Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K.
In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs, and expectations, and involve risks and uncertainties. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”
Overview
We are a biopharmaceutical company advancing the next generation platform of targeted immunotherapies aimed at complement-mediated neuroinflammatory diseases that impact nearly 10 million people worldwide. Building on more than a decade of expertise stopping acute and chronic neuroinflammation at its source, we have demonstrated robust target engagement in the body, brain and eye, and clinical proof of concept in multiple diseases.
Our strategic priorities include advancing two late-stage registrational programs, tanruprubart toward our first approval in Guillain-Barré Syndrome, or GBS, and vonaprument toward pivotal data in geographic atrophy, or GA, as well as developing ANX1502, a novel oral small molecule for autoimmune conditions.
Tanruprubart is an investigational targeted immunotherapy delivered in a single infusion to rapidly halt aggressive neuroinflammation and damage in GBS, an acute, rare, neuromuscular emergency that annually affects ~150,000 people worldwide. There are currently no therapies approved by the FDA for GBS and no substantial evidence of effectiveness from the current standard of care. In the placebo-controlled Phase 3 trial, approximately 90% of GBS patients treated with tanruprubart improved by week 1 and more than twice as many treated patients achieved a normal state of health at week 26. Tanruprubart has consistently demonstrated rapid and sustained functional improvements across a comprehensive data package. The open-label FORWARD study in the U.S. and Europe is ongoing and designed to support a broad intended label for the treatment of GBS and further expand the use of tanruprubart across geographies. We continue to engage with applicable EU and U.S. regulators to advance tanruprubart towards registration worldwide. We filed the Marketing Authorization Application, or MAA, with the European Medicines Agency, or EMA, for tanruprubart for the treatment of GBS in January 2026. We plan to submit a biologics license application, or BLA, to the FDA for GBS in 2026. Tanruprubart has been granted Fast Track and orphan drug designation for the treatment of GBS from the FDA. Tanruprubart has also been granted orphan designation from the EMA.
Vonaprument is an investigational neuroprotective inhibitor of C1q and the classical complement cascade delivered intravitreally for GA, a leading cause of blindness affecting more than eight million people worldwide. There are no approved therapies for GA targeting the preservation of vision. Vonaprument is the only investigational therapy in GA to show significant vision preservation on assessments of best corrected visual acuity, or BCVA, and low luminance visual acuity, or LLVA, demonstrating significant protection from vision loss in both normal and low light conditions, as well as significant preservation of central retinal photoreceptors necessary for visual acuity. In the Phase 2 ARCHER trial, vonaprument also reduced risk of 15-letter vision loss by more than 70%.
In July 2025, we completed enrollment of 659 patients in ARCHER II, a global, sham-controlled, double-masked Phase 3 trial. The primary endpoint of ARCHER II is the gold standard for visual acuity, measuring proportion of patients with confirmed BCVA ≥15-letter loss at any two consecutive visits through month 15. A secondary endpoint is EZ loss, which is a key anatomic measure of photoreceptor health and function. We plan to report topline data in the fourth quarter of 2026. We have established a global registration path with the FDA and EMA, which supports the potential of vonaprument to be the first treatment approved in both Europe and the U.S. for the protection of vision in patients with GA. The single-study program will be analyzed as two sub-studies in the U.S. in accordance with the FDA’s two-trial recommendation. Vonaprument is the first and only therapeutic candidate for the treatment of GA to receive Priority Medicine, or PRIME, designation by the EMA, which provides early and proactive support to developers of promising medicines that may offer a major therapeutic advantage over existing treatments or benefit to patients without treatment options. Vonaprument was also selected by the EMA for the Product Development
Coordinator Pilot launched in July 2025 to help PRIME designation holders efficiently navigate regulatory interactions including expedited scientific advice, MAA submission readiness activities, and ad-hoc queries throughout the development program.
ANX1502 is a novel oral small molecule inhibiting the activated form of C1s, an enzyme carried by C1q to initiate the classical cascade, which we believe is first-in-kind and has the potential to offer the advantages of selective upstream classical complement inhibition with the convenience and flexibility of oral administration. In a Phase 1 single-ascending dose and multiple-ascending dose clinical trial in healthy volunteers designed to evaluate the safety, tolerability, PK and PD, ANX1502 was generally well tolerated across cohorts with no serious adverse events, achieved target levels of active drug and showed supportive impact on a PD biomarker of complement activity. We are evaluating an enteric-coated tablet formulation of ANX1502 in an ongoing POC study in patients with cold agglutinin disease, or CAD. We have observed drug levels at and exceeding the pre-defined target in fasted CAD patients. Dosing is ongoing to enhance our understanding of ANX1502’s profile and we plan to provide an update upon study completion in 2026.
We were incorporated in March 2011 and commenced operations later that year. To date, we have focused primarily on performing research and development activities, hiring personnel and raising capital to support and expand these activities. We do not have any products approved for sale, and we have not generated any revenue from product sales. We have incurred net losses each year since our inception. Our net losses were $206.7 million and $138.2 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $917.4 million and cash and cash equivalents and short-term investments of $238.3 million.
Components of Operating Results
Revenue
Our product candidates are not approved for commercial sale. We have not generated any revenue from sales of our product candidates and do not expect to do so in the foreseeable future and until we complete clinical development, submit regulatory filings and receive approvals from applicable regulatory bodies for such product candidates, if ever.
Operating Expenses
Research and Development
Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of direct and indirect costs incurred for the development of our product candidates.
Direct expenses include:
preclinical and clinical outside service costs associated with discovery, preclinical and clinical testing of our product candidates;
professional services agreements with third party contract organizations, investigative clinical trial sites and consultants that conduct research and development activities on our behalf;
contract manufacturing costs to produce clinical trial materials and commercial materials to support our planned regulatory package submissions to FDA and other foreign regulatory agencies; and
laboratory supplies and materials.
Indirect expenses include:
compensation and personnel-related expenses (including stock-based compensation);
allocated expenses for facilities and depreciation; and
other indirect costs.
We record research and development expenses as incurred. Payments made to other entities are under agreements that are generally cancelable by us. Advance payments for goods or services to be received in future periods for use in research and development activities are deferred as prepaid expenses. The prepaid amounts are then expensed as the related services are performed. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates.
We expect our future research and development expenses to increase as we pursue regulatory approval of our product candidates, continue to advance our product candidates through late-stage clinical trials, invest in capabilities to prepare for commercialization including manufacturing, and hire additional personnel to support our organization. The process of conducting the necessary clinical research, development and manufacturing to obtain regulatory approval is costly and time-consuming, and the successful development and approval of our product candidates is highly uncertain.
General and Administrative
General and administrative expenses consist primarily of compensation and personnel-related expenses (including stock-based compensation) for our personnel in executive, finance and other administrative functions. General and administrative expenses also include professional fees paid for accounting, legal and tax services, allocated expenses for facilities and depreciation and other general and administrative costs.
We expect our general and administrative expenses to increase as we continue to support our research and development activities, grow our business, advance our product candidates in late-stage clinical trials and toward regulatory approval and commercialization activities, and operate as a public company.
Interest and Other Income, Net
Interest and other income, net, primarily consists of interest income earned on our cash equivalents and short-term investments.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following tables summarize our results of operations for the periods presented:
Year Ended
December 31,
Dollar
Change
Change
(in thousands)
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest and other income, net
Net loss
Research and Development Expenses
Year Ended
December 31,
Dollar
Change
Change
(in thousands)
Direct costs:
Clinical and nonclinical outside services
Contract manufacturing
Consulting and professional services
Laboratory supplies and materials
Indirect costs:
Compensation and personnel-related
(including stock-based compensation)
Facilities and depreciation
Other
Total research and development expenses
Research and development expenses increased by $65.3 million, or 55%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The change was attributable to an increase of $27.1 million in contract manufacturing expenses supporting the tanruprubart global regulatory submissions, as well as the manufacturing technology transfer of vonaprument to a commercial-ready facility. In addition, direct clinical and nonclinical outside services costs increased by $21.9 million associated with the vonaprument Phase 3 ARCHER II trial in GA and the initiation of the tanruprubart FORWARD study in GBS. Compensation and personnel-related expenses (including stock-based compensation) increased by $10.0 million, driven by higher headcount, and consulting and professional services expenses increased by $6.0 million primarily due to global regulatory submissions and the ongoing ARCHER II trial.
General and Administrative Expenses
Year Ended
December 31,
Dollar
Change
Change
(in thousands)
Compensation and personnel-related
(including stock-based compensation)
Consulting and professional services
Facilities and depreciation
Other
Total general and administrative expenses
General and administrative expenses decreased by $2.9 million, or 8%, for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by ongoing corporate efficiencies and disciplined prioritization of resources resulting in a $2.6 million decrease in consulting and professional services costs. In addition, compensation and personnel-related expenses decreased by $1.2 million mainly due to the full amortization of previously granted high fair value stock options, partially offset by higher headcount. The overall decrease in general and administrative expenses was partially offset by other expenses which increased by $0.9 million due to cloud-based infrastructure costs.
Interest and other income, net
Interest and other income, net decreased by $6.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to lower average cash and investment balances.
Liquidity and Capital Resources
Sources of Liquidity
Due to our significant research and development expenditures, we have generated operating losses each year since our inception.
To date, we have funded our operations primarily through the sale of equity securities including, most recently, the public offering of approximately $86.3 million of common stock and pre-funded warrants. In addition, on March 30, 2026, we entered into a sales agreement with TD Cowen, or the 2026 Sales Agreement, pursuant to which we may offer and sell, from time to time through TD Cowen, at our option, shares of our common stock having an aggregate offering price of up to $150.0 million. As of December 31, 2025, we had available cash and cash equivalents and short-term investments of $238.3 million and an accumulated deficit of $917.4 million.
Historical Cash Flows
Year Ended
December 31,
(in thousands)
Net cash used in operating activities
Net cash provided by (used in) investing activities
Net cash provided by financing activities
Increase (decrease) in cash, cash equivalents and restricted cash
Cash Flow from Operating Activities
Cash used in operating activities for the year ended December 31, 2025 was $186.4 million, which consisted of a net loss of $206.7 million, partially offset by $16.1 million in non-cash charges and a net change of $4.2 million in our operating assets and liabilities. The non-cash charges consisted of stock-based compensation of $16.4 million, depreciation and amortization of $2.2 million, and reduction in the carrying amount of right-of-use assets of $1.5 million, partially offset by accretion of discount on available-for-sale securities of $4.0 million.
Cash used in operating activities for the year ended December 31, 2024 was $118.0 million, which consisted of a net loss of $138.2 million, partially offset by $13.8 million in non-cash charges and a net change of $6.4 million in our operating assets and liabilities. The non-cash charges consisted of stock-based compensation of $19.4 million, depreciation and amortization of $2.2 million, and reduction in the carrying amount of right-of-use assets of $1.3 million, partially offset by accretion of discount on available-for-sale securities of $9.1 million.
Cash Flow from Investing Activities
Cash provided by investing activities for the year ended December 31, 2025 was $190.1 million, which consisted of $402.4 million of proceeds from maturities of available-for-sale securities, partially offset by $212.2 million of purchases of available-for-sale securities.
Cash used in investing activities for the year ended December 31, 2024 was $218.8 million, which consisted of $583.9 million of purchases of available-for-sale securities, partially offset by $365.1 million of proceeds from maturities of available-for-sale securities.
Cash Flow from Financing Activities
Cash provided by financing activities for the year ended December 31, 2025 was $108.9 million, which consisted of $80.5 million of net proceeds from the issuance of common stock and pre-funded warrants under our 2025 Financing, $27.4 million of net proceeds from the issuance of common stock under our 2024 ATM program and $1.0 million of proceeds from the exercise of common stock options and employee stock purchase plan purchases.
Cash provided by financing activities for the year ended December 31, 2024 was $161.2 million, which consisted of $116.8 million of net proceeds from the issuance of common stock and pre-funded warrants under our 2024 financing, $42.8 million of net proceeds from the issuance of common stock under our 2021 and 2024 ATM programs and $1.6 million of proceeds from the exercise of common stock options and employee stock purchase plan purchases.
Funding Requirements
We use our cash to fund operations, primarily to fund our clinical trials, research and development expenditures and related personnel costs. We expect our future research and development expenses to increase as we pursue regulatory approval of our product candidates, continue to advance our product candidates through late-stage clinical trials, invest in capabilities to prepare for commercialization including manufacturing, and hire additional personnel to support our organization. In addition, we expect our general and administrative expenses to increase as we continue to support our research and development activities, grow our business, advance our product candidates in late-stage clinical trials and toward regulatory approval and commercialization activities, and operate as a public company. The timing and amount of our operating expenditures will depend on many factors, including:
the scope, progress, results and costs of researching and developing our current product candidates or any other future product candidates we choose to pursue, and conducting preclinical studies and clinical trials;
the timing of, and the costs involved in, obtaining feedback from regulators on our clinical trials and regulatory approvals for our lead product candidates or any future product candidates;
the number and characteristics of any additional product candidates we develop or acquire;
the timing and amount of any milestone, royalty and/or other payments we are required to make pursuant to our current or any future license or collaboration agreements;
the cost of manufacturing our lead product candidates or any future product candidates and any products we successfully commercialize;
the cost of building a sales force in anticipation of product commercialization;
the cost of commercialization activities of our product candidates, if approved for sale, including marketing, sales and distribution costs;
our ability to establish strategic collaborations, licensing or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;
any product liability or other lawsuits related to our products;
the expenses needed to attract, hire and retain skilled personnel;
the costs associated with operating as a public company;
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our intellectual property portfolio; and
the timing, receipt and amount of sales of any future approved products.
Based upon our current operating plan, we believe that our existing cash and cash equivalents and short-term investments will enable us to fund operating expenses into the second half of 2027. We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We will be required to seek additional funding in the future until such time, if ever, as we can generate substantial product revenue, and currently intend to do so through public or private equity offerings or debt financings, credit or loan facilities, collaborations or a combination of one or more of these funding sources. We may also need to seek additional funds sooner than planned as result of changes in our development plans and regulatory requirements to support registration of our product candidates. Additional funds may not be available to us on acceptable terms or at all. If we fail to obtain necessary
capital when needed on acceptable terms, or at all, we could be forced to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. If we raise additional funds by issuing equity securities, our stockholders will suffer dilution and the terms of any financing may adversely affect the rights of our stockholders. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, is likely to involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities received any distribution of our corporate assets.
