FBRX US Equity☆

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

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes contained elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. The known risks and uncertainties include, but are not limited to, those identified and described in detail under the caption “Risk Factors” and elsewhere in this Form 10-K.

Overview

Forte Biosciences, Inc. and its subsidiaries (www.fortebiorx.com) (“Forte”, “we”, “our”) is a clinical-stage biopharmaceutical company whose current lead product candidate is FB102. FB102 is a proprietary anti-CD122 monoclonal antibody therapeutic candidate with potentially broad autoimmune and autoimmune-related indications.

Our FB102 program aims to address key pathways implicated in these indications with a CD122 antagonist. CD122 is a subunit of IL-2/IL-15 receptors which are key regulators of NK cells and certain T cell subsets.

In FB102 mechanistic in-vitro studies, human donor T and NK cells were stimulated with either IL2 or IL15 in the presence or absence of FB102. FB102 significantly inhibited proliferation (4-5x inhibition in the proliferation of T cells and 6-8 fold inhibition in the proliferation of NK cells) and also inhibited activation of T cells. The level of FB102 inhibition of proliferation and activation was at levels comparable to unstimulated cells. Human donor regulatory T cell (Treg) studies stimulated with IL2 demonstrated comparable proliferation both in the presence and absence of FB102. Additionally, in-vitro assays demonstrated superiority of FB102 compared to competing antibodies.

In 4- and 13-week non-human primate (NHP) studies, after a single dose, FB102 demonstrated significant reductions in the NK cell pharmacodynamic marker (up to approximately 80%-90%). Additionally, after multiple doses at exposures comparable to human therapeutic doses, Treg levels in the FB102 dosing arm were similar to vehicle supporting the in-vitro data and the mechanism of action of FB102.

Three cohorts of single and two cohorts of multiple ascending doses in a Phase 1 trial of healthy volunteers were completed in which FB102 demonstrated a good safety profile. The primary objective of the Phase 1 trial was to assess the safety, tolerability and pharmacokinetics of single and multiple ascending doses of FB102. No dose limiting toxicities were observed. FB102 demonstrated significant reductions in the NK cell pharmacodynamic marker (greater than approximately 70%). Based on the successful completion of the Phase 1 healthy volunteer cohorts, we initiated a patient-based Phase 1b trial in celiac disease in the third quarter of 2024 and a patient-based Phase 1b trial for non-segmental vitiligo in the first quarter of 2025.

In June 2025, we announced positive data in our celiac disease Phase 1b study. The study enrolled 32 subjects 3:1 randomized (24 on FB102 and 8 on placebo). Subjects received 4 doses of FB102 (10 mg/kg) and underwent a 16- day gluten challenge. In addition to safety and tolerability, the study assessed morphologic and inflammatory endpoints along with gluten challenge induced symptoms.

FB102 demonstrated a statistically significant benefit on the composite histological VCIEL endpoint (change from baseline). The mean VCIEL change from baseline was -1.849 for placebo subjects compared to 0.079 for FB102 treated subjects (p=0.0099).

The change in the density of CD3-positive T cells, or IELs, from baseline was an increase of 13.3 for placebo subjects compared to a decline of 1.5 for FB102 treated subjects (p=0.0035). Baseline IEL density was 25.6 for the placebo subjects and 23.5 for the FB102 treated subjects.

The mean change in the Vh:Cd ratio from baseline was -0.173 (0.21) for placebo subjects compared to -0.046 (0.09), a 73% improvement for FB102 treated subjects compared to placebo.

Gluten challenge induced GI symptoms (nausea, vomiting, diarrhea, abdominal pain and abdominal bloating) reported during the 16-day gluten challenge from patient diaries/AE collection demonstrated a 42% benefit for FB102 treated subject (4.0 events per subject) compared to placebo (6.9 events per subject).

There were no dropouts in the study. Treatment emergent adverse events were primarily mild (grade 1) with no grade 3 or higher SAEs reported in the FB102 arm.

Based on the successful completion of our patient-based Phase 1b celiac disease study, we initiated a Phase 2 celiac study in July 2025 with the topline readout expected in 2026. In November 2025, the US FDA approved our IND application for a United States arm of our Phase 2 celiac study. Our Phase 1b non-segmental vitiligo trial is expecting topline data in the first half of 2026 and we have initiated a Phase 1b alopecia areata study with topline data expected in 2026.

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Celiac disease is an autoimmune disease that is triggered by consuming gluten and results in damage to the small intestine. Symptoms include diarrhea, fatigue, headaches, anemia, nausea and dermatitis herpetiformis (an itchy skin rash). A significant patient population of celiac disease patients do not respond to gluten free diet. The health consequences for not treating include malnourishment, cancer and other autoimmune conditions. It is estimated that 1:133 in U.S. (2.5 million people) have celiac disease (Fasano, Arch Intern Med. 2003 PMID: 12578508) and that 0.3% to 0.5% of celiac disease patients are non-responsive (Malamut Gastroenterology. 2024 38556189). It has been estimated by various U.S. advocacy and epidemiology sources that up to 80% of people in the U.S. with celiac disease are undiagnosed. There are no approved treatment options for celiac disease.

Vitiligo is a disease of the skin mediated primarily by NK and CD8+ T cells that attack melanocytes leading to patchy depigmentation of the skin. It is estimated that vitiligo affects 2 million people in the United States (NIH). The global vitiligo treatment market size was estimated at $1.6-1.8 billion in 2024-2025 and is projected to reach approximately $2.3-2.7 billion by 2032-2034 (Fortune Business Insights).

Alopecia areata is a disease in which immune cells attack and damage hair follicles and is mediated primarily by CD8+ T cells and NK cells. The global alopecia treatment market has been valued at around $3-3.5 billion in 2024 with some forecasts pointing to the potential to reach $6 billion in 2032-2034 (DataM Intelligence).

Further, we believe FB102 has potentially other autoimmune and autoimmune-related applications including in type 1 diabetes ("T1D") which is caused by autoreactive T Cells destroying insulin-producing pancreatic β- cells. CD8+ T cells with receptors recognizing β-cell specific peptides are enriched in pancreatic islets of T1D patients. Environmental stress causes β-cells to upregulate MHC and to express IL-15 and IL-15RA. (Herold 2024 Nat Rev Immunol. PMID 38308004). It is estimated that 64,000 people are diagnosed with T1D annually (https://beyondtype1.org/type-1-diabetes-statistics/).

We had approximately $77.0 million in cash and cash equivalents as of December 31, 2025. Our common stock is publicly traded on the Nasdaq Capital Market under the ticker symbol FBRX. Prior to our merger with Tocagen, Inc., a publicly traded biotechnology company, Forte was a privately held company incorporated in Delaware on May 3, 2017.

In March 2025, the Company filed a new shelf registration statement on Form S-3 that was declared effective by the SEC in April 2025 for the issuance of up to $300.0 million in securities. On June 25, 2025, we closed a public offering (the “Offering”) pursuant to which we sold 5,630,450 shares of common stock at a price to the public of $12.00 per share and pre-funded warrants to purchase 619,606 shares of common stock at a price to the public of $11.999 per pre-funded warrant, which represents the per share public offering price for the shares less the exercise price for each pre-funded warrant. The gross proceeds from the Offering were $75.0 million and the Company incurred approximately $5.1 million in underwriting discounts, commissions and offering expenses. We also granted the underwriters an option, exercisable for a period of 30 days, to purchase up to an additional 937,508 shares of common stock. In July 2025, the underwriters of the Offering exercised their option and purchased 148,258 shares of common stock for gross proceeds of $1.8 million. The pre-funded warrants have an exercise price of $0.001 per share, are immediately exercisable and remain exercisable until exercised in full.

