Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K.
Overview
We are a clinical-stage biopharmaceutical company developing a novel class of injectable therapeutics engineered to selectively engage and modulate disease-specific T cells for the treatment of autoimmune and inflammatory diseases. Unlike conventional approaches that broadly activate the immune system, our Immuno-STAT® platform is designed to selectively modulate disease-relevant T cells, enhancing efficacy while minimizing off-target effects. We believe our Immuno-STAT platform holds the promise of producing drug product candidates with the potential of establishing new standards of care in the treatment of autoimmune and inflammatory diseases. Our programs include, but are not limited to, drug product candidates designed to:
CUE-400 series (Autoimmune Diseases): Exploit transforming growth factor beta (TGF-β) and Interleukin 2 (IL-2) signaling to induce an anti-inflammatory process, with a novel and unique mechanism to not only foster proliferation of regulatory T cells (Tregs) but also induce Tregs from T effector cells with the potential of restoring immune balance and functional immune tolerance (e.g., CUE-401 for autoimmune conditions).
CUE-500 series (Targeted Cell Depletion): Redirect anti-viral killer T cells to target and eliminate defined pathogenic cells (e.g., CUE-501 for autoimmune B cell depletion, which has been licensed to Boehringer Ingelheim International GmbH).
CUE-100 series (Oncology): Selectively activate and expand tumor-specific T cells (e.g., CUE-101 for HPV+ cancers and CUE-102 for Wilms’ tumor 1 protein (WT1), expressing cancers, both of which have been licensed to ImmunoScape Pte. Ltd. for development in oncology indications).
We aim to leverage our differentiated platform to establish new standards of care, forge strategic partnerships, and accelerate clinical development.
As represented in the following image, the Immuno-STAT framework is engineered to be highly flexible and modular, potentially enabling us to deploy the same or similar core functional elements to restore immune balance across diverse therapeutic approaches.
Immuno-STAT Platform Pipeline of Assets for Restoration of Immune Balance
CUE-401
In autoimmune disease, Tregs are the master regulators of maintaining immune homeostasis, or balance, and health. Autoreactive T cells, referred to as T effector cells (Teff cells), are reactive against “self” proteins and foster inflammation and induce chronic tissue damage. Tregs are important to maintaining immune balance in that they possess the ability to dampen and control the Teff cells.
Our lead candidate, CUE-401, is a preclinical, bifunctional fusion protein designed to promote immune tolerance by modulating key components of the immune system, including the induction of newly formed Tregs (iTregs) from Teff cells, as well as expansion of existing or natural regulatory T cells (nTregs). Through the co-activity of engineered variants of TGF-β and IL-2, CUE-401 has the therapeutic potential to re-establish immune balance and induce tolerance across a range of T cell mediated autoimmune and inflammatory diseases.
CUE-401 has been engineered to harness the capacity of TGF-β to re-establish immune balance combined with the complementary signaling of IL-2, to provide an anti-inflammatory environment, as well as Treg induction and expansion for what we believe will provide long-lasting tolerance, which is considered to be the ultimate goal of treating autoimmune disease. In addition, the TGF-β moiety has the potential to reduce inflammation as well as reduce the number of pathogenic pro-inflammatory cells in the autoimmune disease setting.
CUE-401, our first-in-class, bifunctional molecule integrating a masked TGF-ß with our clinically validated, attenuated IL-2 variant, is designed to address multiple hurdles to fully exploit the therapeutic potential of an immunology master switch. This novel design provides for “conditional binding” to avoid off target activity and has generated highly differentiated data in multiple preclinical autoimmune animal disease models.
In these preclinical animal models, CUE-401 behaves as a master switch to reduce inflammation and pro-inflammatory cells, as well as convert autoreactive Teff cells into iTregs, which express FoxP3, the hallmark transcription factor that characterizes stable Tregs. These findings suggest that CUE-401 acts by establishing a “tolerance positive feedback loop” that not only increases nonspecific Treg populations (natural Tregs) but also reduces and converts specific autoreactive T cells into transdifferentiated iTregs that are specific to the disease-causing autoantigens.
We believe these results, along with advances in the manufacturing of CUE-401, have substantially reduced the risk profile for the development of this program, and we have selected a lead candidate molecule. Scale-up manufacturing and other IND-enabling studies for CUE-401 are nearing completion, with GLP toxicology studies having been completed in both mice and non-human primate species. We are preparing to file an investigational new drug (IND) application in the second quarter of 2026. Our Phase 1 trial for CUE-401 will consist of a two-part study, comprised of a single ascending dose and a multiple ascending dose in healthy volunteers. We anticipate receiving human safety data starting in the second half of 2026. We anticipate that these early clinical trial results will provide pharmacokinetic and pharmacodynamic evidence and further support the underlying premise of establishing immune balance and inducing durable immune tolerance with CUE-401. We believe this could represent a potential breakthrough as a new standard of care in multiple high-value autoimmune disease indications.
CUE-500 Series
The CUE-500 series has been developed to enable targeted anti-viral T cell-mediated depletion of pathogenic cell types, including autoreactive B cells. We believe these biologics have the potential to achieve immune balance in autoimmune patients and are significantly differentiated from other competing approaches such as bifunctional antibody drug conjugates, pan-T cell engagers, IL-2 muteins, TNFR2 agonists, and CAR-T therapies.
The CUE-500 series represents a novel approach to selectively target disease-causing cells by redirecting existing anti-viral memory T cells to target and deplete such disease-causing cells. CUE-501, for which we entered into a collaboration and license agreement with Boehringer Ingelheim International GmbH (BI) in April 2025, is being developed to target and deplete autoimmune disease-causing B cells, in patients with autoimmune disease caused by autoreactive, pathogenic B cells. Targeted B cell depletion is widely recognized in the industry as a clinically validated and important approach for the treatment of B cell mediated autoimmune and inflammatory diseases, and we believe the selective mechanism of action exploiting the anti-viral memory T cell repertoire will provide highly effective killing of the targeted cells while preventing or substantially reducing the side effect profile often experienced with competing approaches.
Due to its modularity, we believe that the CUE-500 series has therapeutic potential across multiple disease areas. The mode of redirecting a defined population of already existing anti-viral T cells may apply to many pathogenic cell types readily addressed by swapping different cell-targeting antibody domains into the CUE-500 series framework.
We believe the preclinical data generated to date for CUE-401 and the CUE-500 series demonstrates the intended mechanistic effect of these novel approaches for the potential treatment of autoimmune disease, and each represent potential breakthrough therapeutic opportunities for significant patient populations and potential near-term value creation opportunities for our shareholders.
