CLYM US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in “Item 8. Financial Statements and Supplementary Data.” in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve substantial risks and uncertainties. As a result of many factors, including those factors set forth in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For further information regarding our forward-looking statements, see “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K.

Overview

We are a clinical-stage biotechnology company committed to developing potential best-in-class therapeutics that address significant unmet need for patients living with immune-mediated diseases. We have built our pipeline by strategically acquiring or in-licensing product candidates that we believe have clear biological rationale, well-defined development pathways, and the potential to address multiple indications.

We are developing our product candidates for multiple immune-mediated diseases, as summarized in the pipeline figure below.

We acquired the rights to our product candidates through license and asset purchase agreements. We have worldwide rights to develop and commercialize budoprutug for all indications, except for oncology. We have rights to develop and commercialize CLYM116 for all indications worldwide outside of Greater China.

Since our inception, we have primarily funded our operations with proceeds from the sale and issuance of shares of our redeemable convertible preferred stock, our IPO, and the sale and issuance of shares in a Private Placement in connection with the Acquisition. We do not have any products approved for sale and have not generated any revenue from product sales since our inception. Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates, if approved. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities. We expect to continue to incur operating losses for the foreseeable future and will need to raise substantial additional capital in the future. Until such time, if ever, as we can generate significant revenue from product sales, we may finance our operations through equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. Adequate funding may not be available when needed or on terms acceptable to us, or at all.

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If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. Our ability to raise additional funds may be adversely impacted by the potential worsening of global economic conditions and the recent disruptions to, and volatility in, worldwide credit and financial markets, resulting from increased volatility in the trading prices for shares in the biopharmaceutical industry, or otherwise. Further, imposition of tariffs and other trade restrictions by the U.S., as well as reciprocal trade restrictions imposed by other countries, could adversely affect global economies, financial markets and the overall environment in which we do business, as further described in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

Based on our current operating plan, we estimate that our cash, cash equivalents and marketable securities will be sufficient to fund our planned operations into 2028. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate, in which case we would be required to obtain additional financing, which may not be available to us on acceptable terms, or at all. See “—Liquidity and Capital Resources”.

Components of Operating Results

Operating Expenses

Our operating expenses consist of (i) research and development expenses, (ii) acquired in-process research and development (IPR&D) expense, related party, and (iii) general and administrative expenses.

Research and Development

Research and development expenses consist of costs incurred for our research and development activities, including development of our product candidates, budoprutug and CLYM116, and our previous product candidates, ETX-123 and ETX-155, consisting primarily of the following:

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employee-related expenses, such as salaries, bonuses, benefits, stock-based compensation, and termination benefits, for employees engaged in research and development functions;

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expenses incurred in connection with the nonclinical and clinical development of our product candidates, including under agreements with CROs and consultants;

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the cost of third-party suppliers and manufacturers for material used in our development activities, including under agreements with CDMOs;

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facilities and other expenses, which include direct and allocated expenses including rent; and

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payments made under third-party licensing agreements.

We expense research and development costs to operations as incurred. Advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs, such as fees paid to CDMOs, CROs, consultants and contractors, in connection with our nonclinical and clinical development activities. We do not allocate employee costs, costs associated with facility expenses, or other indirect costs, to specific programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

We expect our research and development expenses to increase substantially for the foreseeable future as we conduct our ongoing research and development activities. The process of conducting nonclinical studies, acquiring drug product supply, and conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achieving marketing approval for budoprutug, CLYM116, or any product candidate we may develop.

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The timelines and costs associated with research and development activities are uncertain and can vary significantly among product candidates and development programs due to the inherently unpredictable nature of nonclinical and clinical development. We anticipate that we will make determinations as to which indications to pursue in connection with our clinical development of budoprutug, CLYM116, or any product candidates we may develop and how much funding to direct to each such indication on an ongoing basis in response to nonclinical and clinical results, regulatory developments, and ongoing assessments as to each such indication’s commercial potential. Our future research and development costs may vary significantly and differ materially from expectations, and a change in the outcome of variables with respect to the development of budoprutug, CLYM116, or any product candidates we may develop could significantly change the costs and timing associated with such development. See the section titled “Risk Factors—Risks Related to our Financial Position and Need for Additional Capital.”

Acquired In-Process Research and Development, Related Party

Our acquired IPR&D expense consists of the fair value of consideration transferred in the Acquisition allocated to assets acquired that were in the research and development phase and determined to not have any alternative future use.

General and Administrative

Our general and administrative expenses consist primarily of personnel-related expenses such as salaries, bonuses, benefits, stock-based compensation, and termination benefits, for our personnel in executive, finance and accounting, legal, human resources, business development, information technology and other administrative functions. Other significant general and administrative expenses include legal fees relating to corporate matters and intellectual property, professional fees for accounting, audit, regulatory, tax and consulting services, insurance costs, as well as investor and public relations costs.

We expect that our general and administrative expenses will increase for the foreseeable future, including increases in headcount as we continue to support our growth strategy and, if any product candidates receive marketing approval, commercialization activities, as well as to support our operations generally.

Other Income (Expense)

Interest Income

Our interest income consists of interest earned on our cash, cash equivalents and marketable securities, including amortization of purchase premiums and accretion of discounts of marketable securities.

Foreign Currency Loss

Our foreign currency loss consists of foreign exchange losses resulting from remeasurement of foreign currency transactions to the U.S. Dollar.

Results of Operations

The following table sets forth our results of operations (in thousands):

Year Ended December 31, Change

Operating expenses:

Acquired in-process research and development, related party — 51,659 (51,659 )

Other income (expense):

Foreign currency loss (291 ) (9 ) (282 )

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Comparison of the Years Ended December 31, 2025 and 2024

Operating Expenses

Research and Development

The following table sets forth our research and development expenses (in thousands):

Year Ended December 31, Change

Direct research and development expenses:

Unallocated research and development expenses:

Personnel-related (including stock-based compensation) 8,232 7,990 242

Research and development expenses increased from $14.3 million for the year ended December 31, 2024 to $46.7 million for the year ended December 31, 2025. The increase was due primarily to an increase of $19.1 million for our budoprutug program, which we acquired as part of the Acquisition on June 27, 2024. Costs incurred for our budoprutug program increased primarily due to costs related to the advancement of our clinical trials of budoprutug in pMN, ITP and SLE, and increased manufacturing costs, and milestone payments under our license agreements. Costs related to our CLYM116 program, which we licensed in January 2025, were $12.0 million, consisting of an upfront payment of $9.0 million under the Mabworks Agreement, milestone payments under our license agreements, and nonclinical, clinical, and manufacturing costs. Personnel-related expenses increased by $0.2 million due primarily to increased headcount and stock-based compensation expense, partially offset by a decrease due to prior year restructuring costs. Research and development expenses for the years ended December 31, 2025 and 2024 included stock-based compensation expense of $3.5 million and $3.0 million, respectively. Other research and development expenses increased by $1.2 million primarily due to an increase in consulting expenses to support our programs.

Acquired In-Process Research and Development, Related Party

Acquired IPR&D expense, related party was $51.7 million for the year ended December 31, 2024. This amount represents the recognition of IPR&D expense from the Acquisition completed on June 27, 2024.

General and Administrative

General and administrative expenses increased from $16.0 million for the year ended December 31, 2024 to $21.2 million for the year ended December 31, 2025. The increase was primarily due to an increase in personnel-related expenses of $3.3 million from increased headcount and stock-based compensation expense. General and administrative expenses for the years ended December 31, 2025 and 2024 included stock-based compensation expense of $4.6 million and $2.5 million, respectively. Legal expenses also increased by $1.0 million.

Other Income (Expense)

Interest Income

Interest income increased from $8.1 million for the year ended December 31, 2024 to $8.3 million for the year ended December 31, 2025 due to higher invested balances, partially offset by lower yields during 2025 as compared to 2024.

Foreign Currency Loss

Foreign currency loss for the year ended December 31, 2025 consisted of the remeasurement of transactions denominated in a foreign currency. Foreign currency loss was not material for the year ended December 31, 2024.

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Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have primarily funded our operations with proceeds from the sale and issuance of shares of our redeemable convertible preferred stock, our IPO, and the sale and issuance of shares of our common stock in the Private Placement in connection with the Acquisition. We have not generated any revenue from product sales or otherwise. We have incurred net losses from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. As of December 31, 2025, we had cash, cash equivalents and marketable securities of $160.7 million.

