Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of the Company. The Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2025. In addition to historical information, this Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) which are intended to be covered by the safe harbors created thereby. See “Special Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K. Our actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under the Part I, Item 1A. Risk Factors section and elsewhere in this report, as well as, in other reports and documents we file with the Securities and Exchange Commission from time to time. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report on Form 10-K.
RECENT DEVELOPMENTS
Overview
Our business strategy is to optimize the clinical and commercial value of tegoprubart and become a global biopharmaceutical company with a focused immunology franchise. Tegoprubart targets the CD40 ligand (also known as CD40L). Blocking CD40L has been shown to inhibit multiple costimulatory receptors including CD40 and CD11, key components of how immune cells communicate with one another. Blocking CD40L also increases polarization of lymphocytes into Tregs, a specialized subpopulation of T cells that act to suppress immune response.
We believe the central role of CD40L signaling in generating pro-inflammatory responses makes it an attractive candidate for therapeutic intervention in the protection of transplanted organs and the prevention of transplant rejection, as well as modulating immune responses in autoimmune disease, and in neuroinflammation. Blocking the activation of the CD40L pathway has been shown to slow disease progression and pathology in preclinical models of autoimmunity and neurodegeneration, and to prevent acute and long-term allograft transplant rejection in multiple animal species.
We continue to focus on the development of tegoprubart for the prevention of rejection of allograft (i.e., transplanting an organ from one human to another) and xenograft (i.e., transplanting an organ from an animal to a human) organs and cells. Our mission is to both extend the functional life of transplanted organ and reduce side effect of current immunosuppressive treatments such as kidney toxicity, high blood pressure, and tremor.
Tegoprubart is being evaluated in multiple kidney transplantation studies, including a Phase 1b trial and a Phase 2 open-label extension study, and was evaluated through our Phase 2 BESTOW trial, each designed to assess safety, pharmacokinetics, and efficacy compared to standard-of-care immunosuppression. Final and interim data suggest improved renal function and reduced immunosuppressive-related adverse events. Additionally, an investigator-initiated islet cell transplantation study has shown potential in achieving insulin independence without the use of calcineurin inhibitors, supporting further exploration in Type 1 diabetes. We also continue to explore xenotransplantation applications, an emerging area of scientific and commercial interest. Our collaboration with eGenesis, Inc. supports preclinical and clinical studies in kidney, heart, and islet cell transplantation. A more complete discussion of the Phase 2 BESTOW clinical data, as well as results from the investigator-initiated islet cell transplantation study, is included in Item 1, Business in Part I of this Annual Report on Form 10-K.
We plan to seek guidance from the FDA regarding the design of a potential Phase 3 clinical trial evaluating tegoprubart in kidney transplantation and, subject to regulatory feedback and alignment, may initiate a Phase 3 trial.
Financing Activities
2023 Securities Purchase Agreement
On April 28, 2023, we entered into a Securities Purchase Agreement (the “2023 Securities Purchase Agreement”) with certain institutional and accredited investors, pursuant to which we agreed to issue and sell to the investors in a private placement (the “2023 Private Placement”) (i) in an initial closing, (a) an aggregate of 15,151,518 shares (the “Shares”) of our common stock, $0.001 par value per share (“common stock”), or pre-funded warrants in lieu thereof (the “Pre-Funded Warrants”), and (b) common stock warrants exercisable into an aggregate of 15,151,518 shares of common stock (or
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Pre-Funded Warrants in lieu thereof) (the “Common Warrants” and, together with the Pre-Funded Warrants, the “Warrants”); (ii) in a second closing (the “Second Closing”), upon the satisfaction or waiver of specified conditions set forth in the 2023 Securities Purchase Agreement, an aggregate of 20,202,024 shares of common stock (or Pre-Funded Warrants); and (iii) in a third closing (the “Third Closing”), upon the satisfaction or waiver of specified conditions set forth in the 2023 Securities Purchase Agreement, an aggregate of 25,252,530 shares of common stock (or Pre-Funded Warrants), in each case subject to customary adjustments as provided in the 2023 Securities Purchase Agreement, Pre-Funded Warrant or Common Warrant, as applicable. Each Common Warrant has an exercise price of $3.00 per share and expires five years after issuance. The Pre-Funded Warrants are exercisable immediately and until exercised in full, with an exercise price of $0.001 per share. The Pre-Funded Warrants and Common Warrants are subject to specified beneficial ownership limitations, which are generally set at 9.99% of the total common stock then issued and outstanding immediately following the exercise of such warrants, and provided that any ownership may not exceed 19.99% unless otherwise permitted. The Shares, the Warrants, and the shares of common stock issuable upon the exercise of the Warrants, have not been registered under the Securities Act and were offered pursuant to the exemption from registration provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder.
