on aggregate annual net sales of such licensed products in the AskGene territory.

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.

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.

The Company recognized a reduction of research and development expenses of $ 4.0 million and $ 2.0 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, $ 2.0 million of earned but unpaid cost-sharing payments were recorded in prepaid expenses and other current assets on the Company’s consolidated balance sheet.

Amended and Restated Exclusive License Agreement with City of Hope

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For the first three licensed products or licensed services to achieve specified development and regulatory milestones, Xilio Development 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, Xilio Development 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.

Xilio Development is also obligated to pay City of Hope a portion of any consideration Xilio Development receives for the grant of sublicenses under the agreement ranging from a low double digit to mid-twenties percentage of such consideration, subject to specified conditions under that agreement at the time that Xilio Development grants any such sublicense.

The Company incurred no costs related to the payment of specified development milestones under the agreement during the years ended December 31, 2023 and 2022.

To date, the Company has made an aggregate of $ 0.8 million in specified development and regulatory milestone payments to City of Hope related to its anti-CTLA-4 monoclonal antibody program.

In addition, subject to specified conditions, Xilio Development 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.

Xilio Development is also obligated to pay City of Hope a portion of any consideration Xilio Development receives for the grant of sublicenses under the agreement in an amount equal to a low double digit percentage of such consideration, subject to specified conditions under that agreement at the time that Xilio Development grants any such sublicense.

The Company incurred costs of $ 0.5 million related to the payment of specified development milestones under the agreement during the year ended December 31, 2024.

The Company incurred no costs related to the payment of specified development milestones under the agreement during the year ended December 31, 2023.

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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.

To date, the Company has made an aggregate of $ 5.8 million in specified development and regulatory milestone payments to WuXi Biologics related to its anti-CTLA-4 monoclonal antibody program.

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 no costs related to the payment of specified development milestones under the agreement during the years ended December 31, 2023 and 2022.

The Company incurred costs of $ 4.0 million related to specified development milestones under the agreement during the year ended December 31, 2024, of which $ 3.0 million was recorded in accrued expenses on the Company’s consolidated balance sheet as of December 31, 2024.

The Company incurred no costs related to the payment of specified development milestones under the agreement during the year ended December 31, 2023.

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.

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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 leased premises, which it began paying simultaneous with the rent commencement date in March 2020.

As of December 31, 2023 and 2022, 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 account, which is recorded as restricted cash on the consolidated balance sheets.

As of December 31, 2024 and 2023, the Company has a letter of credit for the benefit of its landlord in the amount of $ 1.8 million and $ 1.6 million, respectively, collateralized by a money market account, which is recorded as restricted cash on the consolidated balance sheets.

The components of lease expense were as follows:

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Operating Lease

Finance Lease

Total future minimum lease payments

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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 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’ liability insurance.

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Undesignated Preferred Stock

As of December 31, 2023 and 2022, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share.

As December 31, 2024 and 2023, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share.

As of December 31, 2024 and 2023, there were no shares of preferred stock issued or outstanding.

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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.

available for distribution to its stockholders, subject to any preferential or other rights of any then outstanding preferred stock.

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.

Private Placement

In March 2024, the Company entered into a securities purchase agreement with certain existing accredited investors pursuant to which the Company issued and sold an aggregate of 1,953,125 shares of its common stock at a purchase price of $ 0.64 per share and, in lieu of shares of the Company’s common stock, prefunded warrants to purchase up to an aggregate of 15,627,441 shares of its common stock at a purchase price of $ 0.6399 per prefunded warrant, through a private placement.

The prefunded warrants are exercisable any time at an exercise price of $ 0.0001 per share.

The private placement closed in April 2024.

The Company received aggregate gross proceeds of $ 11.3 million from the private

placement, before deducting placement agent fees and expenses payable by the Company.

The shares of common stock issued and sold in the private placement were registered for resale pursuant to the Company’s registration statement on Form S-3 filed with the SEC on April 30, 2024, which became effective on May 6, 2024.