In March 2025, we entered into an Equity Distribution Agreement (the Distribution Agreement) with Oppenheimer & Co. Inc., as agent (Oppenheimer), pursuant to which we may offer and sell shares of our common stock from time to time through Oppenheimer having an aggregate offering price of up to $22.4 million in an at the market offering. During the year ended December 31, 2025, we did not issue and sell any shares of our common stock pursuant to the Distribution Agreement.

Cash Flows

The following table sets forth our cash flows (in thousands):

Year Ended December 31,

Net cash used in operating activities $ (54,356 ) $ (15,562 )

Net cash provided by (used in) investing activities 2,833 (121,092 )

Net cash provided by (used in) financing activities (21 ) 130,729

Operating activities

For the year ended December 31, 2025, net cash used in operating activities was $54.4 million, resulting from our net loss of $59.9 million and cash used by changes in our operating assets and liabilities of $0.6 million, partially offset by $6.1 million in non-cash charges. Cash used by changes in our operating assets and liabilities primarily consisted of an increase in other long-term assets of $1.5 million and an increase in prepaid expenses and other current assets of $0.8 million, partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $1.9 million.

For the year ended December 31, 2024, net cash used in operating activities was $15.6 million, resulting from our net loss of $73.9 million, partially offset by $56.6 million in non-cash charges, which consisted primarily of our IPR&D charge of $51.7 million, and cash provided by changes in our operating assets and liabilities of $1.7 million. Cash provided by changes in our operating assets and liabilities primarily consisted of a decrease in prepaid expenses and other current assets of $1.9 million.

Changes in prepaid expenses and other current assets, other assets, accounts payable, and accrued expenses and other current liabilities were generally due to the advancement of our research and development programs and the timing of vendor invoicing and payments.

Investing activities

For the year ended December 31, 2025, net cash provided by investing activities was $2.8 million consisting primarily of $111.1 million in proceeds received from maturities of marketable securities, partially offset by purchases of $108.1 million of marketable securities.

For the year ended December 31, 2024, net cash used by investing activities was $121.1 million, consisting primarily of purchases of $132.2 million of marketable securities, the issuance of a promissory loan of $5.0 million and cash paid of $4.6 million in connection with the Acquisition, partially offset by $20.8 million in proceeds received from maturities of marketable securities.

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Financing activities

For the year ended December 31, 2025, net cash used by financing activities was less than $0.1 million, consisting of pre-funded warrant issuance costs, partially offset by $0.1 million in proceeds from exercises of stock options. On December 11, 2025, we entered into the Exchange Agreement, pursuant to which the Exchanging Holder exchanged an aggregate of 20,440,000 shares of our common stock beneficially owned by the Exchanging Holder for a pre-funded warrant to purchase the same number of shares of common stock at an exercise price of $0.0001 per share. The exchange of common stock for the pre-funded warrant did not impact cash (See Note 6 to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion of the Exchange Agreement).

For the year ended December 31, 2024, net cash provided by financing activities was $130.7 million, consisting of $119.7 million in proceeds received from the issuance of our common stock in the Private Placement in connection with the Acquisition and $11.0 million in proceeds from exercises of stock options.

Funding Requirements

We believe our existing cash, cash equivalents and marketable securities of $160.7 million as of December 31, 2025 will be sufficient to fund our operations into 2028. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. We anticipate that our expenses will increase for the foreseeable future as we continue to advance our current product candidates and any product candidates we may develop, expand our corporate infrastructure, and incur costs associated with potential commercialization.

We are subject to all of the risks typically related to the development of biopharmaceutical candidates, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. Our future funding requirements will depend on many factors, including the following:

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the number and scope of development, nonclinical and clinical programs we decide to pursue, and the timing, cost and progress of activities related to such programs;

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the progress, costs and results of our clinical trials of budoprutug in pMN, ITP, and SLE, our Phase 1 clinical trial of the SC formulation of budoprutug, our Phase 1 clinical trial of CLYM116, and any future clinical trials of our product candidates;

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the costs of manufacturing our product candidates by third parties;

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the terms of any collaborations, license or research and development agreements we may enter into;

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the cost of regulatory requirements, regulatory submissions and timing of regulatory approvals;

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the costs involved in prosecuting and enforcing patent and other intellectual property claims;

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the potential delays in our development programs and clinical trial activities due to the effects of global events, including macroeconomic conditions and supply chain disruptions;

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the impact of inflationary pressures on salaries and wages, and costs of goods and transportation expenses, including the impact of tariffs and other trade restrictions;

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the cost of commercialization activities if any of our product candidates are approved for sale, including marketing, sales and distribution costs; and

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our efforts to enhance operational systems and hire personnel to support development of budoprutug, CLYM116, or any product candidates we may develop.

Furthermore, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures. Until such time, if ever, as we can generate substantial revenue from product sales, we may finance our operations through equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed or on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

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Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or our product candidates or grant licenses on terms that may not be favorable to us and may reduce the value of our common stock. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. 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 budoprutug, CLYM116, or any product candidates we may develop even if we would otherwise prefer to develop and market such product candidates ourselves.

Contractual Commitments and Obligations

In the normal course of business, we enter into contracts with CROs, CDMOs, and other third parties for nonclinical studies and clinical trials, supply of materials and manufacturing services. These contracts do not contain material minimum purchase commitments and generally provide us with the option to cancel, reschedule and adjust our requirements based on our business needs, prior to the delivery of goods or performance of services. However, it is not possible to predict the maximum potential amount of future payments under these agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each agreement.

We have a lease agreement, as amended, for office space in Wellesley Hills, Massachusetts with remaining fixed payments of $0.3 million through December 2026, with an option to extend the lease through December 2027 for additional fixed payments of $0.3 million.

We have obligations under the Asset Purchase Agreement with Acelyrin with respect to Products (as defined in the Asset Purchase Agreement) and certain license agreements that may obligate us to make specified milestone and royalty payments. The payment obligations under these agreements are contingent upon future events, such as our achievement of specified development, regulatory and commercial milestones, or generating product sales. We are unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. See Note 8 to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion of these milestone and royalty obligations.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs 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 we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements, appearing in Part II of Item 8 of this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate certain research and development expenses. This process involves estimating the level of services performed and the associated cost incurred for services when we have not yet been invoiced or otherwise notified of actual costs, or when payments for such activities differ from the pattern of costs incurred. We make estimates of our accrued expenses or prepaid expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of certain estimates with the service providers. Examples of estimated accrued research and development expenses include those related to fees paid to:

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vendors in connection with nonclinical and clinical development activities, including CROs; and

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the cost of third-party suppliers and manufacturers for material used in our development activities, including CDMOs;

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We base the expense recorded on our estimates of the services received and efforts expended pursuant to quotes and contracts with our vendors, CROs and CDMOs that conduct services and supply materials. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. In recording service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. Certain of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; while others require advance payments. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. We record these as prepaid expenses on our consolidated balance sheet. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.

Stock-Based Compensation

We measure our stock options with service-based vesting or performance-based vesting granted to employees, non-employee directors, consultants and independent advisors based on the estimated fair value on the date of grant using the Black-Scholes option-pricing model. We measure compensation expense for restricted common stock units based on the fair value on the date of grant using the market value of our common stock. Compensation expense for the awards is recognized over the requisite service period for employees and directors and as services are delivered for consultants and independent advisors, both of which are generally the vesting period of the respective award. We use the straight-line method to record the expense of awards with only service-based vesting conditions. We use the graded-vesting method to record the expense of awards with both service-based and performance-based vesting conditions, commencing once achievement of the performance condition becomes probable. The Black-Scholes option-pricing model uses as inputs assumptions we make for the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield. We do not estimate and apply a forfeiture rate as we have elected to account for forfeitures of share-based awards as they occur.

Recently Issued Accounting Pronouncements Not Yet Adopted

See Note 2 to our audited consolidated financial statements, appearing in Part II of Item 8 of this Annual Report on Form 10-K.

Internal Controls over Financial Reporting

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2020, we identified material weaknesses in our internal control over financial reporting, two of which remain unremediated as of December 31, 2025. The material weaknesses, and our remediation plan, are disclosed in Part II of Item 9A of this Annual Report on Form 10-K.

Emerging Growth Company Status

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years audited consolidated financial statements in a registration statement for an IPO, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to the Sarbanes-Oxley Act, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements. We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We will cease to be an emerging growth company on December 31, 2026.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are not required to provide the information requested by this item pursuant to Item 305(e) of Regulation S-K.

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Item 8. Financial Statements and Supplementary Data.