2025 Financing
In November 2025, we raised net proceeds of approximately $80.5 million after deducting underwriting discounts and offering expenses through the sale of 29,423,075 shares of our common stock at a price of $2.60 per share and pre-funded warrants to purchase an aggregate of 3,750,000 shares of common stock at a price of $2.599 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each pre-funded warrant.
2024 Financing
In June 2024, we raised net proceeds of approximately $116.8 million after deducting underwriting discounts and offering expenses through the sale of 13,001,120 shares of our common stock at a price of $6.25 per share and pre-funded warrants to purchase an aggregate of 7,000,000 shares of common stock at a price of $6.249 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each pre-funded warrant. In March 2026, we issued an aggregate of 4,499,124 shares of common stock upon the cashless exercise of pre-funded warrants to purchase 4,500,000 shares of common stock. As of the date of these consolidated financial statements, pre-funded warrants to purchase up to 2,500,000 shares of common stock remained outstanding from the 2024 Financing.
2023 Financing
In December 2023, we raised net proceeds of approximately $117.0 million after deducting underwriting discounts and offering expenses through the sale of 25,035,000 shares of our common stock at a price of $2.880 per share and pre-funded warrants to purchase an aggregate of 18,379,861 shares of common stock at a price of $2.879 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each pre-funded warrant. We issued an aggregate of 5,243,400 and 965,427 shares of common stock upon cashless and cash exercise of these pre-funded warrants in February 2024 and April 2024, respectively.
2022 Financing
In July 2022, we raised net proceeds of approximately $122.5 million after deducting fees and expenses through the sale of an aggregate of 9,013,834 shares of common stock, pre-funded warrants to purchase up to 24,696,206 shares of our common stock and accompanying common warrants to purchase up to 8,427,508 shares of our common stock. The offering price per share and accompanying common warrant was $3.87125 per share and the offering price per pre-funded warrant and accompanying common warrant was $3.87025 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each such pre-funded warrant. The pre-funded warrants remain exercisable until exercised in full. The common warrants had an exercise price of $5.806875 per share and, except as described in the next paragraph, expired on June 30, 2025. Both the pre-funded and common warrants were immediately exercisable, subject to beneficial ownership limitations. We issued an aggregate of 19,901 and 2,739,096 shares of common stock upon the cashless exercise of the common warrants and pre-funded warrants in June 2024 and November 2024, respectively.
In June 2025, we and holders of common warrants exercisable for 6,877,622 shares of our common stock entered into amendments to the common warrants held by such holders. The amendments extended the term of the common warrants by one year until June 30, 2026, and removed the cashless exercise option. If all such common warrants are exercised in full for cash (without regard to any applicable ownership limitations), we would receive aggregate gross proceeds of approximately $39.9 million. The remaining common warrants to purchase 1,226,993 shares of our common stock not subject to these amendments expired unexercised on June 30, 2025.
Pre-Funded and Common Warrants
The following summarizes warrant activity during the year ended December 31, 2025:
Number of Common Warrants
Number of Pre-funded Warrants
Weighted-Average Exercise Price
Balances as of December 31, 2024
Issued
Expired
Balances as of December 31, 2025
2026 At the Market (ATM) Program
Pursuant to the 2026 Sales Agreement, we may offer and sell, from time to time through TD Cowen, at our option, shares of our common stock having an aggregate offering price of up to $150.0 million (the “ATM Shares”). The sales of the ATM Shares will be made by any method permitted that is deemed to be an “at-the-market” equity offering as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the Nasdaq Global Select Market. We agreed to pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds from any ATM Shares sold by TD Cowen.
2024 ATM Program
In March 2024, we entered into a sales agreement with TD Cowen, as sales agent, pursuant to which we could issue and sell shares of our common stock for an aggregate maximum offering of $100.0 million under an at-the-market offering program, or 2024 ATM program. TD Cowen is entitled to compensation up to 3% of the aggregate gross proceeds for the common stock sold through the 2024 ATM program. During the year ended December 31, 2025 and 2024, we sold 9,740,824 shares and 750,000 shares of common stock, respectively, for net proceeds of approximately $27.4 million and $4.5 million, respectively, after deducting commissions paid to TD Cowen. As of December 31, 2025, approximately $66.9 million remained available for the offer and sale of shares of common stock under the 2024 ATM program. Subsequent to December 31, 2025 and through the date of issuance of these consolidated financial statements, we sold 6,049,762 shares of common stock under the 2024 ATM for net proceeds of approximately $32.8 million, after deducting commissions paid to TD Cowen.
2021 ATM Program
In August 2021, we entered into a sales agreement with TD Cowen, as sales agent, pursuant to which we could issue and sell shares of our common stock for an aggregate maximum offering of $100.0 million under an at-the-market offering program, or 2021 ATM program. TD Cowen is entitled to compensation of up to 3% of the aggregate gross proceeds of the common stock sold through the 2021 ATM program. During the year ended December 31, 2024, we sold 7,576,067 shares of common stock under the 2021 ATM program for net proceeds of approximately $38.4 million, after deducting commissions paid to TD Cowen and other financing costs. The Form S-3 registration statement, which registered the 2021 ATM Program, expired on August 15, 2024. As a result, no shares of common stock may be sold under the 2021 ATM Program.
Off-Balance Sheet Arrangements
Since our inception, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Critical Accounting Policies and Estimates
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. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are 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 from these estimates under different assumptions or conditions and any such differences may be material.
While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.
Accrued and Prepaid Research and Development Costs
We record accrued expenses for estimated costs of our research and development activities conducted by third-party service providers, which include the conduct of clinical trials and nonclinical studies. We estimate preclinical study and clinical trial expenses based on the services performed pursuant to contracts with research institutions, clinical research organizations, and clinical manufacturing organizations that conduct and manage preclinical studies and clinical trials on our behalf. In recording service fees as either prepaid or accrued costs, we estimate the period over which services will be performed and the level of effort to be expended in each period. The level of judgment required to estimate research and development expenses varies based on the nature of the services being performed and the underlying support obtained. Accordingly, research and development expenses supported by invoices or reports of costs from third-party providers for the services performed do not require us to make significant estimates.
Our expenses related to clinical trials are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services provided and efforts expended pursuant to contracts with contract research organizations that may be used to conduct and manage our clinical trials. We recognize costs for contract manufacturing based on evaluation of the progress to completion of specific tasks. These estimates of the expense are based on communications with and information provided by the third-party service providers at each balance sheet date. If the actual timing of the performance of services or the level of effort varies from the estimate, we will adjust the amounts recorded accordingly. The estimates are trued up to reflect the best information available at the time of the financial statement issuance. We have not experienced any material differences between accrued or prepaid costs and actual costs incurred since inception.
We defer and capitalize non-refundable advance payments for goods or services that will be used or rendered for future research and development activities as prepaid expenses until the related goods are delivered or services are performed. We evaluate such payments for current or long-term classification based on when such services are expected to be received.
Warrants
To assess the initial classification of our warrants as either liability or equity, we apply judgment when evaluating the potential settlement options. We first assess whether the warrants are within the scope of ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, or ASC 480. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate us to settle the warrants or the underlying shares by paying cash or other assets, or require settlement by issuing variable number of shares.
