What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-08 · 151 added, 119 removed, 198 unchanged (58% of the section changed)

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

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

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

Hoffmann-La Roche Ltd, or Roche.

In January 2025, we announced initial data from the ongoing Phase 2 clinical trial, and we plan to report additional data from the Phase 2 clinical trial, including additional response assessments and further follow-up on the previously reported data, at the 2025 American Society of Clinical Oncology Annual Meeting.

XTX301 is currently advancing in clinical development in a Phase 1 clinical trial in patients with advance solid tumors under our exclusive license agreement with Gilead Sciences, Inc., or Gilead.

In addition to our clinical-stage product candidates, we are leveraging our proprietary tumor-activation platform to advance multiple preclinical programs for a masked PD-1/IL-2 bispecific and masked T cell engager molecules.

Recent Developments

Collaboration, License and Option Agreement with AbbVie Group Holdings Limited

On February 10, 2025, our wholly owned subsidiary Xilio Development, Inc., or Xilio Development, entered into a collaboration, license and option agreement with AbbVie Group Holdings Limited, or AbbVie, for up to four programs leveraging our 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, which we refer to as the initial option program, 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, each of which we refer to as an additional option program and (ii) an exclusive license for a program to develop and commercialize a masked antibody-based immunotherapy, which we refer to as the collaboration program.

We refer to the initial option program and the additional option programs, collectively, as the option programs.

Under the agreement, we granted AbbVie an option to obtain an exclusive global license to exploit products discovered and developed under the initial option program.

During the three-year period following the effective date of the agreement,

AbbVie has the right to initiate up to two additional option programs by (a) selecting an initial target and backup target for each such additional option program (excluding the target known as PSMA) and any other target for which we have completed specified activities prior to lead selection) and (b) paying us an additional program nomination fee for each additional option program.

In addition, on an option program-by-option program basis, prior to the initiation of specified activities related to lead optimization and selection for the initial target for such option program, AbbVie has a one-time right to substitute the initial target with the backup target agreed upon by the parties at the time of option program initiation, subject to the payment by AbbVie of a one-time substitution fee with respect to such substituted target and the other terms of the agreement.

For the initial option program, AbbVie’s option right is exercisable beginning on the effective date of the agreement, and for each additional option program, AbbVie’s option right is exercisable following delivery of written notice of nomination of such additional option program.

For each option program, prior to option exercise, we will be responsible for conducting preclinical discovery and development up to the completion of investigational new drug application enabling studies, subject to AbbVie paying us option extension fees upon completion of specified stages of preclinical discovery and development.

Unless AbbVie elects to extend preclinical development through the next stage and pays the applicable option extension fee, AbbVie’s option right terminates within a specified time period following completion of each stage of preclinical development.

Upon exercising its option for an option program, AbbVie will be responsible for any remaining preclinical development, if applicable, and all clinical development, regulatory and commercialization activities with respect to licensed products under the applicable option program.

In connection with the collaboration program, we granted AbbVie an exclusive global license to exploit products discovered and developed under the collaboration program.

We are responsible for conducting all preclinical development through lead generation, and AbbVie is responsible for all further development and commercialization activities for any licensed products generated under the collaboration program.

Under the agreement, we have received $52.0 million in total upfront payments, consisting of a cash payment of $42.0 million and an equity investment of $10.0 million in our common stock at a purchase price of $2.30 per share.

In addition, we will be eligible to receive up to approximately $2.1 billion in additional contingent payments, consisting of (i) up to $305.0 million in aggregate program nomination fees, preclinical development option extension fees and option fees for the option programs and (ii) up to $1.8 billion in aggregate development, regulatory and sales-based milestones for all option programs and the collaboration program.

In addition, we are eligible to receive tiered royalties ranging in the high single digits on annual global net product sales for the option program and tiered royalties ranging in the mid-single digits on annual global net product sales for the collaboration program.