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 238) 112

Consolidated Balance Sheets 113

Consolidated Statements of Operations and Comprehensive Loss 114

Consolidated Statements of Stockholders’ Equity 115

Consolidated Statements of Cash Flows 116

Notes to Consolidated Financial Statements 117

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Climb Bio, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Climb Bio, Inc. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for the years then ended, including 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 as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Seattle, Washington

March 5, 2026

We have served as the Company’s auditor since 2021.

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Climb Bio, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

December 31,

Assets

Current assets:

Prepaid expenses and other current assets 4,769 3,953

Operating lease right-of-use assets 505 490

Property and equipment, net 288 199

Other long-term assets 1,530 16

Liabilities and Stockholders’ Equity

Current liabilities:

Accrued expenses and other current liabilities 4,459 4,069

Operating lease liabilities 256 157

Operating lease liabilities, net of current portion 285 375

Commitments and contingencies (Note 8)

Stockholders’ equity:

Accumulated other comprehensive income 435 23

Total liabilities and stockholders’ equity $ 167,744 $ 217,187

The accompanying notes are an integral part of these consolidated financial statements.

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Climb Bio, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

Year Ended December 31,

Operating expenses:

Acquired in-process research and development, related party — 51,659

Other income (expense):

Foreign currency loss (291 ) (9 )

Net loss per share, basic and diluted $ (0.88 ) $ (1.53 )

Comprehensive loss:

Other comprehensive income:

Unrealized gain on marketable securities 412 25

The accompanying notes are an integral part of these consolidated financial statements.

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Climb Bio, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

Accumulated

Additional Other Total

Common Stock Paid-in Comprehensive Accumulated Stockholders’

Shares Amount Capital Income (Loss) Deficit Equity

Vesting of restricted stock awards and units 154,599 — — — — —

Stock-based compensation expense — — 5,557 — — 5,557

Unrealized gain on marketable securities — — — 25 — 25

Vesting of restricted stock units 929,563 — — — — —

Issuance of common stock upon exercise of stock options 21,341 — 65 — — 65

Stock-based compensation expense — — 8,054 — — 8,054

Unrealized gain on marketable securities — — — 412 — 412

The accompanying notes are an integral part of these consolidated financial statements.

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Climb Bio, Inc.

Consolidated Statements of Cash Flows

(In thousands)

Year Ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense 8,054 5,557

Non-cash operating lease expense 201 220

Accretion of discounts on marketable securities, net (2,274 ) (757 )

Depreciation and amortization expense 97 —

In-process research and development, related party — 51,659

Unrealized foreign currency transaction (gain) loss 18 (42 )

Changes in operating assets and liabilities:

Prepaid expenses and other current assets (816 ) 1,942

Other long-term assets (1,514 ) (200 )

Accounts payable and accrued liabilities, related party — (177 )

Accrued expenses and other current liabilities 372 1,445

Operating lease liabilities (207 ) (327 )

Long-term liabilities — (22 )

Net cash used in operating activities (54,356 ) (15,562 )

Cash flows from investing activities:

Purchases of property and equipment (186 ) —

Issuance of promissory loan in connection with asset acquisition — (5,000 )

Cash paid in connection with asset acquisition, net of cash received — (4,645 )

Net cash provided by (used in) investing activities 2,833 (121,092 )

Cash flows from financing activities:

Proceeds from exercise of stock options 65 10,979

Pre-funded warrant issuance costs (86 ) —

Net cash provided by (used in) financing activities (21 ) 130,729

Effect of exchange rate changes on cash and cash equivalents — 42

Net change in cash and cash equivalents (51,544 ) (5,883 )

Cash and cash equivalents at beginning of period 87,229 93,112

Cash and cash equivalents at end of period $ 35,685 $ 87,229

Supplemental disclosure of noncash investing and financing activities:

Settlement of promissory loan in connection with asset acquisition $ — $ 5,036

The accompanying notes are an integral part of these consolidated financial statements.

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CLIMB BIO, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations and Basis of Presentation

Organization

Climb Bio, Inc. (the Company), is a clinical-stage biotechnology company developing therapeutics for patients with immune-mediated diseases. The Company’s pipeline includes budoprutug and CLYM116. Budoprutug is an anti-CD19 monoclonal antibody designed to treat a broad range of B-cell mediated diseases. The Company is currently developing budoprutug for the treatment of primary membranous nephropathy, immune thrombocytopenia, and systemic lupus erythematosus. CLYM116 is an anti-APRIL (A Proliferation-Inducing Ligand) monoclonal antibody currently being developed for the treatment of immunoglobulin A nephropathy. The Company was incorporated on October 18, 2018 in Delaware, and its corporate headquarters is in Massachusetts.

On June 27, 2024, the Company completed its acquisition of Tenet Medicines, Inc. (the Acquisition). In connection with the closing of the Acquisition, the Company issued and sold 31,238,282 shares of its common stock at a price of $3.84 per share in a private placement to several accredited institutional investors (the Private Placement). The Company received aggregate gross proceeds from the Private Placement of approximately $120.0 million, before deducting offering costs of $0.3 million (see Note 3). On January 8, 2025, the Company entered into a technology transfer and exclusive license agreement (the Mabworks Agreement) with Beijing Mabworks Biotech Co., Ltd. (Mabworks), for rights to develop and commercialize CLYM116 for all indications worldwide outside of mainland China, Hong Kong, Macau, and Taiwan (Greater China) (see Note 8).

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, reliance on single-source suppliers and manufacturers, availability of raw materials, patentability of the Company’s product candidates and processes and clinical efficacy and safety of the Company’s product candidates, compliance with government regulations and the need to obtain additional financing to fund operations. Budoprutug, CLYM116, or any product candidate the Company may develop will require significant additional research and development efforts, including extensive nonclinical studies, clinical trials, and regulatory approval, prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting.

There can be no assurance that any future research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that any product candidate developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if any future product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid technological change and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB).

The accompanying consolidated financial statements reflect the operations of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

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Liquidity

Since inception, the Company has experienced recurring losses from operations and generated negative cash flows from operations. The Company has an accumulated deficit of $289.7 million as of December 31, 2025 and expects to incur additional losses from operations in the future. In March 2025, the Company entered into an Equity Distribution Agreement (the Distribution Agreement) with Oppenheimer & Co. Inc., as agent (Oppenheimer), pursuant to which the Company may offer and sell shares of its common stock from time to time through Oppenheimer having an aggregate offering price of up to $22.4 million in an at the market offering. During the year ended December 31, 2025, the Company did not issue and sell any shares of its common stock pursuant to the Distribution Agreement.

The Company believes its available cash, cash equivalents and marketable securities of $160.7 million as of December 31, 2025 will be sufficient to meet its projected operating requirements for at least the next twelve months from the filing date of these consolidated financial statements, and the Company anticipates that it will need to raise substantial financing in the future to fund its operations. The Company may finance future cash needs through the sale of equity, debt financings or other capital sources, which could include income from collaborations, strategic partnerships or other strategic arrangements. There are no assurances that the Company will be able to raise sufficient amounts of funding in the future on acceptable terms, or at all.

Note 2. Summary of Significant Accounting Policies

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to avail itself of this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Key management estimates include those related to the accrual of research and development expenses and the valuation of stock-based awards. 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.

Foreign Currency

The Company’s reporting currency is the U.S. dollar. The functional currency of the Company and its subsidiaries is the U.S. dollar. Monetary assets and liabilities resulting from transactions denominated in currencies other than the functional currency are remeasured in the functional currency at exchange rates prevailing at the balance sheet date, and income items and expenses are translated into U.S. dollars at the average exchange rate in effect during the period. Exchange gains and losses resulting from remeasurement and foreign currency transactions are included in the determination of net loss.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. Significantly all of the Company’s tangible assets are held in the United States.

Concentration of Credit Risk and Significant Suppliers and Manufacturers

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains its cash and cash equivalents at accredited financial institutions that may, at times, exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company’s investments in money market funds and marketable securities are held in segregated accounts at a third-party custodian. The Company has established guidelines relative to credit ratings and maturities intended to safeguard principal balances and maintain liquidity.

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The Company is dependent on third-party suppliers and manufacturers for material used in its nonclinical and clinical development activities. In particular, the Company relies and expects to continue to rely on single-source suppliers and manufacturers to supply it with certain critical materials related to the Company’s product candidates. The Company’s development efforts could be adversely affected if a supplier or manufacturer is unable to successfully carry out its contractual obligations or meet expected deadlines. If a supplier or manufacturer needs to be replaced, the Company may not be able to complete its product development on its anticipated timelines and may incur additional expenses as a result.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less from the purchase date to be cash equivalents.