CUE-100 Series
Historically, we primarily focused our resources on the development of our CUE-100 series for oncology, namely the CUE-101 and CUE-102 drug product candidates, which are representative of our approach to selectively activate targeted CD8+ T cells against cancer, both of which have been licensed to ImmunoScape Pte. Ltd., or IMSCP, to advance a novel in vivo approach to cell therapy for the treatment of solid tumors. Under our Collaboration and License Agreement with IMSCP, IMSCP is developing a novel Seed-and-Boost immunotherapy that combines our clinically validated Immuno-STAT T-cell engagers, the CUE-100 series, with IMSCP’s proprietary tumor-specific T cell receptors, or TCRs. The combination therapy is designed to overcome core limitations of existing cell therapies and to potentially establish a new standard of care with superior anti-tumor activity, durable T cell persistence and product scalability.
Plan of Operation
Our approach to developing precision immunotherapies has yielded a growing portfolio of novel proteins with the potential to address multiple unmet needs across autoimmune diseases. We believe that our science is derisked with clinical tolerability and activity from our Phase 1 clinical trials of CUE-101 and CUE-102, with the potential for significant market opportunities. As a result of our insights and learnings from our growing body of supportive data, we believe our corresponding strategic plans position us well to optimize shareholder value.
We intend to maximize this value by focusing on the development of CUE-401, for which we are preparing to file an IND application in the second quarter of 2026. We have also successfully established collaborations across our pipeline, such as our strategic collaboration and license agreements with BI for the development of CUE-501, and ImmunoScape Pte. Ltd. for the development of our CUE-100 series.
As a development-stage company, the majority of our business activities to date have been, and our planned future activities will be, devoted to furthering research and development of our drug product candidates.
Events that Raise Substantial Doubt About Our Ability to Continue as a Going Concern
We have incurred significant losses since our inception and have never generated revenue or profit from product sales, and it is possible we will never generate revenue or profit from product sales. As of December 31, 2025, we had cash and cash equivalents of $27.1 million. Based on our current operating plans, we believe we will have sufficient funds to meet our obligations into the first quarter of 2027. However, we will need to raise substantial additional capital to fund our future operations and remain as a going concern. We expect to finance our future cash needs through a combination of equity offerings, collaborations, and other strategic alliances. Volatility in capital markets and general economic conditions in the U.S. may be a significant obstacle to raising the required funds and, as a result, we may be unable to secure the necessary funding on acceptable terms, if at all. To the extent that we raise additional capital through future equity offerings, the ownership interest of common stockholders will be diluted, which dilution may be significant. We cannot guarantee that we will be able to obtain any or sufficient additional funding or that such funding, if available, will be obtainable on terms to us. In the event that we are to obtain any or sufficient additional funding, there can be no assurance that we will be to continue as a going , and we will be to , reduce or our product development programs or consider other various strategic alternatives, including the sale or disposition of our rights or assets or our and with little or no return to investors. Any such change in our product development programs or strategic alternatives may have a material effect on the price per share of our common stock.
This raises substantial doubt about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern or any actions described above that we may take as a result of our inability to obtain sufficient additional funding may materially and adversely affect the price per share of our common stock, and it may be more difficult for us to obtain financing. If existing or potential collaborators decline to do business with us or potential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited. The
perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations. We could also be forced to sell or dispose of our rights or assets. Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, results of operation and financial condition, including the possibility that a lack of funds could cause our business to fail, dissolve and liquidate with little or no return to investors. For a further discussion of factors that raise substantial doubt about our ability to continue as a going concern, please see “– Liquidity and Capital Resources – Funding Requirements” and Part I. Item 1A, “Risk Factors” herein.
Critical Accounting Estimates and Significant Judgments
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements, and the reported revenue and expenses during the reported periods. We evaluate these estimates and judgments, including those described below, on an ongoing basis. We base our estimates on historical experience, known trends and events, contractual milestones and 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.
While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the estimates, assumptions and judgments involved in the following accounting policies may have the greatest potential impact on the financial statements, so we consider these to be our critical accounting policies and estimates. There were no material changes to our critical accounting policies and estimates during the year ended December 31, 2025.
Revenue Recognition
We recognize collaboration revenue under certain of our license and collaboration agreements that are within the scope of Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers . Our contracts with customers typically include promises related to licenses to intellectual property and research and development services. If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. Our contracts may include options to acquire additional goods and/or services.
The terms of our arrangements with customers typically include the payment of one or more of the following: (i) non-refundable, up-front payment, and pass through costs related to research activities, (ii) development, regulatory and commercial milestone payments, (iii) future options and (iv) royalties on net sales of licensed products. Accordingly, the transaction price is generally comprised of a fixed fee due at contract inception and variable consideration in the form of pass through costs and milestone payments due upon the achievement of specified events and tiered royalties earned when customers recognize net sales of licensed products. We measure the transaction price based on the amount of consideration to which we expect to be entitled in exchange for transferring the promised goods and/or services to the customer. We utilize the “expected value method” method to estimate the amount of variable consideration, to predict the amount of consideration to which we will be entitled for our one open contract. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Milestone payments that are not within our control or the licensee's control, such as those dependent upon receipt of regulatory approval, are not considered to be probable of achievement until the triggering event occurs. At the end of each reporting period, we reevaluate the probability of of each milestone and any related constraint, and, if necessary, adjust its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net in the period of adjustment.
For arrangements that include sales-based royalties, including milestone payments based upon the achievement of a certain level of product sales, we recognize revenue upon the later of: (i) when the related sales occur or (ii) when the performance obligation to which some or all of the payment has been allocated has been satisfied (or partially satisfied). To
date, we have not recognized any development, regulatory or commercial milestones or royalty revenue resulting from any of our collaboration arrangements. Consideration that would be received for optional goods and/or services is excluded from the transaction price at contract inception.
Research and Development Costs
Research and development expenses consist primarily of compensation costs, fees paid to consultants, outside service providers and organizations (including research institutes at universities), facility costs, and development and clinical trial costs with respect to our drug product candidates. We utilize our employee and infrastructure resources across multiple research and development programs, and do not track these costs by project. We believe the attempted allocation of these costs by project would be arbitrary and not meaningful. We expect research and development expenses to remain consistent in future periods.
Research and development expenses incurred under contracts are expensed ratably over the life of the underlying contracts, unless the achievement of milestones, the completion of contracted work, or other information indicates that a different pattern of performance is more appropriate. Other research and development expenses are charged to operations as incurred.
Nonrefundable advance payments are recognized as an expense as the related services are performed. We evaluate whether we expect the services to be rendered at each quarter end and year end reporting date. If we do not expect the services to be rendered, the advance payment is recorded as expense. Nonrefundable advance payments for research and development services are included in prepaid and other current assets on the balance sheet. To the extent that a nonrefundable advance payment is for contracted services to be performed within 12 months from the reporting date, such advance is included in current assets; otherwise, such advance is included in non-current assets.
