OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following discussion of our operating and financial review and prospects should be read in conjunction with our consolidated financial statements and related notes, prepared in accordance with U.S. GAAP as of December 31, 2025, and with any other financial data included elsewhere in this Annual Report. Background We are a clinical-stage therapeutic discovery and development company utilizing Unigen™, our AI/ML powered computational discovery platform, to identify novel drug targets and to develop therapeutics in the field of cancer immunotherapy. Our innovative immuno-oncology pipeline consists of four clinical-stage programs: COM701, COM902, rilvegostomig and GS-0321 (previously COM503). COM701, a potential first-in-class anti-PVRIG antibody, and COM902, a potential best-in-class therapeutic anti-TIGIT antibody, have been evaluated for the treatment of solid tumors as monotherapy and in combinations of dual (PVRIG/PD-1, PVRIG/TIGIT) and triple (PVRIG/PD-1/TIGIT) blockade. The last patient in the clinical trial evaluating the triple combination treatment of COM701, COM902 and pembrolizumab (initiated in 2023), received the last dose in January 2026. Currently, the only clinical trial we are sponsor and conduct is a blinded randomized ovarian cancer platform trial evaluating COM701 as a single agent in maintenance therapy in relapsed platinum sensitive ovarian cancer (named MAIA-ovarian trial) and we expect an interim analysis from this trial in the first quarter of 2027. Rilvegostomig, a PD-1/TIGIT bispecific antibody with a TIGIT component that is derived from our COM902 program, is being developed by AstraZeneca pursuant to an exclusive license agreement between us and AstraZeneca and is being evaluated in multiple Phase 3, Phase 2 and Phase 1 clinical trials. GS-0321 (previously COM503), our potential first-in-class high-affinity antibody, which blocks the interaction between IL-18 binding protein and IL-18, is licensed to Gilead and is being evaluated in a Phase 1 clinical trial that we sponsor and conduct. In addition, we have an early-stage immuno-oncology therapeutic pipeline that consists of research programs aiming to address various mechanisms to enhance anti-cancer immunity. Our business model is to selectively enter into collaborations for our novel targets and drug product candidates at various stages of research and development under various revenue-sharing arrangements. Integrating cutting edge computational capabilities with ground-breaking immuno-oncology research and drug development expertise is our differentiator and has enabled us to advance drug targets from computer prediction through successful preclinical studies to the clinic. Therefore, we believe that we are uniquely positioned to discover and develop innovative treatment options for cancer patients. A. OPERATING RESULTS Overview Since our inception, we have incurred significant losses and, as of December 31, 2025, we had an accumulated deficit of $453.4 million. We expect to continue to incur net losses in the foreseeable future. We are currently pursuing clinical development of our internal program COM701 as well as GS-0321 (previously COM503) on behalf of our partner, Gilead, for which we are only responsible for the Phase 1 development. We have two partnerships in place, one with AstraZeneca, who is developing rilvegostomig, an anti PD-1/TIGIT bispecific antibody with a TIGIT-specific component that is derived from our COM902 antibody and is in multiple Phase 3, Phase 2 and Phase 1 clinical trials, and the second, with Gilead, pursuant to a license agreement for our GS-0321 (previously COM503) program, which is currently in Phase 1 clinical trial. 65 We incurred net profit of approximately $35.3 million in 2025, and net loss of approximately $14.2 million in 2024 and approximately $18.8 million in 2023. We expect to continue to incur net losses for the foreseeable future due in part to the costs and expenses associated with our research, discovery and development activities. While we currently have two active collaborations, our business model primarily involves establishing collaborations for our novel targets and therapeutic product candidates at various stages of research and development to provide us with potential milestone payments and royalties on product sales or other forms of payments. Our research and development expenditures have always comprised a significant portion of our total cash expenditures, and they are expected to remain our major operating expense in 2025. We believe that we have sufficient cash and cash equivalents, short-term bank deposits and investment in marketable securities in order to sustain our operations into 2029, based on our current plans without considering the possible receipt of any additional funds, such as proceeds from existing or additional licensing and/or collaborative agreements, or from financings. However, if our plans change or if our burn-rate increases, our cash balances may only be sufficient for a shorter period of time. For a detailed description of our cash and cash equivalents position, see “Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources.” Years Ended December 31, 2025 and 2024 Revenues. Revenues for the year ended December 31, 2025, were approximately $72.8 million, compared with $27.9 million in the comparable period of 2024. The revenues for 2025 include the upfront payment from AstraZeneca in the amount of $65 million following the amendment of the license agreement with them and the portion of the upfront payment and the IND milestone payment from the license agreement with Gilead allocated to the Phase 1 research and development activities, while the revenues for 2024 reflect the portion of the upfront payment and the IND milestone payment from the license agreement with Gilead allocated to the IND and Phase 1 research and development activities and to the license granted to Gilead, in addition to the clinical milestone from the license agreement with AstraZeneca in the amount of $5 million. Cost of Revenues. During the year ended December 31, 2025, cost of revenues was approximately $9.3 million compared with approximately $7.9 million cost of revenues in the comparable period of 2024. Cost of revenues for the year ended December 31, 2025, represents the cost of Phase 1 activities related to the license agreement with Gilead and royalties to the Israeli Innovation Authority, or the IIA, in connection with our revenues, while cost of revenues for the year ended December 31, 2024, represents the cost of IND and Phase 1 activities related to the license agreement with Gilead and royalties to the IIA in connection with our revenues from AstraZeneca, offset by royalty reversal in 2024 due to exemption from royalties on IL-18BP received from the IIA. Research and Development Expenses, net. Research and development expenses during 2025 decreased by 8% and totaled approximately $22.8 million compared with approximately $24.8 million in the comparable period of 2024. The decrease was mainly due to lower clinical expenses resulting from winding down prior clinical trials, partially offset by an increase in clinical expenses related to MAIA-ovarian trial initiated in 2025. Research and development expenses, as a percentage of total operating expenses, were 71% in 2025 and in 2024. Marketing and Business Development Expenses. Marketing and business development expenses decreased by 6% to approximately $0.5 million in 2025 compared with approximately $0.6 million in the comparable period of 2024. Marketing and business development expenses, as a percentage of total operating expenses, were 2% in both 2025 and 2024. General and Administrative Expenses. General and administrative expenses during 2025 decreased by 6% to approximately $8.9 million in 2025 compared with approximately $9.4 million in the comparable period of 2024. The decrease during 2025 was mainly attributed to lower D&O insurance premium costs coupled with lower legal fees partially offset by higher salary related expenses. General and administrative expenses, as a percentage of total operating expenses, were 28% in 2025 and 27% in 2024. Financial and Other Income, net. Financial and other income decreased by 21% to approximately $4.1 million in 2025 from approximately $5.2 million in the comparable period of 2024. The decrease was mainly attributed to lower cash balances during most of the year and lower interest rates and lower yield on marketable securities leading to lower accretion and financial income. Taxes on Income, net. Taxes on income were approximately $0.1 million in 2025 compared with approximately $4.5 million in the comparable period of 2024. The taxes on income in 2024 represent primarily taxes withheld by Gilead on the IND milestone payments. Net profit and loss. Net profit was approximately $35.3 million in 2025, compared with net loss of $14.2 million in the comparable period of 2024. Net profit and Loss per share. Net profit per share was 38 cents per basic share in 2025, compared with net loss of 16 cents per basic share in the comparable period of 2024, and net profit per share was 38 cents per diluted share in 2025, compared with net loss of 16 cents per diluted share in the comparable period of 2024. 66 Years Ended December 31, 2024 and 2023 Revenues. Revenues for the year ended December 31, 2024, were approximately $27.9 million, compared with $33.5 million in the comparable period of 2023. The revenues for 2024 include the portion of the upfront payment and the IND milestone payment from the License Agreement with Gilead allocated to the IND and Phase 1 research and development activities and to the license in addition to the clinical milestone from the license agreement with AstraZeneca in the amount of $5 million, while the revenues for 2023 reflect the portion of the upfront payment from the license agreement with Gilead allocated to the license and the clinical milestones from the license agreement with AstraZeneca in the amount of $10.0 million. Cost of Revenues. During the year ended December 31, 2024, cost of revenues was approximately $7.9 million compared with approximately $2.0 million cost of revenues in the comparable period of 2023. Cost of revenues for the year ended December 31, 2024, represents the cost of IND and Phase 1 activities and royalty payments in connection with our revenues, offset by royalty reversal in 2024 due to exemption from royalties on IL-18BP received from the IIA, while cost of revenues for the year ended December 31, 2023, represents milestone and royalty payments in connection with our revenues. Research and Development Expenses, net. Research and development expenses during 2024 decreased by 28% and totaled approximately $24.8 million compared with approximately $34.5 million in the comparable period of 2023. The decrease was mainly due to the classification of expenses related to GS-0321 (previously COM503) to cost of revenues and to lower CMC and IND enabling activities related to GS-0321 (previously COM503), partially offset by an increase in clinical expenses. Research and development expenses, as a percentage of total operating expenses, were 71% in 2024 compared to 78% in 2023. Marketing and Business Development Expenses. Marketing and business development expenses increased by 136% to approximately $0.6 million in 2024 compared with approximately $0.2 million in the comparable period of 2023. The increase was mainly due to higher headcount. Marketing and business development expenses, as a percentage of total operating expenses, were 2% in 2024 compared to 1% in 2023. General and Administrative Expenses. General and administrative expenses during 2024 decreased by 3% to approximately $9.4 million in 2024 compared with approximately $9.7 million in the comparable period of 2023. The decrease during 2024 was mainly attributed to lower D&O insurance premium costs, coupled with lower salaries related expenses and legal fees partially offset by an increase in travel and consulting expenses. General and administrative expenses, as a percentage of total operating expenses, were 27% in 2024 compared to 22% in 2023. Financial and Other Income, net. Financial and other income increased by 62% to approximately $5.2 million in 2024 up from approximately $3.2 million in the comparable period of 2023. The increase was mainly attributed to higher cash balances which resulted in higher financial income. Taxes on Income, net. Taxes on income were approximately $4.5 million in 2024 compared with $9.0 million in the comparable period of 2023. The taxes on income in 2024 and 2023 represent primarily taxes withheld by Gilead on the upfront the IND milestone payments. Net loss. Net loss was approximately $14.2 million in 2024, compared with $18.8 million in the comparable period of 2023. Net Loss per share. Net loss per share was 16 cents per basic and diluted share in 2024, compared with 21 cents per basic and diluted share in the comparable period of 2023. Governmental Policies that Materially Affected or Could Materially Affect Our Operations Our income tax obligations consist of those of Compugen Ltd. in Israel and of Compugen USA, Inc. in its taxing jurisdictions. The corporate tax rate in Israel was 23% in 2025, 2024 and 2023. 67 In the future, if and when we generate taxable income, our effective tax rate may be influenced by, among others: (a) the split of taxable income between the various tax jurisdictions; (b) the availability of tax loss carry forwards, R&D credits carry forwards and the extent to which valuation allowance has been recorded against deferred tax assets; (c) the tax benefits we will be entitled to pursuant to the Investment Law; and (d) the changes in the exchange rate of the dollar to the NIS. We may benefit from certain government programs and tax legislation, particularly as a result of the entitlement to Preferred Enterprise status that resulted from our eligibility for tax benefits under the Investment Law. To be eligible for these benefits, we need to meet certain conditions. Should we fail to meet such conditions, these benefits could be cancelled, and we might be required to refund the amount of the benefits previously received, if any, in whole or in part, together with interest and linkage differences to the Israeli CPI, or other monetary penalty. We also received grants from the IIA pursuant to approved IIA programs and accordingly, we are subject to the terms of such programs and approvals as well as to the terms of the R&D Law. For more information, please see “Item 5 Operating and Financial Review and Prospects - C. Research and Development, Patents and Licenses - The Israel Innovation Authority.” There can be no assurance that these programs and tax legislation will continue in the future or that the available benefits will not be reduced. The termination or curtailment of these programs or the loss or reduction of benefits under the Investment Law could have a material adverse effect on our business, financial condition and results of operations. Currently we are entitled to a Preferred Enterprise status under the Investment Law. These benefits should result in income recognized by us being taxed at a lower rate. However, these benefits may not be applied to reduce the U.S. federal tax rate for any income that our U.S. subsidiary may generate. Certain amendments to the Investment Law became effective in January 2011, or the 2011 Amendment. Under the 2011 Amendment, income derived by ‘Preferred Companies’ from ‘Preferred Enterprises’ (both as defined in the 2011 Amendment) would be subject to a uniform rate of corporate tax for an unlimited period as opposed to the incentives prior to the 2011 Amendment that were limited to income from Approved or Benefiting Enterprises during their benefits period. According to the 2011 Amendment, the uniform tax rate on such income, referred to as ‘Preferred Income’, would be 10% in areas in Israel that are designated as Development Zone A and 15% elsewhere in Israel during 2011-2012, 7% and 12.5%, respectively, in 2013, and 9% and 16%, respectively, thereafter. Income derived by a Preferred Company from a ‘Special Preferred Enterprise’ (as defined in the Investment Law) would enjoy further reduced tax rates for a period of ten years of 5% in Development Zone A and 8% elsewhere. As of January 1, 2014, dividends distributed from Preferred Income would subject the recipient to a 20% tax (or lower, if so provided under an applicable tax treaty, subject to the receipt in advance of a valid tax certificate from the Israel Tax Authority allowing for a reduced tax rate), which would generally be withheld by the distributing company, provided however that dividends distributed from ‘Preferred Income’ from one Israeli corporation to another, would not be subject to tax. Under the transitional provisions of the 2011 Amendment, companies may elect to irrevocably implement the 2011 Amendment with respect to their existing Approved and Benefiting Enterprises while waiving benefits provided under the legislation prior to the 2011 Amendment or keep implementing the legislation prior to the 2011 Amendment. Should a company elect to implement the 2011 Amendment with respect to its existing Benefiting Enterprises prior to June 30, 2015 dividends distributed from taxable income derived from Benefiting Enterprises to another Israeli company would not be subject to tax. While a company may incur additional tax liability in the event of distribution of dividends from tax exempt income generated from its Benefiting Enterprise, as previously described, no additional tax liability will be incurred by a company in the event of distribution of dividends from Preferred Income. We have elected to implement the 2011 Amendment and we currently have a Preferred Enterprise. 68 In December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which includes Amendment 73 to the Law, or Amendment 73, was published. According to Amendment 73, a Preferred Enterprise located in development area A will be subject, under certain conditions, to a tax rate of 7.5% instead of 9% effective from January 1, 2017, and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16%). Amendment 73 also prescribes special tax tracks for Technological Enterprises, which are subject to regulations issued by the Minister of Finance on May 16, 2017. The new tax tracks under the Amendment are as follows: Technological Preferred Enterprise - an enterprise for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A Technological Preferred Enterprise, as defined in the Law, which is located in the center of Israel will be subject to tax at a rate of 12% on profits deriving from intellectual property (in development area A - a tax rate of 7.5%). Special Technological Preferred Enterprise - an enterprise for which total consolidated revenues of its parent company and all subsidiaries exceed NIS 10 billion. Such enterprise will be subject to tax at a rate of 6% on profits deriving from intellectual property, regardless of the enterprise’s geographical location. Any dividends distributed to “foreign companies”, as defined in the Law, deriving from income from the Technological Enterprises will be subject, under certain conditions, including holding at least 90% of the share capital, to tax at a rate of 4%. As of December 31, 2025, our net operating loss carry-forward for Israeli tax purposes amounted to approximately $381.4 million. Under Israeli law, this net operating loss may generally be carried forward indefinitely and offset against certain future taxable income. As of December 31, 2025, the net operating loss carry-forward of our U.S. subsidiary for federal income tax purposes amounted to approximately $1.5 million. Approximately $0.3 million of this loss are available to offset any future U.S. taxable income of our U.S. subsidiary and will expire between 2027 and 2032. Use of our U.S. net operating loss may be subject to substantial annual limitation due to the “change in ownership” provisions of the Code and similar state provisions. The annual limitation may result in the expiration of net operating loss before utilization. For a description of Israel government policies that affect our research and development expenses, and the financing of our research and development, see “Item 5. Operating and Financial Review and Prospects - C. Research and Development, Patents and Licenses - The Israel Innovation Authority.” B. LIQUIDITY AND CAPITAL RESOURCES Public Offering of Ordinary Shares Sales Agreement with Leerink Partners LLC On January 31, 2023, we entered into a Sales Agreement, or the Sales Agreement with Leerink, as sales agent, pursuant to which we may offer and sell, from time to time through Leerink, our ordinary shares. The offer and sale of our ordinary shares, if any, will be made pursuant to our shelf registration statement on Form F-3, as supplemented by the prospectus supplement filed on January 31, 2023. Pursuant to the said prospectus supplement, we may offer and sell up to $50 million of our ordinary shares. We are not obligated to make any sales under the Sales Agreement and no assurance can be given that we will sell any ordinary shares under the Sales Agreement, or, if we do, as to the price or number of ordinary shares that we will sell, or the dates on which any such sales will take place. For the year ended December 31, 2025, December 31, 2024, and December 31, 2023, the Company sold 4,862,076, 292,728, and 2,612,822 ordinary shares, respectively, pursuant to the Sales Agreement, for gross proceeds of approximately $10.9 million, $0.6 million, and $3.6 million, respectively, and net proceeds (after deducting expenses and commissions paid) of approximately $10.5 million, $0.5 million, and $3.1 million respectively. From January 1, 2026 until February 28, 2026, we have not sold any ordinary shares pursuant to the Sales Agreement. Shelf Registration Statement On March 30, 2023, we filed a shelf registration statement on Form F-3 with the SEC under which we may offer and sell from time to time in one or more offerings, our ordinary shares, debt securities, rights, warrants and units having an aggregate offering price of up to $350 million, $50 million of which may be offered, issued and sold under the above mentioned Sales Agreement with Leerink. This registration statement was declared effective by the SEC on June 27, 2023. 69 License Agreement AstraZeneca License Agreement On March 30, 2018, we and AstraZeneca, entered into an exclusive license agreement to enable the development of bi-specific and multi-specific immuno-oncology antibody products based on the Company’s monospecific antibodies that bind to TIGIT, including COM902, pursuant to which the Company received an upfront payment of $10 million and was eligible to receive up to $200 million in development, regulatory and commercial milestones for the first product as well as mid-single-digit tiered royalties on future product sales, out of which we accrued $2 million in 2020 as a preclinical milestone, $6 million in 2021 as a clinical milestone (triggered by the dosing of the first patient in a Phase 1/2 clinical trial evaluating rilvegostomig), $7.5 million in 2022 as a clinical milestone (triggered by the dosing of the first patient in its ARTEMIDE Phase 2 clinical trial evaluating rilvegostomig), $10 million in 2023 as a clinical milestone (triggered by the dosing of the first patient in its ARTEMIDE-Bil01 Phase 3 clinical trial evaluating rilvegostomig), and an additional $5 million in 2024 (triggered by dosing of the first patient in the second Phase 3 clinical trial evaluating rilvegostomig). If additional products are developed, additional milestones and royalties would be due to us for each product. On December 16, 2025, we amended the license agreement and sold to AstraZeneca a portion of our existing royalty interest in rilvegostomig for a $65 million upfront payment which was paid in 2025 and for an addition of $25 million to the next milestone payment to be paid to us, which is the first acceptance of the BLA. Following the amendment, we remain eligible for potential future regulatory and commercial milestones of up to $195 million (including the $25 million stated above) for rilvegostomig. In addition, we maintained the majority of our royalties, being eligible for tiered royalties of up to mid-single digit on future sales, also after the amendment. Gilead License Agreement On December 18, 2023, we and Gilead, entered into an exclusive license agreement, pursuant to which we granted Gilead an exclusive license under our preclinical antibody program against IL-18 binding protein and all intellectual property rights subsisting therein, to use, research, develop, manufacture and commercialize products, including our GS-0321 (previously COM503) product candidate, or together, the GS-0321 (previously COM503), and additional products that may be developed by Gilead, together with GS-0321 (previously COM503), the Licensed Products. Pursuant to the license agreement, Gilead paid us a gross amount of $60 million upfront license payment ($51 million net, after $9 million were withheld at source) in January 2024 and additional $30 million ($25.5 million net, after $4.5 million were withheld at source) as a milestone payment upon clearance of the IND application for GS-0321 (previously COM503) in the third quarter of 2024. We are also eligible to receive up to approximately $758 million in additional milestone payments upon the achievement of certain development, regulatory and commercial milestones. We are further eligible to receive single-digit to low double-digit tiered royalties on worldwide net sales of Licensed Products. Unless terminated early by a party pursuant to its terms, the license agreement will continue in effect on a Licensed Product-by-Licensed Product and country-by-country basis until the expiration of the last royalty term in such country. Gilead withheld at source 15% from the upfront payment and the milestone payment amount specified above and is expected to continue to withhold at source all taxes required by law from all payments payable to us under the license agreement. If additional products are developed, additional milestones and royalties would be due to us. Capital Resources In 2025, our primary sources of cash were mainly: • cash received from our partner, AstraZeneca; • proceeds from ordinary shares sold through the Sales Agreement with Leerink; and • cash at hand and yield on investment of such cash balances. We used these funds primarily to finance our business operations. 70 We expect that our sources of cash for 2026 will include cash at hand at the end of 2025. Additional potential sources of cash may include proceeds generated from agreements with collaborators and other third parties with respect to our novel targets and therapeutic drug candidates and proceeds from issuance of ordinary shares pursuant to our equity plans, from the Sales Agreement and other financing transactions. Net Cash Used in or Provided by Operating Activities Net cash provided by operating activities was approximately $31.6 million in 2025, compared with approximately $49.6 million in 2024 and net cash used in operating activities of approximately $35.9 million in 2023. Decrease in net cash provided by operating activities in 2025 compared to 2024 was mainly due to $65 million derived from upfront payment collected from AstraZeneca in 2025, compared with $91.5 million derived from upfront payment and clinical milestones payments collected from Gilead and from AstraZeneca, net of withholding taxes in 2024, offset by operating expenses on cash basis. Net Cash Used in or Provided by Investing Activities Net cash provided by investing activities was approximately $30.0 million in 2025, compared with net cash used in approximately $46.3 million in 2024 and net cash provided by investing activities of approximately $35.5 million in 2023. Increase in net cash provided by investing activities in 2025 compared to 2024 was mainly due to increase in our cash and cash equivalents. Net Cash Provided by Financing Activities Net cash provided by financing activities was approximately $10.6 million in 2025, approximately $0.6 million in 2024 and approximately $3.1 million in 2023. The principal source of cash provided by financing activities in 2025, 2024 and 2023 was proceeds received from sale of ordinary shares through the Sales Agreement with Leerink. Net Liquidity Liquidity refers to the liquid financial assets available to fund our business operations and pay for near-term obligations. These liquid financial assets mostly consist of cash and cash equivalents as well as short-term bank deposits and investment in marketable securities. As of December 31, 2025, we had cash and cash equivalents, short-term bank deposits and investment in marketable securities of approximately $145.6 million compared to approximately $103.3 million on December 31, 2024. We believe that our existing cash, cash equivalents, short-term bank deposits and investment in marketable securities will be sufficient to fund our operations over the next 12 months. We believe we will meet longer-term expected future cash requirements into 2029 based on our current plans, without considering the possible receipt of any additional funds, such as proceeds from existing or additional licensing and/or collaborative agreements, or from financings. We believe that our working capital is sufficient for our present requirements. The table below summarizes our contractual obligations as of December 31, 2025, and should be read together with the accompanying comments that follow. Payments due by period (US$ in thousands) Total Less than 1 year 1-3 years 3-5 years More than 5 years Operating Lease Obligations(1) 3,538 721 1,394 1,292 131 Accrued Severance Pay, net(2) 244 - - - 244 Total 3,782 721 1,394 1,292 375 (1) Consists of operating leases for our facilities and for motor vehicles. Includes the first and second five-year option periods of the lease of the Israeli facility. The first option was exercised during 2020 and the second option was exercised during 2025. (2) Severance pay obligations to our Israeli employees. For more information, see “Item 6. Directors, Senior Management and Employees – D. Employees.” 71 The above table does not include royalties that we may be required to pay to the IIA. For more information, see “Item 5. Operating and Financial Review and Prospects - C. Research and Development, Patents and Licenses - The Israel Innovation Authority.” The above table also does not include contingent contractual obligations or commitments that may enter into effect in the future, such as contractual undertakings to pay royalties subject to certain conditions occurring. C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES We invest heavily in research and development. Research and development expenses were our major operating expenses representing approximately 71% of total operating expenses in 2025 and in 2024 and approximately 78% in 2023. Our research and development expenses, net, were approximately $22.8 million in 2025, approximately $24.8 million in 2024, and approximately $34.5 million in 2023. As of December 31, 2025, 53 of our employees were engaged in research and development on a full-time basis. This represents approximately 71% of our entire work force at that time. We focus our efforts on the development of our discovery capabilities and related technologies, and the discovery and validation of our drug targets and the preclinical and clinical development of the respective therapeutic products. Our pipeline programs are continuously evolving, and we expect that in 2026 our research and development expenses will continue to be our major operating expense. We believe that our future success will depend, in large part, on our ability to discover promising drug target candidates and therapeutic product candidates and to successfully advance the research and development of certain of our product candidates in our internal pipeline towards preclinical and clinical studies and to successfully develop these products or enter into revenue-sharing partnering agreements with pharmaceutical companies with respect to them at the various development stages and eventually the success of such products. Research and Development Grants We have participated in programs offered by the IIA that support research and development activities. See Note 8b to our 2025 consolidated financial statement. Except for a grant received from the IIA in 2025 under a specific “Maagad” program of the IIA in the amount of approximately 58% of a total budget of approximately $130 thousands (to which the royalty payments terms to the IIA do not apply, however all other terms of the R&D Law do apply to it), we have not applied for additional grants from the IIA for research and technological development since 2012. The Israel Innovation Authority The government of Israel encourages research and development projects in Israel through the IIA, pursuant to and subject to the provisions of the R&D Law. Under the R&D Law, research and development projects which are approved by the Research Committee of the IIA are eligible for grants, in exchange for payment of royalties from revenues generated from Financed Know-How or otherwise from all revenues generated by the Company, as designated by the applicable IIA programs, approvals and the R&D Law, and are subject to compliance with certain requirements and restrictions under the R&D Law as detailed below, which must generally continue to be complied with even following full repayment of all IIA grants (as adjusted for fluctuation in the USD/NIS exchange rate), with applicable interest, assuming we neither grant licenses thereunder nor transfer production or development outside of the State of Israel. We received grants from the IIA for several projects and may receive additional grants in the future. Under the terms of the grants received, we are required to pay royalties ranging between 3% to 5% of the revenues we generate from our products and/or services which incorporate Financed Know-How, or IIA Products, or as otherwise designated by the applicable IIA programs, approvals and the R&D Law, until 100% of the dollar value of the grant is repaid, plus, as follows: (i) with respect to grants received on or after January 1, 1999 and until December 31, 2023, the applicable interest is (a) LIBOR interest until December 31, 2023, and (b) from January 1, 2024, the 12 months Term SOFR interest as published on the first trading day of each year by CME Group, or by any other party authorized by the Federal Reserve, or in alternative publication by the Bank of Israel, together with an additional 0.71513% to the applicable interest rate, and (ii) with respect to grants received on or after January 1, 2024, the applicable interest shall be the 12 months Term SOFR interest as detailed in section (b) above. As of December 31, 2025, we received grants from the IIA in the principal amount of approximately $7.3 million that are subject to royalty payment to the IIA. Therefore, our contingent obligation for royalties, net of royalties already paid or accrued in the sum of approximately $4.4 million, along with the accumulated LIBOR/SOFR interest to date of approximately $5.4 million, totaled to approximately $8.3 million as of December 31, 2025. 72 With respect to the Company’s requirement to pay royalties, in February 2025, the IIA approved that the Company will be required to pay royalties from all revenues of the Company, other than from income derived from sales associated with products related to IL-18BP (which currently include, GS-0321 (previously COM503)). In addition, the Company participated in four MAGNET Consortium programs - Drugs and Diagnostic Kits, or DAAT Consortium, Tevel Biotechnology Consortium, Pharmalogica Consortium and Rimonim Consortium – for which it received from the IIA a total amount of approximately $2.1 million, in two MAGNETON programs, for which it received from the IIA approximately $0.6 million and most recently in a Maagad program for which it is entitled to receive approximately 58% of a total budget of approximately $130 thousands. These grants do not bear any royalty obligations, but as the R&D Law applies to these programs, the restrictions on transfer of know-how or manufacturing outside of Israel, as detailed below, do apply. The R&D Law requires that the manufacture of products which incorporate Financed Know-How will be carried out in Israel, unless the IIA provides its approval to the contrary. This approval, to the extent given by the IIA, may be subject to various conditions, including the repayment of increased royalties equal to up to 300% of the total grant amount plus applicable interest and an increase of 1% in the royalty rate, depending on the extent of the manufacturing that is to be conducted outside of Israel. The R&D Law also provides that Financed Know-How and any right derived therefrom may not be sold, licensed, outsourced for development activities or otherwise transferred to third parties, unless such transfer was approved in accordance with the R&D Law. The Research Committee operating under the IIA may approve the sale, license, outsourcing for development activities or otherwise transfer of Financed Know-How between Israeli entities, provided that the transferee undertakes all the obligations in connection with the grant as prescribed under the R&D Law. In certain cases, the research committee may also approve a transfer of the Financed Know-How outside of Israel, in both cases, subject to the receipt of certain payments calculated according to a formula set forth in the R&D Law. In the case of transfer outside of Israel, a payment of up to six times the amount of the grant (as adjusted for fluctuation in the USD/NIS exchange rate) with applicable interest; and in the case the R&D activity related to the Financed Know-How remains in Israel, a payment of up to 3 times of such total amount. These approvals are not required for the sale or export of any products resulting from such R&D activity or based on such Financed Know-How. In addition, the government of Israel may from time to time audit sales of products which it claims incorporate Financed Know-How and this may lead to royalties being payable on additional products, and may subject such products to the restrictions and obligations specified hereunder. Failure to comply with the requirements under the R&D Law may subject us to financial sanctions, to mandatory repayment of grants received by us (together with interest and penalties), as well as expose us to criminal proceedings. For a discussion regarding the effects of the grants we received from the IIA on our business, see “Item 3. Key Information - D. Risk Factors - Risks Related to Operations in Israel - We received grants from the IIA that may require us to pay royalties and restrict the transfer of know-how that we develop.” D. TREND INFORMATION We are unable to predict with a reasonable degree of accuracy the outcome of our research and development efforts. As such, it is not possible for us to predict with a reasonable degree of accuracy any material trends, uncertainties, or other events that are reasonably likely to have a material effect on our net loss, liquidity or capital resources, or that would cause financial information to not necessarily be indicative of our future operating results or our financial condition. However, subject to such limitation, we did identify certain trends that may have an effect on us, some of which are as specified below, and as covered in the risk factors set forth under “Item 3. Key Information - D. Risk Factors.” Access to Additional Funds Should we need to secure additional sources of liquidity, we believe that we could finance our needs through the issuance of equity securities, including through our Sales Agreement with Leerink, debt securities or other arrangements. However, we cannot guarantee that we will be able to obtain financing through the issuance of any of the above arrangements on reasonable terms. 73 Unfavorable Global or Domestic Political or Economic Conditions The global economy continues to experience significant volatility, and the economic environment may continue to be, or become, less favorable than that of past years. Higher costs for goods and services, inflation, deflation, the imposition of tariffs or other measures that create barriers to or increase the costs associated with international trade, overall economic slowdown or recession and other economic factors in Israel, the U.S. or in any other markets in which we operate could adversely affect our operations and operating results and can result in increased operations costs. After several credit rating reductions in recent years, on November 7, 2025, S&P Global Ratings revised its outlook on Israel to “stable” from “negative”, while affirming the “A” rating and on January 30, 2026, Moody’s also revised its outlook on Israel to “stable” from “negative, while affirming Israel’s Baa1 long-term local and foreign-currency issuer ratings. Despite this stabilization in outlook by S&P and Moody’s, other agencies, including Fitcch Ratings, continued to maintain a negative outlook as of early 2026, citing persistent exposure to geopolitical risks and a polarized political system. While these downgrades and negative outlook as of late 2025 did not have an immediate nor direct impact on us, an extended period of economic disruption, including a continued market downfall in Israel, which may be impacted by such downgrades or by some agencies maintaining negative outlook, by future downgrades, by the continuing instability in Israel and the Middle East and its surrounding countries, including as a result of the armed conflicts in the region and the political and civil actions in Israel which began in early 2023, resulting from, among other things, proposed changes to certain Israeli constitutional legislation, as well as other global conflicts, such as the recent developments between the U.S. and Venezuela, the conflict between Russia and Ukraine, and the inner tensions in Iran and their potential global impact, or as a continued market downfall in the United States or any other major market in which we or our partners operate, could materially affect our ability to secure additional funds and could further materially affect our business, strategy, results of operations and financial condition. Exchange Rate A significant portion of our expenses is denominated in currencies other than the dollar. The Company is therefore subject to non-U.S. currency risks and non-U.S. exchange exposure, especially the NIS. Exchange rates can be volatile and a substantial change in foreign currencies against the dollar could increase or reduce the Company’s expenses and net loss and impact the comparability of results from period to period. The depreciation of the dollar against the NIS was 12.5% in 2025 and the appreciation of the dollar against the NIS was 0.6% and 3.1% in 2024 and 2023, respectively. For more information regarding exchange rate risk please see “Item 11. Quantitative And Qualitative Disclosures About Market Risk – Interest Rate Risk.” Interest rate A significant portion of our cash and cash equivalents is invested in bank deposits or in marketable securities and bear interest or yield that depends on the interest rate. The Company’s financial income is therefore subject to interest rate risk. Interest rates can be volatile, and a substantial change in interest rates could increase or reduce the Company’s financial income and net loss. In addition to the impact on our cash and cash equivalents, rising interest rates, or the perception thereof, may have wide economic impacts, including an adverse impact on capital markets, the price of our shares and on supplies that we require to acquire for our different operations. For more information regarding interest rate risk please see “Item 11. Quantitative And Qualitative Disclosures About Market Risk – Interest Rate Risk.” Trend Towards Biologics Biologics (monoclonal and bispecific antibodies, ADCs, enzymes and engineered proteins) represent one of the fastest growing segments in the drug industry, making up 31% of FDA approved drugs in 2023, 32% in 2024, and 25% in 2025. The growth of this class has driven a large number of companies to invest in new technologies (e.g., bi-specific monoclonal antibodies, multi-specific antibodies, ADCs, antibody fragments, T cell engagers) and new approaches to fully exploit the potential of this class. As these new modalities become more widely available, they raise the bar for differentiation, making it increasingly challenging for novel therapeutic candidates, especially those based on traditional formats, to stand out in a competitive landscape. The broadening array of technologies addressing drug targets may therefore reduce the relative attractiveness of earlier‑generation or less differentiated therapeutic approaches. E. CRITICAL ACCOUNTING ESTIMATES The preparation of our consolidated financial statements and other financial information appearing in this Annual Report requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate on an on-going basis these estimates, mainly related to revenue recognition and share-based payments. 74 We base our estimates on our experience and on various assumptions that we believe are reasonable under the circumstances. The results of our estimates form the basis for our management’s judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Revenue Recognition Our revenues are generated mainly from collaborative and license agreements. In the agreements, revenues are typically derived mainly from upfront payment and contingent payments related to milestone achievements. The Company recognizes revenue in accordance with ASC 606 - “Revenue from Contracts with Customers.” As such, the Company analyzes its collaborative and license agreements to assess whether they are within the scope of ASC 606. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company performs the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when, or as, we satisfy a performance obligation. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration will only be included in the transaction price when it is not considered constrained. We use assumptions to determine the standalone selling price of each performance obligation identified in the contract. We then allocate the total transaction price to each performance obligation based on the estimated standalone selling prices of each performance obligation. We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied. After contract inception, the transaction price is reassessed at every period end and updated for changes such as resolution of uncertain events. Any change in the transaction price is allocated to the performance obligations on the same basis as at contract inception. In December 2020 the program under the exclusive license agreement with AstraZeneca achieved a preclinical milestone and in September 2021, November 2022, December 2023 and May 2024 such program achieved clinical milestones and in connection with such milestones, we recognized revenues in an amount of $2 million, $6 million, $7.5 million, $10 million and $5 million, in the years 2020, 2021, 2022, 2023 and 2024, respectively, and in 2025 we amended the license agreement with AstraZeneca and sold a portion of our royalty interest to AstraZeneca, leading to revenue recognition of $65 million, all in accordance with the criteria prescribed under ASC 606. See Note 2j to our 2025 consolidated financial statements. In December 2023, following entrance into license agreement with Gilead, we assessed the promises under the license agreement and concluded that its promise to deliver the GS-0321 (previously COM503) License, the promise to perform IND research and development activities and Phase 1 research and development activities represented separate performance obligations in the license agreement. We also evaluated as a possible variable consideration all milestones and royalties. With respect to clinical development and regulatory milestones, we concluded that all such amounts should be fully constrained and are not included in the initial transaction price. Accordingly, we did not include any potential clinical development, regulatory and sales milestones and royalties in the initial transaction price. We allocated the transaction price to each performance obligation on a relative estimated standalone selling price basis. We developed the estimated standalone selling price for the license. In developing such an estimate, we applied judgement in determining the timing needed to develop the licensed product, the probability of success, and the discount rate. We developed the estimated standalone selling price for the IND research and development activities using a “cost plus” reasonable margin approach. To determine the estimated standalone selling price of the Phase 1 research and development activities obligation, we estimated the standalone selling price of the underlying performance obligations and estimated the probability of our performance of such obligations. 75 We determined that the license granted was a functional license since the underlying intellectual property has significant standalone functionality and recognized the entirety of the initial transaction price allocated to the license performance obligation during the year ended December 31, 2023, in the amount of $23.5 million. The IND research and development activities and Phase 1 research and development activities performance obligations are recognized over time. We determined that the input method under ASC 606 is the best measure of progress towards satisfying the performance obligation and reflects a faithful depiction of the transfer of goods and services. The method of measuring progress towards delivery of the services incorporates actual internal and external costs incurred, relative to total internal and external costs expected to be incurred to satisfy the performance obligation. The period over which total costs were estimated reflected the period over which it performed the activities to achieve clearance of an IND application and our best estimate of the period over which it would take to perform the completion of the phase 1 clinical trial. During the year ended December 31, 2025, the Company recognized $7,764 of Phase 1 services revenues, during the year ended December 31, 2024, the Company recognized $22,864 of license, IND services and Phase 1 services revenues, and during the year ended December 31, 2023, the Company recognized $23,459 of license revenues. As of December 31, 2025, the Company included deferred revenues of $10,970 in current liabilities and $24,943 in non-current liabilities. Share Based Payments We account for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation”, or ASC 718, which requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. We account for forfeitures as they occur. The value of the pro-rata portion of the award, assuming no forfeiture, is recognized in our consolidated statement of comprehensive loss as an expense over the requisite service periods. Upon forfeiture the expense is adjusted so that expense is recognized for the portion of the award that actually vested. We selected the Black-Scholes-Merton option pricing model as the most appropriate method for estimating the fair value of our share-based awards. The resulting cost of an equity incentive award is recognized as an expense over the requisite service period of the award, which is usually the vesting period. We recognize compensation expense over the vesting period using the straight-line method and classify these amounts in the consolidated financial statements based on the department to which the related employee reports. This model evaluates the options as if there is a single exercise point, and thus considers expected option life (expected term). The input factored in this model is constant for the entire expected life of the option. The determination of the grant date fair value is affected by estimates and assumptions regarding a number of complex and subjective variables, including the expected term of the options, the expected volatility of our share price over the expected term, risk-free interest rates and expected dividends. The computation of expected volatility is based on the historical volatility of our shares. The risk-free interest rate assumption is the implied yield currently available on United States treasury zero-coupon issues with a remaining term equal to the expected life term of the options. We determined the expected life of the options based on historical experience, representing the period of time that options granted are expected to be outstanding. The fair value of RSUs is the fair value of the ordinary share at the date of grant. Share-based compensation expense recognized under ASC 718 was approximately $1.9 million, $3.0 million and $3.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. 76