“At-the-Market” Offering Program

In November 2022, the Company filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $ 250,000,000 of its common stock, preferred stock, debt securities, units and warrants, which the Company may issue and sell from time to time in one or more offerings, which became effective on November 18, 2022 (333-268264).

In November 2022, the Company entered into a sales agreement (the “Cowen Sales Agreement”) with Cowen and Company LLC under which the Company could issue and sell shares of its common stock, from time to time, having an aggregate offering price of up to $ 75.0 million under a sales agreement prospectus filed as part of the Form S-3.

During the year ended December 31, 2024, the Company issued and sold 7,000,000 shares of its common stock pursuant to the Cowen Sales Agreement at a price of $ 1.00 per share for aggregate gross proceeds of $ 7.0 million.

In the first quarter of 2025, the Company issued and sold an additional 1,550,000 shares of its common stock pursuant to the Cowen Sales Agreement at a weighted average price of $ 1.3348 per share for aggregate gross proceeds of approximately $ 2.1 million.

In March 2025, the Company terminated the Cowen Sales Agreement, and the Company entered into a new sales agreement with Leerink Partners, LLC under which the Company may issue and sell shares of its common stock from time to time at an aggregate offering price of up to $ 50.0 million under a sales agreement prospectus filed as part of the Form S-3.

Shares Reserved for Future Issuance

The Company has reserved for future issuances the following shares of common stock as of December 31, 2024 and 2023:

Stock options

Stock options and unvested restricted stock units

Employee stock purchase plan

Prefunded warrants

Total shares reserved for future issuance

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2021 Stock Incentive Plan

In September 2021, the Company’s board of directors and stockholders adopted the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective immediately prior to the IPO in October 2021.

In September 2021, the Company’s board of directors and stockholders adopted the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective immediately prior to the initial public offering in October 2021.

Upon effectiveness of the 2021 Plan, the Company ceased granting awards under the 2020 Plan.

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The 2021 Plan provides that the number of shares reserved and available for issuance under the 2021 Plan will be cumulatively increased on January 1 of each calendar year by 5 % of the number of shares of common stock outstanding on such date or such lesser amount determined by the Company’s board of directors.

As of December 31, 2024, there were 1,938,102

shares of common stock available for future issuance under the 2021 Plan.

On January 1, 2025, the number of shares reserved for issuance under the 2021 Plan automatically increased by 2,293,405 shares.

As of December 31, 2023, there were 1,780,442 shares available for future grant under the 2021 Plan.

2022 Inducement Plan

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In accordance with Rule 5635(c)(4), stock-based incentive awards under the 2022 Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona fide period of non-employment by the Company as a material inducement to the employee’s entering into employment with the Company.

An aggregate of 275,000 shares of the Company’s common stock has been reserved for issuance under the 2022 Inducement Plan.

As of December 31, 2023, there were 220,000 shares available for future grant under the 2022 Inducement Plan.

The Company initially reserved 275,000 shares of common stock under the 2022 Inducement Plan.

In November 2024, the number of shares reserved for issuance under the 2022 Inducement Plan was increased by 500,000 shares.

As of December 31, 2024, there were 610,600 shares of common stock available for future issuance under the 2022 Inducement Plan.

2021 Employee Stock Purchase Plan

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The Company initially reserved 292,031 shares of common stock for issuance under the 2021 ESPP.

The 2021 ESPP provides that the number of shares of common

stock reserved for issuance under the 2021 ESPP will be cumulatively increased on January 1 of each calendar year by 1 % of the number of shares of the Company’s common stock outstanding on such date or such lesser amount determined by the Company’s board of directors (up to a maximum increase of 584,062 shares of common stock per year).

On January 1, 2024, the number of shares reserved for issuance under the 2021 ESPP was increased by 276,132 shares.

The Company issued 140,192 shares under the 2021 ESPP during the year ended December 31, 2023 and no shares under the 2021 ESPP during the year ended December 31, 2022.

