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

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-K, including information with respect to our plans, strategies, objectives, expectations and intentions for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Form 10-K, our actual results could differ materially from the results described in or implied by these forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Overview

PepGen Inc., also referred to as “PepGen,” “we,” “our” or “us”, is a clinical-stage biotechnology company advancing the next-generation of oligonucleotide therapies with the goal of transforming the treatment of severe neuromuscular and neurological diseases. Our proprietary Enhanced Delivery Oligonucleotide, or EDO, platform is founded on over a decade of research and development and leverages cell-penetrating peptides, or CPPs, to improve the uptake and activity of conjugated oligonucleotide therapeutics. Using these EDO peptides, our goal is to develop a research and development pipeline of oligonucleotide therapeutic candidates that are designed to target the root cause of serious diseases.

We are developing PGN-EDODM1 for the treatment of DM1 and are utilizing what we believe to be a unique mechanism of action and a different delivery approach compared to other approaches in more advanced stages of clinical development. We have conducted extensive preclinical studies of our product candidate, and these preclinical data form the basis of our clinical development plan for PGN-EDODM1.

Our clinical development program for PGN-EDODM1 includes three studies, FREEDOM-DM1, or FREEDOM, a multinational, randomized, double-blind, placebo-controlled Phase 1 single ascending dose, or SAD, study, FREEDOM2-DM1, or FREEDOM2, a multinational, randomized, double blind, placebo-controlled Phase 2 MAD study and FREEDOM-OLE, which is an open label extension study open to participants who meet its eligibility criteria and have completed either the FREEDOM or FREEDOM2 studies. In the FREEDOM study, we are enrolling adult participants with DM1 in multiple geographies including the U.S., U.K. and Canada, to evaluate the safety and tolerability of PGN-EDODM1, as well as oligonucleotide muscle concentrations, splicing correction and functional outcome measures at day 28 and at week 16 following a single dose of PGN-EDODM1. On February 24, 2025, we reported initial data from the 5 mg/kg and 10 mg/kg dose cohorts in this study where PGN-EDODM1 was observed to have a favorable emerging safety profile and robust splicing correction in a dose-dependent manner in the 5 and 10 mg/kg dose cohorts. Additionally, on September 24, 2025, we reported topline results from the 15 mg/kg cohort in the FREEDOM study of PGN-EDODM1, demonstrating a mean splicing correction of 53.7% following a single 15 mg/kg dose, noting that PGN-EDOM1 was generally well tolerated at this dose, with all drug-related adverse events mild or moderate in severity.Based on the positive splicing correction observed in the FREEDOM trial and the totality of the blinded safety data to date, we have decided to conclude dose escalation in the FREEDOM trial with the 15 mg/kg cohort.

The safety data from the FREEDOM study has informed the design of FREEDOM2, which has received regulatory clearance in Canada, the United Kingdom, South Korea, Australia, and New Zealand and we are currently enrolling patients in Canada and the U.K. We recently received notice that the FDA has placed a partial clinical hold on the FREEDOM2 study based on previously submitted preclinical pharmacology and toxicology studies. The partial clinical hold did not cite any questions regarding the blinded clinical data from the FREEDOM Phase 1 study previously submitted to the FDA in order to initiate the FREEDOM2 study in the U.S. As part of our ongoing dialogue with the FDA, we are submitting additional analyses, including the recently unblinded FREEDOM data, and are preparing to work with the FDA to answer the questions as quickly as possible. FREEDOM2 is a Phase 2 randomized, double-blind, placebo-controlled MAD study of PGN-EDODM1 in DM1 patients. FREEDOM2 is designed to assess PGN-EDODM1’s safety and tolerability, splicing correction and functional outcome measures in DM1 patients. This study has concluded enrollment of the 5 mg/kg dose cohort and all participants have completed dosing. We expect to report data from this cohort at the end of the first quarter of 2026. The study is currently dosing the 10 mg/kg dose cohort and we expect to report data from this cohort in the second half of 2026.

The FDA has granted both orphan drug designation and Fast Track designation for PGN-EDODM1 for the treatment of DM1 and the EMA has also granted orphan medicinal product designation to PGN-EDODM1.

We have also initiated research efforts for additional potential investigational drugs addressing other neuromuscular diseases and neurologic disorders. In May 2025, we announced that based on the levels of dystrophin protein measured in the 10 mg/kg cohort of the CONNECT1-EDO51 study investigating our candidate, PGN-EDO51, in Duchenne muscular dystrophy, or DMD, for patients amenable to exon 51 skipping, we decided to voluntarily discontinue development of PGN-EDO51. Additionally, all DMD-related research and development activities, including our research efforts relating to exons 44, 45 and 53, are being wound down.

Initial Public Offering, ATM Program, Follow-on Offerings and Liquidity

In May 2022, we closed our initial public offering, or IPO, in which we sold an aggregate of 9,000,000 shares of common stock at a public offering price of $12.00 per share for gross proceeds of $108.0 million. In connection with the IPO, we granted the underwriters a 30-day option to purchase 1,350,000 additional shares of common stock, which they exercised in part to purchase 1,238,951 additional shares of common stock for gross proceeds of $14.9 million. We received approximately $122.9 million in gross proceeds and $110.2 million in net proceeds in the IPO, after deducting underwriters’ fees and offering expenses.

Immediately prior to consummation of the IPO, all 12,546,805 outstanding shares of our redeemable convertible preferred stock, and 35,529 preferred stock warrants that were exercised on May 4, 2022, converted into 12,359,856 shares of our common stock.

On February 5, 2024, we issued and sold 1,000,000 shares of common stock at a purchase price of $10.00 per share under our at-the-market offering program, or ATM program, pursuant to an At-the-Market Equity Offering Sales Agreement, or Sales Agreement, with Stifel, Nicolaus & Company, Incorporated, or Stifel, resulting in net proceeds of $9.9 million. On February 9, 2024, we issued and sold 7,530,000 shares of common stock at a purchase price of $10.635 per share, which was the closing sale price of our common stock on the Nasdaq Global Select Market on February 6, 2024, in an underwritten follow-on offering, or the 2024 Offering. The 2024 Offering resulted in net proceeds of $76.4 million after deducting underwriters' fees of $3.7 million. Net proceeds from the ATM program and 2024 Offering, after deducting underwriters’ fees and costs of the offerings, were $86.3 million.

On September 26, 2025, we issued and sold 31,250,000 shares of common stock at a purchase price of $3.20 per share in an underwritten public offering, or the 2025 Offering. Pursuant to the underwriting agreement, we granted underwriters a 30-day option to purchase up to an additional 4,687,500 shares of common stock at a price of $3.20 per share which was exercised in full on September 25, 2025. The 2025 Offering resulted in net proceeds of $107.6 million after deducting underwriters' fees of $6.9 million and offering expenses of $0.5 million.

Since our inception, we have not generated any revenue from product sales or other sources and have incurred significant operating losses and negative cash flows from our operations. Our primary uses of cash to date have been to fund our research and development activities, business planning, establishing and maintaining our intellectual property portfolio, acquiring and developing product and technology rights, hiring personnel, leasing premises and associated capital expenditures, raising capital, and providing general and administrative support for these operations. To date, we have funded our operations primarily through private placements of our convertible preferred stock and proceeds from our IPO, the ATM program, the 2024 Offering, and the 2025 Offering.

We have incurred operating losses in each year since our inception. Our net losses were $89.7 million and $90.0 million for the years ended December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $148.5 million. As of December 31, 2025, we had an accumulated deficit of $361.1 million. Notwithstanding our decision to cease our research and development efforts in DMD, which we announced on May 28, 2025, we expect our expenses and operating losses will continue as we conduct our ongoing preclinical studies and current and planned clinical trials of PGN-EDODM1, continue our research and development activities, utilize third parties to manufacture our product candidates and related raw materials, hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with an exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs. In addition, we have several development, regulatory and commercial milestone payment obligations under our licensing arrangements. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies, current and planned clinical trials, manufacturing campaigns and our expenditures on other research and development activities.

We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our currently planned operations into the second half of 2027. We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which will not be for at least the next several years, if ever. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Components of Results of Operations

Operating Expenses

Research and Development

To date, our research and development expenses have primarily consisted of external and internal costs associated with our research and development activities, including our discovery and research efforts, the development of our proprietary EDO platform, and the preclinical and clinical development of our product candidates. Our research and development expenses include:

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external expenses, including expenses incurred under arrangements with third parties, such as clinical research organizations, or CROs, contract development manufacturing organizations, or CDMOs, consultants and our scientific advisors;

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personnel-related costs, including salaries, cash incentive compensation, payroll taxes, employee benefits, and stock-based compensation;

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costs for laboratory supplies and materials and reagents for chemical synthesis of product candidates; and

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facility costs, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies.

Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development activities are recorded as prepaid expenses until the goods or services are received.

The following table (in thousands) summarizes our research and development expenses for the years ended December 31, 2025 and December 31, 2024. The direct external development program expenses reflect external costs attributable to our clinical development candidates and preclinical candidates selected for further development. Our internal resources, personnel and infrastructure are not directly tied to any one research or drug discovery program and are deployed across multiple programs. As such, we do not track internal expenses on a program-specific basis.

Year EndedDecember 31,

External expenses:

Other programs and unallocated expenses 537 2,556

Internal expenses:

Personnel-related (including stock-based compensation) 22,136 23,433

Total research and development expenses $ 71,043 $ 76,478

We continue to conduct our ongoing Phase 2 clinical trial of our investigational drug candidate, PGN-EDODM1. We have decided to conclude dose escalation in the FREEDOM trial with the 15 mg/kg cohort, based on the positive splicing correction observed and the totality of the blinded safety data to date. As stated above, on May 28, 2025, we announced that we have decided to voluntarily discontinue development of PGN-EDO51 and are working to complete the wind-down of DMD-related research and development activities. Research and development expenses for our lead program can be variable quarter-over-quarter due to the timing of manufacturing campaigns, which are accounted for under the percentage of completion method. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achieving marketing approval for our remaining clinical stage product candidate or any new product candidates we develop.

The timelines and costs associated with research and development activities are uncertain and can vary significantly for our product candidate and development program due to the inherently unpredictable nature of preclinical and clinical development. We previously announced our decision to focus our development efforts on PGN-EDODM1, and to cease development of our DMD-related programs, and may make further determinations as to which programs in our research and development pipeline to pursue and how much funding to direct to each program. We will need to raise substantial additional capital in the future.

Our future development costs may vary significantly based on factors such as:

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the status of clinical trials, the timing and costs, if any, associated with resolving clinical or partial clinical holds, animal and other preclinical studies and IND- or clinical trial application, or CTA-enabling studies;

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per patient trial costs;

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the number of trials required for approval;

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the number of sites included in the trials;

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the countries in which the trials are conducted;

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the length of time required to enroll eligible patients;

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the number of patients that participate in the trials;

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the number of doses that patients receive;

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the drop-out or discontinuation rates of patients;

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the duration of patient participation in the trials and follow-up;

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the cost and timing of manufacturing our product candidates and the cost and timing of our manufacturing campaigns;

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the efficacy and safety profile of our product candidates; and

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maintaining a continued acceptable safety profile of our products if any receive regulatory approval.

General and Administrative

General and administrative expenses consist primarily of personnel-related costs, including salaries, cash incentive compensation, payroll taxes, employee benefits, and stock-based compensation charges for those individuals in executive, finance, facility operations, and other administrative functions. Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for audit, accounting and consulting services, and insurance costs.

Other general and administrative expenses will remain consistent to support our public company operating expenses associated with audit, legal, regulatory, and tax-related services associated with maintaining compliance with our exchange listing and SEC requirements, director and officer insurance premiums, and investor relations.

Other Income (Expense), Net

Interest Income

Interest income consists of interest earned on our money market mutual funds and short-term U.S. treasury holdings.

Other Income (expense)

Other components of other income (expense) relate to realized and unrealized gains and losses on currency revaluation.

Income Taxes

We record tax expense for state taxes on interest income generated from the Company's cash equivalents and marketable securities. We recognized a tax benefit for the year ended December 31, 2024 due to the derecognition of an unrecognized tax benefit of $0.7 million upon the dissolution of our U.K.-based entity, PepGen Limited on December 10, 2024. We have not recorded a U.S. provision for federal or state income taxes as we have no revenue and have incurred losses since inception.

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Results of Operations

Comparison of the Year Ended December 31, 2025 and 2024

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

Year EndedDecember 31, Period-to-

Operating expenses:

Other income (expense), net

Other (expense) income, net (11 ) (1 ) (10 )

Income tax (expense) benefit (49 ) 617 (666 )

Research and Development Expenses

Research and development expenses decreased by $5.4 million from $76.5 million for the year ended December 31, 2024, to $71.0 million for the year ended December 31, 2025. This was attributable to a $4.5 million decrease in preclinical costs as our two lead programs had both advanced into clinical trials, prior to the discontinuation of our DMD program in late May 2025. Additionally, there was a $4.0 million decrease in manufacturing costs due to the timing of manufacturing campaigns. The decrease was further driven by a $0.9 million decrease in facility and office related expenses, including depreciation, a $0.9 million decrease in consulting expense, and a $0.3 million decrease in employee expenses. These decreases were partially offset by increased clinical trial costs of $4.5 million associated with the advancement of clinical development programs and charges taken during the second quarter of 2025 for wind-down costs for the two clinical trials for PGN-EDO51. There was also a $0.8 million increase in other research and development expenses related primarily to the non-cash charge taken during the current year associated with the impairment of unused lab equipment.

General and Administrative Expenses

General and administrative expenses increased by $1.3 million from $21.3 million for the year ended December 31, 2024, to $22.6 million for the year ended December 31, 2025. The increase was driven primarily by an increase in consulting expenses, legal expenses and personnel-related costs.

Other Income (Expense), Net

Other income (expense), net was income of $4.0 million for the year ended December 31, 2025, compared to income of $7.1 million for the year ended December 31, 2024. The decrease was primarily driven by lower cash balances in our money market fund accounts and U.S. treasury holdings prior to the 2025 Financing.

Income Tax Benefit (Expense)

Income tax expense was $0.1 million for the year ended December 31, 2025 for state taxes on interest income generated from the Company's cash equivalents and marketable securities. Income tax benefit was a net benefit of $0.6 million for the year ended December 31, 2024 related the derecognition of an unrecognized tax benefit of $0.7 million upon the dissolution of our U.K.-based entity, PepGen Limited in December 2024. This is partially offset by $0.1 million in state taxes on interest income generated from the Company's cash equivalents and marketable securities.

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Liquidity and Capital Resources

Sources of Liquidity

Since our inception in January 2018, we have funded our operations primarily through the sale of our common stock and convertible preferred stock. We received aggregate gross proceeds of $163.9 million from these sales prior to our IPO. Additionally, in May 2022, we received gross proceeds from our IPO of $122.9 million.

On June 2, 2023, we filed a shelf registration statement on Form S-3 with the SEC, which covers the offering, issuance and sale of an amount up to $300.0 million in the aggregate of shares of our common stock, preferred stock, debt securities, warrants, and/or units or any combination thereof, which was declared effective on June 16, 2023.

On August 8, 2023, we filed a prospectus supplement and entered into the Sales Agreement with Stifel, as sales agent, which provides for the issuance and sale by us of up to $100.0 million of shares of common stock from time to time under the ATM program. On February 5, 2024, we issued and sold 1,000,000 shares of common stock at a purchase price of $10.00 per share under the ATM program, resulting in net proceeds of $9.9 million.

On February 9, 2024, we issued and sold 7,530,000 shares of common stock in the 2024 Offering at a purchase price of $10.635 per share, resulting in net proceeds of $76.4 million after deducting underwriters’ fees and offering costs of $3.7 million.

