Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing at the end of this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage company focused on delivering functional improvement for people living with genetically driven neuromuscular diseases. Our proprietary FORCE platform is designed to leverage the transferrin receptor 1, or TfR1, to deliver targeted therapeutics to muscle tissue and the central nervous system, or CNS. The FORCE platform utilizes an antigen-binding fragment antibody, or Fab, targeting TfR1 conjugated to a payload that we rationally design to target the genetic basis of the disease we are seeking to treat. With our FORCE platform, we have the flexibility to deploy different classes of payloads (such as oligonucleotides and enzymes) with specific mechanisms of action that modify target functions. We currently leverage this modularity to focus on neuromuscular diseases with high unmet need, with etiologic targets and with clear translational potential from preclinical disease models to well-defined clinical development and regulatory pathways.
Using our FORCE platform, we are assembling a broad portfolio of product candidates, including product candidates being developed for Duchenne muscular dystrophy, or DMD, myotonic dystrophy type 1, or DM1, facioscapulohumeral dystrophy, or FSHD, and Pompe disease. In addition, we plan to expand our portfolio through development efforts focused on diseases involving the CNS, rare skeletal muscle diseases, and cardiac and metabolic muscle diseases, including some with larger patient populations. We have identified product candidates for each of our DMD, DM1, FSHD and Pompe programs that are in varying stages of preclinical and clinical development.
DMD
We are developing zeleciment rostudirsen, or z-rostudirsen (also known as DYNE-251), for the treatment of exon 51 skip amenable DMD. Z-rostudirsen is designed to enable the production of near full-length dystrophin in muscle and the CNS to provide functional improvement. Z-rostudirsen has received Breakthrough Therapy, Fast Track and Rare Pediatric Disease designations from the U.S. Food and Drug Administration, or FDA, as well as Orphan Drug designation from the FDA, the European Medicines Agency and the Japanese Ministry of Health, Labour and Welfare for the treatment of individuals with DMD, amenable to exon 51 skipping. Additionally, we are advancing four development candidates (DYNE-253, DYNE-245, DYNE-244 and DYNE-255) for the treatment of DMD amenable to skipping of exons 53, 45, 44, 55, respectively, into IND-enabling studies.
Z-rostudirsen is currently being evaluated in the DELIVER trial, a global Phase 1/2 clinical trial which is designed to be registrational. We plan to submit a biologics license application, or BLA, to the FDA for U.S. Accelerated Approval in the second quarter of 2026 based on dystrophin as a surrogate endpoint. We continue to expect a potential U.S. launch of z-rostudirsen in the first quarter of 2027, assuming FDA grants priority review and FDA approval is received on the anticipated timeline. Further, we plan to initiate a global confirmatory Phase 3 clinical trial of z-rostudirsen in the second quarter of 2026, and we have aligned with the FDA on the Phase 3 trial design and protocol. We continue to pursue approval pathways outside of the United States for z-rostudirsen.
We are developing zeleciment basivarsen, or z-basivarsen (also known as DYNE-101), for the treatment of DM1. Z-basivarsen is designed to deliver functional improvement in individuals living with DM1 by
reducing toxic nuclear DMPK RNA to release splicing proteins and allow normal mRNA processing. Z-basivarsen has been granted Breakthrough Therapy, Orphan Drug and Fast Track designations by the FDA and Orphan Drug designation by the European Medicines Agency and the Japanese Ministry of Health, Labour and Welfare for the treatment of DM1.
Z-basivarsen is being evaluated in the ACHIEVE trial, a global Phase 1/2 clinical trial which is designed to be registrational. We anticipate a potential U.S. launch of z-basivarsen in the first quarter of 2028, assuming we receive favorable data, priority review is granted, and FDA approval is received on the anticipated timeline. We plan to initiate a Phase 3 clinical trial of z-basivarsen in March 2026, and we have aligned with the FDA on the Phase 3 trial design and protocol. We continue to pursue approval pathways outside of the United States for z-basivarsen.
FSHD
We are developing DYNE-302 for the treatment of FSHD. DYNE-302 is designed to deliver functional improvement in individuals living with FSHD by reducing aberrant DUX4 expression. We are progressing DYNE-302 toward clinical development.
In June 2024 and June 2025, we announced preclinical data for DYNE-302, our product candidate for FSHD, that demonstrated robust and durable DUX4 suppression and functional benefit in a mouse model. We generated these data using an innovative hTfR1/iFLExD mouse model we developed that expresses TfR1 and enables tunable DUX4 induction in skeletal muscle. In hTfR1/iFLExD mice, a single intravenous dose of DYNE-302 resulted in dose-dependent and robust reduction of the DUX4 transcriptome that lasted up to three months, with benefit on muscle structure. DYNE-302 also demonstrated prevention as well as reversal of muscle weakness.
Pompe
We are developing a product candidate, DYNE-401, to deliver an enzyme replacement therapy to address the deficiency of the lysosomal enzyme, GAA, that causes Pompe disease. We engineered FORCE-GAA by leveraging the FORCE platform and evaluated efficacy in vivo using hTfR1/6Neo mice, that were developed by crossing the well-established 6Neo mouse model of Pompe with mice expressing human transferrin receptor 1. Using this approach, intravenous administration cleared glycogen in muscle and the CNS and normalized lysosomal size in hTfR1/6Neo mice. This approach reduced serum neurofilament light chain, a biomarker of axonal injury, providing evidence of benefit in the CNS and displayed superior dose potency compared to GAA alone. Additional data with this approach supported the potential for monthly dosing which is less frequent than approved enzyme replacement therapies for Pompe.
We were incorporated and commenced operations in 2017. Since our incorporation, we have devoted substantially all of our financial resources and efforts to organizing and staffing our company, business planning, raising capital, conducting research and development activities and filing and prosecuting patent applications. We do not have any products for sale and have not generated any revenue from product sales or otherwise. To date, we have principally raised capital through sales of equity securities and our borrowing under our Loan and Security Agreement, or the Loan Agreement, with Hercules Capital, Inc., or Hercules.
Since our inception, we have incurred significant operating losses. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more product candidates. For the years ended December 31, 2025, 2024 and 2023, we reported net losses of $446.2 million, $317.4 million and $235.9 million, respectively. As of December 31, 2025, we had an accumulated deficit of $1.4 billion.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We expect that our expenses and capital expenditure requirements will increase substantially in connection with our ongoing activities, particularly if and as we:
advance our product candidates for DMD, DM1, FSHD and Pompe and conduct research programs in additional indications;
expand the capabilities of our proprietary FORCE platform;
seek marketing approvals for any product candidates that successfully complete clinical trials;
obtain, expand, maintain, defend and enforce our intellectual property portfolio;
hire additional clinical, regulatory and scientific personnel;
establish manufacturing sources for any product candidate we may develop, including the Fab antibody, linkers and therapeutic payload that will comprise the product candidate, and secure supply chain capacity to provide sufficient quantities for preclinical and clinical development and commercial supply;
ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and
add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and future commercialization efforts, as well as to support our operations as a public company.
We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for any product candidates we may develop. If we obtain regulatory approval for or otherwise commercialize any product candidates we may develop, we expect to incur significant expenses related to developing our commercialization capabilities to support product sales, marketing and distribution. Further, we expect to continue to incur additional costs associated with operating as a public company.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements, and terms loans under our Loan Agreement with Hercules. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed, on favorable terms, or at all. If we fail to raise capital or enter into such agreements or arrangements as and when needed, we may have to significantly delay, reduce or eliminate the development or future commercialization of one or more product candidates we may develop.
Because of the numerous risks and uncertainties associated with product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to raise capital, maintain our research and development efforts, expand our business or continue our operations at planned levels, and as a result we may be forced to substantially reduce or terminate our operations.
We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses, debt service obligations and capital expenditure requirements into the first quarter of 2028.
We have based our estimate as to how long we expect we will be able to fund our operations, debt service obligations and capital expenditure requirements on assumptions that may prove to be wrong. We could use our available capital resources sooner than we currently expect, in which case we would be
required to obtain additional financing, which may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. See “—Liquidity and capital resources” below. These estimates do not give effect to any additional funding tranches we may obtain access to under our Loan Agreement with Hercules, subject to the achievement of specified clinical, regulatory and commercial milestones, and do not give effect to any revenue we may generate on commercial sales of any products for which we obtain regulatory approval.
Impact of Tariffs
The U.S. administration has announced or imposed a series of tariffs on U.S. trading partners. In response, several countries have threatened or imposed retaliatory measures. While we have not experienced, and do not currently expect to experience, any significant direct impact from these tariffs and retaliatory measures, we could experience a negative impact on our costs of materials and production processes and supply chain disruptions. Supply chain disruptions may impact the development, testing and clinical trials of our product candidates, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business. The full extent of the future impact of these and other threatened measures remains uncertain. We continue to monitor these tariffs and retaliatory measures and their possible effects on our business.
Components of our results of operations
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products until at least 2027, if at all. If our development efforts are successful and we commercialize products, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from product sales, as well as upfront, milestone and royalty payments from such collaboration or license agreements, or a combination thereof.
Research and development expenses
Research and development expenses consist primarily of costs incurred for our research activities and development of our product candidates. These expenses include:
development and operation of our proprietary FORCE platform;
employee-related expenses, including salaries, related benefits and stock-based compensation expense, for employees engaged in research and development functions;
expenses incurred in connection with our research programs and development of our product candidates, including those incurred under agreements with third parties, such as consultants and contract research organizations, or CROs, to conduct preclinical studies and clinical trials;
the cost of laboratory supplies and acquiring, developing and manufacturing materials for use in our research, preclinical studies and clinical trials, including those incurred under agreements with third parties, such as consultants and contract manufacturing organizations, or CMOs;
facilities, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of facilities and insurance; and
costs related to compliance with regulatory requirements.
We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.
Our direct external research and development expenses consist of costs that include fees, reimbursed materials and other costs paid to consultants, contractors, CMOs and CROs in connection with our
development, manufacturing and clinical activities. We have not allocated our direct external research and development costs to specific programs or product candidates that are not in clinical development.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Accordingly, we expect that our research and development expenses will increase substantially as we advance z-rostudirsen and z-basivarsen through clinical trials, in connection with our preclinical and clinical development activities of DYNE-302, our FSHD product candidate, and DYNE-401, our Pompe disease product candidate, and if and as we advance any other product candidates through preclinical studies and clinical trials. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any product candidates we may develop. The successful development of any product candidate is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following:
the timing and progress of preclinical and clinical development activities;
the number and scope of programs we decide to pursue and their regulatory paths to market;
the need to raise funding to complete preclinical and clinical development of any product candidates we may develop;
our ability to establish new licensing or collaboration arrangements and the progress of the development efforts of third parties with whom we may enter into such arrangements;
our ability to maintain our current research and development programs and to establish new programs;
the successful initiation, enrollment and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;
the receipt and related terms of regulatory approvals from applicable regulatory authorities for any product candidates we may develop;
the availability of specialty raw materials for use in production of any product candidate we may develop;
establishing agreements with third-party manufacturers for supply of product candidate components for our clinical trials;
our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both in the United States and internationally;
our ability to protect our other rights in our intellectual property portfolio;
commercializing product candidates, if and when approved, whether alone or in collaboration with others; and
obtaining and maintaining third-party insurance coverage and adequate reimbursement for any approved products.
A change in the outcome of any of these variables with respect to the development of any product candidate we may develop could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any product candidate we may develop.
General and administrative expenses
General and administrative expenses consist primarily of employee-related expenses, including salaries, related benefits and stock-based compensation for employees in executive, finance, corporate and business development, commercial and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; insurance costs; administrative travel expenses; commercial
readiness activities; and facility-related expenses, which include allocated expenses for rent, depreciation and maintenance of facilities and other operating costs.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our growth strategy. In addition, if we obtain regulatory approval for a product candidate and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.
Interest income
Interest income consists of interest earned on our cash, cash equivalents and marketable securities.
Interest expense
Interest expense consists of amortization of debt issuance costs and discount and interest expense under the Loan Agreement with Hercules.
Other income (expense), net
Other income (expense), net consists of realized gains and losses on sales of marketable securities and foreign currency gains and losses.
Income taxes
Since our inception, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in any year or for our earned research and development tax credits, due to our uncertainty of realizing a benefit from those items. As of December 31, 2025, we had federal and state net operating loss carryforwards of $981.6 million and $1.0 billion, respectively. The federal net operating loss carryforwards are indefinite lived and the state net operating loss carryforwards begin to expire in 2038. As of December 31, 2025, we also had federal and state research and development tax credit carryforwards of $49.0 million and $6.2 million which begin to expire in 2039 and 2033, respectively.
Results of operations
Comparison of the years ended December 31, 2025 and 2024
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024:
Year Ended December 31,
(in thousands)
Change
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Other (expense) income:
Interest income
Interest expense
Other expense, net
Total other income, net
Net loss
Research and development expenses
The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024:
Year Ended December 31,
(in thousands)
Change
Direct research and development expenses by product candidate:
Z-rostudirsen (DMD)
Z-basivarsen (DM1)
Unallocated research and development expenses:
Platform and external research and development
Personnel related (including stock-based compensation)
Facility related and other
Total research and development expenses
Expenses related to z-rostudirsen increased in the year ended December 31, 2025 compared to the year ended December 31, 2024. This was attributable to an increase in clinical trial activity for the DELIVER trial's registrational expansion cohort and Phase 3 start-up costs in advance of anticipated commencement in the second quarter of 2026, as well as increased analytical work to support planned regulatory activities, including preparations for a BLA submission in the second quarter of 2026. Expenses related to z-basivarsen increased in the year ended December 31, 2025 compared to the year ended December 31, 2024. This was attributable to higher manufacturing activity in 2025 related to process performance qualification batches to support a potential future BLA filing for U.S. accelerated approval, higher manufacturing activity to ensure a sufficient clinical supply of drug product for the ongoing ACHIEVE trial and an increase in clinical trial activity for the ACHIEVE trial's registrational expansion cohort and Phase 3 start-up costs in advance of anticipated commencement in the first quarter of 2026.
The increase in platform and external research and development expenses in the year ended December 31, 2025 was primarily due to increased external research activity associated with our preclinical programs and product candidates, primarily DYNE-302 and DYNE-401. The increase in personnel-related expenses was primarily due to increased headcount in our research and development function of 37 employees and higher stock-based compensation expense for awards granted to new hires and existing employees, as well as the acceleration of vesting terms and modification of previously granted awards in connection with entering into separation and consulting agreements with our former chief medical officer in the year ended December 31, 2025. The increase in facility-related and other expenses was primarily due to the increased costs of supporting a larger number of research and development personnel.
General and administrative expenses
The following table summarizes our general and administrative expenses for the years ended December 31, 2025 and 2024:
Year Ended December 31,
(in thousands)
Change
Personnel-related
Stock-based compensation expense
Professional and consulting fees
Facility-related and other
Total general and administrative expenses
The increase in personnel-related expenses in the year ended December 31, 2025 compared to the year ended December 31, 2024 was due to increased headcount in our general and administrative function of
30 employees in the year ended December 31, 2025. The decrease in stock-based compensation expense in the year ended December 31, 2025 was primarily the result of acceleration of vesting terms and modification of previously granted awards in connection with entering into separation and consulting agreements with our former chief executive officer, former chief business officer and former chief operating officer in the year ended December 31, 2024. Professional and consulting fees increased in the year ended December 31, 2025 due to the higher consulting costs for commercial preparation activities and to support the overall growth of the organization in 2025. Facility-related and other expenses increased due to the increased costs of supporting a larger number of general and administrative personnel.
Interest income
Interest income for the years ended December 31, 2025 and 2024 was $29.9 million and $26.9 million, respectively, due to interest earned on invested cash balances. The increase in interest income was due to increased cash, cash equivalents and marketable securities balances in the year ended December 31, 2025.
Interest expense
Interest expense for the year ended December 31, 2025 was $6.2 million due to our entry into the Loan Agreement with Hercules in June 2025 and related amendment in December 2025. No interest expense was incurred in the year ended December 31, 2024.
Other expense, net
Other expense for the year ended December 31, 2025 was $1.7 million primarily due to foreign currency gains and losses. Other expense for the year ended December 31, 2024 was $0.5 million primarily due to foreign currency gains and losses.
Comparison of the years ended December 31, 2024 and 2023
Discussion and analysis of the results of operations for the year ended December 31, 2024 as compared to the results of operations for the year ended December 31, 2023 is included under the heading “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025.
Liquidity and capital resources
Sources of liquidity
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we support our continued research activities and development of our product candidates and platform. We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates until at least 2027, if at all. To date, we have funded our operations primarily with proceeds from sales of equity securities and our borrowing under the Loan Agreement with Hercules. As of December 31, 2025, we had cash, cash equivalents and marketable securities of $1.1 billion.
In November 2021, we entered into an Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC, or Jefferies. On March 5, 2024, we filed a universal shelf registration statement on Form S-3, or the 2024 Shelf Registration Statement, pursuant to which we may offer and sell debt securities, common stock, preferred stock, units and/or warrants from time to time at an indeterminate aggregate offering price in one or more offerings. In November 2024, we filed a prospectus supplement relating to the Sales Agreement, pursuant to which, in accordance with the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $300.0 million, which we refer to as our at-the-market offering program. Sales of common stock under the Sales Agreement through Jefferies may be made by any method that is deemed an “at-the-market” offering as defined in Rule 415(a)(4) under the Securities Act.
During the year ended December 31, 2025, we issued and sold an aggregate of 10,660,159 shares of common stock pursuant to the Sales Agreement for aggregate net proceeds of $140.6 million, after deducting commissions and offering expenses payable by us. We sold such shares at a weighted average price of $13.60 per share.
In June 2025, we entered into the Loan Agreement with Hercules, in its capacity as administrative agent and collateral agent and as a lender, and certain other financial institutions that from time to time become parties to the Loan Agreement as lenders, which we refer to collectively as the Lenders. In December 2025, we entered into the First Amendment to the Loan Agreement with Hercules. The Loan Agreement, as amended by the First Amendment, provides for term loans in an aggregate principal amount of up to $275.0 million under multiple tranches, available as follows: (i) an initial term loan tranche funded on the closing date of the Loan Agreement in aggregate principal amount of $100.0 million; (ii) subject to the achievement of specified clinical, regulatory and commercial milestones, and after the borrowing of the second term loan tranche of $50.0 million in December 2025, two additional term loan tranches totaling up to $75.0 million; and (iii) subject to approval by the Lenders’ investment committee in their discretion, a final term loan tranche of up to $50.0 million. In the year ended December 31, 2025, we received net proceeds of $148.3 million from the first and second term loan tranches, after deducting debt issuance costs payable by us. Refer to Note 7, “Long-Term Debt” in the accompanying notes to the condensed consolidated financial statements for a discussion of the Loan Agreement with Hercules.
In July 2025, we completed a follow-on public offering, pursuant to which we issued and sold 27,878,788 shares of our common stock. We received net proceeds from the offering of $215.8 million, after deducting underwriting discounts and commissions and offering expenses paid by us.
In December 2025, we completed a follow-on public offering, pursuant to which we issued and sold 21,827,549 shares of our common stock. We received net proceeds from the offering of $377.7 million, after deducting underwriting discounts and commissions and offering expenses paid by us.
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented:
Year Ended December 31,
(in thousands)
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net increase in cash, cash equivalents and restricted cash
Operating activities
During the year ended December 31, 2025, operating activities used $403.2 million of cash, due to our net loss of $446.2 million and changes in our operating assets and liabilities of $3.4 million, partially offset by non-cash charges of $46.4 million. Net cash used in changes in our operating assets and liabilities primarily consisted of a $12.6 million increase in non-current assets, partially offset by an $8.3 million increase in accounts payable and other liabilities and a $1.0 million decrease in prepaid expenses and other current assets. During the year ended December 31, 2024, operating activities used $292.4 million of cash, due to our net loss of $317.4 million and changes in our operating assets and liabilities of $19.5 million, partially offset by non-cash charges of $44.5 million. Net cash used in changes in our operating assets and liabilities primarily consisted of a $9.0 million decrease in accounts payable and other liabilities and a $10.5 million increase in prepaid expenses and other current assets. Changes in our operating assets and liabilities during these periods were generally due to the growth of our business, increased clinical trial activity, increased manufacturing activities, advancement of our product candidates, the timing of vendor invoices and payments and annual bonus payments.
Investing activities
During the year ended December 31, 2025, net cash used in investing activities was $28.8 million due to purchases of marketable securities of $180.5 million, an advance payment for long-lead equipment of $18.8 million and purchases of property and equipment of $1.9 million, partially offset by maturities of marketable securities of $154.6 million and sales of marketable securities of $17.9 million. During the year ended December 31, 2024, net cash used in investing activities was $204.1 million due to purchases of marketable securities of $317.4 million and purchases of property and equipment of $2.4 million, partially offset by maturities of marketable securities of $105.2 million and sales of marketable securities of $10.6 million
Financing activities
During the year ended December 31, 2025, net cash provided by financing activities was $890.3 million, consisting of $594.0 million in aggregate net proceeds from sales of common stock in our July 2025 and December 2025 offerings, $140.6 million in aggregate net proceeds from sales under our at-the-market offering program, $148.3 million in net proceeds from the first two tranches under the Loan Agreement with Hercules and $8.0 million in proceeds received from stock option exercises. These cash inflows were partially offset by $0.6 million in payment of debt issuance costs.
During the year ended December 31, 2024, net cash provided by financing activities was $809.9 million, consisting of $675.2 million in aggregate net proceeds from sales of common stock in our January 2024 and May 2024 offerings, $97.9 million in aggregate net proceeds from sales under our at-the-market offering program and $36.8 million in proceeds received from stock option exercises.
A discussion of changes in our financial condition for the year ended December 31, 2024 as compared to the year ended December 31, 2023 is included under the heading “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025.
Funding requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the clinical development of z-rostudirsen and z-basivarsen, the development of our FSHD and Pompe programs and additional research programs. The timing and amount of our operating expenditures will depend largely on:
the identification of additional product candidates;
the scope, progress, costs and results of preclinical and clinical development of any product candidates we may develop;
the costs, timing and outcome of regulatory review of any product candidates we may develop;
our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;
changes in laws or regulations applicable to any product candidates we may develop, including but not limited to clinical trial requirements for approvals;
the cost and timing of obtaining materials to produce adequate product supply for any preclinical or clinical development of any product candidate we may develop;
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any product candidate we may develop for which we obtain marketing approval;
the legal costs involved in prosecuting patent applications and enforcing patent claims and other intellectual property claims;
additions or departures of key scientific or management personnel;
our ability to establish and maintain collaborations on favorable terms, if at all, as well as the costs and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; and
the costs of operating as a public company.
We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses, debt service obligations, and capital expenditure requirements into the first quarter of 2028. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of holders of our common stock. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be to us. We may be to raise additional funds or enter into such other agreements or arrangements when needed, on terms, or at all. If we to raise capital or enter into such agreements other arrangements as and when needed, we may have to significantly , reduce or eliminate the development or future commercialization of one or more of our product candidates we may develop. See Item 1A. “Risk factors” in this Annual Report on Form 10-K for additional risks associated with our substantial capital requirements.
Contractual and other obligations
We enter into contracts in the normal course of business with CROs, CMOs and other third parties for preclinical research studies, clinical trials and testing and manufacturing services. Except for the master manufacturing services agreements described below, these contracts typically do not contain minimum purchase commitments and are generally cancelable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation and in the case of certain arrangements with CROs and CMOs may include non-cancelable fees.
We have also entered into a license agreement with the University of Mons under which we are obligated to make specified milestone and royalty payments. The payment obligations under this agreement are contingent upon future events, such as our achievement of specified development, regulatory and commercial milestones, or generating product sales. We are unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. For additional information about our license agreement with the University of Mons and amounts that could become payable in the future under that agreement, see Item 1. “Business—Intellectual Property—License Agreement with the University of Mons” in this Annual Report.
On December 4, 2020, we entered into a lease agreement for office and laboratory space, which was amended in January 2021, March 2021, and June 2021. The lease has a term of 8.5 years that commenced when we gained access to the office and laboratory space in September 2021. Our obligation for the payment of the base rent began in April 2022 and is $0.4 million per month, increasing to $0.5 million per month during the term of the lease. We have two options to extend the term of the lease, each for a period of an additional five years.
On January 15, 2025, we entered into a master manufacturing services agreement with a CMO which secures capacity at the CMO's manufacturing facilities for certain of our product candidates and
components thereof. As of December 31, 2025, we have paid $31.2 million towards non-current assets under this agreement and pursuant to a mutually agreed rolling forecast we have committed to pay an additional $109.5 million in fees through December 2027. In specified termination circumstances, the agreement requires us to pay the CMO for services completed, the cost of the CMO's raw materials that cannot be repurposed and specified cancellation fees. This agreement formalizes and supersedes a letter agreement that we entered into with the CMO on July 18, 2024.
On October 31, 2025, we entered into another master manufacturing services agreement with a CMO which also secures capacity at the CMO's manufacturing facilities for certain of our product candidate components. The agreement obligates us to compensate the CMO for producing certain of our product candidate components pursuant to a mutually agreed rolling forecast. Upon execution, we committed to compensate the CMO at least $28.4 million in fees through March 2027. In specified termination circumstances, the agreement requires us to pay the CMO for services completed, the cost of the CMO's raw materials that cannot be repurposed, capital equipment and certain manufacturing activities previously committed to.
Critical accounting estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events 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 values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
We define our critical accounting policies as those accounting principles generally accepted in the United States of America that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. Management has determined that our most critical accounting policies are those relating to accrued research and development expenses and stock-based compensation. As we advance our product candidates into and through clinical development, we expect research and development expenses and, in particular, our accounting for accrued research and development expenses to be an increasingly important critical accounting policy. We believe the following accounting estimates used in the preparation of our consolidated financial statements have the most significant level of estimation uncertainty and have and are reasonably likely to have a material impact on our financial condition and results of operations. For a more detailed description of our significant accounting policies, refer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to the consolidated financial statements.
Accrued research and development expenses
As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our service providers and applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of these estimates with the service providers and make adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to:
CROs in connection with the DELIVER and ACHIEVE clinical trials;
CROs and investigative sites in connection with research activities;
CMOs in connection with the production of research materials; and
vendors in connection with preclinical development activities.
We measure the expense recognized based on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CMOs and CROs that supply, conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the achievement of specified milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.
Stock-based compensation
We measure stock-based awards granted to employees and directors based on fair value on the date of the grant using the Black-Scholes option-pricing model for options with service-based vesting, and we measure awards of restricted stock units based on the closing price of our common stock on the date of grant. Compensation expense for these awards is recognized over the requisite service period, which is generally the vesting period of the respective award. We use the straight-line method to record the expense of awards with service-based vesting conditions. We use the graded-vesting method to record the expense of awards with both service-based and performance-based vesting conditions, commencing when achievement of the performance condition becomes probable. In July 2025, we granted stock options with a combination of service-based vesting and the achievement of certain market conditions.
The fair value of each stock option grant with service-based vesting conditions is estimated on the date of grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield. The fair value of market-based stock options is estimated using a Monte Carlo valuation method, incorporating various option pricing inputs.
Prior to our IPO, there was no public market for our common stock, and consequently, the estimated fair value of our common stock was determined by our board of directors as of the date of each option grant, with input from management, considering third-party valuations of our common stock as well as our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent third-party valuation through the date of the grant. Since our IPO, we have determined the fair market value of our common stock using the closing price of our common stock as reported on the Nasdaq Global Select Market.
Recently issued accounting pronouncements
Refer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to the consolidated financial statements for a discussion of significant accounting policies. There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material impact on our financial statements.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk.
Interest Rate Risk
We are exposed to interest rate market risk as part of our treasury and investment portfolio, which includes cash, cash equivalents, and marketable securities held in readily available checking and money market accounts, as well as debt securities. As part of our investment portfolio, we own financial instruments that are sensitive to market risks. The investment portfolio is used to preserve our capital, provide adequate liquidity and earn returns commensurate with our risk appetite. We invest in instruments that meet the credit quality standards outlined in our investment policy, which also limits the amount of credit exposure to any one issue or type of instrument. These instruments primarily include securities issued by the U.S. government and its agencies, investment-grade corporate bonds and commercial paper, certificates of deposit and money market funds. These investments are denominated in U.S. Dollars and none are held for trading purposes.
For the years ended December 31, 2025, 2024 and 2023, changes in interest rates did not have a material impact on our historical financial position, our business, our financial condition, our results of operations or our cash flows. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio. However, there can be no assurance that changes in interest rates will not have a material adverse impact on us in the future.
Foreign Currency Exchange Risk
We are exposed to market risk related to changes in foreign currency exchange rates from contracts with vendors located outside of the United States, for which certain invoices are denominated in foreign currencies. We currently do not have a foreign currency hedging program. Changes in the relative values of currencies occur regularly and, in some instances, could materially adversely affect our business, our financial condition, our results of operations or our cash flows.
For the years ended December 31, 2025, 2024 and 2023, changes in foreign currency exchange rates did not have a material impact on our historical financial position, our business, our financial condition, our results of operations or our cash flows. Due to the relatively small number of contracts with vendors located outside of the United States denominated in foreign currencies, an immediate 10% change in a foreign currency exchange change would not have a material effect on our historical financial position, our business, our financial condition, our results of operations or our cash flows. However, there can be no assurance that changes in foreign currency exchange rates will not have a material adverse impact on us in the future.
Item 8. Financial Statement s and Supplementary Data.
The financial statements required to be filed pursuant to this Item 8, together with the report of our independent registered public accounting firm, are appended to this Annual Report on Form 10-K. An index of those financial statements is found in Item 15 of Part IV of this Annual Report on Form 10-K.