If the warrants are not within the scope of ASC 480, they are subsequently assessed under ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock , or ASC 815-40. We review the terms of the warrants to determine whether they require or may require us to settle or net settle the contract for cash which would result in classification of the warrants as liabilities recorded at fair value. If the warrants do not require liability classification under ASC 815-40, and in order to conclude equity classification, we also assess whether the warrants are indexed to our common stock and meet equity classification criteria under ASC 815-40. Liability-classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the consolidated statements of operations. Equity-classified warrants only require fair value accounting at issuance and are not subsequently remeasured.
Our pre-funded and common warrants are equity-classified instruments that were recorded in additional paid-in capital at issuance and are not subject to remeasurement. We periodically evaluate changes in facts and circumstances that could impact the classification of warrants.
Recent Accounting Pronouncements Not Yet Adopted
See Note 2—Basis of Presentation and Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk.
Not required for the Company as a smaller reporting company.
Item 8. Financial Statement s and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm ( KPMG LLP , San Francisco, CA , Auditor Firm ID: 185 )
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Regist ered Public Accounting Firm
To the Stockholders and the Board of Directors
Annexon, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Annexon, Inc. and subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Pre-funded warrants
As discussed in Note 6 to the consolidated financial statements, in November 2025 the Company closed a financing transaction which included the issuance of common stock and pre-funded warrants to purchase its common stock. Upon issuance, the 3,750,000 shares of pre-funded warrants were recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital.
We identified the balance sheet classification of the pre-funded warrants as part of the November 2025 financing transaction as either liabilities or equity as a critical audit matter. Subjective auditor judgment was required in the
evaluation of the balance sheet classification of the pre-funded warrants due to certain provisions included within the warrant agreement.
The following are the primary procedures we performed to address this critical audit matter. We obtained and inspected the pre-funded warrant agreement to identify key terms and conditions within the agreement that were relevant to the balance sheet classification determination. We obtained and assessed the Company’s technical accounting analysis to evaluate whether the Company had considered those key terms and conditions of the pre-funded warrant agreement. We evaluated the Company’s interpretation and application of the relevant accounting literature, including considerations of the settlement provisions unique to the pre-funded warrants.
/s/ KPMG LLP
We have served as the Company’s auditor since 2016.
San Francisco, California
March 30, 2026
ANNEXON, INC.
Consolidated B alance Sheets
(in thousands, except share and per share amounts)
Year Ended
December 31,
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Prepaid expenses and other current assets
Total current assets
Restricted cash
Property and equipment, net
Operating lease right-of-use assets
Other non-current assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Accrued and other current liabilities
Operating lease liabilities, current
Total current liabilities
Operating lease liabilities, non-current
Total liabilities
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock, $ 0.001 par value; 300,000,000 shares authorized
as of December 31, 2025 and 2024; 149,362,800
and 109,381,556 shares issued and outstanding as of
December 31, 2025 and 2024, respectively
Additional paid-in capital
Accumulated other comprehensive (loss) income
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes to consolidated financial statements.
ANNEXON, INC.
Consolidated Statem ents of Operations
(in thousands, except share and per share amounts)
Year Ended
December 31,
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest and other income, net
Net loss
Deemed dividend on modification of common stock warrants
Net loss attributable to common stockholders
Net loss per share, basic and diluted
Weighted-average shares used in computing net loss per share,
basic and diluted
See accompanying notes to consolidated financial statements.
ANNEXON, INC.
Consolidated Statements of Comprehensive Loss
(in thousands)
Year Ended
December 31,
Net loss
Other comprehensive (loss) income:
Foreign currency translation adjustment
Unrealized (loss) gain on available-for-sale securities
Comprehensive loss
See accompanying notes to consolidated financial statements.
ANNEXON, INC.
Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
Common Stock
Additional
Paid-In
Accumulated Other
Comprehensive
Accumulated
Total
Stockholders’
Shares
Cost
Capital
Income (Loss)
Deficit
Equity
Balances as of December 31, 2023
Exercise of stock options
Exercise of pre-funded warrants
Exercise of common warrants
Issuance of common stock, net of issuance
costs of $ 1,528
Issuance of common stock and pre-funded
warrants, net of issuance costs $ 8,183
Issuance of common stock per Employee
Stock Purchase Plan purchase
Restricted stock vested in the period
Stock-based compensation
Other comprehensive income
Net loss
Balances as of December 31, 2024
Exercise of stock options
Issuance of common stock per Employee
Stock Purchase Plan purchase
Restricted stock vested in the period
Issuance of common stock, net of issuance
costs of $ 1,059
Issuance of common stock and pre-funded
warrants, net of issuance costs $ 5,741
Stock-based compensation
Other comprehensive loss
Net loss
Balances as of December 31, 2025
See accompanying notes to consolidated financial statements.
ANNEXON, INC.
Consolidated Stateme nts of Cash Flows
(in thousands)
Year Ended
December 31,
Operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Accretion of discount on available-for-sale securities
Stock-based compensation
Reduction in the carrying amount of right-of-use assets
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
Other non-current assets
Accounts payable
Accrued and other current liabilities
Operating lease liabilities
Net cash used in operating activities
Investing activities:
Purchases of property and equipment
Purchases of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Net cash provided by (used in) investing activities
Financing activities:
Proceeds from the exercise of common stock options
Proceeds from employee stock purchase plan purchases
Proceeds from the issuance of common stock
Proceeds from the issuance of common stock and pre-funded warrants, net of commissions
Payment of financing costs
Net cash provided by financing activities
Increase (decrease) in cash, cash equivalents and restricted cash
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash
Beginning of period
End of period
Supplemental disclosure of cash flow information:
Cash paid for amounts included in the measurement of lease liability
Non-cash investing and financing activities:
Deemed dividend on modification of common stock warrants
Deferred offering costs included in other non-current assets
See accompanying notes to consolidated financial statements.
ANNEXON, INC.
Notes to Consolidated Financial Statements
1. Organization
Annexon, Inc., or the Company, is a biopharmaceutical company advancing the next generation platform of targeted immunotherapies aimed at complement-mediated neuroinflammatory diseases that impact nearly 10 million people worldwide. The Company is located in Brisbane, California and was incorporated in Delaware in March 2011.
The Company’s wholly-owned subsidiary, Annexon Biosciences Australia Pty Ltd, or the Subsidiary, is a proprietary limited company incorporated in 2016 and domiciled in Australia.
Liquidity
Since inception, the Company has been involved primarily in performing research and development activities, conducting clinical trials, hiring personnel, and raising capital to support and expand these activities. The Company has experienced losses and negative cash flows from operations since its inception and, as of December 31, 2025, had an accumulated deficit of $ 917.4 million and cash and cash equivalents and short-term investments of $ 238.3 million.
The Company has historically funded its operations through the issuance of shares of its common stock and warrants. Based on projected activities, management projects that existing cash and cash equivalents and short-term investments will enable the Company to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these financial statements. The Company’s future viability beyond that point is dependent on its ability to achieve development milestones and obtain additional funding. Management expects to continue to incur losses and negative cash flows from operations for at least the next several years. There are uncertainties associated with the Company’s ability to (1) obtain additional equity or debt financing on terms that are favorable to the Company, (2) enter into collaborative agreements with strategic partners, and (3) succeed in its future operations. If the Company is not able to obtain the required funding for its operations or is not able to obtain funding on terms that are favorable to the Company, it could be forced to delay, reduce or eliminate its research and development programs and its business could be materially harmed.