On June 28, 2024, we filed a second shelf registration statement on Form S-3 with the SEC, which covers the offering, issuance and sale of an amount up to $250.0 million in the aggregate of shares of our common stock, preferred stock, debt securities, warrants, and/or units or any combination thereof, which was declared effective on July 8, 2024.

On September 26, 2025, we issued and sold 31,250,000 shares of common stock at a purchase price of $3.20 per share in the 2025 Offering. Underwriters exercised their option to purchase an additional 4,687,500 shares of common stock at a price of $3.20 per share on September 25, 2025. The 2025 Offering resulted in net proceeds of $107.6 million after deducting underwriters' fees of $6.9 million and offering expenses of $0.5 million.

Future Funding Requirements

As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $148.5 million. We believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our currently planned operations into the second half of 2027. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain.

Our future capital requirements will depend on many factors, including but not limited to:

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the scope, progress, costs and results of preclinical and clinical development for PGN-EDODM1, any additional product candidates we may develop and any new indications we may pursue;

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the scope, costs, timing and outcome of regulatory review of PGN-EDODM1, any additional product candidates we may develop and any new indications we may pursue;

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the cost and timing of manufacturing activities;

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the identification of additional research programs and product candidates;

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the costs and scope of the continued development of our EDO platform;

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the costs and timing of preparing, filing and prosecuting applications for patents, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims, including claims of infringement, misappropriation or other violations of third-party intellectual property;

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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any product candidate that receives marketing approval;

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the costs of satisfying any post-marketing requirements;

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the revenue, if any, received from commercial sales of our product candidates if marketing approval is received;

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the costs of operational, financial and management information systems and associated personnel;

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the associated costs in connection with any acquisition of in-licensed products, intellectual property and technologies; and

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the ongoing costs of operating as a public company.

Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, potentially including collaborations, licenses, and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves.

Cash Flows

The following table sets forth a summary of the net cash flow activity for the years ended December 31, 2025 and December 31, 2024 (in thousands):

Year Ended December 31,

Net cash (used in) provided by:

Effect of exchange rate changes on cash (16 ) (62 )

Operating Activities

For the year ended December 31, 2025, net cash used in operating activities was $81.6 million resulting from our net loss of $89.7 million and by cash provided by changes in our operating assets and liabilities of $6.2 million partially offset by non-cash charges of $14.2million. The net changes in our operating assets and liabilities were primarily due to a decrease in prepaids and other current assets of $1.1 million, a decrease in accrued expenses of $3.3 million, a $3.1 million decrease in operating lease liabilities, and a $0.9 million decrease in accounts payable. Non-cash charges included $10.6 million in stock-based compensation expense, $2.2 million of accretion of discounts on our marketable securities, net, $3.7 million of amortization and interest accretion on our operating lease, and $1.4 million in depreciation expense. Additionally, there was a non-cash adjustment of $0.7 million related to the impairment of unused lab equipment.

For the year ended December 31, 2024, net cash used in operating activities was $82.4 million resulting from our net loss of $90.0 million and by cash provided by changes in our operating assets and liabilities of $5.2 million partially offset by non-cash charges of $12.9million. The net changes in our operating assets and liabilities were primarily due to an increase in prepaids and other current assets of $1.3 million, a decrease in accrued expenses of $1.7 million, and a $3.0 million decrease in operating lease liabilities. These changes were partially offset by a $0.7 million increase in accounts payable. Non-cash charges included $11.5 million in stock-based compensation expense, $3.9 million of accretion of discounts on our marketable securities, net, $3.7 million of amortization and interest accretion on our operating lease, and $1.5 million in depreciation expense.

Investing Activities

Net cash used in investing activities was $15.2 million during the year ended December 31, 2025. Cash used in investing activities resulted from $94.0 million in purchases of marketable securities and $0.3 million in purchases of property and equipment. This was partially offset by $79.0 million in maturities of marketable securities.

Net cash used in investing activities was $37.7 million during the year ended December 31, 2024. Cash used in investing activities resulted from $145.2 million in purchases of marketable securities and $0.5 million in purchases of property and equipment. This was partially offset by $108.0 million in maturities and sales of marketable securities.

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Financing Activities

Net cash provided by financing activities was $108.0 million for the year ended December 31, 2025, resulting from $108.1 million in proceeds from the 2025 Offering and $0.3 million of proceeds from the purchase of shares under employee equity plans, partially offset by $0.4 million in the payment of offering costs.

Net cash provided by financing activities was $88.7 million for the year ended December 31, 2024, resulting from $76.9 million in proceeds from the 2024 Offering, $9.9 million in proceeds from sales under the Sales Agreement, and $2.5 million from proceeds from the purchase of shares under employee equity plans, partially offset by $0.5 million in the payment of deferred offering costs.

Critical Accounting Polices and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which are prepared in accordance with generally accepted accounting principles in the U.S., or GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs, and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. We evaluate our estimates and judgments on an ongoing basis. We base our estimates and assumptions on historical experience, known trends and events, 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 values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements appearing elsewhere in this Form 10-K, we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.

Research and Development Expenses and Accrued Research and Development Costs

We are required to estimate our expenses resulting from obligations under contracts with vendors, consultants, CDMOs, and CROs, in connection with conducting research and development activities. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. We reflect research and development expenses in our financial statements by matching those expenses with the period in which services and efforts are expended. We account for these expenses according to the progress of the applicable preclinical or clinical study as measured by the timing of various aspects of the study or related activities. We determine accrual estimates through review of the underlying contracts along with preparation of financial models taking into account discussions and confirmations with research and other key personnel and the third-party vendors as to the progress of studies, or other services being conducted. During the course of a study, we adjust our rate of expense recognition if actual results differ from our estimates.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.

Stock-Based Compensation

We account for all stock-based compensation awards granted as stock-based compensation expense at fair value in accordance with the Financial Accounting Standards Board ASC Topic 718, Compensation—Stock Compensation. Stock-based compensation expense represents the cost of the grant date fair value of equity awards recognized over the requisite service period of the awards (usually the vesting period) on a straight-line or accelerated basis. We estimate the fair value of stock option awards using the Black-Scholes option pricing model and recognize forfeitures as they occur. The fair value of our common stock is used to determine the fair value of restricted stock awards.

The Black-Scholes option pricing model requires the use of subjective assumptions, including the risk-free interest rate, the expected stock price volatility, the expected term of stock options, the expected dividend yield, and the fair value of the underlying common stock on the date of grant. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. The assumptions underlying these valuations represented management's best estimates, which involved inherent uncertainties and the application of management judgment. As a result, if factors or expected outcomes change and we used significantly different assumptions or estimates, our equity-based compensation expense could have been materially different.

Prior to our IPO, there was no public market for our common stock, and consequently, the estimated fair value of our common stock was determined by our board of directors as of the date of each stock option grant, with input from management, considering

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third-party valuations of our common stock as well as our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent third-party valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or Practice Aid. The Practice Aid identifies various available methods for allocating the enterprise value across classes of series of capital stock in determining the fair value of our common stock at each valuation date. Since our IPO, we have determined the fair market value of our common stock using the closing price of our common stock as reported on the Nasdaq Global Select Market.

The fair value of the common stock underlying stock-based awards is the closing price of the Company’s common stock on the date of grant.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

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

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

Item 8. Financial Statements and Supplementary Data.

Our consolidated financial statements, together with the reports of our independent registered public accounting firms, appear beginning on page F-1 of this Form 10-K.

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) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. In designing and evaluating our disclosure controls and procedures, our management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officer to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Management assessed our internal control over financial reporting as of December 31, 2025. Management based its assessment on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2025.

This Form 10-K does not include an attestation report of our independent registered public accounting firm due to an exemption established by the JOBS Act for “emerging growth companies.”

105

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d‐15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Director and Executive Officer Trading Arrangements

During the fourth quarter of 2025, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

Amended and Restated Employment Agreements

On March 3, 2026, we entered into an amended and restated employment agreement with each of James McArthur (the “McArthur Employment Agreement”), Noel Donnelly (the “Donnelly Employment Agreement”), and Paul Streck (the “Streck Employment Agreement” and collectively, the “Amended Employment Agreements”). Pursuant to each of the Amended Employment Agreements, the definition of Sale Event Period was updated to include the three-month period prior to an event constituting a Sale Event (as defined in each of the Amended Employment Agreements) in addition to the 12-month period after such Sale Event. Each of the Amended Employment Agreements replace and supersede all prior employment agreements between the Company and each of Dr. McArthur, Mr. Donnelly, and Dr. Streck.

The foregoing description of each of the McArthur Employment Agreement, Donnelly Employment Agreement, and Streck Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of each of McArthur Employment Agreement, Donnelly Employment Agreement, and Streck Employment Agreement, which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not Applicable.

106

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required under this item is incorporated herein by reference to our definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the SEC not later than 120 days after the close of our fiscal year ended December 31, 2025.

We have adopted a written code of conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions. A current copy of the code is posted on the Corporate Governance section of our website, located at https://investors.pepgen.com/corporate-governance/documents-charters. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions, or any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

Item 11. Executive Compensation.

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

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

Item 14. Principal Accounting Fees and Services.

107

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(1)

For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page F-1 of this Form 10-K, incorporated into this Item by reference.

(2)

Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto.

(3)

Exhibits:

108

ExhibitNumber Description

109

23.1* Consent of KPMG, LLP, independent registered public accounting firm.

101.SCH Inline XBRL Taxonomy Extension Schema Document

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

* Filed herewith.

** Furnished herewith.

*** Previously filed.

† Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the SEC.

Item 16. Form 10-K Summary.

None.

110

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, on March 4, 2026.

PEPGEN INC.

By: /s/ James McArthur

Name: James McArthur

Title: Chief Executive 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 and in the capacities indicated as of March 4, 2026.

Name Title

/s/ James McArthur Chief Executive Officer(Principal Executive Officer)

James McArthur, Ph. D.

Noel Donnelly, M.B.A.

/s/ Laurie B. Keating Chair of the Board of Directors

Laurie B. Keating, J.D.

/s/ Habib Joseph Dable Director

Habib Joseph Dable

/s/ Mitchell H. Finer Director

Mitchell H. Finer, Ph.D.

/s/ Heidi Henson Director

Heidi Henson

/s/ Howard Mayer Director

Howard Mayer, M.D.

/s/ Joshua Resnick. Director

Joshua Resnick, M.D., M.B.A

/s/ Lisa Wyman Director

Lisa Wyman, M.S.

111

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 185) F-2

Consolidated Balance Sheets F-3

Consolidated Statements of Operations and Comprehensive Loss F-4

Consolidated Statements of Stockholders’ Equity F-5

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-7

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

PepGen Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of PepGen Inc. and subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, 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 each of the years in the two-year period ended December 31, 2025, 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.

/s/ KPMG LLP

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

San Diego, California

March 4, 2026

F-2

PEPGEN INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PAR VALUE AMOUNTS)

December 31,

Assets

Current assets:

Prepaid expenses and other current assets 2,507 3,570

Liabilities and stockholders’ equity

Current liabilities:

Operating lease liability, net of current portion 13,817 15,567

Stockholders’ equity:

Accumulated other comprehensive income 11 23

Total liabilities and stockholders’ equity $ 173,907 $ 150,883

See accompanying notes to consolidated financial statements.

F-3

PEPGEN INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Year EndedDecember 31,

Operating expenses:

Other income (expense)

Other (expense) income, net (11 ) (1 )

Income tax (expense) benefit (49 ) 617

Net loss per share, basic and diluted $ (2.12 ) $ (2.85 )

Other comprehensive (loss) income:

Cumulative translation adjustment arising during the period — (50 )

Unrealized (loss) gain on marketable securities (12 ) 39

See accompanying notes to consolidated financial statements.

F-4

PEPGEN INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Common Stock

Issuance of stock under the employee stock purchase plan 56,540 — 252 — — 252

Stock-based compensation expense — — 11,457 — — 11,457

Unrealized gain on marketable securities — — — 39 — 39

Cumulative translation adjustment arising during the period — — — (50 ) — (50 )

Vesting of restricted stock and performance stock units 101,280 — — — — —

Issuance of stock under the employee stock purchase plan 191,615 — 236 — — 236

Stock-based compensation expense — — 10,609 — — 10,609

Unrealized loss on marketable securities — — — (12 ) — (12 )

See accompanying notes to consolidated financial statements.

F-5

PEPGEN INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

Year EndedDecember 31,

Cash flows from operating activities:

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

Amortization and interest accretion related to operating lease 3,748 3,748

Impairment of long-lived assets 701 —

Other non-cash adjustments — 70

Changes in operating assets and liabilities:

Prepaids and other current and non-current assets 1,074 (1,301 )

Accrued expenses and other non-current liabilities (3,268 ) (1,663 )

Operating lease liabilities, current and non-current (3,094 ) (3,004 )

Net cash used in operating activities (81,635 ) (82,372 )

Cash flows from investing activities:

Purchases of property and equipment (264 ) (497 )

Net cash used in investing activities (15,235 ) (37,668 )

Cash flows from financing activities:

Payment of offering costs (413 ) (511 )

Proceeds from employee equity plans 292 2,482

Net cash provided by financing activities 107,979 88,749

Effect of exchange rate changes on cash (16 ) (62 )

Cash, cash equivalents and restricted cash at beginning of period 50,969 82,322

Cash, cash equivalents and restricted cash at end of period $ 62,062 $ 50,969

Components of cash, cash equivalents and restricted cash

Supplemental noncash investing and financing activities

Deferred offering costs in AP and accruals 55 —

Cash paid for taxes 82 71

See accompanying notes to consolidated financial statements.

F-6

PEPGEN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business

PepGen Inc., hereinafter referred to as PepGen or the Company, is a clinical-stage biotechnology company advancing the next generation of oligonucleotide therapeutics with the goal of transforming the treatment of severe neuromuscular and neurologic diseases. The Company's principal offices are located in Boston, Massachusetts.

The Company was initially formed as PepGen Limited on January 25, 2018, in the United Kingdom, or the U.K. On November 9, 2020, PepGen Limited completed a corporate reorganization, or the Reorganization. As part of the Reorganization, PepGen Limited formed PepGen, a Delaware corporation with nominal assets and liabilities, for the purpose of consummating the Reorganization. In connection with the Reorganization, the existing stockholders of PepGen Limited exchanged each of its classes of shares of PepGen Limited for the same number and class of common stock of PepGen on a one-to-one basis. The newly issued stock of PepGen had substantially identical rights to the exchanged shares of PepGen Limited. As a result of the exchange, PepGen became the sole stockholder of PepGen Limited. Upon the completion of the Reorganization on November 23, 2020, the historical financial statements of PepGen Limited became the historical financial statements of PepGen as the Reorganization was deemed to be between entities under common control. PepGen Limited was dissolved on December 10, 2024.

Liquidity

Since inception, the Company has not generated any revenue from product sales or other sources and has incurred significant operating losses and negative cash flows from operations. The Company’s primary uses of cash, cash equivalents, and marketable securities to date have been funding research and development activities, business planning, establishing and maintaining the Company’s intellectual property portfolio, hiring personnel, leasing premises and associated capital expenditures, raising capital, and providing general and administrative support for these operations. As of December 31, 2025, the Company had an accumulated deficit of $361.1million. To date, the Company has funded operations primarily through private placements of convertible preferred stock, the sale of shares of common stock in its initial public offering, or IPO, the sale of shares of common stock under its At-the-Market Equity Offering Sales Agreement, or Sales Agreement, with Stifel, Nicolaus & Company, Incorporated, or Stifel, and through the sale of shares of common stock in follow-on public offerings in February 2024, referred to as the 2024 Offering, and in September 2025, referred to as the 2025 Offering. As of December 31, 2025, the Company had cash, cash equivalents, and marketable securities of $148.5 million.

The Company filed a shelf registration statement on Form S-3 with the United States Securities and Exchange Commission, or SEC, which covers the offering, issuance and sale of an amount up to $300.0 million in the aggregate of shares of common stock, preferred stock, debt securities, warrants, and/or units or any combination thereof, which was declared effective on June 16, 2023. On August 8, 2023, the Company filed a prospectus supplement and entered into the Sales Agreement with Stifel, as sales agent, which provides for the issuance and sale by the Company of up to $100.0 million of shares of common stock from time to time in “at-the-market” offerings. Stifel is entitled to receive a commission of up to 3.0% of gross proceeds from sales under the Sales Agreement. On February 5, 2024, the Company sold 1,000,000 shares of common stock at a price of $10.00 per share under the Sales Agreement, resulting in net proceeds of $9.9 million. On February 9, 2024, the Company sold 7,530,000 shares of common stock in the 2024 Offering, pursuant to an underwriting agreement with Leerink Partners LLC dated as of February 6, 2024, at a price of $10.635 per share, resulting in net proceeds of $76.4 million after deducting underwriting fees and offering costs of $3.7 million. Net proceeds from sales in 2024 under the Sales Agreement and 2024 Offering, after deducting underwriters' fees and costs, were $86.3 million.

On June 28, 2024, the Company filed a second shelf registration statement on Form S-3 with the SEC, which covers the offering, issuance and sale of an amount up to $250.0 million in the aggregate of shares of common stock, preferred stock, debt securities, warrants, and/or units or any combination thereof, which was declared effective on July 8, 2024. On September 26, 2025, the Company issued and sold 31,250,000 shares of common stock at a purchase price of $3.20 per share in the 2025 Offering. Pursuant to the underwriting agreement, the Company granted underwriters a 30-day option to purchase up to an additional 4,687,500 shares of common stock at a price of $3.20 per share, which was exercised in full on September 25, 2025. The 2025 Offering resulted in net proceeds of $107.6 million after deducting underwriters' fees of $6.9 million and offering expenses of $0.5 million.

Based on the 2025 Offering, the Company believes that its cash, cash equivalents, and marketable securities as of December 31, 2025, will be sufficient to fund its currently planned operations for at least the next 12 months from the issuance of these condensed consolidated financial statements.

As the Company continues to pursue its business plan to successfully develop and obtain regulatory approval for its product candidates, it expects to finance its operations through the sale of equity, debt financings or other capital resources, which could

F-7

include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. However, there can be no assurance that any additional financing or strategic transactions will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it may need to delay, reduce or eliminate its product development or future commercialization efforts, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The consolidated financial statements include the accounts of PepGen Inc. (a U.S. corporation) and its wholly owned subsidiaries PepGen Limited (a U.K. corporation which was dissolved on December 10, 2024) and PepGen Securities Corp. (a U.S. corporation). All intercompany accounts and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management bases its estimates and judgments on historical experience, knowledge of current conditions, and beliefs of what could occur in the future, given the available information. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to accruals for research and development activities, for the valuation of intellectual property, for the fair value of common stock and convertible preferred stock warrants and stock-based compensation expense. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ materially from those estimates and assumptions.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or CODM. The Company’s CODM is its chief executive officer who reviews financial information together with certain operating metrics principally to make decisions about how to allocate resources and to measure the Company’s performance. The Company has determined that it operates as a single reportable segment. The Company’s CODM evaluates financial information on a consolidated basis.

Foreign Currency Remeasurement

The Company’s reporting currency is the U.S. Dollar. The functional currency of PepGen Limited was the British Pound. The assets and liabilities of PepGen Limited were translated into U.S. Dollars at the exchange rates in effect at each balance sheet date, and the results of operations are translated using the average exchange rates prevailing throughout the reporting period. Adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars were included in the cumulative translation adjustment, a component of accumulated other comprehensive loss in stockholders’ equity.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and money market accounts. As of December 31, 2025, the Company’s cash, cash equivalents, and marketable securities were held by four financial institutions in the U.S. At times, the Company’s deposits held in the U.S. may exceed the respective insured limits of the Federal Depository Insurance Corporation and Financial Services Compensation Scheme.

Concentration of Supplier Risk

The Company currently depends on a small number of third-party suppliers to supply the product candidates that are being evaluated in the Company’s research and development programs.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of December 31, 2025 and 2024,

F-8

cash and cash equivalents consisted primarily of checking and money market funds composed of U.S. government obligations, and U.S. treasury notes.

Restricted Cash

The Company classifies all cash the use of which is limited by contractual provisions as restricted cash. Restricted cash arises from the requirement for the Company to maintain cash of $1.5 million as collateral under a lease agreement.

Marketable Securities

The Company’s marketable securities consist of U.S. treasury notes which are classified as available-for-sale and are reported at fair value. Unrealized gains and losses on available-for-sale debt securities are reported as a component of accumulated other comprehensive loss in stockholders’ equity. Realized gains and losses are based on the specific identification method and are included as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss.

The Company evaluates its marketable securities with unrealized losses for other-than-temporary impairment. When assessing marketable securities for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value, and market conditions in general. If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be “other-than-temporary,” the Company reduces the investment to fair value through a charge to the consolidated statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented.

Fair Value Measurements

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

•

Level 1: Fair values are determined utilizing prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•

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

•

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

For certain financial instruments, including cash and cash equivalents, prepaid expenses, accounts payable, as well as certain accrued liabilities, the recorded amount approximates estimated fair value due to their relatively short maturity period.

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs that do not improve or extend the life of the assets are expensed when incurred.

The estimated useful lives of the Company’s property and equipment are as follows:

Laboratory and computer equipment 5 years

Furniture and fixtures 3 years

Deferred Offering Costs

The Company capitalizes within other long-term assets certain legal, accounting, and other third-party fees that are directly related to the Company’s in-process equity financings, until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction of the proceeds received as a result of the offering. Should a planned equity

F-9

financing be abandoned, terminated, or significantly delayed, the deferred offering costs are immediately written off to operating expenses. As of December 31, 2025, deferred offering costs of $0.4 million in relation to the Company's shelf registration statements on Form S-3 were recorded within other assets on the consolidated balance sheets.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances presented in the arrangement, including whether the Company controls the use of identified assets. The Company classifies leases with a term greater than one year as either operating or finance leases at the lease commencement date and records a right-of-use asset and current and non-current lease liabilities, as applicable on the balance sheet. The Company has elected not to recognize on the balance sheet leases with terms of one year or less, but payments are recognized as expense on a straight-line basis over the lease term. If a lease includes options to extend the lease term, the Company does not assume the option will be exercised in its initial lease term assessment unless there is reasonable certainty that the Company will renew based on an assessment of economic factors present as of the lease commencement date. The Company monitors its plans to renew its material lease each reporting period. If a lease includes provisions for leasehold improvements for which the Company has an obligation to pay, the Company determines if the improvements should be considered lessor or lessee assets. If the improvements are considered lessor assets, the Company records the payments in the calculation of the lease liability and corresponding right-of-use asset.

Lease liabilities and the corresponding right-of-use assets are recorded based on the present value of lease payments over the remaining lease term. The present value of future lease payments are discounted using the interest rate implicit in lease contracts if that rate is readily determinable; otherwise, the Company utilizes information available at the commencement of the lease to calculate the incremental borrowing rate, or IBR, which reflects the fixed rate at which the Company could borrow on a collateralized basis over a similar term, the amount of the lease payments in a similar economic environment. In order to determine the appropriate IBR, the Company uses available third-party information, including comparable company collateralized borrowing information. After lease commencement and the establishment of a right-to-use asset and operating lease liability, lease expense is recorded on a straight-line basis over the lease term.

The Company enters into contracts that contain both lease and non-lease components. Non-lease components include costs that do not provide a right-to-use leased asset but instead provide a service, such as maintenance costs. The Company has elected to account for the lease and non-lease components together as a single component for all classes of underlying assets. Variable costs associated with the lease, such as maintenance and utilities, are not included in the measurement of right-to-use assets and lease liabilities but rather are expensed when the events determining the amount of variable consideration to be paid have occurred.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group.

If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset or asset group exceeds the estimated discounted future cash flows of the asset or asset group. During the year ended December 31, 2025, the Company took $0.7 million in non-cash charges to research and development and general and administrative expense, associated with the impairment of unused lab equipment and computer and office equipment. There were no impairments of long-lived assets for the year ended December 31, 2024.

Commitment and Contingencies

The Company recognizes a liability with regard to loss contingencies when it believes it is probable a liability has been incurred, and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company has not recorded any such liabilities as of December 31, 2025 and 2024 that were material to the consolidated financial statements.

Research and Development

Research and development costs are expensed as incurred. Research and development costs consist of salaries, benefits, and other personnel-related costs, including stock-based compensation, laboratory supplies, process development costs, fees paid to other entities to conduct certain research and development activities on the Company’s behalf, including contract manufacturing organizations and contract research organizations, and allocated facility and other related costs. Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid

F-10

expenses until the related goods are delivered or services are performed. The Company has not recorded any research and development credits on the consolidated balance sheet at December 31, 2025 and 2024.

The Company records accrued liabilities for estimated costs of research and development activities conducted by third-party service providers. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. The historical accrual estimates made by the Company have not been materially different from the actual costs.

Stock-Based Compensation

The Company accounts for its stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. ASC 718 requires all stock-based payments to employees, non-employees and directors, to be recognized as expense in the consolidated statements of operations based on their grant date fair values. The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model, or Black-Scholes, for stock option grants to employees, non-employees and directors. The fair value of the Company’s common stock is used to determine the fair value of restricted stock awards.

The Company’s stock-based compensation awards are generally subject to service-based vesting conditions. Compensation expense related to awards to employees, non-employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term.

Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. The Company determines the expected volatility using the historical volatility of a peer group of comparable publicly traded companies with product candidates in similar stages of development to the Company’s product candidates. The Company uses the simplified method to calculate the expected term for stock options granted to employees, non-employees and directors whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the stock options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company recognizes forfeitures as they occur.

The fair value of the common stock underlying stock-based awards is the closing price of the Company’s common stock on the date of grant.

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

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts or existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not.

The Company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based on the merits of the position. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Comprehensive Loss

Comprehensive loss is composed of two components — net loss and other comprehensive loss. Other comprehensive loss refers to gains and losses that under U.S. GAAP are recorded as an element of stockholders’ equity but are excluded from net loss. The Company’s other comprehensive loss consists of foreign currency translation adjustments and unrealized gains and losses on available-for-sale marketable debt securities.

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Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of common shares plus the potential dilutive effects of potential dilutive securities outstanding during the period.

Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is anti-dilutive. The Company’s potentially dilutive securities include unvested common stock under the Company’s equity incentive plan which have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

As of December 31,

Emerging Growth Company Status

The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. The Company may take advantage of these exemptions until the Company is no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, its consolidated financial statements may not be comparable to companies that comply with public company effective dates. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of the IPO or such earlier time that it is no longer an “emerging growth company.”

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard-setting bodies that the Company adopts as of the specified effective date. The Company qualifies as an “emerging growth company” as defined in the JOBS Act and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and non-public companies, the Company can adopt the new or revised standard at the time non-public companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for non-public companies. 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 its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, or ASU 2023-09. ASU 2023-09 requires a company's annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. Adoption is either with a prospective method or a fully retrospective method of transition. The Company has adopted Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. Please see additional disclosures related to income taxes in Note 11, Income Taxes, in the Notes to Consolidated Financial Statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures(Subtopic 220-40), or ASU 2024-03. ASU 2024-03 requires companies to disaggregate certain expenses presented on the face of the financial statements to enhance transparency and help investors better understand an entity's performance

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within the notes to the financial statements. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will not be required to adopt ASU 2024-03 until January 1, 2027. The Company is currently evaluating the potential impact of the adoption of ASU 2024-03 on its consolidated financial statements and related disclosures.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets that have been measured at fair value as of December 31, 2025 and December 31, 2024, and indicate the fair value of the hierarchy of the valuation inputs utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. All instruments held by the Company are Level 1. The following tables set forth marketable securities as of December 31, 2025 and December 31, 2024 (in thousands):

Amortized Cost Unrealized Gains Unrealized Losses Total

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

Total Level 1

Cash Equivalents:

U.S. Treasury-backed money market funds $ 58,147 $ 58,147

Marketable Securities:

Total Level 1

Cash Equivalents:

U.S. Treasury-backed money market funds $ 45,570 $ 45,570

Marketable Securities:

Money market funds are highly liquid investments that are valued based on quoted market prices in active markets, which represent a Level 1 measurement within the fair value hierarchy. These money market funds are classified on the consolidated balance sheets under cash and cash equivalents.

The following table summarizes the scheduled maturity for the Company's marketable securities for the period presented (in thousands):

Maturing in one year or less $ 87,942

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4. Property and Equipment, Net

The cost and accumulated depreciation of property and equipment were as follows (in thousands):

December 31,

Computer and office equipment 1,759 1,556

Construction in process 20 96

Less accumulated depreciation (3,911 ) (3,046 )

Total property and equipment, net $ 1,903 $ 3,716

Depreciation expense was $1.4 million and $1.5 million for the years ended December 31, 2025 and 2024, respectively.

During the year ended December 31, 2025, the Company also took $0.7 million in non-cash charges to research and development and general and administrative expense, associated with the impairment of unused lab equipment and computer and office equipment.

5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

December 31,

Employee-related expenses $ 4,663 $ 3,617

6. Leases

In December 2021, the Company entered into a non-cancellable operating lease agreement, or the Harrison Lease, pursuant to which the Company leases 31,668 square feet of office and laboratory space located in Boston, Massachusetts, or the Premises. The Harrison Lease commenced for accounting purposes when the Company gained access to the Premises on December 29, 2022, or the Lease Commencement Date. The Harrison Lease has a term of nine years and two months from the Lease Commencement Date. The Company’s obligation for the payment of base rent for the Premises began in May 2023, and is $0.2 million per month, increasing up to $0.3 million per month during the term of the Lease. The Company has one option to extend the term of the Harrison Lease, for a period of an additional five years. This is not included in the lease term as it was not deemed probable that the Company would exercise this option. At December 31, 2025, the Harrison Lease was the only lease for which the Company recorded a lease liability and corresponding right-of-use asset.

The landlord completed significant leasehold improvements to the Premises, a portion of which the Company was obligated to pay per the terms of the Harrison Lease. The Company paid $2.0 million for the improvements prior to the Lease Commencement Date, and paid $3.4 million for the improvements in 2023, for total payments to the landlord for improvements of $5.4 million. The

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Company determined that the landlord is the accounting owner of the improvements, and payments by the Company for the improvements are included in the calculation of the right-of-use asset and lease liability.

Summary of Lease Costs

The components of lease cost under ASC 842 for the leases were as follows (in thousands):

December 31,

Cash payments for operating leases during 2025 related to $3.1 million in rent payments under the Harrison Lease. Additionally, the Company made payments on variable lease costs throughout the year of $1.5 million. These payments related to parking, management fees, and other costs associated with maintaining our office and lab space.

The remaining lease term for the Harrison Lease is 6.4 years and the incremental borrowing rate is 8.0%.

Future minimum lease payments under the non-cancelable operating lease consisted of the following as of December 31, 2025:

Year Ending December 31, (in thousands)

Total future minimum lease payments $ 21,929

Less: imputed interest (4,925 )

Present value of lease liability $ 17,004

Included in the consolidated balance sheet (in thousands) December 31, 2025

Current portion of lease liability $ 3,187

Non-current portion of lease liability 13,817

Total lease liability $ 17,004

7. Related Party Transactions

Technology License Agreement with Oxford University Innovation Limited

In March 2018, the Company, Oxford University Innovation Limited, or OUI, and the Medical Research Council of United Kingdom Research and Innovation, or MRC, or collectively, the Licensors, entered into a license of technology agreement, which was subsequently amended in December 2018, further amended and restated in November 2020, and further amended in February 2022, referred to, as so amended, as the License Agreement. The Licensors and affiliates held shares of Series A-1 and Series A-2 preferred stock, Series B preferred stock and Class A common stock. The License Agreement provides the Company with an exclusive world wide license to licensed data and technology owned by OUI and MRC in respect of cell-penetrating peptides for the treatment of Duchenne muscular dystrophy, spinal muscular atrophy, and other conditions. The License Agreement provides the Company with the rights to grant and authorize sublicenses to make, use, sell, and import products and otherwise exploit the patent rights.

As consideration for the license, the Company made an initial upfront payment in 2018, as well as a Restatement Completion Fee and a License Data Fee (each as defined in the License Agreement) in 2020 totaling $0.1 million.

The Company could be required to make milestone payments to the Licensors upon achievement of certain patent and commercial milestones related to the patents and commercialization of certain of the Company’s product candidates. The aggregate potential milestone payments are $0.1 million. In 2024, the Company paid the Licensors a patent procurement milestone of £10,000, adjusted per the retail price index under the terms of the License Agreement. The Company also agreed to pay the Licensors low single digit royalties on net sales of any licensed products that are commercialized by the Company in excess of a threshold amount between £20 million and £30 million ($27.0million and $40.5million as of December 31, 2025), subject to certain adjustments. The term of the License Agreement continues until the later of (i) the date on which all the patents and patent applications covered

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thereunder have been abandoned or allowed to lapse or expired or been rejected or revoked or (ii) 20 years from the date of the original license agreement.

Upon completion of the IPO, the Company became obligated to pay OUI an exit fee between 0.5% to 2% of the value determined in an acquisition or initial public offering, not to exceed £5 million ($6.2 million as of the IPO date). The exit fee due to OUI, based on the proceeds of the IPO, was $1.4 million, which was paid during the second quarter of 2022 and included in research and development expense on the condensed consolidated statement of operations.

During the year ended December 31, 2024, one memberof the Company’s board of directors, Dr. Christopher Ashton, was employed by Oxford Science Enterprises, or OSE, which is an affiliate of OUI. On September 19, 2024, the Company announced that Dr. Ashton had resigned from the board of directors, effective as of September 30, 2024.

As of December 31, 2025, OSE owned 7.2% of the Company’s outstanding common stock. Pursuant to the terms of Dr. Ashton's employment agreement with OSE, he was obligated to transfer any cash compensation from the Company to OSE. Fees paid in cash for Dr. Ashton's service on the Company's board of directors were paid directly to OSE and were included within general and administrative expense on the consolidated statement of operations. The Company paid $0 and $36,875 to OSEfor the years ended December 31, 2025 and 2024, respectively, as compensation for Dr. Ashton's service on the board of directors.

RA Capital Management, L.P.

Entities affiliated with RA Capital Management, L.P., or RA Capital, purchased common stock in the Company’s IPO in May 2022, the Company’s 2024 Offering in February 2024, and the Company's 2025 Offering in September 2025. As of December 31, 2025, entities affiliated with RA Capital owned 29.2% of the Company’s outstanding common stock.

Two members of the Company’s board of directors, Dr. Joshua Resnick and Habib Dable, are affiliated with RA Capital. Pursuant to the governing legal documents of RA Capital, Dr. Resnick is obligated to transfer any cash compensation from the Company to RA Capital. Fees paid in cash for Dr. Resnick's service on the Company's board of directors were paid directly to RA Capital and are included within general and administrative expense on the consolidated statement of operations. The Company paid $46,000 and $45,500 to RA Capital for the years ended December 31, 2025 and 2024, respectively, for Dr. Resnick’s service on the board of directors.

8. Commitments and Contingencies

Legal proceedings

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated.

On June 9, 2025, a putative shareholder class action captioned Johnny Karam v. PepGen Inc., et al. was filed in the United States District Court for the Eastern District of New York, naming the Company and its Chief Executive Officer and Chief Financial Officer as defendants. On November 18, 2025, the parties filed a stipulation of voluntary dismissal of the action. Separately, by a letter received by the Company on September 29, 2025, a putative shareholder of the Company made a purported shareholder demand based on substantially the same allegations as those set forth in the above-mentioned putative class action suit. On December 1, 2025, the demanding shareholder withdrew the demand.

The Company is not party to any other litigation and does not have contingency reserves established for any litigation liabilities.

Other

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the agreements, the Company agrees to indemnify, hold harmless, and to reimburse the indemnified party for losses suffered or incurred by the indemnified party, including in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third-party with respect to the Company’s products. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown as of December 31, 2025. The Company does not anticipate recognizing any significant losses relating to these arrangements. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements may be unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

9. Stockholders’ Equity

Under the Third Amended and Restated Certificate of Incorporation, dated May 10, 2022, as amended on June 20, 2024, as currently in effect, the Company has the authority to issue a total of 500,000,000 shares of common stock (par value of $0.0001 per share) and 10,000,000 shares of undesignated preferred stock (par value of $0.0001 per share). Each share of common stock has the right to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding having priority rights as to

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dividends. No cash dividends were declared by the board of directors during the years ended December 31, 2025 and December 31, 2024.

The Company has reserved shares of common stock for issuance, on an as-converted basis, as follows:

December 31,

Authorized for future issuance under the ESPP 532,579 397,998

10. Stock-Based Compensation

The Company maintains four equity compensation plans; the 2020 Stock Plan, or the 2020 Plan, the 2022 Stock Option and Incentive Plan, or the 2022 Plan, the 2022 Employee Stock Purchase Plan, or the ESPP, and the 2024 Inducement Plan, or the Inducement Plan. As of the Company's IPO in May 2022, the Company's board of directors determined that no further awards would be made under the 2020 Plan. The number of shares of common stock that may be issued under the 2022 Plan is subject to increase by the number of shares under any outstanding stock options forfeited and not exercised under the 2020 Plan. Additionally, the number of shares reserved for issuance under the 2022 Plan automatically increases on the first day of each fiscal year in an amount equal to the lower of (1) 5% of the shares of common stock outstanding on such date and (2) an amount determined by the Company’s board of directors. The 2022 Plan allows the board of directors to grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, cash-based awards, and dividend equivalent rights to the Company’s officers, employees, directors and other key persons. The number of shares reserved for issuance under the ESPP automatically increases on the first day of each fiscal year in an amount equal to the lower of (1) 1% of the shares of common stock outstanding on such date and (2) an amount determined by the Company’s board of directors. In August 2024, the Company's board of directors adopted the Inducement Plan. The Inducement Plan provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, dividend equivalent rights and other stock-based awards with respect to an aggregate of 1,000,000 shares of common stock (subject to adjustment as provided in the Inducement Plan). Awards under the Inducement Plan may only be granted to new employees who were not previously employed by the Company or its affiliates in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4).

As of December 31, 2025, 1,914,063 shares remained available for grant under the 2022 Plan, 532,579shares remained available for issuance under the ESPP, and 637,184 shares remained available for issuance under the Inducement Plan.

Stock Option Repricing

On November 4, 2025, the Company’s board of directors approved an option repricing, or the Repricing, effective as of November 4, 2025, or the Effective Date. The Repricing was undertaken in accordance with, and as permitted by, the Company’s 2020 Plan, 2022 Plan, and Inducement Plan. Pursuant to the Repricing, all options granted pursuant to the 2020 Plan, 2022 Plan and Inducement Plan that are held by current employees, or Eligible Participants, were repriced, to the extent such options had an exercise pricein excess of the 52-week high fair market value per share of the Company’s common stock on the Nasdaq Global Select Market determined as of November 4, 2025, or Eligible Options.

The new exercise price for the Eligible Options is $4.53. However, in order to exercise the repriced options at the reduced exercise price, Eligible Participants are required to remain in service with the Company through the Retention Period (as defined herein). The “Retention Period” begins on the Effective Date and ends on the earliest of the following: (i) March 31, 2027; (ii)with respect to Eligible Options granted under the 2020 Plan, the occurrence of a Sale of the Company (as defined therein), or (iii) with respect to Eligible Options granted under the 2022 Plan and the Inducement Plan, the occurrence of a Sale Event (as defined therein).

As of the date of approval of the Repricing, the total number of shares underlying all Eligible Options is 3,557,903 shares. The Eligible Options previously had exercise prices ranging from $8.89 to $17.91 per share. There were no changes to the number of shares, the vesting schedule or the expiration date of the Eligible Options.

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The effect of the option repricing resulted in a total incremental non-cash stock-based compensation expense of $3.4 million, which was calculated using the Black-Scholes option-pricing model, which will be recognized ratably through the 17-month Retention Period.

During the year ended December 31, 2025, the Company recognized incremental stock-based compensation expense of $0.4 million associated with the option repricing which is included in general and administrative and research and development expense in the consolidated statement of operations and comprehensive loss. There was no incremental stock-based compensation expense recognized for year ended December 31, 2024.

Stock Option Valuation

In determining the fair value of the stock options granted, the Company uses Black-Scholes and the assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding. For stock options with service-based vesting periods, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

Expected Volatility—The Company has historically been a private company and lacks significant company-specific historical and implied volatility information. The expected volatility is estimated based on a blend of the Company's own volatility and the average historical volatilities for comparable publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle and area of specialty. The Company will continue to apply this process until enough historical information regarding the volatility of its own stock price becomes available.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Expected Dividend Yield—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

The fair value of stock options granted was estimated using the following weighted average assumptions:

Year EndedDecember 31,

Risk-free interest rate % 3.99 % 4.15 %

Expected term (in years) 5.92 6.06

Expected dividend yield — —

The weighted average assumptions utilized for the Repricing were a risk-free interest rate of 3.63%, an expected volatility of 145.05%, an expected term of 1.40 years, and no expected dividend yield.

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Stock Option Activity

Stock option activity for the year ended December 31, 2025 was as follows:

The aggregate intrinsic value of stock options is calculated as the difference between the exercise prices of the stock options and the fair value of the Company's common stock for those stock options that had exercises prices lower than the fair value of the Company's common stock. The total intrinsic value of the stock options exercised during the years ended December 31, 2025 and 2024 was $0.1 million and $1.0 million, respectively. The intrinsic value is the difference between the estimated fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option. During the years ended December 31, 2025 and 2024, the total proceeds to the Company from stock option exercises was $0.1 million and $2.2 million, respectively.

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2025 and 2024 was $2.06 and $10.19 per share, respectively.

As of December 31, 2025, total unrecognized compensation expense related to stock options, inclusive of the repricing, was $15.8 million. This amount is expected to be recognized over a weighted average period of approximately 2.21 years.

Restricted Stock Units

A restricted stock unit, or RSU, represents the right to receive one share of common stock upon vesting of the RSU. In February 2024, the Company granted employees a one-time RSU award that vested in full on the one-year anniversary of the grant date, provided that the employee remained employed with the Company through the date of vesting. Certain employees, including employees who are executive officers of the Company, received a one-time RSU award that vests upon the achievement of certain performance-based clinical development milestones, or PSUs, provided that the employee remains employed with the Company through the date of vesting. Such awards could not vest in less than one year, regardless of when the performance milestone was achieved. This milestone was achieved and all PSUs vested on February 24, 2025. During the year ended December 31, 2025 the Company recognized $0.3 million in expense associated with the achievement of the performance milestone.

Beginning in 2025, the Company introduced RSU grants which generally vest over four years, provided the employee remains employed by the Company through the vesting dates.No PSUs remain outstanding as of December 31, 2025. As of December 31, 2025, there are no RSUs with performance-based vesting conditions outstanding. A summary of the Company’s RSU and PSU activity and related information for the year ended December 31, 2025 is as follows:

Time-Based RSUs PSUs Weighted-AverageGrant Date Fair Value

The weighted average grant date fair value of the time-based RSUs and the PSUs granted during the year ended December 31, 2025 and 2024 was $3.02 and $10.64, respectively. During the year ended December 31, 2025, 101,280 RSUs and PSUs vested with a total fair value of $0.2 million. During the year ended December 31, 2024, no RSUs vested. As of December 31, 2025, there was $0.7

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million of unrecognized compensation costs related to unvested time-based RSUs, which are expected to be recognized over a weighted-average period of 3.29 years.

Stock-Based Compensation Expense

Stock-based compensation expense recognized for stock option grants included in the accompanying consolidated statements of operations and comprehensive loss is as follows (in thousands):

Year EndedDecember 31,

Total stock-based compensation expense $ 10,609 $ 11,457

11. Income Taxes

The Company’s loss before income taxes for the years ended December 31, 2025 and 2024 were generated in the following jurisdictions (in thousands):

Year EndedDecember 31,

The components of net deferred income taxes consisted of the following as of December 31, 2025 and 2024 (in thousands):

December 31,

Deferred tax assets:

Intangible asset amortization 6,269 6,847

Other, net (1 ) 4

Deferred tax liabilities

Deferred tax liabilities (6,185 ) (7,158 )

Net deferred tax assets $ — $ —

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The components of income tax expense were as follows for the years ended December 31, 2025 and 2024 (in thousands):

Year EndedDecember 31,

Current expense:

U.S. Federal $ — $ —

Foreign — (701 )

Total current expense 49 (617 )

Deferred expense:

U.S. Federal — —

State — —

Foreign — —

Total deferred expense — —

Provision for income taxes $ 49 $ (617 )

A reconciliation of income tax expense to the amount computed by applying the 21% statutory federal income tax rate to the loss from operations is summarized for the year ended December 31, 2025 after the adoption of ASU 2023-09 is as follows:

Description Year EndedDecember 31, 2025

Amount Percent

U.S. Federal Statutory Tax Rate $ (18,816 ) 21.0 %

Foreign Tax Effects

Statutory tax rate difference between local country and United States — 0.0 %

Effect of Changes in Tax Laws or Rates Enacted in the Current Period — 0.0 %

Effect of Cross-Border Tax Laws — 0.0 %

Tax Credits — 0.0 %

Orphan drug credit (1,435 ) 1.6 %

Changes in valuation allowances 20,925 (23.4 )%

Nontaxable or Nondeductible Items — 0.0 %

Permanent Adjustments 706 (0.8 )%

Changes in Unrecognized Tax Benefits — 0.0 %

Other Adjustments — 0.0 %

Income tax expense (benefit) $ 49 (0.1 )%

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory federal income tax rate to the loss from operations is summarized for the tax year ended December 31, 2024 prior to the adoption of ASU 2023-09 is as follows:

Year EndedDecember 31,

Tax at statutory rate 21.0 %

State tax (net of federal benefit) (0.1 )%

Permanent differences (0.8 )%

PEPG US Equity

PEPG · 10-K · period ended 2025-12-31

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

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

Item 8. Financial Statements and Supplementary Data.

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

Item 9A. Controls and Procedures.

Item 9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

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

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

Item 14. Principal Accounting Fees and Services.

Item 15. Exhibits, Financial Statement Schedules.

Item 16. Form 10-K Summary.

PEPG US Equity☆

PEPG · 10-K · period ended 2025-12-31

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

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

Item 8. Financial Statements and Supplementary Data.

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

Item 9A. Controls and Procedures.

Item 9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

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

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

Item 14. Principal Accounting Fees and Services.

Item 15. Exhibits, Financial Statement Schedules.

Item 16. Form 10-K Summary.

PEPG US Equity