We evaluate the status of our research and development agreements and contracts, and the carrying amount of the related assets and liabilities, at each quarter end and year end reporting date, and adjust the carrying amounts and their classification on the balance sheet as appropriate.
The following table summarizes our research and development expenses by category for the years ended December 31, 2025 and 2024 (in millions):
December 31,
Employee compensation
Contract manufacturing costs
Facilities and overhead
Lab costs
Acquired in-process research and development costs
Clinical trial costs
License fees
Professional fees
Total
Income Taxes
We account for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, we recognize deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities.
We account for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made.
We are subject to U.S. federal and Massachusetts state income taxes. As our net operating losses have yet to be utilized, all previous tax years remain open to examination by federal and state taxing authorities in which we currently operate.
We recognize interest accrued relative to unrecognized tax benefits in interest expense and penalties in operating expense.
For the year ended December 31, 2025, there is a provision for income taxes of $0.5 million related to foreign withholding taxes. For the year ended December 31, 2024, there is no provision for income taxes in the U.S. because we have historically incurred net operating losses and maintain a full valuation allowance against our net deferred assets. The reported amount of income tax expense for the years differs from the amount that would result from applying domestic federal statutory tax rates to pretax losses primarily because of changes in valuation allowance.
We recognize interest accrued relative to unrecognized tax benefits in interest expense and penalties in operating expense. During the years ended December 31, 2025 and 2024, we did not recognize any income tax related interest and penalties. We did not have any accruals for income tax related interest and penalties at December 31, 2025 and 2024.
Recent Accounting Pronouncements and Adopted Standards
A discussion of recent accounting pronouncements is included in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K.
Significant Contracts and Agreements Related to Research and Development Activities
Einstein License Agreement
On January 14, 2015, we entered into a license agreement, as amended and restated on July 31, 2017, and as further amended on October 30, 2018, January 13, 2024 and April 10, 2025, or the Einstein License, with Albert Einstein College of Medicine, or Einstein, for certain patent rights, or the Patents, relating to our core technology platform for the engineering of biologics to control T cell activity, precision, immune-modulatory drug product candidates, and two supporting technologies that enable the discovery of costimulatory signaling molecules (ligands) and T cell targeting peptides.
We hold an exclusive worldwide license, with the right to sublicense, import, make, have made, use, provide, offer to sell, and sell all products, processes and services that use the Patents, including certain technology received from Einstein related thereto, which we refer to as the Einstein Licensed Products. Under the Einstein License, we are required to:
Pay royalties and amounts based on a certain percentage of proceeds, as defined in the Einstein License, from sales of Einstein Licensed Products and sublicense agreements.
Pay escalating annual maintenance fees, which are non-refundable, but are creditable against the amount due to Einstein for royalties.
Make significant payments based upon the achievement of certain milestones, as defined in the Einstein License. As of December 31, 2025, two of these milestones had been achieved, as we had filed an IND application in 2019, and initiated an investigator sponsored Phase 1b neoadjuvant clinical trial for CUE-101 in locally advanced HNSCC in 2021.
Incur minimum product development costs per year and meet certain diligence obligations until the first commercial sale of the first Einstein Licensed Product.
The Einstein License requires us to pay a percentage of sublicenses related to our patent rights for components of our core technology that is licensed from Einstein. On April 10, 2025, we entered into an amendment to the Einstein License. Pursuant to the amendment, Einstein consented to our entry into the BI Collaboration and License Agreement and granted us the right to sublicense to BI. In addition, we and Einstein agreed to amend specified upstream payment obligations that may be owed to Einstein by us, solely in connection with the sublicense to BI. In the second quarter of 2025, we paid Einstein $0.9 million in fees in relation to the amendment to this license with Einstein.
In the fourth quarter of 2025, we incurred license maintenance fees of $1.5 million related to the ImmunoScape Pte. Ltd. License Agreement.
As of December 31, 2025, we were in compliance with our obligations under the Einstein License.
We account for the costs incurred in connection with the Einstein License in accordance with Accounting Standards Codification 730, Research and Development .
We pay $0.1 million in annual maintenance license fees to Einstein, which are amortized equally throughout the year. We incurred $0.1 million in annual maintenance fees for each of the years ended December 31, 2025 and 2024. Such costs are included in research and development costs in our consolidated statements of operations.
Pursuant to the Einstein License, we issued to Einstein 671,572 shares of our common stock in connection with the consummation of the initial public offering of our common stock on December 27, 2017.
See “Our License Agreement with Einstein” under Part I, Item 1 of this Annual Report on Form 10-K for additional discussion of the Einstein License.
Collaboration Agreement with LG Chem
On November 6, 2018, we entered into a Collaboration, License and Option Agreement, as amended from time to time, or the LG Chem Collaboration Agreement, with LG Chem Ltd., or LG Chem, pertaining to the development of CUE-101 and CUE-102 Immuno-STATs focused in the field of oncology.
Pursuant to the LG Chem Collaboration Agreement, we granted LG Chem an exclusive license to develop, manufacture and commercialize CUE-101, as well as CUE-102 Immuno-STATs that target T cells against two additional cancer antigens in Australia and certain Asian countries, which we refer to collectively as the LG Chem Territory.
On March 11, 2025, we and LG Chem entered into the Ninth Amendment to the LG Chem Collaboration Agreement, or the Ninth Amendment. As of the date of the Ninth Amendment, we regained our rights to the LG Chem Territory for the CUE-101 program, which had been licensed to LG Chem, and LG Chem terminated all of its rights to the same program. Pursuant to the Ninth Amendment, we agreed to make future payments to LG Chem, if and when one or more potential scenarios related to the CUE-101 program occur, up to a predetermined aggregate amount. LG Chem continues to maintain its interest and rights in the CUE-102 program, targeting WT1 expressing cancers, pursuant to the LG Chem Collaboration Agreement.
We did not recognize any revenue related to the LG Chem Collaboration Agreement for the year ended December 31, 2025. For the year ended December 31, 2024, we recognized revenue of less than $0.1 million related to the LG Chem Collaboration Agreement. As of December 31, 2025, we had recorded $20.0 million in collaboration revenue related to this agreement since the agreement was entered into. The majority of the research phase of the LG Chem Collaboration Agreement was substantially completed by March 31, 2022.
Collaboration and Option Agreement with Ono
In February 2023, we entered into a strategic collaboration agreement, or the Ono Collaboration and Option Agreement, with Ono Pharmaceutical Co., Ltd., or Ono, to further develop CUE-401. In March 2025, we and Ono agreed to terminate the Ono Collaboration and Option Agreement, effective as of March 6, 2025. At such time, the Ono Collaboration and Option Agreement had no further force or effect with the exception of certain customary provisions which are intended to survive termination and expiration of the Ono Collaboration and Option Agreement. We retained all rights to CUE-401.