The 2021 ESPP provides that the number of shares of common stock reserved for issuance under the 2021 ESPP will be cumulatively increased on January 1 of each calendar year by 1 % of the number of shares of the Company’s common stock outstanding on such date or such lesser amount determined by the Company’s board of directors (up to a maximum increase of 584,062 shares of common stock per year).

During the years ended December 31, 2024 and 2023, the Company issued 76,168 shares and 140,192 shares, respectively, under the 2021 ESPP.

As of December 31, 2024, there were 901,208 shares available for future issuance under the 2021 ESPP.

Total Stock-Based Compensation Expense

During the years ended December 31, 2023 and 2022, the Company recorded compensation expense related to 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:

On January 1, 2025, the number of shares reserved for issuance under the 2021 ESPP was increased by 458,681 shares.

Stock-Based Compensation Expense

During the years ended December 31, 2024 and 2023, the Company recorded compensation expense related to stock options, restricted stock units and restricted common stock for employees and non-employees, and share purchases under the 2021 ESPP for employees, which was allocated as follows in the consolidated statements of operations and comprehensive loss:

Year Ended December 31,

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As of December 31, 2024, the Company had unrecognized stock-based compensation expense of $ 7.3 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted average period of 1.8 years.

Restricted Stock

Restricted Stock Units

In January 2024, the Company awarded 481,500 restricted stock units to certain employees of the Company.

The restricted stock units vest in four equal annual installments beginning on the first anniversary of the grant date.

The restricted stock units are generally forfeited if the individual’s service relationship with the Company or any subsidiary terminates prior to vesting.

A summary of the Company’s restricted stock unit activity and related information is as follows:

of Restricted

Unvested as of December 31, 2023

Unvested as of December 31, 2024

Restricted Common Stock

A summary of the Company’s restricted stock activity and related information is as follows:

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Unvested as of December 31, 2023

Canceled/Forfeited

Unvested as of December 31, 2024

In June 2020, the Company granted 552,546 shares of common stock underlying restricted stock awards, and the Company has not subsequently granted any additional restricted stock awards.

The Company recorded stock-based compensation expense for restricted stock granted to employees, directors and non-employees of $ 0.3 million and $ 0.4 million for the years ended December 31, 2023 and 2022.

During the years ended December 31, 2023 and 2022, the aggregate fair value of the restricted stock awards that vested was $ 0.1 million and $ 0.3 million, respectively.

As of December 31, 2023, total unrecognized compensation cost related to unvested restricted stock awards was less than $ 0.1 million, which is expected to be recognized during the first quarter of 2024.

The aggregate fair value of the restricted stock awards that vested during the years ended December 31, 2024 and 2023 was less than $ 0.1 million.

Net Loss Per Share

The weighted average number of shares of common stock used in the basic and diluted net loss per share calculation includes the prefunded warrants issued in connection with the Company’s private placements with certain existing investors and Gilead, as the prefunded warrants are exercisable at any time for nominal cash consideration.

As of December 31, 2024, no prefunded warrants have been exercised and 25,602,707 prefunded warrants are outstanding.

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.

Unvested restricted common stock

Unvested restricted stock units

Outstanding stock options

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Total common stock equivalents

The Company has no t recorded a current or deferred tax provision for the years ended December 31, 2023 and 2022.

The Company has no t recorded a current or deferred tax provision for years ended December 31, 2024 and 2023.

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:

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Lease liability

Deferred revenue

Accruals and reserves

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These loss carryforwards are available to reduce future federal taxable income, if any.

As of December 31, 2023, the Company had federal and state research and development credit carryovers of $ 7.8 million and $ 3.1 million, which may be available to offset any future income tax and which will begin to expire in 2033.

As of December 31, 2024, the Company had federal and state research and development credit carryovers of $ 10.2 million and $ 3.8 million, which may be available to offset any future income tax

and which will 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.

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 (the “Code”) 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 an “ownership change” as defined by Section 382.

The Company has not yet completed a detailed study of its inception to date ownership change activity.

In general, an ownership change as defined by Section 382 of the Code 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.