Basis of Presentation and Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses during the reporting period. Management evaluates its estimates, including but not limited to the fair value of investments, operating lease right-of-use assets and liabilities, valuation of deferred tax assets and uncertain tax positions (including valuation allowance), clinical trial accruals and stock-based compensation. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the operations of Annexon, Inc. and its wholly owned subsidiary and include the results of operations and cash flows of these entities. All intercompany balances and transactions have been eliminated in consolidation.
Segments
The Company’s chief operating decision maker, or CODM, is its Chief Executive Officer. The CODM reviews financial information on an aggregate basis for the purposes of evaluating financial performance and allocating the Company’s resources. Accordingly, the Company has determined that it operates in one segment.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid instruments with an original maturity of three months or less at time of purchase to be cash equivalents. Cash equivalents, which includes amounts invested in money market funds and short-term government bonds, are stated at fair value.
Restricted cash as of December 31, 2025 relates to the letters of credit established for the Company’s office lease.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):
December 31,
Cash
Cash equivalents
Cash and cash equivalents
Restricted cash
Cash, cash equivalents and restricted cash
Short-Term Investments
Short-term investments have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. The Company determines the appropriate classification of its investments in debt securities at the time of purchase. Available-for-sale securities with original maturities beyond three months at the date of purchase are classified as current based on their availability for use in current operations.
The Company evaluates, on a quarterly basis, its available-for-sale debt securities for potential impairment. For available-for-sale debt securities in an unrealized loss position, the Company assesses whether such declines are due to credit loss based on factors such as changes to the rating of the security by a ratings agency, market conditions and supportable forecasts of economic and market conditions, among others. If credit loss exists, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any available-for-sale debt security before recovery of its amortized cost basis. If either condition is met, the security’s amortized cost basis is written down to fair value and is recognized through interest and other income (expense), net. If neither condition is met, declines as a result of credit losses, if any, are recognized as an allowance for credit loss, limited to the amount of unrealized loss, through interest and other income (expense), net. Any portion of the unrealized loss that is not a result of a credit loss, is recognized in other comprehensive income (loss). Realized gains and losses, if any, on available-for-sale debt securities are included in interest and other income (expense), net.
The cost of investments sold is based on the specific-identification method. Interest on available-for-sale debt securities is included in interest and other income (expense), net.
Property and Equipment, Net
Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Depreciation begins at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations in the period realized.
The useful lives of the property and equipment are as follows:
Computer equipment
3 years
Lab equipment and furniture and fixtures
5 years
Leasehold improvements
Shorter of remaining lease term or estimated useful life
Impairment of Long-Lived Assets
The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. When indications of impairment are present and the estimated undiscounted future cash flows from the use of these assets is less than the assets’ carrying value, the related assets will be written down to fair value. There were no impairments of the Company’s long-lived assets for the periods presented.
Leases
The Company determines if an arrangement is a lease at inception. The Company includes operating leases in operating lease right of use, or ROU, assets, current and noncurrent operating lease liabilities in the Company’s consolidated balance sheets. The ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company measures the ROU assets based on the associated lease liabilities adjusted for any lease incentives such as tenant improvement allowances. As most of the leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. Lease expense for lease payments is recognized on a straight-line basis, net of sublease income, over the lease term.
As a practical expedient, the Company elected, for all facility leases, not to separate non-lease components from lease components and instead to account for each separate lease component and its associated non-lease components as a single lease component. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (short-term leases).
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred taxes to the amounts expected to be realized.
The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merit, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
Warrants
Warrants are accounted for as either derivative liabilities or as equity instruments depending on the specific terms of the agreement. The Company’s pre-funded and common warrants are equity-classified instruments that were recorded in additional paid-in capital at issuance and are not subject to remeasurement. The Company periodically evaluates changes in facts and circumstances that could impact the classification of warrants.
Research and Development Expense
Research and development expenses consist primarily of direct and indirect costs incurred for the development of the Company’s product candidates.
Direct expenses include (i) preclinical and clinical outside service costs associated with discovery, preclinical and clinical testing of the Company’s product candidates; (ii) professional services agreements with third-party contract organizations, investigative clinical trial sites and consultants that conduct research and development activities on the Company’s behalf; (iii) contract manufacturing costs to produce clinical trial materials and commercial materials to support future biologics license applications, or BLA, to the FDA, and (iv) laboratory supplies and materials. Indirect expenses include (A) compensation and personnel-related expenses (including stock-based compensation), (B) allocated expenses for facilities and depreciation; and (C) other indirect costs.
Research and development costs are expensed as incurred. Payments made to third parties are under agreements that are generally cancelable by the Company. Advance payments for research and development activities are deferred as prepaid expenses. The prepaid amounts are expensed as the related services are performed.
The Company estimates preclinical studies and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalf. The Company also estimates manufacturing costs based on services performed pursuant to contracts with contract manufacturing organizations that develop and manufacture product on the Company’s behalf. In accruing service fees, the Company estimates the period over which services will be performed and the level of effort to be expended in each period. These estimates are based on the Company’s communications with the third-party service providers and on information available at each balance sheet date. If the actual timing of the performance of services or the level of effort varies significantly from the estimate, the Company will adjust the accrual accordingly to reflect the best information available at the time of the financial statement issuance. The Company has not experienced any material differences between accrued costs and actual costs incurred since its inception.
Stock-Based Compensation
The Company accounts for stock-based compensation arrangements with employees and non-employee directors and consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options and restricted stock units, or RSUs. The fair value method requires the Company to estimate the fair value of stock options to employees and non-employees on the date of grant using the Black-Scholes option pricing model. The fair value of RSU awards is based on the fair value of the underlying common stock as of the grant date.
Stock-based compensation costs are based on the fair value of the underlying RSUs and options and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period.
Determining the appropriate fair value model and related assumptions requires judgment, including estimating expected term, expected stock price volatility, risk-free interest rate and dividend yield. The Company accounts for forfeitures as they occur.
Net Loss Per Share
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. As the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share because the effects of potentially dilutive securities are antidilutive.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company’s cash and cash equivalents and short-term investments are held by high credit quality financial institutions in the United States. At times, such deposits may be in excess of the Federal Depository Insurance Corporation insured limits. Management believes that the financial institutions are financially sound, and accordingly, minimal credit risk exists with respect to the financial institutions.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures , which requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company has adopted ASU 2023-09 on a retrospective basis commencing with the fiscal year ending December 31, 2025 , and have applied the amendments retrospectively to all prior periods presented in the financial statements. See Note 8— Income Taxes .
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures : Disaggregation of Income Statement Expenses , which requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. This guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
Fair Value Measurements
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
On a recurring basis, the Company measures certain financial assets and liabilities at fair value. The following tables summarize the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
December 31, 2025
Valuation
Hierarchy
Amortized
Cost
Gross
Unrealized
Holding
Gains
Gross
Unrealized
Holding
Losses
Aggregate
Fair Value
Assets:
Cash equivalents:
Money market funds
Level 1
Government bonds
Level 2
Total cash equivalents
Short-term investments:
Government bonds
Level 2
Total short-term investments
December 31, 2024
Valuation
Hierarchy
Amortized
Cost
Gross
Unrealized
Holding
Gains
Gross
Unrealized
Holding
Losses
Aggregate
Fair Value
Assets:
Cash equivalents:
Money market funds
Level 1
Government bonds
Level 2
Total cash equivalents
Short-term investments:
Government bonds
Level 2
Total short-term investments
All of the investments held as of December 31, 2025 had original maturities of less than two years . As of December 31, 2025, all of the investments are scheduled to mature in 12 months . During the year ended December 31, 2025, the Company did no t recognize any credit losses. The Company determined that the decline in fair value of debt securities was not due to credit-related factors, and no allowance for expected credit losses was recorded as of December 31, 2025. There were nominal unrealized losses as of December 31, 2025, and no unrealized losses have been in the loss position for more than 12 months. However, the Company is planning to hold these securities until maturity and expects to recover the amortized cost basis.
For the years ended December 31, 2025 and 2024, the Company recognized no material realized gains or losses on financial instruments.
Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
December 31,
Prepaid research and development costs
Prepaid insurance
Prepaid and other current assets
Total prepaid expenses and other current assets
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
December 31,
Leasehold improvements
Laboratory equipment
Furniture and fixtures
Computer equipment and software
Total property and equipment, gross
Less: accumulated depreciation
Total property and equipment, net
Total depreciation expense recognized for each of the years ended December 31, 2025 and 2024 was $ 2.2 million.
Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following (in thousands):
December 31,
Accrued research and development expenses
Accrued compensation
Accrued professional services
Other accrued and current liabilities
Total accrued and other current liabilities
Commitments and Contingencies
Leases
The Company leases its offices and laboratory in Brisbane, California, or the Brisbane Lease, under a ten-year noncancelable lease agreement that ends in October 2031 with a ten-year renewable option.
As of December 31, 2025, the operating lease right-of-use assets were $ 15.2 million and lease liabilities were $ 26.2 million in the consolidated balance sheet. The weighted average remaining lease term is 5.8 years.
The weighted average incremental borrowing rate used to measure the operating lease liability is 8.4 % .
Operating lease cost for each of the years ended December 31, 2025 and 2024 was $ 3.8 million. Variable lease payments for the years ended December 31, 2025 and 2024 were $ 2.7 million and $ 2.3 million, respectively.
Future minimum lease payments and related lease liabilities as of December 31, 2025 were as follows:
(in thousands)
2030 and thereafter
Total undiscounted lease payments
Less: Imputed interest
Total lease liabilities
Guarantees and Indemnifications
In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has no t paid any claims or been required to defend any action related to its indemnification obligations. As of December 31, 2025, the Company did no t have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities.
S tockholders' Equity
2025 Financing
In November 2025, the Company raised net proceeds of approximately $ 80.5 million after deducting underwriting discounts and offering expenses through the sale of 29,423,075 shares of the Company’s common stock at a price of $ 2.60 per share and pre-funded warrants to purchase an aggregate of 3,750,000 shares of common stock at a price of $ 2.599 per share, which equals the per share offering price for the shares of common stock less the $ 0.001 exercise price for each pre-funded warrant. The pre-funded warrants are immediately exercisable, subject to certain beneficial ownership limitations. The warrants meet the criteria for equity classification and were therefore recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital.
2024 Financing
In June 2024, the Company raised net proceeds of approximately $ 116.8 million after deducting underwriting discounts and offering expenses through the sale of 13,001,120 shares of the Company’s common stock at a price of $ 6.25 per share and pre-funded warrants to purchase an aggregate of 7,000,000 shares of common stock at a price of $ 6.249 per share, which equals the per share offering price for the shares of common stock less the $ 0.001 exercise price for each pre-funded warrant. The pre-funded warrants are immediately exercisable, subject to certain beneficial ownership limitations. The warrants meet the criteria for equity classification and were therefore recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital. In March 2026, the Company issued an aggregate of 4,499,124 shares of common stock upon the cashless exercise of pre-funded warrants to purchase 4,500,000 shares of common stock. As of the date of these consolidated financial statements, pre-funded warrants to purchase up to 2,500,000 shares of common stock remained outstanding from the 2024 Financing.
2023 Financing
In December 2023, the Company raised net proceeds of approximately $ 117.0 million after deducting underwriting discounts and offering expenses through the sale of 25,035,000 shares of the Company’s common stock at a price of $ 2.880 per share and pre-funded warrants to purchase an aggregate of 18,379,861 shares of common stock at a price of $ 2.879 per share, which equals the per share offering price for the shares of common stock less the $ 0.001
exercise price for each pre-funded warrant. An entity related to one of the Company’s directors participated in the public offering and purchased 350,000 shares of common stock for an aggregate price of approximately $ 1.0 million. The warrants meet the criteria for equity classification and were therefore recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital. The Company issued an aggregate of 5,243,400 shares and 965,427 shares of common stock upon the cashless and cash exercise of these pre-funded warrants in February 2024 and April 2024, respectively.
2022 Financing
In July 2022, the Company raised net proceeds of approximately $ 122.5 million after deducting fees and expenses through the sale of an aggregate of 9,013,834 shares of common stock, pre-funded warrants to purchase up to 24,696,206 shares of its common stock and accompanying common warrants to purchase up to 8,427,508 shares of its common stock. The offering price per share and accompanying common warrant was $ 3.87125 per share and the offering price per pre-funded warrant and accompanying common warrant was $ 3.87025 per share, which equals the per share offering price for the shares of common stock less the $ 0.001 exercise price for each such pre-funded warrant. The pre-funded warrants remain exercisable until exercised in full. The common warrants had an exercise price of $ 5.806875 per share and, except as described in the next paragraph, expired on June 30, 2025 . Both the pre-funded and common warrants were immediately exercisable, subject to beneficial ownership limitations. The warrants meet the criteria for equity classification and were therefore recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital. The Company issued an aggregate of 19,901 and 2,739,096 shares of common stock upon the cashless exercise of the common warrants and pre-funded warrants in June 2024 and November 2024, respectively.
In June 2025, the Company and holders of common warrants exercisable for 6,877,622 shares of the Company’s common stock entered into amendments to the common warrants held by such holders. The amendments extended the term of the common warrants by one year until June 30, 2026, and removed the cashless exercise option. If all such common warrants are exercised in full for cash (without regard to any applicable ownership limitations), the Company would receive aggregate gross proceeds of approximately $ 39.9 million. The remaining common warrants to purchase 1,226,993 shares of the Company's common stock not subject to these amendments expired unexercised on June 30, 2025.
The Company concluded that the modified common warrants retain equity classification. The excess of fair value of the modified warrants over the fair value of the warrants immediately before the modification of $ 1.9 million was recognized as a deemed dividend. This modification included a related party transaction involving 613,497 common warrants held by a member of the board of directors, which accounted for $ 0.2 million of the deemed dividend recognized. As the Company had an accumulated deficit as of December 31, 2025, the deemed dividend was recognized in additional paid-in capital with zero net impact on stockholders’ equity.
Pre-Funded and Common Warrants
The following summarizes warrant activity during the year ended December 31, 2025:
Number of Common Warrants
Number of Pre-funded Warrants
Weighted-Average Exercise Price
Balances as of December 31, 2024
Issued
Expired
Balances as of December 31, 2025
2026 At the Market (ATM) Program
On March 30, 2026, the Company entered into the sales agreement with TD Securities (USA) LLC, or TD Cowen, as sales agent, pursuant to which the Company may offer and sell, from time to time through TD Cowen, at its option, shares of its common stock having an aggregate offering price of up to $ 150.0 million. The Company agreed to pay TD Cowen a commission of up to 3.0 % of the aggregate gross proceeds for the common stock sold through the 2026 ATM program.
2024 ATM Program
In March 2024, the Company entered into a sales agreement with TD Cowen, as sales agent, or 2024 ATM program, pursuant to which the Company may issue and sell shares of its common stock for an aggregate maximum offering of $ 100.0 million. TD Cowen is entitled to compensation up to 3 % of the aggregate gross proceeds for the common stock sold through the 2024 ATM program. During the years ended December 31, 2025 and 2024, t he Company sold 9,740,824 shares and 750,000 shares of common stock, respectively, for net proceeds of approximately $ 27.4 million and $ 4.5 million, respectively, after deducting commissions paid to TD Cowen. As of December 31, 2025, approximately $ 66.9 million remained available for the offer and sales of shares of common stock under the 2024 ATM program. Subsequent to December 31, 2025 and through the date of issuance of these consolidated financial statements, the Company sold 6,049,762 shares of common stock under the 2024 ATM for net proceeds of approximately $ 32.8 million, after deducting commissions paid to TD Cowen.
2021 ATM Program
In August 2021, the Company entered into a sales agreement with TD Cowen as sales agent, pursuant to which the Company may issue and sell shares of its common stock for an aggregate maximum offering of $ 100.0 million under an at-the-market offering program, or 2021 ATM program. TD Cowen is entitled to compensation up to 3 % of the aggregate gross proceeds for the common stock sold through the 2021 ATM program. During the year ended December 31, 2024, the Company sold 7,576,067 shares of common stock, under the 2021 ATM program for net proceeds of approximately $ 38.4 million, after deducting commissions paid to TD Cowen and other financing costs. The Form S-3 registration statement, which registered the 2021 ATM Program, expired on August 15, 2024. As a result, no further shares of common stock may be sold under the 2021 ATM Program.
Common Stock
The holders of the Company’s common stock have one vote for each share of common stock. Common stockholders are entitled to dividends when, as, and if declared by the board of directors. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. As of December 31, 2025, no dividends had been declared by the board of directors.
The Company reserved the following shares of common stock for issuance as follows:
December 31,
Stock options issued and outstanding
Stock options reserved for 2020 Incentive Award Plan
Unvested restricted stock units outstanding
Common stock reserved for 2024 ATM program
Common stock reserved for Employee Stock Purchase Plan
Common stock reserved for 2022 Employment Inducement
Award Plan
Common stock reserved for pre-funded warrants
Common stock reserved for common warrants
Total common stock reserved
Equity Incentive Plan
In July 2020, the Company’s board of directors and stockholders adopted and approved the 2020 Incentive Award Plan, or the 2020 Plan, and the Employee Stock Purchase Plan, or the ESPP, which became effective in connection with the IPO.
The Company may not grant any additional awards under the 2011 Equity Incentive Plan, or the 2011 Plan. The 2011 Plan will continue to govern outstanding equity awards granted thereunder.
2020 Equity Incentive Plan
The number of shares of common stock reserved for issuance under the 2020 Plan automatically increase on the first day of January, in an amount equal to 4 % of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors.
Awards granted under the 2020 Plan expire no later than ten years from the date of grant. For the Incentive Stock Options, or ISOs, and Nonstatutory Stock Options, or NSOs, the option price shall not be less than 100 % of the estimated fair value on the date of grant. Options granted typically vest over a four-year period but may be granted with different vesting terms. As of December 31, 2025 and 2024, there were 1,184,877 and 2,109,758 shares available for issuance under the 2020 Plan, respectively.
2022 Employment Inducement Award Plan
In July 2022, the Company’s board of directors adopted the Annexon, Inc. 2022 Employment Inducement Award Plan, or the Inducement Plan, and together with the 2011 Plan and the 2020 Plan, the Plans. The Inducement Plan was adopted by the Company’s board of directors without stockholder approval pursuant to Nasdaq Marketplace Rule 5635(c)(4), or Rule 5635(c)(4). In accordance with Rule 5635(c)(4), awards made under the Inducement Plan may only be granted to newly hired employees as an inducement material to the employees entering into employment with the Company. Awards granted under the Inducement Plan expire no later than ten years from the date of grant. An aggregate of 7,850,000 shares of common stock were reserved for issuance under the Inducement Plan. As of December 31, 2025 and 2024, there were 3,585,793 and 3,359,230 shares available for issuance under the Inducement Plan, respectively.
Stock options
The following table presents stock option activity under the Plans for the period:
Number of
Shares
Weighted-
Average
Exercise
Price Per
Share
Weighted-
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
(in thousands)
Balances as of December 31, 2024
Stock options granted
Stock options exercised
Stock options forfeited
Balances as of December 31, 2025
Vested and Exercisable as of December 31, 2025
The total intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was $ 0.5 million and $ 1.2 million, respectively. The intrinsic value is the difference between the fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option.
The weighted-average grant date fair value of options granted to employees during the years ended December 31, 2025 and 2024 was $ 1.99 and $ 4.56 per share, respectively.
As of December 31, 2025, the total unrecognized stock-based compensation cost related to outstanding unvested stock options was $ 24.5 million, which the Company expects to recognize over an estimated weighted-average period of 2.6 years.
Restricted Stock Units
RSUs are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment
terminates prior to the release of the vesting restrictions. The RSUs generally vest over a three-year period in equal amounts on an annual basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.
A summary of RSU activity under the equity incentive plan and related information is as follows:
Number of Shares
Weighted-Average Grant Date Fair Value Per Share
Unvested as of December 31, 2024
Granted
Vested
Cancelled
Unvested as of December 31, 2025
As of December 31, 2025, unrecognized stock-based compensation expense related to outstanding unvested RSUs was $ 2.6 million, which is expected to be recognized over a weighted-average period of 1.8 years.
Employee Stock Purchase Plan
The ESPP enables eligible employees to purchase shares of the Company’s common stock at the end of each offering period at a price equal to 85 % of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Eligible employees generally included all employees. Share purchases are funded through payroll deductions of at least 1 %, and up to 15 % of an employee’s eligible compensation for each payroll period. The number of shares reserved for issuance under the ESPP increase automatically on the first day of each fiscal year, by a number equal to, 1 % of the shares of common stock outstanding on the last day of the immediately preceding fiscal year, or such number of shares determined by the Company’s board of directors. As of December 31, 2025, 2,800,550 shares were available for future purchase. The ESPP generally provides for six-month consecutive offering periods beginning on May 15 th and November 15 th of each year. The ESPP is a compensatory plan as defined by the authoritative guidance for stock compensation. As such, stock-based compensation expense has been recorded for the years ended December 31, 2025 and 2024.
The stock-based compensation expense related to the ESPP for each of the years ended December 31, 2025 and 2024 was $ 0.2 million.
Stock-Based Compensation Expense
The total stock-based compensation expense recognized was as follows (in thousands):
Year Ended
December 31,
Research and development
General and administrative
Total stock-based compensation expense
To determine the value of stock option awards for stock-based compensation purposes, the Company uses the Black-Scholes option pricing model and the assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.
Fair Value of Common Stock —The fair value of each share of underlying common stock is based on the closing price of the Company’s common stock as reported on the date of grant on the Nasdaq Global Select Market.