Under the terms of the Ono Collaboration and Option Agreement, Ono paid us an upfront payment and agreed to fully fund all research and development activities related to CUE-401 through a specified option period of 24 months, or the Ono Research Term. Per the agreement, as consideration for the research and development activities performed by us, Ono (i) made a one-time, non-refundable, non-creditable upfront payment of $3.0 million to us in March 2023, and (ii) agreed to reimburse us for all costs incurred in conducting research, including (a) pass through costs from third party contractors and (b) full-time employee salaries capped at $2.1 million in the first 18 months of the Ono Research Term. Subsequently, we and Ono agreed to increase this cap for full -time employee salaries to $3.1 million.
As of the date of this Annual Report on Form 10-K, both we and Ono have satisfied all of our respective performance obligations and made all outstanding payments under the agreement as of December 31, 2025. For the year ended December 31, 2025 and 2024, we recognized revenue of $0.4 million and $9.2 million related to the Ono Collaboration and Option Agreement, respectively. As of December 31, 2025, we had recorded $14.8 million in collaboration revenue related to this agreement since the agreement was entered into.
See “Our Collaboration and Option Agreement with Ono” under Part I, Item 1 of this Annual Report on Form 10-K for additional discussion of the Ono Collaboration and Option Agreement.
BI Collaboration and License Agreement
On April 10, 2025, we entered into a Collaboration and License Agreement with BI, or the BI Collaboration and License Agreement, to research, develop and commercialize differentiated B cell depletion molecules, including CUE-501.
Under the terms of the BI Collaboration and License Agreement, we and BI will conduct collaborative research focused on CUE-501 during a four-year period or, if earlier, the completion of activities under the research plans, or the BI Research Term. In addition to, or instead of, CUE-501, BI may elect, at its sole discretion, to include additional or alternative compounds targeted at B cell depletion. BI will have an exclusive, royalty-bearing, worldwide, sublicensable license, under our applicable patents and know-how, to develop, manufacture and commercialize such compounds and their derivatives, or BI Licensed Products, for all uses, and BI shall be responsible for all further research, preclinical and clinical development, manufacturing, regulatory approvals, and commercialization of BI Licensed Products at its expense. During the BI Research Term, we are prohibited from developing or commercializing any molecule for applications in B cell depletion.
Pursuant to the terms of the BI Collaboration and License Agreement, we received an upfront payment of $10.1 million in cash in the second quarter of 2025, which is net of $1.9 million of German withholding taxes that we expect to be refunded in 2026. We will also be eligible to receive up to an aggregate of approximately $345.0 million in success-based research, development and commercial milestone payments, beginning with two preclinical development milestones, as well as royalty payments on net sales. The royalty payments will be subject to reduction due to patent expiration, payments made under certain licenses for third-party intellectual property and generic competition. BI has agreed to reimburse us for agreed upon costs incurred in conducting research during the BI Research term, including certain pass-through costs from third party contractors and full-time employee salaries.
The BI Collaboration and License Agreement will continue, on a product-by-product and country-by-country basis, until the expiration of the applicable royalty term, unless earlier terminated. BI has the right to terminate the BI Collaboration and License Agreement for any reason after a specified notice period. Each party has the right to terminate the BI Collaboration and License Agreement on account of the other party’s bankruptcy or material, uncured breach. In connection with our entry into the BI Collaboration and License Agreement, we entered into an amendment to our Einstein License whereby Einstein consented to our entry into the BI Collaboration and License Agreement and granted us the right to sublicense to BI. In addition, we and Einstein agreed to amend specified upstream payment obligations that may be owed to Einstein by us, solely in connection with the sublicense to BI.
For the year ended December 31, 2025, we recognized revenue of $8.1 million related to the BI Collaboration and License Agreement. We recorded short-term research and development liabilities of $5.3 million and accounts receivable of $0.5 million on our consolidated balance sheet as of December 31, 2025.
See “Our Collaboration and License Agreement with BI” under Part I, Item 1 of this Annual Report on Form 10-K for additional discussion of the BI Collaboration and License Agreement.
ImmunoScape Collaboration and License Agreement
On November 6, 2025, ImmunoScape Pte. Ltd., or IMSCP, exercised its option, or Option, to obtain licenses to research, develop and commercialize molecules from our CUE-100 series, including CUE-101 and CUE-102, subject to certain exclusions, for all oncology indications pursuant to a Collaboration and License Agreement, effective November 6, 2025, between us and IMSCP, or the IMSCP Collaboration and License Agreement. The licenses provided pursuant to the IMSCP Collaboration and License Agreement include a co-exclusive development license for five years or, if longer, for so long as IMSCP has a specified number of CUE-100 series molecules under active development and, pursuant to which, we retain non-exclusive research rights to support our other programs. We also retained our rights to the CUE-100 series, including CUE-101 and CUE-102, for use in any manner other than as a component of a cell therapy product for 18 months past the effective date of the IMSCP Collaboration and License Agreement. The licenses include an exclusive commercial license to IMSCP for any CUE-100 series molecule that IMSCP to IND- studies while the co- development license is in effect. The licensed series of molecules will be further developed and potentially commercialized by IMSCP. The Option was exercised pursuant to an Option Agreement between us and IMSCP, dated October 22, 2025, or Option Agreement. In connection with entry into the Option Agreement and IMSCP’s exercise of the Option, we received an aggregate of $9.5
million, net of withholding taxes, in the fourth quarter of 2025 and are entitled to receive an additional $5.0 million before the first anniversary of the effective date of the IMSCP Collaboration and License Agreement.
Pursuant to the IMSCP Collaboration and License Agreement, we (a) received equity of IMSCP equal to 40% of the issued and outstanding equity of IMSCP and are entitled to receive additional equity, in the form of warrants, upon certain dilution events in the future, (b) received time-based payments of $10.0 million in the fourth quarter of 2025, (c) are entitled to receive an additional time-based payment of $5.0 million before the first anniversary of the effective date of the IMSCP Collaboration and License Agreement, and (d) are entitled to receive high single-digit royalties on global net sales and low- to mid-double digit royalties from sublicensing royalties and income. The IMSCP Collaboration and License Agreement includes customary termination provisions, including IMSCP’s ability to terminate the agreement in its entirety on 60 days’ advanced written notice to us.
For the year ended December 31, 2025, we recognized revenue of $18.9 million related to the IMSCP Collaboration and License Agreement. We recorded accounts receivable from IMSCP of $5.0 million on our consolidated balance sheet as of December 31, 2025.
See “Our Collaboration and License Agreement with ImmunoScape” under Part I, Item 1 of this Annual Report on Form 10-K for additional discussion of the IMSCP Collaboration and License Agreement.