In November 2024, we issued 4,931,389 shares of our common stock at a purchase price of $5.5520 per share, and 4,615,555 pre-funded warrants to purchase shares of common stock at a purchase price of $5.5510 per pre-funded warrant ("2024 Private Placement"). The pre-funded warrants have an exercise price of $0.001 per share of common stock, are immediately exercisable and remain exercisable until exercised in full. The gross proceeds of the 2024 Private Placement were $53.0 million and we incurred $3.4 million in issuance costs. In connection with the 2024 Private Placement, we filed a registration statement on Form S-3 that was declared effective in December 2024.

Intellectual Property

We own one US patent for administering a combination of Gram-positive and Gram-negative bacteria along with metabolites for treatment of a wide variety of skin conditions. The patent’s estimated expiration date is 2039. This patent is not material to Forte’s FB102 program. We also own one pending PCT application, six pending US applications and eighteen pending foreign applications in Europe, Australia, Canada, China, Eurasia, Hong Kong, Israel, Japan, South Korea, Mexico, New Zealand, Singapore, Brazil, India, South Africa, Taiwan and Argentina related to the FB102 program. The estimated expiration dates of these patents are 2043-2046. We also own one pending US application and one pending application in Europe that is not material to Forte's FB102 program.

Macroeconomic Environment

Businesses throughout our industry have been and will continue to be impacted by a number of challenging and unexpected global and national events and circumstances that continue to evolve, including without limitation, the military conflicts in Ukraine and the Middle East, increased economic uncertainty, inflation, rising interest rates, recent and any potential future financial institution failures, trade policies, potential trade wars, and actions or inactions of the U.S. or other major national governments (including the

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imposition of tariffs and retaliatory measures) and other geopolitical tensions. The extent of the impact of these events and circumstances on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and scope of the events and their impact on our development activities, third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. We have been and continue to actively monitor the potential impacts that these various events and circumstances may have on our business and we take steps, where warranted, to minimize any potential negative impacts on our business resulting from these events and circumstances.

In July 2025, the U.S. federal government enacted the One Big Beautiful Bill Act ("OBBBA"), a broad tax and spending bill that includes provisions impacting corporate taxpayers. The OBBBA’s various provisions include, among other things, accelerated tax deductions for qualified property and research expenditures. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. The impact of the new tax law did not have a material effect on our effective income tax rate and net deferred federal income tax assets, as we continue to maintain a full valuation allowance.

Components of Operating Results

Revenue

We have no products approved for commercial sale or in active development and have not generated any revenue from product sales. In the future, we may generate revenue from product sales, royalties on product sales, license fees, milestones, or other upfront payments if we enter into any collaborations or license agreements. We expect that our future revenue will fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any such payments and sales.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development costs consist primarily of salaries and benefits of research and development personnel and costs related to research activities, preclinical studies, clinical trials and drug manufacturing. Non-refundable advance payments for goods or services that will be used in future research and development activities are deferred and capitalized and are only expensed when the goods have been received or when the service has been performed rather than when the payment is made.

Drug manufacturing and clinical trial costs are a component of research and development expenses. The Company expenses costs for its drug manufacturing activities performed by Contract Manufacturing Organizations (“CMOs”), costs for its preclinical and clinical trial activities performed by Contract Research Organizations (“CROs”) and other service providers, as they are incurred, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements. The Company uses information it receives from internal personnel and outside service providers to estimate the percentage of completion and therefore the expense to be incurred. Our research and development expenses may fluctuate due to fluctuations in the level of manufacturing and progression of clinical activity as we continue to develop FB102.

We anticipate research and development expenses to continue to increase in the future as we develop our current lead product candidate, FB102. Our research and development expenses may increase as we continue to advance FB102 through a celiac Phase 2 trial including a U.S. arm as a result of the FDA approving our IND, multiple Phase 1b clinical trials and if we pursue additional autoimmune indications.

General and Administrative Expenses

General and administrative expenses consist primarily of professional fees such as legal, auditing, tax and business consulting services, personnel expenses and travel costs, costs associated with being a publicly traded company such as Sarbanes-Oxley compliance, accounting fees, and directors’ and officers’ liability insurance premiums. Our general and administrative expenses may fluctuate due to fluctuations in professional and legal advisory fees and generally increase as we build out our infrastructure to further develop FB102.

Interest Income

Other income consists of interest income earned on our cash, cash equivalents and short-term investment balances.

Other expense, net

Other expense, net, consists of franchise taxes and foreign exchange gains and losses.

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Critical Accounting Policies, Significant Judgments and Use of Estimates

Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that may be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

While our significant accounting policies are described in Note 2 of our consolidated financial statements included elsewhere in this Form 10-K, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our research and development expenses. This process involves reviewing open contracts and commitments, communicating with our personnel to identify services that have been performed for us and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. We make estimates of our research and development expenses in our consolidated financial statements based on facts and circumstances known to us at that time. If our estimates of the status and timing of services performed differs from the actual status and timing of services performed, we may report amounts that are too high or too low in any particular period. To date, there have been no material differences from our estimates to the amounts actually incurred.

Stock-Based Compensation

We account for stock-based compensation arrangements with employees, directors and non-employees in accordance with Accounting Standards Codification (“ASC”) 718, Stock Compensation. Stock-based awards issued by us have been primarily stock options and restricted stock units with time-based or performance-based vesting. ASC 718 requires the recognition of compensation expense, using a fair value-based method, for costs related to all stock-based awards. To determine the grant-date fair value of stock options, we utilize the Black-Scholes option pricing model, which is impacted by the fair value of our common stock as well as other variables including, but not limited to, the expected term that stock-based awards will remain outstanding, expected common stock price volatility over the expected term of the stock-based awards, risk-free interest rates and expected dividends.

For stock-based awards with time-based vesting which includes stock options and restricted stock units, stock-based compensation is recognized over the period during which an awardee is required to provide services in exchange for the stock-based award, known as the requisite service period (usually the vesting period), on a straight-line basis. For time-based stock awards, stock-based compensation expense is recognized based on the fair value determined on the date of grant. For stock-based awards with performance-based vesting, the fair value of the award is recognized as expense when the achievement of the associated performance criteria becomes probable.

Estimates of the fair value of stock-based awards as of the grant date using the Black-Scholes option pricing model are affected by assumptions regarding a number of variables. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. The volatility input is subjective and generally requires significant analysis and judgment to develop and involves inherent uncertainties and the application of significant judgment. If we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different.

We will continue to use judgment in evaluating the expected volatility, expected terms and interest rates utilized for our stock-based compensation expense calculations on a prospective basis.

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Pre-Funded Warrants

We assessed the pre-funded warrants issued with equity financing for appropriate equity or liability classification and determined the pre-funded warrants were freestanding instruments that do not meet the definition of a liability in accordance with ASC 480 and do not meet the definition of a derivative in accordance with ASC 815.

The pre-funded warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, are not considered mandatorily redeemable, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the warrants do not provide any guarantee of value or return. Accordingly, the pre-funded warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance.

Shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for purposes of computing net loss per share because the shares may be issued for little or no consideration and are exercisable after the original issuance date.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following tables summarize our results of operations for the years ended December 31, 2025 and 2024 (in thousands):

Year Ended December 31,

Operating expenses:

Research and Development Expenses

Research and development expenses were $58.2 million for the year ended December 31, 2025, compared to $21.2 million during the same period in 2024. The increase was primarily due to an increase of $36 million in manufacturing and clinical expenses related to FB102 for our Phase 2 clinical trial for celiac disease and Phase 1b clinical trials for vitiligo and alopecia areata, an increase of $0.4 million in discovery work, and an increase of $1.9 million in personnel-related expenses due to an increase in headcount, partially offset by a decrease of $1.5 million in preclinical expenses as a result of toxicology work performed in 2024.

Our research and development expenses may increase as we continue to advance FB102 through a celiac Phase 2 trial including a U.S. arm as a result of the FDA approving our IND, multiple Phase 1b clinical trials and if we pursue additional autoimmune indications.

General and Administrative Expenses

General and administrative expenses were $12.4 million for the year ended December 31, 2025 compared to $15.4 million for the same period in 2024. The decrease was primarily due to decreases in professional and legal advisory fees, including litigation and settlement expenses, of $6.1 million, partially offset by an increase of $3.0 million in personnel-related expenses, including additional non-cash stock-based compensation of $2.5 million.

Our general and administrative expenses may fluctuate in the future due to fluctuations in professional and advisory fees as we build out our infrastructure to advance FB102 through a Phase 2 trial, multiple Phase 1b clinical trials and if we pursue additional autoimmune indications.

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Interest Income

The increase in interest income for the year ended December 31, 2025, compared with the same period in the prior year was primarily driven by higher interest income earned from higher average cash and cash equivalents balances.

Other Expense, net

The increase in other expense, net for the year ended December 31, 2025, compared with the same period in the prior year was primarily driven by foreign exchange losses.

Income Tax Expense

Income tax expense for the year ended December 31, 2025, was related to the Company's subsidiary in Australia.

Liquidity and Capital Resources

We have no products approved for commercial sale and have not generated any revenue from product sales or other sources. We have incurred operating losses in each year since inception. Our net loss was $69.4 million for the year ended December 31, 2025. As of December 31, 2025, we had an accumulated deficit of $223.4 million. We expect to incur operating losses in the foreseeable future as we further develop FB102.

In March 2025, the Company filed a new shelf registration statement on Form S-3 that was declared effective by the SEC in April 2025 for the issuance of up to $300.0 million in securities. On June 25, 2025, the Company closed a public offering (the “Offering”) pursuant to which it sold 5,630,450 shares of common stock at a price to the public of $12.00 per share and pre-funded warrants to purchase 619,606 shares of common stock at a price to the public of $11.999 per pre-funded warrant, which represents the per share public offering price for the shares less the exercise price for each pre-funded warrant. The Company also granted the underwriters an option (the "Option"), exercisable for a period of 30 days, to purchase up to an additional 937,508 shares of common stock. The pre-funded warrants have an exercise price of $0.001 per share, are immediately exercisable and remain exercisable until exercised in full. The gross proceeds from the Offering were $75.0 million and the Company incurred approximately $5.1 million in underwriting discounts, commissions and offering expenses.

In July 2025 the underwriters of the Offering exercised the Option and purchased 148,258 shares of common stock for gross proceeds of $1.8 million and incurred issuance costs of $0.1 million.

In November 2024, the Company issued 4,931,389 shares of the Company’s common stock at a purchase price of $5.552 per Share and 4,615,555 pre-funded warrants to purchase shares of common stock at a purchase price of $5.551 per pre-funded warrant ("2024 Private Placement") in connection with a Securities Purchase Agreement (the “2024 Purchase Agreement”). The pre-funded warrants have an exercise price of $0.001 per share of common stock, are immediately exercisable and remain exercisable until exercised in full. The holders of pre-funded warrants may not exercise a pre-funded warrant if the holder, together with its affiliates, would beneficially own more than 19.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise. The holders of pre-funded warrants may increase or decrease such percentages not in excess of 19.99% by providing at least 61 days’ prior notice to the Company. In connection with the 2024 Private Placement, the Company filed a registration statement to register shares on Form S-3, which was declared effective on December 20, 2024. The gross proceeds of the 2024 Private Placement were $53.0 million and the Company incurred $3.4 million in issuance costs. Certain executive officers and senior management of the Company participated in this 2024 Private Placement, purchasing $475 thousand in shares of common stock at a purchase price of $5.552 per share.

We had cash and cash equivalents of approximately $77.0 million as of December 31, 2025. We believe that our existing cash and cash equivalents will be sufficient to fund our operations for at least 12 months from the filing date of this Form 10-K.

Future Capital Requirements

We have not generated any revenue from product sales or from out-licensing. We do not know when, or if, we will generate any revenue. We expect to incur ongoing losses as we develop FB102, which we believe has potentially broad application for autoimmune and autoimmune-related indications such as celiac disease, vitiligo, alopecia areata and type 1 diabetes. FB102 is currently in clinical development in two Phase 1b and one Phase 2 clinical trials. Our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to:

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the initiation and progress of additional clinical trials and preclinical studies for our product candidate in other indications of FB102;

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the terms and timing of any strategic alliance, licensing and other arrangements that we may establish;

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the number of programs we pursue;

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the outcome, timing and cost of regulatory approvals;

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the cost and timing of hiring new employees to support our continued growth;

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the costs involved in patent filing, prosecution, and enforcement; and

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the costs and timing of having clinical supplies of our product candidates manufactured.

If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any equity or debt financing may contain terms that are not favorable to us or our stockholders. In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the conflicts in Eastern Europe, and otherwise. If we are unable to raise additional funds when needed, we may be required to delay, reduce or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to other parties rights to develop or commercialize our drug candidates that we would prefer to retain.

See “Risk Factors” for additional risks associated with our substantial capital requirements.

Summary Consolidated Statements of Cash Flows

The following table sets forth the primary sources and uses of cash for the years ended December 31, 2025 and 2024 (in thousands):

Year Ended December 31,

Net cash (used in) provided by:

Net increase (decrease) in cash $ 54,713 $ (14,881 )

Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $50.9 million and consisted primarily of a net loss of $69.4 million adjusted for non-cash stock-based compensation of $6.3 million and a decrease in net operating assets of $12.4 million.

Net cash used in operating activities for the year ended December 31, 2024 was $30.7 million and consisted primarily of a net loss of $35.5 million adjusted for non-cash stock-based compensation of $3.1 million and a decrease in net operating assets of $1.7 million.

Investing Activities

Net cash provided by investing activities for the year ended December 31, 2025 was primarily due to proceeds received from the redemption of U.S. treasury bills.

Net cash used in investing activities for the year ended December 31, 2024 was primarily due to the purchase of U.S treasury bills.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was primarily due to proceeds received from the Offering of $75.0 million and from the exercise of the underwriters' option of $1.8 million, which were partially offset by the

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payment of financing costs incurred in connection with the Offering, the underwriters' option exercise, and the 2024 Private Placement costs incurred in 2024 but paid in 2025.

Net cash provided by financing activities for the year ended December 31, 2024 was primarily due to the net proceeds of $51.9 million received from our 2024 Private Placement of 4,931,389 shares of the Company’s common stock at a purchase price of $5.552 per share, and 4,615,555 pre-funded warrants to purchase shares of common stock at a purchase price of $5.551 per pre-funded warrant.

Indemnification

As permitted under Delaware law and in accordance with our bylaws, we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving in such capacity pursuant to indemnification agreements. We believe the fair value of the indemnification rights and agreements is minimal. Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of December 31, 2025 and 2024.

Contractual Obligations

See Note 6 Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b‐2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.

Item 8. Financial Statements and Supplementary Data

The information required by this Item 8 is included in Part IV, Item 15 of this Annual Report on Form 10-K and is incorporated herein by reference.

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

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2025.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

As a smaller reporting company and non-accelerated filer, we are not required to provide an attestation report on our internal control over financial reporting issued by the Company’s independent registered public accounting firm.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and our Chief Financial Officer, believes that our disclosure controls, procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by the collusion of two or more people or by management override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information.

Securities Trading Plans of Directors and Executive Officers

No officers or directors, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information called for by this item will be set forth in our Proxy Statement for the Annual Meeting of Stockholders (the “Definitive Proxy Statement”) and is incorporated herein by reference. Our board of directors has adopted a Business and Ethics Code of Conduct (the “Code of Conduct”) that applies to our officers, directors and employees which is available on our website at www.fortebiorx.com. The Code of Conduct contains general guidelines for conducting the business of our company consistent with the highest standards of business ethics, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K.

Item 11. Executive Compensation

The information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

Item 14. Principal Accounting Fees and Services

The information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)

The following documents are filed as part of this Annual Report

(1)

The Financial Statements of Forte Biosciences Inc. and Report of Independent Registered Public Accounting Firm are included after the Signatures page of this Annual Report on Form 10-K beginning on page F-1.

(2)

Financial Statement Schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not applicable or not required.

(b)

Exhibits

Exhibits are filed as part of this Annual Report and are hereby incorporated by reference. Refer to Exhibit Index included herein.

67

Exhibit Index

ExhibitNumber Description

68

69

23.1* Consent of Independent Registered Public Accounting Firm (KPMG LLP).

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith.

+ Indicates management contract or compensatory plan.

† Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

^ Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.

70

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Forte Biosciences, Inc.

Date: March 31, 2026 By: /s/ Paul Wagner

Date: March 31, 2026 By: /s/ Antony Riley

Antony Riley Chief Financial Officer (Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Name Title Date

/s/ Paul A. Wagner, Ph.D. Chairman and Chief Executive Officer March 31, 2026

Paul A. Wagner, Ph.D.

/s/ Antony Riley Chief Financial Officer March 31, 2026

Antony Riley

/s/ Scott Brun, M.D. Director March 31, 2026

Scott Brun, M.D.

/s/ Stephen Doberstein, Ph. D. Director March 31, 2026

Stephen Doberstein, Ph. D.

/s/ Barbara K. Finck, M.D. Director March 31, 2026

Barbara K. Finck, M.D.

/s/ David Gryska Director March 31, 2026

David Gryska

/s/ Shiv Kapoor Director March 31, 2026

Shiv Kapoor

/s/ Steven Kornfeld Director March 31, 2026

Steven Kornfeld

/s/ Rich Vincent Director March 31, 2026

Rich Vincent

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4

Notes to Consolidated Financial Statements F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

Forte Biosciences, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Forte Biosciences, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, 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 U.S. generally accepted accounting principles.

Basis for Opinion

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

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

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for warrants issued in 2025

As described in Note 7 to the consolidated financial statements, in June 2025, the Company issued 5,630,450 shares of the Company’s common stock and 619,606 pre-funded warrants to purchase shares of common stock in a public offering. The Company determined that the June 2025 pre-funded warrants meet the criteria for equity-classified instruments and were, therefore, recorded in additional paid-in capital at issuance and are not subject to remeasurement. At December 31, 2025, additional paid-in capital included $71.6 million related to the June 2025 issuance of common stock and pre-funded warrants.

We identified the assessment of the accounting for the June 2025 pre-funded warrants to purchase common stock, specifically the classification as liabilities or equity, as a critical audit matter. A high degree of challenging and complex auditor judgment was involved in assessing the warrant features, which required interpretation of the complex terms of the agreements in order to apply the appropriate accounting guidance.

F-2

The following are the primary procedures we performed to address this critical audit matter. We evaluated the terms and conditions of the pre-funded warrant agreements and assessed the appropriateness of management’s interpretation and application of the relevant accounting literature, including consideration of whether certain actions were within the Company’s control, to assess the equity classification of the warrants on the balance sheet.

We have served as the Company’s auditor since 2023.

/s/ KPMG LLP

San Diego, California

March 31, 2026

F-3

Forte Biosciences, Inc.

Consolidated Balance Sheets

(in thousands, except share and par value data)

Assets

Current assets:

Short-term investments - 36,121

Prepaid expenses and other current assets 3,632 2,981

Property and equipment, net 129 77

Liabilities and stockholders' equity

Current liabilities:

Income tax payable 1,037 -

Commitments and contingencies (Note 6)

Stockholders’ equity:

Accumulated other comprehensive income 3 11

Total liabilities and stockholders’ equity $ 82,779 $ 61,561

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

F-4

Forte Biosciences, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

Year Ended December 31,

Operating expenses:

Research and development - related party 600 479

Other expense, net (396 ) (190 )

Income tax expense 1,037 —

Per share information:

Net loss per share - basic and diluted $ (4.71 ) $ (12.17 )

Comprehensive loss:

Unrealized (loss) gain on available-for-sale securities, net (8 ) 7

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

F-5

Forte Biosciences, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

Additional Accumulated Other Total

Common Stock Paid-in Comprehensive Accumulated Stockholders’

Shares Amount Capital Income Deficit Equity

Issuance of common stock under ESPP 958 — 14 — — 14

Stock based compensation — — 3,095 — — 3,095

Unrealized gain on available-for-sale securities, net — — — 7 — 7

Settlement of fractional shares paid in cash (147 ) — (1 ) — — (1 )

Issuance of common stock under ESPP 1,658 — 18 — — 18

Cashless exercise of warrants 251,082 — — — — —

Exercise of common stock options and warrants 491,565 1 33 — — 34

Stock based compensation — — 6,258 — — 6,258

Unrealized loss on available-for-sale securities, net — — — (8 ) — (8 )

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

F-6

Forte Biosciences, 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:

Depreciation expense 64 39

Accretion of debt discount on available-for-sale securities (237 ) (158 )

Stock-based compensation expense 6,258 3,095

Changes in operating assets and liabilities:

Prepaid expenses and other assets (2,574 ) (1,373 )

Income tax payable 1,037 —

Net cash used in operating activities (50,882 ) (30,745 )

Cash flows from investing activities:

Purchase of available-for-sale securities — (35,956 )

Proceeds from redemptions of short-term investments 36,350 —

Purchase of property and equipment (116 ) (37 )

Net cash provided by (used in) investing activities 36,234 (35,993 )

Cash flows from financing activities:

Proceeds from issuance of common stock and pre-funded warrants 75,000 53,000

Payment of issuance costs associated with financings (7,441 ) (1,121 )

Proceeds from issuance of common stock under ESPP 18 14

Proceeds from exercise of warrants and options 34 —

Taxes paid related to net share settlement of equity awards (29 ) (35 )

Settlement of fractional shares paid in cash — (1 )

Net cash provided by financing activities 69,361 51,857

Net increase (decrease) in cash and cash equivalents 54,713 (14,881 )

Cash and cash equivalents — beginning of year 22,244 37,125

Cash and cash equivalents — end of year $ 76,957 $ 22,244

Supplemental disclosure of non-cash investing and financing activities:

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

F-7

Forte Biosciences Inc.

Notes to Consolidated Financial Statements

1. Organization and Description of Business

Forte Biosciences, Inc. (www.fortebiorx.com) and its subsidiaries, referred to herein as the “Company” or "Forte", is a clinical- stage biopharmaceutical company focused on developing FB102, which is a proprietary anti-CD122 monoclonal antibody therapeutic candidate with potentially broad autoimmune and autoimmune-related indications. In June 2025, the Company announced positive data from a celiac disease Phase 1b study and has subsequently commenced a Phase 2 study for celiac disease. The Company is also advancing clinical development of FB102 in patient-based trials for non-segmental vitiligo and alopecia areata.

The Company merged with Tocagen, Inc. ("Merger"), a publicly traded biotechnology company, on June 15, 2020. Prior to the Merger, Forte was a privately held company incorporated in Delaware on May 3, 2017. The Company's headquarters is in Dallas, Texas. The Company’s common stock is traded on the Nasdaq stock exchange under the ticker symbol “FBRX”‌.

Reverse Stock Split

On August 27, 2024, the Company effected a 1-for-25 reverse stock split of its issued and outstanding common stock. The par value and authorized shares were not adjusted as a result of the reverse split. The reverse stock split also affected the Company’s outstanding common stock options and pre-funded warrants and resulted in the shares underlying such instruments being reduced and the exercise price being increased proportionately. All issued and outstanding shares of common stock and per share amounts contained in the consolidated financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented.

Liquidity and Risks

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The consolidated financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

Since inception, the Company has incurred losses and negative cash flows from operations. As of December 31, 2025, the Company had an accumulated deficit of $223.4 million and used $50.9 million of cash and cash equivalents in operating activities during the year ended December 31, 2025. Management expects to continue to incur additional losses in the foreseeable future as the Company focuses its development efforts on advancing FB102 through clinical trials.

The Company had cash and cash equivalents of approximately $77.0 million as of December 31, 2025. The Company’s cash and cash equivalents are held at financial institutions that exceed federally insured limits. The Company believes that its existing cash and cash equivalents will be sufficient to allow the Company to fund its operations for at least 12 months from the filing date of this Form 10-K.

The Company will need to secure significant additional funding in the future in order to carry out all of the Company’s planned research and development activities and regulatory activities, conduct any substantial additional development requirements requested by the FDA, and commercialize product candidates. Management may fund future operations through the sale of equity and debt financings and may also seek additional capital through arrangements with strategic partners or other sources. There can be no assurance that additional funding will be available on terms acceptable to the Company, if at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it may be forced to delay or reduce the scope of its research and development programs and/or limit or cease its operations.

There are numerous risks and uncertainties associated with pharmaceutical development and the Company is unable to predict the timing or amount of increased expenses on the development of future product candidates or when or if it will start to generate revenues. Even if the Company does generate revenues, it may not be able to achieve or maintain profitability. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then it may be unable to continue its operations at planned levels and may be forced to reduce its operations.

Businesses throughout the Company's industry have been and will continue to be impacted by a number of challenging and unexpected global and national events and circumstances that continue to evolve, including without limitation the military conflicts in

F-8

Eastern Europe and the Middle East, increased economic uncertainty, inflation, rising interest rates, recent and any potential future financial institution failures, and other geopolitical tensions. The extent of the impact of these events and circumstances on the Company's business, operations, development timelines and plans remains uncertain, and will depend on certain developments, including the duration and scope of the events and their impact on the Company's development activities, third parties with whom it does business, as well as its impact on regulatory authorities and its key scientific and management personnel. The Company has been and continues to actively monitor the potential impacts that these various events and circumstances may have on its business and the Company takes steps, where warranted, to minimize any potential negative impacts on its business resulting from these events and circumstances.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as found in the Accounting Standards Codification (“ASC”), the Accounting Standards Update (“ASU”), of the Financial Accounting Standards Board (“FASB”), and the rules and regulations of the US Securities and Exchange Commission (“SEC”).

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Forte Subsidiary, Inc. and Forte Biosciences Australia Proprietary Limited. All intercompany accounts and transactions have been eliminated in the preparation of the consolidated financial statements.

Use of Estimates

The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Significant management estimates that affect the reported amounts of assets, liabilities and expenses include stock-based compensation expense and accruals for clinical trials and drug manufacturing. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Cash and Cash Equivalents

Cash and cash equivalents include cash in readily available operating accounts, U.S. treasury bills, money market funds and deposits with commercial banks. Cash equivalents are defined as short-term, highly liquid investments with maturities of 90 days or less from the date of purchase.

Available-for-Sale Securities

The Company’s available-for-sale securities consist of U.S. treasury bills. Securities with maturities from the date of purchase of 90 days or less are included in cash equivalents and 91 days or more are included in short-term investments. The Company classifies its marketable securities as available-for-sale and records such assets at estimated fair value in the consolidated balance sheets, with unrealized gains and losses, if any, reported as a component of other comprehensive loss within the consolidated statements of operations and comprehensive loss and as a separate component of stockholders’ equity. Realized gains and losses are calculated on the specific identification method and recorded as interest income (loss).

Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity. Accretion of discounts are recorded in interest income in the consolidated statements of operations and comprehensive loss.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a three-level hierarchy that prioritizes the inputs used in determining fair value by their reliability and preferred use as follows:

•

Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities.

F-9

•

Level 2 – Valuations based on quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 – Valuations based on inputs that are both significant to the fair value measurements and are unobservable.

To the extent that a valuation is based on models or inputs that are less observable, or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized within Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

There have been no significant changes to the valuation methods utilized by the Company during the periods presented. There have been no transfers between Level 1, Level 2, and Level 3 in any periods presented.

The carrying amounts of financial instruments consisting of cash and cash equivalents, accounts payable and accrued liabilities included in the Company’s financial statements are reasonable estimates of fair value, primarily due to their short maturities. Short-term investments are recorded at fair value, with any unrealized gains or losses reported as accumulated other comprehensive income or loss.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation, subject to review for impairment. Property and equipment, net are depreciated over the estimated useful lives of the assets, generally three to five years, using the straight-line method.

Impairment of Property and Equipment

The Company reviews its property and equipment for impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to future net undiscounted cash flows that the assets or the asset groups are expected to generate. If such assets are considered impaired, the impairment to be recognized is measured by the amount the book value of the assets exceed their fair value, which is measured based on the estimated discounted future net cash flows arising from the assets or asset groups. No impairment losses on property and equipment have been recorded for the years ended December 31, 2025 or 2024.

Pre-Funded Warrants

Pre-funded warrants are accounted for as either derivative liabilities or as equity instruments depending on the specific terms of the agreement. The pre-funded warrants are equity-classified instruments that were recorded in additional paid-in capital at issuance and are not subject to remeasurement. The Company periodically evaluates changes in facts and circumstances that could impact the classification of warrants.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs consist primarily of salaries and benefits of research and development personnel, costs related to research activities, preclinical studies, clinical trials and drug manufacturing. Non-refundable advance payments for goods or services that will be used in future research and development activities are deferred and capitalized and are only expensed when the goods have been received or when the service has been performed rather than when the payment is made.

Drug manufacturing and clinical trial costs are a component of research and development expenses. The Company expenses costs for its drug manufacturing activities performed by Contract Manufacturing Organizations (“CMOs”), preclinical and clinical trial costs performed by Contract Research Organizations (“CROs”) and other service providers, as they are incurred, based upon estimates of the work completed over the life of the individual task in accordance with associated agreements. The Company uses information it receives from internal personnel and outside service providers to estimate the percentage of completion and therefore the expense to be recognized.

F-10

Research and Development Tax Incentive

The Company is eligible to receive a cash refund from the Australian Taxation Office for eligible research and development (“R&D”) expenditures under the Australian R&D Tax Incentive Program (the “Australian Tax Incentive”). The Australian Tax Incentive is recognized as a reduction to R&D expense when the relevant expenditure has been incurred, the amount can be reliably measured and it is probable that the Australian Tax Incentive will be received. The Company has not recorded any reductions to R&D expense under the Australian Tax Incentive. The Company has received $0.9 million under this program which was recorded in accrued liabilities at December 31, 2025.

Patent Costs

Costs related to filing and pursuing patent applications, including direct application fees and the legal and consulting expenses related to making such applications, are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are included in general and administrative expenses within the consolidated statements of operations and comprehensive loss.

Comprehensive Loss

Comprehensive loss is defined as the change in equity during a period from transactions from non-owner sources. Other comprehensive loss includes unrealized gains on available-for-sale securities, which was the only difference between net loss and comprehensive loss for the applicable periods.

Net Loss Per Share

The Company’s net loss is equivalent to net loss attributable to common stockholders for all periods presented. Basic net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares, without consideration for common stock equivalents. The weighted average number of shares of common stock used in the basic and diluted net loss per share calculation include the pre-funded warrants outstanding during the period as they are exercisable at any time and their exercise requires only nominal consideration for the delivery of shares. During the year ended December 31, 2025, 740,112 pre-funded warrants were exercised and as of December 31, 2025 pre-funded warrants to purchase an aggregate of 4,882,615 shares of common stock were outstanding.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock and common stock equivalents outstanding during the period in accordance with the treasury stock method. The following number of unexercised stock options, restricted stock units, warrants, and shares expected to be purchased under the Company's 2017 Employee Stock Purchase Plan (“ESPP”), which are common stock equivalents, have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for the periods presented.

Year Ended December 31,

Stock-Based Compensation

The Company issues stock-based awards to employees, directors and non-employees, generally in the form of stock options, restricted stock units or rights granted to employees under the Employee Stock Purchase Plan (“ESPP”). The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation.

The Company measures compensation cost for all equity awards for employees, directors and non-employees at their grant-date fair value and recognizes compensation expense for service-based awards on a straight-line basis over the requisite service period, which is generally the vesting period. The grant-date fair value of stock options is estimated using the Black-Scholes option pricing model. The grant-date fair value of restricted stock units is determined using the Company’s closing stock price on the date of grant. Forfeitures are recognized as they occur.

F-11

Stock-based compensation expense for an award with a performance condition is recognized when the achievement of the performance condition has been determined to be probable. If the outcome of such performance condition has not been determined to be probable, or has not been met, no compensation expense is recognized and any previously recognized compensation expense is reversed. For rights granted under the ESPP, the fair value of each purchase is estimated at the beginning of the offering period using the Black-Scholes option pricing model.

The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient’s salary and related costs are classified in the case of employees, or in which the award recipient’s service payments are classified in the case of directors and non-employees.

Foreign Currency Transactions

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in currencies other than the US dollar are recorded to other expenses, net in the consolidated statements of operations and comprehensive loss and were not material for the periods presented. The Company's subsidiaries use the U.S. dollar as their functional currency.

Income Taxes

The Company uses an asset and liability approach to account for income taxes. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to be in effect for the years in which differences are expected to reverse.

Valuation allowances are provided when the expected realization of deferred tax assets does not meet a “more likely than not” criterion. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with its plans and estimates. Should the actual amounts differ from those estimates, the amount of the valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to the Company’s tax provision in a period in which such estimates are changed, which in turn would affect net income or loss.

The Company recognizes tax benefits from uncertain tax positions if it believes the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of any reserves for tax positions that are not more likely than not to be sustained, as well as the related net interest and penalties.

Recently Adopted Accounting Standards

In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Improvements to Income Tax Disclosures, which does not change accounting for income taxes but requires new disclosures focusing on the effective rate reconciliation and taxes paid. The Company adopted the standard and applied the disclosure requirements on a prospective basis for the year ended December 31, 2025. Adoption of this ASU did not have a material impact on the consolidated financial statements and related disclosures.

Recently Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies and adopted by us as of a specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires disclosure of additional information about specific expense categories in the notes to the consolidated financial statements on an interim and annual basis. The standard is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the disclosure requirements related to this new standard.

F-12

3. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of December 31, 2025 and 2024 consist of the following (in thousands):

Prepaid manufacturing and research expenses $ 1,908 $ 1,982

Prepaid professional fees 223 377

Total prepaid expenses and other current assets $ 3,632 $ 2,981

Property and Equipment, Net

Property and equipment, net as of December 31, 2025 and 2024 consist of the following (in thousands):

Furniture and Fixtures 18 18

Property and equipment, at cost 241 125

Less accumulated depreciation (112 ) (48 )

Total property and equipment, net $ 129 $ 77

Other Assets

Other assets as of December 31, 2025 and 2024 consist of the following (in thousands):

Prepaid insurance $ — $ 87

Clinical trial deposits 2,036 25

Accrued Liabilities

Accrued liabilities as of December 31, 2025 and 2024 consist of the following (in thousands):

Accrued legal and professional fees $ 163 $ 97

Accrued manufacturing and research expenses 7,374 541

Accrued issuance costs 40 1,881

Deferred R&D credit 927 —

Accrued other expenses 8 132

4. Fair Value

The following tables provide a summary of the assets that are measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024 (in thousands):

F-13

Fair Value Measurements as of December 31, 2025

Cash and cash equivalents Level 1 Level 2 Level 3 Total

Fair Value Measurements as of December 31, 2024

Cash, cash equivalents and short-term investments Level 1 Level 2 Level 3 Total

Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. Money market funds and U.S. Treasury bills were included as cash and cash equivalents in the consolidated balance sheet as of December 31, 2025. The Company's U.S Treasury Bills were included in short-term investments as of December 31, 2024, due to an original maturity greater than 90 days. The Company obtains the fair value of its Level 2 cash equivalents and short-term investments from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable.

5.Available-for-Sale Securities

The following table summarizes the Company's available-for-sale securities as of December 31, 2025 and December 31, 2024 (in thousands).

Unrealized

Cash equivalents Amortized Cost Gains Losses Estimated Fair Value

Total available-for-sale securities $ 19,961 $ 3 $ — $ 19,964

Unrealized

Short-term investments Amortized Cost Gains Losses Estimated Fair Value

Total available-for-sale securities $ 36,110 $ 11 $ — $ 36,121

6. Commitments and Contingencies

Concentrations of Credit Risk

The Company limits its credit risk associated with its cash and cash equivalents by placing them with financial institutions it believes are highly creditworthy. Bank accounts in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250 thousand. The Company’s cash accounts significantly exceed the FDIC limits.

Indemnifications

As permitted under Delaware law, the Company indemnifies its officers, directors, and employees for certain events and occurrences while the officer, employee or director is, or was, serving at the Company’s request in such capacity. As of December 31,

F-14

2025, the Company did not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded any related liabilities.

Lease Agreements

The Company has entered into agreements for certain office and laboratory space that are cancellable by the Company at any time with a six-month notice. Total rent expense was $408 thousand and $300 thousand for the years ended December 31, 2025 and 2024, respectively.

Clinical and Preclinical Services

The Company has entered into various agreements with third-party vendors for preclinical and clinical services. The estimated remaining commitments as of December 31, 2025 under these agreements were approximately $18.8 million. The Company entered into agreements with a clinical research organization ("CRO") for clinical trials of FB102, its current product candidate. The Company has agreed to pay third-party costs associated with those agreements. The CRO agreements are subject to termination at any time, with or without cause, by the Company, in which case only costs earned or non-cancellable to the date of termination would remain subject to reimbursement.

Legal Proceedings

Camac Fund, LP v. Paul A. Wagner, et al., C.A. No. 2023-0817-MTZ (Del. Ch.)

In August 2023, Camac Fund LP (the "Plaintiff") filed a complaint (the “Complaint”) against the members of the Company's Board of Directors and entities affiliated with certain of the Company’s investors. The Complaint alleged amongst other things that the Directors breached their fiduciary duties by causing the Company to enter into a July 2023 private placement. The Company subsequently took certain actions to moot Camac’s claims in the action which Camac acknowledged. The Company made a payment to Plaintiff’s counsel in September 2024 for its fees and expenses in the amount of $1.5 million. The Court subsequently closed the case.

Forte Biosciences, Inc. v. Camac Fund, LP, et al., Case No. 3:23-cv-02399-N (N.D. Tex.)

In October 2023, the Company filed a complaint (the “Texas Complaint”), captioned Forte Biosciences, Inc. v. Camac Fund, LP, et al., Case No. 3:23-cv-02399-N, in the U.S. District Court for the Northern District of Texas. The Texas Complaint alleged that the Texas Defendants issued false and misleading disclosures in connection with their efforts to elect two directors to Forte’s board of directors at the 2023 annual meeting. In October 2024, to resolve all claims and potential claims asserted by the parties, the Texas Defendants entered into a settlement agreement and release with Forte, and all Texas Defendants other than Camac entered into standstill and voting agreements. The Company paid $650 thousand related to these agreements during the year ended December 31, 2024 which does not include any potential insurance recoveries. The Company expenses legal fees as they are incurred.

Forte Biosciences, Inc. v. Wesco Insurance Co., et al., Case No. N24C-10-015 VLM CCLD (Del. Super. Ct.)

In October 2024, the Company filed a complaint (the “Wesco Complaint”), captioned Forte Biosciences, Inc. v. Wesco Insurance Co., et al., Case No. N24C-10-015 VLM CCLD, in the Superior Court of the State of Delaware, against its Directors & Officers liability insurance, Wesco Insurance Company, Beazley Insurance Company, and Palms Insurance Company, Limited (collectively, “Insurance Defendants”), seeking declaratory relief, breach of contract, and bad faith for the Insurance Defendants’ refusal to acknowledge and perform their insurance obligations in connection with the action captioned Camac Fund, LP v. Paul A. Wagner, et al., C.A. No. 2023-0817-MTZ (Del. Ch.), described above, and related Books and Records demands (“Underlying Action”). On January 8, 2026, the Delaware Superior Court entered judgment on the pleadings in favor of Forte Biosciences, finding that Wesco Insurance Co., and Palms Insurance Co. were liable up to their combined $5 million policy limits for Forte’s defense and settlement costs incurred in connection with the Underlying Action. Forte has moved for entry of final judgment consistent with the Court’s January 8th ruling, and is seeking payment of prejudgment interest. That motion is pending with the Delaware Superior Court. In March 2026, Palms Insurance Co. paid the Company $2.3 million as an interim payment, under a reservation of rights.

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7. Equity

Preferred Stock

The Company has 10 million authorized shares of Series A Preferred Stock, par value $0.001, with no shares outstanding as of December 31, 2025 and 2024.

Common Stock

In March 2025, the Company filed a new shelf registration statement on Form S-3 that was declared effective by the SEC in April 2025 for the issuance of up to $300.0 million in securities.

On June 25, 2025, the Company closed a public offering (the “Offering”) pursuant to which it sold 5,630,450 shares of common stock at a price to the public of $12.00 per share and pre-funded warrants to purchase 619,606 shares of common stock at a price to the public of $11.999 per pre-funded warrant, which represents the per share public offering price for the shares less the exercise price for each pre-funded warrant. The Company also granted the underwriters an option (the "Option"), exercisable for a period of 30 days, to purchase up to an additional 937,508 shares of common stock. The pre-funded warrants have an exercise price of $0.001 per share, are immediately exercisable and remain exercisable until exercised in full. The holder of the pre-funded warrants will not be entitled to exercise any portion of any pre-funded warrants that, upon giving effect to such exercise, would cause the aggregate number of shares of common stock beneficially owned by the holder, together with its affiliates, to exceed 9.9%. However, the holder of the pre-funded warrant may increase or decrease such percentage to any other percentage not in excess of 19.99% upon at least 61 days’ prior notice from the holder to the Company. The gross proceeds from the Offering were $75.0 million and the Company incurred approximately $5.1 million in underwriting discounts, commissions and offering expenses. In July 2025, the underwriters of the Offering exercised the Option and purchased 148,258 shares of common stock for gross proceeds of $1.8 million and the Company incurred issuance costs of $0.1 million.

In November 2024, the Company issued 4,931,389 shares of the Company’s common stock at a purchase price of $5.552 per Share and 4,615,555 pre-funded warrants to purchase shares of common stock at a purchase price of $5.551 per pre-funded warrant ("2024 Private Placement") in connection with a Securities Purchase Agreement (the “ 2024 Purchase Agreement”). The pre-funded warrants have an exercise price of $0.001 per share of common stock, are immediately exercisable and remain exercisable until exercised in full. The holders of pre-funded warrants may not exercise a pre-funded warrant if the holder, together with its affiliates, would beneficially own more than 19.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise. The holders of pre-funded warrants may increase or decrease such percentages not in excess of 19.99% by providing at least 61 days’ prior notice to the Company. In connection with the 2024 Private Placement, the Company filed a registration statement to register shares on Form S-3, which was declared effective on December 20, 2024. The gross proceeds of the 2024 Private Placement were $53.0 million and the Company incurred $3.4 million in issuance costs. Certain executive officers and senior management of the Company participated in this 2024 Private Placement, purchasing $475 thousand in shares of common stock at a purchase price of $5.552 per share.

In connection with, and as a condition to, the closing of the 2024 Private Placement, the Company has agreed to enter into letter agreements with two investors. Pursuant to the terms of the letter agreements, the Company has agreed that, during the period beginning ninety (90) days after the closing date of the 2024 Private Placement and ending on the three (3) year anniversary of the closing date of the 2024 Private Placement (or earlier upon investors failing to meet certain ownership thresholds), if the Company’s common stock trades within certain specified parameters for thirty (30) consecutive trading days, each of the investors shall be entitled to designate one individual to serve on the Board, in each case pursuant and subject to the terms of the applicable letter agreement and compliance with applicable Nasdaq and SEC regulations and the Board’s fiduciary duties under applicable law. In addition, for the duration of the applicable designation period, the Company shall also include such designee in the slate of nominees recommended by the Board for election at each annual or special meeting of the Company’s stockholders at which directors of such designee’s class are to be elected. The letter agreement also provides one investor a participation right in future offerings of the Company’s equity securities.

As of December 31, 2025, 740,112 pre-funded warrants were exercised and pre-funded warrants to purchase an aggregate of 4,882,615 shares of common stock remain outstanding. The 4,882,615 and 5,003,121 shares of common stock issuable upon the exercise of the pre-funded warrants is not included in the number of issued and outstanding shares of common stock as of December 31, 2025 and December 31, 2024.

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Shares of common stock reserved for future issuance as of December 31, 2025 were as follows:

Shares

Pre-funded warrants outstanding 4,882,615

Reserved for issuance under equity incentive plans 1,736,669

Reserved for issuance under employee stock purchase plan 41,825

8. Stock-Based Compensation

Equity Plans

In May 2021 the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). As amended and restated in February 2025, the 2021 Plan has an aggregate of 3,340,000 authorized shares.

The 2021 Plan provides for the grant of incentive stock options (“ISOs”), non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, other forms of equity compensation and performance cash awards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants of the Company and its affiliates. Service-based awards generally vested over a four-year period, with the first 25% of such awards vesting following twelve months of continued employment or service with the remaining awards vesting monthly in equal installments over the following thirty-six months. For certain service-based awards to the board of directors, vesting occurs in thirty-six equal monthly installments over a three-year period for initial grants and in twelve equal monthly installments over a twelve-month period for subsequent grants. As of December 31, 2025, there were 935,469 shares available for issuance under the 2021 Plan.

On July 26, 2020, the Company adopted the 2020 Inducement Equity Incentive Plan (the “2020 Inducement Plan”). The 2020 Inducement Plan, as amended and restated in September 2025, has an aggregate of 1,080,000 authorized shares. As of December 31, 2025, there were 801,200 shares available for issuance under the 2020 Inducement Plan.

Stock Options

The risk-free interest rate assumption for stock options is based on the U.S. Treasury yield curve rate at the date of grant with a maturity approximating the expected term of the option.

All option awards generally expire ten years from the date of grant. The expected term assumption for options granted to employees is determined using the simplified method that represents the average of the contractual term of the option and the weighted average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term.

During 2024, the expected volatility assumption utilized a weighted approach by blending the Company’s own historical price data with the historical volatility of a group of similar companies in the life sciences industry whose shares are publicly traded. The Company selected the peer group based on comparable characteristics, including development stage, product pipeline, and market capitalization. Effective January 1, 2025, the Company elected to remove peer group companies and determined its expected volatility assumption based solely on the volatility of the Company’s historical share prices using the closing share price beginning on June 15, 2020 and through the current period.

The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future.

The weighted average grant-date fair value of stock options granted in the years ended December 31, 2025 and 2024 was $7.39 and $14.25, respectively. The weighted-average assumptions used to value these stock options using the Black-Scholes option-pricing model were as follows.

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Risk-free interest rate 4.05 % 4.08 %

Expected term of options (years) 5.83 5.98

The table below summarizes the stock option activity during the year ended December 31, 2025:

The total intrinsic value of options exercised was $12 thousand for the year ended December 31, 2025. There were no options exercised in 2024. The aggregate intrinsic value of stock options as of December 31, 2025 is based on the Company’s closing stock price of $27.27 per share.

Restricted Stock Unit Awards

Restricted stock units vest over four years with one sixteenth of the restricted stock units vesting every quarter.

Restricted stock unit award transactions during the year ended December 31, 2025 were as follows:

Weighted Avg

Grant Date

Shares Fair Value

The aggregate fair value of RSUs vested during the year ended December 31, 2025 was $505 thousand.

2017 Employee Stock Purchase Plan

In May 2021, the Company’s board of directors reactivated the Company’s 2017 Employee Stock Purchase Plan (“ESPP”) which had previously been suspended. The ESPP allows eligible employees to withhold up to 15% of their earnings to purchase shares of the Company’s common stock at a price per share equal to the lower of (i) 85% of the fair market value of a share of the Company’s common stock on the first date of an offering or (ii) 85% of the fair market value of a share of the Company’s common stock on the date of purchase. The Company had 41,825 shares available for future issuance under the ESPP as of December 31, 2025. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each calendar year through January 1, 2027, by the lesser of (a) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (b) 12,000 shares, or (c) a number determined by the Company’s board of directors that is less than (a) and (b). The Company issued 1,658 and 958 shares under the ESPP during the year ended December 31, 2025 and 2024, respectively.

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The ESPP is considered a compensatory plan. The Company recorded stock-based compensation expense related to its ESPP of $74 thousand and $8 thousand for the years ended December 31, 2025 and 2024, respectively.

The fair value of the rights granted to employees under the ESPP was estimated using a Black-Scholes option-pricing model with the following weighted-average valuation assumptions:

Fair value of common stock $ 12.44 $ 16.34

Risk-free interest rate 4.29 % 5.32 %

Expected term of options (years) 0.51 0.50

Stock-Based Compensation Expense

Stock-based compensation expenses included in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2025 and 2024 are as follows (in thousands):

Year Ended December 31,

As of December 31, 2025, there was unrecognized stock-based compensation expense of $14.4 million related to stock options and restricted stock units with service conditions, which is expected to be recognized over a weighted-average period of 2.29 years. Total unrecognized stock-based compensation as of December 31, 2025 was approximately $0.5 million related to restricted stock units with performance based vesting. The performance based conditions are tied to development milestones which have not been met.

9. Income Taxes

The components of net loss before income taxes consisted of the following (in thousands):

Year Ended December 31,

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The federal and state income tax provision is summarized as follows (in thousands):

Year Ended December 31,

Current

Federal $ — $ —

State — —

Total current tax expense 1,037 —

Deferred

Federal — —

State — —

Foreign — —

Total deferred tax expense — —

Total tax expense $ 1,037 $ -

The Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements To Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:

Year Ended December 31,

U.S. federal statutory tax rate $ (14,351 ) 21.0 %

State and local income taxes, net of federal income tax effect (1) — 0.0 %

Foreign tax effects

Effect of changes in tax laws or rates enacted in the current period — 0.0 %

Effects of cross-border tax laws

Global intangible low-taxed income 871 -1.3 %

Tax credits

Changes in valuation allowance 14,587 -21.3 %

Nontaxable or nondeductible items

Changes in unrecognized tax benefits — 0.0 %

(1) State income taxes in all jurisdictions is zero.

The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024:

Year Ended December 31,

Income tax expense (benefit) at federal statutory rate $ (7,450 ) 21.0 %

Increase/(decrease) in tax resulting from:

State income taxes — 0.0 %

Change in valuation allowance 6,441 -18.2 %

Nondeductible R&D Expenses 921 -2.6 %

Stock-based compensation expense 90 -0.2 %

Other (2 ) 0.0 %

Total $ — 0.0 %

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The primary components of temporary differences which give rise to the Company’s net deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows (in thousands):

Year Ended December 31,

Deferred tax assets:

Accrual to cash adjustment $ 1,040 $ 499

Stock-based compensation expense 1,937 1,432

Other deferred taxes 34 21

Net deferred tax assets after valuation allowance $ — $ —

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) modified the Section 174 capitalization rules. Under the OBBBA provisions, the Company discontinued capitalization of domestic Section 174 costs beginning in tax year 2025, while continuing to capitalize foreign Section 174 costs. As a result, deferred tax assets related to capitalized research expenditures increased by $5.8 million during the year ended December 31, 2025.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based upon the Company’s history of operating losses, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2025 and 2024. During 2025 and 2024, the valuation allowance increased by $15.0 million and $5.9 million, respectively.

As of December 31, 2025, the Company has federal and California research and development tax credit carryforwards of $1.2 million and $0.9 million, respectively. The federal research and development tax credits begin to expire in 2041 unless previously utilized. The California credits do not expire.

Net operating losses and tax credit carryforwards as of December 31, 2025 are as follows (in thousands):

Amount Expiration Years

Net operating losses, federal (Post December 31, 2017) $ 59,836 Do Not Expire

Net operating losses, federal (Pre January 1, 2018) $ 11 2037

Net operating losses, foreign $ — Indefinite

Tax credits, state $ 933 Indefinite

The Company is subject to taxation in the U.S., Australia and California. As of December 31, 2025, Tocagen’s tax years beginning 2007 to date are subject to examination by federal and California taxing authorities due to the carry forward of unutilized net operating losses and research and development tax credits. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period.

Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, annual use of a company’s net operating loss and tax credit carryforwards may be limited if there is a cumulative change in ownership of greater than 50% (by value) within a three-year period. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several equity offerings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the IRC, or could result in a change in control in the future. The Company has not completed an IRC Section 382 and 383 analysis regarding the limitation of net operating loss and research and development credit carryforwards. Upon completion of such an analysis, there may be either increases

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or decreases to the reported amount of the deferred tax assets for net operating losses and federal and California research and development credits. Any change in the amount of the deferred tax assets would have a corresponding change in the valuation allowance, and therefore is not expected to impact the Company’s effective tax rate.

The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any appeals or litigation processes. Income tax positions must meet a more likely than not recognition at the effective date to be recognized.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2025 and 2024 is as following (in thousands):

Year Ended December 31,

Additions based on tax positions related to the current year $ 221 $ 160

The Company’s policy is to record interest and penalties relating to uncertain tax positions as a component of income tax expense should the Company believe there is an uncertain tax position liability. As of December 31, 2025, and 2024, there was no accrued interest or penalties for uncertain positions.

10. Related Party Transactions

One member of the Company’s board of directors received $600 thousand and $479 thousand for scientific consulting services during the years ended December 31, 2025 and 2024, respectively.

On November 21, 2024, certain executive officers and senior management of the Company participated in the 2024 Private Placement, purchasing $475 thousand in shares of common stock at a purchase price of $5.552 per share.

11. Employee Benefit Plan

The Company has a defined-contribution 401(k) plan for employees. Under the terms of the plan, employees may make voluntary contributions as a percentage of compensation. The Company matches employee contributions as permitted by the plan. The Company's total cost related to the 401(k) plan was $166 thousand and $138 thousand for the years ended December 31, 2025 and 2024, respectively.

12. Segment Information

The Company operates in one operating segment, which includes all activities related to the discovery and development of FB102, for the purposes of assessing performance, making operating decisions, and allocating Company resources. The Company’s chief operating decision maker (CODM) is its chief executive officer, who considers net loss to evaluate overall expenses associated with conducting research and development activities, which includes evaluating the progress of ongoing clinical trials and the planning and execution of current and future research and development activities. Further, the CODM reviews and utilizes research and development expenses, general and administrative expenses and other income, net as reported in the statements of operations and comprehensive loss to manage the Company’s operations. The measure of performance, significant expenses, and other items are each reflected in the statements of operations and comprehensive loss. In addition to the statements of operations and comprehensive loss, the CODM is regularly provided with forecasted expense information which is used to determine the Company’s liquidity needs. The CODM also monitors the cash, cash equivalents and short-term investments as reported on the Company’s consolidated balance sheets to determine funding for research and development activities. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

13. Subsequent Events

In February 2026, 925,773 of the pre-funded warrants issued in the 2024 Private Placement were exercised.

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