Expected Term —The expected term represents the period that the stock-based awards are expected to be outstanding and is determined using the simplified method. The Company continues using the simplified method as it
does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded.
Expected Volatility —Beginning in 2024, the expected volatility was estimated based on a weighted volatility using both the Company’s trading history for its common stock and the average volatility for comparable publicly traded life sciences companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty.
Risk-Free Interest Rate —The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.
Dividend Yield —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.
The fair value of each stock option issued was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
Year Ended
December 31,
Expected term (in years)
Expected volatility
Risk-free interest rate
Dividend yield
Income Taxes
For financial reporting purposes, loss before provision for income taxes, includes the following components (in thousands):
Year Ended December 31,
Domestic
Foreign
Loss before income taxes
During the years ended December 31, 2025 and 2024, the Company did not make any material payments of U.S federal, state, or local income taxes.
No income tax provision was recorded for the years ended December 31, 2025 and December 31, 2024.
Reconciliation of income tax computed at federal statutory rates to the reported provision for income taxes was as follows (in thousands):
Year Ended December 31,
U.S. Federal provision (benefit)
At federal statutory income tax rate
State income taxes, net of federal effect
Change in valuation allowance
Nontaxable or nondeductible items
Stock-based compensation
Section 162(m) compensation
Other permanent differences
Changes in tax laws or rates
Tax credits
Research credits
Orphan drug credits
Worldwide changes in unrecognized tax benefits
Foreign tax effects
Provision for income taxes
Deferred Tax Assets and Liabilities
The tax effects of temporary differences that give rise to significant portions of the Company’s tax assets and liabilities are as follows (in thousands):
Year Ended December 31,
Deferred Tax Assets:
Net operating loss carryforwards
Research and development credits
Other intangibles
Accruals and reserves
Stock-based compensation
Capitalized research and development
Lease liabilities
Total gross deferred tax assets
Less: valuation allowance
Total deferred tax assets, net
Deferred Tax Liabilities:
Fixed assets
Right-of-use assets
Total gross deferred tax liabilities
Net deferred tax assets
As of December 31, 2025, the Company had $ 556.2 million of federal and $ 226.1 million of state net operating loss, or NOL, carryforwards available to offset future taxable income. Under the Tax Cuts and Jobs Act of 2017, or the Tax Act, federal NOLs generated after December 31, 2017 will be carried forward indefinitely with the yearly NOL utilization limited to 80 % of taxable income. The Company has $ 513.2 million of such federal NOLs that do not expire. If not utilized, the federal carryforward losses generated prior to 2018 and the state carryforward losses will expire in various amounts beginning in 2031.
As of December 31, 2025, the Company had approximately $ 37.4 million of federal and $ 10.2 million of state credit carryforwards available to offset future taxable income. If not utilized, these credit carryforwards will expire in various amounts for federal purposes beginning in 2031 . The state credits do not expire.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not some portion or all of the deferred tax assets will not be realized. Management believes that, based on available evidence, both positive and negative, it is more likely than not that the deferred tax assets will not be utilized; therefore, a full valuation allowance has been recorded. The Company’s valuation allowance increased by $ 43.9 million and $ 50.0 million for the years ended December 31, 2025 and 2024, respectively. The changes in the 2025 valuation allowance were primarily due to the addition of current year loss carryforwards and credits. The changes in the 2024 valuation allowance were primarily due to the addition of capitalized research and development costs, current year loss carryforwards and research and development credits.
As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the "change in valuation allowance" line of the rate reconciliation. The following table presents a reconciliation of the total change in the valuation allowance (in thousands):
Year Ended December 31,
Beginning balance
Change charged to income tax expense
Changes charged to other comprehensive (loss) income
Ending balance
Utilization of the net operating loss carryforwards and credits may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before utilization. The Company performed a Section 382 analysis through December 31, 2025. Federal net operating loss carryforwards of $ 556.1 million and state and local net operating loss carryforwards of $ 191.4 million are not expected to expire unutilized as a result of ownership changes identified through December 31, 2025. The Company has identified $ 0.1 million and $ 34.7 million of federal and state net operating losses, respectively, that will expire unused due to ownership changes, and federal credits of $ 4.3 million that will not be able to be utilized due to ownership change limitation; these amounts have been excluded from the deferred tax assets table above. Further ownership changes subsequent to December 31, 2025 may be identified which could result in limitations to the amount of net operating losses and credits which may be utilized prior to expiration.
Uncertain Tax Benefits
The Company has the following activity relating to the gross amount of unrecognized tax benefits (in thousands):
Year Ended December 31,
Beginning balance
Additions based on tax positions related to prior year
Reductions based on tax positions related to prior year
Additions based on tax positions related to current year
Ending balance
None of these uncertain tax positions will impact the Company’s effective tax rate if assessed. The Company’s policy is to classify interest and penalties associated with unrecognized tax benefits as income tax expense. The Company had no interest or penalty accruals associated with uncertain tax benefits in its consolidated balance sheet and consolidated statement of operations for the years ended December 31, 2025 and 2024. The Company files income tax returns in the United States, various states, and Australia. The Company is not currently under examination by any major tax jurisdictions nor has it been in the past. The tax years 2011 through 2025 remain effectively open for
examination by the Internal Revenue Service and most state tax authorities because of net operating losses and credit carryovers.
Net Loss Per Share
The Company calculates basic net loss per share by dividing net loss by the weighted-average number of shares of common stock outstanding. The weighted-average number of shares of common stock used in the basic and diluted net loss per share calculation include pre-funded warrants to purchase up to 42,293,577 and 38,543,577 shares of common stock for the years ended December 31, 2025 and 2024, respectively, as the pre-funded warrants are exercisable at any time for nominal cash consideration. The Company has generated a net loss in all periods presented, so the basic and diluted net loss per share are the same, as the inclusion of the potentially dilutive securities would be anti-dilutive.
The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:
Year Ended
December 31,
Stock options to purchase common stock
Shares subject to Employee Stock Purchase Plan
Unvested restricted stock units
Common warrants
Total
10. Segment Reporting
The Company has one reportable segment, which is related to the research and development of its product candidates focused on complement-mediated diseases of the body, brain and eye for which there is significant unmet medical need. The accounting policies of the one reportable segment are the same as those described in the summary of significant accounting policies. See Note 2— Basis of Presentation and Significant Accounting Policies .
The segment is managed on a consolidated basis and the CODM uses total operating expenses and consolidated net loss to assess performance, forecast future financial results and allocate resources. In assessing the Company's financial performance and making strategic decisions, the CODM regularly reviews operating expenses by function. This includes a review of budget versus actual expenses and direct program spend, which includes clinical costs, consultant fees, manufacturing expenses, and other direct external costs.
The following table presents the operations for the reportable segment during the years ended December 31, 2025 and 2024 (in thousands):
Year Ended
December 31,
Research and development - external expenses (1)
Research and development - personnel
General and administrative - personnel
Other general and administrative expenses (2)
Depreciation expense
Stock-based compensation
Total operating expense
Loss from operations
Interest and other income, net
Consolidated segment net loss
(1) Research and development - program expenses include other non-program specific expenses and other research expenses.
(2) Other general and administrative expenses include consulting and professional services fees for legal, accounting, tax, and facilities costs.
