{"url_path":"/sec/xlo/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Financial Statements","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-12","source_url":"https://www.sec.gov/Archives/edgar/data/1840233/0001193125-26-218200-index.html","accession_number":"0001193125-26-218200","cik":"0001840233","ticker":"XLO","issuer_name":"Xilio Therapeutics, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1840233/0001193125-26-218200-index.html","primary_entity_key":"0001840233","primary_entity_name":"Xilio Therapeutics, Inc."},"word_count":10641,"has_tables":true,"body_markdown":"Item 1. Financial Statements\n\nXILIO THERAPEUTICS, INC.\n\nCondensed Consolidated Balance Sheets\n\n(In thousands, except share and per share data)\n\n(Unaudited)\n\n \n\n \n\n \n\nMarch 31,\n\n \n\n \n\nDecember 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nASSETS\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n \n\n150,333\n\n \n\n \n\n$\n\n \n\n137,531\n\n \n\nCollaboration and license agreement receivable\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n5,000\n\n \n\nPrepaid expenses and other current assets\n\n \n\n \n\n \n\n3,874\n\n \n\n \n\n \n\n \n\n2,496\n\n \n\nTotal current assets\n\n \n\n \n\n \n\n154,207\n\n \n\n \n\n \n\n \n\n145,027\n\n \n\nRestricted cash\n\n \n\n \n\n \n\n1,813\n\n \n\n \n\n \n\n \n\n1,807\n\n \n\nProperty and equipment, net\n\n \n\n \n\n \n\n3,680\n\n \n\n \n\n \n\n \n\n3,892\n\n \n\nOperating lease right-of-use asset\n\n \n\n \n\n \n\n3,787\n\n \n\n \n\n \n\n \n\n3,959\n\n \n\nTotal assets\n\n \n\n$\n\n \n\n163,487\n\n \n\n \n\n$\n\n \n\n154,685\n\n \n\nLIABILITIES AND STOCKHOLDERS’ EQUITY\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable\n\n \n\n$\n\n \n\n1,064\n\n \n\n \n\n$\n\n \n\n3,168\n\n \n\nAccrued expenses\n\n \n\n \n\n \n\n8,970\n\n \n\n \n\n \n\n \n\n11,739\n\n \n\nDeferred revenue, current portion\n\n \n\n \n\n \n\n31,542\n\n \n\n \n\n \n\n \n\n40,023\n\n \n\nOperating lease liability, current portion\n\n \n\n \n\n \n\n1,384\n\n \n\n \n\n \n\n \n\n1,343\n\n \n\nTotal current liabilities\n\n \n\n \n\n \n\n42,960\n\n \n\n \n\n \n\n \n\n56,273\n\n \n\nDeferred revenue, net of current portion\n\n \n\n \n\n \n\n16,468\n\n \n\n \n\n \n\n \n\n20,635\n\n \n\nOperating lease liability, net of current portion\n\n \n\n \n\n \n\n5,254\n\n \n\n \n\n \n\n \n\n5,611\n\n \n\nCommon stock warrant liabilities\n\n \n\n \n\n \n\n26,260\n\n \n\n \n\n \n\n \n\n29,560\n\n \n\nLiabilities to issue common stock\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n7,333\n\n \n\nTotal liabilities\n\n \n\n \n\n \n\n90,942\n\n \n\n \n\n \n\n \n\n119,412\n\n \n\nCommitments and contingencies (Note 7)\n\n \n\n \n\n \n\n \n\n \n\n \n\nStockholders’ equity\n\n \n\n \n\n \n\n \n\n \n\n \n\nPreferred stock, $0.0001 par value; 5,000,000 shares authorized, no shares issued or outstanding\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\nCommon stock, $0.0001 par value; 600,000,000 shares authorized; 5,782,536 shares issued and outstanding at March 31, 2026; 4,530,641 shares issued and outstanding at December 31, 2025\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n \n\n—\n\n \n\nAdditional paid-in capital\n\n \n\n \n\n \n\n500,862\n\n \n\n \n\n \n\n \n\n454,062\n\n \n\nAccumulated deficit\n\n \n\n \n\n \n\n(428,318\n\n)\n\n \n\n \n\n \n\n(418,789\n\n)\n\nTotal stockholders’ equity\n\n \n\n \n\n \n\n72,545\n\n \n\n \n\n \n\n \n\n35,273\n\n \n\nTotal liabilities and stockholders’ equity\n\n \n\n$\n\n \n\n163,487\n\n \n\n \n\n$\n\n \n\n154,685\n\n \n\n \n\nThe accompanying notes are an integral part of these condensed consolidated financial statements.\n\n7\n\n[Table of Contents](#toc_page)\n\n \n\nXILIO THERAPEUTICS, INC.\n\nCondensed Consolidated Statements of Operations and Comprehensive Loss\n\n(In thousands, except share and per share data)\n\n(Unaudited)\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nRevenue\n\n \n\n \n\n \n\n \n\n \n\nCollaboration and license revenue\n\n$\n\n \n\n12,648\n\n \n\n \n\n$\n\n \n\n2,930\n\n \n\nTotal revenue\n\n \n\n \n\n12,648\n\n \n\n \n\n \n\n \n\n2,930\n\n \n\nOperating expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\nResearch and development\n\n$\n\n \n\n19,832\n\n \n\n \n\n$\n\n \n\n8,266\n\n \n\nGeneral and administrative\n\n \n\n \n\n6,928\n\n \n\n \n\n \n\n \n\n8,515\n\n \n\nTotal operating expenses\n\n \n\n \n\n26,760\n\n \n\n \n\n \n\n \n\n16,781\n\n \n\nLoss from operations\n\n \n\n \n\n(14,112\n\n)\n\n \n\n \n\n \n\n(13,851\n\n)\n\nOther income, net\n\n \n\n \n\n \n\n \n\n \n\nChange in fair value of common stock warrant liabilities\n\n \n\n \n\n3,300\n\n \n\n \n\n \n\n \n\n—\n\n \n\nOther income, net\n\n \n\n \n\n1,283\n\n \n\n \n\n \n\n \n\n586\n\n \n\nTotal other income, net\n\n \n\n \n\n4,583\n\n \n\n \n\n \n\n \n\n586\n\n \n\nNet loss and comprehensive loss\n\n$\n\n \n\n(9,529\n\n)\n\n \n\n$\n\n \n\n(13,265\n\n)\n\nNet loss per share, basic and diluted\n\n$\n\n \n\n(0.58\n\n)\n\n \n\n$\n\n \n\n(2.49\n\n)\n\nWeighted average common shares outstanding, basic and diluted\n\n \n\n \n\n16,347,538\n\n \n\n \n\n \n\n \n\n5,335,740\n\n \n\n \n\nThe accompanying notes are an integral part of these condensed consolidated financial statements.\n\n8\n\n[Table of Contents](#toc_page)\n\n \n\nXILIO THERAPEUTICS, INC.\n\nCondensed Consolidated Statements of Stockholders’ Equity\n\nFor the three months ended March 31, 2026 and 2025\n\n(In thousands, except share data)\n\n(Unaudited)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAdditional\n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal\n\n \n\n \n\n \n\nCommon Stock\n\n \n\n \n\nPaid-In\n\n \n\n \n\nAccumulated\n\n \n\n \n\nStockholders'\n\n \n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nCapital\n\n \n\n \n\nDeficit\n\n \n\n \n\nEquity\n\n \n\nBalance at December 31, 2025\n\n \n\n \n\n4,530,641\n\n \n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n454,062\n\n \n\n \n\n$\n\n \n\n(418,789\n\n)\n\n \n\n$\n\n \n\n35,273\n\n \n\nIssuance of prefunded warrants in connection with a follow-on offering, net of issuance costs\n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n37,256\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n37,256\n\n \n\nIssuance of common stock to settle the liabilities to issue common stock\n\n \n\n \n\n708,223\n\n \n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n \n\n7,332\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n7,333\n\n \n\nIssuance of common stock in connection with the exercise of prefunded warrants\n\n \n\n \n\n535,611\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\nVesting of restricted stock units\n\n \n\n \n\n7,952\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\nExercise of stock options\n\n \n\n \n\n109\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n1\n\n \n\nStock-based compensation expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,211\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,211\n\n \n\nNet loss\n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n(9,529\n\n)\n\n \n\n \n\n \n\n(9,529\n\n)\n\nBalance at March 31, 2026\n\n \n\n \n\n5,782,536\n\n \n\n \n\n$\n\n \n\n1\n\n \n\n \n\n$\n\n \n\n500,862\n\n \n\n \n\n$\n\n \n\n(428,318\n\n)\n\n \n\n$\n\n \n\n72,545\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAdditional\n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal\n\n \n\n \n\n \n\nCommon Stock\n\n \n\n \n\nPaid-In\n\n \n\n \n\nAccumulated\n\n \n\n \n\nStockholders'\n\n \n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nCapital\n\n \n\n \n\nDeficit\n\n \n\n \n\nEquity\n\n \n\nBalance at December 31, 2024\n\n \n\n \n\n3,268,299\n\n \n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n401,351\n\n \n\n \n\n$\n\n \n\n(383,753\n\n)\n\n \n\n$\n\n \n\n17,598\n\n \n\nIssuance of common stock in connection with the AbbVie stock purchase agreement, net of issuance costs\n\n \n\n \n\n310,559\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,810\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,810\n\n \n\nIssuance of common stock in connection with at-the-market offerings, net of issuance costs\n\n \n\n \n\n110,747\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,017\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,017\n\n \n\nVesting of restricted stock units\n\n \n\n \n\n7,952\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\nExercise of stock options\n\n \n\n \n\n648\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n5\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n5\n\n \n\nStock-based compensation expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n1,535\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n1,535\n\n \n\nNet loss\n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n(13,265\n\n)\n\n \n\n \n\n \n\n(13,265\n\n)\n\nBalance at March 31, 2025\n\n \n\n \n\n3,698,205\n\n \n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n407,718\n\n \n\n \n\n$\n\n \n\n(397,018\n\n)\n\n \n\n$\n\n \n\n10,700\n\n \n\n \n\nThe accompanying notes are an integral part of these condensed consolidated financial statements.\n\n9\n\n[Table of Contents](#toc_page)\n\n \n\nXILIO THERAPEUTICS, INC.