Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. For a discussion of our financial condition and results of operations for 2024 as compared to 2023, except as set forth below, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, which discussion is incorporated by reference herein.
In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations, and involve risks and uncertainties. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”
Overview
We are a late clinical-stage biotechnology company focused on developing and commercializing transformative treatments for patients with serious immunological diseases. Our lead product candidate, atacicept, is currently being evaluated for the treatment of immunoglobulin A nephropathy (IgAN) and other autoimmune kidney diseases. Atacicept is a native human TACI-Fc fusion protein that binds both the B-cell activating factor (BAFF) and A proliferation-inducing ligand (APRIL) cytokines and is self-administered subcutaneously at home. We are conducting ORIGIN 3, the pivotal Phase 3 trial of atacicept 150 mg in IgAN. The trial met the primary efficacy endpoint of reduction in proteinuria as measured by 24-hour urine protein-to-creatinine ratio (UPCR) at week 36, where participants treated with atacicept achieved a 46% reduction from baseline in UPCR with a statistically significant and clinically meaningful 42% reduction in UPCR compared to placebo (p<0.0001). The incidence of adverse events was generally balanced between the atacicept and placebo groups, with fewer serious adverse events reported with atacicept than placebo, no safety signals indicating immunosuppression, and no deaths in either treatment group. In November 2025, we submitted a Biologics License Application (BLA) for atacicept for the treatment of adults with IgAN to the U.S. Food and Drug Administration (FDA) through the Accelerated Approval Program. On January 7, 2026, the FDA granted priority review to the application and assigned a Prescription Drug User Fee Act (PDUFA) target action date of July 7, 2026. If approved, atacicept would be the first B-cell modulator inhibiting both BAFF and APRIL for IgAN, offering patients an autoinjector for at-home self-administration.
The ORIGIN Phase 2b clinical trial evaluated the safety and efficacy of atacicept in 116 participants with IgAN and reported positive results at 24 weeks in January 2023, 36 weeks in June 2023, and 96 weeks in October 2024. The trial remained blinded through 36 weeks, after which all participants were eligible for the open label extension portion of the study and received atacicept 150 mg through 96 weeks. Atacicept met its primary endpoint at 24 weeks with a statistically significant reduction in UPCR. Through 36 weeks, participants treated with atacicept demonstrated reductions in galactose-deficient IgA1 (Gd-IgA1, the autoantigen produced by B cells in patients with IgAN), hematuria, and UPCR, with stable estimated glomerular filtration rate (eGFR). The improvements in Gd-IgA1, hematuria, UPCR and eGFR represent the quartet of findings consistent with IgAN disease modification. The 96-week open label extension results showed consistent and sustained reductions in Gd-IgA1, hematuria, and UPCR, with continued eGFR stabilization at a rate similar to the general population without kidney disease. Atacicept’s safety profile appeared favorable, and comparable to placebo, across the ORIGIN program in IgAN.
We believe that atacicept has pipeline-in-a-molecule potential, with potential application in multiple diseases. Based on data from the ORIGIN Phase 2b trial, the FDA granted Breakthrough Therapy Designation to atacicept for the treatment of IgAN. We have also committed to providing long-term access to atacicept for ORIGIN participants through ORIGIN EXTEND, a long-term Phase 2 extension study that offers atacicept to participants who completed ORIGIN Phase 2b or 3 until, if approved, commercial availability in their country or region. We are evaluating atacicept in other autoimmune kidney diseases, including primary membranous nephropathy (pMN), focal segmental glomerulosclerosis (FSGS) and minimal change disease (MCD), in patients with anti-phospholipase A2 receptor (PLA2R) or anti-nephrin autoantibodies in the Phase 2 PIONEER clinical trial. Potential future indications include anti-neutrophil cytoplasmic antibody-associated vasculitis (AAV), lupus nephritis (LN), Sjogren’s disease, systemic lupus erythematosus (SLE), systemic sclerosis, generalized myasthenia gravis, and idiopathic thrombocytopenic purpura.
We also hold worldwide, exclusive development and commercial rights to MAU868, a potentially first-in-class monoclonal antibody to treat reactivated BK virus (BKV) infections, for which we completed a Phase 2 clinical trial in 2022. In January 2025, we acquired worldwide, exclusive development and commercial rights to VT-109, a novel, next-generation dual BAFF/APRIL inhibitor that is in preclinical development. We believe that our current pipeline programs leverage the deep expertise of our team and have strong potential commercial synergies.
We do not have any product candidates approved for commercial sale, and we have not generated any revenue from product sales. Our ability to generate revenue sufficient to achieve profitability, if ever, will depend on the successful development and eventual commercialization of one or more of our product candidates, which we expect will take a number of years. We also do not own or operate, and currently have no plans to establish, any manufacturing facilities. We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for nonclinical and clinical testing, as well as for commercial manufacturing if any of our
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product candidates obtain marketing approval. We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the development of our product candidates.
To date, we have funded our operations primarily through proceeds from the sale of shares of our common stock, redeemable convertible preferred stock, debt financing and convertible promissory notes. As of December 31, 2025, we had $714.6 million in cash, cash equivalents and marketable securities, compared to $640.9 million as of December 31, 2024.
We have incurred significant operating losses since the commencement of our operations. Our net losses were $299.6 million, $152.1 million, and $96.0 million for the years ended December 31, 2025, 2024, and 2023 respectively, and we expect to incur significant and increasing losses for the foreseeable future as we continue to advance our product candidates toward commercialization. Our net losses may fluctuate significantly from period to period, depending on the timing of expenditures on our research and development activities. As of December 31, 2025, we had an accumulated deficit of $760.9 million, compared to $461.3 million as of December 31, 2024. Our primary use of cash is to fund operating expenses, which consist of research and development and general and administrative expenditures. Cash used to fund operating expenses depends on the timing of when we pay these expenses, as reflected in the changes in our working capital balances.
We expect to continue to incur net operating losses for at least the next several years, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. We expect our expenses and capital requirements will increase significantly in connection with our ongoing activities as we:
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initiate or continue nonclinical studies and clinical trials for our product candidates; seek regulatory approvals for any product candidates that successfully complete clinical trials;
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continue to scale up external manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for clinical trials and potential commercialization;
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establish a sales, marketing and distribution infrastructure to commercialize any approved product candidates and related additional commercial manufacturing costs;
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develop, maintain, expand, protect and enforce our intellectual property portfolio, including patents, trade secrets, and know-how;
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acquire, develop or in-license other product candidates and technologies and further expand our clinical product pipeline;
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attract, develop and retain additional clinical, scientific, quality control, commercial, and manufacturing management and administrative personnel; and
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add clinical, operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts.
We also expect to increase the size of our administrative function to support the growth of our business. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.
We will require substantial additional funding to develop our product candidates and support our continuing operations. Until such time that we can generate significant revenue from product sales or other sources, if ever, we expect to finance our operations through the sale of equity, debt financings, or other capital sources, which could include income from collaborations, strategic partnerships, or marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide. Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to have to delay, reduce or eliminate our product development or future commercialization efforts. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts. We cannot provide assurance that we will ever be profitable or generate positive cash flow from operating activities.
Geopolitical and Macroeconomic Developments
Due to geopolitical and macroeconomic events, including bank failures, tariffs and trade tensions, supply chain challenges, ongoing military conflicts, related sanctions, changes in U.S.-China relations, elevated inflation rates and the responses by central banking authorities to control such inflation, the U.S. and global financial markets experienced volatility, which has led to disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally. As a result of these factors and other
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geopolitical and macroeconomic developments described in this Annual Report, our business and results of operations may be adversely affected.
Although we did not see a significant financial impact to our business operations as a result of recent geopolitical and macroeconomic developments during the year ended December 31, 2025, there may be potential impacts to our business in the future that are highly uncertain and difficult to predict such as disruptions or restrictions in our supply chain, disruption or restrictions on our employees’ ability to travel, disruptions to or delays in ongoing non-clinical trials, clinical trials, third-party manufacturing supply and other operations, interruptions or delays in the operations of the FDA or other regulatory authorities, and continued elevated inflation and interest rates which may increase the cost of conducting business activities or cause changes in availability and cost of credit and impact our ability to raise capital and conduct business development activities. The ultimate impact of these geopolitical and macroeconomic developments, as well as any lasting effects on our business, is highly uncertain and subject to continued change, and we recognize that macroeconomic and geopolitical factors may continue to present unique challenges for us.
We believe that our existing cash, cash equivalents and marketable securities held as of December 31, 2025, will be sufficient to fund our planned operations and capital expenditure requirements for at least the next 12 months from the date of this Annual Report. However, should adverse geopolitical or macroeconomic events, such as those discussed above, any recession or depression associated with those events or other events described herein, continue for a prolonged period, our results of operations, financial condition, liquidity and cash flows could be materially impacted as a result of a lower likelihood of effectively and efficiently developing and successfully commercializing our product candidates.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024.
Year Ended December 31, CHANGE
(dollars in thousands) 2025 2024 AMOUNT %
Operating expenses:
Other income (expense):
Research and Development Expenses
Research and development expenses represent a substantial portion of our operating expenses. Our research and development expenses consist primarily of direct and indirect expenses incurred in connection with the research and development of our product candidates. Direct expenses include costs incurred under agreements with third parties, including contract research organizations, contract drug manufacturing organizations and consultants directly related to our research and development of product candidates, and license and milestone fees incurred as a result of our contractual obligations for our development candidates. Indirect expenses include employee compensation and other personnel-related expenses, including stock-based compensation, facilities and depreciation related to buildings and equipment used by research and development personnel and activities and other expenses.