In the second quarter of 2024, the Company had an ownership change as defined by Section 382 and Section 383 of the Code.

As a result, if the Company earns net taxable income, its ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset such taxable income may be subject to limitations, which could result in increased future tax liability to the Company and could have an adverse effect on its future results of operations.

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;

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Under the 401(k) Plan, all employees who meet minimum age and service requirements may elect to defer a portion of their annual compensation on a pre-tax basis or post-tax basis, up to the maximum amount prescribed by statute.

For each participating employee, the Company makes matching contributions equal to 100 % of the first 3 % of compensation contributed, plus 50 % of the next 2 % of compensation contributed, for a maximum of up to 4 % of the employee’s eligible compensation.

employee’s eligible compensation.

Matching contributions are fully vested at the time of contribution.

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Subsequent Events

License Agreement and Issuance of Common Stock

On March 27, 2024, Xilio Development entered into an exclusive license agreement with Gilead Sciences, Inc.

Under the license agreement, the Company is eligible to receive approximately $ 43.5 million in upfront payments, including a cash payment of $ 30.0 million and an initial equity investment by Gilead of approximately $ 13.5 million in the Company’s common stock at a purchase price of $ 1.97 per share.

In connection with the execution of the license agreement, on March 27, 2024, the Company entered into a stock purchase agreement with Gilead pursuant to which the Company agreed to initially issue and sell 6,860,223 of its shares of common stock to Gilead in a private placement at a purchase price of $ 1.97 per share for an aggregate purchase price of approximately $ 13.5 million.

The initial Gilead private placement closed on March 28, 2024, and the $ 30.0 million upfront cash payment is payable by Gilead within a specified time period promptly following signing of the license agreement.

March 2024 Private Placement

On March 28, 2024, the Company entered into a securities purchase agreement with certain existing accredited investors pursuant to which the Company agreed to sell and issue to the investors in a private placement an aggregate of 1,953,125 shares of the Company’s common stock at a purchase price of $ 0.64 per share, and to certain investors in lieu of shares of the Company’s common stock, prefunded warrants to purchase up to an aggregate of 15,627,441 shares of the Company’s common stock at a purchase price of $ 0.6399 per prefunded warrant.

The private placement is anticipated to close on April 2, 2024, subject to customary closing conditions.

Strategic Portfolio Reprioritization and Workforce Reduction

On March 27, 2024, the board of directors of the Company approved a strategic portfolio reprioritization and restructuring.

As part of the strategic portfolio reprioritization and restructuring, the Company plans to undertake efforts to further reduce its expenses and streamline its operations, including a reduction in headcount of 15 employees, representing approximately 21 % of the Company’s workforce immediately prior to the workforce reduction.

Collaboration, License and Option Agreement and Issuance of Common Stock

On February 10, 2025, Xilio Development entered into a collaboration, license and option agreement with AbbVie Group Holdings for up to four programs leveraging the Company’s proprietary tumor-activation technology and platform, consisting of (i) an exclusive option for (a) an initial program to discover, develop and commercialize masked T cell engager molecules for an agreed upon initial target and backup target, and (b) subject to the terms of the agreement, up to two additional programs to discover, develop, and commercialize masked T cell engager molecules for an initial target and backup target determined at the time of program initiation and (ii) an exclusive license for a program to develop and commercialize a masked antibody-based immunotherapy.

Under the collaboration, license and option agreement, the Company received an upfront cash payment of $ 42.0 million in February 2025.

In addition, the Company will be eligible to receive up to approximately $ 2.1 billion in additional contingent payments and tiered royalties ranging in the mid to high single digits on annual global net product sales.

In connection with the execution of the collaboration, license and option agreement, on February 10, 2025, the Company entered into a stock purchase agreement with AbbVie Inc.

pursuant to which the Company issued and sold 4,347,826 shares of its common stock to AbbVie Inc.

in a private placement at a purchase price of $ 2.30 per share for an aggregate purchase price of $ 10.0 million.

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What changed 10-K

Item 9A. Controls and Procedures