What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-16 compared with 2025-03-11 · 185 added, 95 removed, 237 unchanged (54% of the section changed)

6 unchanged sentences

We are a clinical stage global biopharmaceutical company committed to being a leader in the development and commercialization of transformative immunology-based therapies for patients in need.

With the evolving understanding of the pathogenesis of autoimmune diseases, along with the expansion of promising immunology-based pharmacologic targets, we are building an immunology and inflammation (“I&I”) focused biopharmaceutical company.

Our core business strategy combines disciplined product candidate acquisition with strategic deployment of internal expertise and effective use of external resources.

3 unchanged sentences

We are developing obexelimab as a potential I&I franchise for patients in several autoimmune diseases, representing substantial commercial opportunities individually and in the aggregate.

The first three indications we are pursuing include IgG4-RD through an ongoing registration-directed Phase 3 trial, RMS and SLE through ongoing Phase 2, double-blind, randomized, placebo-controlled trials, each of which are currently enrolling.

Beyond our lead product candidate, obexelimab, we have two other programs for the potential treatment of other I&I indications that we may continue to advance and ultimately commercialize with partners.

The first three indications we are pursuing include IgG4-RD through a registration-directed Phase 3 trial, which reported topline data in January 2026, RMS through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial which reported topline data in October 2025 and SLE through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial, for which we expect to report topline results, including biomarker data, in the fourth quarter 2026.

In January 2026, we reported positive results from the Phase 3 trial of obexelimab in patients with IgG4-RD.

Obexelimab met the primary endpoint, demonstrating a highly statistically significant and clinically meaningful 56% reduction in the risk of IgG4-RD flare compared to placebo (Hazard Ratio 0.44, p=0.0005) and also met and demonstrated highly statistically significant activity compared to placebo on all four key secondary endpoints.

Obexelimab was well tolerated with a safety profile consistent with that observed in previously completed clinical trials.

Based on these results, we plan to submit the obexelimab BLA to the FDA for the treatment of IgG4-RD in the second quarter of 2026.

We also intend to submit an MAA to the EMA in the second half of 2026.

In October 2025, we announced topline data from the MoonStone trial.

Obexelimab met the primary endpoint, demonstrating a statistically significant 95% relative reduction in the cumulative number of new gadolinium-enhancing T1 hyperintense lesions, which are markers of active inflammation, over week 8 and week 12 compared with placebo (p=0.0009).

In February 2026, we reported the 24-week data from the MoonStone trial which confirmed the reductions in total GdE T1 hyperintense lesions observed with obexelimab over weeks 8 and 12 were maintained through week 24;

unadjusted mean of new lesions per scan were 0.87 at baseline, 0.08 at week 12 and 0.04 at week 24 for obexelimab indicating a 95% reduction.

The 24-week data from additional secondary and exploratory endpoints may inform obexelimab’s potential impact on disability progression and help the Company determine next steps for future development of obexelimab in RMS.

As we continue to evaluate the MoonStone data and consider next steps for clinical development in this indication, we will consider, among other items, the evolving treatment landscape in RMS, including existing therapies, current pivotal trial endpoints and prioritization of capital.

We expect to report topline results, including biomarker data, from the SunStone trial, including biomarker data, in the fourth quarter of 2026.

Based on the outcome of the SunStone trial, and considering other factors, we may initiate a Phase 3 program in patients with SLE in the first half of 2027.

In October 2025, we entered into a License Agreement with InnoCare Pharma Inc.

pursuant to which we were granted exclusive rights to develop, manufacture and commercialize orelabrutinib, a BTK inhibitor, for multiple sclerosis worldwide, and in all non-oncology indications worldwide excluding greater China, and Southeast Asia, as well as two early-development product candidates:

ZB021, an IL-17AA/AF inhibitor, in all fields of use worldwide excluding greater China and Southeast Asia, and ZB022, a TYK2 inhibitor, in all fields of use worldwide.

Orelabrutinib is a highly selective and CNS-penetrant, oral small molecule BTK inhibitor.

Orelabrutinib is designed to bind irreversibly to BTK with minimal off-target effects, which may potentially reduce certain side effects.

We believe orelabrutinib is designed to efficiently cross the blood-brain barrier, reaching therapeutic levels within the CNS to directly target inflammation in diseases like MS.

In September 2025, the Phase 3 PriMroSe trial of orelabrutinib in patients with PPMS was initiated.

The PriMroSe trial is a global, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating the safety and efficacy of orelabrutinib dosed 80 mg QD compared to placebo in patients with PPMS, with a primary endpoint of time to onset of 12-week composite confirmed disability progression.

In the first quarter of 2026, we plan to initiate a second global, Phase 3, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating orelabrutinib dosed 80 mg QD compared to placebo in patients with non-active SPMS, with a primary endpoint of time to onset of 24-week CDP.

ZB021 is an oral IL-17AA/AF inhibitor designed to block both IL-17AA homodimer and IL-17AF heterodimer signaling.

Preclinical studies for ZB021 have shown favorable PK and ADME properties.

ZB021 achieved comparable activity in vivo to a reference anti-IL-17 biologic in a rat CIA model.

Subject to the results of IND-enabling studies, we, along with our partner, InnoCare, expect to submit an IND application for ZB021, and if cleared, initiate a Phase 1 clinical study in 2026.

ZB022 is an oral, brain-penetrant TYK2-JH2 inhibitor, currently in IND-enabling studies.

Subject to the results of IND-enabling studies, we expect to submit an IND application for ZB022, and if cleared, initiate a Phase 1 clinical study in 2026.

In addition, we have two other programs for the potential treatment of other I&I indications that we may continue to advance and ultimately commercialize with partners.

These consist of ZB002 and ZB004.

We retain global rights for both assets.

In addition, we hold the development and commercialization rights to one regional program, ZB001, and related programs, which were recently exclusively sublicensed to a partner in greater China.