Components of Results of Operations
Collaboration Revenue
We have not yet generated commercial revenue from product sales. To date, we have generated revenue from collaboration agreements with BI, IMSCP, LG Chem, Ono (which terminated in March 2025), and Merck Sharp & Dohme Corp. (which terminated in December 2022). Our collaboration revenue may vary from period to period depending on the progress of our work in connection with our collaboration agreements.
Research and Development Expenses
Research and development expenses consist primarily of compensation costs, fees paid to consultants, outside service providers and organizations (including research institutes at universities), facility costs, development and clinical trial costs with respect to our drug product candidates, and acquired in-process research and development. We utilize our employee and infrastructure resources across multiple research and development programs, and do not track these costs by project. We believe the attempted allocation of these costs by project would be arbitrary and not meaningful.
Research and development expenses incurred under contracts are expensed ratably over the life of the underlying contracts, unless the achievement of milestones, the completion of contracted work, or other information indicates that a different pattern of performance is more appropriate. Other research and development expenses are charged to operations as incurred.
Nonrefundable advance payments are recognized as an expense as the related services are performed. We evaluate whether we expect the services to be rendered at each quarter end and year end reporting date. If we do not expect the services to be rendered, the advance payment is recorded as expense. Nonrefundable advance payments for research and development services are included in prepaid and other current assets on the balance sheet. To the extent that a nonrefundable advance payment is for contracted services to be performed within 12 months from the reporting date, such advance is included in current assets; otherwise, such advance is included in non-current assets.
We evaluate the status of our research and development agreements and contracts, and the carrying amount of the related assets and liabilities, at each quarter end and year end reporting date, and adjust the carrying amounts and their classification on the balance sheet as appropriate.
The following table summarizes our research and development expenses by category for the years ended December 31, 2025 and 2024 (in millions):
December 31,
Employee compensation
Contract manufacturing costs
Facilities and overhead
Lab costs
Acquired in-process research and development costs
Clinical trial costs
License fees
Professional fees
Total
General and Administrative Expenses
General and administrative expenses consist of salaries and related expenses for executive, legal, finance, human resources, information technology and administrative personnel, as well as professional fees, insurance costs, and other general corporate expenses. We expect general and administrative expenses to remain consistent in future periods as we continue to incur expenses related to our operation as a public company, which requires our ongoing compliance with certain laws and regulations.
Interest Income
We earn interest income from cash invested in money market funds and U.S. Treasury securities.
Interest Expense
We incurred interest expense from borrowings under our Loan and Security Agreement, as amended, or the Loan Agreement, with Silicon Valley Bank, a division of First Citizens Bank & Trust Company, or SVB. As of December 31, 2025, the loan principal balance was fully paid off.
Results of Operations
Years Ended December 31, 2025 and 2024
Our consolidated statements of operations for the years ended December 31, 2025 and 2024, as discussed herein are presented below.
Collaboration revenue
Operating expenses (income):
General and administrative
Research and development
Loss (gain) on fixed asset disposal
Total operating expenses
Loss from operations
Other income (expense):
Interest income
Interest expense
Total other income, net
Loss before provision for income taxes
Provision for income taxes
Net loss
Collaboration Revenue
Collaboration revenue increased by $18.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase was primarily due to revenue recognized from the BI Collaboration and License Agreement executed in April 2025 and the IMSCP Collaboration and License Agreement executed in November 2025.
General and Administrative Expenses
General and administrative expenses increased by $1.7 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. This was primarily due to an increase in professional fees of $2.0 million, which included fees incurred for the review, negotiation, and preparation of the BI Collaboration and License Agreement executed in April 2025 and the IMSCP Collaboration and License Agreement executed in November 2025, as well as an increase in severance expense of $0.8 million due to severance paid to our former Chief Executive Officer, partially offset by a decrease in employee compensation, which includes stock-based compensation, of $1.1 million resulting from a reduction in headcount.
Research and Development
Research and development expenses increased by $1.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. This was primarily due to an increase in acquired in-process research and development costs related to our investment in IMSCP of $3.9 million, an increase in manufacturing of $3.4 million for our lead candidate, CUE-401, an increase in license fees of $1.5 million payable to Einstein in connection with the BI Collaboration and License Agreement executed in April 2025 and the IMSCP Collaboration and License Agreement executed in November 2025, and an increase in severance expense of $0.6 million due to severance paid to our former Chief Medical Officer, partially offset by a decrease in clinical trial costs of $3.4 million for our CUE-100 series as a result of us licensing molecules from the CUE-100 series to IMSCP, a decrease in employee compensation, which includes stock-based compensation, of $3.4 million resulting from a reduction in headcount, a decrease in lab costs of $1.0 million, and a decrease in facilities costs of $0.2 million.
Loss (Gain) on Fixed Asset Disposal
Loss on fixed asset disposal was $0.03 million for the year ended December 31, 2025 compared to a gain on fixed asset disposal of $0.1 million for the year ended December 31, 2024. These gains and losses were recognized from the sale of laboratory equipment.
Interest Income
Interest income decreased by $0.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was due to less interest earned on cash and cash equivalents balances.
Interest Expense
Interest expense decreased by $0.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was due to less interest incurred from the Loan Agreement with SVB, as the loan principal balance decreased year over year and was fully paid off in December 2025.
Foreign Withholding Taxes
Provision for income tax for the year ended December 31, 2025 was comprised of $500,000 in foreign income tax expense related to the IMSCP upfront payments received as of December 31, 2025.
Net Loss
As a result of the foregoing, our net loss decreased by $14.1 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Liquidity and Capital Resources
We have financed our working capital requirements primarily through private and public offerings of equity securities, cash received from BI, IMSCP, LG Chem, Ono, and Merck Sharp & Dohme Corp. under collaboration agreements, and borrowings under the Loan Agreement. At December 31, 2025, we had cash and cash equivalents totaling $27.1 million available to fund our ongoing business activities. Additional information concerning our financial condition and results of operations is provided in the financial statements included in this Annual Report on Form 10-K.
The amounts that we actually spend for any specific purpose may vary significantly and will depend on a number of factors, including, but not limited to, our research and development activities and programs, clinical testing, regulatory approval, market conditions, and changes in or revisions to our business strategy and technology development plans.
On May 9, 2023, we filed a registration statement on Form S-3, which was declared effective on May 26, 2023 (File No. 333-271786), to register for sale from time to time up to $300 million of our common stock, preferred stock, debt securities, warrants, subscription rights and/or units in one or more offerings.