\n\nCondensed Consolidated Statements of Cash Flows\n\n(In thousands)\n\n(Unaudited)\n\n \n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nCash flows from operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n$\n\n \n\n(9,529\n\n)\n\n \n\n$\n\n \n\n(13,265\n\n)\n\nAdjustments to reconcile net loss to net cash (used in) provided by operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n\n \n\n344\n\n \n\n \n\n \n\n \n\n497\n\n \n\nStock-based compensation expense\n\n \n\n \n\n \n\n2,211\n\n \n\n \n\n \n\n \n\n1,535\n\n \n\nChange in fair value of common stock warrant liabilities\n\n \n\n \n\n \n\n(3,300\n\n)\n\n \n\n \n\n \n\n—\n\n \n\nChanges in operating assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCollaboration and license agreement receivable\n\n \n\n \n\n \n\n5,000\n\n \n\n \n\n \n\n \n\n—\n\n \n\nPrepaid and other assets\n\n \n\n \n\n \n\n(1,205\n\n)\n\n \n\n \n\n \n\n964\n\n \n\nAccounts payable\n\n \n\n \n\n \n\n(1,680\n\n)\n\n \n\n \n\n \n\n(590\n\n)\n\nAccrued expenses and other liabilities\n\n \n\n \n\n \n\n(1,536\n\n)\n\n \n\n \n\n \n\n(6,376\n\n)\n\nDeferred revenue\n\n \n\n \n\n \n\n(12,648\n\n)\n\n \n\n \n\n \n\n46,213\n\n \n\nNet cash (used in) provided by operating activities\n\n \n\n \n\n \n\n(22,343\n\n)\n\n \n\n \n\n \n\n28,978\n\n \n\nCash flows from investing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nPurchases of property and equipment\n\n \n\n \n\n \n\n(556\n\n)\n\n \n\n \n\n \n\n(22\n\n)\n\nNet cash used in investing activities\n\n \n\n \n\n \n\n(556\n\n)\n\n \n\n \n\n \n\n(22\n\n)\n\nCash flows from financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from issuance of prefunded warrants in connection with a follow-on offering, net of issuance costs\n\n \n\n \n\n \n\n37,256\n\n \n\n \n\n \n\n \n\n—\n\n \n\nProceeds from issuance of common stock in connection with the AbbVie stock purchase agreement, net of issuance costs\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,810\n\n \n\nProceeds from issuance of common stock in connection with at-the-market offerings, net of issuance costs\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n2,017\n\n \n\nProceeds from exercise of stock options\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n \n\n5\n\n \n\nPayments of issuance costs included in accounts payable or accrued expenses at prior year end\n\n \n\n \n\n \n\n(1,550\n\n)\n\n \n\n \n\n \n\n—\n\n \n\nNet cash provided by financing activities\n\n \n\n \n\n \n\n35,707\n\n \n\n \n\n \n\n \n\n4,832\n\n \n\nIncrease in cash, cash equivalents and restricted cash\n\n \n\n \n\n \n\n12,808\n\n \n\n \n\n \n\n \n\n33,788\n\n \n\nCash, cash equivalents and restricted cash, beginning of period\n\n \n\n \n\n \n\n139,338\n\n \n\n \n\n \n\n \n\n57,073\n\n \n\nCash, cash equivalents and restricted cash, end of period\n\n \n\n$\n\n \n\n152,146\n\n \n\n \n\n$\n\n \n\n90,861\n\n \n\nSupplemental disclosure of non-cash activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCapital expenditures included in accounts payable or accrued expenses\n\n \n\n$\n\n \n\n19\n\n \n\n \n\n$\n\n \n\n292\n\n \n\nSettlement of liabilities to issue common stock by issuing common stock\n\n \n\n$\n\n \n\n7,332\n\n \n\n \n\n$\n\n \n\n—\n\n \n\nReconciliation to amounts within the consolidated balance sheets:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n \n\n150,333\n\n \n\n \n\n$\n\n \n\n89,073\n\n \n\nRestricted cash\n\n \n\n \n\n \n\n1,813\n\n \n\n \n\n \n\n \n\n1,788\n\n \n\nCash, cash equivalents and restricted cash, end of period\n\n \n\n$\n\n \n\n152,146\n\n \n\n \n\n$\n\n \n\n90,861\n\n \n\n \n\nThe accompanying notes are an integral part of these condensed consolidated financial statements.\n\n10\n\n[Table of Contents](#toc_page)\n\n \n\nXILIO THERAPEUTICS, INC.\n\nNotes to Condensed Consolidated Financial Statements\n\n(Dollars in thousands, unless otherwise stated)\n\n(Unaudited)\n\n# 1. Description of Business and Liquidity\n\nXilio Therapeutics, Inc. (“Xilio” or the “Company”) is a clinical-stage biotechnology company dedicated to discovering and developing masked immuno-oncology (“I-O”) therapies with the goal of significantly improving outcomes for people living with cancer without the systemic side effects of current I-O treatments. The Company was incorporated in Delaware in June 2020, and its headquarters are located in Waltham, Massachusetts.\n\nSince its inception, the Company has devoted substantially all of its financial resources and efforts to research and development activities. As of March 31, 2026, the Company had an accumulated deficit of $428.3 million and has incurred significant operating losses, including net losses of $9.5 million and $13.3 million for the three months ended March 31, 2026 and 2025, respectively. The Company expects its operating losses and negative operating cash flows to continue for the foreseeable future as it continues to advance its product candidates through clinical trials, maintains the infrastructure necessary to support these activities and continues to incur costs associated with operating as a public company.\n\nAs of March 31, 2026, the Company had cash and cash equivalents of $150.3 million. Based on its current operating plans, the Company anticipates that its existing cash and cash equivalents as of March 31, 2026 will be sufficient to enable it to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of the issuance of these condensed consolidated financial statements.\n\nHowever, the Company has based its estimates on assumptions that may prove to be wrong. If actual results differ from the Company’s estimates, the Company could exhaust its available capital resources sooner than it anticipates, in which case, the Company would be required to seek additional capital sooner or curtail planned activities to reduce operating expenses, which may have an adverse impact on the Company’s ability to achieve its business objectives.\n\n2. Summary of Significant Accounting Policies\n\n## Basis of Presentation\n\nThe Company’s unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”), and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2025 and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 23, 2026. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of March 31, 2026 and the results of its operations for the three months ended March 31, 2026 and 2025 and cash flows for the three months ended March 31, 2026 and 2025. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or for any future period.\n\nOn March 13, 2026, the Company effected a reverse stock split of its common stock at a ratio of 1-for-14. The reverse stock split did not impact the number of authorized shares of common stock or preferred stock or the par value per share of the common stock or preferred stock. All share and per share amounts in these condensed consolidated financial statements and notes thereto have been adjusted retroactively to reflect the reverse stock split for all periods presented.\n\n11\n\n[Table of Contents](#toc_page)\n\n \n\n## Principles of Consolidation\n\n## The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Xilio Development, Inc. (“Xilio Development”), a Delaware corporation, and Xilio Securities Corporation, a Massachusetts security corporation. All intercompany accounts and transactions have been eliminated in consolidation.\n\n## Significant Accounting Policies\n\n## The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements are described in Note 2, “Summary of Significant Accounting Policies” of the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.\n\nUse of Estimates\n\nThe preparation of financial statements in accordance with GAAP requires management to make estimates and judgments that may affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the related reporting of revenue and expenses during the reporting period. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Factors that may affect estimates include expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Significant estimates of accounting reflected in these condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued expenses, the valuation of the common stock warrant liabilities, the valuation of stock-based compensation, including stock options and restricted stock units, useful life of long-lived assets and income taxes. Actual results could differ from those estimates.\n\nConcentrations of Credit Risk\n\nFinancial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company holds all cash and cash equivalents at accredited financial institutions. Bank accounts in the United States are generally insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Substantially all of the Company’s cash and cash equivalents are FDIC insured, including funds held through an insured cash sweep program. The Company has not experienced any losses in its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.\n\nSegments\n\nThe Company has one operating and reportable segment, the consolidated Company operations, reflecting the integrated nature of its business focused on discovering and developing masked I-O therapies. The Company’s chief operating decision maker (“CODM”) is its chief executive officer. The CODM allocates resources and assesses performance on a consolidated basis, focused on the Company’s cash resources and an assessment of the probability of success of its ongoing research and development activities. Resource allocation decisions are informed by forecasted cash expenditures and actual expenses incurred to date. The CODM is not regularly provided with disaggregated actual expense information, other than the actual expense information included in the consolidated statements of operations and comprehensive loss, as the Company’s integrated operating model emphasizes shared resources and centralized decision-making.\n\nAll of the Company’s collaboration and license revenue is generated in the United States and all of the Company’s long-lived assets are held in the United States.\n\n12\n\n[Table of Contents](#toc_page)\n\n \n\nRecent Accounting Pronouncements Not Yet Adopted\n\nIn November 2024 the FASB issued Accounting Standards Update No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.\n\n# 3. Fair Value Measurements\n\nLiabilities measured at fair value on a recurring basis consist of the following as of March 31, 2026:\n\n \n\n \n\n \n\nQuoted\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPrices in\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nActive\n\n \n\n \n\nSignificant\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMarkets for\n\n \n\n \n\nOther\n\n \n\n \n\nSignificant\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIdentical\n\n \n\n \n\nObservable\n\n \n\n \n\nUnobservable\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAssets\n\n \n\n \n\nInputs\n\n \n\n \n\nInputs\n\n \n\n \n\n \n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nFinancial liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSeries A warrants to purchase common stock\n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n20,560\n\n \n\n \n\n$\n\n \n\n20,560\n\n \n\nSeries C warrants to purchase common stock\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n5,700\n\n \n\n \n\n \n\n \n\n5,700\n\n \n\nTotal financial liabilities at March 31, 2026\n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n26,260\n\n \n\n \n\n$\n\n \n\n26,260\n\n \n\n \n\nLiabilities measured at fair value on a recurring basis consist of the following as of December 31, 2025:\n\n \n\n \n\n \n\nQuoted\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPrices in\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nActive\n\n \n\n \n\nSignificant\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMarkets for\n\n \n\n \n\nOther\n\n \n\n \n\nSignificant\n\n \n\n \n\n \n\n \n\n \n\n \n\nIdentical\n\n \n\n \n\nObservable\n\n \n\n \n\nUnobservable\n\n \n\n \n\n \n\n \n\n \n\n \n\nAssets\n\n \n\n \n\nInputs\n\n \n\n \n\nInputs\n\n \n\n \n\n \n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nFinancial liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSeries A warrants to purchase common stock\n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n23,100\n\n \n\n \n\n$\n\n \n\n23,100\n\n \n\nSeries C warrants to purchase common stock\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n6,460\n\n \n\n \n\n \n\n \n\n6,460\n\n \n\nTotal financial liabilities at December 31, 2025\n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n—\n\n \n\n \n\n$\n\n \n\n29,560\n\n \n\n \n\n$\n\n \n\n29,560\n\n \n\n \n\nThe fair value of the common stock warrant liabilities, which are described in more detail in Note 8, are calculated utilizing a Black-Scholes option pricing model for the Series A warrants and a Monte Carlo simulation model for the Series C warrants. The Black-Scholes option pricing model and the Monte Carlo simulation model both require the use of assumptions, certain of which are not observable in the market, which represent Level 3 measurements within the fair value hierarchy. The Black-Scholes pricing model and the Monte Carlo simulation model assumptions include the warrant exercise price, the expected term of the warrant, the current price of the Company’s common stock, expected volatility, the risk-free interest rate for the expected term of the warrant and expected dividend yield. The Monte Carlo simulation assumptions also include the potential impacts of the warrant strike price reset features.\n\n13\n\n[Table of Contents](#toc_page)\n\n \n\nThe following assumptions were used in determining the fair value of the Company’s common stock warrant liabilities as of March 31, 2026 and December 31, 2025:\n\n \n\n \n\nMarch 31,\n\n \n\nDecember 31,\n\n \n\n2026\n\n \n\n2025\n\nClosing price of common stock\n\n$\n\n \n\n8.41\n\n \n\n \n\n \n\n$\n\n \n\n8.96\n\n \n\n \n\nWarrant exercise price\n\n$\n\n \n\n10.50\n\n \n\n \n\n \n\n$\n\n \n\n10.50\n\n \n\n \n\nExpected volatility\n\n \n\n \n\n70\n\n \n\n%\n\n \n\n \n\n \n\n70\n\n \n\n%\n\nRisk free interest rate\n\n \n\n \n\n3.79\n\n \n\n%\n\n \n\n \n\n \n\n3.62\n\n \n\n%\n\nExpected dividend yield\n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\nExpected term (in years)\n\n \n\n0.67 - 4.18\n\n \n\n \n\n \n\n \n\n0.92 - 4.43\n\n \n\n \n\n \n\nThe following table summarizes the changes in the fair market value of the Company’s common stock warrant liabilities, which are classified within the Level 3 fair value hierarchy:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal level 3\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nfinancial\n\n \n\n \n\n \n\nSeries A\n\n \n\n \n\nSeries C\n\n \n\n \n\nliabilities\n\n \n\nBalance at December 31, 2025\n\n \n\n$\n\n \n\n23,100\n\n \n\n \n\n$\n\n \n\n6,460\n\n \n\n \n\n$\n\n \n\n29,560\n\n \n\nChange in fair value of common stock warrant liabilities\n\n \n\n \n\n \n\n(2,540\n\n)\n\n \n\n \n\n \n\n(760\n\n)\n\n \n\n \n\n \n\n(3,300\n\n)\n\nBalance at March 31, 2026\n\n \n\n$\n\n \n\n20,560\n\n \n\n \n\n$\n\n \n\n5,700\n\n \n\n \n\n$\n\n \n\n26,260\n\n \n\n \n\n# 4. Property and Equipment, Net\n\nProperty and equipment, net consists of the following as of March 31, 2026 and December 31, 2025:\n\n \n\n \n\n \n\nMarch 31,\n\n \n\n \n\nDecember 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nLaboratory equipment\n\n \n\n$\n\n \n\n6,943\n\n \n\n \n\n$\n\n \n\n6,381\n\n \n\nFurniture and fixtures\n\n \n\n \n\n \n\n681\n\n \n\n \n\n \n\n \n\n681\n\n \n\nLeasehold improvements\n\n \n\n \n\n \n\n5,124\n\n \n\n \n\n \n\n \n\n5,124\n\n \n\nConstruction in process\n\n \n\n \n\n \n\n29\n\n \n\n \n\n \n\n \n\n459\n\n \n\nTotal property and equipment\n\n \n\n \n\n \n\n12,777\n\n \n\n \n\n \n\n \n\n12,645\n\n \n\nLess: accumulated depreciation\n\n \n\n \n\n \n\n(9,097\n\n)\n\n \n\n \n\n \n\n(8,753\n\n)\n\nProperty and equipment, net\n\n \n\n$\n\n \n\n3,680\n\n \n\n \n\n$\n\n \n\n3,892\n\n \n\n \n\nThe Company recognized depreciation and amortization expense related to property and equipment of $0.3 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively.\n\n# 5. Accrued Expenses\n\nAccrued expenses consist of the following as of March 31, 2026 and December 31, 2025:\n\n \n\n \n\n \n\nMarch 31,\n\n \n\n \n\nDecember 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nExternal research and development\n\n \n\n$\n\n \n\n6,160\n\n \n\n \n\n$\n\n \n\n3,767\n\n \n\nPersonnel-related\n\n \n\n \n\n \n\n1,695\n\n \n\n \n\n \n\n \n\n5,733\n\n \n\nProfessional and consulting fees\n\n \n\n \n\n \n\n917\n\n \n\n \n\n \n\n \n\n2,156\n\n \n\nOther\n\n \n\n \n\n \n\n198\n\n \n\n \n\n \n\n \n\n83\n\n \n\nTotal accrued expenses\n\n \n\n$\n\n \n\n8,970\n\n \n\n \n\n$\n\n \n\n11,739\n\n \n\n \n\n14\n\n[Table of Contents](#toc_page)\n\n \n\n \n\n# 6. Collaboration, License and Option Agreements\n\n# Collaboration, License and Option Agreement with AbbVie\n\nIn February 2025, Xilio Development entered into a collaboration, license and option agreement (the “Collaboration Agreement”) with AbbVie Group Holdings Limited (\"AbbVie\") for up to four programs leveraging the Company’s proprietary masking technology and platform, consisting of (i) an exclusive license for a program to develop and commercialize a masked antibody-based immunotherapy (the “Collaboration Program”) and (ii) an exclusive option for (a) an initial program to discover, develop and commercialize masked T cell engager molecules for an agreed upon initial target and backup target (“Initial Option Program”), and (b) subject to the terms of the Collaboration Agreement, up to two additional programs (each, an “Additional Option Program” and together with the Initial Option Program, the “Option Programs”).\n\n# In connection with the Collaboration Program, Xilio Development is responsible for conducting all preclinical development through lead generation (“Collaboration Program Services”). For the Initial Option Program, AbbVie’s option right is exercisable beginning on the effective date of the Collaboration Agreement, and for each Additional Option Program, AbbVie’s option right is exercisable following delivery of written notice of nomination of such Additional Option Program. During the three-year period following the effective date of the Collaboration Agreement, AbbVie has the right to initiate up to two Additional Option Programs by (a) selecting an initial target and backup target for each such Additional Option Program (excluding the target known as prostate-specific membrane antigen and any other target for which Xilio Development has completed specified activities prior to lead selection) and (b) paying Xilio Development an additional program nomination fee for each Additional Option Program. For each Option Program, prior to option exercise, Xilio Development is responsible for conducting preclinical discovery and development up to the completion of investigational new drug application (“IND”) enabling studies, subject to AbbVie paying Xilio Development option extension fees upon completion of specified stages of preclinical discovery and development (“Option Program Services”). Unless AbbVie elects to extend preclinical development through the next stage and pays the applicable option extension fee, AbbVie’s option right terminates within a specified time period following completion of each stage of preclinical development. Upon exercising its option for an Option Program, AbbVie will be responsible for any remaining preclinical development, if applicable, and all clinical development, regulatory and commercialization activities with respect to licensed products under the applicable Option Program.\n\n# In addition, on an Option Program-by-Option Program basis, prior to the initiation of specified activities related to lead optimization and selection for the initial target for such Option Program, AbbVie has a one-time right to substitute the initial target with the backup target agreed upon by the parties at the time of Option Program initiation, subject to the payment by AbbVie of a one-time substitution fee with respect to such substituted target and the other terms of the Collaboration Agreement.\n\n# In connection with the execution of the Collaboration Agreement, in February 2025, the Company also entered into a stock purchase agreement with AbbVie Inc. pursuant to which the Company issued and sold 310,559 shares of its common stock to AbbVie Inc. in a private placement at a purchase price of $32.20 per share for an aggregate purchase price of $10.0 million.\n\n# As of March 31, 2026, the Company has received $57.0 million in payments under the AbbVie agreements, consisting of a $42.0 million upfront cash payment under the Collaboration Agreement, $10.0 million in gross proceeds from the private placement under the stock purchase agreement and a $5.0 million development milestone related to the Collaboration Program, which was recorded as a receivable on the condensed consolidated balance sheet as of December 31, 2025 and was received in the first quarter of 2026. In the second quarter of 2026, the Company achieved an additional $6.0 million development milestone. The Company is eligible to receive up to approximately $2.1 billion in additional contingent payments under the Collaboration Agreement, consisting of (i) up to $305.0 million in aggregate program nomination fees, preclinical development option extension fees and option fees for the Option Programs and (ii) up to $1.8 billion in aggregate development, regulatory and sales-based milestones for all Option Programs and the Collaboration Program. In addition, the Company is eligible to receive tiered royalties ranging in the high single digits on annual global net product sales for the Option Program and is eligible to receive tiered royalties ranging in the mid-single digits on annual global net product sales for the Collaboration Program.\n\n# The Company considered the criteria of ASC 606, Revenue from Contracts with Customers (“ASC 606”) for combining contracts and determined the Collaboration Agreement and the stock purchase agreement should be combined into a single contract because they were negotiated and entered into in contemplation of one another. The Company accounted for the common stock issued to AbbVie Inc. based on the fair market value of the common stock on the date of issuance. The fair market value of the common stock issued to AbbVie\n\n15\n\n[Table of Contents](#toc_page)\n\n \n\n# Inc. was $2.9 million, based on the closing price of the Company’s common stock on the date of issuance, resulting in a $7.1 million premium. The Company determined that the premium paid by AbbVie Inc. for the common stock purchased should be attributed to the transaction price of the Collaboration Agreement.\n\n# The Company determined that the Collaboration Agreement represents a contract with a customer within the scope of ASC 606 and identified the following promises under the Collaboration Agreement: (i) the exclusive license granted to AbbVie related to the Collaboration Program, (ii) the Collaboration Program Services and (iii) the Option Program Services for the Initial Option Program. In addition, the Company identified several customer options that were evaluated to determine if such options represented material rights, each of which would be considered a performance obligation at contract inception only if the option provides a material right to AbbVie that it would not receive without entering into that contract.\n\n# The Company determined that the exclusive license and development services related to the Collaboration Program Services were not capable of being distinct on the basis that the services to be provided by Xilio Development are specialized in nature, specifically with respect to its specialized expertise in developing masked antibody-based immunotherapies and the Company’s proprietary platform for masked biologics. Accordingly, the Company concluded that these promises should be a combined performance obligation consisting of the exclusive license and the development services for the Collaboration Program Services. As such, the Company identified the following performance obligations at contract inception: (i) the performance obligation consisting of the exclusive license and the Collaboration Program Services (the “Collaboration Program Performance Obligation”); (ii) the Option Program Services for the Initial Option Program (the “Initial Option Program Performance Obligation”); (iii) a material right to receive an exclusive license to the Initial Option Program; (iv) a material right to receive additional services related to the Initial Option Program; and (v) a material right related to AbbVie’s one-time right to substitute the initial target with the backup target for the Initial Option Program.\n\n# For purposes of ASC 606, the transaction price at the outset of the arrangement was determined to be $49.1 million, which consisted of the upfront cash payment of $42.0 million under the Collaboration Agreement and the $7.1 million premium on the sale of common stock to AbbVie Inc. The Company used the most likely amount method to estimate variable consideration. During the year ended December 31, 2025, the overall transaction price was adjusted to include the achievement of the $5.0 million development milestone related to the Collaboration Program in the fourth quarter of 2025. All additional contingent payments are fully constrained as of March 31, 2026, as the achievement of the milestones underlying such contingent payments is based on either the Company or AbbVie’s ability to execute under the development plan which is not certain at contact inception. Accordingly, all such contingent payments are excluded from the transaction price. The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and may adjust the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company plans to recognize such revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).\n\nThe Company allocated the transaction price at the outset of the arrangements to the performance obligations on a relative selling price basis as follows: (i) $32.4 million related to the Collaboration Program Performance Obligation; (ii) $6.9 million related to the Initial Option Program Performance Obligation; (iii) $8.2 million related to the material right to receive an exclusive license to the Initial Option Program; (iv) $1.1 million related to the material right to receive additional services related to the Initial Option Program; and (v) $0.5 million related to the material right for AbbVie’s one-time right to substitute the initial target with the backup target for the Initial Option Program. The Company determined the estimated standalone selling price for the licenses using an adjusted market assessment approach, whereby the Company adjusted a comparable transaction previously entered into by the Company and comparable third-party transactions to reflect the stage of development of the Company’s assets under the Collaboration Agreement. The Company determined the estimated standalone selling price for services based on estimated costs to be incurred plus a reasonable margin. The Company determined the estimated standalone selling price for material rights by estimating the standalone selling price of the underlying performance obligations included in the material right and estimating the probability that AbbVie will exercise such material right.\n\n# Revenue associated with the Collaboration Program Performance Obligation and the Initial Option Program Performance Obligation is recognized as the underlying services are provided as control is transferred over time. The Company measures progress based on the amount of costs incurred relative to the total costs expected to fulfill the combined performance obligation. In management’s judgment, this input method is the best measure of progress towards satisfying the combined performance obligation and reflects a faithful depiction of the transfer of goods and services. Revenue associated with the material rights will be recognized upon expiry if the option is not\n\n16\n\n[Table of Contents](#toc_page)\n\n \n\n# exercised. If the material right is exercised, the Company will evaluate the performance obligations underlying the option exercised and recognize the amount allocated to the material right and any additional consideration over the appropriate recognition period associated with the underlying performance obligations.\n\n# During the three months ended March 31, 2026 and 2025, the Company recognized collaboration and license revenue of $8.0 million and $0.7 million, respectively, under the Collaboration Agreement and the stock purchase agreement. As of March 31, 2026, the Company recorded deferred revenue of $26.0 million, of which $16.1 million was recorded as a current liability on the Company’s condensed consolidated balance sheet. The deferred revenue is expected to be recognized as collaboration and license revenue through at least 2026 depending on (i) the timing of services being provided for the Collaboration Program and the Initial Option Program and (ii) the timing of AbbVie’s exercise or expiration of the material rights.\n\n# License Agreement with Gilead Sciences, Inc.\n\nIn March 2024, Xilio Development entered into a license agreement (the \"License Agreement\") with Gilead Sciences, Inc. (\"Gilead\"), pursuant to which it granted Gilead an exclusive global license to develop and commercialize efarindodekin alfa, the Company’s masked IL-12 product candidate, and specified other molecules directed to IL-12. Xilio Development is responsible for conducting clinical development for efarindodekin alfa through an initial Phase 2 clinical trial. Following the delivery by Xilio Development of a specified clinical data package for efarindodekin alfa related to the Phase 1 clinical trial and the initial Phase 2 clinical trial, Gilead can elect to transition responsibilities for the development and commercialization of efarindodekin alfa to Gilead, subject to the terms of the License Agreement and payment by Gilead of a $75.0 million transition fee.\n\nIn connection with the execution of the License Agreement, in March 2024, the Company also entered into a stock purchase agreement with Gilead. Under the stock purchase agreement, Gilead purchased $25.0 million of the Company’s common stock and prefunded warrants in three private placements, consisting of an aggregate of 650,387 shares of common stock and prefunded warrants to purchase up to an aggregate of 712,514 shares of its common stock. The prefunded warrants are exercisable any time at an exercise price of $0.0014 per share, subject to Gilead not being deemed a beneficial owner of greater than 19.9% of the Company’s common stock upon the exercise of the prefunded warrants.\n\nThe Company has received $72.5 million in payments under the Gilead agreements, consisting of the $30.0 million upfront cash payment under the License Agreement, $25.0 million in gross proceeds from private placements under the stock purchase agreement and a $17.5 million development milestone. As of March 31, 2026, the Company is eligible to receive up to $575.0 million in additional contingent payments, which consist of a $75.0 million transition fee if Gilead exercises its option for the IL-12 program and up to $500.0 million in specified development, regulatory and sales-based milestones after opt-in. In addition, the Company is eligible to receive tiered royalties ranging from high single digits to mid-teens on annual global net product sales.\n\nThe Company considered the ASC 606 criteria for combining contracts and determined the License Agreement and the stock purchase agreement should be combined into a single contract because they were negotiated and entered into in contemplation of one another. The Company concluded the initial private placement and the additional private placements do not represent freestanding financial instruments as such instruments are not legally detachable due to contractual transfer restrictions. The Company accounted for the common stock issued to Gilead in the initial private placement based on the fair market value of the common stock on the date of issuance. The fair market value of the common stock issued to Gilead in the initial private placement was $4.4 million, based on the closing price of the Company’s common stock on the date of issuance, resulting in a $9.1 million premium. The Company determined that the premium paid by Gilead for the common stock purchased in the initial private placement should be attributed to the transaction price of the License Agreement.\n\nThe Company determined that the License Agreement represents a contract with a customer within the scope of ASC 606 and identified two promises under the License Agreement: (i) the exclusive licenses granted to Gilead related to the Company’s IL-12 program and (ii) the provision by Xilio Development and its affiliates of development services related to ongoing and planned clinical trials for efarindodekin alfa through an initial Phase 2 clinical trial. The Company determined that the exclusive license and development services were not capable of being distinct on the basis that the development services to be provided by Xilio Development are specialized in nature, specifically with respect to its specialized expertise related to efarindodekin alfa, the IL-12 program and the Company’s proprietary platform for masked biologics. Accordingly, the Company concluded that there is a single identified combined performance obligation consisting of the exclusive license and the development services.\n\n17\n\n[Table of Contents](#toc_page)\n\n \n\nFor purposes of ASC 606, the transaction price of the License Agreement at the outset of the arrangement was determined to be $39.1 million, which consisted of the upfront cash payment of $30.0 million under the License Agreement and the $9.1 million premium on the sale of common stock to Gilead in the initial private placement, which was allocated to the single combined performance obligation. The Company used the most likely amount method to estimate variable consideration. During the year ended December 31, 2025, the overall transaction price was adjusted to include the achievement of the $17.5 million development milestone in the third quarter of 2025. All additional contingent payments are fully constrained as of March 31, 2026, as the achievement of the milestones underlying such contingent payments are uncertain and highly susceptible to factors outside of the Company’s control. Accordingly, all such additional contingent payments are excluded from the transaction price. The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and may adjust the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company plans to recognize such revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).\n\nRevenue associated with the combined performance obligation is recognized as services are provided as control is transferred over time. The Company measures progress based on the amount of costs incurred relative to the total costs expected to fulfill the combined performance obligation. In management’s judgment, this input method is the best measure of progress towards satisfying the combined performance obligation and reflects a faithful depiction of the transfer of goods and services.\n\nDuring the three months ended March 31, 2026 and 2025, the Company recognized collaboration and license revenue of $4.7 million and $2.2 million, respectively, under the License Agreement and the stock purchase agreement with Gilead. As of March 31, 2026, the Company recorded deferred revenue under the License Agreement and the stock purchase agreement of $22.0 million, of which $15.5 million was recorded as a current liability on the Company’s condensed consolidated balance sheet. The deferred revenue is expected to be recognized as collaboration and license revenue through at least 2027 depending on the timing of certain clinical development activities.\n\nSummary of Contract Assets and Liabilities\n\nThe following table presents changes in the balances of the Company's contract liabilities:\n\n \n\n \n\n \n\nGilead\n\n \n\n \n\nAbbVie\n\n \n\n \n\nTotal\n\n \n\nDeferred revenue as of December 31, 2025\n\n \n\n$\n\n \n\n26,651\n\n \n\n \n\n$\n\n \n\n34,007\n\n \n\n \n\n$\n\n \n\n60,658\n\n \n\nCollaboration and license revenue recognized\n\n \n\n \n\n \n\n(4,653\n\n)\n\n \n\n \n\n \n\n(7,995\n\n)\n\n \n\n \n\n \n\n(12,648\n\n)\n\nDeferred revenue as of March 31, 2026\n\n \n\n$\n\n \n\n21,998\n\n \n\n \n\n$\n\n \n\n26,012\n\n \n\n \n\n$\n\n \n\n48,010\n\n \n\n \n\n# Clinical Trial Collaboration with F. Hoffmann-La Roche Ltd\n\n# In July 2023, the Company and F. Hoffmann-La Roche Ltd (“Roche”) entered into a clinical trial collaboration pursuant to a clinical supply agreement to evaluate vilastobart in combination with atezolizumab (Tecentriq®) in a Phase 1/2 clinical trial in patients with microsatellite stable metastatic colorectal cancer.\n\n# Under the clinical supply agreement, the Company is eligible to receive specified cost-sharing payments from Roche. As of March 31, 2026, the Company has received $8.0 million in total cost-sharing payments from Roche. The Company is responsible for conducting the Phase 1/2 clinical trial and retains global development and commercialization rights to vilastobart.\n\n# The Company concluded that the cost-sharing payments under the clinical supply agreement are not in the scope of ASC 606 because the Company does not consider performing research and development services for reimbursement to be part of its ongoing major or central operations. Therefore, the Company applied a reasonable, rational, and consistently applied accounting policy election to record the cost-sharing payments under the clinical supply agreement as a reduction of research and development expenses in the condensed consolidated statements of operations and comprehensive loss for the period in which a study development event is achieved. During the three months ended March 31, 2026, the Company did not recognize a reduction of research and development expense and during the three months ended March 31, 2025, the Company recognized a reduction of research and development expense of $2.0 million.\n\n18\n\n[Table of Contents](#toc_page)\n\n \n\n# 7. Commitments and Contingencies\n\n## The Company has an operating lease for its headquarters and a finance lease for certain lab equipment. In August 2019, the Company entered into a facility lease agreement with a landlord providing funding for tenant improvements and occupancy of approximately 27,830 square feet of office and laboratory space (the “premises”) at 828 Winter Street, Waltham, Massachusetts. The initial term of the lease expires in March 2030, unless terminated earlier in accordance with the terms of the lease. The Company has an option to extend the lease for an additional term of five years at then-market rates. The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement, and management of the leased premises, which it began paying simultaneous with the rent commencement date in March 2020. As of March 31, 2026 and December 31, 2025, the Company had a letter of credit for the benefit of its landlord in the amount of $1.8 million, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.\n\n# 8. Preferred Stock and Common Stock\n\n## Undesignated Preferred Stock\n\n## As of March 31, 2026 and December 31, 2025, the Company’s restated certificate of incorporation, as amended, authorizes the Company to issue up to 5,000,000 shares of undesignated preferred stock at $0.0001 par value per share. As of March 31, 2026 and December 31, 2025, there were no shares of preferred stock issued or outstanding.\n\n## Common Stock\n\nAs of March 31, 2026 and December 31, 2025, the Company’s restated certificate of incorporation, as amended, authorized the Company to issue up to 600,000,000 shares of common stock, $0.0001 par value per share.\n\nFebruary 2026 Follow-On Offering\n\nIn February 2026, the Company closed a follow-on offering of prefunded warrants and received net proceeds of $37.3 million. In connection with the offering, the Company issued prefunded warrants to purchase 5,341,404 shares of its common stock. Each prefunded warrant is exercisable for one share of the Company's common stock. The purchase price of each prefunded warrant was $7.4886. Each prefunded warrant has an exercise price of $0.0014 per share and will be exercisable from the date of issuance until fully exercised, subject to beneficial ownership limitations for each holder.\n\nJune 2025 Follow-On Offering\n\nIn June 2025, the Company closed a follow-on offering of prefunded warrants and accompanying common stock warrants and received net proceeds of $47.0 million. In connection with the offering, the Company issued prefunded warrants to purchase 4,762,533 shares of common stock, accompanied by Series A warrants to purchase 4,762,533 shares of common stock (or prefunded warrants in lieu of common stock) (the “Series A warrants”), Series B warrants to purchase 4,762,533 shares of common stock (or prefunded warrants in lieu of common stock) (the “Series B warrants”), and Series C warrants to purchase 4,762,533 shares of common stock (or prefunded warrants in lieu of common stock) (the “Series C warrants”). The combined public offering price of one prefunded warrant, one Series A warrant, one Series B warrant and one Series C warrant, which were sold together but are immediately separable, was $10.4986, which was equal to the combined offering price of the prefunded warrants, Series A warrants, Series B warrants and Series C warrants, less the $0.0014 per share exercise price of the prefunded warrants.\n\nIn the event of certain fundamental transactions, each holder of the prefunded warrants and the common stock warrants has the right to receive, upon exercise of such warrant, the same amount and kind of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if it had been, immediately prior to such fundamental transaction, the holder of the number of shares of common stock underlying such holder’s warrant without regard to any limitations on exercise contained in such holder’s warrant. The holders of Series A warrants are alternatively entitled to elect to receive consideration in an amount equal to the Black Scholes value of the unexercised portion of such holder’s Series A warrants and if the fundamental transaction is within the Company’s control, the Series A warrant holders can require the Black Scholes value to be paid in cash.\n\nIn addition, for each dollar of non-dilutive capital received by the Company prior to the exercise or expiration of the remaining outstanding Series C warrants, the Company may elect to cancel a number of warrant shares equal to $14.00 divided by the $10.50 warrant exercise price (or one and one-third warrants) without any compensation paid by the Company to the warrant holders. Subject to certain specified exceptions, non-dilutive capital includes: upfront payments under any future collaboration, license or similar\n\n19\n\n[Table of Contents](#toc_page)\n\n \n\nagreement; milestone payments and option fees under any current or future collaboration, license or similar agreement; and net proceeds pursuant to any equity issuance where the purchase price per share is above $21.00.\n\nAt the June 2025 issuance date, the Company concluded that the prefunded warrants, the Series A warrants, the Series B warrants and the Series C warrants are freestanding financial instruments because each of these instruments can be transferred or assigned by the holder subject to compliance with the applicable securities laws and are legally detachable and separately exercisable. The Company determined the classification of each warrant based on the guidance in ASC 480 and ASC 815. As part of this assessment under ASC 815, the Company was required to allocate its available authorized shares of common stock to its outstanding contracts and commitments. The Company applied an accounting policy to first allocate available authorized shares of common stock based on the earliest issuance date of the contract. To the extent more than one contract or commitment made was issued on the same date, the available shares of common stock were allocated first to the contract with the earliest potential exercise date. The Company concluded that the prefunded warrants are classified as equity. The Company concluded the Series A warrants, the Series B warrants and the Series C warrants are required to be initially classified as liabilities as a result of their settlement provisions. The Series B warrants that were exercised for common stock and prefunded warrants in lieu of shares of common stock were reclassified to equity on the later of the date of each exercise, or December 2, 2025, the date the remaining outstanding Series B warrants qualified for equity classification due to the settlement of the exercise price reset feature. The Series A warrants and the remaining outstanding Series C warrants will continue to be classified as liabilities until such time as the applicable warrant is exercised, expires, or qualifies for equity classification.\n\nThe Company received initial gross proceeds from the offering of $50.0 million, before deducting approximately $3.0 million in underwriting discounts and commissions and offering expenses payable by the Company. The Company allocated the initial gross proceeds as follows: $26.8 million to the Series A warrants, $6.6 million to the Series B warrants and $5.1 million to the Series C warrants, in each case, based on the fair value of each instrument on the date of issuance with the remaining $11.5 million allocated to the prefunded warrants. The Company allocated the issuance costs to the financial instruments in a manner consistent with the allocation of the proceeds.\n\nDuring the three months ended March 31, 2026, the Company recognized a gain of $3.3 million, related to the change in fair value of the common stock warrants, which is recorded as a component of the change in fair value of common stock warrant liabilities on the condensed consolidated statements of operations and comprehensive loss.\n\nThe exercisability of the prefunded warrants and common stock warrants is subject to limitations on exercise. Specifically, a holder will be prohibited from exercising any portion of any warrant if immediately prior to or following such exercise such holder (together with its affiliates) would beneficially own more than 4.99% (or up to 19.99% at the election of the holder) of the Company’s issued and outstanding common stock immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrant. However, any holder of any warrant may increase or decrease such percentage to any other percentage not in excess of 19.99%, provided that any such increase will not be effective until the 61st day after notice from the holder is delivered to the Company.\n\nDuring the year ended December 31, 2025, 524,033 prefunded warrants were exercised and 4,238,500 prefunded warrants remain outstanding as of December 31, 2025. No prefunded warrants were exercised during the three months ended March 31, 2026.\n\nEach Series A warrant became exercisable on December 1, 2025, with an exercise price of $10.50 per share of common stock, and will expire on June 5, 2030. Through March 31, 2026, no Series A warrants have been exercised and 4,762,533 Series A warrants remain outstanding.\n\nEach Series B warrant became exercisable on November 1, 2025 and was exercisable through December 31, 2025. During the year ended December 31, 2025, 3,443,388 of the Series B warrants were exercised for 1,008,415 shares of common stock and 2,434,973 prefunded warrants in lieu of shares of common stock. The Company received net proceeds of $34.3 million from the exercise of the Series B warrants, after deducting underwriting discounts and commissions and offering expenses payable by the Company. The remaining 1,319,145 Series B warrants were not exercised and expired on December 31, 2025. In addition, 1,319,145 Series C warrants expired according to their terms on December 31, 2025 in connection with the expiration of unexercised Series B warrants, and 3,443,388 of the Series C warrants remained outstanding as of December 31, 2025. Through March 31, 2026, none of the Series B warrants that were exercised for prefunded warrants in lieu of shares of common stock have been exercised for shares of common stock.\n\nEach remaining Series C warrant will be exercisable on or after June 1, 2026, with an exercise price of $10.50 per share of common stock, and will expire on December 2, 2026. In addition, if the closing sale price of the Company's common stock is below the exercise\n\n20\n\n[Table of Contents](#toc_page)\n\n \n\nprice on December 2, 2026, the exercise price will reset to the closing sale price on December 1, 2026 and the expiration time will be extended to December 31, 2026.\n\nThe prefunded warrants and Series A warrants may be exercised for cash or on a net exercise or “cashless” basis, and the Series C warrants may be exercised for cash or on a net exercise or “cashless” basis in the event there is no effective registration statement or prospectus available which covers the Series C warrants and shares of common stock issuable upon exercise of the Series C warrants. There can be no assurance that any of the warrants that remain outstanding as of March 31, 2026 will be exercised for cash or at all, and it is possible that the common stock warrants may expire without being exercised. If all of the outstanding Series C warrants are exercised in cash at their current exercise price of $10.50 per warrant, the Company will receive up to $36.2 million in additional total gross proceeds by the end of 2026, before deducting underwriting discounts and commissions and any offering expenses.\n\nSales Agreement and “At-The-Market” Facility\n\nIn March 2025, the Company entered into an “at-the-market” (“ATM”) facility with Leerink Partners, LLC (“Leerink”) pursuant to which the Company could initially issue and sell shares of its common stock from time to time at an aggregate offering price of up to $50.0 million through Leerink as sales agent. In February 2026, the Company filed a prospectus supplement to reduce the amount of common stock it may offer and sell under the ATM facility to an aggregate offering price of up to $9.5 million. The Company did not issue any shares under the ATM facility during the three months ended March 31, 2026.\n\nShares Reserved for Future Issuance\n\nShares of common stock reserved for future issuance consists of the following as of March 31, 2026 and December 31, 2025:\n\n \n\n \n\n \n\nMarch 31,\n\n \n\n \n\nDecember 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nStock options and unvested restricted stock units\n\n \n\n \n\n3,192,894\n\n \n\n \n\n \n\n2,963,086\n\n \n\nEmployee stock purchase plan\n\n \n\n \n\n131,321\n\n \n\n \n\n \n\n89,603\n\n \n\nCommon stock in process of settlement at period end\n\n \n\n \n\n—\n\n \n\n \n\n \n\n708,215\n\n \n\nPrefunded warrants\n\n \n\n \n\n13,307,918\n\n \n\n \n\n \n\n8,502,224\n\n \n\nCommon stock warrants\n\n \n\n \n\n8,206,109\n\n \n\n \n\n \n\n8,206,109\n\n \n\nTotal shares reserved for future issuance\n\n \n\n \n\n24,838,242\n\n \n\n \n\n \n\n20,469,237\n\n \n\n \n\n \n\n# 9. Stock-Based Compensation\n\n## Equity Incentive Plans\n\n2020 Stock Incentive Plan\n\nUnder the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the Company was authorized to issue shares of common stock to the Company’s employees, officers, directors, consultants and advisors in the form of options, restricted stock awards or other stock-based awards.\n\n2021 Stock Incentive Plan\n\nIn September 2021, the Company’s board of directors and stockholders adopted the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective immediately prior to the Company’s initial public offering of common stock (“IPO”) in October 2021. Upon effectiveness of the 2021 Plan, the Company ceased granting awards under the 2020 Plan. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The Company initially reserved 469,929 shares of common stock under the 2021 Plan. The 2021 Plan provides that the number of shares reserved and available for issuance under the 2021 Plan will be cumulatively increased on January 1 of each calendar year by 5% of the number of shares of common stock outstanding on such date or such lesser amount determined by the Company’s board of directors. On January 1, 2026, the number of shares reserved for issuance under the 2021 Plan automatically increased by 226,931 shares. As of March 31, 2026, there were 356,869 shares of common stock available for future issuance under the 2021 Plan.\n\n21\n\n[Table of Contents](#toc_page)\n\n \n\n2025 Stock Incentive Plan\n\nIn November 2025, the Company’s stockholders adopted the 2025 Stock Incentive Plan (the “2025 Plan”), which had previously been adopted by the Company’s board of directors subject to stockholder approval. The 2025 Plan provides for the grant of stock options to employees for 2,285,592 shares of common stock, divided into four equal tranches of 571,398 total shares per tranche, with the vesting of each tranche of stock options tied to a tranche of the June 2025 warrants, which are further described in Note 8.\n\nThe stock options granted under the 2025 Plan vest as follows:\n\n•\nThe first tranche of stock options vests in equal monthly installments over a period of three years, subject to the employee continuing to provide services to the Company on each vesting date.\n\n•\nThe second tranche of stock options (\"Tranche 2 Stock Options\") will become eligible to vest based on the portion of such stock options that equals the percentage of the Series A warrants that are exercised by December 31 of each of 2025, 2026, 2027, 2028, and 2029 and on June 30, 2030 (each, a “measurement date”). Any Tranche 2 Stock Options will vest in three equal installments with one-third vesting on the applicable measurement date and the remaining two-thirds vesting in equal annual installments on each of the subsequent two anniversaries thereafter.\n\n•\nThe third tranche of stock options (\"Tranche 3 Stock Options\") became eligible to vest based on the portion of such stock options that equaled the percentage of Series B warrants that were exercised by December 31, 2025. The Tranche 3 Stock Options vest in three equal installments with one-third vesting on December 31, 2025 and the remaining two-thirds vesting in equal annual installments on each of the subsequent two anniversaries thereafter.\n\n•\nThe fourth tranche of stock options (\"Tranche 4 Stock Options\") will become eligible to vest based on the portion of such stock options that equal the percentage of the Series C warrants that are exercised or are cancelled due to the Company’s receipt of non-dilutive capital by December 31, 2026. Any Tranche 4 Stock Options that become eligible for vesting will vest in three equal installments with one-third vesting on December 31, 2026 and the remaining two-thirds vesting in equal annual installments on each of the subsequent two anniversaries thereafter.\n\nAs of March 31, 2026, there were 21,805 shares of common stock available for future issuance under the 2025 Plan.\n\n## 2022 Inducement Plan\n\n## In 2022, the Company’s board of directors adopted the 2022 Inducement Stock Incentive Plan pursuant to Nasdaq Rule 5635(c)(4) (the “2022 Inducement Plan”). In accordance with Nasdaq Rule 5635(c)(4), stock-based incentive awards under the 2022 Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona fide period of non-employment by the Company as a material inducement to the employee’s entering into employment with the Company. The Company initially reserved 19,642 shares of the Company’s common stock for issuance under the 2022 Inducement Plan. The number of shares reserved for issuance under the 2022 Inducement Plan was increased by 35,714 in both November 2024 and March 2025. In January 2026, the number of shares reserved for issuance under the 2022 Inducement Plan increased by an additional 32,485 shares. As of March 31, 2026, there were 52,812 shares of common stock available for future issuance under the 2022 Inducement Plan.\n\n2021 Employee Stock Purchase Plan\n\nIn 2021, the Company’s board of directors and stockholders adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective immediately prior to the IPO in October 2021. The Company initially reserved 20,859 shares of common stock for issuance under the 2021 ESPP. The 2021 ESPP provides that the number of shares of common stock reserved for issuance under the 2021 ESPP will be cumulatively increased on January 1 of each calendar year by 1% of the number of shares of the Company’s common stock outstanding on such date or such lesser amount determined by the Company’s board of directors (up to a maximum increase of 41,718 shares of common stock per year). On January 1, 2026, the number of shares reserved for issuance under the 2021 ESPP was increased by 41,718 shares. During each of the three months ended March 31, 2026 and 2025, the Company did not issue any shares of common stock under the 2021 ESPP. As of March 31, 2026, there were 131,321 shares available for future issuance under the 2021 ESPP.\n\n22\n\n[Table of Contents](#toc_page)\n\n \n\n## Stock-Based Compensation Expense\n\nDuring the three months ended March 31, 2026 and 2025, the Company recorded compensation expense related to stock options, restricted stock units and restricted common stock for employees and non-employees and share purchases under the 2021 ESPP for employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss:\n\n \n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nResearch and development expense\n\n \n\n$\n\n \n\n792\n\n \n\n \n\n$\n\n \n\n389\n\n \n\nGeneral and administrative expense\n\n \n\n \n\n \n\n1,419\n\n \n\n \n\n \n\n \n\n1,146\n\n \n\nTotal stock-based compensation expense\n\n \n\n$\n\n \n\n2,211\n\n \n\n \n\n$\n\n \n\n1,535\n\n \n\n## Stock Options\n\nA summary of stock option activity under the Company’s 2020 Plan, 2021 Plan, 2025 Plan and 2022 Inducement Plan is as follows:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAverage\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRemaining\n\n \n\n \n\nAggregate\n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted\n\n \n\n \n\nContractual\n\n \n\n \n\nIntrinsic\n\n \n\n \n\n \n\nNumber of\n\n \n\n \n\nAverage\n\n \n\n \n\nTerm\n\n \n\n \n\nValue (1)\n\n \n\n \n\n \n\nStock Options\n\n \n\n \n\nExercise Price\n\n \n\n \n\n(In years)\n\n \n\n \n\n(In thousands)\n\n \n\nOutstanding as of December 31, 2025\n\n \n\n \n\n2,785,102\n\n \n\n \n\n$\n\n \n\n14.40\n\n \n\n \n\n \n\n9.1\n\n \n\n \n\n$\n\n \n\n27\n\n \n\nGranted\n\n \n\n \n\n9,280\n\n \n\n \n\n$\n\n \n\n8.36\n\n \n\n \n\n \n\n \n\n \n\n \n\nExercised\n\n \n\n \n\n(109\n\n)\n\n \n\n$\n\n \n\n7.70\n\n \n\n \n\n \n\n \n\n \n\n \n\nForfeited\n\n \n\n \n\n(26,988\n\n)\n\n \n\n$\n\n \n\n11.40\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOutstanding as of March 31, 2026 (2)\n\n \n\n \n\n2,767,285\n\n \n\n \n\n$\n\n \n\n14.41\n\n \n\n \n\n \n\n8.9\n\n \n\n \n\n$\n\n \n\n19\n\n \n\nExercisable as of March 31, 2026 (2)\n\n \n\n \n\n726,042\n\n \n\n \n\n$\n\n \n\n21.28\n\n \n\n \n\n \n\n7.4\n\n \n\n \n\n$\n\n \n\n8\n\n \n\n \n\n(1)\nThe aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock as of the end of the period.\n\n \n\n(2)\nThe weighted-average exercise price per share of the options outstanding and exercisable as of March 31, 2026 includes the impact of the stock option repricing described below.\n\n \n\nAs of March 31, 2026, the Company had unrecognized stock-based compensation expense of $16.7 million related to stock options issued to employees and directors, including $9.8 million of unrecognized stock-based compensation expense related to awards with performance conditions for which the likelihood of satisfying such performance conditions are considered probable, which is expected to be recognized over a weighted-average period of 3.0 years.\n\n \n\nUsing the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the three months ended March 31, 2026 and 2025 was $6.82 per share and $10.36 per share, respectively. The following assumptions were used in determining the fair value of options granted during the three months ended March 31, 2026 and 2025:\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n2026\n\n \n\n2025\n\nRisk-free interest rate\n\n3.6 - 3.8\n\n \n\n%\n\n \n\n \n\n \n\n4.4\n\n \n\n%\n\nExpected dividend yield\n\n \n\n0\n\n \n\n%\n\n \n\n \n\n \n\n0\n\n \n\n%\n\nExpected term (in years)\n\n6.0 - 6.1\n\n \n\n \n\n \n\n \n\n6.0 - 6.1\n\n \n\n \n\nExpected volatility\n\n102.3 - 103.3\n\n \n\n%\n\n \n\n \n\n94.5 - 95.6\n\n \n\n%\n\n \n\n23\n\n[Table of Contents](#toc_page)\n\n \n\nStock Option Repricing\n\nIn October 2025, the Company's board of directors approved a stock option repricing (the “Option Repricing”), which was effective upon stockholder approval on November 21, 2025 (the “Repricing Date”). The Option Repricing applied to all outstanding options to purchase shares of common stock of the Company granted to employees under the Company’s 2020 Plan, 2021 Plan and 2022 Inducement Plan with an exercise price greater than $21.00 for members of the Company's executive team and $14.00 for all other employees (the “underwater options”) with grant dates prior to January 1, 2025 (the “Eligible Options”). The total number of shares of common stock underlying all Eligible Options was 354,200. Non-employee members of the Company’s board of directors were not eligible to participate in the Option Repricing. If such Eligible Options are exercised prior to the one-year anniversary of the Repricing Date (the \"Retention Period\"), the original exercise price must be paid.\n\nThe repricing of the Eligible Options was accounted for as a modification under ASC 718. Accordingly, the Company calculated incremental compensation cost on the modification date in an amount equal to the difference between the fair value of the awards before and after modification. The total amount of the incremental compensation expense to be recognized was determined to be $0.6 million, which is being recognized over the Retention Period.\n\nStock Options with Performance Conditions\n\nThe Company determined that the Tranche 2, Tranche 3 and Tranche 4 Stock Options contain performance conditions for which the likelihood of satisfying each of the performance conditions is considered probable as of March 31, 2026.\n\nAs of March 31, 2026 and December 31, 2025, no Tranche 2 Stock Options were eligible to vest as there have been no exercises of Series A warrants to date. Based on the Series B warrants exercised during the year ended December 31, 2025, 412,043 Tranche 3 Stock Options became eligible to vest and will vest in three equal annual installments beginning on December 31, 2025. On December 31, 2025, 157,875 Tranche 3 Stock Options were cancelled in proportion to the respective amount of unexercised Series B warrants. The Series C warrants are cancellable to the extent Series B warrants are not exercised or cancelled due to the Company’s receipt of non-dilutive capital. Therefore, on December 31, 2025, 157,875 Tranche 4 Stock Options were cancelled in proportion to the respective amount of unexercised Series B warrants.\n\n## Restricted Stock Units\n\nIn January 2024, the Company awarded 34,389 restricted stock units to certain employees of the Company. The restricted stock units vest in four equal annual installments beginning on the first anniversary of the grant date. The restricted stock units are generally forfeited if the individual’s service relationship with the Company or any subsidiary terminates prior to vesting.\n\nA summary of the Company’s restricted stock unit activity and related information is as follows:\n\n \n\n \n\n \n\nNumber\n\n \n\n \n\nWeighted\n\n \n\n \n\n \n\nof Shares\n\n \n\n \n\nAverage\n\n \n\n \n\n \n\nof Restricted\n\n \n\n \n\nGrant Date\n\n \n\n \n\n \n\nStock Units\n\n \n\n \n\nFair Value\n\n \n\nUnvested as of December 31, 2025\n\n \n\n \n\n23,866\n\n \n\n \n\n$\n\n \n\n7.70\n\n \n\nGranted\n\n \n\n \n\n—\n\n \n\n \n\n$\n\n \n\n—\n\n \n\nVested\n\n \n\n \n\n(7,952\n\n)\n\n \n\n$\n\n \n\n7.70\n\n \n\nForfeited\n\n \n\n \n\n—\n\n \n\n \n\n$\n\n \n\n—\n\n \n\nUnvested as of March 31, 2026\n\n \n\n \n\n15,914\n\n \n\n \n\n$\n\n \n\n7.70\n\n \n\n \n\nFor each of the three months ended March 31, 2026 and 2025, the Company recognized less than $0.1 million of stock-based compensation expense related to these awards. As of March 31, 2026, the Company had unrecognized stock-based compensation expense of $0.1 million related to these restricted stock units, which is expected to be recognized over 1.7 years.\n\n#  \n\n24\n\n[Table of Contents](#toc_page)\n\n \n\n# 10. Net Loss Per Share\n\nThe Company calculates basic net loss per share by dividing net loss by the weighted average number of shares of common stock outstanding. The weighted average number of shares of common stock used in the basic and diluted net loss per share calculation includes prefunded warrants to purchase common stock, as the prefunded warrants are exercisable at any time for nominal cash consideration. As of March 31, 2026, 1,059,743 prefunded warrants have been exercised for common stock and 13,307,918 prefunded warrants are outstanding.\n\nThe following table sets forth the outstanding shares of common stock equivalents, presented based on amounts outstanding at each period end, that were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have been anti-dilutive:\n\n \n\n \n\n \n\nThree Months Ended\n\n \n\n \n\n \n\nMarch 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nUnvested restricted stock units\n\n \n\n \n\n15,914\n\n \n\n \n\n \n\n23,866\n\n \n\nOutstanding stock options\n\n \n\n \n\n2,767,285\n\n \n\n \n\n \n\n775,507\n\n \n\nCommon stock warrants\n\n \n\n \n\n8,206,109\n\n \n\n \n\n \n\n188\n\n \n\nUnvested employee stock purchase plan shares\n\n \n\n \n\n69,939\n\n \n\n \n\n \n\n3,250\n\n \n\nTotal common stock equivalents\n\n \n\n \n\n11,059,247\n\n \n\n \n\n \n\n802,811\n\n \n\n \n\n#  \n\n25\n\n[Table of Contents](#toc_page)"}