Research and development expenses are recorded as expense in the period in which the related activities occurred, and payments we make prior to the receipt of goods or services to be used in research and development efforts are deferred as prepaid expenses until the goods or services are received and used. We accrue expenses for contract research and development as the related services are performed by monitoring the status of specified activities and billings received from our external service providers. These expenses are accrued based on estimates and are adjusted as actual expenses become known. The cost incurred in obtaining technology licenses, including initial and subsequent milestone payments incurred under our licensing agreements, are recorded as expense in the period in which they are incurred, as the licensed technology, method or process has no alternative future uses other than for our research and development activities. Where contingent milestone payments are due to third parties under license or other agreements, the milestone
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payment obligations are recognized as expense when achievement of the contingent milestone is probable, which is generally upon achievement of the milestone.
The following table summarizes our research and development expenses incurred during the respective periods.
Year Ended December 31, CHANGE
(dollars in thousands) 2025 2024 AMOUNT %
Direct research and development expenses
Indirect research and development expenses
Research and development expenses increased by $89.1 million, or 71%, to $215.3 million in the year ended December 31, 2025, from $126.2 million in the year ended December 31, 2024, due to an increase of $23.4 million in contract drug manufacturing costs for clinical and potential commercial use, an increase of $14.5 million in clinical trial expenses due to greater numbers of active sites and completion of enrollment in ORIGIN 3 and expenses incurred for the PIONEER, monthly dose range finding and ORIGIN EXTEND trials, an increase of $15.4 million in consulting and professional services, including a $9.4 million increase in medical affairs and commercial planning expenses as we prepare for potential regulatory approval and commercialization of atacicept, an increase of $33.0 million for employee compensation and related benefit expenses, including a $8.7 million increase in stock-based compensation expense, due to growth in research and development headcount, and an increase of $2.9 million in facilities and other, including a $1.9 million increase in travel expenses to support research and development activities, including travel associated with medical conferences.
We expect our research and development expenses to increase in future periods as we seek regulatory approval of atacicept in IgAN in the U.S. and other markets, conduct additional clinical trials of atacicept, and if we expand development of atacicept in other indications or product configurations, or other product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and personnel-related expenses, including stock-based compensation, for our personnel in executive management, legal, finance, human resources, and other administrative functions. General and administrative expenses also include professional fees paid for accounting, auditing, legal, tax and consulting services, and other general overhead costs to support our operations. General and administrative expenses are recorded as expense in the period in which they are incurred, and payments we make prior to the receipt of goods or services to be used for general and administrative purposes are deferred as prepaid expenses until the goods or services are received and used.
The following table summarizes our general and administrative expenses incurred during the respective periods.
Year Ended December 31, CHANGE
(dollars in thousands) 2025 2024 AMOUNT %
Consultants, including non-employee director compensation 5,461 3,564 1,897 53 %
General and administrative expenses increased by $59.2 million, or 144%, to $100.2 million in the year ended December 31, 2025, from $41.0 million in the year ended December 31, 2024, due to an increase of $30.3 million in employee compensation and related benefits expenses, including stock-based compensation, as a result of increased general and administrative employee headcount, an increase of $16.1 million in commercial and medical affairs expenses related to market research, market access and health economics activities related to commercialization planning of atacicept, an increase of $3.3 million in legal, accounting, and audit fees, an increase of $1.9 million in consulting expenses, including non-employee director stock-based compensation, an increase of $2.5 million in software expenses, an increase of $1.8 million in corporate communications expenses, and an increase of $1.7 million in business travel expenses.
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Other Income, Net
Year Ended December 31, CHANGE
(dollars in thousands) 2025 2024 AMOUNT %
Other income (expense):
Total other income, net, increased by $0.8 million, or 6%, to $15.9 million in the year ended December 31, 2025, from $15.0 million in the year ended December 31, 2024, primarily due to an increase of $3.8 million in interest income from an increase in the average balance of marketable securities held during the year ended December 31, 2025 as compared to the year ended December 31, 2024, partially offset by an increase in other expense from $0.8 million in third-party legal and consulting fees and $1.0 million in amortization of deferred debt issuance costs for unfunded loan commitments, both relating to the refinancing of the Oxford credit facility in June 2025, an increase of $0.5 million in foreign exchange loss and a $0.5 million decrease in sublease income due to the expiration of a sublease concurrent with the expiration of the master lease in September 2025.
Liquidity and Capital Resources
To date, we have funded our operations primarily through proceeds from the sale of shares of our common stock, redeemable convertible preferred stock, debt financing and convertible notes. From our inception through December 31, 2025, we have raised aggregate net cash proceeds of approximately $1.3 billion from the issuance and sale of redeemable convertible preferred stock, convertible notes and common stock, and proceeds from our current and former loan agreements. Since the date of our incorporation, we have not generated any revenue from product sales and have incurred substantial operating losses and negative cash flows from operations.
In February 2024, we completed a follow-on public offering and issued 9,274,194 shares of common stock for net proceeds of approximately $269.6 million, after deducting underwriting fees and offering-related expenses. In October 2024, we completed a follow-on public offering and issued 7,142,858 shares of common stock, and in November 2024 we issued an additional 1,071,428 shares of common stock pursuant to the underwriters’ full exercise of the 30-day option to purchase additional shares. We received aggregate net proceeds of approximately $323.6 million, after deducting underwriting fees and offering-related expenses. In December 2025, we completed a follow-on public offering and issued 7,058,824 shares of common stock for net proceeds of approximately $281.3 million, after deducting underwriting fees and offering-related expenses.
In June 2025, we entered into an agreement to refinance our existing debt by replacing the existing $50.0 million in notes payable with $75.0 million in new notes payable. We received aggregate net proceeds of approximately $23.3 million, after deducting debt issuance costs.
In August 2025, we entered into a Sales Agreement (Sales Agreement) with TD Securities (USA) LLC (TD Cowen). Under the Sales Agreement, we may offer and sell, from time to time, through TD Cowen as our sales agent and/or principal, shares of our common stock, having an aggregate offering amount of up to $200 million (Shares). We are not obligated to sell any Shares under this agreement. We will pay TD Cowen a commission of up to 3.0% of the gross sales proceeds of any Shares sold through TD Cowen under the Sales Agreement. As of December 31, 2025, no sales had been made under the Sales Agreement.
We use our cash to fund operations, primarily to fund our research and development efforts, clinical trials, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations. Cash used to fund operating expenses is affected by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid assets.
We anticipate that we will continue to incur net losses for the foreseeable future as we continue research and development activities of our product candidates, hire additional staff, including clinical, commercial, operational, administrative and management personnel, and incur additional expenses associated with operating as a public company. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our clinical development activities and our product candidate portfolio and prepare for anticipated commercialization of atacicept. We expect that our research and development and general and administrative costs will increase substantially in connection with conducting additional clinical trials for our research programs and product candidates, contracting with third parties to support nonclinical studies and clinical trials, expanding our intellectual property portfolio, scaling up external commercial manufacturing capacity, building a sales, marketing and distribution infrastructure to commercialize any approved product candidates, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources.
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As of December 31, 2025, we had cash, cash equivalents and marketable securities of $714.6 million, as compared to $640.9 million as of December 31, 2024. We believe, based on our current operating plan, that our cash, cash equivalents and marketable securities as of December 31, 2025 will be sufficient to fund our planned operations and capital expenditure requirements for at least the next 12 months from the date of this Annual Report.
Cash Flows
The following table summarizes our cash flows for the periods indicated.
Year Ended December 31,
Net cash used in operating activities $ (241,104 ) $ (134,679 )
Net cash provided by (used in) investing activities 194,286 (425,029 )
Net increase in cash and cash equivalents $ 262,079 $ 46,965
Operating Activities
For the year ended December 31, 2025, we used $241.1 million of cash in operating activities, attributable to a net loss of $299.6 million, partially offset by non-cash charges of $34.7 million, a decrease in our net operating assets and liabilities of $23.0 million, and license fee payments of $0.8 million. Non-cash charges primarily consisted of $37.9 million of stock-based compensation, non-cash interest income of $7.0 million related to amortization of discount on purchases of marketable securities, and a $1.4 million reduction in the carrying amount of operating lease right-of-use assets, partially offset by $1.9 million net in accretion and amortization of loan exit fees and costs. The change in our net operating assets and liabilities was primarily due to an increase of $13.9 million in accounts payable, an increase of $14.4 million in accrued and other current liabilities, a decrease of $3.9 million in prepaid expenses and other assets, and a decrease of $1.5 million in operating lease liabilities.
For the year ended December 31, 2024, we used $134.7 million of cash in operating activities, attributable to a net loss of $152.1 million, partially offset by non-cash charges of $14.8 million and a decrease in our net operating assets and liabilities of $2.7 million. Non-cash charges primarily consisted of $20.8 million of stock-based compensation, non-cash interest income of $9.0 million related to amortization of discount on purchases of marketable securities, and a $2.1 million reduction in the carrying amount of operating lease right-of-use assets. The change in our net operating assets and liabilities was primarily due to an increase of $7.2 million in accrued and other current liabilities, a decrease of $3.5 million in accounts payable, and a decrease of $2.4 million in operating lease liabilities.
The increase in cash used in operating activities from the year ended December 31, 2024 to the year ended December 31, 2025 was primarily attributable to increased research and development, and general and administrative expenses.
Investing Activities
For the year ended December 31, 2025, our investing activities provided $194.3 million of cash, primarily resulting from the maturity of short-term marketable securities, less purchases of short-term marketable securities during the year.
For the year ended December 31, 2024, our investing activities used $425.0 million of cash, primarily resulting from the purchase of short-term marketable securities, less sales and maturities of short-term marketable securities during the year.
Financing Activities
For the year ended December 31, 2025, our financing activities provided $308.9 million of cash resulting from $300.0 million gross proceeds received from our December 2025 follow-on offering, $23.3 million in net proceeds from borrowings from the initial funding under the 2025 Loan Agreement in June 2025, after repayment of borrowings under the 2021 Loan Agreement, and $7.0 million proceeds from exercise of stock options and issuance of shares under our employee stock purchase plan, less $18.4 million offering costs related to our follow-on offerings including underwriting fees.
For the year ended December 31, 2024, our financing activities provided $606.7 million of cash resulting from $632.5 million gross proceeds received from our February and October 2024 follow-on offerings and $13.4 million proceeds from exercise of stock options and issuance of shares under our employee stock purchase plan, less $39.3 million offering costs related to our follow-on offerings including underwriting fees.
Material Cash Requirements
Our material cash requirements in the short- and long-term consist of the following operational expenditures, a portion of which contain contractual or other obligations.
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Our primary uses of cash and operating expenses relate to contract drug manufacturing, clinical trial expenses, commercial launch planning, and paying employees and consultants to support our operations. Our research and development expenses in 2025 were $215.3 million and we expect to increase our investment in research and development expenses in 2026. Our general and administrative expenses were $100.2 million in 2025 and we expect to increase our general and administrative expenses to support our anticipated commercial launch of atacicept in 2026. On a long-term basis, we manage future cash requirements relative to our long-term business plans.
We also enter into agreements in the normal course of business with various third parties for preclinical, clinical and other services. These contracts are generally cancellable without material penalty upon written notice.
Operating costs also relate to our building leases for our office. Our operating lease obligations reflect those for our corporate headquarters office space in Brisbane, California. In August 2024, we entered into a non-cancellable operating lease for 40,232 square feet of office space in Brisbane, California, that has served as our corporate headquarters since November 2024. The term of this lease is 54 months.
Our future minimum lease payments as of December 31, 2025 were $3.0 million. Refer to Note 5 in the Notes to Financial Statements in Item 8 for further detail of our lease obligations.
2021 Loan Agreement
On December 17, 2021, we entered into the 2021 Loan Agreement. The 2021 Loan Agreement provided for term loans (collectively, the Loan) in an aggregate maximum principal amount of $50.0 million, of which $5.0 million was funded on December 17, 2021, $20.0 million was funded on November 4, 2022, and the remaining $25.0 million was funded in December 2023.
In March 2023, we opted to extend the final maturity date of the Loan from December 2026 to December 2027, based on positive Phase 2b clinical trial data of atacicept in IgAN, as provided in the 2021 Loan Agreement. We were required to make monthly interest-only payments for 60 months followed by full amortization through maturity.
In June 2025, the Company refinanced its debt under the 2021 Loan Agreement by entering into a new non-revolving loan and security agreement, the proceeds of which were partially used to prepay the outstanding principal balance of the 2021 Loan Agreement in full. As a result, the Company no longer has any contractual obligations and commitments under the 2021 Loan Agreement, which were previously described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report.
2025 Loan Agreement
On June 2, 2025, we entered into the 2025 Loan Agreement. The 2025 Loan Agreement provides for term loans (collectively, 2025 Loan) in an aggregate maximum principal amount of $500.0 million, of which $75.0 million was funded on June 4, 2025.
The 2025 Loan Agreement is scheduled to mature in June 2030, but the maturity date can be extended based on achievement of a revenue-based interest-only extension milestone as of the end of the initial interest-only period in August 2029. If the Company achieves this interest-only extension milestone, the maturity date and the end of the interest-only period will be extended to June 2031 and August 2030, respectively. We are required to make monthly interest-only payments for 49 months (or 61 months upon achievement of the revenue-based interest-only extension milestone mentioned above) followed by full amortization through maturity.
The 2025 Loan incurs interest at a floating per annum rate (based on the actual number of days elapsed divided by a year of 360 days) equal to the sum of (a) the greater of (i) the 1-Month CME Term Secured Overnight Financing Rate (SOFR) and (ii) 3.75%, plus (b) 4.95%.
We are permitted to prepay the 2025 Loan in full or in part at any time upon 10 business days’ written notice to Oxford, subject to payment of the applicable Prepayment Fee (as defined below). Upon the earlier of the maturity date, acceleration of the 2025 Loan or prepayment of the 2025 Loan, we are required to make a final payment equal to 5.0% of the aggregate principal amount of the 2025 Loan (Final Fee). Any prepayments of the 2025 Loan must be accompanied by (a) accrued and unpaid interest thereon, (b) the Final Fee and (c) prepayment fee of (i) 2.0% of the portion of the 2025 Loan being prepaid if the repayment is on or before June 4, 2027 or (ii) 1.0% of the portion of the 2025 Loan being prepaid if the repayment is after June 4, 2027 through June 4, 2028. There is no Prepayment Fee for any prepayments occurring after June 4, 2028.
Our obligations under the 2025 Loan Agreement are secured by a security interest in substantially all of our assets, other than our intellectual property, which is subject to a negative pledge. The 2025 Loan Agreement contains two financial related covenants. Also included in the 2025 Loan Agreement are customary representations and covenants that, subject to exceptions, restrict our ability to, among other things: declare dividends or redeem or repurchase equity interests; incur additional liens; make loans and investments; incur additional indebtedness; engage in mergers, acquisitions, and asset sales; transact with affiliates; undergo a change in control; add or change business locations; and engage in businesses that are not related to our existing business.
Upon the occurrence of an event of default, a default interest rate of an additional 4.0% may be applied to the outstanding loan
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balances, and Oxford may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the 2025 Loan Agreement. Events of default under the 2025 Loan Agreement include customary events of default, including, but not limited to: (i) non-payment; (ii) failure to perform any obligation under the 2025 Loan Agreement and related documents; (iii) the occurrence of a material adverse change; (iv) bankruptcy and other insolvency events; (v) cross-defaults; and (vi) judgment defaults.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, as well as expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
While our significant accounting policies are described in the notes to our financial statements, we believe that the following critical accounting policies and estimates are most important to understanding and evaluating our reported financial results.
Research and development contract costs, and related prepaid and accrued balances
We enter into various research and development and other agreements with commercial firms, researchers and others for provision of goods and services from time to time. These agreements are generally cancellable, and the related costs are recorded as incurred.
We estimate clinical trial expenses based on the services performed pursuant to contracts with clinical research organizations that conduct and manage clinical trials on our behalf. We also estimate manufacturing costs based on services performed pursuant to contracts with contract manufacturing organizations that develop and manufacture product on our behalf. In accruing service fees, we estimate the period over which services will be performed. These estimates are based on our communications with the third-party service providers and on information available at each balance sheet date. If the actual timing of the performance of services or the level of effort varies significantly from the estimate, we adjust the accrual accordingly to reflect the best information available at the time. When evaluating the adequacy of the accrued liabilities, we analyze progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Judgments and estimates are made in determining the prepaid and accrued balances at the end of the reporting period. Actual results may differ from our estimates. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. As of December 31, 2024 and December 31, 2025, we had cash, cash equivalents, and marketable securities of $640.9 million and $714.6 million, respectively, consisting primarily of money market funds, U.S. government bonds, and corporate debt securities.
Our primary exposure to market risk is interest rate sensitivity in our fixed income portfolio, which is affected by changes in the general level of U.S. interest rates. Due to the short-term duration of our investment portfolio and the low risk profile of our investment portfolio, an immediate 100 basis point change in interest rates as of December 31, 2024 and December 31, 2025 would not have a material effect on the fair market value of our cash, cash equivalents, and marketable securities. We have the ability to hold our investments until maturity, and therefore, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a change in market interest rates on our investment portfolio.
We are also exposed to interest rate risk in connection to our borrowings under our 2025 Loan Agreement with Oxford. As of December 31, 2025, we had $75.0 million of outstanding borrowings under the 2025 Loan Agreement. Pursuant to the 2025 Loan Agreement, outstanding indebtedness under the term loan bears interest at a per annum rate equal to the sum of (a) the greater of (i) the 1-Month CME Term SOFR (Term SOFR) and (ii) 3.75%, plus (b) 4.95%. We currently do not engage in any interest rate hedging activity, and we have no intention to do so in the foreseeable future. Based on the current interest rate of the term loan and the scheduled payments thereunder, we do not believe a 1.0% increase in the Term SOFR would have a material impact on our financial condition or results of operations. For more information regarding the 2025 Loan Agreement, see Note 6, Notes Payable, to our audited financial statements.
Financial Institution Risk
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Substantially all of our cash is held with a single financial institution. Due to its size, this financial institution represents a minimal credit risk. Cash amounts held at financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor, per financial institution.
Foreign Currency Exchange Risk
We are also exposed to market risk related to changes in foreign currency exchange rates, including recent changes resulting from monetary policies set by the U.S. and international central banks, inflationary pressures, and geopolitical developments, or instability or volatility in the global markets. From time to time, we contract with vendors that are located in Asia and Europe and whose balances due are denominated in foreign currencies. We are subject to fluctuations in foreign exchange rates in connection with these agreements. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We do not currently hedge our foreign currency exchange rate risk. As of December 31, 2025 and 2024, we held limited funds and future obligations denominated in foreign currencies. As such, a 10.0% increase or decrease in current exchange rates would not have a material effect on our financial results.
Effects of Inflation
Inflation generally affects us by increasing our cost of labor, pricing of contracts for clinical trial and manufacturing costs, and indirectly, interest rates. We do not believe that inflation has had a material effect on our business, financial condition, or results of operations during the periods presented.
Item 8. Financial Statements and Supplementary Data.
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VERA THERAPEUTICS, INC.
Index to Financial Statements
PageNumber
Report of Independent Registered Public Accounting Firm (PCAOB ID: 185) 106
Financial Statements:
Balance Sheets 108
Statements of Operations and Comprehensive Loss 109
Statements of Stockholders’ Equity 110
Statements of Cash Flows 111
Notes to Financial Statements 112
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Vera Therapeutics, Inc.:
Opinions on the Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying balance sheets of Vera Therapeutics, Inc. (the Company) as of December 31, 2025 and 2024, the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the financial statements referred to above 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 three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
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The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the debt refinancing
As discussed in Note 6 to the consolidated financial statements, on June 2, 2025, the Company entered into a new non-revolving loan and security agreement with a loan syndicate (debt refinancing agreement). The new agreement has a total borrowing capacity of up to $500.0 million, the proceeds of which were partially used to prepay the outstanding principal balance on the 2021 Loan Agreement (the debt refinancing). The Company evaluated the accounting treatment for the loan syndicate on a creditor-by-creditor basis. With respect to the continuing creditors, the Company accounted for this transaction as a loan modification, and with respect to the new lender, the Company accounted for this transaction as an issuance of debt.
We identified the evaluation of the accounting for the debt refinancing as a critical audit matter. Complex auditor judgment was required to evaluate the terms and provisions of the debt refinancing agreement in order to assess the appropriateness of the Company’s application of the accounting guidance. Additionally, the audit effort associated with the evaluation of the Company’s accounting for the debt refinancing required the involvement of professionals with specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an control related to the Company’s evaluation of the appropriate accounting guidance and technical accounting assessment for non-routine transactions. We read the debt refinancing agreement to understand the relevant terms and conditions of the transaction. We inspected the Company’s accounting analysis for the transaction. We involved professionals with specialized skills and knowledge, who assisted in identifying and evaluating the key terms and provisions of the debt refinancing agreement and evaluating the Company’s application of the relevant accounting literature in accounting for the debt refinancing.
/s/ KPMG LLP
We have served as the Company’s auditor since 2018.
San Francisco, California
February 26, 2026
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VERA THERAPEUTICS, INC.
Balance Sheets
(in thousands, except share and per share amounts)
December 31,
Assets
Current assets:
Prepaid expenses and other assets, current 14,294 10,366
Property and equipment, net 1,374 960
Operating lease right-of-use assets 1,923 3,372
Prepaid expenses and other assets, noncurrent 2,553 131
Liabilities and stockholders’ equity
Current liabilities:
Operating lease liabilities 549 1,483
Accrued expenses and other liabilities 31,008 16,223
Operating lease liabilities, noncurrent 1,919 2,468
Stockholders’ equity
Accumulated other comprehensive income 786 393
Total liabilities and stockholders’ equity $ 734,733 $ 655,681
The accompanying notes are an integral part of these financial statements.
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VERA THERAPEUTICS, INC.
Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
Year Ended December 31,
Operating expenses:
Other income (expense):
Provision for income taxes (1 ) (1 ) (1 )
Other comprehensive loss:
Change in fair value on marketable securities 393 142 251
The accompanying notes are an integral part of these financial statements.
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VERA THERAPEUTICS, INC.
Statements of Stockholders’ Equity
(in thousands, except share amounts)
Shares Amount Capital Income (Loss) Deficit Equity
Issuance of common stock pursuant to exercise of options 111,927 — 781 — — 781
Issuance of common stock upon vesting of restricted stock units 66,321 — — — — —
Unrealized gain on marketable securities — — — 475 — 475
Proceeds from short swing settlement — — 37 — — 37
Repurchase of common stock (4,450 ) — (13 ) — — (13 )
Unrealized gain on marketable securities — — — 142 — 142
Proceeds from short swing settlement — — 500 — — 500
Unrealized gain on marketable securities — — — 393 — 393
The accompanying notes are an integral part of these financial statements.
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VERA THERAPEUTICS, INC.
Statements of Cash Flows
(in thousands)
Year Ended December 31,
Cash flows from operating activities
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of loan exit fee and amortization of loan costs, net 1,857 810 326
Payment of VT-109 license fee 800 — —
Changes in operating assets and liabilities:
Prepaid expense and other current assets (3,928 ) 981 173
Cash flows from investing activities
Payment of VT-109 license fee (800 ) — —
Purchase of property and equipment (630 ) (972 ) (63 )
Proceeds from sale of marketable securities — 4,000 9,543
Cash flows from financing activities
Proceeds from refinancing under loan and security agreement, net 23,338 — —
Proceeds from short swing settlement 500 37 —
Proceeds from borrowings, net of costs — — 24,741
Repurchase of common stock — (13 ) —
Supplemental disclosure of cash flow information
Purchases of property and equipment included in accounts payable $ 252 $ — $ —
Follow-on offering costs included in accounts payable $ 71 $ — $ —
Follow-on offering costs included in accrued and other liabilities $ 343 $ — $ —
The accompanying notes are an integral part of these financial statements.
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VERA THERAPEUTICS, INC.
Notes to Financial Statements
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
Description of Business
Vera Therapeutics, Inc. (the Company) is a clinical stage biotechnology company focused on developing and commercializing treatments for patients with serious immunological diseases. The Company was incorporated in May 2016 in Delaware. The Company’s headquarters are in Brisbane, California. The Company operates in one segment, Therapeutics, focused on developing and commercializing transformative treatments for patients with serious immunological diseases.
Liquidity
Since inception, the Company devoted substantially all of its resources to its research and development efforts, pre-clinical studies and clinical trials, building a sales, marketing and distribution infrastructure to support anticipated commercial launch activities, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations. The Company has incurred recurring net operating losses and has not generated positive cash flows from operations since its inception and had an accumulated deficit of $760.9 million as of December 31, 2025. The Company had cash, cash equivalents and marketable securities of $714.6 million as of December 31, 2025. The Company has funded its operations primarily through the issuance of common stock, redeemable convertible preferred stock, debt financing and convertible notes. Management expects to continue to incur losses and negative cash flows from operations for at least the next several years.
Management believes that the Company’s cash, cash equivalents and marketable securities as of December 31, 2025 will be sufficient to fund its planned operations and capital expenditure requirements for at least the next 12 months subsequent to the issuance date of these financial statements. The Company intends to raise additional capital through public or private equity offerings, debt financing, or other capital sources, which may include strategic collaborations or other arrangements with third parties in order to achieve its long-term business objectives. If the Company fails to obtain necessary capital when needed on acceptable terms, or at all, it could force the Company to delay, limit, reduce or terminate its product development programs, commercialization efforts or other operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding financial reporting. The U.S. dollar is the Company’s functional and reporting currency.
Use of Estimates
The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Management estimates that affect the reported amounts of assets and liabilities include the accrual of research and development expenses, valuation of equity awards for stock-based compensation, determination of incremental borrowing rate for operating leases, the valuation allowance for deferred tax assets, and fair value of marketable securities. The Company evaluates and adjusts its estimates and assumptions on an ongoing basis using historical experience and other factors. Actual results could differ from those estimates.
Concentrations of Credit Risk and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains bank deposits in federally insured financial institutions and these deposits may exceed federally insured limits. The Company is exposed to credit risk in the event of default by the financial institution holding its cash, cash equivalents, and marketable securities to the extent recorded in the balance sheet. The Company has not experienced any losses to date related to these concentrations.
The Company’s future results of operations involve a number of other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current and
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potential future product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole-source suppliers. The Company relies on one supply chain for each of its product candidates. If any of the single source suppliers in any of the supply chains fails to satisfy the Company’s requirements on a timely basis, it could suffer delays in its clinical development programs and activities, which could adversely affect operating results.
The Company’s product candidates require approvals from the U.S. Food and Drug Administration and comparable foreign regulatory authorities prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company was denied approval, approval was delayed, or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on deposit with financial institutions and highly liquid investments, primarily money market funds, with maturities of 90 days or less from the date of purchase.
Marketable Securities
The Company holds investments in marketable securities, consisting of U.S. government bonds, U.S. government agency securities, and investment grade corporate debt securities. Marketable debt securities with stated maturities of three months or less from the date of purchase are classified as cash equivalents and those with stated maturities of greater than three months as marketable securities on the balance sheet. The Company determines the appropriate classification of marketable debt securities at the time of purchase. The Company has the ability, if necessary, to liquidate its investments to meet its liquidity needs in the next 12 months, without significant penalty. Accordingly, those investments with contractual maturities greater than one year from the date of purchase are classified as current assets on the accompanying balance sheets. All marketable debt securities are classified as available-for-sale and are reported at estimated fair value, with unrealized gains and losses recorded in accumulated other comprehensive income within stockholders’ equity. Interest, amortization and accretion of purchase premiums and discounts on marketable debt securities are included in other (expense) income, net, in the statements of operations and comprehensive loss.
The cost of available-for-sale marketable securities sold is based on the specific identification method. Realized gains and losses on the sale of available-for-sale marketable securities are recorded in other (expense) income, net in the statements of operations and comprehensive loss.
The Company periodically reviews marketable debt securities for impairment. For debt securities in an unrealized loss position, the Company determines whether a credit loss exists. The credit loss is estimated by considering available information relevant to the collectability of the security and information about past events, current conditions, and reasonable and supportable forecasts. Any decline in fair value due to a credit loss is recorded in other (expense) income, net in the statements of operations and comprehensive loss. Unrealized losses due to factors other than the credit loss are recognized in accumulated other comprehensive income (loss). In addition, if the Company has the intent to sell a debt security or it is more likely than not that the Company will be required to sell the security before recovery of the entire cost basis, an impairment charge equal to the difference between fair value and the cost basis is recorded in other (expense) income, net in the statements of operations and comprehensive loss. No impairment loss was recognized for the fiscal years ended December 31, 2025 and 2024.
The amortized or accreted cost basis of the marketable securities approximates its fair value.
Leases
The Company leases office space under operating leases and determines if the arrangement is a lease at inception. These lease agreements generally contain lease and non-lease components. Non-lease components primarily include fixed payments for maintenance, utilities, and management fees. The fixed costs of the lease components and associated non-lease components are combined and accounted together as a single lease component which is recognized as an increase to the operating lease right-of-use (ROU) assets and operating lease liabilities. For leases with a lease term of 12 months or less, ROU assets and lease liabilities are not recognized on the balance sheets.
Certain lease agreements may also contain variable payments, such as common area maintenance, real estate taxes, and insurance, which are expensed as incurred and not included in the lease ROU assets and lease liabilities. Operating lease cost (excluding variable lease costs) is recognized on a straight-line basis over the lease term.
ROU assets and lease liabilities are recognized at the present value of future lease payments at the lease commencement date. As the rate implicit in the Company’s leases is not readily determinable, the Company uses an incremental borrowing rate based on information available at commencement date in determining the present value of future lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
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Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make the contractual lease payments over the lease term. The current portion of operating lease liabilities is included in current liabilities, and the long-term portion is included in operating lease liabilities, noncurrent.
Foreign Currency Translations
Transactions denominated in foreign currencies are initially measured in U.S. dollars using the exchange rate on the date of the transaction. Foreign currency denominated monetary assets and liabilities are subsequently re-measured at the end of each reporting period using the exchange rate at that date, with the corresponding foreign currency transaction gain or loss recorded in the statements of operations and statements of cash flows. Nonmonetary assets and liabilities are not subsequently re-measured.
Fair Value Measurements
Fair value is defined as the exchange price to sell an asset or transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value should be based on the assumptions market participants would use when pricing the asset or liability. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.
Fair value measurements are classified and disclosed in one of the following three categories:
Level 1 – Quoted unadjusted prices for identical instruments in active markets.
Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and value drivers are observable in active markets.
Level 3 – Model derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company.
Fair value accounting is applied to all financial assets and liabilities that are recognized or disclosed in the financial statements on a recurring basis. The Company’s financial instruments consist of cash and cash equivalents, marketable securities, prepaid expenses and other current assets, accounts payable and accrued expenses and long-term debt. Cash and marketable securities are reported at their respective fair values on the Company’s balance sheets. The carrying amount of long-term debt approximates fair value due to its variable interest rate. The remaining financial instruments are reported on the Company’s balance sheets at cost, which approximates their fair value due to their short-term nature.
Money market funds are highly liquid investments that are actively traded. The pricing information for the Company’s money market funds is readily available and can be independently validated as of the measurement date. This approach results in the classification of these instruments as Level 1 within the fair value hierarchy.
There were no transfers of financial assets or liabilities between Levels 1, 2, or 3 for any of the periods presented.
Comprehensive Loss
Comprehensive loss consists of two components: net loss and other comprehensive income. Other comprehensive income refers to unrealized gains and losses that are recorded as an element of stockholders’ equity and are excluded from net loss. For the years ended December 31, 2025, 2024, and 2023, other comprehensive income consists of unrealized gains and losses on marketable securities.
Research and Development Costs
Research and development costs are expensed as incurred and consist primarily of employees’ salaries and related benefits, including stock-based compensation for employees engaged in research and development efforts, allocated overhead including rent, depreciation, information technology and utilities, contracted services, license fees, and external expenses to conduct and support the Company’s operations that are directly attributable to the Company’s research and development efforts. Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.
Costs incurred in obtaining technology licenses including upfront and milestone payments incurred under the Company’s licensing agreements are recorded as expense in the period in which they are incurred, provided that the licensed technology, method or process has no alternative future uses other than for the Company’s research and development activities. Where contingent milestone payments are due to third parties under license or other agreements, the milestone payment obligations are recognized as expense when achievement of the contingent milestone is probable, which is generally upon achievement of the milestone.
The Company enters into various research and development and other agreements with commercial firms, researchers, and others for provisions of goods and services from time to time. These agreements are generally cancellable, and the related costs are recorded as
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research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Judgments and estimates are made to determine the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates.
Stock-Based Compensation
The Company recognizes compensation expense based on estimated fair values for all stock-based payment awards made to the Company’s employees, nonemployee directors and consultants that are expected to vest. The valuation of stock option awards is determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the Company to make assumptions and judgments about the inputs used in the calculations, such as the fair value of the common stock, expected term, expected volatility of the Company’s common stock, risk-free interest rate and expected dividend yield. The valuation of restricted stock awards is measured by the fair value of the Company’s Class A common stock on the date of the grant.
For all stock options granted, the Company calculated the expected term using the simplified method (derived from the average midpoint between the weighted average vesting period and the contractual term of the award), as the Company has limited historical information to develop expectations about future exercise patterns and post-vesting employment termination behavior. The estimate of expected volatility is based on comparative companies’ volatility. The risk-free rate is based on the yield available on United States Treasury zero-coupon issues corresponding to the expected term of the award. The Company records forfeitures when they occur. The Company determines the fair value of its Class A common stock using the market closing price on the date of grant.
The Company records compensation expense for service-based awards on a straight-line basis over the requisite service period, which is generally the vesting period of the award. The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect tax rates expected to be in effect for the years in which the differences are expected to be reversed. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized.
Net Loss Per Share Attributable to Common Stockholders
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for outstanding shares that are subject to repurchase.
Diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method based on the nature of such securities. For periods in which the Company reports net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because potentially dilutive shares are not assumed to have been issued if their effect is anti-dilutive.
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures in response to investor requests. The amendments in ASU 2023-09 address these requests primarily through changes to the effective tax rate reconciliation, disaggregation of income taxes paid, and certain additional income tax-related disclosures. The guidance is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this standard effective January 1, 2025 using a retrospective approach, and it did not have a material impact on the Company’s financial statements or related disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update will improve disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general, and administrative expenses, and research and development). The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company will adopt the standard as of and for the year ending December 31, 2027 and for the interim
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reporting periods within the year ending December 31, 2028. This ASU will result in the required additional disclosures being included in the Company’s financial statements upon adoption.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update will provide all entities with a practical expedient in developing reasonable and supportable forecasts as part of estimating expected credit losses by assuming that current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted in both interim and annual reporting periods for which financial statements have not yet been issued or made available for issuance. The Company will adopt the standard as of and for the year ending December 31, 2026 and interim periods within that period, starting with the first quarter of 2026. The Company does not expect that the adoption of this standard will have a material impact on its financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update will introduce changes to the timing of software cost capitalization based on likelihood of completion for all entities subject to the internal-use software guidance in Subtopic 350-40 and the guidance on website development costs in Subtopic 350-50. The ASU will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted as of the beginning of an annual reporting period. The Company is currently evaluating the timing of adoption and the impact of adoption on its financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements. This update will improve the navigability of required interim disclosures and clarify when that guidance is applicable, and will require entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The ASU will be effective for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company will adopt the standard for the interim periods within the year ending December 31, 2028. The Company is currently evaluating the impact of the adoption on its financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. This update will make a number of amendments to the Accounting Standards Codification and improvements to GAAP arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The ASU will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted in both interim and annual reporting periods for which financial statements have not yet been issued or made available for issuance. Entities may elect to early adopt the amendments on an issue-by-issue basis. The Company is currently evaluating the timing of adoption and the impact of adoption on its financial statements and related disclosures.
Income Taxes
On July 4, 2025, President Trump signed “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14,” commonly referred to as the “One Big Beautiful Bill Act” (OBBB), into law. The OBBB makes key elements of the Tax Cuts and Jobs Act permanent, including 100% bonus depreciation and domestic research cost expensing, and raises the limit on business interest expense deductions. Accounting Standards Codification Topic No. 740, Income Taxes, requires that the Company recognize the effects of changes in tax rates and laws in the period in which the legislation is enacted. In accordance with GAAP, the Company accounted for the effects of the changes in the tax law in the year ended December 31, 2025. The OBBB did not have a material impact on the Company’s effective income tax rate for the year ended December 31, 2025.
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3. OTHER FINANCIAL STATEMENT INFORMATION
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
December 31,
Prepaid clinical trial costs $ 3,435 $ 2,228
Prepaid drug manufacturing costs 1,637 21
Prepaid professional services fees 838 659
Prepaid commercial planning costs 359 933
Total prepaid expenses and other current assets $ 14,294 $ 10,366
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
December 31,
Accrued drug manufacturing costs 8,424 3,059
Accrued commercial expenses 1,181 689
Related party payable 3 217
Total accrued expenses and other current liabilities $ 31,008 $ 16,223
4. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES
The Company’s cash equivalents and available-for-sale investment securities are classified within the fair value hierarchy as defined by authoritative guidance. Level 1 securities consist of highly liquid money market funds for which the carrying amount approximates the fair value of identical assets as quoted in the active markets. Level 2 securities, consisting of U.S. Treasuries, U.S. agency securities and corporate debt securities, are measured based on other observable inputs, including broker or dealer quotations or other valuations using observable market data. The Company’s debt securities are accounted for as available-for-sale securities.
Unrealized gains and losses are reported as a component of other comprehensive income (loss). Fair value of the debt securities was $367.1 million and $552.8 million as of December 31, 2025 and 2024, respectively.
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The following table presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
Marketable debt securities that had been in unrealized loss positions as of December 31, 2025 and 2024 were in an unrealized loss position for less than 12 months. Unrealized losses from marketable debt securities are primarily attributable to changes in interest rates. Management does not believe any remaining unrealized losses represent impairments based on evaluation of available evidence.
The following table classifies the estimated fair value of investments in available-for-sale marketable debt securities by effective contractual maturity dates (in thousands):
Due after one year to two years 53,501
Total marketable securities $ 359,864
5. LEASES
The Company has entered into non-cancellable operating leases, including a sublease for an office facility serving as its corporate headquarters in Brisbane, California, that expires in 2029. The Company was the primary leaseholder of a facility in South San Francisco, California, that was later subleased to a third party and for which both the lease and the sublease ended concurrently in September 2025.
Components of net lease cost are as follows (in thousands):
Year Ended December 31,
Variable lease cost (4 ) 45 14
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Other supplemental information related to operating leases is as follows (in thousands):
Year Ended December 31,
Cash paid for operating lease liabilities $ 2,141 $ 3,116 $ 3,000
December 31,
Weighted-average discount rate for operating leases 12.5% 11.3%
Weighted-average remaining lease term 3.3 years 3.0 years
As of December 31, 2025, the maturities of operating lease liabilities are as follows (in thousands):
Total minimum lease payments 3,045
Less: Imputed interest (577 )
Present value of operating lease liabilities 2,468
Less: Current portion of operating lease liabilities (549 )
Non-current operating lease liabilities $ 1,919
As of December 31, 2025, the Company had not executed any leases that were yet to commence.
6. NOTES PAYABLE
Notes payable consist of the following (in thousands):
December 31,
Maturity Effective Interest Rate Amount Effective Interest Rate Amount
Unamortized issuance costs net of accrued exit fees (162 ) 687
2021 Loan Agreement
In June 2025, the Company refinanced its debt under the non-revolving loan and security agreement (2021 Loan Agreement) with a loan syndicate involving Oxford Finance LLC (Oxford Finance), Oxford Finance Credit Fund II LP (OFCF II), and Oxford Finance Credit Fund III LP (OFCF III) entered into in December 2021, by entering into a new non-revolving loan and security agreement, the proceeds of which were partially used to prepay the outstanding principal balance of the 2021 Loan Agreement in full. The Company paid an exit fee of $3.0 million, equal to 6% on the aggregate principal amount of the loan, as 1% of the original 7% exit fee was waived in connection with the refinancing. The entirety of the 2% prepayment fee that would have applied to the prepayment of the $25.0 million of debt drawn in December 2023 was also waived in connection with the refinancing.
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2025 Loan Agreement
On June 2, 2025, the Company entered into a new non-revolving loan and security agreement (2025 Loan Agreement) with a loan syndicate involving Oxford Finance, OFCF II, OFCF III, and Oxford Finance Credit Fund IV LP (OFCF IV) (collectively, Oxford). The 2025 Loan Agreement has a total borrowing capacity of up to $500.0 million, of which $75.0 million was funded at closing and $50.0 million remains available for draw at the Company’s discretion from January 1, 2026 through December 31, 2026. The Company also has the option to draw up to $75.0 million upon accelerated approval of atacicept in immunoglobulin A nephropathy (IgAN), two tranches of a maximum of $50.0 million upon achievement of certain commercial milestones related to atacicept in IgAN once approved, and up to $200.0 million available at the mutual discretion of the Company and Oxford. As of December 31, 2025, the Company’s outstanding borrowing under the 2025 Loan Agreement was $75.0 million.
The Company accounted for the loan syndicate on a creditor-by-creditor basis. With respect to the continuing creditors, Oxford Finance, OFCF II, and OFCF III, the Company accounted for this transaction as a loan modification, and with respect to the new lender, OFCF IV, the Company accounted for this transaction as an issuance of debt. Of the $3.7 million in exit fees on the 2021 Loan Agreement and fees paid to creditors as part of the refinancing, $1.6 million was recorded as a reduction to the net carrying amount of the debt drawn under the 2025 Loan Agreement at close, and $2.0 million was recorded as noncurrent deferred debt issuance costs. Of the $2.3 million in fees paid by the Company to third parties in connection with the refinancing, $0.8 million was recorded as other expense, and $1.4 million was recorded as noncurrent deferred debt issuance costs. Deferred debt issuance costs will be amortized over the respective draw periods of each of the loan commitment tranches on a straight-line basis.
The 2025 Loan Agreement is scheduled to mature in June 2030, provided that the Company has not achieved a revenue-based interest-only extension milestone as of the end of the initial interest-only period in August 2029. If the Company achieves this interest-only extension milestone, the maturity date and end of the interest-only period will be extended to June 2031 and August 2030, respectively. The Company is permitted to prepay the loan, subject to certain conditions, and will incur prepayment fees of 2% if the loan is prepaid prior to June 4, 2027 or 1% if the loan is prepaid between June 5, 2027 and June 4, 2028. No prepayment fee shall be applicable after June 4, 2028. Additionally, upon maturity date, acceleration of the loan in the event of default, or prepayment of the loan, the Company is required to pay an exit fee equal to 5% of the aggregate principal amount of the loan. The Company will accrue for this exit fee over the life of the loan as an increase to the net carrying amount of debt using the effective interest rate method.
The variable interest rate on the drawn amount is 1-Month CME Term SOFR (subject to a per annum floor rate of 3.75%) plus 4.95% per annum. At the initial funding of the 2025 Loan Agreement on June 4, 2025, the nominal interest rate was 9.27%. There are two financial covenants: (i) commencing on March 31, 2027, the Company is required to maintain certain levels of unrestricted cash subject to control agreements provided that such liquidity covenant shall not apply at any given time if the market capitalization of the Company is at least $1.0 billion on the measurement date, and (ii) commencing with the last day of the month in which the aggregate amount of Term Loans funded exceeds $200.0 million, the Company will be required to maintain a loan coverage ratio, which will replace the minimum cash covenant. The loan coverage ratio should not apply at any given time if the market capitalization of the Company is at least $1.25 billion on the measurement date. The loan is secured by substantially all of the Company’s assets. The proceeds from the 2025 Loan Agreement were partially used to prepay the outstanding principal balance of the 2021 Loan Agreement in full, with the remaining proceeds available for working capital, capital expenditures, and other general corporate purposes.
Principal installments due on the notes are as follows (in thousands):
Total long-term debt $ 75,000
7. STOCKHOLDERS’ EQUITY
As of December 31, 2025 and 2024, the Company’s amended and restated certificate of incorporation authorized the Company to issue 500,000,000 shares of Class A common stock, 14,600,000 shares of Class B common stock, and 10,000,000 shares of preferred stock, each with a par value of $0.001 per share. Each share of Class A common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. There were no shares of Class B common stock or preferred stock issued and outstanding as of December 31, 2025 and 2024. Common stockholders are entitled to receive dividends, as may be declared by the board of directors. Through December 31, 2025, no cash dividends have been declared or paid.
In February 2023, the Company completed a follow-on public offering pursuant to which the Company issued and sold 16,428,572 shares of its Class A common stock at a public offering price of $7.00 per share, including 2,142,857 shares of Class A common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares.
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In February 2024, the Company completed a follow-on public offering pursuant to which the Company issued and sold 9,274,194 shares of its Class A common stock at a public offering price of $31.00 per share, including 1,209,677 shares of Class A common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares.
In October 2024, the Company completed a follow-on public offering pursuant to which the Company issued and sold 7,142,858 shares of its Class A common stock at a public offering price of $42.00 per share, and in November 2024, the Company issued and sold an additional 1,071,428 shares of Class A common stock, pursuant to the full exercise of the underwriters’ option to purchase additional shares at the public offering price.
In December 2025, the Company completed a follow-on public offering pursuant to which the Company issued and sold 7,058,824 shares of its Class A common stock at a public offering price of $42.50 per share, including 920,716 shares of Class A common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares.
8. STOCK COMPENSATION
Equity Plans
2024 Inducement Plan
In February 2024, the Company adopted the 2024 Inducement Plan (Inducement Plan). The Inducement Plan was adopted by the compensation committee of the Company’s board of directors without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4) and subsequently amended in August 2024, January 2025, and September 2025. In accordance with Rule 5635(c)(4), awards made under the Inducement Plan, including stock options and restricted stock units, may only be granted to newly hired employees as a material inducement to accept employment with the Company. Stock options granted under the Inducement Plan expire no later than ten years from the date of grant.
2021 Equity Incentive Plan and 2017 Equity Incentive Plan
The 2021 Equity Incentive Plan (2021 EIP) and the 2017 Equity Incentive Plan (2017 EIP) became effective in May 2021 and February 2017, respectively. The Company may not grant any additional awards under the 2017 EIP. The 2017 EIP will continue to govern outstanding equity awards granted thereunder. Stock options granted under the 2021 EIP and 2017 EIP expire no later than ten years from the date of grant.
2021 Employee Stock Purchase Plan
The 2021 Employee Stock Purchase Plan (ESPP) became effective in May 2021. As of December 31, 2025, 150,090 shares have been issued pursuant to the ESPP. The ESPP generally provides for six-month consecutive offering periods beginning every September 14 and March 14. The ESPP is a compensatory plan as defined by the authoritative guidance for stock compensation.
The table below summarizes the Company's equity plans as of December 31, 2025:
Plan Maximum Number of Shares Authorized Shares Available for Future Issuance
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Option Activity
Stock option activity under the 2017 EIP, 2021 EIP, and 2024 Inducement Plan for the year ended December 31, 2025 is summarized as follows:
The aggregate intrinsic value of stock options exercised during the years ended December 31, 2025, 2024, and 2023 was $12.0 million, $46.8 million, and $1.0 million, respectively. The weighted-average grant date fair value of options granted during the years ended December 31, 2025, 2024, and 2023 was $22.59 per share, $19.65 per share, and $5.92 per share, respectively.
Award Activity
The Company grants restricted stock units (RSU) pursuant to the 2021 EIP and satisfies such grants through the issuance of the Company’s Class A common stock. The following table shows RSU activity for the period ending December 31, 2025:
NUMBER OFSHARES WEIGHTED-AVERAGEGRANT DATE FAIR VALUE PER SHARE
Stock-Based Compensation Expense
The following tables summarize the stock-based compensation expense for stock options and restricted stock units granted to employees and nonemployees and for ESPP stock-based compensation that was recorded in the Company’s statements of operations and comprehensive loss for the years ended December 31, 2025, 2024, and 2023 (in thousands):
Year Ended December 31,
Year Ended December 31,
As of December 31, 2025, the Company had $66.0 millionof unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.5 years. For the years ended December 31, 2025, 2024, and 2023, the Company recognized $27.3 million, $17.1 million, and $10.0 million of stock-based compensation expense for stock options, respectively.
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As of December 31, 2025, the Company had $38.0 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 3.1 years. For the years ended December 31, 2025, 2024, and 2023, the Company recognized $9.9 million, $3.4 million, and $1.6 million of stock-based compensation expense for RSUs, respectively.
Stock-based compensation expense related to the ESPP for the years ended December 31, 2025, 2024, and 2023 was $0.9 million, $0.3 million, and $0.2 million, respectively.
No tax benefit was recognized related to stock-based compensation expense since the Company has never reported taxable income and has established a full valuation allowance to offset all of the potential tax benefits associated with its deferred tax assets.
The fair value of stock options granted during the years ended December 31, 2025, 2024, and 2023 was estimated using the Black-Scholes option pricing model based on the following assumptions:
Year Ended December 31,
Dividend yield — — —
9. LICENSES AND COLLABORATIONS
Ares Trading S.A.
In October 2020, the Company entered into a license agreement (Ares Agreement) with Ares Trading S.A. (Ares), pursuant to which the Company obtained an exclusive worldwide license to certain patents and related know-how to research, develop, manufacture, use and commercialize therapeutic products containing atacicept, a recombinant fusion protein used to inhibit B cell growth and differentiation, which could potentially treat some autoimmune diseases.
As consideration for the Ares Agreement, the Company paid a non-refundable license issue fee to Ares in the form of shares of redeemable convertible preferred stock valued at $13.1 million. The redeemable convertible preferred stock subsequently converted into 1,913,501 shares of common stock in May 2021. In December 2020, the Company paid Ares a milestone payment of $25.0 million upon delivery and initiation of the transfer of specified information and materials. The non-refundable license issue fee and milestone payment were recorded to research and development expense in the period incurred. In January 2026, upon filing of the Company’s Biologics License Application (BLA) with the U.S. Food and Drug Administration (FDA) for treatment of atacicept in IgAN, the Company achieved a specified regulatory milestone and paid $15.0 million to Ares.
The Company is obligated to pay Ares additional milestone payments, including $20.0 million upon regulatory approval for IgAN in the U.S., and other potential milestone payments of up to $141.5 million in aggregate upon the achievement of regulatory filing and approval milestones for other geographic regions and indications, and up to $515.0 million upon the achievement of specified worldwide aggregate annual net sales milestones, beginning with $15.0 million if net sales reach $250.0 million and $50.0 million if net sales reach $500.0 million.
Subsequent to the effective date of the Ares Agreement, Ares has performed transfer of manufacturing technology and know-how to the Company. The Company recorded expenses of $0.3 million and $2.8 million to Ares for these services during the years ended December 31, 2024, and 2023, respectively. These amounts are included in research and development expenses on the statements of operations and comprehensive loss.
Commencing on the first commercial sale of licensed products, the Company is obligated to pay Ares tiered royalties of low double-digit to mid-teen percentages on annual net sales of the licensed products covered by the license. The Company is obligated to pay royalties on a licensed product-by-licensed product and country-by-country basis from the first commercial sale of a product in a country until the latest of (i) 15 years after the first commercial sale of such licensed product in such country; (ii) the expiration of the last valid claim of a licensed patent that covers such licensed product in, or its use, importation or manufacture with respect to, such country; and (iii) expiration of all applicable regulatory exclusivity periods, including data exclusivity, in such country with respect to such product. If the Company were to sublicense its rights under the Ares Agreement, the Company would be obligated to pay Ares a percentage ranging from the mid-single-digit to the low double-digits of specified sublicensing income received.
Amplyx Pharmaceuticals, Inc.
In December 2021, the Company entered into an asset purchase agreement (Amplyx Agreement) with Amplyx Pharmaceuticals,
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Inc. (Amplyx), a wholly owned subsidiary of Pfizer Inc. Pursuant to the terms of the Amplyx Agreement, the Company paid $5.0 million to Amplyx to purchase assets relating to an anti-BK virus monoclonal antibody referred to as MAU868 for the treatment of reactivated BK virus (BKV) infection pursuant to a License Agreement between Amplyx and Novartis International Pharmaceutical AG (Novartis). In addition, the Company recognized a $2.0 million contingent milestone obligation as an assumed liability related to the asset purchase. The acquisition cost of $7.0 million was recorded as research and development expense in the statement of operations and comprehensive loss on the acquisition date.
In connection with the Amplyx asset purchase, Amplyx assigned the Exclusive License Agreement between Amplyx and Novartis (Novartis License) and Manufacturing and Supply Agreements to the Company. Under the Novartis License, the Company has exclusive worldwide rights from Novartis to develop, manufacture and commercialize MAU868. The Company will be solely responsible for all research, development, regulatory, manufacturing and commercialization activities of MAU868.
Under the Amplyx Agreement, the Company is obligated to make future milestone payments to Amplyx and Novartis upon the achievement of specified development, regulatory and commercial milestones. In September 2022, the Company and Novartis entered into an amendment to the Novartis License to modify the terms of future milestone payments. Pursuant to this amendment, the Company issued 283,034 shares of Class A common stock to Novartis in exchange for a reduction of $7.0 million in contingent future development milestones, including the $2.0 million contingent milestone obligation accrued by the Company in December 2021. The value of the shares issued was $5.7 million based on the closing market value of the Company’s Class A common stock as of the effective date of the amendment.
The Company is obligated to make future milestone payments of up to $7.0 million to Amplyx, contingent upon the achievement of certain regulatory milestones. The Company is also obligated to make future milestone payments of up to $62.0 million to Novartis, contingent upon the achievement of specified development, regulatory and commercial milestones. In the event that MAU868 is commercialized, the Company will be obligated to pay royalties to Amplyx and Novartis based on net sales by country and by product.
Stanford University
In January 2025, the Company entered into a license agreement (Stanford Agreement) with the Board of Trustees of Leland Stanford Junior University (Stanford). Pursuant to the terms of the Stanford Agreement, as amended in April 2025, the Company acquired worldwide development and commercial rights to a fusion protein in preclinical development referred to as VT-109, with therapeutic potential in B cell mediated diseases, in exchange for license issue fees of $0.8 million, annual license maintenance fees, and potential future license fees, milestone payments and royalties if the compound advances to certain clinical development and commercial milestones.
10. INCOME TAXES
For financial reporting purposes, loss before provision for income taxes includes the following components (in thousands):
Year Ended December 31,
Foreign — — —
Income Taxes Paid
The following table presents income taxes paid, net of refunds received (in thousands):
Year Ended December 31,
U.S. State and Local:
California 1 1 1
New Jersey 1 — —
Massachusetts 15 — —
Total income taxes paid $ 17 $ 1 $ 1
Provision for Income Taxes
Current and deferred provision for income taxes was de minimis for the years ended December 31, 2025, 2024, and 2023.
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A reconciliation of the provision for income taxes computed using the U.S. statutory federal income tax rate compared to the income tax provision included in the statement of operations and comprehensive loss is as follows (in thousands):
Year Ended December 31,
Nontaxzable or nondeductible items:
Tax credits:
For the years ended December 31, 2025, 2024, and 2023, state and local income taxes in California comprise the majority of the state and local income taxes, net of federal effect category.
Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are determined based on the differences between financial reporting and income tax bases of assets and liabilities, as well as net operating loss carryforwards and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The significant components of the Company’s net deferred tax assets and liabilities are as follows (in thousands):
December 31,
Deferred tax assets:
Federal and state net operating loss carryforward $ 84,624 $ 38,736 $ 27,539
Deferred tax liabilities:
Other deferred tax liabilities (166 ) (83 ) (100 )
Total gross deferred tax liabilities (572 ) (792 ) (719 )
Net deferred tax assets $ — $ — $ —
As of December 31, 2025, the Company has federal and state net operating loss carryforwards of $389.9 million and $42.3 million, respectively, of which $10.2 million of federal net operating loss carryforwards and $37.0 million of state net operating carryforwards will begin expiring in the year 2032 and 2036, respectively, if not utilized. The Company also has $379.6 million of federal net operating loss carryforwards as of December 31, 2025 that do not expire. The Company has $8.6 million of federal research and development tax credit carryforwards, which begin to expire in the year 2037. The Company has $4.3 million of state research and development tax credit carryforwards, which have no expiration date.
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Utilization of the federal and state net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company has not performed an analysis to determine if such ownership changes have occurred. An analysis will be performed prior to recognizing the benefits of any losses or credits in the financial statements.
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Based on the weight of all evidence including a history of operating losses, management has determined that it is not more likely than not that the net deferred tax assets will be realized. A valuation allowance of $172.3 million and $106.9 million as of December 31, 2025 and 2024, respectively, has been established to offset the deferred tax assets as realization of such assets is uncertain.
As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the “change in valuation allowance” line of the rate reconciliation. The following table presents a reconciliation of the total change in the valuation allowance (in thousands):
Year Ended December 31,
Changes charged to other comprehensive income (82 ) 25 (147 )
Uncertain Tax Benefits
The Company has the following activity relating to the gross amount of unrecognized tax benefits (in thousands):
Year Ended December 31,
Additions based on tax positions related to prior year 63 — —
Additions based on tax positions related to current year 535 535 572
During the years ended December 31, 2025, 2024, and 2023, no interest or penalties were required to be recognized relating to unrecognized tax benefits.
The Company accounts for income taxes in accordance with authoritative accounting guidance which states the impact of an uncertain income tax position is recognized at the largest amount that is “more likely than not” to be sustained upon audit by the relevant taxing authority. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained. None of these uncertain tax positions will impact the Company’s effective tax rate if assessed. The Company’s policy is to classify interest and penalties associated with unrecognized tax benefits as income tax expense.
The Company files income tax returns in the U.S. and various states. The Company is not currently under examination by any major tax jurisdictions nor has it been in the past. Because of net operating losses and research credit carryovers, substantially all of our tax years remain open to examination. Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next 12 months due to tax examination changes, settlement activities, expirations of statute of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, the Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months.
11. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company believes that there are no actions pending which would have a material adverse effect on its results of operations, financial condition, or cash flows.
Indemnifications
As of December 31, 2025, the Company did not have any material indemnification claims that were probable or reasonably possible, and consequently no related liabilities have been recorded.
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Employee Agreements
The Company has signed employment agreements with certain key employees pursuant to which, if their employment is terminated following a change of control of the Company, the employees are entitled to receive certain benefits, including severance and accelerated vesting of equity incentives.
Development and Manufacturing Services Agreements
The Company enters into development and manufacturing contracts with vendors in the conduct of its business. Contracts with these vendors may be terminated at the Company’s option, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, the Company would be obligated to pay for the products or services that had been provided or received at the time the termination became effective, and potentially additional compensation based upon the period of time remaining between the date of notice of cancellation and the scheduled manufacturing.
12. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
The following outstanding potentially dilutive shares were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis).
Year Ended December 31,
Vested but unsettled stock units — 2,987 —
13. RELATED PARTY TRANSACTIONS
Sofinnova Venture Partners X, L.P. (SVP X) is an investment fund in which Maha Katabi (Dr. Katabi), a member of the Company’s board of directors, has a pecuniary interest. SVP X completed transactions in the Company’s common stock within a six-month period ended March 25, 2024. The transactions included both purchases and sales of shares of the Company’s common stock that may be matchable for purposes of Section 16(b) of the Securities Exchange Act of 1934, as amended. A complaint filed in October 2024 in a legal action pending in the U.S. District Court for the Southern District of New York in the case captioned Calenture, LLC et al. v. Sofinnova Venture Partners X, L.P. et al., alleged that SVP X, Sofinnova Management X, L.P., and Sofinnova Management X-A, L.L.C. (collectively, Sofinnova) was liable to the Company for damages in the form of short-swing profits realized from transactions in the Company’s equity securities. In November 2025, the Company entered into a settlement agreement with Sofinnova to settle the legal action, which resulted in a payment by Sofinnova to the Company of $0.5 million in December 2025, which was recorded to additional paid-in capital.
14. SEGMENT REPORTING
The Company has one reportable segment: Therapeutics. This segment is dedicated to developing and commercializing transformative treatments for patients with serious immunological diseases. The Company’s lead product candidate, atacicept, is currently being evaluated for the treatment of IgAN and other autoimmune kidney diseases. Atacicept is a native human TACI-Fc fusion protein that binds both the B-cell activating factor (BAFF) and A proliferation-inducing ligand (APRIL) cytokines and is self-administered subcutaneously at home. The Company also holds worldwide, exclusive development and commercial rights to MAU868, a monoclonal antibody to treat BKV infections for which the Company completed a Phase 2 clinical trial in 2022, and worldwide, exclusive development and commercial rights to VT-109, a novel, next generation dual BAFF/APRIL inhibitor that is in preclinical development.
Since inception, the Company has devoted substantially all its resources to research and development efforts, pre-clinical studies and clinical trials, building a sales, marketing and distribution infrastructure to support anticipated commercial activities, establishing and maintaining intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations. The Company does not have any product candidates approved for commercial sale and has not generated any revenue from product sales.
The accounting policies used in the segment reporting are the same as those described in the summary of significant accounting policies (Note 2). The Company’s Chief Operating Decision Maker (CODM) is the Chief Executive Officer. The CODM assesses
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performance for the single reportable segment and decides how to allocate resources based on net loss and total operating expenses. As the Company has not generated any revenue, total operating expenses is equivalent to loss from operations on the statements of operations and comprehensive loss. The measure of segment assets is reported on the balance sheet as total assets.
The CODM uses net loss as the reportable segment’s primary measure of profit or loss to evaluate the segment’s financial position and to determine the need for additional financing or equity offerings. The CODM also uses total operating expenses as a measure to evaluate controllable spend from total current assets, in deciding how to allocate resources within the Therapeutics segment.
As of December 31, 2025 and 2024, all of the Company’s property and equipment was located in the United States.
The Company's reportable segment total operating expenses (including significant segment expenses) and net loss, consisted of the following (in thousands):
Therapeutics
Year Ended December 31,
Operating expenses:
Direct research and development - contract manufacturing 74,193 50,753 35,049
Other income (expense):
Provision for income taxes (1 ) (1 ) (1 )
Other Significant Items:
Expenditures for additions to long-lived assets $ (630 ) $ (972 ) $ (63 )
*Other segment items included in total operating expenses primarily consist of consulting and contractors, professional services, equipment and software, travel and entertainment, facilities, medical affairs, and corporate communications.
**Other segment items included in loss before provision for income taxes consist of currency exchange gains and losses and other income/expense.
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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
Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal financial officer, respectively), have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
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 Exchange Act Rules 13a-15(f) and 15d-15(f).
Under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the criteria set forth 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 the Company’s internal control over financial reporting was effective as of December 31, 2025.
The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by KPMG LLP, an independent registered public accounting firm, and they have issued an attestation report on our internal control over financial reporting, which appears in this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations of internal controls, misstatements due to error or fraud may occur and not be detected.
Item 9B. Other Information
(a)
None.
(b)
The following table describes for the quarterly period covered by this report each trading arrangement for the purchase or sale of Company securities adopted, modified or terminated by our directors and officers that is either (1) a contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), or a “Rule 10b5-1 trading arrangement,” or (2) a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K):
129
Type of Trading Arrangement
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
130
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item will be included in our definitive proxy statement to be filed with the Securities and Exchange Commission in connection with our 2026 Annual Meeting of Stockholders (Definitive Proxy Statement), which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2025 and is incorporated herein by reference.
Code of Business Conduct and Ethics
We maintain a Code of Business Conduct and Ethics (Code of Conduct) that applies to all our employees, officers, directors, and contractors. This includes our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The full text of our Code of Conduct is posted on our website at https://ir.veratx.com/corporate-governance/governance-highlights. If we make any substantive amendments to the Code of Conduct or grant any waiver from a provision of the Code of Conduct to any executive officer or director that are required to be disclosed pursuant to SEC rules, we will promptly disclose the nature of the amendment or waiver on our website or in a current report on Form 8-K.
Item 11. Executive Compensation.
The information required by this item will be included in our Definitive Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be included in our Definitive Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be included in our Definitive Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this item will be included in our Definitive Proxy Statement and is incorporated herein by reference.
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PART IV
Item 15. Exhibit and Financial Statement Schedules.
We have filed the following documents as part of this Annual Report.
1.
Financial Statements:
The financial statements filed as part of this Annual Report are included in Part II, Item 8 of this Annual Report.
2.
Financial Statement Schedules:
All schedules have been omitted because they are not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the required information is otherwise included.
3.
Exhibits:
The exhibits listed in the accompanying Exhibit Index are filed as part of, or incorporated by reference into, this Annual Report.
Item 16. Form 10-K Summary.
None.
EXHIBIT INDEX
ExhibitNumber Description
132
23.1* Consent of Independent Registered Public Accounting Firm.
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
* Filed herewith.
† Indicates management contract or compensatory plan.
133
¥ Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
^ Pursuant to Item 601(b)(10) of Regulation S-K, certain portions of this exhibit (indicated by asterisks) have been omitted.
# The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (including this Annual Report on Form 10-K), unless the Registrant specifically incorporates the foregoing information into those documents by reference.
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SIGNATURES
Pursuant to the requirements 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.
Vera Therapeutics, Inc.
Date: February 26, 2026 By: /s/ Marshall Fordyce
Marshall Fordyce, M.D.
President, Chief Executive Officer and Director(Principal 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 in the capacities and on the dates indicated.
Name Title Date
Marshall Fordyce, M.D. (Principal Executive Officer)
/s/ Sean Grant Chief Financial Officer February 26, 2026
Sean Grant (Principal Financial Officer)
Joseph Young (Principal Accounting Officer)
/s/ Michael Morrissey Chairman of the Board February 26, 2026
Michael Morrissey, Ph.D.
/s/ Andrew Cheng Director February 26, 2026
Andrew Cheng, M.D., Ph.D.
/s/ Patrick Enright Director February 26, 2026
Patrick Enright
/s/ Kimball Hall Director February 26, 2026
Kimball Hall
/s/ Maha Katabi Director February 26, 2026
Maha Katabi, Ph.D.
/s/ James Meyers Director February 26, 2026
James Meyers
/s/ Scott Morrison Director February 26, 2026
Scott Morrison
/s/ Christy Oliger Director February 26, 2026
Christy Oliger
/s/ Beth Seidenberg Director February 26, 2026
Beth Seidenberg, M.D.
i