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Item 2 — Management's Discussion and Analysis
Inhibrx Biosciences, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report, and our audited consolidated financial statements and notes thereto as of and for the fiscal year ended December 31, 2025 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, or the Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report contains forward-looking statements that involve risk and uncertainties, including those described in the section titled “Special Note Regarding Forward-Looking Statements.” As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biopharmaceutical company with a pipeline of novel biologic therapeutic candidates, developed using our proprietary modular protein engineering platforms. We leverage our innovative protein engineering technologies and deep understanding of target biology to create therapeutic candidates with attributes and mechanisms we believe to be superior to current approaches and applicable to a range of challenging, validated targets with high potential.
Current Clinical Pipeline
Our current clinical pipeline of therapeutic candidates includes ozekibart and INBRX-106, both of which utilize our multivalent formats where the precise valency can be optimized in a target-centric way to mediate what we believe to be the most appropriate agonist function:
ozekibart (INBRX-109) INBRX-106
Tetravalent DR5 agonist Hexavalent OX40 agonist
Program Therapeutic Area Target(s)/Format STAGE OF DEVELOPMENT
Preclinical Phase 1 Phase 2 Phase 3
ozekibart (INBRX-109)* Oncology DR5 Tetravalent Agonist
INBRX-106** Oncology OX40 Hexavalent Agonist
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* Currently being investigated in chondrosarcoma, Ewing sarcoma, colorectal cancer, and certain other solid tumor types.
** Currently being investigated in patients with non-small cell lung cancer, or NSCLC, head and neck squamous cell carcinoma, or HNSCC, among others.
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ozekibart (INBRX-109)
Ozekibart is a precisely engineered tetravalent death receptor 5, or DR5, agonist currently being evaluated in patients diagnosed with colorectal cancer, Ewing sarcoma, chondrosarcoma, and certain other solid tumor types.
Colorectal adenocarcinoma
In April 2026, we announced interim data from the Phase 1/2 study evaluating ozekibart in combination with FOLFIRI in patients with locally advanced or metastatic, unresectable colorectal cancer, or CRC. Efficacy was assessed in 45 evaluable patients as of April 10, 2026, the cutoff date, and resulted in an ORR of 20% per RECIST v1.1 criteria. Historically, the current standard of care has yielded limited response rates (ORR of 1-6% per RECIST v1.1 criteria). Nearly half of responses were durable with a duration of response exceeding 6 months. Responses were observed irrespective of RAS/RAF mutation status. The median progression-free survival, or PFS, for the evaluable population was 5.5 months. Notably, 42% of patients remained progression-free at the 6-month landmark, with 9 patients remaining on therapy, suggesting that a significant portion of patients achieve durable disease control that extends well beyond the median PFS. The overall disease control rate (partial responses and stable disease as best response) remained robust at 87%, further supporting the potential of ozekibart to control tumor growth in a heavily pre-treated population. Ozekibart in combination with FOLFIRI continues to maintain a manageable safety profile. The most common treatment-related adverse events were diarrhea, fatigue, and nausea, which were largely Grade 1 or 2 and consistent with the known side effects of FOLFIRI. Despite the majority of the patients (68%) presenting with liver metastases at baseline, no significant liver toxicity was observed.
During the second quarter of 2026, we initiated two additional Phase 1 cohorts in CRC: (1) a second line study investigating ozekibart in combination with Folfiri and Avastin, and (2) a third/fourth line study investigating ozekibart in combination with Lonsurf and Avastin. We expect to announce interim results from these cohorts during the first quarter of 2027. We plan to meet with the FDA in the fourth quarter of 2026 to discuss our plans to initiate a first-line registrational trial in CRC, as well as the potential for an accelerated regulatory pathway for ozekibart in fourth-line CRC.
Ewing sarcoma
In November 2023, we announced interim efficacy and safety data from the cohort of the Phase 1/2 trial evaluating ozekibart in combination with Irinotecan, or IRI, and Temozolomide, or TMZ, for the treatment of advanced or metastatic, unresectable Ewing sarcoma. Overall, ozekibart in combination with IRI/TMZ was well tolerated from a safety perspective.
Based on this preliminary data, the ongoing Phase 1/2 trial in the Ewing sarcoma cohort was expanded to enroll up to an additional 50 patients. In March 2026, we provided an update at the European Society for Medical Oncology (ESMO) Sarcoma and Rare Cancers Congress. Of the 31 patients evaluable based on a cutoff date of January 15, 2026, we observed a 64.5% ORR and a disease control rate of 87.1%. At the time of the presentation, responses were ongoing in eight patients, one of which had been on treatment and progression free for more than two years.
We expect to complete enrollment in the Phase 1/2 trial of ozekibart in combination with IRI/TMZ for advanced or metastatic, unresectable, relapsed, or refractory Ewing sarcoma in 2027. We are evaluating the submission of clinical data to the National Comprehensive Cancer Network® (NCCN®) to consider ozekibart for potential inclusion in the NCCN Guidelines® as a treatment option for Ewing sarcoma.
Chondrosarcoma
In June 2021, we initiated a randomized, blinded, placebo-controlled, registrational trial in patients with metastatic, unresectable conventional chondrosarcoma, which enrolled over 200 patients in total at 68 different sites worldwide and for which the United States Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, granted orphan drug designation for the treatment of chondrosarcoma in November 2021 and August 2022, respectively. The primary endpoint for this trial was PFS.
In October 2025, we announced this trial met its primary endpoint of a statistically significant and clinically meaningful median PFS for patients with advanced or metastatic chondrosarcoma treated with ozekibart compared to placebo. Ozekibart achieved a 52% reduction in the risk of disease progression or death compared to placebo
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(stratified Hazard Ratio 0.479; 95% CI: 0.33, 0.68); P<0.0001), more than doubling median PFS to 5.52 months versus 2.66 months for placebo. Importantly, ozekibart is the first investigational therapy to demonstrate a significant PFS benefit in a randomized trial for chondrosarcoma, a disease with no approved systemic options.
In June 2026, the FDA accepted for filing our biologics license application for the potential approval of ozekibart in conventional chondrosarcoma.
INBRX-106
INBRX-106 is a hexavalent OX40 agonist currently being investigated as a single agent and in combination with KEYTRUDA® (pembrolizumab), a PD-1 blocking checkpoint inhibitor, in patients with locally advanced or metastatic solid tumors. KEYTRUDA® is a registered trademark of Merck Sharp & Dohme LLC, a subsidiary of Merck & Co., Inc., Rahway, NJ, USA. INBRX-106 is currently being investigated in combination with KEYTRUDA® in patients with non-small cell lung cancer, or NSCLC, head and neck squamous cell carcinoma, or HNSCC, among others.
In May 2026, we announced positive interim results from the randomized, first-line Phase 2 portion of the HexAgon study. The trial evaluated the safety and efficacy of INBRX-106 in combination with pembrolizumab (the combination arm) versus pembrolizumab monotherapy (the control arm) in first-line patients with treatment-naïve, PD-L1 positive (CPS ≥ 20) metastatic or unresectable recurrent HNSCC. The Phase 2 portion of the HexAgon study enrolled 68 patients: 33 randomized to the combination arm and 35 to the control arm. In the evaluable population, 11 out of 25 patients (44.0%) in the INBRX-106 combination arm achieved a confirmed objective response, compared with 6 out of 28 patients (21.4%) in the control arm. This represented a 22.6% absolute increase in confirmed responses. Three complete responses were observed in the INBRX-106 combination arm, reflecting tumor clearance, while no complete responses were observed with pembrolizumab alone. Complete responses in first-line HNSCC remain uncommon and are generally associated with more durable outcomes. The combination of INBRX-106 and pembrolizumab was generally manageable, with a safety profile consistent with the addition of an active immunostimulatory agent to checkpoint blockade. The most common treatment-related adverse events were rash, diarrhea, fatigue, and infusion-related reactions, which were predominantly low-grade. No treatment-related deaths were reported in either arm.
The progression-free survival data from the Phase 2 portion of the HexAgon study are expected to become available in the third quarter of 2026. We plan to begin the Phase 3 portion of the HexAgon study during the third quarter of 2026.
Based on these promising early results, we aim to evaluate INBRX-106 across broader indications to potentially improve the efficacy of checkpoint inhibitors. This strategy includes initiating a study in the perioperative setting in NSCLC. We believe OX40 agonism has the greatest potential to drive cure in earlier-stage disease settings, where patients typically retain a more active and responsive immune system. Outside of combination with checkpoint inhibitors, we plan to explore combinations with agents that could benefit from T-cell costimulation, such as vaccines, T-cell engagers, and CAR-Ts.
Components of Results of Operations
Revenue
As of the date of this Quarterly Report, all of our revenue has been derived from licenses with collaboration partners and grant awards. We have not generated any revenue from the commercial sale of approved therapeutic products to date.
Operating Expenses
Research and Development
As of the date of this Quarterly Report, our research and development expenses have related primarily to research activities, including our discovery efforts, and preclinical and clinical development and the manufacturing of our therapeutic candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
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In accordance with the applicable accounting and regulatory requirements, we track all research and development expenses in the aggregate and do not manage or track either external or internal expenses on a program-by-program basis. External research and development expenses are instead managed and tracked by the nature of the activity, and primarily consist of contract manufacturing and clinical trial expenses. Internal research and development expenses primarily relate to personnel, early research and consumable costs, which are deployed across multiple projects under development. We manage and prioritize our research and development expenses based on scientific data, probability of successful technical development and regulatory approval, market potential and unmet medical need, among other considerations. We regularly review our research and development activities and, as necessary, reallocate resources that we believe will best support the long-term growth of our overall business. We review expenses incurred by vendor and by contract as benchmarked against the progression of our clinical and other milestones.
External research and development expenses consist of:
•expenses incurred in connection with the preclinical development of our programs;
•clinical trials of our therapeutic candidates, including under agreements with third parties, such as consultants and contract research organizations, or CROs;
•expenses associated with the manufacturing of our therapeutic candidates under agreements with contract development and manufacturing organizations, or CDMOs;
•expenses associated with regulatory requirements, including fees and other expenses related to our Scientific Advisory Board; and
•other external expenses, such as laboratory services related to our discovery and development programs and other shared services.
Internal research and development expenses consist of:
•salaries, benefits and other related costs, including non-cash stock-based compensation under the 2024 Omnibus Incentive Plan, or the 2024 Plan, for personnel engaged in research and development functions;
•facilities, depreciation and other expenses, which include direct and allocated expenses for depreciation and amortization, rent and maintenance of facilities; and
•other internal expenses, such as laboratory supplies and other shared research and development costs.
We expect that research and development expense will continue to increase over the next several years as we continue development of our therapeutic candidates currently in clinical stage development and support our preclinical programs. In particular, clinical development of our therapeutic candidates, as opposed to preclinical development, generally has higher development costs, primarily due to the increased size and duration of later-stage clinical trials. Moreover, the costs associated with our CDMOs to manufacture our therapeutic candidates and future commercial products is also much more costly as compared to early-stage preclinical development. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our therapeutic candidates due to the inherently unpredictable nature of preclinical and clinical development. Preclinical and clinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which therapeutic candidates to pursue and how much funding to direct to each therapeutic candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments, and our ongoing assessments as to each therapeutic candidate’s commercial potential. We will need substantial additional capital in the future to support these efforts. In addition, we cannot forecast which therapeutic candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
Our clinical development costs may vary significantly based on factors such as:
•the per patient trial costs;
•the number of trials required for approval;
•the number of sites included in the trials;
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•the countries in which the trials are conducted;
•the length of time required to enroll eligible patients;
•the number of patients that participate in the trials;
•the ability to identify patients eligible for our clinical trials;
•the number of doses that patients receive;
•the drop-out or discontinuation rates of patients;
•the potential additional safety monitoring requested by regulatory agencies;
•the duration of patient participation in the trials and follow-up;
•the cost, timing, and successful manufacturing of our therapeutic candidates;
•the phase and development of our therapeutic candidates;
•the efficacy and safety profile of our therapeutic candidates;
•the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators;
•maintaining a continued acceptable safety profile of our therapeutic candidates following approval, if any;
•significant and changing government regulation and regulatory guidance;
•the ability to attract and retain personnel;
•the impact of any business interruptions to our operations or to those of the third parties with whom we work;
•the uncertainties related to potential economic downturn, inflation, interest rates, geopolitical events and widespread health events on capital and financial markets, the supply chain and our expenses; and
•the extent to which we establish additional strategic collaborations or other arrangements.
General and Administrative
General and administrative, or G&A, expenses consist primarily of:
•salaries, benefits and other related costs, including non-cash stock-based compensation under the 2024 Plan, for personnel engaged in G&A functions;
•expenses incurred in connection with accounting, audit, and tax services, legal services, including costs associated with obtaining and maintaining our patent portfolio, investor relations and consulting expenses under agreements with third parties, such as consultants and contractors;
•expenses incurred in connection with commercialization and business development activity; and
•facilities, depreciation and other expenses, which include direct and allocated expenses for depreciation and amortization, rent and maintenance of facilities, insurance and supplies.
We expect certain of our G&A expenses will continue to increase in the future to support our continued research and development activities, including costs related to pre-commercialization and business development activities. Additionally, we will continue to incur other professional service fees, including but not limited to, legal costs associated with the filing, prosecution, and maintenance of our patents for our therapeutic candidates, and other legal matters, as well as costs associated with services for compliance, accounting, legal, regulatory, tax, investor and public relations.
Other Income (Expense)
Interest expense. Interest expense consists of interest on our 2025 Loan Agreement, as amended, with Oxford Finance LLC and other lenders, or collectively, Oxford.
Interest income. Interest income consists of interest earned on cash and cash equivalents.
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Results of Operations
Comparison of the Three Months Ended June 30, 2026 and June 30, 2025
The following table summarizes our condensed consolidated results of operations for each of the periods indicated (in thousands, except percentages):
THREE MONTHS ENDED JUNE 30, CHANGE
2026 2025 ($) (%)
Revenue:
License fee revenue $ — $ 1,300 $ (1,300) (100) %
Total revenue — 1,300 (1,300) (100) %
Operating expense:
Research and development $ 23,899 $ 22,267 $ 1,632 7 %
General and administrative 8,250 6,422 1,828 28 %
Total operating expense 32,149 28,689 3,460 12 %
Loss from operations (32,149) (27,389) (4,760) 17 %
Other income (expense)
Interest expense (5,693) (3,141) (2,552) 81 %
Interest income 1,263 2,124 (861) (41) %
Other expense, net (68) (246) 178 (72) %
Total other expense (4,498) (1,263) (3,235) 256 %
Provision for income taxes 3 2 1 50 %
Net loss $ (36,650) $ (28,654) $ (7,996) 28 %
Revenue
License fee revenue during the three months ended June 30, 2025 was $1.3 million and consisted of revenue related to our License and Assignment Agreement with Scithera, Inc., or the Scithera License Agreement, which we recognized following the completion of the transfer of all licenses, related materials, and know-how. We did not recognize any revenue during the three months ended June 30, 2026.
Research and Development Expense
The following table sets forth the primary external and internal research and development expenses (in thousands, except percentages):
THREE MONTHS ENDED JUNE 30, CHANGE
2026 2025 ($) (%)
External expenses:
Contract manufacturing $ 5,418 $ 3,828 $ 1,590 42 %
Clinical trials 5,285 4,082 1,203 29 %
Other external research and development 2,122 2,316 (194) (8) %
Internal expenses:
Personnel 8,017 8,637 (620) (7) %
Equipment, depreciation, and facility 2,489 2,563 (74) (3) %
Other internal research and development 568 841 (273) (32) %
Total research and development expenses $ 23,899 $ 22,267 $ 1,632 7 %
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Research and development expenses increased by $1.6 million from $22.3 million during the three months ended June 30, 2025 to $23.9 million during the three months ended June 30, 2026. The overall increase was primarily due to the following factors:
•contract manufacturing expense increased by $1.6 million due to the timing of certain manufacturing activities required to support our clinical trials for ozekibart (INBRX-109) and INBRX-106, including the initiation of certain activities associated with our filing of the BLA for potential approval of ozekibart (INBRX-109) in conventional chondrosarcoma;
•clinical trial expense increased by $1.2 million due to the progression of our clinical trials for ozekibart (INBRX-109) and INBRX-106 and the timing of the completion of enrollment in our trial for ozekibart (INBRX-109) for the treatment of unresectable or metastatic conventional chondrosarcoma;
•personnel-related expense decreased by $0.6 million, which was primarily related to a decrease in headcount; and
•other research and development expenses decreased by $0.5 million, primarily due to a decrease in clinical consulting services.
G&A Expense
General and administrative expenses increased by $1.8 million from $6.4 million during the three months ended June 30, 2025 to $8.2 million during the three months ended June 30, 2026. The overall increase was primarily due to the following factors:
•pre-commercialization expenses increased by $1.6 million, which was primarily related to the progression of our potential commercialization strategy surrounding market access and launch and the development of communication materials for ozekibart (INBRX-109) in conventional chondrosarcoma; and
•personnel-related expense increased by $0.4 million, which was primarily related to an increase in stock options outstanding during the period.
Other income (expense)
Interest expense. Interest expense was $5.7 million and $3.1 million during the three months ended June 30, 2026 and June 30, 2025, respectively, all of which related to interest incurred and the amortization of debt discounts related to the 2025 Loan Agreement, as amended. We incurred increased interest expense on the $175.0 million in principal outstanding during the three months ended June 30, 2026 following the March 2026 Amendment, upon which we received an additional $75.0 million in gross proceeds, as compared to the $100.0 million in principal outstanding during the three months ended June 30, 2025.
Interest income. During the three months ended June 30, 2026 and June 30, 2025, we earned $1.3 million and $2.1 million, respectively, of interest income related to interest earned on our sweep and money market account balances. The decrease in interest income is due to lower average cash balances and decreased interest rates.
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Comparison of the Six Months Ended June 30, 2026 and June 30, 2025
The following table summarizes our condensed consolidated results of operations for each of the periods indicated (in thousands, except percentages):
SIX MONTHS ENDED JUNE 30, CHANGE
2026 2025 ($) (%)
Revenue:
License fee revenue $ — $ 1,300 $ (1,300) (100) %
Total revenue — 1,300 (1,300) (100) %
Operating expense:
Research and development 49,116 59,144 (10,028) (17) %
General and administrative 13,960 12,446 1,514 12 %
Total operating expense 63,076 71,590 (8,514) (12) %
Loss from operations (63,076) (70,290) 7,214 (10) %
Other income (expense)
Interest expense (9,202) (5,830) (3,372) 58 %
Interest income 2,270 4,453 (2,183) (49) %
Other expense, net (80) (296) 216 (73) %
Total other expense (7,012) (1,673) (5,339) 319 %
Provision for income taxes 3 2 1 50 %
Net loss $ (70,091) $ (71,965) $ 1,874 (3) %
License Fee Revenue
License fee revenue during the six months ended June 30, 2025 was $1.3 million and consisted of revenue related to our License and Assignment Agreement with Scithera, Inc., or the Scithera License Agreement, which we recognized following the completion of the transfer of all licenses, related materials, and know-how. We did not recognize any revenue during the six months ended June 30, 2026.
Research and Development Expense
The following table sets forth the primary external and internal research and development expenses (in thousands, except percentages):
SIX MONTHS ENDED JUNE 30, CHANGE
2026 2025 ($) (%)
External expenses:
Clinical trials $ 14,465 $ 17,347 $ (2,882) (17) %
Contract manufacturing 7,461 12,378 (4,917) (40) %
Other external research and development 4,427 4,594 (167) (4) %
Internal expenses:
Personnel 16,543 17,963 (1,420) (8) %
Equipment, depreciation, and facility 5,051 5,146 (95) (2) %
Other internal research and development 1,169 1,716 (547) (32) %
Total research and development expenses $ 49,116 $ 59,144 $ (10,028) (17) %
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Research and development expenses decreased by $10.0 million from $59.1 million during the six months ended June 30, 2025 to $49.1 million during the six months ended June 30, 2026. The overall decrease was primarily due to the following factors:
•clinical trial expense decreased by $2.9 million, primarily due to a decrease in expense associated with the ozekibart (INBRX-109) trial for the treatment of unresectable or metastatic conventional chondrosarcoma as the trial approached completion of enrollment;
•contract manufacturing expense decreased by $4.9 million primarily due to the timing and completion of certain manufacturing activities required to support our clinical trials for ozekibart (INBRX-109) and INBRX-106, offset in part by the initiation of certain activities associated with our filing of the BLA for potential approval of ozekibart (INBRX-109) in conventional chondrosarcoma;
•personnel-related expense decreased by $1.4 million, which was primarily related to a decrease in headcount; and
•other research and development expense decreased by $0.7 million, which was primarily attributable to a decrease in preclinical studies and the associated lab supplies and materials for research efforts.
G&A Expense
G&A expenses increased by $1.5 million from $12.5 million during the six months ended June 30, 2025 to $14.0 million during the six months ended June 30, 2026. The overall increase during the six months ended June 30, 2026, was primarily due to the following factors:
•pre-commercialization expenses increased by $1.6 million, which was primarily related to the progression of our potential commercialization strategy surrounding market access and launch and the development of communication materials for ozekibart (INBRX-109) in conventional chondrosarcoma;
•personnel-related expenses increased by $0.3 million, which was primarily related to an increase in stock options outstanding during the period; and
•professional service fees decreased by $0.2 million, primarily due to a decrease in legal, accounting, and other consulting services.
Other Expense
Interest expense. Interest expense was $9.2 million and $5.8 million during the six months ended June 30, 2026 and June 30, 2025, respectively, all of which related to interest incurred and the amortization of debt discounts related to the 2025 Loan Agreement, as amended. We incurred increased interest expense on the $175.0 million in principal outstanding during the six months ended June 30, 2026 following the March 2026 Amendment, upon which we received an additional $75.0 million in gross proceeds, as compared to the $100.0 million in principal outstanding during the six months ended June 30, 2025.
Interest income. During the six months ended June 30, 2026 and June 30, 2025, we earned $2.3 million and $4.5 million, respectively, of interest income related to interest earned on our sweep and money market account balances. The decrease in interest income is due to lower average cash balances and decreased interest rates.
Liquidity, Capital Resources and Financial Condition
Sources of Liquidity
As of the date of this Quarterly Report, sources of capital raised to fund our operations have been comprised of the sale of equity securities, borrowings under our prior loan and security agreements, payments received from commercial partners for licensing rights to our therapeutic candidates under development, grants, and proceeds from the sale and issuance of convertible promissory notes.
In January 2025, we entered into the 2025 Loan Agreement with Oxford Finance LLC, or Oxford, upon which we received gross proceeds of $100.0 million, or the Term A Loan. On March 18, 2026, we entered into the First Amendment to Loan and Security Agreement with Oxford, or the March 2026 Amendment. The March 2026 Amendment provided for an additional tranche, or the Term B Loan, in an aggregate principal amount of $75.0 million, upsized from $50.0 million originally available under the 2025 Loan Agreement. Upon closing of the March 2026 Amendment, the Term B Loan was funded and we received gross proceeds of $75.0 million. On July 15, 2026, we entered into the Second Amendment to Loan and Security Agreement with Oxford, or the July 2026 Amendment, or collectively with the 2025 Loan Agreement and the March 2026 Amendment, the Amended 2025
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Loan Agreement. The July 2026 Amendment provides for the funding of up to an additional $325.0 million in gross proceeds, $100.0 million of which we received upon execution of the amendment, or the Term C Loan, with up to an additional $225.0 million to be funded in increments of $50.0 million or more upon the Company’s request and at the Lenders’ sole discretion, or the Term D Loan.
Future Funding Requirements
Since our inception, we have devoted substantially all of our efforts to therapeutic drug discovery and development, conducting preclinical studies and clinical trials, enabling manufacturing activities in support of our therapeutic candidates, pre-commercialization activities, organizing and staffing the Company, establishing our intellectual property portfolio, and raising capital to support and expand these activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. Our net income or losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities, as well as the timing of other corporate transactions. During the six months ended June 30, 2026 our net loss was $70.1 million. As of June 30, 2026, we had an accumulated deficit of $316.3 million and cash and cash equivalents of $133.3 million.
Based upon our current operating plans, we believe that our existing cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months from the date of filing of this Quarterly Report. Our forecast of the period through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect.
The process of conducting preclinical studies and testing therapeutic candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. We expect to continue to incur net losses for the foreseeable future until, if ever, we have an approved product and can successfully commercialize it. We expect our research and development expenses to increase as we continue our development of, and seek marketing approvals for, our therapeutic candidates (especially as we move more candidates into later stages of clinical development), and begin to commercialize any approved products, if ever. At this time, we are preparing to proceed with the commercialization of certain of our therapeutic candidates, if ever approved. As a result, we will incur significant pre-commercialization expenses in preparation for launch, the outcome of which is uncertain. Additionally, if approved, we will incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution.
Until such time we, if ever, can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including strategic licensing and collaborations, strategic transactions, or other similar arrangements and transactions, and from time to time, we engage in discussions with potential acquirers regarding the disposition of one or more of our therapeutic candidates. If the Company does raise additional capital through public or private equity or convertible debt offerings, the ownership interests of its existing stockholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect its stockholders’ rights. If the Company raises capital through additional debt financings, it may be subject to covenants limiting or restricting its ability to take specific actions, such as incurring additional debt or making certain capital expenditures. To the extent that the Company raises additional capital through strategic licensing, collaboration or other similar agreements, it may have to relinquish valuable rights to its therapeutic candidates, future revenue streams or research programs at an earlier stage of development or on less favorable terms than it would otherwise choose, or to grant licenses on terms that may not be favorable to the Company. However, there can be no assurance as to the availability or terms upon which such finances or capital might be available in the future. If we are unable to secure adequate additional funding, we will need to reevaluate our operating plan and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, delay, scale back or eliminate some or all of our development programs, or relinquish rights to our intellectual property on less favorable terms than we would otherwise choose. These actions could materially impact our business, results of operations, financial condition, and prospects.
Our future liquidity and capital funding requirements will depend on numerous factors, including:
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•the outcome, costs and timing of preclinical studies and clinical trials for our current or future therapeutic candidates;
•whether and when we are able to obtain marketing approval to market any of our therapeutic candidates and the outcome of meetings with applicable regulatory agencies, including the FDA;
•our ability to successfully commercialize, including the costs and timing of manufacturing, any therapeutic candidates that receive marketing approval;
•the emergence and effect of competing or complementary therapeutics or therapeutic candidates;
•our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
•our ability to retain our current employees and the need and ability to hire additional management and scientific and medical personnel;
•the costs and timing of establishing or securing sales and marketing capabilities if any current or future therapeutic candidate is approved;
•the terms and timing of any strategic licensing, collaboration or other similar agreement that we have established or may establish;
•our ability to achieve market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved therapeutics;
•our ability to repay, refinance or restructure when payment is due any indebtedness we might incur, including in the event such indebtedness is accelerated;
•the valuation of our capital stock; and
•the continuing or future effects of a potential economic downturn, inflation, interest rates, geopolitical events, and widespread health events on capital and financial markets, the supply chain and our expenses.
We do not own or operate manufacturing and testing facilities for the production of any of our therapeutic candidates, nor do we have plans to develop our own manufacturing operations in the foreseeable future. We currently rely on a limited number of third-party contract manufacturers for all of our required raw materials, antibodies and other biologics for our preclinical research, clinical trials, and if and when applicable, commercial product, and employ internal resources to manage our manufacturing relationships with these third parties.
Commitments
Our material cash requirements from known contractual and other obligations primarily relate to our lease obligations, debt, and services provided by our third party CROs and CDMOs.
Our lease for our laboratory and office space expires in 2028, with an option to extend for an additional three years. As of June 30, 2026, we had future minimum rental payments under these leases of $5.9 million, of which $2.9 million and $3.0 million are current and non-current, respectively. For more information regarding these lease agreements, refer to Note 7 to the unaudited condensed consolidated financial statements.
Under the 2025 Loan Agreement, as amended, we are required to make interest only payments through February 2028, with all principal payments and final fee payments beginning in March 2028 and continuing through the maturity date of January 2030. As of June 30, 2026, we have a minimum obligation of $237.9 million of long-term debt, including minimum interest and final fee payments, of which $17.7 million and $220.2 million are current and non-current, respectively. For more information regarding the Amended 2025 Loan Agreement, refer to Note 3 to the condensed consolidated financial statements.
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We enter into contracts in the normal course of business with CROs related to our ongoing preclinical studies and clinical trials and with CDMOs for clinical supplies and manufacturing scale-up activities. These contracts are generally cancellable, with notice, at our option. We have recorded accrued expenses of approximately $6.6 million in our condensed consolidated balance sheets for expenditures incurred by CROs and CDMOs as of June 30, 2026.
While these contracts are generally cancellable, some may contain specific activities that involve one or more noncancellable commitments. Depending on the timing and reasoning of the exit, certain termination penalties may apply and can range from the cost of work performed to date up to twelve months of future committed manufacturing costs. As of June 30, 2026, the noncancellable portion of these contracts totaled in aggregate, excluding amounts recorded in accounts payable and accrued expenses as of this date, approximately $15.9 million. The noncancellable purchase commitments relate to future contract manufacturing of drug supply for one of our therapeutic candidates.
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Cash Flow Summary
The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):
SIX MONTHS ENDED JUNE 30,
2026 2025
Net cash used in operating activities $ (67,943) $ (65,848)
Net cash used in investing activities — (21)
Net cash provided by financing activities 77,067 99,840
Net increase in cash and cash equivalents $ 9,124 $ 33,971
Operating Activities
Net cash used in operating activities was $67.9 million during the six months ended June 30, 2026 and consisted primarily of a net loss of $70.1 million, adjusted for non-cash items, including accretion on our debt discount and the non-cash portion of interest expense related to our debt of $2.0 million, stock-based compensation expense of $5.8 million, depreciation and amortization of $1.1 million and non-cash lease expense of $1.0 million. Changes in operating assets and liabilities also contributed to the cash used in operating activities, including the decrease in operating lease liability of $1.1 million as a result of lease payments made throughout the period, and an increase in prepaid expenses and other current assets of $0.7 million and a decrease in accrued expenses of $9.8 million due to the timing of payments to our CRO and CDMO partners during the period. These uses of cash were offset in part by an increase in accounts payable of $3.8 million during the period.
Net cash used in operating activities was $65.8 million during the six months ended June 30, 2025 and consisted primarily of a net loss of $72.0 million, adjusted for non-cash items, including accretion on our debt discount and the non-cash portion of interest expense related to our debt of $1.2 million, stock-based compensation expense of $5.2 million, depreciation and amortization of $1.3 million and non-cash lease expense of $0.9 million. Changes in operating assets and liabilities also contributed to the cash used in operating activities, including the decrease in operating lease liability of $0.5 million as a result of lease payments made throughout the period, an increase in accounts receivables and other receivables of $0.6 million, and decreases in accounts payable of $1.0 million and accrued expenses of $1.4 million due to the timing of payments to our CRO and CDMO partners during the period. These uses of cash were offset in part by a decrease in prepaid expenses and other current assets of $1.0 million.
Investing Activities
Net cash used in investing activities was approximately $21,000 during the six months ended June 30, 2025, and was related to capital purchases of laboratory equipment. We did not use any cash in investing activities during the six months ended June 30, 2026.
Financing Activities
Net cash provided by financing activities was $77.1 million during the six months ended June 30, 2026, which consisted of $75.0 million in net proceeds from the March 2026 Amendment and $2.1 million in proceeds from the exercise of stock options. Net cash provided by financing activities was $99.8 million during the six months ended June 30, 2025, which consisted of net proceeds from the 2025 Loan Agreement which we entered into in January 2025.
Critical Accounting Estimates and Policies
Our consolidated financial statements and accompanying notes are prepared in accordance with United States generally accepted accounting principles, or GAAP, which requires management to make estimates and assumptions that affect the amounts reported. Management bases its estimates on historical experience, market and other conditions, and various other assumptions it believes to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, the estimation process is, by its nature, uncertain given that estimates depend on events over which we may not have control. If market and other conditions change from those that we anticipate, our consolidated financial statements may be materially affected. In addition, if our assumptions change, we may need to revise our estimates, or take other corrective
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actions, either of which may also have a material effect in our consolidated financial statements. We review our estimates, judgments, and assumptions used in our accounting practices periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that these estimates are reasonable; however, our actual results may differ from these estimates.
There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes and other financial information included in the 2025 Annual Report.
Emerging Growth Company
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in 2012. As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, presenting only two years of audited financial statements, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation, and an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or golden parachute arrangements.
In addition, an emerging growth company can take advantage of an extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
In light of the market value of our common stock held by non-affiliates as of June 30, 2026, we expect that we will no longer be an emerging growth company effective on December 31, 2026.
Smaller Reporting Company Status
Additionally, we are a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act. As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not smaller reporting companies, including, but not limited to, reduced disclosure obligations regarding executive compensation.
We will remain a smaller reporting company as long as either: (i) the market value of the shares of our common stock held by non-affiliates is less than $250.0 million as of the last business day of our most recently completed second fiscal quarter; or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of the shares of our common stock held by non-affiliates is less than $700.0 million as of the last business day of our most recently completed second fiscal quarter.
In light of our annual revenue during 2025 and the market value of the shares of our common stock held by non-affiliates as of June 30, 2026, we expect that we will no longer be a smaller reporting company beginning with our Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2027. Based on recent SEC guidance, we will, however, continue to be a non-accelerated filer through at least our fiscal year ending December 31, 2027.
Recent Accounting Pronouncements
See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of recent accounting pronouncements and their effect, if any, on us.
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