Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion and analysis and other parts of this Annual Report contain forward-looking statements that are based upon current beliefs, plans, and expectations related to future events and our future financial performance that involve risks, uncertainties, and assumptions, such as statements regarding our intentions, plans, objectives, and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of numerous factors, including those set forth in the section of this Annual Report titled “Risk Factors.” See also the section of this Annual Report titled “Special Note Regarding Forward-Looking Statements.”
Overview
We were founded on the belief that engineered cells will be one of the most important transformations in medicine over the next several decades. The burden of diseases that can be addressed at their root cause through engineered cells is significant. We view engineered cells as having the potential to be as therapeutically disruptive as biologic drugs to clinical practice, enabling us to repair cells in the body when possible and replace them when needed. We have developed ex vivo and in vivo cell engineering platforms to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including type 1 diabetes, oncology, and B cell mediated autoimmune diseases.
For our ex vivo platform, we have made focused investments in our hypoimmune platform technology, which we refer to as our HIP technology, with the twin goals of engineering allogeneic cells that can "hide" from the patient's immune system to overcome the fundamental challenge of immune rejection and cell persistence and that we can manufacture at scale. A successful therapeutic requires cells that can engraft, function, and persist in the body, and we believe our approach can unlock a wave of disruptive therapeutics, starting in type 1 diabetes. For in vivo therapies that aim to repair or control genes in the body, a successful product candidate requires both gene modification and in vivo delivery of the therapeutic payload. Our initial focus is on cell-specific delivery of genetic payloads, known as chimeric antigen receptors (CARs), to a patient’s T cells, resulting in the generation and proliferation of CAR T cells, which have been shown to deplete a patient’s disease-causing B cells.
We are currently focused on advancing two distinct therapeutics, each of which leverages one of these platform technologies. SC451 is our HIP-edited product candidate for the treatment of type 1 diabetes. SG293 is our in vivo CAR T product candidate for the treatment of B cell malignancies and B cell mediated autoimmune diseases. We retain worldwide rights to each of these product candidates.
Type 1 Diabetes : Almost ten million people suffer from type 1 diabetes (T1D) worldwide, and there has been limited progress in treatments for this disease since the advent of insulin injections over 100 years ago. We are developing SC451, a HIP-modified, stem cell-derived pancreatic islet cell therapy, for the treatment of T1D. The goal of this therapy is euglycemia, or normal blood glucose, without the need for exogenous insulin injections or immunosuppression. Through a first-in-human investigator-sponsored study (IST), we have shown that UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, can survive and function for twelve months post-transplant in a patient with T1D without the need for immunosuppression. We have incorporated this HIP technology into a more scalable manufacturing platform with SC451 and expect to file an investigational new drug application (IND) as well as begin a Phase 1 clinical trial for this therapy as early as this year.
In vivo CAR T cells : Using our fusogen platform, which enables cell-specific, in vivo delivery of various payloads, we are developing SG293, a CD8-targeted fusosome. SG293 delivers genetic material to CD8+ T cells, which enables them to become CD19-targeting CAR T cells while avoiding potentially problematic delivery to tissues such as the liver and gonads. In vivo CAR T cells have the potential to provide the clinical benefit of autologous, ex vivo manufactured CAR T cells while avoiding the need for lymphodepleting chemotherapy as well as significant complexity and bottlenecks related to manufacturing. SG293 builds on data from our prior lead in vivo CAR T product candidate, SG299. We plan to develop SG293 in a range of B cell cancers and B cell mediated autoimmune diseases and expect to generate initial clinical data as early as this year.
In November 2025, in order to prioritize our resources and pursue promising data in the SC451 and fusogen programs, we announced our prioritization of further development of our SC451 and SG293 programs, and suspended development of our two allogeneic cell therapy CAR T programs – SC291 in B cell mediated autoimmune diseases and SC262 in oncology. As part of these efforts, we are winding down the GLEAM Phase 1 clinical trial evaluating SC291 in B cell mediated autoimmune diseases and the VIVID Phase 1 clinical trial evaluating SC262 in oncology.
We believe the time is right to develop engineered cell therapies in various therapeutic areas. Substantial progress in the understanding of genetics, gene editing, protein engineering, stem cell biology, immunology, process analytics, and computational biology have converged to create an opportunity to markedly increase the breadth and depth of the potential impact of cellular medicines. We continue to make progress developing our ex vivo cell engineering platform that leverages our HIP technology and our in vivo cell engineering platform. Each of our programs provides the potential for meaningful standalone value while also supporting our potential ability to further exploit our platforms in a manner that leads to the development of broadly applicable medicines.
With respect to our ex vivo cell engineering efforts, in January 2026, we announced positive 12-month results from the UP421 IST demonstrating that all primary and secondary endpoints were met. The study showed no drug product-related adverse events. Additionally, there was evidence of graft survival and function with positron emission tomography and magnetic resonance imaging (PET/MRI) as well as with detectable C-peptide production through 12 months following transplantation. C-peptide levels increased, as expected, during a mixed meal tolerance test, showing appropriate function of the transplanted islet cells. Immunological analysis revealed comprehensive immune evasion of HIP-modified pancreatic islet cells. In August 2025, The New England Journal of Medicine published a journal article titled "Survival of Transplanted Allogeneic Beta Cells with No Immunosuppression," which discusses the 12-week results of the trial. We continue preclinical development of SC451, and the results of recent regulatory interactions, including FDA INTERACT and Pre-IND meetings, increase our confidence in our manufacturing process, manufacturing controls, nonclinical testing plan, and clinical trial plan.
With respect to our in vivo cell engineering research efforts, in January 2026, we shared data from a preclinical study using a surrogate for SG293 that delivers a CD20 CAR capable of targeting non-human primate (NHP) B cells in cynomolgus macaques in the absence of lymphodepletion. A single intravenous injection of the SG293 surrogate to these NHPs resulted in robust in vivo generation of CAR T cells and deep B-cell depletion in the peripheral blood and lymph nodes. The B cell depletion was further confirmed by lymph node biopsies showing clearance of B cells as well as by “reset” of the NHPs’ B cell repertoire toward naïve B cells. We believe that deep B cell depletion in this preclinical model is the most significant biomarker for potential efficacy in patients with B cell cancers and B cell mediated autoimmune diseases. Separately, in vitro studies using SG293 have shown selective gene delivery to CD8+ T cells with minimal or undetectable off-target transduction in tissues such as the liver and gonadal tissue, supporting the specificity of SG293.
We continue to make progress on advancing our product candidates into and through preclinical development and toward potential IND submissions. As our product candidates advance toward potential IND submissions, we are conducting good laboratory practices toxicology studies and establishing necessary scale-up for our manufacturing processes.
We expect to continue to assess and prioritize our programs on an ongoing basis based on various factors, including internal and external opportunities and constraints, which may result in our decision to advance certain programs ahead or instead of others or suspend, discontinue, or divest certain programs that represent our current development focus. For details regarding our product candidates, see the section titled “Business—Overview” in Part I, Item 1 included elsewhere in this Annual Report.
Our ex vivo and in vivo technologies represent an aggregation of years of innovation and technology from multiple academic institutions and companies, including hypoimmune technology licensed from the President and Fellows of Harvard College (Harvard) and The Regents of the University of California, fusogen technology acquired from Cobalt Biomedicine Inc. (Cobalt), and gene editing technology licensed from Beam Therapeutics Inc. (Beam), among others. For details regarding these acquisitions and license and collaboration agreements, see Note 4, Acquisitions and Note 5, License and collaboration agreements, to our consolidated financial statements included in this Annual Report, as well as the section titled “Business—Key Intellectual Property Agreements” in Part I, Item 1 included elsewhere in this Annual Report.
Our operations to date have included developing our ex vivo and in vivo cell engineering platforms, identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, conducting clinical trials of our product candidates, supporting clinical trials of product candidates developed using our technologies, acquiring technologies, staffing the company, business planning, establishing and maintaining our intellectual property portfolio, raising capital, and providing general and administrative support for these operations. All of our programs are currently in the development stage, and we do not have any products approved for sale. We have incurred net losses each year since our inception. Our net losses for the years ended December 31, 2025, 2024, and 2023 were $244.2 million, $266.8 million, and $283.3 million, respectively. As of December 31, 2025, we had an accumulated deficit of $1.8 billion. Our net losses resulted primarily from our research and development programs, and, to a lesser extent, general and administrative costs associated with our operations.
In March 2026, we entered into an amended and restated sales agreement (the Sales Agreement) with TD Securities (USA) LLC (TD Cowen), acting as sales agent, pursuant to which we may offer and sell through TD Cowen shares of our common stock from time to time in a series of one or more at the market equity offerings. We initially intend to offer and sell up to $150.0 million of shares of our common stock under the Sales Agreement pursuant to a prospectus supplement to be filed with the SEC (collectively, the ATM facility). The Sales Agreement amends and restates our prior sales agreement with TD Cowen entered into in May 2025 (the Prior Sales Agreement). During the quarter and year ended December 31, 2025, we sold an aggregate of 3.9 million shares and 11.3 million shares of our common stock, respectively, under the Prior Sales Agreement, for net proceeds of approximately $17.0 million and $45.8 million, respectively, after deducting commissions and expenses.
In August 2025, we completed an underwritten public offering (the Offering) pursuant to which we sold 24.3 million shares of our common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of our common stock for net proceeds of approximately $80.6 million, after deducting underwriting discounts and commissions and offering expenses.
As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $138.4 million. We will need to raise additional financing within the next 12 months and in the future to fund our operations, including conducting clinical trials and the commercialization of any approved product candidates. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and milestone, royalty, and other payments received under any future licenses, collaborations, or other arrangements. Additional capital may not be available on terms that are reasonable or acceptable to us, if at all. If we are unable to raise capital when needed or on attractive terms, our business, results of operations, and financial condition would be adversely affected.
Management has determined that our present capital resources may not be sufficient to fund our planned operations for at least one year from the date of this Annual Report, and there is substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern will depend on, among other things, our ability to obtain additional funding and appropriately manage the amount of cash used to fund our operations. We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements. If we are unable to obtain such financing, we may be required to pursue alternative sources of capital which may not be available to us on favorable terms, significantly modify our operational plans by delaying, reducing the scope of, or ceasing some or all of our research and development programs, or pursue strategic alternatives.
Although our historical portfolio prioritizations have enabled reduced operating expenses, our operating expenses may increase over the longer term if our future clinical trials are successful and if we expand our research and development efforts. Cost increases would be driven in large part by commencing and advancing our current and future product candidates through clinical trials; identifying additional product candidates; continuing to establish our manufacturing capabilities, including through third-party contract development and manufacturing organizations (CDMOs); initiating and advancing preclinical development of our current and future product candidates; advancing and expanding the capabilities of our ex vivo and in vivo cell engineering platforms; acquiring and licensing technologies aligned with our ex vivo and in vivo cell engineering platforms, or modifying the terms of existing acquisition or license arrangements; seeking regulatory approval of our current and future product candidates; engaging in commercialization activities for any of our product candidates for which we obtain marketing approval; increasing our personnel, including those required to support our research, clinical and preclinical development, manufacturing, and potential future commercialization efforts; expanding our operational, financial, and management systems; continuing to develop, prosecute, and our intellectual property portfolio; and continuing to incur legal, accounting, or other expenses to operate our business, including the costs associated with being a public company.
We have invested in building world class capabilities in key areas of manufacturing sciences and operations, including development of our cell engineering platforms, product characterization, and process analytics. Our investments also include scaled research solutions, scaled infrastructure, and novel technologies to improve efficiency, characterization, and scalability of manufacturing.
Macroeconomic and Other Considerations
Our business and operations may be negatively affected by local and global economic, political, and regulatory developments and conditions, such as changes in trade policies (including sanctions, treaties, tariffs, regulatory requirements, and other limitations on cross-border operations and international trade), changes in inflation and fluctuations in interest rates, instability in the banking and financial services sector, declines in consumer confidence, declines in economic growth, uncertainty in the markets, geo-political and economic instability, changes in regulatory agencies having oversight of our operations, and tensions in ex-U.S. relations. Further, it is possible that government policy changes and related uncertainty could increase market volatility. The extent, severity, and duration of the impact of these events and conditions on our business cannot be predicted and may not be fully reflected in our results of operations until future periods. If economic uncertainty continues or increases, or if the global economy worsens, our business, financial condition, and results of operations may be . For further discussion of the potential impacts of macroeconomic events and conditions on our business, financial condition, and operating results, see the section of this Annual Report titled “Risk Factors.”
Acquisitions
We have completed various acquisitions since inception. For details regarding acquisitions involving technologies that we are currently developing, see the section titled “Business—Key Intellectual Property Agreements” and Note 4, Acquisitions, to our consolidated financial statements included elsewhere in this Annual Report.
License and collaboration agreements
We have entered into license and collaboration agreements with various third parties. For details regarding these agreements, see the section titled “Business— Key Intellectual Property Agreements” and Note 5, License and collaboration agreements, to our consolidated financial statements included elsewhere in this Annual Report.
Success payments and contingent consideration
Cobalt success payment and contingent consideration
Pursuant to the terms and conditions of the Cobalt acquisition agreement, we are obligated to pay to certain former Cobalt stockholders contingent consideration (Cobalt Contingent Consideration) of up to an aggregate of $500.0 million upon our achievement of certain specified development milestones and a success payment (Cobalt Success Payment) of up to $500.0 million, each of which is payable in cash or stock. The Cobalt Success Payment is payable if, at pre-determined valuation measurement dates, our market capitalization equals or exceeds $8.1 billion, and we are advancing a program based on the fusogen technology in a clinical trial pursuant to an IND, or have filed for, or received approval for, a biologics license application or new drug application for a product based on the fusogen technology. The Cobalt Success Payment can be achieved over a maximum of 20 years from the date of the acquisition, but this period could be shorter upon the occurrence of certain events. A valuation measurement date would also be triggered upon a change of control if at least one of our programs based on the fusogen technology is the subject of an active research program at the time of such change of control. If there is a change of control and our market capitalization is below $8.1 billion as of the date of such change of control, the amount of the potential Cobalt Payment will decrease, and the amount of potential Cobalt Contingent Consideration will increase. As of December 31, 2025, a Cobalt Payment had not been triggered.
See Note 4, Acquisitions to our consolidated financial statements included elsewhere in this Annual Report for details on the amount of the potential Cobalt Success Payment and potential Cobalt Contingent Consideration if there is a change of control based on various thresholds for our market capitalization on such change of control date. See the subsections below titled “—Success payments” and “—Contingent consideration” for more information on the accounting treatment of the Cobalt Success Payment and Cobalt Contingent Consideration.
Harvard success payments
Pursuant to the terms of the Harvard agreement, we may be required to make up to an aggregate of $175.0 million in success payments to Harvard (Harvard Success Payments), payable in cash, based on increases in the per share fair market value of our common stock. The potential Harvard Success Payments are based on multiples of increasing value ranging from 5x to 40x based on a comparison of the per share fair market value of our common stock relative to the original issuance price of $4.00 per share at ongoing pre-determined valuation measurement dates. The Harvard Success Payments can be achieved over a maximum of 12 years from the effective date of the agreement. If a higher success payment tier is met at the same time a lower tier is met, both tiers will be owed. Any previous Harvard Success Payments made are credited against the Harvard Success Payment owed as of any valuation measurement date so that Harvard does not receive multiple payments in connection with the same threshold. As of December 31, 2025, a Harvard Payment had not been triggered.
See Note 5, License and collaboration agreements to our consolidated financial statements included elsewhere in this Annual Report for more details on the various per share common stock values that trigger a Harvard Success Payment. See the subsection below titled “—Success payments” for more information on the accounting treatment of the Harvard Success Payments.
Components of operating results
Operating expenses
Research and development
To date, research and development expenses have related primarily to discovery and development of our platform technologies and product candidates. Research and development expenses are recognized as incurred, and payments made prior to the receipt of goods or services to be used in research and development are recorded as prepaid expenses until the goods or services are received.
Research and development expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, external research and development expenses incurred under arrangements with third parties, including CDMO manufacturing costs (including pass-through costs) and clinical trial costs, costs for laboratory supplies, costs to acquire and license technologies aligned with our ex vivo and in vivo cell engineering platforms, and facility expenses, including rent and depreciation, and allocated overhead costs. The timing and amount of costs to acquire and license technologies in the future cannot be reliably estimated and may fluctuate from quarter to quarter and year to year.
We deploy our employee and infrastructure resources across multiple research and development programs for developing our ex vivo and in vivo cell engineering platforms, identifying and developing product candidates, and establishing manufacturing capabilities. Due to our early stage of development, the number of ongoing projects, and our ability to use resources across several projects, most of our research and development costs are not recorded on a program-specific basis. These include costs for personnel, laboratory, and other indirect facility and operating costs.
Research and development activities account for a significant portion of our operating expenses. Excluding any one-time items, we expect our research and development expenses to be materially flat in 2026 compared to 2025. Research and development expenses may increase over the longer term due to a variety of factors, including if our future clinical trials are successful and if we expand our research and development efforts. Cost increases, if they occur, would be driven in large part by advancing our current and future product candidates into and through clinical trials; identifying additional product candidates; continuing to establish our manufacturing capabilities, including through CDMOs; initiating and advancing preclinical development of our current and future product candidates; advancing and expanding the capabilities of our ex vivo and in vivo cell engineering platforms; acquiring and licensing technologies aligned with our ex vivo and in vivo cell engineering platforms, or modifying the terms of existing acquisition or license arrangements; seeking regulatory approval of our current and future product candidates; and increasing our workforce to support our expanded research, clinical, and preclinical development efforts. A change in the outcome of any of these factors could result in a significant change in the costs and timing associated with the development of our product candidates. In addition, recent and potential future developments in international trade, including tariffs imposed on imports from other countries, could cause increases in our research and development costs, primarily through increased CDMO costs and costs of our laboratory and manufacturing supplies, and we may not be to accurately forecast their impacts on our business.
Research and development related success payments and contingent consideration
Research and development related success payments and contingent consideration include the change in the estimated fair value of our Cobalt and Harvard Success Payment liabilities and Cobalt Contingent Consideration liability. The expense or gain associated with our research and development related success payments and contingent consideration is unpredictable, in part, because our success payments are impacted by changes in our common stock price and market capitalization at the end of each reporting period, and continues to vary significantly from quarter to quarter and year to year due to changes in the assumptions used in the calculations.
General and administrative
General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation for our employees in finance, legal, executive, human resources, and information technology functions, legal and consulting fees, insurance fees, and facility costs not otherwise included in research and development expenses. Legal fees include those related to corporate, patent, and litigation matters. Included in general and administrative expenses for the year ended December 31, 2023, are costs incurred for the early termination of the lease (Fremont lease) for our previously planned manufacturing facility in Fremont, California (Fremont facility).
Excluding any one-time items, we expect our general and administrative expenses to be materially flat in 2026 compared to 2025. General and administrative expenses may increase over the longer term to support potential expanded research and development activities.
Impairment of long-lived assets
Impairment of long-lived assets in 2025 consists of non-cash losses recognized for the impairment of the right-of-use (ROU) asset, construction in progress, and laboratory equipment for our manufacturing facility in Bothell, Washington (the Bothell facility), and the ROU asset, leasehold improvements, and laboratory equipment for certain office and laboratory space in Seattle, Washington (the Seattle facility). We also recognized additional non-cash impairment losses for other long-lived assets. The losses were recorded in operating expenses in the statement of operations in the second quarter of 2025. Impairment of long-lived assets in 2024 and 2023 consists of non-cash losses recognized for the impairment of certain laboratory equipment and leasehold improvements as a result of the portfolio prioritizations in 2024 and 2023. Refer to Note 11, Impairment of long-lived assets to our consolidated financial statements included elsewhere in this Annual Report for details on the .
Results of operations
Comparison of the years ended December 31, 2025 and 2024
The following table summarizes our results of operations for the periods presented:
Year Ended December 31,
Change
(in thousands)
Operating expenses:
Research and development
Research and development related success payments and contingent consideration
General and administrative
Impairment of long-lived assets
Total operating expenses
Loss from operations
Interest income, net
Other income (expense), net
Net loss
Research and development expenses
The following table summarizes the components of our research and development expenses for the periods presented:
Year Ended December 31,
Change
(in thousands)
Personnel
Research, development, and laboratory
Facility and other allocated costs
Third-party manufacturing
Other
Total research and development expense
Research and development expense was $132.0 million and $215.7 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $83.7 million was primarily due to:
a decrease of $32.3 million in personnel-related expenses due to lower research and development headcount primarily related to the portfolio prioritization in the fourth quarter of 2024;
a decrease of $31.0 million in research, development, and laboratory expenses primarily due to reduced scope of research and development activities related to the portfolio prioritization in the fourth quarter of 2024;
a decrease of $14.1 million in facility and other allocated costs primarily due to the portfolio prioritization in the fourth quarter of 2024; and
a decrease of $3.6 million in third-party manufacturing costs at CDMOs.
Research and development related success payments and contingent consideration
The following table summarizes the expenses and gains associated with research and development related success payments and contingent consideration for the periods presented:
Year Ended December 31,
Change
(in thousands)
Cobalt success payment
Harvard success payments
Contingent consideration
Total research and development related success payments and contingent consideration
The expense related to the change in the estimated fair value of our Cobalt Success Payment was $13.6 million compared to a gain of $6.9 million for the years ended December 31, 2025 and 2024, respectively. The changes in value were primarily due to changes in our market capitalization during the relevant periods. The expense related to the change in the estimated fair value of our Harvard Success Payments was $1.1 million compared to a gain of $1.3 million for the years ended December 31, 2025 and 2024, respectively. The changes in value were primarily due to changes in our common stock price during the relevant periods. The expense related to the change in the estimated fair value of our Cobalt Contingent Consideration was $14.7 million compared to a gain of $0.6 million for the years ended December 31, 2025 and 2024, respectively. The changes in value were due primarily to changes in the timing and probability of the achievement of milestones during the relevant periods and the discount rates used in the calculations.
General and administrative expenses
General and administrative expenses were $44.3 million and $64.0 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $19.7 million was primarily due to a decrease in personnel costs, including non-cash stock-based compensation of $9.5 million, costs of $5.5 million incurred in 2024 related to the portfolio prioritization in the fourth quarter of 2024 that did not recur in 2025, a decrease in legal fees of $1.9 million, and a decrease in consulting fees of $1.6 million.
Impairment of long-lived assets
Impairment of long-lived assets was $44.6 million and $1.9 million for the years ended December 31, 2025 and 2024, respectively. See Note 11, Impairment of long-lived assets to our consolidated financial statements included elsewhere in this Annual Report for details on the impairments.
Interest income, net
Interest income, net, was $3.8 million and $10.5 million for the years ended December 31, 2025 and 2024, respectively, and consisted primarily of interest earned on our cash and marketable securities balances.
Other income (expense), net
Other income, net, was $2.3 million and other expense, net, was $4.5 million for the years ended December 31, 2025 and 2024, respectively. The change in value of $6.8 million was due to cash received in 2025 related to the sale of equipment and other-than-temporary impairments of other assets recorded in 2024 that did not recur in 2025.
Comparison of the years ended December 31, 2024 and 2023
The following table summarizes our results of operations for the periods presented:
Year Ended December 31,
Change
(in thousands)
Operating expenses:
Research and development
Research and development related success payments and contingent consideration
General and administrative
Impairment of long-lived assets
Total operating expenses
Loss from operations
Interest income, net
Other expense, net
Net loss
Research and development expenses
The following table summarizes the components of our research and development expenses for the periods presented:
Year Ended December 31,
Change
(in thousands)
Research and laboratory
Personnel
Third-party manufacturing
Facility and other allocated costs
Clinical development
Other
Total research and development expense
Research and development expenses were $215.7 million and $261.8 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $46.1 million was primarily due to:
a decrease of $20.6 million in research and laboratory expenses primarily due to reduced scope of research and development activities;
a decrease of $20.1 million in personnel-related expenses due to reduced scope of research and development activities related to the portfolio prioritizations in the fourth quarters of 2024 and 2023;
a decrease of $9.7 million in third-party manufacturing costs for CDMOs; and
a decrease of $5.8 million in facility and other allocated costs.
These decreases were partially offset by an increase of $11.8 million in clinical development costs.
Research and development related success payments and contingent consideration
The following table summarizes the gains associated with research and development related success payments and contingent consideration for the periods presented:
Year Ended December 31,
Change
(in thousands)
Cobalt success payment
Harvard success payments
Contingent consideration
Total research and development related success payments and contingent consideration
The gains related to the change in the estimated fair value of our Cobalt Success Payment were $6.9 million and $7.9 million for the years ended December 31, 2024 and 2023, respectively. The changes in value were primarily due to changes in our market capitalization during the relevant periods, and for 2023, the reduction of our near-term investment in our fusogen program in connection with our portfolio prioritization in the fourth quarter of 2023. The gains related to the change in the estimated fair value of our Harvard Success Payments were $1.3 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively. The changes in value were primarily due to changes in our common stock price during the relevant periods. The gains related to the change in the estimated fair value of our Cobalt Contingent Consideration were $0.6 million and $40.8 million for the years ended December 31, 2024 and 2023, respectively. The changes in value were primarily due to changes in the timing and probability of the achievement of milestones during the relevant periods and the discount rates used in the calculations.
General and administrative expenses
General and administrative expenses were $64.0 million and $73.3 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $9.3 million was primarily due to a decrease in legal fees of $3.1 million, a loss on lease termination of $2.7 million associated with the Fremont facility recorded in 2023, a decrease in personnel costs of $2.6 million, a decrease in facility costs of $1.9 million, and a decrease in insurance and consulting fees of $1.1 million. These decreases were partially offset by an increase in non-cash stock-based compensation of $2.0 million.
Impairment of long-lived assets
Impairment of long-lived assets was $1.9 million and $7.0 million for the years ended December 31, 2024 and 2023, respectively. See Note 11, Impairment of long-lived assets to our consolidated financial statements included elsewhere in this Annual Report for details on the impairments.
Interest income, net
Interest income, net, was $10.5 million and $9.9 million for the years ended December 31, 2024 and 2023, respectively, and consisted primarily of interest earned on our cash and marketable securities balances.
Other expense, net
Other expense, net, was $4.5 million and immaterial for the years ended December 31, 2024 and 2023, respectively. The change in value of $4.5 million was due to other-than-temporary impairments of other assets.
Liquidity, capital resources, and capital requirements
Sources of liquidity
As of December 31, 2025, we had $138.4 million in cash, cash equivalents, and marketable securities. Since inception through December 31, 2025, we have raised an aggregate of approximately $1.7 billion in net proceeds from sales of our equity securities.
In March 2026, we entered into the Sales Agreement, pursuant to which we may offer and sell shares of our common stock from time to time under the ATM facility. The Sales Agreement amends and restates the Prior Sales Agreement. During the quarter and year ended December 31, 2025, we sold an aggregate of 3.9 million shares and 11.3 million shares of our common stock, respectively, under the Prior Sales Agreement, for net proceeds of approximately $17.0 million and $45.8 million, respectively, after deducting commissions and expenses.
In August 2025, we completed the Offering, pursuant to which we sold 24.3 million shares of our common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of our common stock for net proceeds of approximately $80.6 million, after deducting underwriting discounts and commissions and offering expenses.
Since our inception, we have not generated any revenue from product sales or any other sources, and we have incurred significant operating losses. We have not yet commercialized any products, and we do not expect to generate revenue from sales of any product candidates for a number of years, if ever.
Future funding requirements
We expect to incur additional losses for the foreseeable future as we conduct our research and development efforts, including conducting preclinical studies and clinical trials, developing new product candidates, continuing to establish our external manufacturing capabilities, and funding our operations generally. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.
Management has determined that our present capital resources may not be sufficient to fund our planned operations for at least one year from the date of this Annual Report, and there is substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern will depend on, among other things, our ability to obtain additional funding and appropriately manage the amount of cash used to fund our operations. We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements. If we are unable to obtain such financing, we may be required to pursue alternative sources of capital which may not be available to us on favorable terms, significantly modify our operational plans by delaying, reducing the scope of, or ceasing some or all of our research and development programs, or pursue strategic alternatives.
Our future capital requirements will depend on many factors, including:
the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current or future product candidates, including the development of companion diagnostics to such product candidates;
the number and scope of clinical trials required for regulatory approval of our current or future product candidates;
the costs, timing, and outcome of regulatory review of our current or future product candidates and any companion diagnostics to such product candidates;
the cost, timing, and scope of our manufacturing capabilities and our uses of our existing facilities, as well as costs associated with the manufacturing of clinical and commercial supplies of our current and future product candidates;
the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval;
the costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights;
our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements, and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty, or other payments due under any such agreement;
the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;
the expenses required to attract, hire, and retain skilled personnel;
the impact of global supply chain issues and changing rates of inflation on the costs of laboratory consumables, supplies, and equipment required for our ongoing operations;
the costs of operating as a public company;
our ability to effectively manage the amount of cash used in our operations;
our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party, including government, payors;
potential interruptions or delays resulting from global geo-political, economic, and other factors beyond our control;
the effect of competing technological and market developments; and
the extent to which we acquire or invest in businesses, products, and technologies.
Until such time, if ever, as we can generate significant revenue from product sales, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and milestone, royalty, and other payments received under any future licenses, collaborations, or other arrangements. In the event that additional financing is required, we may not be able to raise it on terms that are acceptable to us or at all. Our ability to raise additional financing may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from public health crises, the conflicts in Ukraine and the Middle East, or other regions, changes in inflation, interest rate uncertainty, disruptions in global trade caused by political tensions and conflicts between countries, and other factors creating market risk. Bank have also caused increased about liquidity in the broader financial services industry, and our business, business partners, or industry as a whole may be impacted in ways that we cannot predict at this time. If we raise additional funds through the issuance of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include or other preferences that affect the rights of our stockholders. Debt financing, if available, may result in increased fixed payment obligations, and the existence of securities with rights that may be senior to those of our common stock, and involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, or acquiring, selling, or licensing intellectual property rights or assets, which could impact our ability to conduct our business. If we raise funds through strategic or licensing or other arrangements, we may have to significant rights or grant licenses on terms that are not to us. If we are to raise additional capital when , our business, results of operations, and financial condition would be affected.
Cash flows
The following table summarizes our cash flows for the periods indicated:
Year Ended December 31,
(in thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net decrease in cash, cash equivalents, and restricted cash
Operating activities
During the year ended December 31, 2025, net cash used in operating activities was $143.8 million, consisting primarily of net loss of $244.2 million and the change in net operating assets and liabilities of $10.1 million, offset by non-cash charges of $110.5 million. The non-cash charges of $110.5 million consisted of $44.6 million for impairment of long-lived assets, non-cash stock-based compensation expense of $25.5 million, $14.7 million for the revaluation of our contingent consideration, $14.7 million for the revaluation of our success payment liabilities, and depreciation expense of $12.8 million, partially offset by other non-cash charges of $1.8 million.
During the year ended December 31, 2024, net cash used in operating activities was $223.2 million, consisting primarily of net loss of $266.8 million and the change in net operating assets and liabilities of $1.2 million, offset by non-cash charges of $44.8 million. The non-cash charges of $44.8 million consisted of non-cash stock-based compensation expense of $37.7 million, depreciation expense of $15.5 million, and $1.9 million for the impairment of certain laboratory equipment and leasehold improvements which were primarily related to the portfolio prioritization in the fourth quarter of 2024, offset by gains of $8.2 million and $0.6 million for revaluation of our success payment liabilities and contingent consideration, respectively, and other non-cash charges of $1.5 million.
During the year ended December 31, 2023, net cash used in operating activities was $253.6 million, consisting primarily of net loss of $283.3 million, offset by the change in net operating assets and liabilities of $18.6 million and non-cash charges of $11.1 million. The non-cash charges of $11.1 million consisted of non-cash stock-based compensation expense of $35.5 million, depreciation expense of $17.6 million, and $7.0 million for the impairment of certain laboratory equipment and leasehold improvements which were primarily related to the portfolio prioritization in the fourth quarter of 2023, partially offset by gains of $40.8 million and $8.2 million for revaluation of our success payment liabilities and contingent consideration, respectively.
Investing activities
Cash used in investing activities was $40.2 million for the year ended December 31, 2025, and cash provided by investing activities was $17.5 million, and $172.0 million during the years ended December 31, 2024, and 2023, respectively. For the year ended December 31, 2025, this consisted of net purchases and maturities of marketable securities of $40.7 million, offset by net sales of property and equipment of $0.5 million. For the years ended December 31, 2024 and 2023, this consisted of net maturities of marketable securities of $50.9 million and $192.0 million, respectively, offset by the purchase of property and equipment of $33.4 million and $20.0 million, respectively.
Financing activities
During the year ended December 31, 2025, cash provided by financing activities was $128.7 million, consisting primarily of net proceeds from issuance of common stock of $126.4 million and $2.6 million in proceeds from our employee stock purchase program and the exercise of stock options, partially offset by net principal payments of $0.3 million from a loan to fund tenant improvements for the Bothell facility.
During the year ended December 31, 2024, cash provided by financing activities was $199.7 million, consisting primarily of net proceeds from issuance of common stock of $181.0 million, $11.0 million in proceeds from our employee stock purchase program and the exercise of stock options, and net proceeds of $7.7 million from a loan to fund tenant improvements for the Bothell facility.
During the year ended December 31, 2023, cash provided by financing activities was $31.6 million, consisting primarily of net proceeds from issuance of common stock of $27.0 million and $4.6 million in proceeds from our employee stock purchase program and the exercise of stock options.
Contractual obligations and commitments
The following table summarizes our significant contractual obligations and commitments as of December 31, 2025:
Payments Due by Period
Less than 1 Year
1 to 3 Years
3 to 5 Years
More than 5 Years
Total
(in thousands)
Operating lease obligations
Other than as disclosed in the table above, the payment obligations under our license, collaboration, and acquisition agreements as of December 31, 2025 are contingent upon future events such as our achievement of specified development, regulatory, and commercial milestones or royalties on net product sales. See the section titled “Business—Key Intellectual Property Agreements” for more information about these payment obligations.
We are also obligated to make a success payment to Cobalt of up to $500.0 million, payable in cash or stock, pursuant to the terms and conditions in the Cobalt acquisition agreement, and up to an aggregate of $175.0 million in success payments to Harvard, payable in cash. See the subsection below titled “—Critical accounting policies and significant judgments and estimates—Success payments” and Note 4, Acquisitions, and Note 5, License and collaboration agreements, to our consolidated financial statements located elsewhere in this Annual Report for more information on the success payments. As of December 31, 2025, the timing and likelihood of achieving the milestones and success payments and generating future product sales are uncertain, and therefore any related payments are not included in the table above.
We also enter into agreements in the normal course of business for sponsored research, preclinical studies, clinical trials, contract manufacturing, and other services and products for operating purposes, which are generally cancelable upon written notice. These obligations and commitments are not included in the table above.
Off-balance sheet arrangements
Since our inception, we have not engaged in any off-balance sheet arrangements as defined under the rules and regulations of the SEC.
JOBS Act accounting election
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). We will remain an emerging growth company until the earliest to occur of (1) December 31, 2026, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the fair market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our independent registered public accounting firm provide an attestation report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use the extended transition period for any new or revised accounting standards during the period in which we remain an emerging growth company; however, we may adopt certain new or revised accounting standards early if the standard allows early adoption.
Critical accounting policies and significant judgments and estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are described in more detail in the notes to our consolidated financial statements included elsewhere in this Annual Report. We believe the following accounting policies relate to the significant areas involving management’s judgments and estimates and are critical to understanding our historical and future performance.
Research and development expenses
We record research and development expenses in the periods in which they are incurred. We accrue for research and development expenses based on the estimated services performed, but not yet invoiced, pursuant to contracts with clinical research organizations, CDMOs, research institutions, or other service providers that conduct and manage clinical trials and preclinical studies, manufacture our product candidates, and perform other research services on our behalf and record these costs in accrued and other current liabilities. We make judgments and estimates in determining the accrued liabilities balance at each reporting period. Payments made prior to the receipt of goods or services to be used in research and development are recorded as prepaid expenses until the goods or services are received.
To date, we have not experienced any material differences between accrued expenses and actual expenses incurred. However, the status and timing of actual services performed may vary from our estimates, resulting in adjustments to expense in future periods. Changes in these estimates that result in material changes to our accruals could materially affect our results of operations.
Acquisitions
We account for business combinations using the acquisition method of accounting, which requires the assets acquired, including in-process research and development (IPR&D), and liabilities assumed, be recorded at their fair values as of the acquisition date. Any excess of the purchase price over the fair value of net assets acquired is recorded as goodwill. The determination of the estimated fair value of these items requires us to make significant estimates and assumptions.
If we determine the acquisition does not meet the definition of a business combination under the acquisition method of accounting, the transaction is accounted for as an asset acquisition and no goodwill or contingent consideration are recognized at the acquisition date. In an asset acquisition, upfront payments allocated to IPR&D are recorded in research and development expense if it is determined that there is no alternative future use, and subsequent milestone payments are recorded in research and development expense when achieved.
Intangible assets and goodwill
Accounting for business combinations requires us to make significant estimates and assumptions with respect to tangible and intangible assets acquired and liabilities assumed. We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets. Intangible assets are reviewed for impairment annually and upon the occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment.
Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination. We evaluate goodwill for impairment annually and upon the occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment. Our evaluation includes assessing qualitative factors or performing a quantitative analysis to determine whether it is more-likely-than-not that the fair value of net assets is below the carrying amounts.
Contingent consideration
Contingent consideration obligations are estimated at fair value at the acquisition date of a business combination and at each subsequent balance sheet date, with changes in fair value recorded in research and development related success payments and contingent consideration. The fair value of contingent consideration is determined by calculating the probability-weighted estimated value of the milestone payments based on the assessment of the likelihood and estimated timing that the milestones would be achieved and applying the relevant discount rates. We use significant estimates and assumptions in determining the estimated contingent consideration and associated expense or gain at each balance sheet date. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. In evaluating the fair value of contingent consideration, significant judgment is required to estimate the likelihood and timing that the milestones would be achieved. We assess these estimates on an ongoing basis as additional data impacting the assumptions become available. Contingent consideration may change significantly as development progresses and additional data is obtained, impacting our assumptions regarding probabilities of successful achievement of the related milestones used to estimate the fair value of the liability and the timing in which they are expected to be . Accordingly, the use of different market assumptions and/or different valuation techniques could result in materially different fair value estimates.
Success payments
The Cobalt Success Payment was recorded as a liability on the consolidated balance sheet at fair value on the acquisition date and is remeasured at each subsequent reporting period, with changes in fair value recognized in research and development related success payments and contingent consideration. For the Harvard Success Payments, both the initial value and subsequent changes in fair value are recorded in research and development related success payments and contingent consideration. To determine the estimated fair value of the success payment liabilities, we use a Monte Carlo simulation methodology which models the estimated fair value of the liability based on several key assumptions, including the estimated number and timing of valuation measurement dates on the basis of which payments may be triggered, term of the success payments, the risk-free interest rate, and expected volatility, which is estimated using peer company stocks for a period of time commensurate with the expected term assumption. Additionally, the computation of the estimated fair value of the Harvard Success Payments incorporates the per share fair market value of our common stock at the end of each reporting period, and the computation of the estimated fair value of the Cobalt Payment incorporates our market capitalization at the end of each reporting period. The assumptions used to calculate the fair value of the payments are subject to a significant amount of judgment and a small change in the assumptions may have a relatively large change in the estimated liability and resulting expense or .
Stock-based compensation
We recognize compensation costs related to restricted stock awards, restricted stock units, and stock options granted to employees and non-employees based on the estimated fair value of the awards on the date of grant, and we recognize forfeitures as they occur. For restricted stock awards and restricted stock units, the fair value of our common stock is used to determine the resulting stock-based compensation expense. For stock options, we estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option pricing model. The fair value of stock-based awards is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period.
The Black-Scholes option pricing model requires the use of highly subjective assumptions to determine the fair value of stock-based awards. These assumptions include:
Fair Value of Common Stock—The fair value of our common stock is based on the closing price as reported on the Nasdaq Global Select Market on the date of grant.
Expected Term—The expected term represents the period that the stock-based awards are expected to be outstanding. We use the simplified method to determine the expected term, which is based on the average of the time-to-vesting and the contractual life of the options.
Expected Volatility—Due to our limited operating history, the expected volatility is estimated based on the average historical volatilities of common stock of comparable publicly traded companies and our historical common stock volatility over a period of time commensurate with the expected term of the stock option grants. The comparable companies are chosen based on their size, stage in the product development cycle, or area of specialty. We will continue to apply this process until sufficient historical information regarding the volatility of our own stock price becomes available.
Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the awards.
Expected Dividend—We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.
See Note 13, Stock-based compensation to our consolidated financial statements included elsewhere in this Annual Report for information concerning certain specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted in the years ended December 31, 2025, 2024, and 2023. Such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change or we use significantly different assumptions or estimates, our stock-based compensation could be materially different.
Recently adopted and recent accounting pronouncements
See Note 2, Summary of significant accounting policies to our consolidated financial statements included elsewhere in this Annual Report for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition or results of operations.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk.
We are exposed to market risks in the ordinary course of our business primarily related to interest rate sensitivities and the volatility of our common stock price.
Interest rate risk
As of December 31, 2025, we had cash, cash equivalents, and restricted cash of $76.1 million, which consisted of bank deposits and money market funds, and also had marketable securities of $66.5 million. The primary objective of our investment activities is to preserve capital to fund our operations while earning a low-risk return. Because our marketable securities are primarily short-term in duration, we believe that our exposure to interest rate risk is not significant, and a hypothetical 10% change in market interest rates during any of the periods presented would not have had a significant impact on the total value of our portfolio. As of December 31, 2025, we had no debt outstanding that is subject to interest rate variability.
Market capitalization and common stock price sensitivity
We agreed to make a success payment to Cobalt based on our market capitalization payable in cash or stock, and success payments to Harvard based on increases in the per share fair market value of our common stock, payable in cash.
As of December 31, 2025, the estimated aggregate fair value of the success payment liabilities was $19.2 million. For the twelve months ended December 31, 2025, we recorded an expense of $14.7 million related to the aggregate change in the estimated fair value of our success payment liabilities.
Changes in our market capitalization and the fair value of our common stock as of each balance date may have a relatively large change in the estimated valuation of the success payment liabilities and resulting expense or gain. For example, for the Cobalt Success Payment, keeping all other variables constant, a hypothetical 20% increase in our market capitalization as of December 31, 2025 from $1.1 billion to $1.3 billion would have increased the expense recorded in the three months ended December 31, 2025 by $4.7 million to $9.8 million. A hypothetical 20% decrease in our market capitalization from $1.1 billion to $0.9 billion would have decreased the expense recorded in the three months ended December 31, 2025 by $4.4 million to $0.7 million. For the Harvard Success Payments, keeping all other variables constant, a hypothetical 20% increase in our common stock price as of December 31, 2025 from $4.07 per share to $4.88 per share would have increased the expense recorded in the three months ended December 31, 2025 by $0.5 million to $0.9 million. A hypothetical 20% decrease in the common stock price from $4.07 per share to $3.26 per share would have decreased the expense recorded in the three months ended December 31, 2025 by $0.5 million to a gain of $0.1 million.
Foreign currency sensitivity
We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we do contract with vendors that are located outside of the United States and may be subject to fluctuations in foreign currency rates. We do not believe we will experience material impacts from such foreign currency sensitivity. We may enter into additional contracts with vendors located outside of the United States in the future, which may increase our foreign currency exchange risk.
Effects of inflation
Inflation generally affects us by increasing our cost of labor and laboratory consumables. We believe that inflation has not had a material effect on our financial statements.
Item 8. Financial Statemen ts and Supplementary Data.
SANA BIOTECHNOLOGY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
(PCAOB ID: 42 )
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Sana Biotechnology, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Sana Biotechnology, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, 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 three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
The Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s 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 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2019.
Seattle, Washington
March 3, 2026
Sana Biotechnology, Inc.
Consolidated Ba lance Sheets
(in thousands, except per share amounts)
December 31, 2025
December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents
Marketable securities
Restricted cash
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Intangible asset
Goodwill
Other non-current assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued compensation
Accrued expenses and other current liabilities
Operating lease liabilities
Contingent consideration
Total current liabilities
Operating lease liabilities, net of current portion
Contingent consideration, net of current portion
Success payment liabilities
Other non-current liabilities
Total liabilities
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $ 0.0001 par value; 50,000 shares authorized; zero shares issued and outstanding as of December 31, 2025 and December 31, 2024
Common stock, $ 0.0001 par value; 750,000 shares authorized; 266,732 and 223,923 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total stockholders' equity
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
See accompanying notes.
Sana Biotechnology, Inc.
Consolidated Statem ents of Operations
(in thousands, except per share amounts)
Year Ended December 31,
Operating expenses:
Research and development
Research and development related success payments and contingent consideration
General and administrative
Impairment of long-lived assets
Total operating expenses
Loss from operations
Interest income, net
Other income (expense), net
Net loss
Net loss per common share – basic and diluted
Weighted-average number of common shares – basic and diluted
See accompanying notes.
Sana Biotechnology, Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
Year Ended December 31,
Net loss
Other comprehensive income:
Unrealized gain on marketable securities, net
Total comprehensive loss
See accompanying notes.
Sana Biotech nology, Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands)
Common Stock
Additional
Paid-In
Accumulated
Other
Comprehensive
Accumulated
Total
Stockholders'
Shares
Amount
Capital
Income (Loss)
Deficit
Equity
Balance as of December 31, 2022
Issuance of common stock from at the market offering, net of issuance costs of $ 1,213
Vesting of restricted stock
Exercise of stock options
Issuance of common stock related to employee stock purchase plan
Stock-based compensation expense
Unrealized gain on marketable securities, net
Net loss
Balance as of December 31, 2023
Issuance of common stock from at the market offering, net of issuance costs of $ 158
Issuance of common stock from follow-on offering and accompanying pre-funded warrants, net of issuance costs of $ 9,741
Vesting of restricted stock
Exercise of stock options
Issuance of common stock related to employee stock purchase plan
Stock-based compensation expense
Unrealized gain on marketable securities, net
Net loss
Balance as of December 31, 2024
Issuance of common stock from at the market offering, net of issuance costs of $ 1,598
Issuance of common stock from common stock financings and accompanying pre-funded warrants, net of issuance costs of $ 5,625
Exercise of pre-funded warrants
Vesting of restricted stock
Exercise of stock options
Issuance of common stock related to employee stock purchase plan
Stock-based compensation expense
Unrealized gain on marketable securities, net
Net loss
Balance as of December 31, 2025
See accompanying notes.
Sana Biotechnology, Inc.
Consolidated Stateme nts of Cash Flows
(in thousands)
Year Ended December 31,
OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
Stock-based compensation expense
Change in the estimated fair value of contingent consideration
Change in the estimated fair value of success payment liabilities
Non-cash expense for operating lease right-of-use assets
Impairment of long-lived assets
Other non-cash items, net
Changes in operating assets and liabilities:
Prepaid expenses and other assets
Operating lease right-of-use assets and liabilities
Accounts payable
Accrued expenses and other liabilities
Net cash used in operating activities
INVESTING ACTIVITIES:
Purchases of marketable securities
Proceeds from maturities of marketable securities
Purchases of property and equipment
Proceeds from disposal of assets
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES:
Proceeds from employee stock purchase plan and exercise of stock options
Proceeds related to common stock financings, net
Proceeds (principal payments), net for tenant improvement loan
Net cash provided by financing activities
Net decrease in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash
SUPPLEMENTAL CASH FLOW INFORMATION:
Operating lease right-of-use assets obtained in exchange for lease obligations
Purchases of property and equipment included in accounts payable and accrued liabilities
Cash received for tenant improvement allowances
Derecognition of operating lease right-of-use assets for lease termination and modification
See accompanying notes.
Sana Biotechnology, Inc.
Notes to Consolidated Financial Statements
1. Organization
Sana Biotechnology, Inc. (the Company or Sana) is a biotechnology company focusing on utilizing engineered cells as medicines. The Company’s operations to date have included identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, preparing for and executing clinical trials of its product candidates and supporting clinical trials of product candidates developed using its technologies, acquiring technologies, staffing the Company, business planning, establishing and maintaining the Company’s intellectual property portfolio, raising capital, and providing general and administrative support for these operations.
Liquidity and capital resources
The Company is subject to a number of risks and uncertainties similar to other biotechnology companies in the development stage, including, but not limited to, those related to the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, building its manufacturing capabilities, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, the need to protect the Company’s intellectual property and proprietary technologies, and the need to attract and retain key scientific and management personnel. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations with the proceeds from additional equity or debt financings or capital obtained in connection with strategic collaborations or licensing or other arrangements. In the event that additional financing is required, the Company may not be to raise capital on terms acceptable to it or at all.
In March 2026, the Company entered into an amended and restated sales agreement (the Sales Agreement) with TD Securities (USA) LLC (TD Cowen), acting as sales agent, pursuant to which it may offer and sell through TD Cowen shares of the Company's common stock from time to time in a series of one or more at the market equity offerings. The Company initially intends to offer and sell up to $150.0 million of shares of the Company's common stock under the Sales Agreement pursuant to a prospectus supplement to be filed with the SEC (collectively, the ATM facility). The Sales Agreement amends and restates the Company's prior sales agreement with TD Cowen entered into in May 2025 (the Prior Sales Agreement). During the quarter and year ended December 31, 2025, the Company sold an aggregate of 3.9 million shares and 11.3 million shares of the Company's common stock, respectively, under the Prior Sales Agreement, for net proceeds of approximately $ 17.0 million and $ 45.8 million, respectively, after deducting commissions and expenses.
In August 2025, the Company completed an underwritten public offering pursuant to which it sold 24.3 million shares of its common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of its common stock for net proceeds of approximately $ 80.6 million, after deducting underwriting discounts and commissions and offering expenses.
In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock for net proceeds of approximately $ 180.0 million, after deducting underwriting discounts and commissions and offering expenses.
The Company has incurred operating losses each year since inception and expects such losses to continue for the foreseeable future. As of December 31, 2025, the Company had cash, cash equivalents, and marketable securities of $ 138.4 million, and an accumulated deficit of $ 1.8 billion, which includes cumulative non-cash charges related to the revaluation of the success payment liabilities and contingent consideration of $ 16.8 million and $ 72.5 million, respectively. Management has determined that the Company's current c apital resources may not be sufficient to fund its planned operations for at least one year from the date of this Annual Report, and there is substantial doubt as to the Company's ability to continue as a going concern . The Company's ability to continue as a going concern will depend on, among other things, its ability to obtain additional funding and appropriately manage the amount of cash used to fund its operations. The Company plans to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements. If the Company is to obtain such financing, it may be required to pursue alternative sources of capital which may not be available to it on terms, significantly modify its operational plans by , reducing the scope of, or some or all of its research and development programs, or pursue strategic alternatives.
2. Summary of significant accounting policies
Basis of presentation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). Certain prior period amounts have been reclassified to conform to current period presentation.
Use of estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates. The most significant estimates in the Company’s consolidated financial statements relate to success payment liabilities, contingent consideration, business combinations, accrued expenses, and operating lease right-of-use (ROU) assets and liabilities.
Cash and cash equivalents
Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less at acquisition. Cash equivalents include investments in money market funds with commercial banks and financial institutions and are stated at fair value.
Marketable securities
Marketable securities are classified as available-for-sale debt securities and are carried at fair value, which is derived from independent pricing sources based on quoted prices in active markets for similar securities. Investments in securities with maturities of less than one year, or those for which management intends to use to fund current operations, are included in current assets. Unrealized gains and losses that are deemed to be temporary in nature are reported as a component of accumulated comprehensive income (loss). Amortization, accretion, and dividends are included in interest income, net on the consolidated statement of operations. The cost of securities sold is based on the specific-identification method. Each reporting period, the Company evaluates whether declines in fair value below carrying value are due to expected credit losses, as well as the Company’s ability and intent to hold the investment until a forecasted recovery occurs. Expected credit losses are recorded as an allowance through other income (expense), net.
Concentrations of credit risk and off-balance sheet risk
The Company maintains its cash, cash equivalents, and marketable securities with high quality, accredited financial institutions. These amounts, at times, may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to significant risk on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts, or other hedging arrangements.
Fair value measurement
The Company accounts for certain assets and liabilities at fair value and is required to disclose information that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The hierarchy applies only to the valuation inputs used to determine the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 – Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
The Company’s financial instruments include cash and cash equivalents, short- and long-term marketable securities, accounts payable, contingent consideration, success payment liabilities, and other accrued liabilities. The carrying amounts of cash, cash equivalents, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. To the extent the valuation of financial instruments is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. See Note 7, Fair value measurements for more information on how the Company determines fair value.
Property and equipment, net
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years . Leasehold improvements are depreciated over the lesser of their useful lives or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is recorded in research and development expenses in the period realized. Repairs and maintenance are expensed as incurred.
Impairment of long-lived assets
The Company reviews the carrying value and estimated lives of its long-lived assets whenever events or circumstances indicate the carrying values may not be recoverable. Factors that may indicate potential impairment and trigger an impairment test include, but are not limited to, general macroeconomic conditions, conditions specific to the industry and market, business climate or operational performance of the business, and sustained decline in the stock price and market capitalization compared to the net book value.
If a change in circumstance occurs that indicates long-lived assets may be impaired, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. The long-lived asset evaluation is performed at the asset group level, which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If this review indicates that the carrying amount of the asset group may not be recoverable, an impairment loss is measured as the amount by which the carrying amount of an asset group exceeds its estimated fair value. To measure impairment, the Company uses market participant assumptions to determine the estimated fair value of the asset based on anticipated future cash flows. Any impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the carrying amount of an individual asset will not be reduced below its fair value.
Calculating the fair value of a reporting unit, an asset group, and an individual asset involves significant estimates and assumptions. These estimates and assumptions include, among others, projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables. Changes in these factors and assumptions used can materially affect the amount of impairment loss recognized in the period the asset was impaired.
Impairment of long-lived assets was $ 44.6 million for the year ended December 31, 2025. The non-cash impairment, recorded in the second quarter of 2025, was primarily related to Sana’s manufacturing facility in Bothell, Washington and certain laboratory and office space in Seattle, Washington. During the fourth quarters of 2024 and 2023, the Company recognized $ 1.9 million and $ 7.0 million, respectively, for the impairment of certain laboratory equipment and leasehold improvements as a result of the portfolio prioritizations in the fourth quarters of 2024 and 2023, previously included in research and development expense in the statement of operations.
Acquisitions
The Company accounts for business combinations using the acquisition method of accounting, which requires the assets acquired, including in-process research and development (IPR&D), and liabilities assumed be recorded at fair value as of the acquisition date. Any excess of the purchase price over the fair value of net assets acquired is recorded as goodwill. The determination of the estimated fair value of these items requires significant estimates and assumptions. Transaction costs associated with business combinations are recorded in general and administrative expense as they are incurred.
If the Company determines the acquisition does not meet the definition of a business combination under the acquisition method of accounting, the transaction is accounted for as an asset acquisition. In an asset acquisition, up-front payments allocated to IPR&D are recorded in research and development expense if it is determined that there is no alternative future use, and subsequent milestone payments are recorded in research and development expense when achieved.
Goodwill and intangible assets
Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment annually or when a triggering event occurs that could indicate a potential impairment. The evaluation for impairment includes assessing qualitative factors or performing a quantitative analysis to determine whether it is more-likely-than-not that the fair value of net assets is below the carrying amount. As of December 31, 2025, the Company had goodwill of $ 140.6 million related to its acquisition of Cobalt Biomedicine, Inc. (Cobalt) in 2019 (the Cobalt acquisition), which represents the excess of the purchase price over the estimated fair value of the net assets acquired. There have been no impairments of goodwill since the acquisition.
Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at fair value at the acquisition date. The fair value of the IPR&D is estimated using the replacement cost method. Under this method, the Company estimates the cost to recreate the technology and derive an estimated value to develop the technology. IPR&D assets are required to be classified as indefinite-lived assets and are not amortized until they become finite-lived assets upon the successful completion of the associated research and development technology. At that time, the useful life of the asset will be determined, and amortization will begin. If the associated research and development technology is abandoned, the related IPR&D asset will be written off and an impairment charge recorded. Intangible assets are reviewed for impairment at least annually or when a triggering event occurs that could indicate a potential impairment. There has been no amortization or impairment of the intangible asset since the Cobalt acquisition.
Contingent consideration from business combinations
Contingent consideration from a business combination is recorded at fair value on the acquisition date and remeasured at each subsequent reporting period with changes in fair value recognized in research and development related success payments and contingent consideration. Changes in fair values reflect changes to the Company’s assumptions regarding probabilities of successful achievement of related milestones, the timing in which the milestones are expected to be achieved, and the discount rate used to estimate the fair value of the obligation.
Pursuant to the terms and conditions of the Cobalt acquisition agreement, we are obligated to pay to certain former Cobalt stockholders contingent consideration (Cobalt Contingent Consideration). See Note 4, Acquisitions for more details on the Cobalt Contingent Consideration.