In October 2021, we entered into an open market sale agreement, or the ATM Sales Agreement, with Jefferies LLC, or Jefferies, to sell shares of our common stock for aggregate gross proceeds of up to $80.0 million, from time to time, through an "at-the-market" equity offering program under which Jefferies acts as sales agent. The ATM Sales Agreement will terminate upon the earliest of (a) the sale of $80.0 million of shares of our common stock pursuant to the ATM Sales Agreement or (b) the termination of the ATM Sales Agreement by us or Jefferies. During the years ended December 31, 2025 and 2024, we sold 3,414,197 and 1,471,858 shares, respectively, of common stock under the ATM Sales Agreement for proceeds of $2.5 million and $3.4 million, respectively, net of commission paid, but excluding transaction expenses. As of December 31, 2025, we had sold an aggregate of 12,486,428 shares of common stock under the ATM Sales Agreement for proceeds of $42.9 million, net of commission paid, but excluding transaction expenses.
On February 15, 2022, we entered into the Loan Agreement with SVB, pursuant to which we have borrowed $10.0 million. The Loan Agreement was amended in April 2023 and October 2024. All outstanding principal and accrued and unpaid interest under the Term Loans and all other outstanding obligations with respect to the Term Loans became due and payable in full on December 1, 2025. As of December 31, 2025, the Term Loans were fully paid off. The term loans under the Loan Agreement, or the Term Loans, bore interest at a floating rate per annum equal to the greater of (A) the prime rate (as published in the money rates section of The Wall Street Journal) plus 2.25% and (B) 5.50%. On the first calendar day of each month, we were required to make monthly interest payments and commencing on June 30, 2023, we began repayment of the Term Loans in (i) 30 consecutive installments of principal plus monthly payments of accrued interest if the additional term loans were not advanced and (ii) 24 months if the additional term loans were advanced.
The Loan Agreement permitted voluntary prepayment of all, but not less than all, of the Term Loans, subject to a prepayment premium except if the facility was refinanced with another First Citizens Bank facility. Such prepayment premium would be 1.00% of the principal amount of the Term Loans. Upon repayment in full of the Term Loans, we were required to pay a one-time final payment fee equal to 5.00% of the original principal amount of any funded Term Loans being repaid. The Loan Agreement, as amended, also required us to have at all times on deposit in our accounts maintained with SVB, unrestricted and unencumbered cash in an amount equal to the lesser of (i) 100% of the dollar value of our consolidated cash, in the aggregate, at all financial institutions, and (ii) $20,000,000.
On September 26, 2024, we entered into an underwriting agreement, or the 2024 Underwriting Agreement, with Oppenheimer & Co. Inc., as representative of the several underwriters named therein, or, collectively, the 2024 Underwriters, relating to an underwritten public offering of (i) 11,564,401 shares, or the 2024 Shares, of our common stock, $0.001 par value per share, and accompanying common stock warrants, or the 2024 Common Stock Warrants, to purchase 2,891,100 shares of our common stock, and (ii) to certain investors in lieu of common stock, pre-funded warrants, or the 2024 Pre-Funded Warrants, to purchase 12,435,599 shares of our common stock and accompanying 2024 Common Stock Warrants to purchase 3,108,900 shares of common stock. All of the 2024 Shares, the 2024 Pre-Funded Warrants and the 2024 Common Stock Warrants were sold by us. Each 2024 Share was offered and sold together with an accompanying 2024 Common Stock Warrant to purchase one-quarter of one share of our common stock at a combined offering price of $0.50, and each 2024 Pre-Funded Warrant was offered and sold together with an accompanying 2024 Common Stock Warrant to purchase one-quarter of one share of our common stock at a combined offering price of $0.499, which is equal to the combined offering price per share of common stock and accompanying 2024 Common Stock Warrant less the $0.001 exercise price of each 2024 Pre-Funded Warrant. The 2024 Underwriters purchased (i) each 2024 Share and accompanying 2024 Common Stock Warrant from us pursuant to the 2024 Underwriting Agreement at a combined price of $0.47 and (ii) each 2024 Pre-Funded Warrant and accompanying 2024 Common Stock Warrant from us pursuant to the 2024 Underwriting Agreement at a combined price of $0.46906. We recorded net proceeds from the offering of $10.8 million, after deducting underwriting discounts and commissions and offering expenses of $1.2 million, excluding any proceeds that may be received from exercise of the 2024 Common Stock Warrants and the 2024 Pre-Funded Warrants.
On April 14, 2025, we entered into an underwriting agreement, or the April 2025 Underwriting Agreement, with Oppenheimer & Co. Inc., as representative of the several underwriters named therein, or, collectively, the April 2025 Underwriters, relating to an underwritten public offering of (i) 13,530,780 shares, or the April 2025 Shares, of our common stock, $0.001 par value per share, and accompanying common stock warrants, or the April 2025 Common Stock Warrants to
purchase 3,382,695 shares of our common stock, and (ii) to certain investors in lieu of common stock, pre-funded warrants, or the April 2025 Pre-Funded Warrants, to purchase 11,469,216 shares of our common stock and accompanying April 2025 Common Stock Warrants to purchase 2,867,304 shares of common stock. All of the April 2025 Shares, the April 2025 Pre-Funded Warrants and the April 2025 Common Stock Warrants were sold by us. Each April 2025 Share was offered and sold together with an accompanying April 2025 Common Stock Warrant to purchase one-quarter of one share of our common stock at a combined offering price of $0.79, and each April 2025 Pre-Funded Warrant was offered and sold together with an accompanying April 2025 Common Stock Warrant to purchase one-quarter of one share of our common stock at a combined offering price of $0.789, which is equal to the combined offering price per share of common stock and accompanying April 2025 Common Stock Warrant less the $0.001 exercise price of each April 2025 Pre-Funded Warrant. The April 2025 Underwriters purchased (i) each April 2025 Share and accompanying April 2025 Common Stock Warrant from us pursuant to the April 2025 Underwriting Agreement at a combined price of $0.7426 and (ii) each April 2025 Pre-Funded Warrant and accompanying April 2025 Common Stock Warrant from us pursuant to the April 2025 Underwriting Agreement at a combined price of $0.74166. We received net proceeds from the offering of approximately $18.0 million, after deducting underwriting discounts and commissions and offering expenses of $0.5 million excluding any proceeds that may be received from exercise of the April 2025 Common Stock Warrants and the April 2025 Pre-Funded Warrants.
On December 19, 2025, we entered into an underwriting agreement, or the December 2025 Underwriting Agreement, with H.C. Wainwright & Co., LLC, as representative of the several underwriters named therein, or, collectively, the December 2025 Underwriters, relating to an underwritten public offering of (i) 12,500,000 shares, or the December 2025 Shares, of our common stock, $0.001 par value per share, and accompanying common stock warrants, or the December 2025 Common Stock Warrants to purchase 6,250,000 shares of our common stock, and (ii) to certain investors in lieu of common stock, pre-funded warrants, or the December 2025 Pre-Funded Warrants, and, together with the December 2025 Shares and the December 2025 Common Stock Warrants, the December 2025 Securities, to purchase 23,214,286 shares of our common stock and accompanying December 2025 Common Stock Warrants to purchase 11,607,143 shares of common stock. All of the December 2025 Securities were sold by us. Each December 2025 Share was offered and sold together with an accompanying December 2025 Common Stock Warrant to purchase one-half of one share of our common stock at a combined offering price of $0.28, and each December 2025 Pre-Funded Warrant was offered and sold together with an accompanying December 2025 Common Stock Warrant to purchase one-half of one share of our common stock at a combined offering price of $0.279, which is equal to the combined offering price per share of common stock and accompanying December 2025 Common Stock Warrant less the $0.001 exercise price of each December 2025 Pre-Funded Warrant. The December 2025 Underwriters purchased (i) each December 2025 Share and accompanying December 2025 Common Stock Warrant from us pursuant to the December 2025 Underwriting Agreement at a combined price of $0.2632 and (ii) each December 2025 Pre-Funded Warrant and accompanying December 2025 Common Stock Warrant from us pursuant to the December 2025 Underwriting Agreement at a combined price of $0.2622. Under the terms of the December 2025 Underwriting Agreement, we also granted the December 2025 Underwriters an option, exercisable for a period of 30 days, to purchase up to an additional 5,357,140 shares of common stock and/or common stock warrants to purchase up to an additional 2,678,570 shares of common stock at the applicable public offering price, less underwriting discounts and commissions, which they exercised in full in December 2025. The net proceeds from the offering were $10.2 million after deducting underwriting discounts and commissions and offering expenses, and excluding any proceeds that may be received from exercise of the December 2025 Common Stock Warrants and the December 2025 Pre-Funded Warrants.
If we issue additional equity securities to raise funds, the ownership percentage of our existing stockholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock. If we issue debt securities, we may be required to grant security interests in our assets, could have substantial debt service obligations, and lenders may have a senior position (compared to stockholders) in any potential future bankruptcy or liquidation. Additionally, corporate collaboration and licensing arrangements may require us to incur non-recurring and other charges, give up certain rights relating to our intellectual property and research and development activities, increase our near and long-term expenditures, issue securities that dilute our existing stockholders, issue debt which may require liens on our assets and which will increase our monthly expense obligations, or disrupt our management and business.
Cash Flows
Based on our current plans and forecasted expenses, we believe our existing cash and cash equivalents as of December 31, 2025, will enable us to fund our operations into the first quarter of 2027. However, we will need to raise substantial additional capital to fund our future operations and remain as a going concern. We expect to finance our future cash needs through a combination of equity offerings, collaborations, and other strategic alliances. Volatility in capital markets and general economic conditions in the United States may be a significant obstacle to raising the required funds and, as a result, we may be unable to secure the necessary funding on acceptable terms. This raises substantial doubt about our ability to continue as a going concern.
The following table summarizes our changes in cash, cash equivalents, and restricted cash for the year ended December 31, 2025 and 2024:
December 31,
(in thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net increase (decrease) in cash, cash equivalents, and restricted cash
Operating Activities
Net cash used in operating activities decreased by $14.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. This was primarily attributable to a lower net loss recognized during the year ended December 31, 2025 and an increase in research and development contract liability, partially offset by an increase in accounts receivable and prepaid expenses and other current assets.
Investing Activities
Net cash provided by investing activities increased by $0.04 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. This was primarily due to redemptions of marketable securities during the year ended December 31, 2025.
Financing Activities
Net cash provided by financing activities increased by $16.0 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. This was primarily due to an increase in proceeds received from our underwritten public offerings in April 2025 and December 2025, partially offset by a decrease in proceeds from sales pursuant to our ATM Sales Agreement in 2025 compared to 2024.
Funding Requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of our Immuno-STAT platform and continue ongoing and initiate new clinical trials of and seek marketing approval for our drug product candidates. In addition, we expect to incur additional costs associated with operating as a public company. Our expenses will also increase if, and as, we:
continue the preclinical development of CUE-401 and the CUE-500 series (excluding CUE-501, which has been licensed to BI);
continue to assess maturing clinical data of our CUE-100 series, including CUE-101 and CUE-102, which we have deprioritized and which have been licensed to IMSCP for development in oncology indications;
leverage our autoimmune and cancer programs to advance our other drug product candidates into preclinical and clinical development;
seek regulatory approvals for any drug product candidates for which we successfully complete clinical trials;
seek to discover and develop additional drug product candidates;
establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any drug product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly;
expand our manufacturing, quality, operational, financial and management systems, including personnel to support these functions;
maintain, expand and protect our intellectual property portfolio;
acquire or in-license other drug product candidates and technologies; and
incur additional legal, accounting and other expenses in operating as a public company.
Under Accounting Standards Update, or ASU, 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40), or, ASC 205-40, we have the responsibility to evaluate whether conditions or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year after the date the financial statements are issued. Under ASC 205-40, this evaluation initially cannot take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. We currently believe that our existing cash and cash equivalents as of December 31, 2025 will allow us to fund our operations into the first quarter of 2027. As a result, we have determined that this cash runway of less than 12 months from the date of issuance of our financial statements included in this Annual Report on Form 10-K, along with our accumulated deficit, history of losses, future expected losses and uncertain future capital resources, meet the ASC 205-40 standard for raising substantial doubt about our ability to continue as a going concern within one year of the issuance date of our financial statements included in this Annual Report on Form 10-K. While we have plans in place to mitigate this risk, which primarily consist of raising additional capital through a combination of equity offerings, , and other strategic , and, depending on the availability and level of additional financings, and cash expenditure reduction, there is no guarantee that we will be in these mitigation efforts.