Marketable Securities

The Company classifies its marketable securities as available-for-sale. Marketable securities with remaining maturities of less than one year from the balance sheet date are classified as short-term marketable securities. Marketable securities with remaining maturities of greater than one year from the balance sheet date are classified as long-term marketable securities. The Company reports available-for-sale investments at fair value as of each balance sheet date and records unrealized gains or losses as a component of stockholders’ equity in accumulated other comprehensive income (loss). Realized gains and losses of securities sold are determined on a specific identification basis and included in other income (expense) within the consolidated statements of operations and comprehensive loss.

When the fair value is below the amortized cost of a marketable security, the Company estimates the portion of the unrealized loss that relates to credit. The credit-related impairment amount is recorded in other income (expense) in the consolidated statements of operations and comprehensive loss. Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheet and subsequent improvements in expected credit losses are recorded as a reversal of an amount in the allowance account. If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss, if any, is written-off and the excess of the amortized cost basis of the asset over its fair value is recognized in other income (expense) in the consolidated statements of operations and comprehensive loss. There were no credit losses recorded during the years ended December 31, 2025 and 2024.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•

Level 1—Quoted prices in active markets for identical assets or liabilities.

•

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

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Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy (see Note 4). The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The Company’s only element of other comprehensive income (loss) is unrealized gains and losses on available-for-sale marketable securities.

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Asset Acquisitions

In determining whether an acquisition of assets and related liabilities should be accounted for as a business combination or asset acquisition, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this is the case, the single identifiable asset or the group of similar assets is not deemed to be a business and the acquisition is accounted for as an asset acquisition. If this is not the case, the Company then further evaluates whether the acquisition includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If so, the Company concludes that the acquisition is a business and accounts for it as a business combination.

The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the asset or group of assets, which includes transaction costs, allocated on a relative fair value basis. Goodwill is not recognized in asset acquisitions. In an asset acquisition, the cost allocated to acquire in-process research and development (IPR&D) with no alternative future use is charged to expense at the acquisition date.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of each asset.

Estimated Useful Life

Furniture and fixtures 5 years

Leasehold improvements Shorter of remaining life of lease or useful life

When an item is sold or retired, the costs and related accumulated depreciation are eliminated, and the resulting gain or loss, if any, is credited or charged to operating loss in the consolidated statements of operations and comprehensive loss. Repairs and maintenance costs are expensed as incurred.

Leases

The Company accounts for leases under ASC Topic 842, Leases (“ASC 842”). In accordance with ASC 842, the Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, the Company determines the initial classification and measurement of its right-of-use asset and lease liability at the lease commencement date and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. The Company’s policy is to not record leases with an original term of 12 months or less on its consolidated balance sheets and recognizes those lease payments in the income statement on a straight-line basis over the lease term. The Company’s existing lease is for office space.

In addition to rent, leases may require the Company to pay additional costs, such as utilities, maintenance and other operating costs, which are generally referred to as non-lease components. The Company has elected to not separate lease and non-lease components. Only the fixed costs for lease components and their associated non-lease components are accounted for as a single lease component and recognized as part of a right-of-use asset and lease liability. Rent expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the consolidated statements of operations and comprehensive loss.

Long-Lived Assets

Long-lived assets consist of property and equipment and right-of-use assets.The Company reviews the recoverability of its long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable, based on undiscounted cash flows. If such assets are considered to be impaired, an impairment loss is recognized and is measured as the amount by which the carrying amount of the assets exceed their estimated fair value, which is measured based on the projected discounted future net cash flows arising from the assets.

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Research and Development Expenses

Research and development expenses consist of costs incurred in performing research and development activities, including salaries and bonuses, stock-based compensation, employee benefits, termination benefits, facilities costs and depreciation, and external costs of vendors engaged to conduct research, nonclinical and clinical development activities as well as the cost of acquiring and licensing technology.

Upfront payments and milestone payments made for the licensing of technology are expensed as research and development over the period to which they relate. Costs for research and development activities are expensed in the period in which they are incurred. Payments for such activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid expense or accrued research and development expense. Determining the prepaid and accrued balances at the end of any reporting period incorporate certain judgments and estimates by management that are based on information available to the Company including information provided by vendors regarding the progress to completion of specific tasks or costs incurred.

Patent costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are recorded as general and administrative expenses as incurred.

Stock-Based Compensation

The Company measures its stock options with service-based vesting or performance-based vesting granted to employees, non-employee directors, consultants and independent advisors based on the estimated fair value on the date of grant using the Black-Scholes option-pricing model. The Company measures compensation expense for restricted common stock units based on the fair value on the date of grant using the market value of the Company’s common stock. Compensation expense for the awards is recognized over the requisite service period for employees and directors and as services are delivered for consultants and independent advisors, both of which are generally the vesting period of the respective award. The Company uses the straight-line method to record the expense of awards with only service-based vesting conditions. The Company uses the graded-vesting method to record the expense of awards with both service-based and performance-based vesting conditions, commencing once achievement of the performance condition becomes probable. The Company accounts for forfeitures of share-based awards as they occur.

The Company classifies stock-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.

The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to the provision for income taxes. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. Any resulting unrecognized tax benefits are recorded within the provision for income taxes.

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Net Loss Per Share

Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, adjusted for potential dilutive common shares.

In periods in which the Company reported a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for the years ended December 31, 2025 and 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09 (ASU 2023-09), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, the following for public business entities: (i) enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as additional information for any of these items meeting certain qualitative and quantitative thresholds; (ii) disclosure of the nature, effect and underlying causes of each individual reconciling item disclosed in the rate reconciliation and the judgment used in categorizing them if not otherwise evident; and (iii) enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. The effective date of this update for non-public companies is for fiscal years beginning after December 15, 2025; early adoption is permitted. The Company expects ASU 2023-09 to require additional disclosures in the notes to its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 (ASU 2024-03), Disaggregation of Income Statement Expenses, which requires additional disclosures about specific types of expenses included in the expense captions presented on the face of the income statement, as well as disclosures about selling expenses. The provisions of ASU 2024-03 are effective for public business entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements.

Note 3. Asset Acquisition and Private Placement with a Related Party

Background

The Company entered into (i) an Agreement and Plan of Merger and Reorganization, dated as of April 10, 2024 (the Acquisition Agreement), by and among the Company, Tango Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (Transitory Subsidiary), Tenet Medicines, Inc. (Tenet), a Delaware corporation, and, solely in his capacity as Tenet equityholder representative, Stephen Thomas, providing for the acquisition of Tenet by the Company through the merger of Transitory Subsidiary into Tenet, with Tenet surviving as a wholly owned subsidiary of the Company, (ii) a Securities Purchase Agreement, dated as of April 10, 2024 (the Securities Purchase Agreement), by and among the Company and several accredited institutional investors (the PIPE Investors) including funds affiliated with RA Capital Management, L.P. (RA Capital Management), pursuant to which the Company agreed to issue and sell to the PIPE Investors in the Private Placement an aggregate of 31,238,282 shares (the PIPE Shares) of the Company’s common stock, and (iii) a registration rights agreement with the PIPE Investors, pursuant to which the Company agreed to register for resale the PIPE Shares.

On June 27, 2024, the Company completed its acquisition of Tenet in accordance with the terms of the Acquisition Agreement. Tenet was a private, development stage biotechnology company that was majority-owned by funds affiliated with RA Capital Management prior to the closing of the Acquisition. Immediately prior to the closing of the Acquisition and Private Placement, RA Capital Management beneficially owned approximately 43.9% of the Company’s outstanding common stock. The Private Placement closed immediately following the closing of the Acquisition. The Company received aggregate gross proceeds from the Private Placement of approximately $120.0 million, before deducting offering costs of $0.3 million. The offering costs were recorded as a reduction of additional paid-in capital generated in connection with the Private Placement.

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At the effective time of the Acquisition, by virtue of the Acquisition and without any action on the part of the holders of common stock of Tenet, (i) all issued and outstanding shares of the common stock of Tenet and (ii) all securities convertible into shares of common stock of Tenet were converted into the right to receive, in the aggregate, 5,560,047 shares of the Company’s common stock.

Acquisition Accounting

The Company accounted for the Acquisition as an asset acquisition and accordingly, total consideration of $52.8 million, comprised of the fair value of common stock issued of $41.9 million, settlement of pre-existing loan of $5.0 million and transaction costs of $5.8 million, was allocated to the assets acquired and liabilities assumed on a relative fair value basis. The following table sets forth the allocation of the purchase consideration (in thousands):

Assets acquired

In-process research and development $ 51,659

Cash and cash equivalents 1,204

Prepaid expenses and other current assets 1,861

Total assets acquired 54,724

Liabilities assumed

Accounts payable (1,603 )

Accounts payable, related party (101 )

Accrued expenses and other current liabilities (192 )

Accrued expenses, related party (76 )

Total liabilities assumed (1,972 )

Net assets acquired $ 52,752

The value of the IPR&D was expensed in the consolidated statements of operations and comprehensive loss, as the IPR&D was determined to have no future alternative use.

Note 4. Marketable Securities and Fair Value Measurements

Marketable securities consisted of available-for-sale securities as follows (in thousands):

Estimated

Amortized Unrealized Unrealized Fair

Cost Gain Loss Value

Short-term marketable securities:

Total short-term marketable securities $ 65,170 $ 225 $ — $ 65,395

Long-term marketable securities:

U.S. government agency debt securities 2,999 1 — 3,000

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Estimated

Amortized Unrealized Unrealized Fair

Cost Gain Loss Value

Short-term marketable securities:

Total short-term marketable securities $ 63,649 $ 50 $ (9 ) $ 63,690

Long-term marketable securities:

U.S. government agency debt securities 3,500 1 — 3,501

As of December 31, 2025, the Company’s long-term marketable securities have contractual maturity dates between one and two years.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Fair Value Measurements at December 31, 2025 Using:

Level 1 Level 2 Level 3 Total

Assets:

Cash equivalents:

Marketable securities:

U.S. government agency debt securities — 3,000 — 3,000

Fair Value Measurements at December 31, 2024 Using:

Level 1 Level 2 Level 3 Total

Assets:

Cash equivalents:

Marketable securities:

U.S. government agency debt securities — 3,501 — 3,501

Cash equivalents and U.S. Treasury securities were valued by the Company based on quoted market prices for identical securities, which represent a Level 1 measurement within the fair value hierarchy. Corporate bonds and agency securities were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. There were no transfers into or out of Level 3 for any of the periods presented.

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Note 5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

December 31,

Accrued payroll and related expenses $ 1,891 $ 1,997

Accrued external research and development expenses 1,816 1,237

Accrued professional fees 693 746

Other accrued expenses and current liabilities 59 89

Total accrued expenses and other current liabilities $ 4,459 $ 4,069

Note 6. Related Party Transactions

Equity

On December 11, 2025, the Company entered into an exchange agreement (the Exchange Agreement) with RA Capital Management and an entity affiliated with RA Capital Management (the Exchanging Holder), pursuant to which the Exchanging Holder exchanged an aggregate of 20,440,000 shares of the Company’s common stock, beneficially owned by the Exchanging Holder for a pre-funded warrant to purchase the same number of shares of the Company’s common stock (subject to adjustment in the event of stock splits, recapitalizations and other similar events affecting the Company’s common stock), with an exercise price of $0.0001 per share. The pre-funded warrant is exercisable at any time and does not expire.

The Exchanging Holder is not entitled to exercise any portion of the pre-funded warrant if, upon giving effect or immediately prior to such exercise, such exercise would result in the aggregate number of shares of common stock beneficially owned by RA Capital Management, the Exchanging Holder, and their respective affiliates, collectively, to exceed 33.0% of the number of shares of common stock issued and outstanding immediately after giving effect to such exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrant. The Exchanging Holder may increase or decrease such percentage to any other percentage not in excess of 33.0%; provided that any such increase will not be effective until the 61st day after notice from the Exchanging Holder is delivered to the Company. In addition, following the date of the Exchange Agreement, RA Capital Management may exchange additional shares of common stock beneficially owned by it or its affiliates for pre-funded warrants, subject to certain terms and conditions, including the Company’s written consent.

The Company determined that the pre-funded warrant did not meet the classification of a liability under ASC 480, Distinguishing Liabilities from Equity. The Company concluded that the pre-funded warrant should be classified as equity based on an analysis performed under ASC 815-40, Contracts in an Entity's Own Equity. The Exchange Agreement did not have any cash impact, and the shares of common stock exchanged for the pre-funded warrant were retired.

In June 2024, the Company issued shares to RA Capital Management and affiliates in connection with the Acquisition and Private Placement (see Note 3).

Service Agreements

As a result of the Acquisition, the following legacy Tenet agreements effectively became agreements of the Company.

Tenet was a party to a service agreement with Sera Services, Inc. (Sera Services), a wholly-owned subsidiary of Sera Medicines, LLC (Sera Medicines) to provide research and other services to the Company. Sera Medicines is an entity controlled by RA Capital Management, and Dr. Stephen Thomas, a current board member of the Company, owns a minority ownership in and is also a board member of Sera Medicines. No services were provided under the Sera Services Agreement for the year ended December 31, 2025 and, in March 2026, the Company terminated the agreement. The Company paid $0.1 million to Sera Services for services provided under the Sera Services Agreement for the year ended December 31, 2024.

Tenet was a party to a service agreement with Blackbird Clinical, Inc. (Blackbird), an entity controlled by RA Capital Management. Under the terms of the service agreement, Blackbird provided consulting services to Tenet in connection with its clinical trials. For the year ended December 31, 2024, the Company paid approximately $0.1 million to Blackbird under the Blackbird Service Agreement. In October 2024, the Company terminated the Blackbird Service Agreement.

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Note 7. Leases

The Company leases office space under a non-cancelable operating lease in Wellesley, Massachusetts under a 24-month lease agreement that expires in December 2026. The lease contains rent escalation clauses and an option to extend the term of the lease for an additional 12-month period at a market rate determined according to the lease. At the lease’s inception and as of December 31, 2025, the Company expects to exercise its option to extend the lease, and therefore the period covered by this option is included in the lease term.

In April 2025, the Company amended the lease to add space to the existing lease for additional fixed payments totaling $0.2 million through 2026 with an option to extend the lease through 2027 for additional fixed payments of $0.1 million. As the Company expects to exercise its option to extend the lease, the extension period is included in the lease term. Accordingly, the Company recorded an increase to operating lease right-of-use assets and operating lease liabilities of $0.2 million.

The Company previously leased office space in Bellevue, Washington, which expired in January 2025, and Cambridge, U.K., which expired in June 2024.

The components of lease expense were as follows (in thousands):

Year Ended December 31,

Operating lease cost $ 250 $ 243

Short-term lease cost — —

Variable lease cost 9 86

Supplemental disclosure of cash flow information related to leases was as follows (in thousands):

Year Ended December 31,

The weighted-average remaining lease term and discount rate were as follows:

Year Ended December 31,

Weighted-average remaining lease term - operating lease (in years) 2.0 2.9

Weighted-average discount rate - operating lease 8.5 % 8.5 %

As of December 31, 2025, the annual future minimum lease payments due under the Company’s non-cancelable operating lease was as follows (in thousands):

Year ending December 31,

Total undiscounted lease payments 591

Less: imputed interest (50 )

Total operating lease liabilities $ 541

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Total operating lease liabilities in the table above are classified on the consolidated balance sheet as follows (in thousands):

Included in the consolidated balance sheet (in thousands):

Current operating lease liability $ 256

Operating lease liability, net of current portion 285

Total operating lease liabilities $ 541

Note 8. Commitments and Contingencies

Operating Leases

The Company’s commitments under its leases are described in Note 7.

License Agreements (Budoprutug)

As a result of the Acquisition, the following legacy Tenet agreements effectively became agreements of the Company.

Acelyrin Asset Purchase Agreement

On January 11, 2024, Tenet entered into an asset purchase agreement (the Asset Purchase Agreement) with Acelyrin, Inc. (Acelyrin) and WH2, LLC, which was subsequently transferred to the Company by operation of law upon the closing of the Acquisition, providing for the acquisition of certain assets of Acelyrin related to budoprutug (the Transferred Assets), including certain assigned contracts. Under these assigned contracts, the Company (i) received worldwide licenses (with the right to sublicense) to certain patents, know-how and other intellectual property rights to develop, manufacture, use and commercialize budoprutug for any non-oncology indication, and (ii) assumed certain liabilities of Acelyrin arising from (1) governmental authority action or notification relating to budoprutug, (2) contracts assigned to the Company pursuant to the Asset Purchase Agreement and (3) the Company’s ownership, lease or operation of the Transferred Assets. The Asset Purchase Agreement includes customary representations, warranties and covenants, as well as standard mutual indemnities, including those covering losses arising from any material breach of the Asset Purchase Agreement.

Under the Asset Purchase Agreement, the Company also acquired the rights and obligations, including financial obligations, under a license agreement with Cancer Research Technology Limited (CRH), which Tenet subsequently amended and restated in the CRH Agreement (as defined below) and a cell line development, manufacturing services and license agreement with ProBioGen AG (ProBioGen).

Under the Asset Purchase Agreement with respect to any “Product” (as such term is defined in the Asset Purchase Agreement), the Company is obligated to (i) make total payments of up to $157.5 million to Acelyrin upon the achievement of various development, regulatory and commercial milestones, (ii) pay royalties in the single-digit percentages, subject to specified reductions, to Acelyrin on worldwide net sales in a given calendar year, and (iii) make non-refundable and non-creditable payments to Acelyrin on sublicense income with rates ranging from the low single digit to mid teen percent depending on the stage of development of the most advanced Product at the time of such sublicense.

The royalty term continues for each Product on a country-by-country and Product-by-Product basis beginning on the first commercial sale of such Product and ending on the latest of (a) the date when such Product is no longer covered by a valid claim of a royalty-bearing patent (as such term is defined in the Asset Purchase Agreement) in such country, (b) the expiration of any regulatory exclusivity period for such Product in such country, and (c) the twelfth anniversary of the first commercial sale of such Product in such country.

The Company is obligated to use commercially reasonable efforts to commercialize at least one Product in the U.S., to the extent a Product exists under the Asset Purchase Agreement, and to achieve specified development, regulatory and commercial milestones for such Product set forth in the Asset Purchase Agreement.

To the extent a Product exists under the Asset Purchase Agreement, if Acelyrin asserts that the Company has failed to meet a specified diligence obligation under the Asset Purchase Agreement within specified time periods, and such failure is finally determined through a dispute resolution process, Acelyrin may elect, in lieu of a claim for damages, to repurchase the Transferred Assets at the then-fair market value of such Transferred Assets, as Acelyrin’s sole and exclusive remedy for such breach.

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If, within a specified period following the top line data readout from the first Phase 2 clinical trial of a Product, the Company receives a bona fide offer or proposal from a third party to sell, transfer or otherwise divest all or substantially all of the rights to the Transferred Assets or Products, or grant an exclusive license or exclusive sublicense to such third party to develop and commercialize Products under specified terms, then prior to entering into any discussions or negotiations with any third party in relation to such a transaction, the Company shall provide written notice to Acelyrin of such intent or receipt of proposal. Acelyrin shall have the right to negotiate with the Company the terms for a definitive agreement with respect to such sale, transfer or grant of the rights to Products for a specified period of time. If Acelyrin does not exercise its right to negotiate or the parties are unable to agree on the terms of a definitive agreement, the Company shall have the right to negotiate or enter into an agreement with a third party with respect to such transaction, subject to specified conditions.

The Company may not sell, assign or transfer all or substantially all of the rights to develop or commercialize a Product unless, as a condition to such sale, assignment or transfer, the purchaser, assignee or transferee (as applicable) assumes in writing all of our obligations as set forth in the Asset Purchase Agreement with respect to the applicable Products.

The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. As of December 31, 2025, the Company has not recorded expense related to milestone payments under the Asset Purchase Agreement. On December 31, 2025, the Company filed a complaint in Delaware Superior Court against Alumis Inc. and its wholly owned subsidiary, Acelyrin, relating to a dispute concerning the Asset Purchase Agreement as further described below.

CRH Agreement

In connection with the Asset Purchase Agreement, in January 2024 Tenet was assigned a license agreement with CRH and, in connection with such assignment, Tenet entered into an amended and restated license agreement with CRH (the CRH Agreement) which was subsequently transferred to the Company by operation of law upon the closing of the Acquisition. The CRH Agreement granted the Company a worldwide exclusive license (other than specified patent rights and materials, which are licensed to the Company on a non-exclusive basis) under certain know-how, patents and materials, or the licensed rights, to research, develop, test, manufacture or sell certain licensed products related to budoprutug, for all therapeutic uses except for oncology indications. The Company is permitted to grant a sublicense under these licenses with CRH’s prior written consent. CRH retains, on behalf of itself and the charitable company Cancer Research U.K., a worldwide, fully paid-up, perpetual and irrevocable right in the licensed rights and in certain intellectual property owned or controlled by the Company that is necessary to exploit the licensed products and used, conceived or generated in the course of exercising the license or exploiting any licensed product, or product-specific foreground intellectual property, for the purpose of non-commercial, non-clinical scientific research.

The Company is obligated to use commercially reasonable efforts to perform all activities set forth in a mutually agreed-upon development plan within the timelines set forth therein. The Company is also obligated to develop at least one licensed product in an autoimmune indication and to pursue worldwide regulatory authorization for licensed products. The Company must use commercially reasonable efforts to commercialize each licensed product throughout each of the specified major markets as soon as practicable following receipt of regulatory authorization for such product in such market. Additionally, the Company must use commercially reasonable efforts to make the licensed product available through the U.K. and negotiate with relevant regulatory authorities to make each licensed product available through the National Health Service in England and Wales within a specified time of the licensed product being made available elsewhere in the territory. If the Company fails to meet one or more of these diligence obligations, and such failure is not remedied within the specified cure period, CRH shall have the right to terminate the CRH Agreement with respect to the relevant licensed product.

The Company is obligated to pay CRH a mid-five figure digit fee on each anniversary of the effective date. The Company is obligated to pay up to an aggregate of £106.8 million ($143.6 million as of December 31, 2025) upon the achievement of specified development, regulatory, commercial and sales milestone events, including: (i) payments of up to mid-six figure digits in pounds sterling for certain development milestones, (ii) payments of up to low-eight figures in pounds sterling per indication (for up to three indications) for certain regulatory and commercial milestones and (iii) payments up to mid-eight figures in pounds sterling for certain sales milestones. The Company is also obligated to pay tiered royalties ranging from a rate in the mid-single digit to high-single digit percentage on net sales. The royalty term continues for each licensed product on a country-by-country basis beginning on the first commercial sale of such licensed product and ending on the latest of (a) the date when such licensed product is no longer covered by a valid claim of a licensed patent in such country, (b) the expiration of the exclusivity period for such licensed product in such country, and (c) the tenth anniversary of the first commercial sale of such licensed product in such country. The Company is also responsible for a sublicensing revenue payment ranging from a rate in the mid-single digit to mid-double digits for any sublicense revenue.

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The CRH Agreement shall remain in effect in each country in the territory until the expiry of our obligation to pay royalties in such country. Either party may terminate the CRH Agreement if the other party is in material breach that has not been remedied within the specified cure period or if the other party becomes insolvent. CRH also has the right to terminate the CRH Agreement if the Company or one of its sublicensees or affiliates challenges a licensed patent, or if the Company is acquired by a tobacco company.

The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. During the year ended December 31, 2025, the Company recorded $1.0 million of research and development expense related to the milestones.

ProBioGen Agreement

Under the Asset Purchase Agreement, Tenet was assigned a cell line development, manufacturing services and license agreement (the ProBioGen Agreement) originally entered into by ValenzaBio, Inc. and ProBioGen in February 2021, which was subsequently transferred to the Company by operation of law upon the closing of the Acquisition. The ProBioGen Agreement granted the Company a non-exclusive license under certain know-how, patents and materials, to use cell lines in which ProBioGen’s proprietary technology is applied, to research, develop, manufacture, use, sell, offer to sell, import or export budoprutug. This license includes a non-exclusive sublicense by ProBioGen of certain third-party patent rights, limited to the use of budoprutug.

The Company is obligated to (i) make payments of up to €10.0 million ($11.7 million as of December 31, 2025) upon the achievement of certain development, manufacturing and commercial milestones, including the start of a Phase 2 clinical trial for budoprutug, and (ii) make milestone payments of up to €7.0 million ($8.2 million as of December 31, 2025) upon the achievement of certain sales milestones. If the Company elects to contract ProBioGen to perform certain manufacturing services for budoprutug, the milestone payments would be reduced by €1.1 million ($1.2 million as of December 31, 2025).

The ProBioGen Agreement will remain in effect until the services are completed for the service-related component and until the payment obligations expire in connection with the commercial license component. Both parties have the right to terminate the ProBioGen Agreement if the other party becomes insolvent, or materially breaches the ProBioGen Agreement and fails to remedy such default within the specified cure period.

The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. During the year ended December 31, 2025, the Company recorded $2.7 million of research and development expense related to the milestones.

License Agreement (CLYM116)

On January 8, 2025, the Company entered into the Mabworks Agreement, pursuant to which Mabworks granted to the Company (i) an exclusive (even as to Mabworks and its affiliates), sublicensable right and license under certain patent rights and related know-how (the Licensed Intellectual Property) to develop, manufacture and commercialize Mabworks’ proprietary antibodies associated with Mabworks’ proprietary antibody program, identified as MIL116 (the Licensed Compounds or CLYM116) and products containing the Licensed Compounds (Licensed Products) outside of Greater China (the Licensed Territory), (ii) a non-exclusive, sublicensable right and license under the Licensed Intellectual Property to manufacture the Licensed Compounds and Licensed Products in Greater China and (iii) a non-exclusive, sublicensable right and license under the Licensed Intellectual Property to develop the Licensed Compounds and Licensed Products in the Greater China in connection with certain global clinical studies (as described below).

Under the terms of the Mabworks Agreement, the Company paid to Mabworks a $9.0 million upfront payment, and the Company is obligated to pay a total of up to $30.0 million upon the achievement of certain development and regulatory milestones pertaining to the first indication for a Licensed Product, additional lower amounts upon the achievement of certain development and regulatory milestones pertaining to up to two additional indications for a Licensed Product and a total of up to $832.0 million upon the achievement of certain commercial milestones for all Licensed Products. In addition, the Company is obligated to pay Mabworks tiered royalties in the low-to mid-single-digit percentages on aggregate annual net sales of all Licensed Products in the Licensed Territory. The Company is obligated to pay royalties on a Licensed Product-by-Licensed Product and country-by-country basis from the date of the first commercial sale in such country until the latest of: (i) the expiration of the last valid claim on the Licensed Intellectual Property covering the composition of matter of the Licensed Compound in such Licensed Product in such country; and (ii) ten years following the first commercial sale of such Licensed Product in such country (each, a Royalty Term). The royalty rate is subject to reduction on a Licensed Product-by-Licensed Product and country-by-country basis under certain circumstances. In the event that the Company grants sublicenses under the

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Licensed Intellectual Property, the Company will be obligated to pay Mabworks a percentage, in the mid-single-digits to low-double-digits, of certain consideration received under such sublicenses.

The Company agreed to use commercially reasonable efforts to develop, obtain regulatory approval for and commercialize a Licensed Product in the U.S. The Company has also granted Mabworks a right of first refusal to develop and commercialize in Greater China any product the Company controls that contains an antibody directed to tumor necrosis factor ligand superfamily member 13 (APRIL). Mabworks has agreed not to exploit in the Licensed Territory any product that is directed to APRIL during the term of the Mabworks Agreement. The Mabworks Agreement also contains a mechanism for the parties to collaborate on global clinical studies in the future, where the Company has a right to perform clinical studies in Greater China with Mabworks’ approval in the event that Mabworks elects not to participate in such global clinical studies. Unless earlier terminated, the Mabworks Agreement will expire on the expiration of the last to expire Royalty Term. Either party may terminate the Mabworks Agreement for the other party’s material breach, following a customary notice and cure period, or insolvency. Additionally, the Company may terminate the Mabworks Agreement for any reason upon 60 days written notice to Mabworks.

The Company recorded the upfront payment of $9.0 million as research and development expenses in the first quarter of 2025 in the consolidated statements of operations and comprehensive loss. The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. During the year ended December 31, 2025, the Company recorded $1.0 million of research and development expense related to a milestone.

Legal Proceedings

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company records accruals for estimated losses when available information indicates a loss is probable and reasonably estimable. Significant judgment is required to determine both probability and the estimated amount. The Company expenses the costs related to its legal proceedings as they are incurred.

On December 31, 2025, the Company filed a complaint in Delaware Superior Court against Alumis Inc. and its wholly owned subsidiary, Acelyrin, relating to a dispute concerning the Asset Purchase Agreement seeking a declaratory judgment that the Company’s budoprutug drug candidate is not a Product under the Asset Purchase Agreement, and that the Company does not owe a milestone payment sought by Alumis in connection with its development of budoprutug. This matter is currently pending. The Company is unable to predict the timeline for resolution or the outcome of this matter.

As of the date of these consolidated financial statements, the Company is not party to any other material legal matters or claims.

Indemnification

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless, and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. To date, the Company has not incurred any material costs as a result of such indemnification provisions. The Company is not currently aware of any indemnification claims and has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2025.

Note 9.Stock-Based Compensation

2019 and 2021 Equity Incentive Plans

The Company has outstanding awards under its 2019 Equity Incentive Plan (the 2019 Plan), but is no longer granting awards under this plan. The Company’s 2021 Equity Incentive Plan (the 2021 Plan and, together with the 2019 Plan, the Plans) provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units (RSUs), stock appreciation rights and other stock-based awards to the Company’s employees, officers, directors and consultants. Any shares that are returned under the 2019 Plan as a result of cancellation or forfeiture become available for grant under the 2021 Plan. Further, the number of shares of common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each year continuing through and including January 1, 2031, by 5% of the total number of shares of common stock outstanding on December 31 of the immediately preceding calendar year, or a lesser number of shares

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determined by the Company’s board of directors. The number of authorized shares reserved for issuance under the 2021 Plan was increased by 3,362,771 shares effective as of January 1, 2025 in accordance with the provisions of the 2021 Plan described above. As of December 31, 2025, 3,124,834 shares remained available for future grant under the 2021 Plan. The number of shares reserved for issuance under the 2021 Plan was increased by 2,388,316 shares effective January 1, 2026.

Under the terms of the 2021 Plan, options are granted at an exercise price no less than fair value of the Company’s common stock on the grant date, except in certain cases related to significant corporate transactions. Options expire no later than ten years from the date of the grant.

2025 Inducement Plan

In March 2025, the Company’s board of directors adopted the 2025 Inducement Plan (the Inducement Plan), pursuant to which the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock awards, RSUs and other stock-based awards with respect to an aggregate of 1,250,000 shares of its common stock. Awards under the Inducement Plan may only be granted to new employees who were not previously an employee or director of the Company or are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to the individual’s entering into employment with the Company in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4). On September 30, 2025, the Company’s board of directors approved an amendment to the Inducement Plan to increase the number of shares of common stock authorized for issuance under the Inducement Plan by 750,000 shares. As of December 31, 2025, no shares remained available for issuance under the Inducement Plan.

Employee Stock Purchase Plan

The Company’s 2021 Employee Stock Purchase Plan (the ESPP) allows employees, including executive officers, to contribute up to 15% of their earnings, subject to certain limitations, for the purchase of the Company’s common stock at a price per share equal to the lower of (a) 85% of the fair market value of a share of common stock on the first day of the offering period, or (b) 85% of the fair market value of a share of common stock on the last day of the offering period. The number of shares of common stock reserved for issuance under the ESPP automatically increases on January 1 of each calendar year through and including January 1, 2031, by the lesser of (1) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year or (2) a number of shares determined by the Company’s board of directors. Shares subject to purchase rights granted under the ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under the ESPP. The number of authorized shares reserved for issuance under the ESPP was increased by 672,554 shares effective as of January 1, 2025 in accordance with the provisions of the ESPP described above. The first offering period began on December 16, 2025 and will end on June 15, 2026. As of December 31, 2025, no shares had been granted or purchased under the ESPP and 1,736,779 shares remained available for issuance under the ESPP. The number of shares reserved for issuance under the ESPP was increased by 477,663 shares effective January 1, 2026.

Stock Option Valuation

The fair value of stock option grants is estimated on the date of grant using the Black Scholes option pricing model. Volatility is estimated based on the historical and implied volatilities of comparable publicly traded companies as the Company does not have sufficient history of trading in its common stock. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The relevant data used to determine the fair value of the stock option grants during the years ended December 31, 2025 and 2024 is as follows, presented on a weighted-average basis:

Year Ended December 31,

Expected term (in years) 6.0 6.1

Risk-free interest rate 4.3 % 4.0 %

Expected dividend yield — —

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Stock Option Activity

Outstanding stock options consist of option grants with service-based vesting conditions, typically 25% on the first anniversary of the grant date with the remainder vesting monthly over the following three years. The activity for stock options is as follows:

Weighted Weighted

Average Average Aggregate

Number of Exercise Contractual Intrinsic

Shares Price Term Value

(in years) (in thousands)

The aggregate intrinsic value disclosed in the above table is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had strike prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was less than $0.1 million and $6.4 million, respectively.

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2025 and 2024 was $1.45 and $5.56 per share, respectively.

Restricted Stock Units

The Company has outstanding RSUs with service-based vesting conditions and RSUs with performance-based vesting conditions. The activity for RSUs is as follows:

Shares Weighted Average Grant Date Fair Value

The total fair value of restricted stock vested during the years ended December 31, 2025 and 2024 was $1.5 million and $0.9 million, respectively

Stock-Based Compensation

The following table sets forth stock-based compensation expense included in the Company’s consolidated statements of operations and comprehensive loss (in thousands):

Year Ended December 31,

Research and development expenses $ 3,503 $ 3,032

General and administrative expenses 4,551 2,525

Total stock-based compensation expense $ 8,054 $ 5,557

Stock-based compensation expense for the year ended December 31, 2025 included $3.0 million related to performance-based RSUs that vested in the third quarter of 2025 upon achievement of the performance conditions. As of December 31, 2025, there was $11.7 million of total unrecognized compensation cost related to unvested awards expected to vest, which is expected to be recognized over a weighted average period of 2.9 years.

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Note 10. Net Loss Per Share

Basic and diluted net loss per share are computed using the weighted-average number of shares of common stock outstanding for the period. The Company issued a pre-funded warrant in December 2025 (see Note 6). The shares of common stock underlying the pre-funded warrant are included in the calculation of basic and diluted net loss per share because they are considered shares issuable for little or no consideration under ASC 260, Earnings Per Share. The following table shows the computation of basic and diluted net loss per share (in thousands, except share and per share data):

Year Ended December 31,

Numerator:

Denominator:

Net loss per share, basic and diluted $ (0.88 ) $ (1.53 )

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive:

December 31,

Shares of common stock issuable under the ESPP 23,944 —

Note 11. Income Taxes

The components of net loss before tax provision from income taxes are as follows (in thousands):

Year Ended December 31,

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The following table presents a reconciliation of the Company’s expected tax computed at the U.S. statutory federal income tax rate to the total provision for income taxes (in thousands):

Year Ended December 31,

U.S. federal taxes at statutory rate $ (12,569 ) $ (15,518 )

State taxes, net of federal benefit — 1

Acquired in-process research and development, related party — 7,698

Effect of cross-border transfers 1,303 —

Non-deductible officer compensation 293 575

Foreign rate differential 237 (211 )

Stock-based compensation 83 588

Other expenses, net (228 ) (123 )

Effective income tax rate $ — $ —

The significant components of the Company’s deferred tax assets and liabilities are presented below (in thousands):

December 31,

Deferred tax assets:

Research and development expenses 3,824 2,388

Stock compensation expense, including 162m limitations 1,400 432

Accrued compensation and benefits 332 303

Operating lease liabilities 113 121

Net deferred tax assets 91 138

Deferred tax liabilities:

Operating lease, right-of-use asset (106 ) (112 )

Other assets 15 (26 )

Total deferred tax liabilities (91 ) (138 )

Net deferred tax assets and liabilities $ — $ —

As of December 31, 2025, the Company had federal net operating loss carryforwards of $55.8 million, which may be available to offset future taxable income and do not expire but are limited in their usage to an annual deduction equal to 80% of annual taxable income. As of December 31, 2025, the Company had state net operating loss carryforwards of $9.5 million, which may be available to offset future taxable income and expire at various dates beginning in 2038. As of December 31, 2025, the Company also had U.S. federal and state research and development tax credit carryforwards of $1.0 million and $0.1 million, respectively, which may be available to offset future tax liabilities and expire at various dates beginning in 2039. As of December 31, 2025, the Company had foreign net operating loss carryforwards of $63.2 million, which may be available to offset future taxable income and do not expire.

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Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income or tax liabilities. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position.

As required by ASC 740, management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards. Management has determined that it is more likely than not that the Company will not recognize the benefits of its deferred tax assets and, as a result, a valuation allowance has been recorded.

The changes in the valuation allowance were as follows (in thousands):

Year Ended December 31,

Valuation allowance as of beginning of year $ 28,492 $ 20,856

Net increases recorded to income tax provision 10,876 7,636

Valuation allowance as of end of year $ 39,368 $ 28,492

The increase in the valuation allowance for deferred tax assets during the year ended December 31, 2025 related primarily to an increase in net operating losses. The increase in the valuation allowance for deferred tax assets during the year ended December 31, 2024 related primarily to increases in net operating losses and capitalized research and development costs.

The Company assesses the uncertainty in its income tax positions to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon the ultimate settlement with the relevant taxing authority. No reserve for uncertain tax positions or related interest and penalties has been recorded at December 31, 2025 and 2024.

The Company is subject to taxation in the U.S. (federal and various states) and the U.K. Currently, no historical years are under examination. The Company’s tax years starting in December 31, 2018 are open and subject to examination by the U.S. (federal and various states) and the U.K. taxing authorities due to the carryforward of utilized net operating losses and research and development credits.

Note 12. Defined Contribution Plans

The Company has a 401(k) defined contribution plan. Participation in the plan is available to substantially all U.S.-based employees. Company contributions are discretionary but the Company has an employer matching program pursuant to which the Company makes matching contributions of up to 4% of each participating employee’s eligible compensation. For the years ended December 31, 2025 and 2024, total expense recognized from the 401(k) matching contributions was approximately $0.2 million and $0.1 million, respectively.

Prior to the Company's restructuring in 2024 (see Note 13), the Company had a workplace pension contribution scheme for U.K.-based employees. For the year ended December 31, 2024, the Company made contributions to the pension scheme of approximately $0.1 million.

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Note 13. Restructuring Costs

In 2024, the Company shifted its focus from developing therapeutics for neuronal excitability disorders to immune-mediated diseases. In connection with this shift, the Company ceased its operations in the U.K. and separated from seven U.K. employees in 2024. The costs associated with this headcount reduction were fully recognized and all of the related payments were made by December 31, 2024. A summary of the restructuring costs recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024 were as follows (in thousands):

Research and development expenses $ — $ 1,778 $ 944 $ 2,722

General and administrative expenses — 475 161 636

Note 14. 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 (the CODM). The Company views its operations and manages its business as one operating and reportable segment, focused on developing therapeutics for patients with immune-mediated diseases. The Company’s CODM is its chief executive officer.

Segment profit or loss is measured as net loss presented in the consolidated statements of operations and comprehensive loss. For the purpose of evaluating segment performance and allocating resources, the CODM reviews the Company’s financial information on a consolidated basis together with certain operating metrics and evaluates net loss against comparable prior periods and the Company’s annual operating plan. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

In addition to the significant expense categories included within net loss presented on the consolidated statements of operations and comprehensive loss, the following table sets forth disaggregated research and development expenses (in thousands):

Year Ended December 31,

Direct research and development expenses:

Unallocated research and development expenses:

Personnel-related (including stock-based compensation) 8,232 7,990

Other research and development expenses 1,365 163

Total research and development expenses $ 46,713 $ 14,336

1Includes the upfront payment and the associated direct transaction costs incurred in connection with the Mabworks Agreement for the year ended December 31, 2025.

2Includes direct expenses related to the Company's legacy product candidates ETX-123 and ETX-155.

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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and chief financial officer (our principal financial officer) or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based on our evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2025 because of the material weaknesses in our internal control over financial reporting described below.

Notwithstanding the material weaknesses, management believes the consolidated financial statements as included in Item 8 of this Annual Report on Form 10-K present fairly, in all material respects, the Company's financial condition, results of operations and cash flows as of and for the periods presented in accordance with generally accepted accounting principles in the United States.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of our executive chair and our chief accounting officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with generally accepted accounting principles.

As of December 31, 2025, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in “Internal Control—Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting was not effective as of December 31, 2025, because of the unremediated material weaknesses in our internal control over financial reporting described below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses are as follows:

•

We did not design or maintain an effective control environment. Specifically, we lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters commensurate with accounting and reporting requirements. The lack of personnel contributed to the following material weakness.

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We did not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including segregation of duties and controls over the preparation and review of journal entries, account reconciliations and consolidation.

These material weaknesses did not result in a misstatement to the consolidated financial statements. However, these material weaknesses could result in a misstatement of our account balances or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected.

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Management’s report on internal control over financial reporting was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report.

Remediation Efforts to Address Material Weaknesses

Management has concluded that the material weaknesses in internal control over financial reporting were due to the fact that we were a private company with limited resources when the material weaknesses were identified and did not have the necessary business processes and related internal controls formally designed and implemented, coupled with the appropriate resources with the appropriate level of experience and technical expertise, to oversee our business processes and controls.

We have implemented measures designed to improve internal control over financial reporting to remediate the control deficiencies that led to our material weaknesses. The remediation measures we have taken include: