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 accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reporting amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to investments, goodwill, fair value of warrant liabilities, share-based compensation and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying 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. If actual results for the critical accounting estimates listed below varied from our estimates, it could significantly impact our financial results. We believe that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements accurately reflect our best estimate of the results of operations, financial position and cash flows for the periods presented. While our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” of the notes to our consolidated financial statements in Part IV, Item 15 of this Annual Report on Form 10-K, we believe the following accounting policies to be most critical to the judgements and estimates used in the preparation of our financial statements.
Revenue Recognition
We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Our revenue is generated through research collaboration and license agreements with pharmaceutical partners. The terms of these agreements contain multiple goods and services which may include (i) licenses, (ii) research and development activities and (iii) participation in joint research and development steering committees. The terms of these agreements may include non-refundable upfront license or option fees, payments for research and development activities, milestone payments and royalty payments based on product sales derived from the collaboration. Under ASC 606, we evaluate whether the license agreement, research and development services and participation in research and development steering committees represent separate or combined performance obligations. We have determined that these services within our existing contracts represent multiple performance obligations.
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The research collaboration and license agreements typically include contingent milestone payments related to specified preclinical and clinical development milestones and regulatory milestones. These milestone payments represent variable consideration that are not initially recognized within the transaction price as they are fully constrained under the guidance in ASC 606. We will continue to assess the probability of significant reversals for any amounts that become likely to be realized prior to recognizing the variable consideration associated with these payments within the transaction price.
Revenue is recognized ratably over our expected performance period or as these performance obligations are fulfilled under each respective arrangement. We make our best estimate of the period over which we expect to fulfill our performance obligations, which includes access to technology through the license agreement and research activities. Given the uncertainties of these collaboration arrangements, significant judgment is required to estimate the duration of the performance period.
For the years ended December 31, 2025 and 2024, transaction price allocated to the performance obligations identified under the agreements was recognized as these performance obligations were fulfilled under each respective arrangement.
Our contracts may also call for certain sales-based milestone and royalty payments upon successful commercialization of a target. In accordance with ASC 606-10-55-65, we recognize revenues from sales-based milestone and royalty payments at the later of (i) the occurrence of the subsequent sale or (ii) the performance obligation to which some or all of the sales-based milestone or royalty payments has been allocated has been satisfied (or partially satisfied). We anticipate recognizing these milestone and royalty payments if and when subsequent sales are generated by the customer from the use of the technology. To date, no revenue from these sales-based milestone and royalty payments has been recognized for any periods.
Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in our consolidated balance sheets.
Research and Development Costs
Research and development expenses are recognized as services are performed and as costs occur. As part of our process of preparing our consolidated financial statements, we are required to estimate our research and development expenses as of each balance sheet date. Research and development expense accruals are estimated based on the level of services performed, progress of the work orders, including the phase or completion of events, and contracted costs. This process involves reviewing open contracts and purchase orders along with preparation of financial models taking into account communications with our key personnel to identify the level of services that have been performed. We then make estimates of levels of service performed when we have not yet been invoiced or otherwise notified of actual costs incurred as of the balance sheet date. We make significant judgments and estimates in determining the accrual balance at each reporting period based on the facts and circumstances known to us at that time.
There may be instances in which vendors will require nonrefundable advance payments for goods or services to be received in the future. Such advance payments for use in research and development activities are capitalized and recorded in prepaid expenses and other current assets and then expensed as the related goods are delivered or the services are performed.
Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the level of services and timing of services performed differ from actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular reporting period. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred.
Convertible Preferred Stock Forward
Certain provisions of the Series C Preferred Stock Purchase Agreement (“Series C SPA”) obligated us to sell, and the investors to purchase, an additional tranche of shares of Series C Preferred Stock, par value $0.0001 per share (“Series C Preferred Stock”), at a future date and specified price (the “tranche closings forward”) if certain clinical performance milestones are met. The tranche closings forward represented freestanding instruments as they were legally detachable and separately exercisable and, therefore, were accounted for separately from Series C Preferred Stock as convertible preferred stock forwards (liability or asset).
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These derivatives were recorded at fair value at inception and were subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recognized in change in the fair value of convertible preferred stock forward in the statements of operations. (see Note 3 and Note 7 to our audited consolidated financial statements).
Recently Adopted Accounting Pronouncements
Refer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to our audited consolidated financial statements for the years ended December 31, 2025 and 2024 for a discussion of recent accounting pronouncements.
Emerging Growth Company and Smaller Reporting Company Statu s
As an “emerging growth company” under the JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years of audited consolidated financial statements in a registration statement for an IPO, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less extensive disclosure about our executive compensation arrangements.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
We may remain classified as an emerging growth company until the end of the fiscal year following the fifth anniversary of our IPO or such earlier time that we are no longer an emerging growth company. If the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of June 30 of any year, or if we have annual gross revenues of $1.235 billion or more in any fiscal year, we would cease to be an emerging growth company as of December 31 of the applicable year. We also would cease to be an emerging growth company if we issue more than $1.0 billion of non-convertible debt over a three-year period.
We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures until the fiscal year following the determination that (i) our voting and non-voting common stock held by non-affiliates is at least $250.0 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is at least $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is at least $700.0 million measured on the last business day of our second fiscal quarter.
Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Item 10 of Regulation S-K and are not required to provide the information otherwise required under this item.
Ite m 8. Financial Statements and Supplementary Data.
Our financial statements, together with the report of our independent registered public accounting firm, appear in Part IV, Item 15 of this Annual Report on Form 10-K.
It em 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
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I tem 9A. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
As of December 31, 2025, management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Annual Report on Internal Control Over Financial Reporting
This Annual Report on Form 10-K does not include a report of management’s assessment regarding our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or an attestation report of our independent registered accounting firm due to a transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There are no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control financial reporting.
It em 9B. Other Information.
During the three months ended December 31, 2025, none of our directors or officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.
It em 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
It em 10. Directors, Executive Officers and Corporate Governance.
The information required by this item (other than the information set forth in the next paragraph in this Item 10) will be included in our definitive proxy statement with respect to our 2026 Annual Meeting of Shareholders to be filed with the SEC, which will be filed no later than 120 days after the end of our fiscal year ended December 31, 2025 and is incorporated herein by reference.
We have adopted a written code of conduct and business ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, and third-party consultants. We have posted a current copy of the code on our website, www.evommune.com . In addition, we intend to post on our website all disclosures that are required by law or the New York Stock Exchange listing standards concerning any amendments to, or waivers from, any provision of the code. The reference to our website does not constitute incorporation by reference of the information contained at or available through our website.
We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees. In addition, it is our intent to comply with the applicable laws and regulations relating to insider trading.
It em 11. Executive Compensation.
The information required by this item will be included in our definitive proxy statement with respect to our 2026 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
It em 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be included in our definitive proxy statement with respect to our 2026 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
It em 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be included in our definitive proxy statement with respect to our 2026 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
Ite m 14. Principal Accounting Fees and Services.
The information required by this item will be included in our definitive proxy statement with respect to our 2026 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
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PART IV
It em 15. Exhibits, Financial Statement Schedules.
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Consolidated Financial Statements
Our consolidated financial statements are listed in the “Index to Consolidated Financial Statements” under Part IV, Item 15 of this Annual Report on Form 10-K.
(2) Financial Statement Schedules
All financial statement schedules have been omitted because they are not applicable, not material, or the required information is shown in Part IV, Item 15 of this Annual Report on Form 10-K.
(3) Exhibits
The exhibits listed below are filed as part of this Annual Report on Form 10-K, or are incorporated herein by reference, in each case as indicated below:
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Exhibit Index
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed Herewith
Amended and Restated Certificate of Incorporation of the Registrant
Amended & Restated Bylaws of the Registrant
Form of Common Stock Certificate
Third Amended and Restated Investors’ Rights Agreement, dated October 30, 2024, by and among the Registrant and the investors party thereto
Description of Registrant’s Securities
Form of Indemnification Agreements
Evommune, Inc. 2020 Stock Plan
Forms of Stock Option Grant Notice, Option Agreement, Notice of Exercise, Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice under the 2020 Plan
Evommune, Inc. 2025 Equity Incentive Plan
Forms of Stock Option Grant Notice, Option Agreement, Notice of Exercise, Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice under the 2025 Plan.
Evommune, Inc. 2025 Employee Stock Purchase Plan
Employment Agreement, dated November 1, 2024, by and between the Registrant and Luis Peña
Employment Agreement, dated November 1, 2024, by and between the Registrant and Eugene A. Bauer
Amendment to Employment Agreement, dated September 22, 2025, by and between the Registrant and Eugene A. Bauer
Employment Agreement, dated November 1, 2024, by and between the Registrant and Kyle B. Carver
Employment Agreement, dated November 1, 2024, by and between the Registrant and Janice Drew
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Employment Agreement, dated November 1, 2024, by and between the Registrant and Gregory S. Moss
Employment Agreement, dated November 1, 2024, by and between the Registrant and Jeegar P. Patel
Stock Appreciation Right Agreement, dated January 17, 2025, by and between the Registrant and Luis Peña
License, Development and Commercialization Agreement, dated December 17, 2020, by and between the Registrant and Dermira, Inc.
Sublicense Agreement, dated September 26, 2023, by and between the Registrant and Maruho Co., Ltd.
Sublicense Agreement, dated March 19, 2024, by and between the Registrant and Maruho Co., Ltd.
License Agreement, dated June 20, 2024, by and between the Registrant and AprilBio Co., Ltd.
Lease Agreement, dated June 29, 2025, by and between the Registrant and Hudson Page Mill Hill, LLC
Form of Securities Purchase Agreement, dated February 12, 2026, by and among the Registrant and the investors thereunder
Form of Registration Rights Agreement, dated February 12, 2026, by and among the Registrant and the investors thereunder
Insider Trading Policy
List of Subsidiaries of the Registrant
Consent of BDO USA, P.C., Independent Registered Public Accounting Firm
Power of Attorney (included on signature page)
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Incentive Compensation Recoupment Policy
101.INS
Inline XBRL Instance Document
101.SCH
Taxonomy Extension Schema With Embedded Linkbase Documents
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101)
+ Indicates management contract or compensatory plan.
Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
* This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
Item 16. Form 10-K Summary
None.
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EVOMMUNE, INC.
Index to Consolidated Financial Statements
Consolidated Financial Statements
Page
Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; New York, NY; PCAOB ID# 243 )
Consolidated balance sheets as of December 31, 2025 and 2024
Consolidated statements of operations for the years ended December 31, 2025 and 2024
Consolidated statements of convertible preferred stock and stockholders’ equity (deficit) for the years ended December 31, 2025 and 2024
Consolidated statements of cash flows for the years ended December 31, 2025 and 2024
Notes to the consolidated financial statements
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Report of Independent Registered Public Accounting Firm
Stockholders and Board of Directors
Evommune, Inc.
Palo Alto, CA
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Evommune, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years then ended , in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BDO USA, P.C .
We have served as the Company's auditor since 2022.
New York, NY
March 5, 2026
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EVOMMUNE, INC.
Consolidated Balance Sheets
(in thousands, except share amounts)
December 31,
December 31,
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Prepaid expenses and other current assets
Total current assets
Operating lease right-of-use assets, net
Property and equipment, net
Long-term investments
Restricted cash
Other non-current assets
Total assets
Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable
Accrued liabilities
Operating lease liability, current portion
Convertible preferred stock forward
Deferred revenue
Other current liabilities
Total current liabilities
Operating lease liability, non-current portion
Financing lease liability
Total liabilities
Commitments and contingencies (Note 6)
Convertible preferred stock: $ 0.0001 par value — 10,000,000 and 157,657,729 shares authorized at December 31, 2025 and December 31, 2024, and 0 and 116,716,142 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively, (liquidation preference $ 0 and $ 210,328 at December 31, 2025 and December 31, 2024, respectively)
Stockholders’ equity (deficit):
Common stock, par value $ 0.0001 — 500,000,000 and 223,593,879 shares authorized at December 31, 2025 and December 31, 2024, respectively; 31,524,093 and 1,551,420 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively
Additional paid-in capital
Accumulated deficit
Total stockholders’ equity (deficit)
Total liabilities, convertible preferred stock, and stockholders’ equity
The accompanying notes are an integral part of these consolidated financial statements.
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EVOMMUNE, INC.
Consolidated State ments of Operations
(in thousands, except share and per share amounts)
Year Ended
December 31,
Revenues:
License revenue
Total revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Other income, net:
Change in fair value of convertible preferred stock forward
Interest income
Other expense, net
Total other income, net
Net loss
Deemed dividend
Net loss attributable to common stockholders
Basic and diluted net loss per share of common stock
Weighted average basic and diluted shares of common stock outstanding
The accompanying notes are an integral part of these consolidated financial statements.
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EVOMMUNE, INC.
Consolidated Statements of Convertibl e Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands, except share amounts)
Convertible Preferred stock
Common stock
Additional
paid-in
Accumulated
Shares
Amount
Shares
Amount
capital
Deficit
Total
Balance, January 1, 2024
Issuance of common stock on exercise of options
Issuance of Series C convertible preferred stock, net of transaction costs and tranche liability (Note 7)
Stock-based compensation
Vesting of early exercised options
Deemed dividend
Net loss
Balance, December 31, 2024
Issuance of common stock on exercise of options
Issuance of Series C convertible preferred stock, net of transaction costs
Conversion of redeemable convertible preferred stock upon initial public offering
Issuance of common stock upon initial public offering
Vesting of restricted stock units
Shares withheld related to net share settlement of equity awards
Stock-based compensation
Vesting of early exercised options
Net loss
Balance, December 31, 2025
The accompanying notes are an integral part of these consolidated financial statements.
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EVOMMUNE, INC.
Consolidated Statem ents of Cash Flows
(in thousands)
Years End
December 31,
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense
Accretion of discount on investments
Depreciation and amortization
Change in fair value of convertible preferred stock forward
Changes in operating assets and liabilities:
Prepaid expenses and other assets
Accounts payable
Accrued liabilities
Operating lease liabilities
Deferred revenue
Net cash used in operating activities
Cash flows from investing activities:
Purchases of investments
Maturities of investments
Purchase of property and equipment
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from the sale of common stock in initial public offering, net of offering costs paid
Proceeds from issuance of convertible preferred stock, net of issuance costs
Proceeds from exercise of stock options
Principal payments of finance lease liability
Principal payments of financing obligation
Taxes paid related to net share settlement of equity awards
Net cash provided by financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of year
Cash, cash equivalents and restricted cash, end of year
Components of cash, cash equivalents, and restricted cash
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash
Supplemental cash flow disclosures:
Cash paid for interest
Non-cash investing and financing activities:
Issuance of common stock upon conversion of convertible preferred stock
Unpaid fixed asset purchases
Vesting of early exercised stock options
Assets acquired under finance leases
Deferred offering costs in accounts payable
Operating lease liabilities arising from obtaining right-of-use assets
Deemed dividend from trigger of anti-dilution provision feature
The accompanying notes are an integral part of these consolidated financial statements.
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EVOMMUNE, INC.
Notes to the Consolidat ed Financial Statements
1. Organization and Description of the Business
Business and Organization
Evommune, Inc. and its subsidiaries (“Evommune” or the “Company”) is a Delaware corporation headquartered in Palo Alto, California. Evommune is a clinical stage biotechnology company developing innovative therapies that target key drivers of chronic inflammatory diseases.
Liquidity
The Company has incurred significant operating losses since inception and has relied primarily on equity financing and license revenue to fund its operations. As of December 31, 2025, the Company had an accumulated deficit of $ 221.1 million . The Company expects to continue to incur substantial losses, and its ability to achieve and sustain profitability will depend on the successful development, approval, and commercialization of product candidates and on the achievement of sufficient revenue to support its cost structure. The Company may never achieve profitability and, unless and until it does, the Company will need to continue to raise additional capital.
As previously disclosed in the Company’s consolidated financial statements for the year ended December 31, 2024, management identified conditions that raised substantial doubt about the Company’s ability to continue as a going concern. During the year ended December 31, 2025 , management implemented plans that alleviated the substantial doubt. The principal factor leading to this conclusion is additional capital raised through the issuance of preferred stock (Note 7), and the issuance of common stock in the Company’s initial public offering (“IPO”) in November 2025 (Note 7), through which the Company raised gross proceeds of $ 237.8 million. As of December 31, 2025, management expects that existing cash, cash equivalents and short-term investments will be sufficient to fund the Company’s current operating plan for at least twelve months from the issuance date of these financial statements.
Significant Risks and Uncertainties
The Company operates in a dynamic and highly competitive industry and believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: its ability to obtain future financing; its ability to continue research and development of its product candidates; payment obligations under license or collaboration agreements; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s product candidates; development of sales, marketing and distribution infrastructure; competing therapies and marketing development; investment in or in-license other technologies; certain strategic relationships; competition from pharmaceutical or other biotechnology companies with greater financial resources or expertise; litigation or claims against its intellectual property portfolio, patent, product, regulatory, or other factors; operational, financial and management systems; and the Company’s ability to attract and retain employees necessary to support its growth.
Product candidates being developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that any product candidates will receive the necessary approvals. If the Company is denied approval, approval is delayed or the Company is unable to maintain approval, it could have a material adverse impact on the Company.
The Company has expended and expects to continue to expend substantial funds to complete the research, development and pre-clinical and clinical testing of product candidates. The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of product candidates that may receive regulatory approval. If adequate funds are unavailable from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs which would materially and adversely affect its business, financial condition and results of operations.
The Company is currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by domestic and global monetary and fiscal policy, geopolitical instability, a recessionary environment and high domestic and global inflation. The U.S. Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy, and inflation may increase or continue for a prolonged period of time. Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs and transportation costs may adversely affect the Company’s operating results. The Company continues to monitor these events and the potential impact on its business. Although the Company does not believe that inflation has had a material impact on its financial position or operations to date, it may be adversely affected in the future due to domestic and global monetary and fiscal policy, supply chain constraints, and other factors, and such factors may lead to increases in the cost of manufacturing for and initiation of studies in the Company’s product candidates.
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2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements, which include the accounts of Evommune, Inc. and its subsidiaries, all of which are wholly owned by Evommune, Inc., have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as defined by the Financial Accounting Standards Board (“FASB”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, stock-based compensation, including the fair value of common stock and related assumptions, accrued expenses, and the valuation of convertible preferred stock forwards. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates.
Reverse Stock Split
On October 17, 2025, the Company effected a 1-for- 8.5180 reverse stock split of its common stock. Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split. There was no effect on the number of shares of common stock or preferred stock authorized for issuance under the Company’s certificate of incorporation or the par value of such securities. The shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. In addition, the conversion ratios for each series of the Company’s convertible preferred stock were proportionally adjusted (Note 7).
Segments
The Company operates in one segment considering the nature of the Company’s products and services, class of customers, methods used to distribute the products and the regulatory environment in which the Company operates. The Company’s chief operating decision maker (“CODM”), its Chief Executive Officer , manages and allocates resources to the operations of the company on a total company basis by assessing the overall level of resources available and how to best deploy these resources across functions and research and development projects that are in line with its long-term company-wide strategic goals. In making these decisions, the CODM uses consolidated financial information for purposes of evaluating performance, and forecasting future period financial results. The CODM performs this assessment based on the Company’s consolidated net loss. Through this analysis, the CODM assesses performance by comparing actual net loss versus the budget, and then decides how to allocate resources to invest in the Company’s research and development programs. The following is a breakdown of net loss by category for the years ended December 31, 2025 and 2024 as managed by the CODM (in thousands).
December 31,
December 31,
License revenue
Operating expenses:
EVO756
EVO301
Other research and development
Total external research and development
Research and development personnel costs
Total research and development operating expenses
General and administrative operating expenses
General and administrative personnel costs
Total general and administrative operating expenses
Total operating expenses
Other income, net
Net loss
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Other research and development consists of discovery research, pre-clinical programs and other early-stage development programs. The measure of segment assets, all of which are held in the United States, is reported on the condensed consolidated balance sheets as total assets.
Revenue Recognition
The Company recognizes revenue in accordance with FASB Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers (“ASC 606”), the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it determines that it is probable it will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is .
Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in the Company’s consolidated balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, non-current portion. Since inception, the Company’s only revenues have been generated through license agreements.
License Revenue
The terms of the Company’s license agreements typically may include payment to the Company of one or more of the following: non-refundable, up-front license fees; research, development and commercial milestone payments; royalties and other contingent payments due based on the activities of the counterparty. Each of these types of revenue are recorded as license revenues in the Company’s consolidated statements of operations. See Note 5 for additional details regarding the Company’s license arrangements.
As part of the accounting for these arrangements, the Company allocates the transaction price to each performance obligation on a relative stand-alone selling price basis. The stand-alone selling price may be, but is not presumed to be, the contract price. In determining the allocation, the Company maximizes the use of observable inputs. When the stand-alone selling price of a good or service is not directly observable, the Company estimates the stand-alone selling price for each performance obligation using assumptions that require judgment. Acceptable estimation methods include, but are not limited to: (i) the adjusted market assessment approach, (ii) the expected cost plus margin approach, and (iii) the residual approach (when the stand-alone selling price is not directly observable and is either highly variable or uncertain). In order for the residual approach to be used, the Company must demonstrate that (a) there are observable stand-alone selling prices for one or more of the performance obligations and (b) one of the two criteria in ASC 606-10- 32-34(c)(1) and (2) is met. The residual approach cannot be used if it would result in a stand-alone selling price of zero for a performance obligation as a performance obligation, by definition, has value on a stand-alone basis.
An option in a contract to acquire additional goods or services gives rise to a performance obligation only if the option provides a material right to the customer that it would not receive without entering into that contract. Factors that the Company considers in evaluating whether an option represents a material right include, but are not limited to: (i) the overall objective of the arrangement, (ii) the benefit the collaborator might obtain from the arrangement without exercising the option, (iii) the cost to exercise the option (for example, priced at a significant and incremental discount) and (iv) the likelihood that the option will be exercised. With respect to options determined to be performance obligations, the Company recognizes revenue when those future goods or services are transferred or when the options expire.
The Company’s revenue arrangements may include the following:
Up-front License Fees: If a license is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from nonrefundable, 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, the Company utilizes 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. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
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Milestone Payments: At the inception of an agreement that includes research and development milestone payments, the Company evaluates whether each milestone is considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such milestones and any related constraint, and if necessary, adjusts the Company’s estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license revenues and earnings in the period of adjustment.
Royalties: If the Company is entitled to receive sales-based royalties from its licensees, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, provided the reported sales are reliably measurable, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its license arrangements.
The Company receives payments from its licensees based on schedules established in each contract. Upfront payments and fees are recorded as deferred revenue upon receipt, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less.
Transaction Price Allocated to Future Performance Obligations
ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of December 31, 2025. The guidance provides certain practical expedients that limit this requirement. The Company has various contracts that meet the following practical expedients provided by ASC 606:
1. The performance obligation is part of a contract that has an original expected duration of one year or less.
2. Revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer.
3. The variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation.
Concentration of Credit Risk
Cash equivalents are financial instruments that potentially subject the Company to concentrations of credit risk. The Company has less than $ 3 million maintained in cash balance in excess of federally insured limits as of December 31, 2025 . The Company has not experienced any losses on its cash and cash equivalents. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
Cash, Cash Equivalents, Short-term and Long-term Investments
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of December 31, 2025 and 2024, cash and cash equivalents consisted of cash and money market mutual funds.
The Company has invested its excess cash in U.S. government securities and corporate bonds. The Company intends and has the ability to hold these investments to maturity. Securities with original maturity dates of more than three months are reported as held-to-maturity investments and are recorded at amortized cost, which approximates fair value measured using a combination of Level 1 and Level 2 inputs due to the negligible risk of changes in value due to interest rates. The Company determines the appropriate classification of its investments at the time of purchase. All of the Company’s investments are classified as held to maturity and are reported as short-term or long-term based on maturity dates.
The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairments of investments are recognized in the consolidated statements of operations if the Company experienced a credit loss and has the intent to sell the investment or if it is more likely than not that the Company will be required to sell the investment before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period. There was no impairment of the Company’s investments as of December 31, 2025 and 2024.
The following tables summarize the Company’s short-term and long-term investments (in thousands):
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December 31, 2025
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Short-term investments:
Held-to-maturity securities
Total short-term investments
Long-term investments:
Held-to-maturity securities
Total long-term investments
Total investments
December 31, 2024
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Short-term investments
Held-to-maturity securities
Total short-term investments
As of December 31, 2025, the Company had 30 securities with a fair value of $ 105.1 million with a contractual maturity of less than 12 months and 14 securities with a fair value of $ 67.5 million with a contractual maturity of greater than 12 months. As of December 31, 2024, the Company had 42 securities with a fair value of $ 55.8 million with a contractual maturity of less than 12 months.
Restricted Cash
Restricted cash is defined as cash and cash equivalents that cannot be withdrawn or used for general operating activities. As of December 31, 2025 and 2024 , the Company’s restricted cash was $ 1.4 million and $ 0.2 million, respectively, and was associated with a letter of credit issued in connection with office leases.
Property and Equipment, Net
Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to five years , and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset. Repairs and maintenance expenditures, which are not considered improvements and do not extend the useful life of property and equipment, are expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheets and the resulting gain or loss is reflected in the consolidated statements of operations in the period realized.
Property and equipment, net consisted of the following (in thousands):
Useful Lives
December 31,
December 31,
Years
Leasehold improvements
Shorter of life of lease or remaining lease term
Office equipment and furniture
Machinery and laboratory equipment
Lab and office equipment under finance right-of-use asset
Construction-in-progress
Less accumulated depreciation and amortization
Property and equipment, net
Depreciation and amortization expense of property and equipment, net totaled $ 0.6 million and $ 0.5 million for the years ended December 31, 2025 and 2024 , respectively.
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Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future undiscounted net cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows generated by the assets. There have been no such impairments of long-lived assets during the years ended December 31, 2025 and 2024 .
Leases
Contractual arrangements that meet the definition of a lease are classified as operating or finance leases and are recorded on the consolidated balance sheets as both a right-of-use asset (“ROU asset”) and lease liability, calculated by discounting fixed lease payments over the lease term at the Company’s incremental borrowing rate (“IBR”). Lease ROU assets and lease obligations are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company currently has operating leases for office space and equipment and a finance lease related to lab and office equipment.
ROU assets are adjusted for (i) payments made at or before the commencement date, (ii) initial direct costs incurred, and (iii) tenant incentives under the lease. As the implicit rates for the operating leases are not determinable, the Company uses an IBR based on the information available at the respective lease commencement dates to determine the present value of future payments. IBR represents the interest rate that the Company would expect to incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located. The Company considers a lease term to be the non-cancelable period that it has the right to use the underlying asset, including any periods where it is reasonably certain the Company will exercise any option to extend the contract.
Lease costs for minimum lease payments for operating leases are recognized on a straight-line basis over the lease term. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. Variable lease payments that do not depend on an index or rate are recognized as lease costs when incurred. In measuring the ROU assets and lease liabilities, the Company has elected to combine lease and non-lease components.
A finance lease ROU asset is recorded within property and equipment, net within the Company’s consolidated balance sheets, and is amortized on a straight-line basis over the shorter of estimated useful lives of the asset or the lease term. Finance lease liability is recorded within other current liabilities and other non-current liabilities within the Company’s consolidated balance sheets. Interest expense from fixed payments on finance leases is recognized using the effective interest method. Finance lease ROU asset amortization and interest expense are recorded within operating expenses and interest expense, respectively, within the Company’s consolidated statements of operations.
The Company does not recognize ROU assets or lease liabilities for short-term leases, if any, having initial terms of 12 months or less at lease commencement as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term for these types of leases.
Fair Value Measurements
The Company follows the provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”). This pronouncement defines fair value, establishes a framework for measuring fair value under GAAP and requires expanded disclosures about fair value measurements. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and defines fair value as the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. ASC 820 utilizes a fair value hierarchy that prioritizes inputs to fair value measurement techniques into three broad levels. The following is a brief description of those three levels:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
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To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. The carrying amounts reflected in the consolidated balance sheets for cash, cash equivalents, restricted cash, short-term investments, accounts payable and accrued liabilities approximate their fair values due to their short-term nature.
Convertible Preferred Stock
Prior to the completion of the Company's IPO, the convertible preferred stock was recorded outside of permanent equity because while it was not mandatorily redeemable, in certain events considered not solely within the Company’s control, such as a merger, acquisition, or sale of all or substantially all of the Company’s assets (each, a “deemed liquidation event”), the convertible preferred stock would have become redeemable at the option of the holders of at least a majority of the then outstanding shares of convertible preferred stock. The Company did not adjusted the carrying values of the convertible preferred stock to its liquidation value prior to the IPO, because a deemed liquidation event obligating the Company to pay the liquidation preferences to holders of shares of convertible preferred stock was not probable. In connection with the closing of the Company’s initial public offering on November 6, 2025, all outstanding shares of convertible preferred stock automatically converted into shares of common stock.
Convertible Preferred Stock Forward
Certain provisions of the Series C Preferred Stock Purchase Agreement (“Series C SPA”) obligated the Company to sell, and the investors to purchase, additional tranches of the Series C Convertible Preferred Stock (“Series C Preferred Stock”) at a future date and specified price (the “tranche closings forward”) if certain clinical performance milestones were met. The tranche closings forward represented freestanding instruments as they are legally detachable and separately exercisable and, therefore, were accounted for separately from Series C Preferred Stock as convertible preferred stock forwards (liability or asset).
These derivatives were recorded at fair value at inception and were subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recognized in change in the fair value of convertible preferred stock forward in the statements of operations (Note 3 and Note 7). The Company had $ 8.9 million of forward contracts related to shares of Series C Preferred Stock outstanding as of December 31, 2024. The tranc he closings forward were settled in June 2025. See Note 7 for additional details regarding the Company’s convertible preferred stock.
Research and Development
Research and development costs are expensed as incurred. Research and development costs include salaries and benefits, consultants’ fees, process development costs, stock-based compensation, laboratory supplies, preparation of regulatory submission expenses, and allocated facilities related expenses as well as fees paid to third parties that conduct certain preclinical research and development activities on the Company’s behalf. Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.
The Company has entered into agreements with third parties to acquire technologies and product candidates for development (Note 5). Such agreements generally require an initial payment by the Company when the contract is executed, and additional payments upon the occurrence of certain events. Additionally, the Company may be obligated to make future royalty payments in the event the Company commercializes the product candidate. In accordance with FASB ASC Topic 730-10-55, Research and Development, expenditures for research and development, including upfront licensing fees and milestone payments associated with products that have not yet been approved by the FDA and do not have alternative commercial use, are charged to research and development expense as incurred. Future contract milestone payments will be recognized as expense when achievement of the milestone is determined to be probable. Once a product candidate receives regulatory approval, subsequent license payments are recorded as an intangible asset.
The Company’s accruals for research and development activities performed by third parties are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development provided, but not yet invoiced, are included in accrued liabilities on the consolidated balance sheets. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company intends to adjust the accruals accordingly.
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Stock-Based Compensation
The Company maintains a stock-based compensation plan as a long-term incentive for employees, certain consultants and advisors, and directors of the Company. Stock-based compensation is measured at the date of grant, based on the estimated fair value of the award, and recognized as an expense over the employee’s requisite service period (usually the vesting period) on a straight-line basis. The Company estimates the grant date fair value of restricted stock units ("RSUs") using the common stock fair value as determined by the board of directors with the assistance of management and an independent third-party valuation specialist. The Company has issued RSUs and stock appreciation rights ("SARs") with service and performance-based vesting conditions and records the expense for these awards if the Company concludes that it is probable that the performance condition will be achieved. The Company estimates the grant date fair value of the stock options, and the resulting stock-based compensation, using the Black-Scholes option pricing model. The Company accounts for forfeitures as they occur.
The Black-Scholes model considers several variables and assumptions in estimating the fair value of each stock option that requires judgment. Changes in these variables and assumptions can materially affect the resulting estimates of fair value. These variables and assumptions include the per unit fair value of the underlying common units, exercise price, expected term, risk-free interest rate, expected dividend rate, and the expected unit and stock price volatility over the expected term as follows:
Expected term. The expected term represents the period that the options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term.
Expected volatility . The Company derives the expected volatility from the average historical volatilities over a period approximately equal to the expected term of comparable publicly traded companies within its peer group that were deemed to be representative of future stock price trends as the Company does not have any trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.
Risk-free interest rate . The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of a stock award.
Expected dividend rate . The Company has not paid and does not anticipate paying any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be zero .
Common stock fair value. Prior to having a public common stock price available, the grant date fair value of the Company’s common stock has been determined by the board of directors with the assistance of management and an independent third-party valuation specialist. The grant date fair value of the Company’s common stock was determined using valuation methodologies that utilize certain assumptions including probability weighting of events, volatility, time to liquidation, a risk-free interest rate and an assumption for a discount for lack of marketability (Level 3 inputs). In determining the fair value of the Company’s common stock, the methodologies used to estimate the enterprise value of the Company were performed using methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .
The fair values of SARs are estimated at the grant date using a Monte Carlo simulation model. Compensation expense is recognized for the number of SARs expected to be earned after assessing the probability that certain performance criteria will be met and the targeted payout level associated with the performance criteria expected to be achieved. Cumulative adjustments are recorded each quarter to reflect the estimated outcome of the performance-related conditions until the date results are determined and settled.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as well as for net operating loss carryforwards and research and development credits. Valuation allowances are provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of a change in the tax laws is recorded in the period in which the law is enacted.
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Net Loss Per Share
Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, the convertible preferred stock, common stock subject to repurchase, stock options, restricted stock units ("RSUs"), and stock appreciation rights ("SARs") are considered to be potentially dilutive securities. Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities as the convertible preferred stock is considered a participating security. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss is attributed entirely to common stockholders. Because the Company has reported a net loss for the reporting periods presented, the diluted net per common share is the same as basic net per common share for those periods.
The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):
Year ended December 31,
Numerator:
Net loss
Adjust: deemed dividend
Net loss attributable to common stockholders
Denominator:
Weighted-average common shares outstanding
Less: weighted-average unvested founder shares
Less: weighted-average unvested early-exercised options
Weighted-average common shares outstanding used to compute net loss per share, basic and diluted
Net loss per share, basic and diluted
The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:
December 31,
Convertible preferred stock
Stock options outstanding
Restricted stock options outstanding
Stock appreciation rights outstanding
Common stock subject to repurchase
Total
The amounts above represent common stock equivalents, where applicable.
JOBS Act Accounting Election
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
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Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which will require incremental income tax disclosures on an annual basis for all public entities. The amendments require that public business entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items meeting a quantitative threshold. The amendments also require disclosure of income taxes paid to be disaggregated by jurisdiction, and disclosure of income tax expense disaggregated by federal, state and foreign. The Company adopted this ASU on January 1, 2025, with retrospective application. The adoption of this ASU resulted in expanded disclosures as shown in Note 10.
In November 2024, the FASB issued ASU 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” (“ASU 2024-03”), which will require additional expense disclosures for all public entities. The amendments require that at each interim and annual reporting period, an entity will disclose certain disaggregated expenses included in each relevant expense caption, as well as the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for annual reporting periods beginning with the fiscal year ending December 31, 2027, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the incremental disclosures that will be required in its future consolidated financial statements.
3. Fair Value Measurements and Fair Value of Financial Instruments
The following table sets forth the Company’s consolidated financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
Fair Value Measurements at December 31, 2025
Total
Level 1
Level 2
Level 3
Assets:
Cash equivalents
Money market funds
Total fair value of assets
Fair Value Measurements at December 31, 2024
Total
Level 1
Level 2
Level 3
Assets:
Cash equivalents
Money market funds
Total fair value of assets
Liabilities:
Convertible preferred stock forward
Total fair value of liabilities
Items classified as Level 1 within the valuation hierarchy consist of the Company’s cash equivalents held in money market funds. The Company measures these investments at fair value determined based on Level 1 observable quoted price market inputs. The Company’s money market funds are included in cash and cash equivalents in the consolidated balance sheets.
Items classified as Level 3 within the valuation hierarchy consist of the Company’s convertible preferred stock forward (Note 7). The fair value of the convertible preferred stock forward has been estimated at the date of inception, and re-measured at the end of each reporting period until the forwards expired. The Company used a standard forward pricing valuation model to estimate the fair value of the forward contracts with the following significant assumptions:
June 26, 2025
December 31, 2024
Fair value per share of Series C Tranche II
Strike Price
Expected term
0.1 years
0.6 years
Discount rate
The following table is a roll-forward of Level 3 assets (liabilities) for the periods indicated (in thousands):
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Series C Tranche Two Forward
Balance at January 1, 2024
Issuance of convertible preferred stock forward
Balance at December 31, 2024
Change in fair value of convertible preferred stock forward
Balance at December 31, 2025
In June 2025, the Company issued 40,941,587 shares of Series C Preferred Stock and settled the convertible preferred stock forward.
4. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
December 31,
December 31,
Accrued research and development
Accrued compensation
Other
Total
5. Strategic Collaborations and License Agreements
Dermira
In December 2020, the Company entered into an exclusive license agreement with Dermira, Inc., a wholly owned subsidiary of Eli Lilly and Company ("Dermira") to develop and commercialize EVO756 and two other development programs for the treatment of various inflammatory diseases (the "Dermira License Agreement").
The Dermira License Agreement remains in effect on a product-by-product and a country-by-country basis until the expiration of the royalty term for such product in such country. The Dermira License Agreement may be terminated by either party due to the other party’s uncured material breach or bankruptcy.
Milestones and royalties are contingent upon future events and will be recorded when the milestones are achieved and when payments are due. Under the Dermira License Agreement, the Company paid certain upfront and milestone fees that were recognized as research and development expense between 2020 and 2022, and may be required to pay up to $ 285.0 million upon achievement of specified development, regulatory and sales milestones, as well as tiered royalty payments in the mid-single digit to low-double digit percentage on worldwide sales of the licensed products. For the year ended December 31, 2025 , the Company has recorded $ 2.5 million as research and development expense upon achievement of a development milestone under the Dermira License Agreement. No milestones were achieved under the Dermira License Agreement during the year ended December 31, 2024.
Maruho Co., Ltd.
Maruho Japan Agreement
In September 2023, the Company entered into a strategic collaboration with Maruho Co., Ltd. (“Maruho”) and granted Maruho an exclusive license to develop and commercialize EVO756 in Japan (the “Maruho Japan Agreement”).
Under the Maruho Japan Agreement, the Company received an upfront payment of $ 8.0 million in September 2023 and is eligible to receive up to $ 52.0 million in additional milestone payments and also eligible to receive low single-digit royalty payments on future sales of EVO756 in Japan.
The potential development, regulatory and commercial milestone payments and sales-based royalties that the Company is eligible to receive represent variable consideration under the Maruho Japan Agreement. The development and regulatory milestone amounts were excluded from the transaction price and were fully constrained based on their probability of achievement and the fact that the Company cannot reasonably conclude that a significant reversal of revenue related to these milestones would not occur. Any future sales-based royalties, including commercial milestone payments based on the level of sales, will be included in the transaction price and recognized as revenue when the related sales occur and the milestones are achieved. The Company will reevaluate the transaction price at the end of each reporting period as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjust its estimate of the transaction price.
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The recognition of revenue related to the Maruho Japan Agreement requires significant judgment and estimates. As discussed in Note 2, the Company is required to identify distinct performance obligations and subsequently allocate a portion of the transaction price to each performance obligation. The Company identified the following two performance obligations under the arrangement: (1) an exclusive license to develop and commercialize EVO756 in Japan (“Exclusive License 1”) and (2) to conduct a Phase 1 clinical trial including a Japanese cohort (the “R&D Activity Deliverable”). The Company will recognize such revenue or expense, as applicable, as these performance obligations are fulfilled. The Company allocated the transaction price to the two performance obligations based on the estimated stand-alone selling price (R&D Activity Deliverable) and residual approach (Exclusive License 1) at contract inception. The Company determined the residual approach was appropriate, consistent with ASC 606-10-32-34(c)(1) and (2), as a standalone selling price has not previously been established for Exclusive License 1. Significant estimates were used in the determination of the stand-alone selling prices. The stand-alone selling price of the R&D Activity Deliverable was based on an expected cost approach, and considered several factors including, but not limited to, contract research organization costs and project management. The Company reevaluates the transaction price and the total estimated costs expected to be incurred to the performance obligations and adjust the deferred revenue at the end of each reporting period, if necessary. Such changes will result in a change to the amount of revenue recognized and deferred revenue.
As of December 31, 2024 , the Company had recorded short term deferred revenue of $ 3.0 million, attributable to the Company’s ongoing performance obligations. The Company recognized $ 3.0 million in license revenue for the year ended December 31, 2025 upon the satisfaction of the performance obligation. There was no deferred revenue recorded as of any other period and no outstanding performance obligations remain under the agreement. In addition, in July 2025, the Company received payment from Maruho of $ 10.0 million upon the achievement of a development milestone, which is recognized as license revenue for the year ended December 31, 2025. No other milestone or royalty revenues related to this agreement have been earned as of December 31, 2025.
Maruho Greater Asia Agreement
In March 2024, the Company entered into a second strategic collaboration with Maruho (the “Maruho Greater Asia Agreement”) and granted Maruho an exclusive license to develop and commercialize EVO756 in Greater China and other Asian countries (the “Territory”). Under the Maruho Greater Asia Agreement, the Company received an upfront payment of $ 7.0 million in March 2024 and is eligible to receive up to $ 54.5 million in additional milestone payments and is also eligible to receive low single-digit royalty payments on future sales of EVO756 in the Territory.
The potential development, regulatory and commercial milestone payments and sales-based royalties that the Company is eligible to receive represent variable consideration under the Maruho Greater Asia Agreement. The development and regulatory milestone amounts were excluded from the transaction price and were fully constrained based on their probability of achievement and the fact that the Company cannot reasonably conclude that a significant reversal of revenue related to these milestones would not occur. Any future sales-based royalties, including commercial milestone payments based on the level of sales, will be included in the transaction price and recognized as revenue when the related sales occur and the milestones are achieved. The Company will reevaluate the transaction price at the end of each reporting period as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjust its estimate of the transaction price.
The recognition of revenue related to the Maruho Greater Asia Agreement requires significant judgment and estimates. As discussed in Note 2, the Company is required to identify distinct performance obligations and subsequently allocate a portion of the transaction price to each performance obligation. The Company identified the following performance obligation under the arrangement: an exclusive license to develop and commercialize EVO756 in the Territory (“Exclusive License 2”). The Company recognized $ 7.0 million in license revenue in March 2024 related to the Maruho Greater Asia Agreement. No other milestone or royalty revenues related to Maruho Greater Asia Agreement have been earned as of December 31, 2025.
AprilBio
In June 2024, the Company entered into a License, Development and Commercialization Agreement with AprilBio Co., Ltd. (“AprilBio”), upon which AprilBio granted the Company an exclusive worldwide license to develop and commercialize an IL-18BP compound (“EVO301”). The Company paid an upfront payment of $ 15.0 million to AprilBio, which was recognized as research and development expense during the year ended December 31, 2024 . The Company is responsible for the payments of development milestones of up to $ 82.5 million, sales milestones of up to $ 377.5 million, and tiered royalty payments in the mid-to-high single digit percentage on covered product net worldwide sales. For the year ended December 31, 2025 , the Company has recorded $ 1.5 million as research and development expense upon achievement of a development milestone under the AprilBio License, Development and Commercialization Agreement. No other milestones were achieved or recorded as research and development expenses for the years ended December 31, 2025 and 2024.
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6. Commitments and Contingencies
Leases
The Company has operating leases for office space and equipment as well as finance leases of certain lab and office equipment. The Company's lab and office equipment leases each have original lease terms of three years . Generally, the Company’s leases are non-cancellable and do not have any residual value guarantees or any restrictions or covenants imposed by leases.
In July 2025, the Company executed a sixty-three-month lease agreement to lease office space in Palo Alto, California. The lease is expected to commence in March 2026 and includes annual lease payments during each of the first three years of approximately $ 1.5 million, with an increase of approximately 3 % each year thereafter for the remainder of the lease. The Palo Alto lease includes an option to terminate after thirty-nine months, subject to a one-time termination fee equal to six months of base rent. The Palo Alto lease also includes a renewal option for one additional five-year period and does not have any residual value guarantees or any restrictions or covenants. The Company is not reasonably certain to exercise either the early-termination or renewal option, and therefore neither option will be included in the measurement of the related right-of-use asset and lease liability upon commencement of the lease.
In August 2025, the Company executed a sixty-month lease agreement to lease office space in New York, New York. The lease commenced in October 2025 and includes annual lease payments of approximately $ 0.4 million. The New York lease is non-cancellable and does not include a renewal option, any residual value guarantees or any restrictions or covenants.
As of December 31, 2025, future minimum lease payments included in the measurement of lease liabilities were as follows (in thousands):
Operating lease
Finance lease
2029 and thereafter
Total undiscounted lease payments
Less: imputed interest
Total lease liability
Less: current portion
Operating and finance lease liability, net of current portion
The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases and finance leases (in thousands):
Year ended December 31,
Operating lease:
Short-term lease cost
Variable lease cost
Operating lease cost
Total operating lease costs
Finance lease:
Amortization of right-of-use assets
Interest on lease liabilities
Financing obligation:
Interest expense
Total finance lease and financing obligation cost
Total lease cost
For the year ended December 31, 2025, cash payments were $ 0.8 million , $ 0.4 million , and $ 0.2 million for operating leases, finance leases and financing obligation, respectively. For the year ended December 31, 2024, cash payments were $ 0.8 million , $ 0.2 million , and $ 0.2 million for operating leases, finance leases and financing obligation, respectively. Interest expense is recorded within other expense in the Company’s consolidated statements of operations. The weighted average discount rate and remaining terms are as follows:
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As of December 31,
Weighted-average remaining lease term (in years)
Operating leases
Finance leases
Financing obligation
Weighted-average discount rate (percent)
Operating leases
Finance leases
Financing obligation
Research and Development Agreements
The Company enters into contracts in the normal course of business with clinical research organizations, contract manufacturing organizations and other third-party vendors for clinical trials, manufacturing, testing, and other research and development activities. These contracts generally provide for termination on notice, with varying termination fees, typically up to 50 %, dependent on timing of notification in advance of planned activity timelines. As of December 31, 2025 and 2024, there were no amounts accrued related to termination and cancellation charges as these are not probable.
License Agreements
The Company has entered into various license agreements (Note 5), pursuant to which the Company is required to make payments contingent upon the occurrence of specified events. The Company is required to pay development and sales milestones and royalties on sales of products developed under these agreements. Except as disclosed in Note 5, no such other milestone events occurred during 2025 and 2024.
Guarantees and Indemnifications
The Company accrues a liability for any contingent liabilities when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount.
Legal proceedings
The Company was not subject to any material legal proceedings during the years ended December 31, 2025 and 2024 , and, no material legal proceedings are currently pending or threatened.
7. Convertible Preferred Stock
In connection with the closing of the Company’s IPO in November 2025, all outstanding shares of Preferred Stock converted into an aggregate of 19,147,559 shares of common stock and no convertible preferred stock was outstanding as of December 31, 2025. The Company’s current amended and restated certificate of incorporation authorizes 500,000,000 share of common stock and 10,000,000 shares of preferred stock.
Series Seed Convertible Preferred Stock Financing
From June 2020 through May 2021, the Company sold 12,858,517 shares of Series Seed Preferred Stock, par value $ 0.0001 per share (“Series Seed Preferred Stock”), at $ 0.9692 per share for aggregate gross proceeds of $ 12.5 million.
Series A Convertible Preferred Stock Financing
In August 2021, the Company entered into the Series A Preferred Stock Purchase Agreement (the "Series A SPA") to issue up to an aggregate of 48,675,300 shares of Series A Preferred Stock, par value $ 0.0001 per share (the "Series A Preferred Stock") at a purchase price of $ 1.93634 per share. From August to November 2021, the Company sold 31,193,506 shares of Series A Preferred Stock. The Company also was obligated to sell, and the investors to purchase, up to 15,002,837 shares of Series A Preferred Stock at an original issuance price of $ 1.93634 (the “Series A Tranche Two Closing”). The Company called for Series A Tranche Two Closing in December 2022 and sold 10,664,668 shares of Series A Preferred Stock for total gross cash proceeds of $ 20.6 million in December 2022 and 3,434,385 shares of Series A Preferred Stock for total gross cash proceeds of $ 6.6 million in January 2023.
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Certain investors, who had a purchase commitment to buy 903,784 shares, did not participate in the Series A Tranche Two Closing. In accordance with the Series A SPA and the Company’s then in effect certificate of incorporation, all shares of Series A Preferred Stock held by such investors were converted to shares of common stock at a one-for-one ratio. The Company converted 1,678,457 shares of Series A Preferred Stock, held by the non-participating investors into shares of common stock on a one for one basis in December 2022. As the conversion occurred per the contractual terms, the Company reclassified the carrying value of shares of Series A Preferred Stock to additional paid-in-capital and common stock par value at the date of the conversion.
In February 2023, the non-participating investors that initially elected to not participate in the Series A Tranche Two Closing, purchased approximately 20 percent of the shares of Series A Preferred Stock initially forfeited in December 2022. The total number of shares purchased by these investors was 180,756 . All of such shares of Series A Preferred Stock then immediately converted into shares of common stock on a one-for-one basis , in accordance with the conversion provisions of the Series A SPA.
Series A Convertible Preferred Stock Tranche Closings Forward
The Company determined that its obligation to issue and the investors’ obligation to purchase additional shares of Series A Preferred Stock in the Series A Tranche Two Closing at a fixed price represented freestanding instruments and forward contracts that are accounted at fair value at the issuance date and re-measured at each reporting date until the expiration or the settlement of the obligation (the “Series A Tranche Two Forward”). Changes in the fair value of these derivatives are recorded in the consolidated statements of operations.
On December 15, 2022 (the “call date”), the Company exercised its call right under the Series A Tranche Two Forward to sell 15,002,837 additional shares of Series A Preferred Stock at the Series A Tranche Two Closing, when the total fair value of the Series A Tranche Two Forward was $ 4.3 million. The Company issued 10,664,668 shares of Series A Preferred Stock and settled the related forward contracts with an estimated fair value of $ 3.0 million in December 2022.
Series B Convertible Preferred Stock Financing
Throughout 2023, the Company sold 28,750,000 shares of Series B Preferred Stock, par value $ 0.0001 per share (“Series B Preferred Stock”) at $ 2.00 per share for aggregate gross proceeds of $ 57.5 million.
Series C Convertible Preferred Stock Financing
In October 2024, the Company entered into the Series C SPA to issue up to an aggregate of 72,435,110 shares of Series C Preferred Stock at a purchase price of $ 1.59453 per share. In October 2024, the Company sold 31,493,523 shares of Series C Preferred Stock for gross proceeds of $ 50.2 million. The Company also was obligated to sell, and the investors to purchase, up to 40,941,587 shares of Series C Preferred Stock at an original issuance price of $ 1.59453 (the “Series C Tranche Two Closing”) upon the decision by the Company, and approval by the board of directors, to advance the development of EVO756 following the completion of the Phase 2 trial in chronic inducible urticaria (the “Milestone Event”). The Series C Tranche Two Closing could be initiated either by the Company, upon the occurrence of the Milestone Event, or by the investors, but in no event was the Series C Tranche Two Closing to be held later than October 30, 2025.
Series C Convertible Preferred Stock Tranche Closings Forward
The Company determined that its obligation to issue and the investors’ obligation to purchase additional shares of Series C Preferred Stock in the Series C Tranche Two Closing at a fixed price represent freestanding instruments and forward contracts that are accounted for at fair value at the issuance date and re-measured at each reporting date until the expiration or the settlement of the obligation (the “Series C Tranche Two Forward”). The Company had $ 8.9 million of forward contracts outstanding as of December 31, 2024. As the Company determined there was no change in value of the Series C Tranche Two Forward from the date of issuance in October 2024 through the year ended December 31, 2024, there was no gain or loss recorded for a change in fair value during the year ended December 31, 2024.
On May 20, 2025, the Company completed, and the board of directors approved, the achievement of the Series C Preferred Stock milestone event and as a result, on June 27, 2025, the Company issued and sold 40,941,587 shares of Series C redeemable convertible preferred stock at the original issuance price of $ 1.59453 when the total fair value of the Series C Tranche Two Forward was $ 0.0 million. The Company issued 40,941,587 shares of Series C Preferred Stock and settled the related forward contracts in June 2025, and recognized a gain of $ 8.9 million for the year ended December 31, 2025. The Company received aggregate gross proceeds of $ 65.3 million as part of the Series C Tranche Two Closing.
Pursuant to the Series C SPA, the Company issued and sold shares of Series C Preferred Stock at a purchase price of $ 1.59453 per share, which triggered the anti-dilution protection provision under the Company’s then in effect certificate of incorporation. Due to these provisions, the conversion ratio of the Series A Preferred Stock and Series B Preferred Stock was adjusted from 8.2077 to 7.9557 , and from 8.1621 to 7.8721 , respectively.
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The authorized, issued, and outstanding shares of the Company’s convertible preferred stock and liquidation values as of December 31, 2024 were as follows (in thousands, except for share amounts):
Authorized
Outstanding
Liquidation
Carrying
Shares
Shares
Preference
Value
Series Seed
Series A
Series B
Series C
Total
The significant rights and obligations of the Company’s Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (collectively “Convertible Preferred Stock”) were as follows prior to conversion into common stock:
Voting Rights
The holders of Convertible Preferred Stock are entitled to vote on all matters on which the common stockholders are entitled to vote. Holders of Convertible Preferred Stock and common stock vote together as a single class not as separate classes, except with respect to the election of directors. Each holder of Convertible Preferred Stock is entitled to the number of votes equal to the number of common stock shares into which the shares held by such holder could be converted as of the record date. As long as a majority of the shares of Series C Preferred Stock originally issued remain outstanding, as adjusted for any anti dilution adjustments, the holders of such shares of Series C Preferred Stock shall be entitled to elect two directors of the Company at any election of directors. As long as at least 24 % of the shares of Series B Preferred Stock originally issued remain outstanding, the holders of such shares of Series B Preferred Stock shall be entitled to elect one director of the Company at any election of directors. As long as a majority of the shares of Series A Preferred Stock originally issued remain outstanding, the holders of Series A Preferred Stock shall be entitled to elect two directors of the Company at any election of directors. The holders of outstanding common stock shall be entitled to two directors of the Company at any election of directors. The holders of Convertible Preferred Stock and common stock (voting together as a single class and not as separate series, and on an as-converted basis) shall be entitled to elect any remaining directors of the Company.
Dividends
Holders of Convertible Preferred Stock are entitled to receive dividends, when, as and if declared by the board of directors, at the annual rate of 8 % of the original issue price, as adjusted for any anti dilution adjustments, payable in preference and priority to any declaration or payment of any distribution on capital stock (other than dividends on shares of common stock payable in shares of common stock) of the Company. No distributions may be made with respect to the common stock unless the requisite dividends on the Convertible Preferred Stock have been declared and all declared dividends on the Convertible Preferred Stock have been paid to the holders of the Convertible Preferred Stock. Dividends are noncumulative, and the Company has never declared a dividend.
Liquidation Preference
In the event of any liquidation, dissolution, or winding up of the Company, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the proceeds or assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of Series B Preferred Stock, Series A Preferred Stock, Series Seed Preferred Stock or common stock an amount per share equal to the liquidation preference amount, which is the original issue price per share of the Series C Preferred Stock, as adjusted for any anti-dilution adjustments, plus any dividends declared but unpaid thereon. If, upon the occurrence of such event, the proceeds are insufficient to permit the payment to holders of shares of Series C Preferred Stock of the full amounts, then the entire proceeds legally available for distribution shall be distributed ratably among the holders of shares of Series C Preferred Stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive.
After the payment in full to the holders of shares of Series C Preferred Stock, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the proceeds or assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of shares of Series A Preferred Stock, Series Seed Preferred Stock or common stock an amount per share equal to the liquidation preference amount, which is the original issue price per share of the Series B Preferred Stock, as adjusted for any anti-dilution adjustments, plus any dividends declared but unpaid thereon. If, upon the occurrence of such event, the proceeds are insufficient to permit the payment to holders of shares of Series B Preferred Stock of the full amounts, then the entire proceeds legally available for distribution shall be distributed ratably among the holders of shares of Series B Preferred Stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive.
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After the payment in full to the holders of shares of Series C Preferred Stock and Series B Preferred Stock, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of shares of Series Seed Preferred Stock or common stock, an amount per equal to the liquidation preference amount of respective original issue price per share, as adjusted for any anti-dilution adjustments, plus any dividends declared but unpaid. If, upon the occurrence of such event, the proceeds are insufficient to permit the payment to holders of shares of Series A Preferred Stock of the full amounts, then the entire proceeds legally available for distribution shall be distributed ratably among the holders of shares of Series A Preferred Stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive.
After the payment in full to the holders of shares of Series C Preferred Stock, Series B Preferred Stock and Series A Preferred Stock, the holders of shares of Series Seed Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of shares of common stock an amount per equal to the liquidation preference amount of respective original issue price per share, as adjusted for any anti-dilution adjustments, plus any dividends declared but unpaid. If, upon the occurrence of such event, the proceeds thus distributed among the holders of shares of Series Seed Preferred Stock shall be insufficient to permit the payment to such holders of the full preferential amounts, then the entire proceeds legally available for distribution to the Series Seed Preferred Stock shall be distributed ratably among the holders of shares of Series Seed Preferred Stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive.
After the payment to the holders of Convertible Preferred Stock of the full preferential amounts specified above, the entire remaining assets of the Company legally available for distribution by the Company shall be distributed with equal priority and pro rata among the holders of the common stock in proportion to the number of shares of common stock held by them.
Conversion
Each share of Convertible Preferred Stock was convertible, at the option of the holder at any time after the date of issuance of such share into such number of shares of common stock as is determined by dividing the original issue price for such series by the applicable conversion price for such series, in effect on the date of conversion. If, after the issuance date of Convertible Preferred Stock, the Company issued or sold, or was deemed to have sold, additional shares of capital stock at a price lower than the original issuance price of the Convertible Preferred Stock, except for certain exceptions allowed, the conversion price of such Convertible Preferred Stock would be adjusted. As of December 31, 2024, the Company’s Series Seed Preferred Stock and Series C Preferred Stock were convertible into the Company’s shares of common stock on an 8.518-for-1 basis. The Company’s Series A Preferred Stock was convertible into the Company’s shares of common stock at a conversion ratio of 8.2077 to one, and the Company’s Series B Preferred Stock was convertible into the Company’s shares of common stock at a conversion ratio of 8.1621 to one.
Each share of Convertible Preferred Stock was automatically converted into shares of common stock at the conversion price then in effect in connection with the IPO of the Company's common stock.
8. Common Stock
As of December 31, 2025, the Company is authorized to issue 500,000,000 shares of $ 0.0001 par value common stock. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to prior rights of the preferred stockholders.
The Company had reserved common stock for future issuance as follows:
December 31, 2025
December 31, 2024
Series Seed
Series A
Series B
Series C
Outstanding options
Outstanding restricted stock
Options available for grants
Total
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9. Stock Option Plan
Stock Options
The Company’s board of directors adopted the 2025 Equity Incentive Plan (the “2025 Plan”), which became effective in connection with the IPO and replaced the 2020 Stock Plan ("2020 Plan"). The 2025 Plan provides for the grant of incentive stock options, nonstatutory stock options, SARs, RSU awards, performance awards, and other forms of awards to employees, non-employee directors and consultants. A total of 7,312,677 shares of the Company’s common stock were reserved for future issuance under the 2025 Plan, including shares underlying outstanding equity awards granted under the 2020 Stock Plan that expire, or are forfeited, cancelled, or re-acquired. In addition, the share reserve is subject to annual increases each January 1 for the first ten years following approval of the 2025 Plan of up to 5 % of shares of the Company’s common stock outstanding, including the number of shares of common stock issuable upon the exercise of any pre-funded warrants and preferred stock, if applicable (or a lesser number determined by the Company’s board of directors). Options under the 2025 Plan may be granted for periods of up to 10 years at exercise prices no less than 100 % of the fair market value of the Company’s common stock on the date of grant with the exception of incentive stock options granted to a 10 % holder which is no less than 110 % of the fair market value of common stock on the date of grant. As of December 31, 2025, the Company had 345,347 shares available for issuance under the 2025 Plan. On January 1, 2026, the number of shares of common stock available for issuance under the 2025 Plan increased by 1,576,204 shares, which was five percent (5%) of the outstanding shares of common stock on December 31, 2025 , bringing the total shares available for issuance under the 2025 Plan to 1,921,551 .
In October 2025, the board of directors adopted the 2025 Employee Stock Purchase Plan (the “2025 ESPP”), which became effective in connection with the IPO. The 2025 ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. A total of 300,000 shares of the Company’s common stock have been reserved for future issuance under the 2025 ESPP, in addition to any automatic increases in the number of shares of common stock reserved for future issuance under this plan.
The following table summarizes the Company’s stock option activity from January 1, 2024 to December 31, 2025:
Stock Options
Weighted-Average Exercise Price
Weighted-Average Remaining Contractual Term (years)
Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2024
Options granted
Options exercised
Options forfeited
Outstanding at December 31, 2024
Options granted
Options exercised
Options cancelled or forfeited
Outstanding at December 31, 2025
Exercisable at December 31, 2025
Vested and expected to vest at December 31, 2025
The weighted-average grant-date fair value of options granted during the years ended December 31, 2025 and 2024 was $ 12.61 and $ 2.09 per option, respectively . The aggregate intrinsic value of options exercised for the years ended December 31, 2025 and 2024 was less than $ 0.1 million, respectively. In trinsic values are calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock, multiplied by the related in the money options that would have been received by the option holders had they exercised their options at the end of the period.
As of December 31, 2025, the total unrecognized stock-based compensation expense for stock options was $ 38.6 million , which is expected to be recognized over a weighted-average period of 6.1 years. The total fair value of options vested for the years ended December 31, 2025 and 2024 was $ 2.3 million and $ 2.0 million , respectively.
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The fair value of the stock options granted was estimated using the following assumptions:
Years Ended December 31,
Expected term
5.6 - 6.6 Years
5.8 - 6.1 Years
Expected volatility
Risk-free interest rate
Fair value of common stock
Dividend yield
Restricted Stock Units
In December 2024, certain employees were granted a total of 437,754 RSUs with a grant date fair value per share of $ 2.99 , expiring on the earlier of (i) the 10-year anniversary of the date of grant or (ii) the date of termination of the employees' service for any reason. Each unit entitles the holder to one share of common stock upon vesting.
The RSUs vest as follows: (i) 25 % on each anniversary of vest commencement date, (ii) 0.0911 share of common stock subject to the RSU upon issuance of each share of Series C Preferred Stock issued subsequent to October 30, 2024, and (iii) upon the first to occur of: (a) immediately prior to the consummation of a Change in Control (as defined in the award agreement) or (b) the effective date of a registration statement of the Company filed under the Securities Act for the sale of the Company’s common stock, or (c) the settlement of the initial trade of shares of the Company's common stock on a nationally recognized exchange. All unvested RSUs are forfeited upon termination or resignation for any reason.
If a RSU vests, the Company will issue one share of common stock for each vested RSU.
A summary of RSU activity during the year ended December 31, 2025, is as follows:
Number
of Units
Outstanding
Grant Date
Fair Value
per Share
Unvested balance at January 1, 2025
Granted
Vested
Unvested balance at December 31, 2025
As of December 31, 2025, the total unrecognized stock-based compensation expense for unvested restricted stock was $ 1.0 million , which is expected to be recognized over a weighted-average period of 2.9 years. Prior to the completion of the Company’s IPO on November 7, 2025, the performance condition associated with the RSUs was not considered probable, and accordingly, no stock compensation expense was recognized. Upon completion of the IPO, the performance condition was met, and the Company began recognizing stock-based compensation expense for the RSUs over the remaining time-based vesting period. The Company recorded $ 0.3 million as stock-based compensation expenses for RSUs for the year ended December 31, 2025.
During the year ended December 31, 2025 , we settled 109,436 shares underlying RSUs, of which 40,319 shares underlying RSUs were net settled by withholding 69,117 shares. The value of the RSUs withheld was $ 1.2 million, based on the closing price of our common stock on the settlement date. The value of RSUs withheld in each period was remitted to the appropriate taxing authorities and has been reflected as a financing activity in our condensed consolidated statements of cash flows.
Stock Appreciation Rights
In December 2024, an executive officer was granted 444,992 SARs with a base price of $ 2.99 per unit. The SARs expire on the earlier of (i) the 10-year anniversary of the date of grant or (ii) the date of termination of the employees' service for any reason (the “SAR Award”).
The SAR Award vests as follows: (i) 25 % on each anniversary of vest commencement date, (ii) 0.0061 share of common stock subject to the SAR Award upon issuance of each share of Series C Preferred Stock issued subsequent to October 30, 2024, and (iii) upon the first to occur of: (a) immediately prior to the consummation of a Change in Control (as defined in the award agreement) or (b) after an IPO, at such time as the 30-day volume-weighted average price of a share of common stock is greater than $ 40.75 . All unvested SARs are forfeited upon termination or resignation for any reason.
If a SAR vests, the Company will issue one share of common stock, or deliver the cash equivalent, each as determined in the Company’s sole discretion, for an amount equal to the fair market value of a share of common stock on the settlement date less the exercise price.
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The number of SARs that vest is dependent on achieving certain performance conditions (liquidity event) and market conditions (minimum stock price). The Company determined that the SAR Award is an equity classified award since although the SARs may be settled in cash or equity, the Company has no intention or history of settling awards in cash. The Company determined that the fair value of the SAR Award was $ 12.27 per share for a total fair value of $ 5.5 million . The Company utilized a Monte Carlo simulation with the following assumptions: a 10-year term to maturity, the Company's fair value of common stock at September 30, 2024 of $ 2.99 , estimated volatility of 108 % , and risk-free rate of 4.2 % to discount the ending result to present value. The valuation also includes a derived service period of 2.07 years, which is the median time to vest, as calculated by the model. This derived service period inherently contains some degree of estimation uncertainty. Prior to the completion of the Company’s IPO on November 7, 2025, the performance condition associated with the RSUs was not considered probable, and accordingly, no stock compensation expense was recognized. Upon completion of the IPO, the performance condition was met, and the Company began recognizing stock-based compensation expense for the SARs over the remaining time-based vesting period. The Company recorded sto ck-based compensation expense of $ 2.1 million for SAR units for the year ended December 31, 2025.
Stock-Based Compensation Expense
Stock compensation expense recorded for the years ended December 31, 2025 and 2024 , consisted of expense for stock options, RSUs and SARs. The following table is a summary of stock compensation expense by function recognized for the periods indicated (in thousands):
Years Ended December 31, 2025
Years Ended December 31, 2024
General and administrative
Research and development
The 2020 Plan provided the holders of certain stock options an election to early exercise prior to vesting. The shares are subject to the Company’s lapsing repurchase right upon termination of employment, with the repurchase price being the lesser of the original exercise price or the then fair value of the Company’s common stock. At December 31, 2025 , less than $ 0.1 million of proceeds from unvested early exercised options were recognized as other current liability in the accompanying consolidated balance sheets.
The following table summarizes activity relating to early exercises of stock options for the periods indicated:
Number of shares
Unvested balance at January 1, 2024
Vested
Unvested balance at December 31, 2024
Vested
Unvested balance at December 31, 2025
10. Income Taxes
Loss before provision for income taxes consisted of the following (in thousands):
Year Ended December 31,
Domestic
Foreign
Loss before provision for income taxes
For the years ended December 31, 2025 and 2024 the Company was not required to pay, and did no t pay, federal or state income taxes. A reconciliation of the Company's statutory income tax rate to the Company's effective income tax rate is as follows:
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Year Ended December 31,
Amount
Percent
Amount
Percent
US federal statutory tax rate
State and local income taxes, net of federal income tax effect (a)
Tax credits
Research and development tax credits
Nontaxable or nondeductible items
Change in fair value of financial instruments
Executive compensation limitation
Other
Changes in unrecognized tax benefit
Change in valuation allowance
Total
(a) The majority of state taxes are in California, however due to the valuation allowance state taxes are zero.
The net deferred income tax asset balance related to the following (in thousands):
December 31,
Deferred tax assets
Net operating loss carryforwards
Tax credit
Intangibles
Capitalized research and development
Right of use liabilities
Accrued bonus
Stock compensation
Deferred revenue
Other
Total deferred tax assets
Deferred tax liabilities
Right of use assets
Total net deferred tax assets
Valuation allowance
Net deferred tax assets
The table below presents the changes in the Company’s valuation allowance.
December 31,
Valuation allowance at January 1,
Additional allowances
Valuation allowance at December 31,
As of December 31, 2025 and 2024, the Company had federal net operating loss ("NOL") carryforwards of $ 44.1 million and $ 38.5 million, respectively, which can be carried forward indefinitely. As of December 31, 2025 and 2024 , the Company had state NOL carryforwards of $ 38.8 . The state NOL carryforwards begin to expire in 2040 .
As of December 31, 2025 and 2024 , the Company also has federal tax credits of $ 6.5 million and $ 4.2 million, respectively, which begin to expire in 2040 , and state tax credits of $ 1.6 million and $ 1.2 million, respectively, which do not expire.
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Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2025 and 2024, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2025 and 2024.
Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The Company completed a formal Section 382 study that determined an “ownership change” had occurred in August 2021 and November 2025, which limits the Company’s ability to utilize its then existing tax attributes. The Company expects to be able to utilize all of its pre-change and post change federal NOL carryforwards and as such, has not recorded a deferred tax asset reduction. With regard to state NOLs and federal tax credits, the section 382 limitation should not prevent the full utilization of these attributes, provided the Company generates sufficient future taxable income to utilize these attribute before they expire. Tax losses generated since the Company’s inception in 2020 may be used to offset only 80 % of taxable income and carryforward indefinitely, which may require the Company to pay federal income taxes in future years despite generating a loss for federal income tax purposes in prior years. Future changes in the Company's stock ownership, which may be outside of the Company's control, may trigger an “ownership change.” In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change.” If an additional “ownership change” does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to the Company.
The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which the Company operates or does business in. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.
The Company records uncertain tax positions as liabilities in accordance with ASC 740 and adjust these liabilities when the Company's judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2025 and 2024 , the Company has recorded unrecognized tax benefits and if recognized would not impact the effective tax rate and has no t recognized any interest or penalties related to unrecognized tax benefits.
The following table summarizes the changes to the Company’s gross unrecognized tax benefits (in thousands):
December 31,
Balance at January 1,
Additions based on tax positions related to current year
Reduction for tax positions of prior years
Balance at December 31,
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from December 31, 2020, to the present.
11. Subsequent Events
February 2026 Private Placement
On February 12, 2026 , the Company entered into a Securities Purchase Agreement with certain investors pursuant to which the Company, in a private placement, sold an aggregate of 4,494,279 shares of the Company’s common stock, par value $ 0.0001 per share at a purchase price of $ 27.88 . The Company received gross proceeds of $ 125.3 million, before deducting any transaction-related expenses. In connection with the private placement, the Company entered into a registration rights agreement pursuant to which it agreed to register the resale of the shares issued in the private placement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized .
Evommune, Inc.
Date: March 5, 2026
/s/ Luis Peña
Luis Peña
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS , that each person whose signature appears below constitutes and appoints Luis Peña and Kyle Carver, and each of them, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such individual in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or the individual’s substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name
Title
Date
/s/ Luis Peña
President, Chief Executive Officer and Director
March 5, 2026
Luis Peña
(Principal Executive Officer)
/s/ Kyle Carver
Chief Financial Officer
March 5, 2026
Kyle Carver, CPA, MBA
(Principal Financial and Accounting Officer)
/s/ Benjamin F. McGraw
Chairman
March 5, 2026
Benjamin F. McGraw, III, Pharm.D.
/s/ Eugene A. Bauer
Director
March 5, 2026
Eugene A. Bauer, M.D.
/s/ David E. Cohen
Director
March 5, 2026
David E. Cohen, M.D., M.P.H.
/s/ Derek DiRocco
Director
March 5, 2026
Derek DiRocco, Ph.D.
/s/ Arthur Kirsch
Director
March 5, 2026
Arthur Kirsch
/s/ Rob Hopfner
Director
March 5, 2026
Rob Hopfner, R.Ph., Ph.D.
/s/ Felice Verduyn-van Weegen
Director
March 5, 2026
Felice Verduyn-van Weegen