We will need to raise additional capital or incur additional indebtedness to continue to fund our operations in the near term. Our ability to raise additional funds will depend on financial, economic and market conditions, many of which are outside of our control, and we may be unable to raise financing when needed, or on terms favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market drug product candidates that we would otherwise prefer to develop and market ourselves, which could adversely affect our business prospects, and we may be unable to continue our operations. Because of numerous risks and uncertainties associated with the research, development and commercialization of our drug product candidates, we are unable to estimate the exact amount of our working capital requirements. Factors that may affect our planned future capital requirements and accelerate our need for additional working capital include the following:
the progress, timing, scope and costs of our clinical trials, including the ability to timely enroll patients in our ongoing, planned and any future clinical trials;
the outcome, timing and cost of regulatory approvals by the FDA and other comparable regulatory authorities, including the potential that the FDA or other comparable regulatory authorities may require that we perform more studies than those that we currently expect;
the number and characteristics of drug product candidates that we may in-license and develop;
our ability to successfully commercialize our drug product candidates, if approved;
the amount of sales and other revenues from drug product candidates that we may commercialize, if any, including the selling prices for such potential products and the availability of adequate third-party reimbursement;
selling and marketing costs associated with our potential products, including the cost and timing of expanding our marketing and sales capabilities;
the terms and timing of any existing collaborations, licensing or other arrangements or any potential future collaborations, licensing or other arrangements that we may establish;
cash requirements of any future acquisitions and/or the development of other drug product candidates;
the costs of operating as a public company;
the cost and timing of completion of commercial-scale, outsourced manufacturing activities;
the time and cost necessary to respond to technological and market developments;
the impact of government laws and regulations, general economic and market conditions, inflation, and the imposition of new or revised global trade tariffs;
any disputes which may occur between us and our employees, collaborators, including Einstein, LG Chem, BI or IMSCP or other prospective business partners; and
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
A change in the outcome of any of these or other variables with respect to the development of any of our drug product candidates could significantly change the costs and timing associated with the development of that drug product candidate. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties and grants from organizations and foundations. If we raise additional funds by selling shares of our common stock or other equity-linked securities, the ownership interest of our current stockholders will be diluted. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock. If we issue debt securities, we may be required to grant security interests in our assets, could have substantial debt service obligations, and lenders may have a senior position (compared to stockholders) in any potential future bankruptcy or liquidation. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish rights to our technologies, future revenue streams or drug product candidates or to grant licenses on terms that may not be acceptable to us. Additionally, corporate and licensing arrangements may require us to incur non-recurring and other charges, give up certain rights relating to our intellectual property and research and development activities, increase our near and long-term expenditures, issue securities that dilute our existing stockholders, issue debt which may require liens on our assets and which will increase our monthly expense obligations, or our management and business.
If we are unable to raise additional capital when needed, we may be required to curtail the development of our technology or materially curtail or reduce our operations. We could be forced to sell or dispose of our rights or assets. Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, results of operations and financial condition, including the possibility that a lack of funds could cause our business to fail, dissolve and liquidate with little or no return to investors.
Principal Commitments
Leased Facilities
On March 28, 2022, we entered into a License Agreement, or the License, with MIL 40G, LLC, or the Licensor, pursuant to which we lease approximately 13,000 square feet of office, research and development and laboratory space located at 40 Guest Street, Boston, Massachusetts 02135, or the Premises. We recognized a right of use asset of $9.1 million and an operating lease liability of $9.1 million which were recorded as of the Term Commencement Date (as defined below) related to the License.
The term of the License commenced on April 15, 2022, or the Term Commencement Date, and expires on April 14, 2026, or the Term. The License has a monthly rental rate of $200,700 for the first year of the Term, $208,728 for the second year of the Term, $217,077 for the third year of the Term and $225,760 for the remainder of the Term. Pursuant to the License, we prepaid two months of rent and a security deposit. The Licensor is obligated under the License to provide certain services to us, including providing certain gases, chemicals and equipment to the Premises’ laboratory space, IT support, security, office support and health and safety training. The Licensor has the right to terminate the License for Cause (as defined in the License).
On May 3, 2022, we entered into the First Amendment to the License, or the First Amendment, with the Licensor, pursuant to which the License was expanded to include an additional room effective July 15, 2022. In consideration of the First Amendment, the security deposit was increased from $225,760 to $235,884 effective July 15, 2022. Upon execution of the First Amendment, we prepaid three months of rent, two of which will be held in escrow and credited against future rent payments and the other of which was applied to the first month’s rent. Effective July 15, 2022, the monthly rental rate under the First Amendment increased to $209,700 from $200,700. During the year ended December 31, 2022, we recognized a right of use asset of $0.4 million and short and long term operating lease liabilities of $0.1 million and $0.3 million, respectively, using a discount rate of 8%, which were recorded as of the Term Commencement Date related to the License.
On May 31, 2022, we entered into an operating lease for additional laboratory space at 40 Guest Street, Boston, Massachusetts for the period from December 1, 2022, through December 1, 2024, or the 40G Additional Laboratory Lease. The 40G Additional Laboratory Lease contains escalating payments during the lease period. The monthly rental rate under the 40G Additional Laboratory Lease was $59,153 for the first 12 months and $61,519 for the remainder of the initial term. Under the terms of the 40G Additional Laboratory Lease, we prepaid three months of rent, two of which are held in escrow and credited against future rent payments and the other of which was applied to the first month’s rent. On November 20, 2024, we extended the lease through July 14, 2026. The monthly rental rate is $61,519 through November 30, 2025 and $63,979 for the remainder of the term until July 14, 2026. During the year ended December 31, 2024, we recognized a right of use asset of $1.1 million and a short and long term operating lease liability of $0.7 million, and $0.4 million, respectively, using a discount rate
of 10%, which were recorded as of the Term Commencement Date related to the 40G Additional Laboratory Lease, as amended.
On November 20, 2024, we extended the term of the 40G Additional Laboratory Lease through July 14, 2026. The monthly rental rate was $61,519 through November 30, 2025 and $63,979 for the remainder of the term until July 14, 2026. During the year ended December 31, 2024, we recognized a right of use asset of $1.1 million and short term and long term operating lease liabilities of $0.7 million, and $0.4 million, respectively, using a discount rate of 10%, which were recorded as of the Term Commencement Date related to the 40G Additional Laboratory Lease.
On June 30, 2025, we entered into the Second Amendment to the License with the Licensor. Pursuant to the Second Amendment, effective June 30, 2025, the monthly rental rate for the Office and Laboratory Space decreased from $235,884 to $147,546, subject to a 4% increase on April 15, 2027, and the term of the License was extended from April 14, 2026 to April 14, 2028. In addition, the Licensor agreed to provide us a partial credit of $44,169 for rent we had paid at the new monthly rental rate for the month of June 2025.
For the years ended December 31, 2025 and 2024, we recorded $0.4 million and $0.3 million, respectively, in interest expense to the lease liability.
At December 31, 2025, we recorded an operating lease right-of-use asset of $4.1 million, as well as corresponding short-term and long-term operating lease liabilities of $1.9 million and $2.3 million, respectively. At December 31, 2024, we recorded an operating lease right-of-use asset of $4.4 million, as well as corresponding short-term and long-term operating lease liabilities of $3.5 million and $1.0 million, respectively. As of December 31, 2025 and 2024, a security deposit of $0.5 million was included in deposits on our consolidated balance sheet related to our leases.
Einstein License Agreement
Our commitments with respect to the Einstein License are summarized above at “Significant Contracts and Agreements Related to Research and Development Activities.”
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk.
As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information under this item.
Item 8. Financial Statemen ts and Supplementary Data.
Our financial statements and the related notes, together with the Report of Independent Registered Public Accounting Firm thereon, are set forth beginning on page F-1 of this Annual Report on Form 10-K.