On September 16, 2024, we completed our IPO in which we issued and sold an aggregate of 15,220,588 shares of our common stock, including 1,985,294 shares of common stock sold pursuant to the full exercise of the underwriter’s option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $258.7 million.

We received $234.3 million in net proceeds after deducting underwriting discounts, commissions and other offering costs payable by us.

In connection with the IPO, all outstanding shares of convertible preferred stock (“Preferred Stock”) converted into an aggregate of 24,978,715 shares of common stock.

On October 21, 2024, we entered into the Novation Agreement with Tenacia, under which we transferred our rights and obligations under our agreements with Dianthus to Tenacia for ZB005.

In addition, we hold the development and commercialization rights to one regional program, ZB001, and related programs, which were exclusively sublicensed to a partner in China, as discussed below.

In September 2024, we completed our IPO in which we issued and sold an aggregate of 15,220,588 shares of our common stock, including 1,985,294 shares of common stock sold pursuant to the full exercise of the underwriter’s option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $258.7 million.

We received $234.3 million in net proceeds after deducting underwriting discounts, commissions and other offering costs.

In October 2024, we entered into the Novation Agreement with Tenacia, under which we transferred our rights and obligations under our agreements with Dianthus to Tenacia for ZB005.

As partial consideration for the Tenacia Agreement, we received a non-creditable, non-refundable upfront fee of $5.0 million from Tenacia.

In addition, we are eligible to receive up to $86.0 million upon the achievement of certain future regulatory and commercial milestones.

Since inception, our operations have focused on research and development activities with respect to our product candidates as described above, as well as raising capital, business planning, organizing and staffing our company, establishing our intellectual property portfolio, establishing arrangements with third parties for the manufacture of our product candidates

and related raw materials, and providing general and administrative support for these operations.

Through December 31, 2024, we have financed our operations primarily with the proceeds from the issuance of Preferred Stock and convertible notes, payments received from our license and collaboration agreement and from the sale of common stock in our IPO completed in September 2024.

In January 2025, we entered into the Zai License Agreement, with Zai, under which we granted to Zai an exclusive sublicense to develop and commercialize ZB001 and related programs in greater China.

As partial consideration for the Zai License Agreement, we received an upfront fee of $10.0 million from Zai.

In addition, we are eligible to receive up to $96.0 million upon the achievement of certain future development and commercial milestones and royalty percentage rates from the low to mid-single digits, net of pass-through obligations due to Viridian.

In September 2025, we entered into the Royalty Purchase Agreement with Royalty Pharma, pursuant to which Royalty Pharma purchased the right to receive, for each calendar quarter, (i) 5.5% of net sales of obexelimab products sold by us and our affiliates worldwide, (ii) 5.5% of net sales of obexelimab products sold by our licensees and our affiliates in the U.S., the United Kingdom and the European Union, (iii) 25% of royalty income payable to us or any of our affiliates on sales of obexelimab products in countries other than the U.S., the United Kingdom, and in the European Union by its licensees pursuant to out-licenses less royalty payments payable by us to Xencor Inc.

and (iv) 25% of non-royalty income attributable to obexelimab products payable to us or any of our affiliates by its licensees (other than certain milestone payments payable by Bristol-Myers Squibb) pursuant to out-licenses and allocated to countries other than the U.S., the United Kingdom and in the European Union.

In October 2025, we entered into the InnoCare License Agreement with InnoCare, under which InnoCare granted to us the exclusive rights to develop, manufacture and commercialize:

i) orelabrutinib, in the MS field worldwide, and in all non-oncology indications outside greater China and Southeast Asia, ii) ZB021 in all fields of use worldwide, excluding greater China and Southeast Asia and iii) ZB022 in all fields of use worldwide.

We also obtained certain non-exclusive rights to perform development and manufacturing activities in greater China and Southeast Asia.

As consideration for the InnoCare License Agreement, we made a non-refundable upfront payment of $35.0 million.

We also issued 5,000,000 shares of common stock to InnoCare in a private placement, and we may be required to issue an additional 2,000,000 million shares of common stock in a private placement, upon the occurrence of our initiation of a Phase 3 clinical trial for orelabrutinib in any indication other than primary progressive MS.

We are further obligated to pay future regulatory and commercial milestones of up to $723.0 million related to orelabrutinib and future development, regulatory, and commercial milestones of $656.0 million.

In addition, we may be obligated to pay royalties on net sales at rates ranging from high-single digits to high-teens for orelabrutinib, and mid-single digits to mid-teens for the preclinical compounds.

Through December 31, 2025, we have financed our operations primarily with the proceeds from the issuance of convertible preferred stock, convertible notes, payments received under our license and collaboration agreements, and from the sale of common stock in our IPO completed in September 2024 as well as other public and private equity offerings.

In October 2025, we closed our PIPE offering and issued 6,311,030 shares of common stock for net proceeds of $111.8 million, after deducting placement agent fees and other offering costs.

Additionally, in October 2025, we entered into a sales agreement with Jefferies under which we may, from time to time, issue and sell shares of our common stock having aggregate sales proceeds of up to $200.0 million, in a series of one or more at-the-market (“ATM”) equity offerings (“2025 ATM Program”).

As of December 31, 2025, we sold 828,195 shares of common stock pursuant to the 2025 ATM Program, for net proceeds of $28.5 million, after deducting commissions and other offering costs.

Further, in March 2026, we entered into the Loan Agreement with Credit PLC (the “Collateral Agent”), BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon, providing for up to a $250.0 million term loan facility consisting of several tranches of loans that will become available upon the achievement of certain milestones.

We have incurred significant operating losses and negative cash flows since inception.

4 unchanged sentences

We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

● continue clinical development of obexelimab and our other programs;

● advance our obexelimab program and our other product candidates through preclinical development and clinical trials;

● continue clinical development of obexelimab, orelabrutinib and our other programs;

● advance our obexelimab and orelabrutinib programs and our other product candidates through preclinical development and clinical trials;

● identify additional product candidates and acquire rights from third parties to those product candidates through licenses or acquisitions and conduct development activities, including preclinical studies and clinical trials;

9 unchanged sentences

● experience delays in our preclinical studies, clinical trials or regulatory approval for our current or any future product candidates, including with respect to failed studies, inconclusive results, safety issues or other regulatory challenges;

● establish agreements with contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), and

● incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with an exchange listing and the SEC requirements, director and officer insurance premiums and investor relations costs.

● establish agreements with CROs and CMOs;

● incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with an exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate, and we cannot assure investors that we will ever generate significant revenue or profits.

11 unchanged sentences

If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of December 31, 2024, we had $350.8 million in cash, cash equivalents and short-term investments.

We believe that our cash, cash equivalents and short-term investments as of December 31, 2024 will be sufficient to fund our operations and capital expenditure requirements into the fourth quarter of 2026.

As of December 31, 2025, we had $360.5 million in cash, cash equivalents and investments.

We believe that our cash, cash equivalents and investments as of December 31, 2025 together with the $71.5 million of net proceeds received to date in the first quarter of 2026 from sales under our ATM Program and the first tranche of $75.0 million available under the Company’s debt arrangement with Pharmakon (see Note 18, Subsequent Events , to our consolidated financial statements included elsewhere in this Annual Report will be sufficient to fund our operations and capital expenditure requirements for approximately twelve months from the date our consolidated financial statements are issued.

However, due to the uncertainties inherent in forecasting our future cash requirements, management has concluded that these resources are not sufficient to alleviate substantial doubt with respect to our ability to continue as a going concern.

Our financial statements do not include any adjustments or changes in classification of assets or liabilities that may result from our possible inability to continue as a going concern.

However, we expect to finance our operations through private or public equity financing, debt financing or other capital resources.

We have based this estimate on our current assumptions, which may prove to be wrong, and we may exhaust our available capital resources sooner than we expect.

1 unchanged sentence

Significant Risks and Uncertainties

The current inflationary environment may materially affect our business and operating results by increasing the costs of our clinical trial materials and supplies, driving the U.S.

Federal Reserve system to increase interest rates, which in turn increase our overhead costs.

Rising interest rates could make it more difficult to obtain traditional financing on acceptable terms, if at all.

The current geopolitical, trade, regulatory and economic environment, including, but not limited to imposition of new tariffs or increases in tariff rates and other trade measures, may materially affect our business and operating results by increasing the costs of our clinical trial materials and supplies, which in turn increase our overhead costs.

Additionally, the ongoing recession risk together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term and, as a result could negatively affect our operations.

Furthermore, such economic conditions have produced downward pressure on share prices.

Although we do not believe that inflation has had a material impact on our financial positions or results of operations to date, additional high inflation could increase our operating costs, including our labor costs and research and development costs.

These costs may also be negatively impacted due to supply chain constraints, global geopolitical tensions, worsening macroeconomic conditions and employee availability and wage increases, which may result in additional stress on our working capital.

We import from China drug product and other components for use in our clinical studies, and such products are subject to tariffs.

Increases in tariffs could result in increased costs.

Such economic conditions could increase our operating costs, including our labor costs and research and development costs.

For example, we import drug products and other components from and into China for use in the manufacturing process and in our clinical studies, and such components and products are subject to tariffs, which we anticipate will result in increased costs.

Our operating and labor costs and research and development costs may also be negatively impacted due to supply chain constraints, global geopolitical tensions, worsening macroeconomic conditions and employee availability and wage increases, which may result in additional stress on our working capital.

Additionally, we are subject to other challenges and risk specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the clinical stage biopharmaceutical industry.

3 unchanged sentences

License and Collaboration Revenue

License and collaboration revenue is generated from our Bristol-Myers Squibb (“BMS”) Agreement and our Tenacia Agreement.

Pursuant to the BMS Agreement, we sublicensed the rights to develop and commercialize obexelimab in Japan, South Korea, Taiwan, Singapore, Hong Kong and Australia (the “BMS Territory”).

License and collaboration revenue is generated from our BMS Agreement, our Tenacia Agreement and our Zai License Agreement.

Pursuant to the BMS Agreement, we sublicensed the rights to develop and commercialize obexelimab in the BMS Territory.

We retain exclusive rights to commercialize the licensed products containing obexelimab outside of the BMS Territory.

8 unchanged sentences

Sales milestones and royalties on future sales will be recognized in the period the related sales occur.

For a more detailed description of this agreement, see Note 7, License and Collaboration Revenue , to our consolidated financial statements included elsewhere in this Annual Report.

Pursuant to the Zai License Agreement, we granted Zai an exclusive sublicense to develop and commercialize ZB001 and related programs in greater China.

As partial consideration for the Zai License Agreement, we received an upfront fee of $10.0 million from Zai.

For a more detailed description of these agreements, see Note 7, License and Collaboration Revenue , to our consolidated financial statements included elsewhere in this Annual Report.

Operating Expenses

1 unchanged sentence

Research and Development Expenses

Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal costs incurred in connection with the preclinical and clinical development of obexelimab, ZB002, ZB004, ZB001 and ZB005, and include:

Direct Costs:

16 unchanged sentences

We do not track internal costs on a program specific or stage of program basis because these costs are deployed across multiple programs and, as such, are not separately classified.

Where we share costs with our collaboration partners, such as in our BMS Agreement, research and development expenses may include cost sharing reimbursements from our partner.

Where we share costs with our collaboration partners, such as in our BMS Agreement, research and development expenses may include cost sharing reimbursements from our partners.

Research and development activities are central to our business model.

7 unchanged sentences

This is due to the numerous risks and uncertainties associated with product development, including the uncertainty of:

● the scope, timing and progress of our ongoing obexelimab clinical studies and other research and development activities associated with the development of our other and future product candidates;

● the scope, timing and progress of our ongoing clinical studies and other research and development activities associated with the development of our current and future product candidates;

● the number and scope of preclinical and clinical programs we decide to pursue;

1 unchanged sentence

● the timing of and successful patient enrollment in, and the initiation and completion of, clinical trials;

● the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S.

Food and Drug Administration (“FDA”), or any comparable foreign regulatory authority;

● the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA, or any comparable foreign regulatory authority;

● the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;

4 unchanged sentences

● obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

● our ability to hire additional personnel and consultants as our business grows, including additional executive officers and clinical development, regulatory, chemistry, manufacturing and controls (“CMC”), quality and commercial personnel;

● commercializing product candidates, if approved, whether alone or in collaboration with others;

● the costs and timing of establishing or securing sales and marketing capabilities for our product candidates if approved;

● the imposition of new laws and regulations, including those relating to labor conditions and safety standards, information and data transfer, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed on imports, and as a result supply-related costs, from countries where our suppliers operate, as well as tariffs that impact the biopharmaceutical industry generally;

● our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

1 unchanged sentence

Any changes in the outcome of any of these variables with respect to the development of our current product candidates or any future product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently anticipate would be required for the completion of clinical development, or if we experience significant delays in enrollment in any clinical trials following the FDA’s acceptance and clearance of an Investigational New Drug Application (“IND”), we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently anticipate would be required for the completion of clinical development, or if we experience significant delays in enrollment in any clinical trials following the FDA’s acceptance and clearance of an IND, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect.

We may never obtain regulatory approval for any product candidates that we develop.

3 unchanged sentences

We anticipate that our general and administrative expenses will increase in the next few years as we increase our headcount to support our continued research and development activities of our product candidates.

These increases will likely include

increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses.

These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses.

We also anticipate increased expenses associated with being a public company, including costs for accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with the rules and regulations of the SEC, listing standards applicable to companies listed on a national securities exchange, director and officer insurance costs, and investor and public relations costs.

In addition, if we obtain regulatory approval for our current product candidates or any product candidates we may develop in the future and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.

We will also incur pre-commercialization expenses to facilitate commercial readiness, as we prepare for a potential product candidate approval.

Acquired In-Process Research and Development Expenses

We expense acquisition costs for assets purchased for use in research and development activities that have no alternative future use as in-process research and development (“IPR&D”) expense as of the acquisition date.

When we become obligated to make contingent milestone payments under the terms of the agreements by which we acquired the IPR&D assets, we will recognize additional IPR&D expense.

We measure and recognize contingent consideration in the period in which the related milestone is achieved and becomes payable.

Total Other Income, Net

Other Income, Net

Other income, net primarily consists of interest income generated from cash equivalents and investments, and realized and unrealized gains and losses on foreign currency transactions.

Change in Fair Value of Convertible Notes

In August 2023, we issued a convertible note to BMS (the “BMS Note”) in connection with the BMS Agreement, (see Note 7, License and Collaboration Revenue to our audited consolidated financial statements).

We elected to record the BMS Note at fair value upon issuance and to subsequently remeasure the note at fair value at the end of each reporting period with the change in fair value being recorded as a component of other expense in our consolidated statement of operations and comprehensive loss.

In May 2024, in connection with our Series C convertible preferred stock (“Series C Preferred Stock”) financing, the BMS Note plus accrued interest was automatically converted into 12,284,686 shares of Series C Preferred Stock.

We reassessed the estimated fair value of the BMS Note immediately prior to the conversion utilizing the fair value of the shares of Series C Preferred Stock for which the note subsequently converted into and recorded the change in fair value as a component of other income (expense), net in our consolidated statement of operations and comprehensive loss during the years ended December 31, 2024 and 2023.

Since our inception, we have not recorded income tax benefits for any of our deferred tax assets, including the net operating losses (“NOLs”) incurred or the research and development tax credits generated in each year, as we have concluded that it is more likely than not that these deferred tax assets will not be realized.

Certain agreements may require the payment of milestones in shares of our common stock, which if determined not to be a derivative or liability are recognized as acquired IPR&D expense and a component of equity based on the fair value of the shares at execution.

Total Other Income (Expense), Net

Other Income (Expense), Net

Other income (expense), net primarily consists of interest income generated from cash equivalents and investments, realized and unrealized gains and losses on foreign currency transactions and interest expense related to our royalty obligation.

Since our inception, we have not recorded income tax benefits for any of our deferred tax assets, NOLs incurred or the research and development tax credits generated in each year, as we have concluded that it is more likely than not that these deferred tax assets will not be realized.

Results of Operations

11 unchanged sentences

Loss from operations

Other income, net:

Fair value adjustments to convertible notes

Other income (expense), net:

Fair value adjustments to convertible notes

Interest expense on royalty obligation

Interest income

Other income, net

Total other income (expense), net

Loss before income taxes

Income tax provision

Income tax (benefit) provision

For the year ended December 31, 2025, we recognized revenue of $10.0 million, related to the one-time non-refundable upfront cash payment under the Zai License Agreement that was recognized upon delivery of the license and related technology transfer.

For the year ended December 31, 2024, we recognized revenue of $5.0 million, related to the upfront payment under the Tenacia Agreement.

For the year ended December 31, 2023, we recognized revenue of $50.0 million, related to the upfront payment under the BMS Agreement.

Research and Development Expenses

3 unchanged sentences

Direct research and development expenses by program:

Other programs (ZB002 & ZB004)

Orelabrutinib

Other programs (ZB002, ZB004, ZB021 & ZB022)

Partnered regional programs (ZB001 & ZB005)

Unallocated research and development expenses:

Personnel expenses (including stock-based compensation)

Personnel related expenses (including stock-based compensation)

Other expenses

2 unchanged sentences

The increase of $29.0 million was primarily attributable to the following:

● a $69.1 million increase in costs related to the development of obexelimab, our lead product candidate, driven by a $36.6 million increase in manufacturing costs for clinical trial materials and also a $32.0 million increase clinical trial costs;

● a $4.1 million decrease in costs related to our other programs, including a $2.3 million decrease related to ZB002 and a $1.8 million decrease related to ZB004;

● a $10.0 million increase in costs related to the development of obexelimab, our lead product candidate, driven by a $13.1 million increase in clinical trial, development and regulatory costs, partially offset by a $3.1 million decrease in manufacturing costs for clinical trial materials;

● a $7.2 million increase in costs related to the development of orelabrutinib, a recently acquired product candidate, primarily driven by clinical trial and regulatory costs;

● a $6.6 million decrease in costs related to our partnered regional programs, including a $5.1 million decrease related to ZB005 and a $1.5 million decrease related to ZB001, as a result of transitioning these programs to Tenacia and Zai, respectively;

● a $15.7 million increase in personnel costs, including a $10.3 million increase in salary and benefit related expense, primarily due to an increase in headcount, a $4.8 million increase in stock-based compensation expense, and a $0.6 million increase in external contractor expense and other personnel costs.

General and Administrative Expense

General and Administrative Expenses

The following table summarizes our general and administrative expenses for each of the periods presented (in thousands):

Years Ended December 31,

Increase (Decrease)

Personnel related expenses (including stock-based compensation)

Legal and professional fees

Facilities and supplies

Other expenses

2 unchanged sentences

The increase of $23.6 million was primarily attributable to the following:

● a $8.8 million increase in personnel costs, including a $4.9 million increase in stock-based compensation expense, a $3.8 million increase in salary and benefit related expense, primarily due to an increase in headcount, and a $0.1 million increase in recruiting expense, partially offset by a $0.1 million decrease in external contractor expense;

● a $1.7 million increase in professional fees, including legal, audit and tax expenses, primarily attributable to operating as a public company;

● a $1.6 million increase in other expenses, including insurance and other variable costs related to operating as a public company.

● a $17.1 million increase in personnel costs, including a $10.8 million increase in stock-based compensation expense, a $5.3 million increase in salary and benefit related expense, primarily due to an increase in headcount, a $0.8 million increase in recruiting expense, and a $0.2 million increase in external contractor expense and other personnel costs;

● a $4.2 million increase in professional fees, including legal, audit and tax expenses, primarily attributable to operating as a public company and business development efforts;

● a $2.3 million increase in facilities and other expenses, including insurance and other variable costs related to operating as a public company.

Acquired In-Process Research and Development Expenses

There was no acquired IPR&D expense recorded for the year ended December 31, 2024.

Acquired IPR&D for the year ended December 31, 2023 was comprised of a $10.0 million development milestone expense related to obexelimab.

For the year ended December 31, 2025, acquired IPR&D expenses were $171.7 million, which included $35.0 million, related to the upfront cash payment for the exclusive rights to develop and manufacture product candidates under the InnoCare License Agreement.

Additionally, we recorded $136.7 million related to the respective fair values on the date of acquisition of the 5,000,000 shares of common stock issued and the 2,000,000 million shares of common stock to be issued pursuant to the InnoCare License Agreement.

The Company did not recognize any acquired IPR&D expenses during the year ended December 31, 2024.

Total Other Income (Expense), Net

For the year ended December 31, 2024, total other income (expense), net increased from the comparable period in the prior year primarily due to interest earnings as a result of higher cash, cash equivalents and short-term investments due to proceeds from the Series C Preferred Stock and IPO.

For the year ended December 31, 2025, total other income (expense), net was $5.2 million, compared to $7.3 million for the year ended December 31, 2024.

The decrease of $2.1 million primarily related to an increase in interest expense of $7.3 million related to our royalty obligation, partially offset by $4.2 million of interest income as a result of higher cash and investments, a decrease of $0.8 million in the change in fair value of the BMS Note settled in the year ended December 31, 2024 and immaterial realized and unrealized gains and losses on foreign currency transactions.

Liquidity and Capital Resources

We have incurred significant operating losses since inception.

We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources for several years, if at all.

As of December 31, 2024, we had $350.8 million in cash, cash equivalents and short-term investments and we had an accumulated deficit of $387.4 million.

Through December 31, 2024, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of our Preferred Stock, our convertible notes, as well as $55.0 million through our BMS Agreement and Tenacia Agreement, and most recently, from the sale of common stock in our IPO.

We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources until 2027 at the earliest, if at all.

As of December 31, 2025, we had $360.5 million in cash, cash equivalents and investments and we had an accumulated deficit of $765.1 million.

Through December 31, 2025, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of preferred stock and convertible notes, net proceeds from the sale of common stock of $234.3 million after deducting underwriting discounts, commissions and other offering costs from our IPO, $111.8 million, after deducting placement agent fees and other offering costs, from our PIPE offering, $28.5 million, after deducting commissions and other offering costs, from our 2025 ATM Program, as well as $65.0 million from our BMS Agreement, Tenacia Agreement and Zai Agreement, collectively, and $75.0 million through our Royalty Purchase Agreement.

Future Funding Requirements

We believe that our available cash, cash equivalents and short-term investments, as of December 31, 2024, are sufficient to fund existing and planned cash requirements for at least the next 12 months, from the filing of this Form 10-K.

Our primary uses of capital are, and we expect to continue to be, compensation and related expenses, third-party clinical research and development services, clinical costs, legal and other regulatory expenses and general overhead costs.

We expect that our available cash, cash equivalents and investments, as of December 31, 2025, together with the $71.5 million of net proceeds received to date in the first quarter of 2026 from sales under our ATM Program and proceeds of $75.0 million available from the first tranche under the Company’s debt arrangement with Pharmakon (see Note 18, Subsequent Events , to our consolidated financial statements included elsewhere in this Annual Report) will be sufficient to fund our operating and capital expenditures for approximately 12 months past the filing date of this Annual Report on Form 10-K.

However, due to the uncertainties inherent in forecasting our future cash requirements, we have concluded that these resources are not sufficient to alleviate substantial doubt with respect to our ability to continue as a going concern.

Our financial statements do not include any adjustments or changes in classification of assets or liabilities that may result from our possible inability to continue as a going concern.

However, we expect to finance our operations through private or public equity financing, debt financing or other capital resources.

Our primary uses of capital are, and we expect to continue to be, third-party clinical research and development services, manufacturing costs, compensation and related expenses, legal and other regulatory expenses and general overhead costs.

We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect.

2 unchanged sentences

Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:

● the scope, timing, progress results and costs of our ongoing obexelimab clinical studies and other research and development activities associated with the development of our other and future product candidates;

● the scope, timing, progress results and costs of our ongoing clinical studies and other research and development activities associated with the development of our other and future product candidates;

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

1 unchanged sentence

● the costs of establishing and maintaining arrangements with third-party manufacturers for the commercial supply of products that receive marketing approval, if any;

● the costs and timing of manufacturing for obexelimab and other product candidates, including commercial manufacturing at sufficient scale, if any product candidate is approved, including as a result of inflation, any supply chain issues or component shortages;

● the costs and timing of manufacturing for obexelimab, orelabrutinib and other product candidates, including commercial manufacturing at sufficient scale, if any product candidate is approved, including as a result of inflation, any supply chain issues or component shortages;

● the revenue, if any, received from commercial sale of our products, should any product candidates receive marketing approval;

7 unchanged sentences

● the costs associated with operating as a public company, including legal, accounting or other expenses in operating our business.

A change in the outcome of any of these or other variables with respect to the development of obexelimab or any other product candidate could significantly change the costs and timing associated with our operating plans.

A change in the outcome of any of these or other variables with respect to the development of obexelimab, orelabrutinib or any other product candidate could significantly change the costs and timing associated with our operating plans.

Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

We have no products approved for commercial sale and have not generated any product revenues from product sales to date.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financing and additional funding from license, strategic alliances and collaboration arrangements.

We have no products approved for commercial sale and have not generated any revenues from product sales to date.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financing and additional funding from licenses, strategic alliances and collaboration arrangements.

Except for any obligations of our collaborators to reimburse us for research and development expenses or make milestone or royalty payments under our agreements with them, we will not have any committed external source of liquidity.

1 unchanged sentence

We anticipate that we will continue to incur significant losses for at least the next several years.

We expect our research and development, general and administrative expenses will continue to increase.

We expect our research and development, and general and administrative expenses will continue to increase.

As a result, we will need additional capital to fund our operations, which we may raise through a combination of the sale of our equity, debt financings, or other sources, including potential collaborations.

1 unchanged sentence

If we enter into debt financing arrangements, if available, they may involve restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business.

If we raise additional funds through license, strategic alliances or collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or drug candidates or grant licenses on terms that may not be favorable to us.

If we are unable to raise funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

If we raise additional funds through licenses, strategic alliances or collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or drug candidates, or grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

Loan Agreement

In March 2026, the Company entered into the Loan Agreement with Credit PLC (the “Collateral Agent”), BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon and the guarantors party thereto.

The Loan Agreement provides for up to a $250.0 million Term Loan that matures on March 27, 2031 and consists of five tranches including (1) a Tranche A Loan of $75.0 million drawn ten business days following the execution of the Loan Agreement, (2) a Tranche B Loan of $50.0 million which will be required to be drawn (and up to an additional $25.0 million that the Company may elect to draw) by no later than November 1, 2027, subject to the occurrence of the Tranche B/C Approval Condition, (3) a Tranche C Loan of $25.0 million (less any amounts elected to be (and actually) drawn under the Tranche B Loan in excess of $50.0 million) which will be available at the Company’s election, subject to the occurrence of the Tranche B/C Approval Condition, no later than April 28, 2028, (4) a Tranche D Loan of $50.0 million which will be available at the Company’s election no later than October 30, 2028, subject to the occurrence of the Tranche B/C Approval Condition and achievement of certain milestones in respect of certain net sales levels and (5) a Tranche E Loan of $50.0 million which will be available at the Company’s election no later than April 30, 2029, subject to the occurrence of the Tranche B/C Approval Condition and achievement of certain milestones in respect of net sales levels.

The Term Loan bears interest at a rate based upon an annual interest rate of 3-month secured overnight financing rate (subject to a 3.25% floor) plus 5.75% payable quarterly in arrears;

provided that the Company may elect for 100% of the interest for the first 24 months following the Tranche A Loan funding date may be paid-in-kind without an increase in the interest rate.

The Company is required pay a funding fee equal to (i) 2.00% of the funding amount of the Tranche A Loan on the funding date of such loan, (ii) 2.00% of $50,000,000 of the funding amount of the Tranche B Loan on the funding date for such loan, (iii) 1.00% of any amounts in excess of $50,000,000 of the funding amount for the Tranche B Loan on the funding date for such loan, and (iv) 1.00% of each of the funding amount of the Tranche C Loan, Tranche D Loan, and Tranche E Loan on each respective funding date.

The Company may elect to prepay the Term Loans in whole or, subject to certain conditions, in part prior to the Term Loan Maturity Date with such prepayments being subject to certain prepayment, make-whole and exit fees.

The Term Loans are subject to certain mandatory prepayments, including a repayment in full of all term loans in four equal payments commencing on September 30, 2028 to the extent the Tranche B/C Approval Condition is not met on or prior to June 30, 2028.

The Loan Agreement contains customary affirmative and restrictive covenants and representations and warranties.

We and our subsidiaries are bound by certain affirmative covenants setting forth actions that are required during the term of the Loan Agreement, including, without limitation, certain information delivery requirements (including that consolidated financial statements delivered for and after the fiscal year ending December 31, 2026 are not subject to any qualification as to “going concern” or “scope of audit”), obligations to maintain certain insurance, and certain notice requirements.

The Loan Agreement contains customary financial covenants, including (i) at all times prior to the satisfaction of the Tranche B/C Approval Condition, a minimum liquidity requirement and (ii) subject to the outstanding aggregate principal amount of Term Loans advanced under the Loan Agreement being equal to or greater than $200.0 million, a minimum trailing twelve months consolidated net revenue covenant.

Additionally, we and our subsidiaries are bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of the Loan Agreement, including, without limitation, (i) selling or disposing of assets, (ii) amending, modifying or waiving our rights under material agreements, (iii) consummating change in control transactions unless all amounts becoming due under the Loan Agreement are paid in full immediately upon (and concurrent with) the consummation of any such change in control transaction, (iv) incurring additional indebtedness, (v) incurring non-permitted liens or encumbrances on our or our subsidiaries’ assets, (vi) paying dividends or making any distribution or payment on or redeeming, retiring or purchasing any equity interests, (vii) making payments on subordinated indebtedness and (viii) making investments other than permitted acquisitions and permitted investments, in each case, subject to specified exceptions including, in the case of restrictions on incurrence of additional indebtedness, the ability to incur certain convertible indebtedness and enter into certain permitted royalty financing agreements.

The Loan Agreement also contains certain events of default, including the following:

(i) failure to pay principal, interest and other amounts when due, (ii) the breach of the covenants under the Loan Agreement, (iii) the occurrence of a material adverse change or a withdrawal event in respect of obexelimab or orelabrutinib, (iv) certain attachments of the credit parties assets and restraints on their business, (v) certain insolvency, liquidation, bankruptcy or similar events, (vi) certain cross-default of third-party indebtedness and royalty revenue contracts, (vii) the failure to pay certain judgements, (viii) material misrepresentations, (ix) the loan documents ceasing to create a valid security interest in a material portion of the collateral, (x) the occurrence of certain ERISA events and (xi) the occurrence of a default under any intercreditor agreement, in each case subject to the grace periods, cure period and thresholds as specified in the Loan Agreement.

Upon the occurrence of an event of default, the Lenders may, among other things, accelerate our obligations under the Loan Agreement (including all obligations for principal, interest and any applicable make-whole and prepayment premiums); provided that upon an event of default relating to certain insolvency, liquidation, bankruptcy or similar events, all outstanding obligations will be automatically accelerated.

Our obligations under the Loan Agreement are secured by substantially all of our assets, including our intellectual property.

Certain of our subsidiaries may, from time to time after the Tranche A Closing Date, be required to guarantee our obligations under the Loan Agreement and, in connection with such guarantee, pledge substantially all of their assets, including intellectual property, to secure such guarantee.

At-the-Market Program

In October 2025, we entered into a sales agreement with Jefferies under which we could, from time to time, issue and sell shares of our common stock having aggregate sales proceeds of up to $200.0 million, under the 2025 ATM Program.

Pursuant to the sales agreement, shares will be sold under the shelf registration statement on Form S-3 ASR (Registration No.

333-290777), which became automatically effective upon filing on October 8, 2025.

Our common stock will be sold at prevailing market prices at the time of the sale;

and as a result, prices may vary.

For the year ended December 31, 2025, we sold 828,195 shares of common stock under the 2025 ATM Program, with proceeds of approximately $28.5 million, net of commissions and other offering costs.

Since January 1, 2026, we have sold 2,827,723 shares of common stock under the 2025 ATM Program, with proceeds of $71.5 million, net of commissions.

As of the issuance date of this Annual Report on Form 10-K, $96.8 million remained available under the 2025 ATM Program.

Royalty Pharma Agreement

In September 2025, the Company and Royalty Pharma entered into the Royalty Purchase Agreement.

Pursuant to the Royalty Purchase Agreement, the Company received a $75.0 million upfront payment in exchange for which Royalty Pharma purchased the right to receive, for each calendar quarter, (i) 5.5% of net sales of obexelimab products sold by the Company and its affiliates worldwide, (ii) 5.5% of net sales of obexelimab products sold by licensees of Zenas and its affiliates in the U.S., the United Kingdom and the European Union, (iii) 25% of royalty income payable to Zenas or any of its affiliates on sales of obexelimab products in countries other than the U.S., the United Kingdom, and in the European Union by its licensees pursuant to out-licenses less royalty payments payable by Zenas to Xencor Inc.

and (iv) 25% of non-royalty income attributable to obexelimab products payable to Zenas or any of its affiliates by its licensees (other than certain milestone payments payable by Bristol-Myers Squibb) pursuant to out-licenses and allocated to countries other than the U.S., the United Kingdom and in the European Union.

The Royalty Purchase Agreement provides for an additional $225.0 million of payments to be paid to the Company by Royalty Pharma upon the occurrence of certain triggering events which includes (1) $75.0 million payable upon the achievement of certain milestones with respect to Zenas’ INDIGO Phase 3 Trial, noting the Company is not currently eligible for this milestone, (2) $75.0 million payable following receipt of marketing approval for obexelimab from the FDA for the treatment of IgG4-Related Disease on or before a specified date and (3) $75.0 million payable following receipt of marketing approval for obexelimab from the FDA for the treatment of systemic lupus erythematosus on or before a specified date.

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

Years Ended December 31,

Net cash used in operating activities

2 unchanged sentences

Effect of exchange rate changes on cash and restricted cash

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

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

Net Cash Used in Operating Activities

Net cash used in operating activities for the year ended December 31, 2024 was $119.7 million, and was primarily due to our net loss of $157.0 million adjusted for non-cash items including stock-based compensation of $10.8 million, an investment accretion of $0.6 million and non-cash operating lease of $0.7 million, and an increase in assets and liabilities of $25.3 million.

The significant items of the increase in operating assets and liabilities include an increase in accrued expenses and accounts payable of $33.8 million and prepaid expenses and other assets of $7.7 million.

Net cash used in operating activities for the year ended December 31, 2023 was $30.5 million, and was primarily due to our net loss of $37.1 million, adjusted for non-cash items including acquired in-process research and development expense related to a milestone payment of $10.0 million, stock-based compensation of $3.5 million and non-cash operating lease of $0.7 million, offset by a decrease in assets and liabilities of $8.0 million.

The significant items of the decrease in operating assets and liabilities include a $4.0 million decrease in accrued expense and accounts payable and an increase of $3.3 million decrease in prepaid expenses and other assets.

Net cash used in operating activities for the year ended December 31, 2025 was $172.3 million, and was primarily due to our net loss of $377.7 million, which included non-cash charges principally related to the InnoCare license agreement, stock-based compensation and interest charges on our agreement with Royalty Pharma.

Net changes in our working capital during the year resulted in a $1.0 million cash inflow.

Net cash used in operating activities for the year ended December 31, 2024 was $119.7 million, and was primarily due to our net loss of $157.0 million adjusted for non-cash charges principally related to stock-based compensation.

Net changes in our working capital during the year were a cash inflow of $25.4 million and were driven by increases in accounts payable and accrued expenses.

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2025 was $251.9 million and was primarily due to the purchase of $417.8 million of investments and a $35.0 million upfront payment under the InnoCare License Agreement, partially offset by $200.9 million in proceeds from the maturities of investments.

Net cash used in investing activities for the year ended December 31, 2024 was $30.6 million and was due to the purchase of $36.4 million of investments, partially offset by $6.0 million in proceeds from the maturities of investments.

Net cash used in investing activities for the year ended December 31, 2023 was less than $0.1 million and consisted of purchases of property and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $215.3 million, resulting from $75.0 million in gross proceeds received in connection with royalty obligation, proceeds of $120.0 million and $28.6 million received from the sale and issuance of common stock under the PIPE and ATM offerings, net of commissions, respectively, and $4.4 million of proceeds received for the issuance of common stock from the exercise of stock options and the employee stock purchase plan, partially offset by $12.7 million of payments related to placement agent fees and other offering costs related to the PIPE and ATM offerings.

Net cash provided by financing activities for the year ended December 31, 2024 was $413.0 million, resulting from $178.4 million in net proceeds received from the issuance and sale of shares of our Series C Preferred Stock, proceeds of $240.6 million from our IPO, net of underwriting discounts and commissions, and $0.3 million of proceeds received from the exercise of stock options, partially offset by a $6.3 million payment of offering costs related to our IPO.

Net cash provided by financing activities for the year ended December 31, 2023 was $20.1 million, resulting from $20.0 million in proceeds received from the sale of the BMS Note and $0.1 million in proceeds received from the exercise of stock options.

Contractual obligations and commitments

We have entered into lease arrangements for facilities, which are comprised of office space, through April 30, 2026.

As of December 31, 2024, our total fixed lease payment obligations outstanding are $1.1 million of which $0.9 million is payable within 12 months.

For additional information on our lease obligations, please see Note 6, Leases , to these consolidated financial statements.

License and Option Agreements

We have entered into arrangements for leases of office space, for additional information, see Note 6, Leases to our consolidated financial statements included elsewhere in this Annual Report.

License Agreements

We have entered into license agreements under which we may be obligated to make milestone and royalty payments, which are contingent upon future events, such as achieving certain development, regulatory, and commercial milestones or generating product sales.

As of December 31, 2025 and 2024, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales.

For additional information on our license and option agreements, please see Note 8, License and Option Agreements , to these consolidated financial statements.

For additional information on our license and option agreements, for additional information, see Note 8, License Agreements to our consolidated financial statements included elsewhere in this Annual Report.

Royalty Obligation

We have entered into a royalty purchase agreement under which we are obligated to make contingent payments related to future net sales and royalty income of obexelimab;

for additional information see Note 9, Royalty Obligation to our consolidated financial statements included elsewhere in this Annual Report.

Purchase and Other Obligations

4 unchanged sentences

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.

GAAP”), requires us to make judgments, assumptions and estimates that may affect the reported amounts of assets and liabilities, equity and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reported periods.

On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experiences.

Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”).

The preparation of these consolidated financial statements requires us to make judgments, assumptions and estimates that may affect the reported amounts of assets and liabilities, equity and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reported periods.

On an ongoing basis, we evaluate our judgments, assumptions and estimates in light of changes in circumstances, facts and experiences.

We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

1 unchanged sentence

The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.

Other significant accounting policies are outlined in Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements.

Other significant accounting policies are outlined in Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included elsewhere in this Annual Report.

We have listed below our critical accounting estimates that we believe to have the greatest potential impact on our consolidated financial statements.

Our assumptions, judgements and estimates relative to our critical accounting estimates have not differed materially from actual results.

Our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.

Accrued Research and Development Expenses

5 unchanged sentences

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows and expense recognition.

Payments under some of these contracts depend on factors out of our control, as such as the successful enrollment of patients and the completion of clinical trial milestones.

Payments under some of these contracts depend on factors out of our control such as the successful enrollment of patients and the completion of clinical trial milestones.

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

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, we may report amounts that are too high or too low in any particular period.

Royalty Obligation

We have entered into a royalty financing arrangement, which has been recognized as debt on our consolidated balance sheet.

Pursuant to this arrangement, we are required to estimate the future anticipated royalty and other payments, which impact the determination of the effective interest rate and corresponding interest expense that we recognize over the term of the agreement.

We base these estimates on projected cash flows and future sales projections.

At the end of each reporting period we reassess these estimates, and should the estimated cash flows change, or future funding is received, we will recalculate the effective interest rate and adjust the accretion of interest on a prospective basis.

Although we do not expect our estimates to be materially different from amounts currently assumed, they are based on long-term projection of cash flows, which are inherently uncertain and may change, and the impact could be material in future periods.

Recent Accounting Pronouncements

10 unchanged sentences

We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted.

Therefore, the reported results of operations contained in our financial statements may not be directly comparable to those of other public companies.

7 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis