ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION S
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A. “Risk Factors” and under “Forward-Looking Statements” in this Annual Report on Form 10-K.
We are a biotechnology company whose mission is to leverage the power of human genetics to modify the course of and ultimately cure neurological diseases. Our pipeline includes programs for Alzheimer’s disease, or AD; Friedreich’s ataxia, or FA; Parkinson’s disease, or PD; and multiple other diseases of the central nervous system, or CNS. Many of our programs are derived from our TRACER™ (Tropism Redirection of AAV by Cell-type-specific Expression of RNA) adeno-associated virus, or AAV, capsid discovery platform, which we have used to generate novel capsids, or TRACER Capsids, and identify associated receptors to potentially enable high brain penetration with genetic medicines following intravenous, or IV, dosing. Some of our programs are wholly-owned, and some are advancing with licensees and collaborators, including Alexion, AstraZeneca Rare Disease, or Alexion; Novartis Pharma AG, or Novartis; Neurocrine Biosciences, Inc., or Neurocrine; and Transition Bio, Inc., or Transition Bio.
We are advancing our own proprietary pipeline of drug candidates for neurological diseases, with a focus on AD. Our wholly-owned prioritized pipeline includes two tau targeting programs: VY1706, a tau silencing gene therapy for AD, and VY7523, an anti-tau antibody for AD. VY1706 is a gene therapy that leverages an intravenously delivered TRACER Capsid containing a vectorized small interfering RNA specifically targeting tau mRNA. In a non-human primate, or NHP, study, a single 1.3E13 vector genomes per kilogram, or vg/kg, dose of VY1706 delivered intravenously resulted in reductions in tau mRNA levels of 50% to 73% across the cerebral cortex, including in areas of the brain where tau accumulates during the progression of AD. We expect to complete a good laboratory practices, or GLP, toxicology study in the first quarter of 2026. Having had a Type C communication with the FDA in the first quarter of 2026, we anticipate the submission of an investigational new drug, or IND, application in the second quarter of 2026 and initiation of a clinical trial for the VY1706 program in the second half of 2026. VY7523 is an IV-administered, recombinant, humanized IgG4 monoclonal antibody developed to inhibit the spread of pathological tau, which is closely correlated with disease progression and cognitive decline in AD. The murine version of VY7523 reduced tau spread by approximately 70% in preclinical studies. VY7523 demonstrated an acceptable safety, tolerability, and immunogenicity profile as well as expected pharmacokinetic results in a Phase 1, single ascending dose, or SAD, clinical trial in healthy volunteers. In February 2025, we initiated a Phase 1 multiple ascending dose, or MAD, clinical trial of VY7523 in early AD patients. We expect initial tau positron emission tomography, or PET, imaging data in the second half of 2026.
Our proprietary pipeline also includes an early research initiative to develop a non-viral therapeutic that leverages our proprietary Voyager NeuroShuttle TM platform for the treatment of an undisclosed neurological disease. We paused investment in our apolipoprotein E, or APOE, gene therapy program to prioritize other programs. The decision is unrelated to data from the program, which have demonstrated dose-dependent APOE4 protein reduction and APOE2 protein expression in murine studies while maintaining total APOE at physiological levels.
In addition to our wholly-owned pipeline, we are advancing three programs with collaboration partners for which we retain options to participate in future development and commercialization. Two of these programs are in collaboration with Neurocrine: a frataxin (FXN) gene therapy program for FA, which we refer to as the FA Program, and a glucosylceramidase beta 1, or GBA1, gene therapy program that will focus on Gaucher and PD, which we refer to as the GBA1 Program. Neurocrine has stated that, pending successful FDA IND clearance, it intends to initiate a clinical trial with NBIB-’223 for FA in the second half of 2026. In preclinical studies, IV-administered NBIB-’223 resulted in protein expression in the brain and heart. Neurocrine has informed us that it continues to progress the GBA1 Program in addition to three gene therapy programs for which we do not have opt-in rights. We maintain an option to co-develop and co-commercialize 40% of the FA Program and 50% of the GBA1 Program for PD in the U.S.
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Our third opt-in program is our collaboration with Transition Bio to develop selective small molecules for the treatment of amyotrophic lateral sclerosis, or ALS, and frontotemporal dementia with TDP-43 pathology. We have an option for an exclusive license to the worldwide rights to develop and commercialize this program.