On May 5, 2023, the initial closing occurred, and we received gross proceeds of $35.0 million, or net proceeds of approximately $33.0 million after deducting underwriting discounts and commissions and offering expenses, in exchange for 8,730,168 shares of common stock and Pre-Funded Warrants to purchase 6,421,350 shares of common stock.
On July 8, 2024, the Second Closing occurred, and the Company received gross proceeds of $2.1 million, or net proceeds of approximately $2.0 million after deducting underwriting discounts and commissions and offering expenses, in exchange for 909,088 shares of common stock.
On September 30, 2024, and October 1, 2024, the Third Closing occurred, and the Company received gross proceeds of $4.0 million, or net proceeds of approximately $3.8 million after deducting underwriting discounts and commissions and offering expenses, in exchange for 1,727,400 shares of common stock.
In connection with the 2023 Private Placement, the Company filed on May 18, 2023, a registration statement on Form S-3 (the “2023 Registration Statement”) with the Securities and Exchange Commission (“SEC”) to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants. The 2023 Registration Statement became effective on June 2, 2023.
Exercise of Pre-Funded Warrants from 2023 Securities Purchase Agreement
On January 30, 2024, Armistice Capital Master Fund Ltd. (the “Exercising Stockholder”) exercised Pre-Funded Warrants to purchase 600,000 shares of common stock at an exercise price of $0.001 per share, which were issued in conjunction with the 2023 Securities Purchase Agreement. On January 30, 2024, the Company issued 600,000 shares of common stock to the Exercising Stockholder in accordance with such exercise.
On May 7, 2024, the Exercising Stockholder exercised Pre-Funded Warrants to purchase 583,000 shares of common stock at an exercise price of $0.001 per share, which were issued in conjunction with the 2023 Securities Purchase Agreement. On May 9, 2024, the Company issued 583,000 shares of common stock to the Exercising Stockholder in accordance with such exercise.
On July 11, 2024, the Exercising Stockholder exercised their remaining Pre-Funded Warrants to purchase 240,000 shares of common stock at an exercise price of $0.001 per share, which were issued in conjunction with the 2023 Securities Purchase Agreement. On July 11, 2024, the Company issued 240,000 shares of common stock to the Exercising Stockholder in accordance with such exercise.
2024 Securities Purchase Agreement
On May 6, 2024, we entered into a Securities Purchase Agreement (the “2024 Securities Purchase Agreement”) with certain institutional and accredited investors, pursuant to which we agreed to issue and sell to the investors in a private placement (the “2024 Private Placement”) an aggregate of 13,110,484 shares (the “2024 Shares”) of our common stock at a price of $2.37 per share, and pre-funded warrants (the “2024 Pre-Funded Warrants”) at a price of $2.369 per underlying share, which are exercisable to purchase 7,989,516 shares of common stock at an exercise price of $0.001 per share. The 2024 Pre-Funded Warrants were issued in lieu of shares of common stock and are exercisable immediately and until exercised in full. The 2024 Pre-Funded Warrants are subject to specified beneficial ownership limitations (equal to 4.99% or
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9.99% as determined by the holder of each such warrant) of the total common stock then issued and outstanding immediately following the exercise of such warrants, and provided that any beneficial ownership limitation may not exceed 19.99% unless otherwise permitted. The 2024 Shares, the 2024 Pre-Funded Warrants, and the shares of common stock issuable upon the exercise of the 2024 Pre-Funded Warrants, have not been registered under the Securities Act and were offered pursuant to the exemption from registration provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder.
The 2024 Private Placement resulted in gross proceeds to the Company of $50.0 million, or net proceeds of approximately $48.1 million after deducting offering costs.
In connection with the 2024 Private Placement, on May 24, 2024, we filed a registration statement on Form S-3 (the “2024 Registration Statement”) with the SEC to register for resale the 2024 Shares and the shares of common stock issuable upon the exercise of the 2024 Pre-Funded Warrants. The 2024 Registration Statement became effective on June 5, 2024.
2024 Equity Distribution Agreement
On September 20, 2024, we entered into an Open Market Sale Agreement (the “Sales Agreement”) with Guggenheim Securities, LLC (“Guggenheim Securities”) to sell shares of our common stock, having aggregate sales proceeds of up to $75.0 million, from time to time, through an “at the market” equity offering program under which Guggenheim Securities will act as sales agent. In connection with the Sales Agreement, we filed on September 20, 2024 a registration statement on Form S-3 containing a prospectus and prospectus supplement (the “Shelf Registration Statement”) with the SEC. The Shelf Registration Statement became effective on October 2, 2024. As of December 31, 2025, we have not sold any shares under the Sales Agreement.
2024 Underwritten Offering
On October 29, 2024, we entered into an underwriting agreement with Leerink Partners, LLC, as representative of the several underwriters named therein in connection with the underwritten offering, issuance and sale by the Company (the “2024 Underwritten Offering”) of 18,356,173 shares of our common stock, at an offering price of $3.65 per share, and pre-funded warrants at a price of $3.649 per pre-funded warrant, which are exercisable to purchase 4,931,507 shares of our common stock at an exercise price of $0.001 per share (the “2024 Offering Pre-Funded Warrants”).
The 2024 Underwritten Offering closed on October 30, 2024 and resulted in gross proceeds of $85 million, or net proceeds of approximately $79.5 million after deducting underwriting discounts and commissions and offering expenses. The 2024 Underwritten Offering was made pursuant to the Shelf Registration Statement and a prospectus supplement relating to the 2024 Underwritten Offering dated October 29, 2024.
A holder of the 2024 Offering Pre-Funded Warrants (together with its affiliates) may not exercise any portion of a 2024 Offering Pre-Funded Warrant to the extent that the that, after giving effect to such exercise, the holder (together with the holder’s affiliates, and any other persons acting as a group together with the holder or any of the holder’s affiliates) would beneficially own in excess of 4.99% (or, at the holder’s option upon issuance, 9.99%) of the number of shares of the our common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon exercise of such 2024 Offering Pre-Funded Warrants.
2025 Underwritten Offering
On November 12, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Leerink Partners, LLC, as representative of the several underwriters named therein (the “Underwriters”), in connection with the underwritten public offering and sale by the Company (the “2025 Underwritten Offering”) of 15,152,485 shares of the Company’s common stock at a public offering price of $1.65 per share (the “Common Stock Purchase Price”), and pre-funded warrants (the “2025 Offering Pre-Funded Warrants”) at a public offering price of $1.649 per 2025 Offering Pre-Funded Warrant, which are exercisable to purchase up to 15,151,515 shares of common stock at an exercise price of $0.001 per share. In addition, pursuant to the Underwriting Agreement, the Company granted the Underwriters an option (the “Option”), exercisable for 30 days, to purchase up to 4,545,600 additional shares of common stock at the Common Stock Purchase Price less the underwriting discounts and commissions, which Option was exercised in full by the Underwriters.
The 2025 Underwritten Offering closed on November 13, 2025 and resulted in gross proceeds of $57.5 million or net proceeds of approximately $53.6 million after deducting the underwriting discounts and commissions and offering expenses.
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The 2025 Underwritten Offering was made pursuant to the Shelf Registration Statement and a prospectus supplement relating to the 2025 Underwritten Offering dated November 12, 2025.
A holder of the 2025 Offering Pre-Funded Warrants (together with its affiliates) may not exercise any portion of a 2025 Offering Pre-Funded Warrant to the extent that, after giving effect to such exercise, the holder (together with the holder’s affiliates, and any other persons acting as a group together with the holder or any of the holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of the Company's common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon exercise of such 2025 Offering Pre-Funded Warrant. A holder, A holder, upon notice to the Company, may increase or decrease such beneficial ownership limitation provision, provided that in no event shall the limitation exceed 19.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the 2025 Offering Pre-Funded Warrant may increase or decrease such beneficial ownership limitation, provided that in no event shall the limitation exceed 19.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the 2025 Offering Pre-Funded Warrant.
2025 Warrant Exchange Agreement
On December 30, 2025, the Company entered into an exchange agreement (the “Warrant Exchange Agreement”) with Coastlands Capital Partners LP, (“Coastlands Capital”), pursuant to which Coastlands Capital agreed to exchange 4,203,764 shares of common stock for a pre-funded warrant to purchase an aggregate of 4,203,764 shares of common stock (the “Exchange Warrant”), and the Company cancelled the 4,203,764 shares of common stock delivered in the exchange.
Coastlands Capital (together with its affiliates) may not exercise any portion of the Exchange Warrant to the extent that, after giving effect to such exercise, Coastlands Capital (together with its affiliates and any other persons acting as a group together with Coastlands Capital or any of the its affiliates) would beneficially own in excess of 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon exercise of the Exchange Warrant. Coastlands Capital may increase or decrease such beneficial ownership limitation, provided that in no event shall the limitation exceed 19.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the Exchange Warrant.
Common Stock Warrants
As of December 31, 2025, 15,151,518 warrants were exercisable into common stock (after rounding for fractional shares and subject to beneficial ownership conversion blockers). The shares of common stock underlying the registered direct and private placement warrants are registered for offer and sale under the Securities Act pursuant to our effective registration statements on Forms S-3.
Financial Operations Overview
Operating Expenses
Our operating expenses consist primarily of costs associated with research and development activities and general and administrative activities.
Research and Development Expenses
Research and development expenses, which consist primarily of costs associated with our product research and development efforts, are expensed as incurred. Research and development expenses consist primarily of:
personnel costs, including salaries, benefits, stock-based compensation and travel expenses, for employees engaged in research and development functions;
expenses incurred under agreements with contract research organizations, or (“CROs”), and sites that conduct our non-clinical studies and clinical trials;
expenses associated with manufacturing materials for use in non-clinical studies and clinical trials and developing external manufacturing capabilities;
costs of outside consultants engaged in research and development activities, including their fees and travel expenses;
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other expenses related to our non-clinical studies and clinical trials and expenses related to our regulatory activities; and
payments made under our third-party license agreements.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel costs that include salaries, benefits and travel expenses for our executive, finance, and other administrative functions, and stock-based compensation expense. General and administrative expenses also include professional fees for expenses incurred under agreements with third parties relating to public relations, audit, tax and legal services, including legal expenses to pursue patent protection of our intellectual property; and our information technology, facilities and other related expenses, including rent, maintenance of facilities, insurance and supplies.
Change in fair value of warrant liabilities
Change in fair value of warrant liabilities represents the initial recognition of warrant liabilities at fair value in excess of proceeds received, as well as subsequent period remeasurements of these warrant liabilities at fair value. These remeasurements reflect changes in market conditions, such as fluctuations in stock price, volatility, interest rates, and other valuation inputs that impact the fair value of the liability.
CRITICAL ACCOUNTING ESTIMATES
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.
Accrued Research and Development Expenses
As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts, communicating with our personnel and vendors to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:
CROs in connection with performing research and development services on our behalf;
other providers in connection with clinical trials;
vendors in connection with non-clinical development activities; and
vendors related to product manufacturing, development and distribution of clinical supplies.
We base our expenses related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. When determining accruals, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated and 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 or prepaid accordingly. Although
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we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting expenses that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.
Stock-Based Compensation
The Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair value.
The fair value of stock options is determined using the Black-Scholes option pricing model, using assumptions which are subjective and require significant judgment and estimation by management. The risk-free rate assumption was based on observed yields from governmental zero-coupon bonds with an equivalent term. The expected volatility assumption was based on historical volatilities of a group of comparable industry companies whose share prices are publicly available. The peer group was developed based on publicly traded biotechnology and pharmaceutical companies with comparable business characteristics, clinical stages of development, and organizational scale, including employee headcount, primarily consisting of companies with Phase II or Phase III clinical programs. The expected term of stock options represents the weighted-average period that the stock options are expected to be outstanding. Because the Company does not have historical exercise behavior, the Company determined the expected life assumption using the simplified method for stock options granted to employees, which is an average of the options ordinary vesting period and the contractual term. The expected dividend assumption was based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not expect to pay dividends at any time in the foreseeable future. The Company recognizes forfeitures on an actual basis and as such did not estimate forfeitures to calculate stock-based compensation.
Restricted Stock Units (“RSU”) are measured and recognized based on the quoted market price of our common stock on the date of grant.
Warrant Liabilities
Warrants are accounted for as either derivative liabilities or as equity instruments depending on the specific terms of the underlying agreement. Warrants classified as derivative liabilities are initially recorded at fair value on the issuance date and are remeasured at each reporting period, with changes in fair value recognized in the consolidated statements of operations. Warrants classified as equity instruments are recorded in additional paid-in capital at issuance and are not subject to remeasurement. The Common Warrants are recorded at fair value using the Black-Scholes option-pricing model at issuance, with any subsequent changes in fair value recognized in the consolidated statements of operations. To determine the fair value of the liability classified warrants, a Black-Scholes option-pricing model is used, which considers assumptions that are subjective and require significant judgment and estimation by management. The risk-free rate assumption was based on observed yields from governmental zero-coupon bonds with an equivalent term. The expected volatility assumption was based on a peer group of publicly traded biotechnology and pharmaceutical companies with comparable business characteristics, clinical stages of development, and organizational scale, including employee headcount, primarily consisting of companies with Phase II or Phase III clinical programs. We periodically evaluate changes in facts and circumstances that could impact the classification of warrants.
Recently Issued and Adopted Accounting Pronouncements
A description of recently issued and recently adopted accounting pronouncements that may potentially impact our financial position and results of operations is set forth in Note 2. Summary of Significant Accounting Policies , of the Notes to Financial Statements included in this Annual Report on Form 10-K.
Market Trends and Uncertainties
The global economy, including the financial and credit markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, elevated inflation and interest rates, changes in U.S. trade policy and uncertainty about economic stability. Likewise, the current conflicts in Ukraine and the Middle East have created volatility in the global capital markets and global economic consequences, including disruptions of the global supply chain and energy markets. A severe or prolonged economic downturn or continued volatility in the financial and credit markets could impact our ability to obtain necessary debt or equity financing in a timely manner or on terms, if at all.
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The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies or cause us to delay our clinical development plans, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business.
Any of the foregoing items could materially affect our business, possibly to a significant degree. The severity and duration of any such impacts cannot be predicted. See Item 1A, “Risk Factors” in Part I of this Annual Report on Form 10-K for additional information
RESULTS OF OPERATIONS
Comparison of the Years Ended December 31, 2025 and 2024
The following table provides comparative results of operations for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended
December 31,
$ Variance
% Variance
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Other income, net
Change in fair value of warrant liabilities
Loss before income taxes
Provision for income taxes
Net loss
Other comprehensive loss:
Unrealized loss on available-for-sale securities, net
Comprehensive loss
Research and Development Expenses
The following table summarizes the period-over-period changes in research and development expenses for the periods presented (in thousands):
Year Ended
December 31,
Change
Tegoprubart - kidney transplantation programs
Tegoprubart - other development programs
Manufacturing
Personnel-related
Stock-based compensation
Other expenses
Total research and development expenses
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Research and development expenses increased $14.3 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily attributable to:
an increase of $8.5 million in Tegoprubart - kidney transplantation programs, primarily driven by higher external CRO costs, related to increased activities in our Phase 1b, Phase 2 BESTOW and Phase 2 open-label extension trials for kidney transplantation;
a decrease of $0.5 million in Tegoprubart - other development programs, primarily external CRO costs, related to the close-out of activities of our terminated IgAN program in 2024;
an increase of $2.5 million in manufacturing costs, primarily contract manufacturing organization expenses, associated with increased production of drug substance and drug product clinical trial supply; and
an increase of $3.7 million in personnel-related expenses, driven by increased headcount supporting ongoing clinical development programs.
General and Administrative Expenses
The following table summarizes the period-over-period changes in general and administrative expenses for the periods presented (in thousands):
Year Ended
December 31,
Change
Professional Fees
Personnel-related
Stock-based compensation
Other expenses
Total general and administrative expenses
General and administrative expenses decreased $1.6 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease was primarily attributable to:
an increase of $0.9 million in professional and consulting fees, primarily due to increased audit and legal service costs;
an increase of $0.1 million in personnel-related expenses driven by higher headcount; and partially offset by;
a decrease of $2.6 million in stock-based compensation expense, attributable to performance-based stock options granted in 2024.
Other Income, Net
The $0.3 million increase in other income, net was primarily due to an increase in interest income, driven by higher balances of our cash and cash equivalents and short-term investments during the year ended December 31, 2025 as compared to the year ended December 31, 2024.
Change in fair value of warrant liabilities
For the year ended December 31, 2025, the fair value of warrant liabilities decreased by $33.4 million. This change was primarily driven by a decrease in the fair value of the Common Warrants, reflecting a decline in the Company’s stock price during the period. The warrant liability declined from $44.9 million as of December 31, 2024 to $11.4 million as of December 31, 2025.
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Provision for Income Taxes
The provision for income taxes for the year ended December 31, 2025 and 2024 was $35 thousand and $0.4 million, respectively. The higher income tax expense in 2024 versus income tax expense in 2025 was the result of a larger change in the effective state tax rate used to remeasure the deferred tax liability related to indefinite-lived assets in 2024.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity
As of December 31, 2025, the Company had cash and cash equivalents and short-term investments of $133.3 million, working capital of $117.3 million and an accumulated deficit of $401.2 million.
We do not have any approved products for commercial sale and have never generated revenue from product sales and have incurred significant net losses since our inception and expect to continue to incur net operating losses for the foreseeable future. We do not expect to receive any revenue from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our product candidates or enter into collaborative arrangements with third parties. We currently have no credit facility or committed sources of capital. To date, our operations have been financed primarily by net proceeds from the sale of preferred and common stock, and the sale of warrants. Additionally, in view of our expectation to incur significant losses for the foreseeable future we will be required to raise additional capital resources in the future in order to fund our operations, although the availability of, and our access to, such resources is not assured.
Based on our liquidity estimates and our current resources, we have concluded that we have sufficient cash resources to meet our anticipated cash needs through at least the next 12 months from the date of this report. We have based this estimate on assumptions that may prove to be incorrect, and we could utilize our available resources sooner than we currently expect. To finance our operations beyond that point we will need to raise additional capital, which cannot be assured. Further, from time to time, our operating plans may change, and we may need additional funds to meet operational needs for clinical studies sooner than planned or to fund additional clinical studies. For example, we do not currently have sufficient liquidity to fund the continued clinical development of tegoprubart for people with ALS without additional financing. We will continue to monitor our liquidity position in light of various financing alternatives and may pursue additional financing or other alternatives to allow us to continue our product development. However, there can be no assurance such financing or other alternatives will be available to us on acceptable terms, or at all, which could force us to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether.
Material Cash Requirements
Our primary use of cash is to fund operating expenses, which consist of clinical research and development expenses, manufacturing expenses, legal and compliance expenses, compensation and related expenses, and general overhead costs. Cash used to fund operating expenses is impacted by the timing of when we pay or prepay these expenses.
We expect our expenses to increase in connection with our ongoing activities, particularly as we expand our clinical program with tegoprubart and, continue the research and development of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.
We will continue to require additional financing in order to advance our drug product through clinical development, to manufacture, obtain regulatory approval for and to commercialize our product candidates, to develop, acquire or in-license other potential product candidates, and to fund operations for the foreseeable future. Therefore, we will seek to raise additional capital through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. The ability to raise substantial additional capital will depend on many factors, including:
the initiation, progress, timing, costs and results of our ongoing and future clinical trials of tegoprubart, including as such activities may be adversely impacted by global events or macroeconomic conditions;
the impact of global macroeconomic trends and uncertainties, which continue to experience volatility and disruptions, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, rising interest rates and uncertainty about economic stability;
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the number and scope of indications we decide to pursue for tegoprubart development;
the cost, timing and outcome of regulatory review of any biologics license application, or BLA, we may submit for tegoprubart;
the costs and timing of manufacturing for tegoprubart, if approved;
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of tegoprubart;
the costs associated with being a public company;
the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements;
the extent to which we acquire or in-license other product candidates and technologies; and
the cost associated with commercializing tegoprubart, if approved for commercial sale.
Conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding. As a result of any of the foregoing factors, adequate additional funding may not be available to us on acceptable terms on a timely basis, or at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies or cause us to delay our clinical development plans, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business. The issuance of shares of common stock in the 2023 Private Placement, the 2024 Private Placement, the 2024 Underwritten Offering and the 2025 Underwritten Offering diluted the ownership interests of our existing stockholders, and to the extent that we raise additional capital through the sale of additional equity, including through our “at the market” equity offering program, or convertible debt securities in the future, our stockholders’ ownership interests may be further diluted, and the terms of these securities may also include or other preferences that affect our stockholders’ rights. Debt financing, if available, would result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could impact our ability to conduct our business. If we raise funds through , licenses and other similar arrangements with third parties, we may have to rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be to us. Please see Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K for additional risks associated with our substantial capital requirements and the we may face in raising capital.
We lease our office facilities in Irvine, California and Burlington, Massachusetts under non-cancelable operating leases that expire in June 2027 and November 2027, respectively. As of December 31, 2025, we expect to make total lease payments of $0.7 million through November 2027.
We enter into contracts in the normal course of business with third-party contract organizations for preclinical and clinical studies, manufacture and supply of our preclinical and clinical materials and providing other services and products for operating purposes. Contracts for preclinical and clinical studies and other services generally provide for termination following a certain period after notice, and therefore we believe that our non-cancelable obligations under these agreements are not material. We do not have any long-term manufacturing and supply agreements with our third-party contract manufacturers but enter into specific contracts on an as needed basis for individual batch production runs (See Note 7. Commitments and Contingencies of the Notes to Financial Statements included in this Annual Report on Form 10-K for contract obligations due within the next year).
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Cash Flows
The following table provides a summary of our net cash flow activity for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended
December 31,
Change
Net cash used in operating activities
Net cash provided by (used in) investing activities
Net cash provided by financing activities
Net change in cash and cash equivalents
Operating Activities
Net cash used in operating activities was $62.3 million for the year ended December 31, 2025, reflecting a net loss of $45.6 million. Adjustments for certain non-cash items including a $33.4 million change in fair value of warrant liabilities due to decreased stock price and $10.5 million of stock-based compensation. The change in cash used in operating assets and liabilities was $7.7 million, primarily driven by an increase in accrued expenses as a result of kidney transplantation programs.
Net cash used in operating activities was $47.3 million for the year ended December 31, 2024, reflecting a net loss of $36.2 million. Operating activities include adjustments for certain non-cash charges including $30.9 million due to a change in fair value of warrant liabilities and fair value of financial instruments issued in excess of proceeds and $13.1 million of stock-based compensation. Net operating assets and liabilities changed by $8.7 million, primarily driven by an increase in accounts payable and accrued expense as of result of kidney transplantation programs.
Investing Activities
Net cash provided by investing activities for the year ended December 31, 2025 was $10.8 million. We purchased $161.1 million of short-term investments, which was offset by the maturing of $171.9 million of our short-term investments during the year.
Net cash used in investing activities for the year ended December 31, 2024 was $70.3 million. We purchased $156.1 million of short-term investments, which was partially offset by the maturing of $85.8 million of our short-term investments during the year.
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was $53.8 million, which consisted of the 2025 Underwritten Offering, totaling $53.6 million in net proceeds from the sale of 19.7 million shares of common stock and 15.2 million pre-funded warrants to purchase common stock and $0.2 million from exercise of stock options.
Net cash provided by financing activities for the year ended December 31, 2024 was $133.5 million, which consisted of the following: $79.5 million in net proceeds from the 2024 Underwritten Offering, involving the sale of 18.4 million shares of the common stock and pre-funded warrants to purchase 4.9 million shares of common stock; $48.1 million in net proceeds from the 2024 Private Placement, involving the sale of 13.1 million shares of common stock and pre-funded warrants to purchase 8.0 million shares of common stock; $1.9 million in net proceeds from the Second Closing, involving the sale of 0.9 million shares of common stock; $3.8 million in net proceeds from the Third Closing, involving the sale of 1.7 million shares of common stock; and $0.2 million from exercise of stock options.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk.
Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item.
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Item 8. Financial Statement s and Supplementary Data.
The Report of Independent Registered Public Accounting Firm, our consolidated financial statements and accompanying notes listed under Part IV, Item 15. Exhibits and Financial Statement Schedules of this Annual Report on Form 10-K are set forth beginning on page F-1 immediately following the signature page hereof and incorporated by reference herein.