Success payments
The Company agreed to pay success payments to Cobalt (Cobalt Success Payment) pursuant to the terms of its acquisition agreement with Cobalt and to the President and Fellows of Harvard College (Harvard) (Harvard Success Payments) pursuant to the terms of its exclusive license agreement with Harvard. See Note 4, Acquisitions and Note 5, License and collaboration agreements for more details on the success payments.
The success payments are accounted for under Accounting Standards Codification (ASC) 815, Derivatives and Hedging . The Cobalt Success Payment was recorded as a liability on the consolidated balance sheet at fair value on the acquisition date and is remeasured at each subsequent reporting period, with changes in fair value recognized in research and development related success payments and contingent consideration. For the Harvard Success Payments, both the initial value and subsequent changes in fair value are recorded in research and development related success payments and contingent consideration.
To determine the estimated fair value of the success payment liabilities, the Company uses a Monte Carlo simulation methodology, which models the value of the liabilities based on several key assumptions, including the remaining terms of the success payments, risk-free interest rate, estimated number and timing of valuation measurement dates on the basis of which payments may be triggered, and expected volatility of the Company’s common stock. Expected volatility is estimated using the volatility of peer companies for a period of time commensurate with the remaining terms of the success payments. Additionally, the computation of the estimated fair value of the Cobalt Success Payment liability incorporates the market capitalization of the Company at the end of each reporting period, and the computation of the estimated fair value of the Harvard Success Payments incorporates the per share fair market value of the Company’s common stock at the end of each reporting period.
Leases
At the inception of an arrangement with a third party, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Lease liabilities represent an obligation to make payments arising from a lease and are measured at the present value of the remaining future lease payments over the term of the lease. The present value of the lease payments is determined using an incremental borrowing rate (IBR), which reflects the fixed rate at which the Company could borrow the amount of the lease payments, on a collateralized basis, for a similar term and economic environment. The lease terms may include the impact of options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. Assumptions made by the Company at the lease commencement date are re-evaluated upon the occurrence of certain events, including a lease modification. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease. ROU assets represent the right to use the underlying asset identified in the lease for the term of the agreement. The calculation of the ROU asset incorporates the value of the lease liability and excludes any lease incentives received and initial direct costs incurred.
The Company’s lease portfolio consists of operating leases related to its facilities for office, laboratory, and manufacturing space. The Company does not have any financing leases. Leases with a term of 12 months or less are considered short-term and do not require recognition on the balance sheet, and payments associated with short-term leases are expensed as incurred. Rent expense for operating leases is recognized on a straight-line basis over the lease term.
Claims and contingencies
From time to time, the Company has and may in the future become involved in litigation and proceedings relating to claims arising in the ordinary course of business. The Company accrues a liability if the likelihood of an adverse outcome is probable, and the amount can be reasonably estimated. If the likelihood of an adverse outcome is only reasonably possible, or if an adverse outcome is probable, but an estimate is not determinable, the Company provides disclosure of the material claim or contingency.
Stock-based compensation
The Company recognizes compensation costs related to restricted stock awards (RSAs), restricted stock units (RSUs), and stock options granted to employees and nonemployees based on the estimated fair value of the awards on the date of grant and recognizes expense on a straight-line basis over the requisite service period, which is generally the vesting period of the award. Forfeitures are recognized as they occur. For RSAs and RSUs, the fair value of the Company’s common stock is used to determine the resulting stock-based compensation expense. The fair value of stock options is estimated on the date of grant using a Black-Scholes option pricing model which requires management to apply judgment and make estimates, including:
Fair Value of Common Stock —The fair value of common stock is based on the closing price as reported on The Nasdaq Global Select Market on the date of grant.
Expected Term —The expected term represents the period that a stock-based award is expected to be outstanding. The Company uses the simplified method to determine the expected term, which is based on the average of the time-to-vesting and the contractual life of the option.
Expected Volatility —Due to the Company's limited operating history, the expected volatility is estimated based on the average historical volatilities of common stock of comparable publicly traded companies and the Company's historical common stock volatility over a period of time commensurate with the expected term of the stock option grants. The comparable companies are chosen based on their size, stage in the product development cycle, or area of specialty. The Company will continue to apply this process until sufficient 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 U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the awards.
Expected Dividend— The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero .
Research and development expense
The Company records expense for research and development costs as incurred. Nonrefundable, advance payments for goods or contracts for services are deferred, and expense is recognized in the period in which the goods are received or the services are rendered. Research and development expense consists of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, external research and development expenses incurred under arrangements with third parties, including CDMO manufacturing costs (including pass-through costs), clinical trial costs, costs for laboratory supplies, costs to acquire and license technologies aligned with the Company’s ex vivo and in vivo cell engineering platforms, facility expenses, including rent, depreciation, and costs related to the impairment of certain lab equipment and leasehold improvements, and other allocated expenses.
Research and development related success payments and contingent consideration
Research and development related success payments and contingent consideration include the change in the estimated fair value of the Cobalt Success Payment and Harvard Success Payment liabilities and Cobalt Contingent Consideration. Research and development expense related to the success payment liabilities and contingent consideration is unpredictable and may vary significantly from quarter-to-quarter and year-to-year due to changes in the assumptions used in the calculations.
General and administrative expenses
General and administrative expenses consist of personnel costs, including salaries, benefits, and non-cash stock-based compensation, for employees in finance, legal, executive, human resources, information technology, and other administrative functions, legal and consulting fees, recruiting costs, restructuring expenses, and facility costs not otherwise included in research and development expenses. Legal fees include those related to corporate and patent matters.
Income taxes
The Company determines its deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be recovered. The Company applies judgment in the determination of the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes any material interest and penalties related to unrecognized tax benefits in income tax expense.
The Company is required to file income tax returns in the United States (U.S.) federal jurisdiction, and other state and local jurisdictions. The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which the loss carryforward is available. The Company is currently not under examination by the Internal Revenue Service or other jurisdictions for any tax years.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment.
JOBS Act accounting election
The Company is an emerging growth company (EGC), as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, an EGC 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; however, the Company may adopt new or revised accounting standards early if the standard allows for early adoption.
In addition, the Company will utilize other exemptions and reduced reporting requirements provided to EGCs by the JOBS Act until the Company no longer qualifies as an EGC. Subject to certain conditions set forth in the JOBS Act, an EGC is not required to, among other things, (i) provide an auditor’s attestation report on the company’s system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, (ii) provide all of the compensation disclosure that may be required of non-EGC public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), or (iv) disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard-setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the adoption of any recently issued standards has had or may have a material impact on its consolidated financial statements or disclosures.
In November 2024, the FASB issued ASU 2024-03 Income Statement (Subtopic 220-40) Reporting Comprehensive Income – Expense Disaggregation Disclosures, which requires disclosure of disaggregated information about specific income statement expense categories. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. There was no impact on the Company's reportable segment identified and additional required disclosures have been included in Note 3, Segment reporting, to the Company's consolidated financial statements included in this Annual Report.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. This ASU is effective for the Company's fiscal year 2025. Early adoption is permitted. There was no material impact and the additional required disclosures have been included in Note 13, Income taxes, to the Company's consolidated financial statements included in this Annual Report.
3. Segment reporting
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM) , the Company's Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. When evaluating the Company's financial performance, the CODM reviews total expenses and expenses by function. Further, the CODM reviews the segment's assets based on total assets reported on the consolidated balance sheet.
The table below is a summary of the segment loss, including significant segment expenses (in thousands):
Twelve months ended December 31,
Operating expenses:
Research, development, and laboratory
Facility costs
Support functions
Stock-based compensation
Technical operations and manufacturing
Portfolio prioritization costs
Other (1)
Research and development related success payments and contingent consideration
Impairment of long-lived assets
Total operating expenses
Loss from operations
Interest income, net
Other income (expense), net
Net loss
(1) Other segment expenses include licensing costs, consulting fees, business taxes, and insurance costs for the years ended December 31, 2025, 2024, and 2023, and costs incurred for the early termination of the Fremont lease for the year ended December 31, 2023.
4. Acquisitions
Cobalt Biomedicine, Inc.
In February 2019, the Company acquired 100 % of the outstanding equity of Cobalt, a privately-held early-stage biotechnology company developing a platform technology using its fusogen technology to specifically and consistently deliver various biological payloads to cells (the Cobalt acquisition).
As part of the Cobalt acquisition, the Company recorded an intangible asset of $ 59.2 million, which consists of in-process research and development that is classified as indefinite-lived until the successful completion of the associated research and development technology, at which point it becomes a finite-lived asset and will be amortized over its estimated useful life. If the research and development technology is abandoned, an impairment charge will be recorded. The Company is actively developing the fusogen technology and, accordingly, the intangible asset is not complete. Amortization will begin when regulatory approval of a product candidate developed using the fusogen technology is obtained in a major market, typically either the United States or the European Union.
The Company recognized $ 140.6 million of goodwill as a result of the Cobalt acquisition, which is primarily attributable to the value the acquisition provides the Company by complementing the Company’s ex vivo cell therapy technology with in vivo fusogen cell engineering technology and furthering the Company’s research in using engineered cells as medicines. The goodwill is not deductible for income tax purposes. There were no impairments of the intangible asset or goodwill since the acquisition.
Pursuant to the terms and conditions in the Cobalt acquisition agreement, the Company has an obligation to pay to certain former Cobalt stockholders contingent consideration (Cobalt Contingent Consideration) of up to an aggregate of $ 500.0 million upon the achievement of certain specified development milestones and a success payment (Cobalt Success Payment) of up to $ 500.0 million, each of which is payable in cash or stock. The Cobalt Success Payment is payable if, at pre-determined valuation measurement dates, the Company’s market capitalization equals or exceeds $ 8.1 billion, and the Company is advancing a program based on the fusogen technology in a clinical trial pursuant to an investigational new drug application, or has filed, or received approval for, a biologics license application or new drug application for a product developed using the fusogen technology. The Cobalt Success Payment can be achieved over a maximum of 20 years from the date of the acquisition, but this period could be shorter upon the occurrence of certain events. A valuation measurement date would also be triggered upon a change of control of the Company if at least one of the Company’s programs based on the fusogen technology is an active research program at the time of such change of control. If the Company’s market capitalization is below $ 8.1 billion as of the date of a change of control, the amount of the potential Cobalt Payment will decrease, and the amount of potential Cobalt Contingent Consideration will increase. As of December 31, 2025, a Cobalt Payment had not been triggered.
The following table sets forth various thresholds for the Company’s market capitalizations as of the date of a change of control and the resulting potential Cobalt Success Payment and additional potential Cobalt Contingent Consideration:
Sana market capitalization upon a change of control and resulting impact to Cobalt Success Payment and additional potential Cobalt Contingent Consideration
Cobalt Success
Payment
Additional
potential Cobalt
Contingent
Consideration
(in millions)
Equal to or exceeds $ 8.1 billion
Equal to or exceeds $ 7.4 billion, but less than $8.1 billion
Equal to or exceeds $ 6.8 billion, but less than $7.4 billion
Less than $ 6.8 billion
The Cobalt Success Payment and Cobalt Contingent Consideration liabilities are carried at fair value with changes in fair value recognized in research and development related success payments and contingent consideration. As of December 31, 2025 and 2024, the estimated fair value of the Cobalt Success Payment liability was $ 17.9 million and $ 4.2 million, respectively, and was recorded in long-term liabilities. In connection with the change in estimated fair value of the Cobalt Success Payment, the Company recognized an expense of $ 13.6 million compared to gains of $ 6.9 million and $ 7.9 million for the years ended December 31, 2025, 2024, and 2023, respectively.
As of December 31, 2025, the estimated fair value of the Cobalt Contingent Consideration was $ 123.7 million, of which $ 40.2 million was recorded in short-term liabilities and $ 83.5 million was recorded in long-term liabilities. As of December 31, 2024, the estimated fair value of the Cobalt Contingent Consideration was $ 109.0 million, and was recorded in long-term liabilities. In connection with the change in estimated fair value of the Cobalt Contingent Consideration, the Company recognized an expense of $ 14.7 million compared to gains of $ 0.6 million and $ 40.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.
5. License and collaboration agreements
Beam Therapeutics Inc.
In October 2021, the Company entered into an option and license agreement with Beam Therapeutics Inc. (Beam), pursuant to which the Company was granted a non-exclusive license to use Beam’s proprietary CRISPR Cas12b nuclease editing technology to research, develop, and commercialize engineered cell therapy products that (i) are directed to certain antigen targets, with respect to allogeneic T cell products, or (ii) comprise certain human cell types, with respect to stem cell-derived products. The Company made an upfront payment of $ 50.0 million to Beam, which was recorded in research and development expense for the year ended December 31, 2021. Additionally, under the terms of the agreement, the Company may be obligated to pay, with respect to each licensed product, up to $ 65.0 million in specified developmental and commercial milestone payments as well as royalties. At the time of the entry into the option and license agreement, a member of the Company’s board of directors was a beneficial owner of greater than 10 % of the outstanding shares of Beam. In 2024, this director was also affiliated with a member of the board of directors of Beam.
President and Fellows of Harvard College
In March 2019, the Company entered into an exclusive license agreement with Harvard to access certain intellectual property for the development of hypoimmune-modified cells.
Under the terms of the agreement, the Company paid to Harvard aggregate consideration of $ 12.0 million, comprising $ 9.0 million in common stock and $ 3.0 million in cash. Additionally, the Company may be required to pay to Harvard up to an aggregate of $ 175.0 million in success payments, payable in cash, based on increases in the fair value of the Company’s common stock. The potential Harvard Success Payments are based on multiples of increased value ranging from 5x to 40x, based on a comparison of the fair market value of the Company’s common stock relative to the original issuance price of $ 4.00 per share at ongoing pre-determined valuation measurement dates. The Harvard Success Payments can be achieved over a maximum of 12 years from the effective date of the agreement. If a higher success payment tier is first met at the same time a lower tier is first met, both tiers will be owed. Any previous success payments made to Harvard would be credited against the success payment owed as of any valuation measurement date so that Harvard does not receive multiple payments in connection with the same threshold. As of December 31, 2025, a Harvard Payment had not been triggered.
The following table summarizes the potential success payments and common stock price required for payment:
Multiple of Equity Value at Issuance
Per share common stock price required for payment
Success payment(s) (in millions)
The Harvard Success Payment liabilities are carried at fair value, with the initial value and changes in fair value recognized in research and development related success payments and contingent consideration. As of December 31, 2025 and December 31, 2024, the estimated fair value of the Harvard Success Payment liability was $ 1.4 million and $ 0.3 million, respectively, and was recorded in long-term liabilities. In connection with the change in the estimated fair value of the Harvard Success Payment liability, the Company recognized an expense of $ 1.1 million compared to gains of $ 1.3 million and $ 0.3 million for the years ended December 31, 2025, 2024, and 2023, respectively.
6. Restricted cash
The Company maintains standby letters of credit that are collateralized with a bank account at a financial institution in accordance with certain lease agreements. The aggregate amount of such standby letters of credit was $ 4.2 million and $ 3.8 million as of December 31, 2025 and 2024, respectively.
7. Fair value measurements
The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy:
December 31, 2025
Valuation
Hierarchy
Amortized Cost
Gross
Unrealized
Holding Gains
Gross
Unrealized
Holding Losses
Estimated
Fair Value
(in thousands)
Financial assets:
Cash equivalents:
Money market funds
Level 1
U.S. government and agency securities
Level 2
Total cash equivalents
Short-term marketable securities:
U.S. government and agency securities
Level 2
Corporate debt securities
Level 2
Total short-term marketable securities
Total financial assets
Financial liabilities:
Short-term financial liabilities:
Contingent consideration
Level 3
Total short-term financial liabilities
Long-term financial liabilities:
Contingent consideration
Level 3
Success payment liabilities
Level 3
Total long-term financial liabilities
Total financial liabilities
December 31, 2024
Valuation
Hierarchy
Amortized Cost
Gross
Unrealized
Holding Gains
Gross
Unrealized
Holding Losses
Estimated
Fair Value
(in thousands)
Financial assets:
Cash equivalents:
Money market funds
Level 1
U.S. government and agency securities
Level 2
Total cash equivalents
Short-term marketable securities:
U.S. government and agency securities
Level 2
Corporate debt securities
Level 2
Total short-term marketable securities
Total financial assets
Long-term financial liabilities:
Contingent consideration
Level 3
Success payment liabilities
Level 3
Total long-term financial liabilities
Total financial liabilities
The Company measures the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. The Level 2 marketable securities include U.S. government and agency securities and corporate debt securities and are valued based on either recent trades of securities in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.
There were no available-for-sale debt securities in a material loss position as of December 31, 2025 and 2024. The Company determined that there was no material change in the credit risk of the investments during the year ended December 31, 2025. As such, an allowance for credit losses has not been recognized. As of December 31, 2025, the Company does not intend to sell such securities, and it is not more-likely-than-not that the Company will be required to sell the securities prior to the recovery of the amortized cost basis.
As of December 31, 2025, all marketable securities had an effective maturity date of two years or less. Investments in securities with maturities of less than one year , or those for which management intends to use to fund current operations, are included in current assets and classified as available-for-sale. As of December 31, 2025 and 2024, the balance in accumulated other comprehensive loss included net unrealized gains (losses) related to the Company’s available-for-sale debt securities.
The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities:
Contingent
Consideration
Cobalt
Success Payment
Liability
Harvard
Success Payment
Liability
(in thousands)
Balance as of December 31, 2024
Changes in fair value – expense (gain)
Balance as of March 31, 2025
Changes in fair value – expense
Balance as of June 30, 2025
Changes in fair value – expense (gain)
Balance as of September 30, 2025
Changes in fair value – expense
Balance as of December 31, 2025
Contingent consideration
The Company utilizes significant estimates and assumptions it believes would be made by a market participant in determining the estimated fair value of the Cobalt Contingent Consideration at each balance sheet date. The fair value of the Cobalt Contingent Consideration was determined by calculating the probability-weighted estimated value of the pre-specified development milestone payments, which are payable in cash or stock based on the assessment of the likelihood and estimated timing that the milestones would be achieved and the applicable discount rates. The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due. The Company assesses these estimates on an ongoing basis as additional data impacting the assumptions are obtained.
The fair value of the Cobalt Contingent Consideration was calculated using the following unobservable inputs:
December 31, 2025
December 31, 2024
Unobservable Input
Range
Weighted-Average
Range
Weighted-Average
Discount rates
Probability of milestone achievement
The weighted-average unobservable inputs were calculated based on the relative value of the pre-specified development milestones. The estimated fair value of the Cobalt Contingent Consideration may change significantly as development progresses and additional data are obtained, impacting the assumptions regarding probabilities of successful achievement of the milestones used to estimate the fair value of the liability and the timing in which they are expected to be achieved. In evaluating the fair value assumptions, judgment is required to interpret the market data used to develop the estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions, inputs and/or different valuation techniques could result in materially different fair value estimates.
Success payments
The Company utilizes significant estimates and assumptions in determining the estimated fair value of the success payment liabilities and the associated expense or gain at each balance sheet date. The estimated fair value of the Cobalt Success Payment and Harvard Success Payment liabilities was determined using a Monte Carlo simulation methodology, which models the estimated fair value of the liability based on several key assumptions, including the expected volatility, remaining term, risk-free interest rate, estimated number and timing of valuation measurement dates on the basis of which payment may be triggered, and, for the Cobalt Success Payment, the Company’s market capitalization, and for the Harvard Success Payments, the per share fair value of the Company’s common stock. The potential Cobalt Success Payment is payable in cash or stock, and the potential Harvard Success Payments are payable in cash.
The fair values of the Cobalt Success Payments and Harvard Success Payments were calculated using the following unobservable inputs:
December 31, 2025
December 31, 2024
Unobservable Input
Cobalt
Harvard
Cobalt
Harvard
Expected stock price volatility
Expected term (years)
8. Property and equipment, net
Property and equipment, net consists of the following:
December 31, 2025
December 31, 2024
(in thousands)
Laboratory equipment
Leasehold improvements
Construction in progress
Computer equipment, software, and other
Total property and equipment, at cost
Less: Accumulated depreciation
Property and equipment, net
Depreciation expense was $ 12.8 million, $ 15.5 million, and $ 17.5 million for the years ended December 31, 2025, 2024, and 2023, respectively. In the second quarter of 2025, the Company recognized non-cash impairment losses related to construction in progress, laboratory equipment, and leasehold improvements for the Company's manufacturing facility in Bothell, Washington (the Bothell facility) and a portion of the Company's laboratory and office space in Seattle, Washington (the Seattle facility). The losses were recorded as a reduction in the cost of the assets and related accumulated depreciation in the second quarter of 2025. Refer to Note 11, Impairment of long-lived assets for further information.
9. Accrued liabilities
Accrued compensation and accrued expenses and other current liabilities consist of the following:
December 31, 2025
December 31, 2024
(in thousands)
Accrued compensation:
Accrued bonuses
Accrued paid time off
Accrued payroll
Other accrued compensation
Total accrued compensation
Accrued expenses and other current liabilities:
Accrued research and development services
Accrued professional fees
Other accrued current liabilities
Total accrued expenses and other current liabilities
10. Commitments and contingencies
Lease commitments
The Company’s lease portfolio primarily comprises operating leases for office, laboratory, and manufacturing space. These leases contain various rent abatement periods, after which they require monthly lease payments that may be subject to annual increases throughout the lease term. Certain leases include options to extend the term. The renewal option is considered in the remaining lease term for the lease only when the Company is reasonably certain it will renew the lease. Certain leases provide the Company with the right to make tenant improvements, including the addition of laboratory space or build-out of manufacturing capabilities, and include a lease incentive allowance.
In June 2022, the Company entered into a lease agreement for 79,565 square feet of office, laboratory, and manufacturing space located in Bothell, Washington. The initial term of the lease expires in February 2039, with the option to extend the lease for up to three additional five-year terms. The lease agreement also provides for up to $ 19.9 million for reimbursement of tenant improvements, as well as an additional $ 8.0 million loan for tenant improvements, available at the Company’s election (the Tenant Improvement Loan). The Company elected to receive the Tenant Improvement Loan in the second quarter of 2024 and is obligated to repay to the landlord monthly over the initial term of the lease with interest at a rate of 6.5 % per year . As of December 31, 2025, $ 0.4 million was included in accrued expenses and other current liabilities and $ 7.0 million was included in other non-current liabilities. The Company is obligated to pay base rent of approximately $ 68.8 million over the initial term of the lease. In accordance with the lease agreement, the Company has obtained a letter of credit in the amount of $ 1.6 million.
In the second quarter of 2025, the Company recognized non-cash impairment losses for the operating lease ROU asset, construction in progress, and laboratory equipment for the Bothell facility, and for the operating lease ROU asset, leasehold improvements, and laboratory equipment for the Seattle facility. The Company also recognized additional non-cash impairment losses for other long-lived assets. Refer to Note 11, Impairment of long-lived assets for further information.
The following table contains additional information related to the Company’s operating leases:
Location
Use
Approximate
Square Footage
Commencement Dates
Expiration Dates
Seattle, WA
Office/Laboratory
March 2019 to September 2020
December 2026 to April 2028
Cambridge, MA
Office/Laboratory
March 2019 to January 2020
June 2027 to February 2028
South San Francisco, CA
Office/Laboratory
December 2019 to April 2022
April 2030
Rochester, NY
Office/Laboratory
January 2022
January 2027
Bothell, WA
Office/Laboratory/Manufacturing
January 2023
January 2039
Throughout the term of each lease agreement, the Company is responsible for paying, in addition to base rent, certain operating costs, such as common area maintenance, taxes, utilities, and insurance. These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred.
The following table summarizes the Company’s lease costs:
Year Ended December 31,
(in thousands)
Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost
As of December 31, 2025, the weighted-average remaining lease term was 7.2 years and the weighted-average IBR was 10.9 %.
The following table reconciles the Company’s undiscounted operating lease cash flows by fiscal year to the present value of the operating lease liabilities as of December 31, 2025 (in thousands):
2031 and thereafter
Total undiscounted lease payments
Less: imputed interest
Present value of operating lease liabilities
Less: current portion of operating lease liabilities
Operating lease liabilities, net of current portion
11. Impairment of long-lived assets
As a result of changes in business plans and the Company's intention to pursue potential subleases for the Bothell facility and the Seattle facility, due in part to the Company’s decision to suspend further build-out of its internal manufacturing capabilities at the Bothell facility in the-near term due to increased availability of manufacturing capacity at third-party contract development and manufacturing organizations for cell and gene therapy products, as well as progress in understanding its near-term manufacturing needs, and other factors, the Company determined that during the second quarter of 2025 a triggering event occurred and performed an impairment analysis. For the Bothell facility, the Company determined that the combined operating lease ROU asset and construction in progress were not fully recoverable as the carrying value exceeded the estimated fair value and recorded a non-cash impairment loss of $ 34.2 million for this asset group. For the Seattle facility, the Company determined that the combined operating lease ROU asset and leasehold improvements were not fully recoverable as the carrying value exceeded the estimated fair value and recorded a non-cash impairment of $ 3.8 million for this asset group. In addition, in connection with the Bothell facility and the Seattle facility, the Company recognized non-cash related to laboratory equipment of $ 3.8 million and $ 2.0 million, respectively. The Company also recognized an additional $ 0.8 million non-cash for other long-lived assets. The were recorded in operating expenses in the statement of operations in the second quarter of 2025. During the fourth quarters of 2024 and 2023, the Company recognized $ 1.9 million and $ 7.0 million, respectively, for the of certain laboratory equipment and leasehold as a result of the portfolio prioritizations in the fourth quarters of 2024 and 2023.
12. Stockholders’ equity
In March 2026, the Company entered into the Sales Agreement with TD Cowen, acting as sales agent, pursuant to which it may offer and sell through TD Cowen shares of the Company’s common stock from time to time under the ATM facility. The Sales Agreement amends and restates the Prior Sales Agreement. During the quarter and year ended December 31, 2025, the Company sold an aggregate of 3.9 million shares and 11.3 million shares of its common stock, respectively, under the Prior Sales Agreement, for net proceeds of $ 17.0 million and $ 45.8 million, respectively, after deducting commissions and expenses.
In August 2025, the Company completed an underwritten public offering pursuant to which it sold 24.3 million shares of its common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of its common stock for net proceeds of approximately $ 80.6 million, after deducting underwriting discounts and commissions and offering expenses. The pre-funded warrants have an exercise price of $ 0.0001 per share of common stock. As the pre-funded warrants are indexed to the Company’s common stock and otherwise meet the requirements to be classified in equity, the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on its consolidated balance sheet. The pre-funded warrants are exercisable at any time; however, the holders of pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise. The holders of pre-funded warrants may increase or decrease such percentages not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company. The pre-funded warrants do not expire. During the twelve months ended December 31, 2025, no pre-funded warrants sold in this offering were exercised.
In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock, for net proceeds of approximately $ 180.0 million, after deducting underwriting discounts and commissions and offering expenses. The pre-funded warrants have an exercise price of $ 0.0001 per share of common stock. As the pre-funded warrants are indexed to the Company’s common stock and otherwise meet the requirements to be classified in equity, the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on the Company’s consolidated balance sheet. The pre-funded warrants are exercisable at any time; however, the holders of pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99 % of the number of shares of the Common Stock outstanding immediately after giving effect to such exercise. The holders of pre-funded warrants may increase or decrease such percentages not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company. The pre-funded warrants do not expire. During the twelve months ended December 31, 2025, 4.4 million pre-funded warrants sold in this offering were exercised.
13. Stock-based compensation
Equity incentive plans
In February 2021, the Company adopted the 2021 Incentive Award Plan (2021 Plan) and the 2021 Employee Stock Purchase Plan (2021 ESPP), both of which became effective on the completion of the Company’s initial public offering. The 2021 Plan provides for a variety of stock-based compensation awards, including stock options, restricted stock awards (RSAs), and restricted stock units (RSUs). The 2021 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15 % of their earnings, subject to plan limitations. Unless otherwise determined by the Company’s board of directors, employees may purchase shares at 85 % of the lower of the fair market value of the Company’s common stock on the first date of an offering period or on the purchase date. As of December 31, 2025, 34.7 million shares and 5.8 million shares were available for future issuance under the 2021 Plan and the 2021 ESPP, respectively.
Stock-based compensation expense
Stock-based compensation expense is recognized in the consolidated statements of operations as follows:
Year Ended December 31,
(in thousands)
Research and development
General and administrative
Total stock-based compensation expense
Unrecognized stock-based compensation costs related to unvested awards and the weighted-average period over which the costs are expected to be recognized as of December 31, 2025 are as follows:
Stock Options
RSUs
Unrecognized stock-based compensation expense (in thousands)
Weighted-average period costs expected to be recognized (in years)
Stock options
A summary of the Company’s stock option activity is as follows:
Stock Options
(in thousands)
Weighted-Average
Exercise Price per
Share
Weighted-Average
Remaining
Contractual Life
(in years)
Aggregate Intrinsic
Value
(in thousands)
Outstanding as of December 31, 2024
Granted
Exercised
Forfeited/Cancelled
Outstanding as of December 31, 2025
Exercisable as of December 31, 2025
The fair value of stock options granted to employees, directors, and consultants was estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions:
Year Ended December 31,
Assumptions
Risk free interest rate
Expected volatility
Expected term (years)
Expected dividend
The following table summarizes additional information related to stock option activity:
Year Ended December 31,
Weighted average grant date fair value per share for options granted
Aggregate intrinsic value of stock options exercised (in thousands)
Restricted stock
A summary of the Company’s RSU activity is as follows:
RSUs
(in thousands)
RSUs
Weighted-Average
Grant Date Fair
Value per Share
Unvested as of December 31, 2024
Granted
Vested
Forfeited
Unvested as of December 31, 2025
No RSAs vested during the years ended December 31, 2025 and 2024, and the fair value of RSAs that vested during the year ended December 31, 2023 was immaterial . The fair value of RSUs that vested during the years ended December 31, 2025, 2024, and 2023 was $ 4.1 million, $ 6.4 million, and $ 1.9 million, respectively.
14. Income taxes
As of December 31, 2025, the Company had U.S. federal and state tax-effected net operating loss (NOL) carryforwards of $ 245.2 million and $ 73.6 million, respectively, which are available to reduce future taxable income. As of December 31, 2025, the Company also had federal and state research tax credits of $ 64.9 million and $ 30.2 million, respectively, which may be used to offset future liabilities. The Tax Cuts and Jobs Act enacted on December 22, 2017, altered the carryforward period for federal NOLs and as a result, all NOLs generated in 2018 and forward have an indefinite life. Of the federal NOLs reported, we have accumulated $ 243.6 million with an indefinite life as of December 31, 2025. The state NOL will begin to expire in 2036 . The federal tax credit carryforward will begin to expire in 2037 , and the state tax credit will carry forward indefinitely. The NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. Subsequent ownership changes may further affect the limitation in future years.
A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:
Year Ended December 31,
Federal statutory tax
State income tax, net of federal benefit
Valuation allowance
Success payment liabilities
Contingent consideration
Tax credits
Other
Effective income tax rate
The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures for the year ended December 31, 2025.
Year Ended December 31, 2025
(in thousands)
Federal statutory tax
Valuation allowance
Non-taxable or non-deductible items:
Stock-based compensation
Contingent consideration
Success payment liabilities
Other non-deductible items
Tax credits:
Research and development credits
Other
Effective income tax rate
The principal components of the Company’s net deferred tax assets are as follows:
December 31,
(in thousands)
Deferred tax assets:
Net operating loss carryforwards
Capitalized research and development
Tax credit carryforwards
Lease liabilities
Stock-based compensation
Intangibles
Accrued liabilities and allowances
Fixed assets
Success payment liabilities
Other
Gross deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Right-of-use assets
Net deferred taxes assets
The One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025, introduced notable changes to the U.S. Internal Revenue Code, including immediate expensing of domestic research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique. As previously required under the Tax Cuts and Jobs Act, the Company capitalized research and development expenditures in the years ended December 31, 2022 through December 31, 2024. With the enactment of OBBBA, the Company began deducting domestic research and development costs in 2025.
The valuation allowance relates primarily to net U.S. deferred tax assets from operating losses, research tax credit carryforwards, capitalized research and development, and amounts paid and accrued to enter into various agreements for which the tax treatment requires capitalization and amortization.
The Company maintains a full valuation allowance on its net U.S. deferred tax assets. The assessment regarding whether a valuation allowance is required considers both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. In making this assessment, significant weight is given to evidence that can be objectively verified. In its evaluation, the Company considered its cumulative losses and its forecasted losses in the near term as significant negative evidence. Based upon a review of the four sources of income identified within ASC 740, Accounting for Income Taxes , the Company determined that the negative evidence outweighed the positive evidence, and a full valuation allowance on its net deferred tax assets should be maintained. The Company will continue to assess the realizability of its deferred tax assets going forward and will adjust the valuation allowance as needed.
As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the rate reconciliation. The following table presents a reconciliation of the total change in the valuation allowance:
(in thousands)
Beginning balance
Change charged to income tax expense
Ending balance
The Company determines its uncertain tax positions based on a determination of whether and how much of the tax benefit the Company takes in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities. The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which the loss carryforward is available. The Company applies judgment in its determination of the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. As of December 31, 2025 and 2024, the Company’s uncertain tax positions were immaterial.
15. Net loss per share
Basic and diluted net loss per common share are calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. The Company was in a loss position for all periods presented, and basic net loss per share and diluted net loss per share are therefore the same for all periods, as the inclusion of all potential common securities outstanding would have been anti-dilutive.
The following securities were excluded from the computation of net loss per diluted share of common stock for periods presented as their effect would have been anti-dilutive:
Year Ended December 31,
(in thousands)
Options to purchase common stock
Unvested RSUs
Total
16. Employee benefit plan
In January 2019, the Company adopted a 401(k) retirement and savings plan (the 401(k) Plan) covering all employees. The 401(k) Plan allows employees to make pre- and post-tax contributions up to the maximum allowable amount set by the IRS. The Company matches each participant’s 401(k) contributions in cash, up to $ 4,000 per year per participant through December 31, 2025 and, effective January 1, 2026, up to $ 4,500 per year per participant.
17. Subsequent event
In March 2026, the Company entered into the Sales Agreement with TD Cowen, acting as sales agent, pursuant to which it may offer and sell through TD Cowen shares of the Company’s common stock from time to time under the ATM facility. The Sales Agreement amends and restates the Prior Sales Agreement.