In addition to the three partnered programs for which we retain opt-in rights, we have entered into multiple additional collaboration and licensing agreements with collaboration partners.
We are collaborating with Neurocrine on three gene therapy programs against undisclosed targets. Two of these three programs have development candidates selected and are advancing through preclinical toxicology studies. In addition to the Neurocrine collaborations, we have partnered with Novartis on TRACER Capsid-based gene therapies for spinal muscular atrophy and Huntington’s disease. We have also licensed capsids to Alexion for one undisclosed rare neurological disease target and to Novartis for one undisclosed CNS target. In total, our partnerships have delivered more than $500.0 million in non-dilutive funding to us to date, including upfront fees, development milestone payments, option exercise fees, license fees, and research and development expense reimbursement. Looking forward, we have the potential to earn up to $6.8 billion in milestone payments across the partnered portfolio, including $2.4 billion in potential development milestone payments, as well as royalties.
All of the gene therapies in our wholly-owned and collaborative pipeline are delivered intravenously leveraging TRACER capsids. TRACER is a broadly applicable, RNA-based screening platform that enables rapid discovery of AAV capsids with robust penetration of the blood-brain barrier, or BBB, and enhanced CNS tropism in multiple species, including NHPs. We subsequently utilized these BBB-penetrant capsids to identify the receptors by which the capsids enter the BBB. We have identified multiple receptors, including alkaline phosphatase, or ALPL, that are capable of transporting a large biologic molecule, such as a capsid, across the BBB.
We have leveraged our knowledge of BBB receptors, discovered using TRACER, to develop a second delivery platform called Voyager NeuroShuttle TM . Voyager NeuroShuttle is a non-viral delivery platform leveraging novel receptor-binding molecules to transport multiple modalities of neurotherapeutics across the blood-brain barrier. The first NeuroShuttle within the platform leverages the ALPL receptor. During the third quarter of 2025, we shared the results of initial murine proof-of-concept studies of ALPL-VYGR-NeuroShuttle demonstrating in the study sustained brain expression over three weeks, compared to less than one week for transferrin receptor, or TfR, shuttles, with no impact on circulating reticulocytes or downstream measurements of anemia. In addition to the initial murine proof-of-concept data provided for the ALPL-VYGR-NeuroShuttle, a proof-of-concept study using anti-amyloid antibodies demonstrated that the ALPL-NeuroShuttle showed similar target engagement to a TfR shuttle. We initiated a discovery program using ALPL-VYGR-NeuroShuttle to target an undisclosed neurological disease.
During the year ended December 31, 2025, the restructurings in June 2025 and December 2025 resulted in restructuring expenses of $4.3 million. Employees impacted by the restructurings were eligible to receive one-time severance benefits, including cash severance, temporary health care coverage, and transition support services, subject to each employee entering into a separation agreement, which included a general release of claims against the company. Restructuring expenses are recorded as either research and development expense or general and administrative expense in the consolidated statements of operations and comprehensive loss.
Despite reporting $132.3 million in net income for the year ended December 31, 2023, we have a history of incurring significant losses. We reported net losses of $119.7 million and $65.0 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $445.9 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future in connection with our ongoing activities, as we:
initiate and conduct clinical trials in connection with our tau silencing program, which we expect to initiate in the second half of 2026, and continue to conduct clinical trials in connection with our anti-tau antibody program;
continue investing in our proprietary antibody program, non-viral therapeutics platform, gene therapy platforms and programs, and other research and development initiatives;
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continue investing in NeuroShuttle, our proprietary non-viral delivery platform leveraging novel receptor-binding molecules to transport multiple modalities of neurotherapeutics across the blood-brain barrier ;
continue investing in and supporting TRACER™ (Tropism Redirection of AAV by Cell-type-specific Expression of RNA), our proprietary discovery platform to facilitate the selection of adeno-associated virus, or AAV, capsids, which we refer to as TRACER Capsids, and our investment to discover TRACER Capsids with broad tropism in CNS and other tissues with cell-specific transduction properties for particular therapeutic applications;
continue investing in our collaboration with Transition Bio to advance small molecules targeting TDP-43 to treat ALS and frontotemporal dementia with TDP-43 pathology;
increase our investment in the discovery and development of additional modalities for receptor-mediated non-viral delivery of therapeutic payloads to the CNS, including but not limited to our alkaline phosphatase and other BBB-receptor ;
conduct joint research and development under our strategic collaborations for the research, development, and commercialization of certain of our pipeline programs, including our Friedreich’s ataxia program, or the FA Program, pursuant to our collaboration and license agreement with Neurocrine entered into in January 2019, or the 2019 Neurocrine Collaboration Agreement, our glucosylceramidase beta 1 , or GBA1, gene therapy program for PD and other GBA1-mediated diseases, or the GBA1 Program, pursuant to our collaboration and license agreement with Neurocrine entered into in January 2023, or the 2023 Neurocrine Collaboration Agreement, and our Huntington’s disease program, or the Novartis HD Program, pursuant to our license and collaboration agreement with Novartis entered into in December 2023, or the 2023 Novartis Collaboration Agreement;
initiate additional preclinical studies and clinical trials for, and continue research and development of, our other programs;
continue our process research and development activities, as well as establish our research-grade manufacturing capabilities;
identify additional diseases for treatment with our AAV gene and non-viral therapies and BBB-crossing technologies and develop additional programs or product candidates;
seek marketing and regulatory approvals for any of our product candidates that successfully complete clinical development;
maintain, expand, protect and enforce our intellectual property portfolio;
identify, acquire or in-license other product candidates and technologies;
expand our operational, financial and management systems and personnel, including personnel to support our clinical development, manufacturing and commercialization efforts;
increase our clinical trial insurance coverage as we expand our clinical trials and increase our product liability insurance once we engage in commercialization efforts; and
continue to operate as a public company.
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Financial Operations Overview
Revenue
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. For the year ended December 31, 2025, we recognized $30.5 million of collaboration revenue from the 2023 Neurocrine Collaboration Agreement, $5.9 million of collaboration revenue from the 2023 Novartis Collaboration Agreement, $3.5 million of collaboration revenue from the 2019 Neurocrine Collaboration Agreement, and $0.5 million of collaboration revenue from other agreements. For additional information about our revenue recognition policy, see the section titled “Summary of significant accounting policies and basis of presentation” in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For the foreseeable future, we expect substantially all of our revenue will be generated from the 2019 Neurocrine Collaboration Agreement, the 2023 Neurocrine Collaboration Agreement, the 2023 Novartis Collaboration Agreement, the 2022 Novartis Option and License Agreement, and our option and license agreement with Alexion entered into on October 1, 2021, or the Alexion Agreement, and any other strategic collaborations and out-licensing arrangements we may enter into in the future. If our development efforts are successful, we may also generate revenue from product sales.
Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our program discovery efforts, and the development of our proprietary antibody, gene therapy, and non-viral therapeutic platforms and programs, which include:
employee-related expenses including salaries, benefits, and stock-based compensation expense;
severance benefits, including cash severance, temporary health care coverage, and transition support services related to restructurings, which were recognized in 2025;
costs of funding research performed by third parties that conduct research and development, preclinical and clinical activities, manufacturing and production design on our behalf;
the cost of purchasing laboratory supplies and non-capital equipment used in designing, developing and manufacturing preclinical and clinical study materials;
consultant fees;
facility costs including rent, depreciation and maintenance expenses;
the cost of securing and protecting intellectual property rights associated with our research and development activities;
fees for maintaining licenses under our third-party licensing agreements; and
payments under our research and collaboration agreements.
Research and development costs are expensed as incurred. Costs for certain activities, such as manufacturing, preclinical studies, and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.
Research and development activities are central to our business model. We are in the early stages of development of our product candidates. We expect research and development expenses to decrease in the near term as a result of continued portfolio prioritization and alignment of operating expenditures with our current capital resources. At
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this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of our product candidates.
Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses. Our expenses will increase if:
we are required by the FDA or the European Medicines Agency or other regulatory agencies to redesign or modify trials or studies or to perform trials or studies in addition to those currently expected;
there are any delays in the receipt of regulatory clearance to begin our planned clinical programs; or
there are any delays in site initiation, enrollment of participants in or completion of our clinical trials or the development of our product candidates .
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, information technology, business development, legal and human resource functions. Other significant costs include corporate facility costs not otherwise included in research and development expenses, legal fees related to patent and corporate matters, fees for accounting and consulting services, and one-time severance benefits, including cash severance, temporary health care coverage, and transition support services related to restructurings recognized in 2025. We expect general and administrative costs to decrease in the near term as a result of our continued disciplined expense management.
Other Income, Net
Other income, net consists primarily of interest income on our marketable securities.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our consolidated financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates.
While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that certain aspects of our accounting policy on revenue recognition require the most significant judgments and estimates in the preparation of our financial statements.
Revenue Recognition – ASC 606
We recognize revenue in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 606 Revenue from Contracts with Customers, or ASC 606.
We enter into license, option, and collaboration agreements which are within the scope of ASC 606, under which we license or provide options to license certain of our product candidates and, in certain cases, perform research and development. The terms of these arrangements typically include payment of one or more of the following: non-
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refundable, upfront fees; reimbursement of research and development costs; development, regulatory and commercial milestone payments; option exercise fees; and royalties on net sales of licensed products.
We estimate the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include fixed consideration and/or variable consideration. At the inception of each arrangement that includes variable consideration, we evaluate the amount of potential payment and the likelihood that the payments will be received. We utilize either the most likely amount method or expected value method to estimate the amount expected to be received based on which method best predicts the amount expected to be received. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.
Our contracts often include development and regulatory milestone payments which are assessed under the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone payments that are not within our control or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each reporting period, we re-evaluate the probability of achievement of such development and regulatory milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Given the nature of the milestone payments in our contracts with customers, most of the variable consideration is subject to a constraint that does not involve significant judgement.
We allocate the transaction price based on the estimated stand-alone selling price of each of the performance obligations. We must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. We utilize key assumptions to determine the stand-alone selling price for performance obligations, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs of satisfying the performance obligation. Additionally, in determining the standalone selling price for material rights, we utilize comparable transactions, industry standards for product development and clinical trial success probabilities and estimates of option exercise likelihood. We do not believe that reasonable changes in the assumptions used to determine stand-alone selling price for our performance obligations would materially impact the amount of revenue we recognize.
The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services. For performance obligations which consist of licenses and other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
A significant portion of revenue recognized from the 2019 Neurocrine Collaboration Agreement and the 2023 Neurocrine Collaboration Agreement is related to performance obligations pursuant to which revenue is recognized using a proportional performance model. Revenue is recognized using input-based measurements, which involves the measurement of progress toward each performance obligation based on the actual costs incurred compared to total expected costs. We use judgment in estimating the expected remaining costs to complete the research and development services for each performance obligation based on discussions with the Joint Steering Committee for the program and discussions with our collaboration partners. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure and related revenue recognition. Changes in the expected remaining costs to complete the research and development services for our performance obligations can result in significant changes to the amount of revenue we recognize each period. In general, the uncertainty associated with expected costs to complete the research and development services for our performance obligations decreases as the remaining services near the end of their contractual term. As the research term for both collaboration agreements were near completion as of December 31, 2025, the uncertainty associated with expected costs was limited as of that date.
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Results of Operations
Comparison of the years ended December 31, 2025 and 2024:
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024, respectively, together with the changes in those items in dollars:
Year ended
December 31,
Change
(in thousands)
Collaboration revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Other income, net:
Interest income
Other income
Total other income, net
Loss before income taxes
Income tax provision
Net loss
Collaboration Revenue
Collaboration revenue was $40.4 million and $80.0 million for the years ended December 31, 2025 and 2024, respectively. During the year ended December 31, 2025, we recognized collaboration revenue in connection with the following agreements:
$30.5 million under the 2023 Neurocrine Collaboration Agreement;
$3.5 million under the 2019 Neurocrine Collaboration Agreement;
$5.9 million under the 2023 Novartis Collaboration Agreement; and
$0.5 million under other agreements.
During the year ended December 31, 2024, we recognized collaboration revenue in connection with the following agreements:
$49.7 million under the 2023 Neurocrine Collaboration Agreement;
$15.0 million of collaboration revenue from the execution of the amendment to the 2022 Novartis Option and License Agreement, or the Novartis Amendment;
$10.4 million under the 2019 Neurocrine Collaboration Agreement; and
$4.9 million under the 2023 Novartis Collaboration Agreement.
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Research and Development Expense
Research and development expense increased by $7.3 million from $127.4 million for the year ended December 31, 2024, to $134.7 million for the year ended December 31, 2025. The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024:
Year ended
December 31,
Change
(in thousands)
Internal research and development
External research and development:
Anti-tau antibody program (VY7523)
SOD1 silencing gene therapy program
Tau silencing gene therapy program (VY1706)
Partnered programs
Other programs and platforms
Facilities and other
Total research and development expenses
The increase in research and development expenses for the year ended December 31, 2025, was primarily attributable to the following:
approximately $3.7 million for increased internal research and development costs associated with increased employee-related costs, which included $2.4 million associated with employee-related costs from charges associated with the restructurings recognized during June 2025 and December 2025; and
approximately $19.8 million for increased external research and development costs related to our anti-tau antibody program, tau silencing gene therapy program, and other programs as we continued to develop our programs; partially offset by
a decrease of approximately $13.6 million for external research and development costs for our SOD1 silencing gene therapy program as we are no longer advancing VY9323; and
a decrease of approximately $2.6 million for decreased facility and other costs primarily due to an impairment charge on our leased office and laboratory space in Cambridge, Massachusetts, recognized during the second quarter of 2024.
General and Administrative Expense
General and administrative expense increased by $1.6 million from $35.9 million for the year ended December 31, 2024 to $37.5 million for the year ended December 31, 2025. The increase in general and administrative expense was primarily attributable to $0.9 million in increased consulting fees and $1.1 million in employee-related costs primarily associated with the restructurings completed in June 2025 and December 2025, offset by $0.4 million in lower legal fees.
Other Income, Net
Other income, net of approximately $12.3 million was recognized during the year ended December 31, 2025, as compared to $19.0 million during the year ended December 31, 2024. Other income, net decreased during the year ended December 31, 2025, primarily related to interest income as our marketable securities decreased during the year ended December 31, 2025, as compared to the year ended December 31, 2024.
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Comparison of the years ended December 31, 2024 and 2023:
The following table summarizes our results of operations for the years ended December 31, 2024 and 2023, respectively, together with the changes in those items in dollars:
Year ended
December 31,
Change
(in thousands)
Collaboration revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Other income, net:
Interest income
Other income
Total other income, net
(Loss) income before income taxes
Income tax provision
Net (loss) income
Collaboration Revenue
Collaboration revenue was $80.0 million and $250.0 million for the years ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2024, we recognized collaboration revenue in connection with the following agreements:
$49.7 million under the 2023 Neurocrine Collaboration Agreement;
$15.0 million of collaboration revenue from the Novartis Amendment;
$10.4 million under the 2019 Neurocrine Collaboration Agreement; and
$4.9 million under the 2023 Novartis Collaboration Agreement.
During the year ended December 31, 2023, we recognized collaboration revenue in connection with the following agreements:
$79.0 million upon Novartis’ decision to exercise two of its license options under the 2022 Novartis Option and License Agreement, or Novartis License Options, along with the expiration of a third Novartis License Option, all of which were determined to be material rights in the 2022 Novartis Option and License Agreement ;
$80.8 million under the 2023 Neurocrine Collaboration Agreement;
$80.0 million under the 2023 Novartis Collaboration Agreement;
$9.8 million under the 2019 Neurocrine Collaboration Agreement; and
$0.4 million under other agreements.
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Research and Development Expense
Research and development expense increased by $35.2 million from $92.2 million for the year ended December 31, 2023, to $127.4 million for the year ended December 31, 2024. The following table summarizes our research and development expenses for the years ended December 31, 2024 and 2023. All amounts for the year ended December 31, 2023, have been reclassified to conform to the current year’s presentation.
Year ended
December 31,
Change
(in thousands)
Internal research and development
External research and development:
Anti-tau antibody program (VY7523)
SOD1 silencing gene therapy program
Tau silencing gene therapy program (VY1706)
Partnered programs
Other programs and platforms
Facilities and other
Total research and development expenses
The increase in research and development expenses for the year ended December 31, 2024, was primarily attributable to the following:
approximately $12.6 million for facility and other costs primarily related to our lease for additional laboratory and office space at 75 Hayden Avenue in Lexington, Massachusetts, which we took occupancy of on February 1, 2024, along with an impairment charge on our leased office and laboratory space in Cambridge, Massachusetts;
approximately $12.1 million for external research and development costs related to increased program-related spending; and
approximately $10.6 million for increased internal research and development costs associated with higher headcount in research and development functions as compared to the same period in the prior year .
General and Administrative Expense
General and administrative expenses remained consistent for the year ended December 31, 2024, compared to December 31, 2023.
Other Income, Net
Other income, net of approximately $19.0 million was recognized during the year ended December 31, 2024, as compared to $11.7 million during the year ended December 31, 2023. Other income, net during the year ended December 31, 2024, increased primarily related to interest income due to higher interest rates and as our marketable securities increased during the year ended December 31, 2024, as compared to the year ended December 31, 2023.
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Liquidity and Capital Resources
Sources of Liquidity
We have funded our operations primarily through private placements of redeemable convertible preferred stock, public offerings and private placements of our common stock, strategic collaborations and option and license arrangements, including our 2019 Neurocrine Collaboration Agreement, 2023 Neurocrine Collaboration Agreement, 2022 Novartis Agreement, 2023 Novartis Collaboration Agreement, Alexion Agreement, and with our prior collaboration agreements.
Cash Flows
The following table provides information regarding our cash flows:
Year ended
December 31,
(in thousands)
Net cash (used in) provided by:
Operating activities
Investing activities
Financing activities
Net (decrease) increase in cash, cash equivalents, and restricted cash
Cash Flows from Operating Activities
Net cash used in operating activities was $132.5 million during the year ended December 31, 2025. The cash used in operating activities for the year ended December 31, 2025, was primarily driven by our net loss for the year ended December 31, 2025, of $119.7 million and a decrease in deferred revenue of $28.8 million due to revenue recognized under the 2019 Neurocrine Agreement, 2023 Neurocrine Collaboration Agreement, and 2023 Novartis Agreement, partially offset by stock-based compensation expense of $14.8 million.
Net cash used in operating activities was $15.3 million during the year ended December 31, 2024. The cash used in operating activities for the year ended December 31, 2024, was primarily driven by our net loss for the year ended December 31, 2024, of $65.0 million and a decrease in deferred revenue of $44.8 million due to revenue recognized under the 2019 Neurocrine Agreement and the 2023 Neurocrine Collaboration Agreement, partially offset by a decrease in accounts receivable of $78.6 million due to the collection of the upfront payment under the 2023 Novartis Agreement, and stock-based compensation expense of $14.8 million.
Net cash provided by operating activities was $77.9 million during the year ended December 31, 2023. The cash provided by operating activities for the year ended December 31, 2023, was primarily driven by our net income for the year ended December 31, 2023, of $132.3 million, stock-based compensation expense of $11.2 million, and an increase in deferred revenue of $9.4 million, partially offset by an increase in accounts receivable of $80.2 million due to the recording of the upfront payment under the 2023 Novartis Agreement.
Cash Flows from Investing Activities
Net cash provided by investing activities was $125.4 million during the year ended December 31, 2025. The cash provided by investing activities for the year ended December 31, 2025, was primarily due to $262.0 million in proceeds from maturities and sales of marketable securities, partially offset by $133.9 million in purchases of marketable securities and $2.6 million in purchases of property and equipment.
Net cash used in investing activities was $94.9 million during the year ended December 31, 2024. The cash used in investing activities for the year ended December 31, 2024, was primarily due to $465.7 million for purchases of
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marketable securities and $3.5 million for purchases of property and equipment, partially offset by $374.3 million from proceeds from maturities and sales of marketable securities.
Net cash used in investing activities was $141.6 million during the year ended December 31, 2023. The cash used in investing activities for the year ended December 31, 2023, was primarily due to $224.0 million for purchases of marketable securities and $3.3 million for purchases of property and equipment, partially offset by $85.6 million from proceeds from maturities and sales of marketable securities.
Cash Flows from Financing Activities
Net cash provided by financing activities was $0.8 million during the year ended December 31, 2025, primarily due to the $0.5 million in proceeds from the purchase of common stock under the employee stock purchase plan.
Net cash provided by financing activities was $114.0 million during the year ended December 31, 2024, primarily due to the $93.5 million in net proceeds from a public offering of common stock and warrants and $19.3 million in connection with the sale of common stock to Novartis in January 2024.
Net cash provided by financing activities was $33.6 million during the year ended December 31, 2023, primarily due to the $31.1 million in proceeds from the sale of common stock in connection with the 2023 Neurocrine Collaboration Agreement along with proceeds from the exercise of stock options, and purchases by our employees of our common stock under our employee stock purchase plan.
Funding Requirements
Our expenses increased during the year ended December 31, 2025, as compared with the prior year as our development programs progressed. We will continue to incur research and development expenses as we conduct clinical trials and seek marketing approval of our product candidates, and as we continue to enter into or conduct activities in connection with our collaboration agreements. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we expect to incur increasing costs associated with operating as a public company, satisfying regulatory and quality standards, fulfilling healthcare compliance requirements, and maintaining product, clinical trial and directors’ and officers’ liability insurance coverage. We also anticipate the cost of goods and services and the levels of compensation paid to employees will increase due to inflationary conditions existing in the general economy. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital or enter into business development transactions when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.
As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $ 201.7 million. Based upon our current operating plan, we expect that our existing cash, cash equivalents, and marketable securities at December 31, 2025, along with amounts expected to be received as reimbursement for development costs under our collaboration and license agreements with Neurocrine and Novartis and interest income, to be sufficient to meet our planned operating expenses and capital expenditure requirements into 2028. Our future capital requirements will depend on many factors, including:
the scope, progress, results, and costs of product discovery, preclinical studies and clinical trials for our product candidates, including our ongoing Phase 1 clinical trial to evaluate VY7523 and our planned Phase 1 clinical trial to evaluate VY1706;
the scope, progress, results, costs, prioritization, and number of our research and development programs;
the progress and status of our strategic collaborations and option and license agreements and any similar arrangements we may enter into in the future, including any research and development costs for which we are responsible, future additional obligations that we may be committed to in connection with these
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agreements, including, for example, if we elect to exercise our rights for any of the three programs for which we retain opt-in rights, and our receipt of any expense reimbursements, future milestone payments and royalties from our collaboration partners or licensors;
the extent to which we are obligated to reimburse preclinical development and clinical trial costs, or the achievement of milestones or occurrence of other developments that trigger milestone and royalty payments, under any collaboration or license agreements to which we might become a party, such as the license agreement we entered into with Touchlight IP Limited, or Touchlight, in November 2022, which we refer to as the Touchlight License Agreement, and the research collaboration, option and license agreement we entered into with Transition Bio in June 2025;
the costs, timing and outcome of regulatory review of our product candidates;
our ability to establish and maintain collaboration, distribution, or other marketing arrangements for our product candidates on favorable terms, if at all;
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
the extent to which we acquire or in-license other product candidates and technologies, including any intellectual property associated with such candidates or technologies, acquire or invest in other businesses, or out-license our product candidates, capsids or other technologies;
the costs of advancing our manufacturing capabilities and securing manufacturing arrangements for pre-commercial and commercial production;
the level of product sales by us or our collaborators from any product candidates for which we obtain marketing approval in the future;
the costs of operating as a public company and maintaining adequate product, clinical trial, and directors’ and officers’ liability insurance coverage; and
the costs of establishing or contracting for sales, manufacturing, marketing, distribution, and other commercialization capabilities if we obtain regulatory approvals to market our product candidates .
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete. We may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our product revenues, if any, and any commercial milestone payments or royalty payments under our collaboration agreements, will be derived from sales of products that may not be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing and business development transactions to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.
Until such time, if ever, as we can generate product revenues sufficient to achieve consistent profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and option and license arrangements. We do not have any committed external source of funds other than the amounts we are entitled to receive from our collaboration partners and licensees for reimbursement of certain research and development expenses, potential option exercises, the achievement of specified regulatory and commercial milestones, and royalty payments under our collaboration, and option and license agreements, as applicable. To the extent that we raise additional capital through the sale of equity or equity-linked securities, including convertible debt, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights as holders of our common stock. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability
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to take specific actions, such as incurring additional debt, obtaining additional capital, acquiring or divesting businesses, making capital expenditures or declaring dividends.
If we raise additional funds through collaborations, strategic alliances, or option and license arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations
We enter into agreements in the normal course of business with clinical research organizations, contract manufacturing organizations, and institutions to license intellectual property. These contracts generally are cancelable at any time by us, upon 30 to 90 days prior written notice.
Our agreements to license intellectual property include potential milestone payments that are dependent upon the development of products using the intellectual property licensed under the agreements and contingent upon the achievement of clinical trial or regulatory approval milestones. We may also be required to pay annual maintenance fees or minimum amounts payable ranging from low-four digits to low five-digits depending upon the terms of the applicable agreement. In certain instances, we are also obligated to pay our licensors royalties based on sales of products, if approved, using the intellectual property licensed under the applicable agreement.
We also have non-cancelable operating lease commitments arising from our leases of office and laboratory space at our facilities in Cambridge and Lexington, Massachusetts. For more information, refer to Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable rules of the Securities and Exchange Commission, or the SEC.