Subject to the terms, conditions and specified exceptions set forth in the agreement, until the agreement is terminated or expires with respect to an option program or the collaboration program, we have agreed to work exclusively with AbbVie with respect to the target for (i) each option program and (ii) the collaboration program.

In addition, we have agreed to work exclusively with AbbVie with respect to the backup target for each option program until the expiration of the applicable target substitution period.

Unless earlier terminated in accordance with its terms, the agreement will expire upon expiration of the last royalty term for the last licensed product.

AbbVie may terminate the agreement for convenience upon specified time periods.

On an option program-by-option program basis, if AbbVie elects not to pay the applicable option extension fee following completion of each stage of preclinical development, or if AbbVie elects not to exercise its option right and pay the option exercise fee for the applicable option program, then the agreement will automatically terminate with respect to such option program.

Subject to the terms and specified exceptions set forth in the agreement, either party may terminate the agreement for the other party’s uncured material breach or insolvency.

Stock Purchase Agreement and Investor Rights Agreement with AbbVie Inc.

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

pursuant to which we issued and sold 4,347,826 of our shares of 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.

The stock purchase agreement contains customary terms and conditions, including closing conditions, mutual representations, warranties and covenants for each of us and AbbVie Inc.

In addition, pursuant to the terms of an investor rights agreement entered into by and between us and AbbVie Inc.

in connection with the stock purchase agreement, AbbVie

agreed to certain transfer and standstill restrictions.

In addition, AbbVie Inc.

is entitled to certain registration rights with respect to the shares issued pursuant to the stock purchase agreement following termination of the transfer restrictions.

We and AbbVie Inc.

each granted the other party customary indemnification rights in connection with the registration of the shares issued pursuant to the stock purchase agreement.

In May 2025, we announced updated data from the ongoing Phase 2 clinical trial at the 2025 American Society of Clinical Oncology (ASCO) Annual Meeting, demonstrating additional anti-tumor activity, further duration of responses and a generally well-tolerated safety profile and we anticipate reporting additional data from the Phase 2 trial in the first half of 2026.

For XTX301, we have completed enrollment in Phase 1A monotherapy dose escalation and evaluation of those patients is ongoing, and we continue to enroll patients in Phase 1B monotherapy dose expansion of our ongoing Phase 1 clinical trial in patients with advanced solid tumors under our exclusive license agreement with Gilead Sciences, Inc., or Gilead.

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

Liquidity and Going Concern Overview

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

a debt financing;

our initial public offering, or IPO, of common stock in October 2021;

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

and sales of common stock through at-the-market, or ATM, offerings.

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

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

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

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

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

Since inception, we have incurred significant operating losses, including net losses of $13.3 million and $17.2 million for the three months ended March 31, 2025 and 2024, respectively, and a net loss of $58.2 million for the year ended December 31, 2024.

As of March 31, 2025, we had an accumulated deficit of $397.0 million.

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

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

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

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

Since inception, we have incurred significant operating losses, including net losses of $29.1 million and $31.1 million for the six months ended June 30, 2025 and 2024, respectively, and a net loss of $58.2 million for the year ended December 31, 2024.

As of June 30, 2025, we had an accumulated deficit of $412.9 million.

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

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● obtain, expand, maintain, defend and enforce our intellectual property;

● hire additional research, clinical, regulatory, quality, manufacturing and general and administrative personnel;

● establish a commercial and distribution infrastructure to commercialize products for which we may obtain marketing approval, if any;

● continue to discover, validate and develop additional product candidates;

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● acquire or in-license other product candidates, technologies or intellectual property;

● hire additional personnel to support current or future programs;

● establish a commercial and distribution infrastructure to commercialize products for which we may obtain marketing approval, if any;

● incur additional costs associated with current and future research, development and commercialization efforts and operations as a public company.

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

As of March 31, 2025, we had cash and cash equivalents of $89.1 million.

Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of March 31, 2025 will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2026.

Since these amounts are not expected to be sufficient to fund our operations for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability

to continue as a going concern.

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

additional equity or debt financings;

additional collaborations, partnerships or licensing transactions;

or other sources.

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

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

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

As of June 30, 2025, we had cash and cash equivalents of $121.6 million.

Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of June 30, 2025 will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the end of the third quarter of 2026.

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

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

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

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

arrangements or other sources.

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

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

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

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

Financial Operations Overview

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

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

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

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

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

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

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

Restructuring

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

Other Income, Net

Other income, net consists primarily of interest income earned from our cash and cash equivalents, interest expense principally on the note payable under our former debt arrangement with Pacific Western Bank, or PacWest, and amortization of the debt discount related to debt issuance costs.

Other Income (Expense), Net

Change in Fair Value of Common Stock Warrant Liabilities

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

Other Income (Expense), Net

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

Results of Operations

Comparison of the three months ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024 (in thousands):

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

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

Three Months Ended

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Loss from operations

Other income, net

Total other income, net

Other income (expense), net

Change in fair value of common stock warrant liabilities

Other income (expense), net

Total other income (expense), net

Collaboration and License Revenue

We recognized $2.9 million in collaboration and license revenue for the three months ended March 31, 2025 under the collaboration, license and option agreement and stock purchase agreement with AbbVie and the license agreement and stock purchase agreement with Gilead.

We did not recognize any collaboration and license revenue for the three months ended March 31, 2024 under our agreements with AbbVie and Gilead, as we entered into those agreements in February 2025 and March 2024, respectively.

Collaboration and license revenue increased by $5.7 million from $2.4 million for the three months ended June 30, 2024 to $8.1 million for the three months ended June 30, 2025.

The increase was due to collaboration and license revenue recognized under the collaboration, license and option agreement and stock purchase agreement that we entered into in February 2025 with AbbVie.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2025 and 2024 (in thousands):

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

Three Months Ended

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Total research and development expenses

Research and development expenses decreased by $2.1 million from $10.4 million for the three months ended March 31, 2024 to $8.3 million for the three months ended March 31, 2025.

Research and development expenses increased by $4.1 million from $11.2 million for the three months ended June 30, 2024 to $15.3 million for the three months ended June 30, 2025.

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

● vilastobart costs, which include $2.0 million of cost-sharing payments earned under our Roche clinical collaboration during both the three months ended March 31, 2025 and 2024, and which were recorded as a reduction in research and development expenses, increased by $0.3 million, primarily driven by an increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

● XTX301 costs decreased by $0.2 million, primarily driven by a $0.1 million decrease in manufacturing activities and a $0.1 million decrease in clinical development activities related to our ongoing Phase 1 clinical trial;

● XTX501 costs, which were not separately tracked during the three months ended March 31, 2024 as we had not begun performing IND-enabling studies, increased by $0.5 million primarily due to manufacturing activities related to IND-enabling studies;

● XTX202 costs decreased by $3.1 million, primarily driven by a decrease in clinical development activities as a result of discontinuing further investment in XTX202 as a monotherapy;

● vilastobart costs increased by $1.8 million, primarily driven by a $2.5 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

in addition, for the three months ended June 30, 2024, research and development expenses included a $1.0 million development milestone under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics (Hong Kong) Limited, or WuXi Biologics, for which there was no comparable cost during the three months ended June 30, 2025;

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

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

● XTX202 costs decreased by $1.5 million, primarily driven by a decrease in clinical development activities as a result of discontinuing further investment in XTX202;

● other early programs and indirect research and development costs increased by $1.1 million, primarily driven by an increase in external expenses related to preclinical research and development activities;

● personnel-related costs decreased by $0.3 million, primarily driven by a $0.2 million decrease in salaries, bonuses and benefits due to lower research and development headcount and a $0.1 million decrease in stock-based compensation.

● personnel-related costs increased by $0.8 million, primarily driven by an increase in salaries, bonuses and benefits due to higher research and development headcount.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended March 31, 2025 and 2024 (in thousands):

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

Three Months Ended

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Total general and administrative expenses

General and administrative expenses increased by $2.4 million from $6.1 million for the three months ended March 31, 2024 to $8.5 million for the three months ended March 31, 2025.

General and administrative expenses increased by $1.3 million from $5.8 million for the three months ended June 30, 2024 to $7.1 million for the three months ended June 30, 2025.

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

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Restructuring

We did not recognize any restructuring expenses for the three months ended March 31, 2025.

We recognized $0.9 million in restructuring expenses for the three months ended March 31, 2024.

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

Other Income, Net

Other income, net, increased by $0.3 million from $0.3 million for the three months ended March 31, 2024 to $0.6 million for the three months ended March 31, 2025.

The increase in other income, net, was primarily due to an increase in interest income earned on our cash and cash equivalents due to a higher average cash balance.

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

We recognized $0.1 million in restructuring expenses for the three months ended June 30, 2024, consisting of employee outplacement service costs related to the workforce reduction announced in March 2024.

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities for the three months ended June 30, 2025 was due to a loss of less than $0.1 million on the change in the fair value of the common stock warrant liabilities between the issuance date of June 5, 2025 and the quarter ended June 30, 2025.

Other Income (Expense), Net

Other income (expense), net, of $1.4 million for the three months ended June 30, 2025 included $2.3 million of the issuance costs we incurred in connection with the sale and issuance of the prefunded warrants and common stock warrants in June 2025 in connection with our follow-on public offering, which were allocated to the common stock warrant liabilities and were partially offset by $0.9 million of interest income.

Other income (expense), net of $0.8 million for the three months ended June 30, 2024 consisted of interest income.

Comparison of the six months ended June 30, 2025 and 2024

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

Six Months Ended

Collaboration and license revenue

Total revenue

Operating expenses

Research and development

General and administrative

Restructuring

Total operating expenses

Loss from operations

Other income (expense), net

Change in fair value of common stock warrant liabilities

Other income (expense), net

Total other income (expense), net

Collaboration and License Revenue

Collaboration and license revenue increased by $8.7 million from $2.4 million for the six months ended June 30, 2024 to $11.0 million for the six months ended June 30, 2025.

The increase was due to an increase in collaboration and license revenue recognized under the license agreement and stock purchase agreement with Gilead and collaboration and license revenue recognized under the collaboration, license and option agreement and stock purchase agreement that we entered into in February 2025 with AbbVie.

Research and Development Expenses

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

Six Months Ended

Other early programs and indirect research and development

Personnel-related

Total research and development expenses

Research and development expenses increased by $2.0 million from $21.6 million for the six months ended June 30, 2024 to $23.6 million for the six months ended June 30, 2025.

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

● vilastobart costs, which include $2.0 million of cost-sharing payments earned under our Roche clinical collaboration during each of the six months ended June 30, 2025 and 2024, that were recorded as a reduction in research and development expenses, increased by $2.1 million, primarily driven by an increase in clinical

development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

in addition, for the six months ended June 30, 2024, research and development expenses included a $1.0 million development milestone under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics, for which there was no comparable cost during the six months ended June 30, 2025;

● XTX301 costs decreased by $0.3 million, primarily driven by a $0.1 million decrease in clinical development activities related to our ongoing Phase 1 clinical trial and a $0.1 million decrease in manufacturing activities;

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

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

● XTX202 costs decreased by $4.6 million, primarily driven by a decrease in clinical development activities as a result of discontinuing further investment in XTX202;

● other early programs and indirect research and development costs increased by $1.7 million, primarily driven by an increase in external expenses related to preclinical research and development activities;

● personnel-related costs increased by $0.9 million, primarily driven by a $1.0 million increase in salaries, bonuses and benefits due to higher general and administrative headcount and a $0.1 million increase in recruiting and other personnel-related costs, partially offset by a $0.2 million decrease in stock-based compensation.

General and Administrative Expenses

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

Six Months Ended

Personnel-related

Professional and consulting fees

Facility-related and other general and administrative expenses

Total general and administrative expenses

General and administrative expenses increased by $3.7 million from $12.0 million for the six months ended June 30, 2024 to $15.6 million for the six months ended June 30, 2025.

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

● personnel-related costs increased by $1.4 million, primarily driven by a $1.1 million increase in salaries, bonuses and benefits due to higher general and administrative headcount and a $0.6 million increase in recruiting and other personnel-related costs, partially offset by a $0.3 million decrease in stock-based compensation;

● professional and consulting fees increased by $2.6 million, primarily driven by an increase in legal fees and other professional costs;

● facility-related and other general and administrative expenses decreased by $0.2 million, primarily driven by a decrease in costs related to directors’ and officers’ liability insurance.

Restructuring

We did not recognize any restructuring expenses for the six months ended June 30, 2025.

We recognized $1.0 million in restructuring expenses for the six months ended June 30, 2024.

The restructuring expenses were associated with the

workforce reduction announced in March 2024 and consisted of employee severance, benefits continuation and outplacement service costs.

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities for the six months ended June 30, 2025 was due to a loss of less than $0.1 million on the change in the fair value of the common stock warrant liabilities between the issuance date of June 5, 2025 and the quarter ended June 30, 2025.

Other Income (Expense), Net

Other income (expense), net of $0.8 million for the six months ended June 30, 2025 included $2.3 million of the issuance costs we incurred in connection with the sale and issuance of the prefunded warrants and common stock warrants in June 2025 in connection with our follow-on public offering, which were allocated to the common stock warrant liabilities and were partially offset by $1.4 million of interest income.

Other income (expense), net of $1.1 million for the six months ended June 30, 2024 consisted of interest income.

Liquidity and Capital Resources

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

a debt financing;

our collaboration and license agreements with AbbVie and Gilead;

and sales of common stock through ATM offerings.

Through March 31, 2025, we have received an aggregate of $491.8 million in gross proceeds from such transactions, including $224.5 million in gross proceeds from the sale and issuance of preferred units and convertible preferred stock, $10.0 million in gross proceeds from our debt financing with PacWest, $129.9 million in gross proceeds from our IPO, $72.0 million in upfront cash payments under our collaboration and license agreements with AbbVie and Gilead, $46.3 million in gross proceeds from the sale and issuance of common stock and

prefunded warrants to certain existing accredited investors, Gilead and AbbVie in private placements and $9.1 million in gross proceeds from the sale and issuance of common stock through our ATM offerings.

As of March 31, 2025, we had cash and cash equivalents of $89.1 million.

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

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

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

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

As of June 30, 2025, we had cash and cash equivalents of $121.6 million.

In November 2022, we filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $250.0 million of our common stock, preferred stock, debt securities, units and warrants, which we could issue and sell from time to time in one or more offerings, which became effective on November 18, 2022 (333-268264), or the Prior S-3 Shelf.

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Prior to the effectiveness of the New S-3 Shelf, the offering of shares under the Leerink Sales Agreement was registered under the Prior S-3 Shelf.

In connection with the effectiveness of the New S-3 Shelf, the registration of such offering under the Prior S-3 Shelf was terminated and such offering was registered under the New S-3 Shelf.

In connection with the effectiveness of the New S-3

Shelf, the registration of such offering under the Prior S-3 Shelf was terminated and such offering was registered under the New S-3 Shelf.

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

Three Months Ended

Six Months Ended

Net cash provided by (used in):

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Financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Operating Activities

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

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

During the three months ended March 31, 2024, net cash used in operating activities of $10.5 million was primarily driven by our net loss of $17.2 million, partially offset by changes in operating assets and liabilities of $4.4 million and net non-cash expenses of $2.3 million.

During the six months ended June 30, 2025, net cash provided by operating activities of $14.5 million was primarily driven by net changes in operating assets and liabilities of $37.5 million, which includes the $49.1 million recorded as deferred revenue in connection with our collaboration, license and option agreement and stock purchase agreement with AbbVie, and net non-cash expenses of $6.1 million, partially offset by our net loss of $29.1 million.

During the six months ended June 30, 2024, net cash provided by operating activities of $9.5 million was primarily driven by the $39.1 million received from Gilead for the upfront payment under the license agreement and equity investments under the stock purchase agreement, which were recorded as deferred revenue at the outset of the arrangement and net non-cash expenses of $4.2 million, partially offset by our net loss of $31.1 million and remaining changes in operating assets and liabilities of $2.8 million.

Investing Activities

During the three months ended March 31, 2025 and 2024, net cash used in investing activities consisted of purchases of property and equipment.

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

Financing Activities

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

During the three months ended March 31, 2024, net cash provided by financing activities of $1.0 million consisted of proceeds from the sale and issuance of common stock to Gilead in a private placement, partially offset by repayments of debt principal under our loan agreement with PacWest and payments on our finance lease for certain lab equipment.

During the six months ended June 30, 2025, net cash provided by financing activities of $52.1 million consisted of proceeds from the sale of prefunded warrants and common stock warrants through a follow-on public offering, proceeds from the sale and issuance of common stock to AbbVie in a private placement and proceeds from the sale and issuance of common stock through ATM offerings.

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

Capital Requirements and Going Concern

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

As of March 31, 2025, we had cash and cash equivalents of $89.1 million.

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

In addition, since these amounts are not expected to be sufficient to fund our operations for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

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

additional equity or debt financings;

additional collaborations partnerships or licensing transactions;

or other sources.

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

As of June 30, 2025, we had cash and cash equivalents of $121.6 million.

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

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

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

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

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

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● the scope, progress, results and costs of research and development for our current and future product candidates, including our current and planned clinical trials for our clinical-stage product candidates, vilastobart and XTX301, and ongoing preclinical development for our current and future product candidates;

● our ability to implement and maintain cost reduction strategies, as well as the timing of such cost reductions;

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

● the timing and amount of milestones, option-related fees and other contingent payments under our collaboration, license and option agreement with AbbVie for tumor-activated immunotherapies and our license agreement with Gilead for XTX301, as well as the scope, costs and timing of our development obligations under these agreements;

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

● the potential receipt of up to $100.0 million in additional gross proceeds from the exercise, if any, of the common stock warrants issued in connection with our June 2025 follow-on public offering;

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

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

● the scope, costs, timing and outcome of regulatory review of our product candidates;

● the costs of securing manufacturing materials for use in preclinical studies, clinical trials and, for any product candidates for which we receive regulatory approval, if any, commercial supply;

● the costs and timing of future commercialization activities for any of our product candidates for which we receive regulatory approval;

● the amount and timing of revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approval;

● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims;

● the extent to which we may acquire or in-license other products, product candidates, technologies or intellectual property, as well as the terms of any such arrangements;

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

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

● the scope, costs, timing and outcome of regulatory review of our product candidates;

● the costs and timing of future commercialization activities for any of our product candidates for which we receive regulatory approval;

● the amount and timing of revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approval;

● general economic conditions, including inflation and the imposition of new or revised global trade tariffs;

● the costs of maintaining our operations and continuing to operate as a public company.

● whether we are able to overcome the substantial doubt about our ability to continue as a going concern.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales.

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Our expectation with respect to our ability to fund our currently planned operations is based on estimates that are subject to various risks and uncertainties.

Our operating plan may change as a result of many factors currently unknown to management and there can be no assurance that our current operating plan will be achieved in the time frame anticipated by us, and we may exhaust our available capital resources sooner than we expect.

Our operating plan may change as a result of many factors currently unknown to

management and there can be no assurance that our current operating plan will be achieved in the time frame anticipated by us, and we may exhaust our available capital resources sooner than we expect.

Adequate additional capital may not be available to us on acceptable terms, or at all.

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Contractual Obligations

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

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

Critical Accounting Policies and Use of Estimates

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

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

Emerging Growth Company and Smaller Reporting Company Status

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis