XNCR

The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the consolidated financial statements and accompanying notes thereto 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 year ended December 31, 2025. See also “Special Note Regarding Forward-Looking Statements” included in this Quarterly Report on Form 10-Q. OVERVIEW We are a clinical-stage biopharmaceutical company focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and autoimmune diseases who have unmet medical needs. Leveraging our XmAb® protein engineering platforms, we rapidly design, engineer and advance purpose-built drug candidates with novel mechanisms of action and improved therapeutic potential. We advance selected candidates through clinical development, while also partnering with programs to access complementary development and commercialization capabilities. Our portfolio spans early- and mid-stage clinical programs, and our strategic approach emphasizes disciplined portfolio management, including advancing, partnering, or discontinuing programs based on clinical data and development priorities. Three marketed medicines have been developed using our XmAb technologies. Refer to Part I, “Item 1. Business” in our Annual Report on Form 10-K for the year ended December 31, 2025 for a more detailed discussion of our business, technology platforms, pipeline, and key developments. Wholly Owned Clinical-Stage XmAb Drug Candidates We are currently enrolling seven clinical studies to evaluate our XmAb drug candidates for patients with many different types of serious diseases. Oncology Programs XmAb819 (ENPP3 x CD3): XmAb819 is a novel, potential first-in-class, tumor-targeted, T-cell engaging XmAb 2+1 bispecific antibody in development for patients with clear cell renal cell carcinoma (ccRCC) and additional ENPP3+ tumors. XmAb819 is designed to engage the immune system and activate T cells for highly potent and targeted lysis of tumor cells expressing ENPP3. ENPP3 is differentially expressed with high level expression in several tumor types and low level expression on normal tissues. With two tumor-antigen binding domains and one T-cell binding domain, our XmAb 2+1 format is designed to enable antibodies to bind more avidly and selectively kill tumor cells with higher antigen density, potentially sparing normal cells. We are conducting a Phase 1 study to evaluate XmAb819 in patients with ENPP3+ tumors. Currently, expansion cohorts are evaluating intravenous doses to support selection of a dose for the planned Phase 3 pivotal study for patients with advanced ccRCC; dose escalation of subcutaneous administration in advanced ccRCC is ongoing; a sub-study for patients with ENPP3+ advanced colorectal cancer (CRC), non-small cell lung cancer (NSCLC) and papillary renal cell carcinoma (pRCC) began enrollment in the second quarter of 2026, and a sub-study for patients with intermediate- or poor-risk advanced ccRCC who have progressed after front-line immuno-oncology (IO) doublet therapy is planned to open for enrollment in the third quarter of 2026. XmAb541 (CLDN6 x CD3) + XmAb808 (B7-H3 x CD28): XmAb541 and XmAb808 are being evaluated in Phase 1 clinical development for T-cell engagement of CLDN6-expressing tumors, including high-grade serous ovarian cancer. Together, XmAb541 and XmAb808 are intended to provide tumor-targeted T-cell activation and co-stimulation. XmAb541 is a novel, potential first-in-class, tumor-targeted, T-cell engaging XmAb 2+1 bispecific antibody. The XmAb 2+1 multivalent format used in XmAb541 is intended to enable greater selectivity for CLDN6 over similar claudin 22 Table of Contents family members, such as CLDN9, CLDN3 and CLDN4, and XmAb541 is designed to engage the immune system and activate T cells for highly potent and targeted lysis of tumor cells expressing CLDN6. XmAb808 is a tumor-selective, co-stimulatory CD28 bispecific antibody that binds to the broadly expressed tumor antigen B7-H3 and is also constructed with the XmAb 2+1 multivalent format. Co-stimulation is required for T cells to achieve full activation, and targeted CD28 bispecific antibodies may provide conditional co-stimulation when the antibodies are bound to tumor cells. At the American Association for Cancer Research Annual Meeting in April 2026, we presented data demonstrating co-expression of CLDN6 and B7-H3 on high-grade serous ovarian carcinoma cells. Preclinical testing demonstrated that XmAb808 promoted durable T-cell-directed killing of cancer cells with XmAb541, enhanced XmAb541-induced killing by exhausted T cells and enhanced the anti-tumor activity of XmAb541. CLDN6 and B7-H3 have low expression overlap on normal tissues, potentially localizing T-cell co-stimulation to tumor cells, which supports the continued clinical evaluation of the XmAb541 and XmAb808 combination in patients with CLDN6-expressing tumors. XmAb541 (CLDN6 x CD3): We have prioritized the development of XmAb541 in combination with XmAb808. XmAb541 monotherapy expansion cohorts at the putative recommended Phase 3 dose (RP3D) of 60 mg dosed every 3 weeks in high-grade serous ovarian carcinoma (TPS≥50) and germ cell tumors are expected to complete enrollment by year end, with the data intended to support further combination development with XmAb808. Emerging clinical data from XmAb541 monotherapy support evaluation of XmAb541 in combination with XmAb808. At the putative RP3D, clinical activity has been observed in heavily pretreated patients, with an approximate overall response rate of 14% in patients with ovarian cancer and an approximate overall response rate of 28% in patients with germ cell tumors. Potential additional anti-tumor activity was observed at doses above 60 mg; however, reversible hearing impairment limited XmAb541 exposure due to the frequency of dose interruptions and dose reductions at those higher dose levels. Hearing impairment is potentially on-target for CLDN6, which is expressed on cochlear hair cells. The safety profile of XmAb541 monotherapy at the putative RP3D supports further clinical evaluation, including future outpatient administration. Cytokine release syndrome (CRS) has been low grade and no cases of Grade ≥3 CRS were reported at any dose level. At the putative RP3D, Grade 1 CRS was reported in approximately 14% of patients, and Grade 2 CRS was reported in approximately 17%. No other clinically significant safety signals have been observed. Based on monotherapy data, in July 2026 the U.S. Food and Drug Administration granted Fast Track designation to XmAb541 for the treatment of patients with germ cell tumors who have relapsed following two or more lines of platinum therapy or were refractory to prior platinum therapy. Autoimmune Disease Programs XmAb942 (Xtend TL1A): XmAb942 is a high-potency, extended half-life, investigational anti-TL1A antibody in clinical development for patients with inflammatory bowel disease (IBD), such as ulcerative colitis (UC) and Crohn’s disease (CD). The first generation of anti-TL1A antibodies, designed to block the interaction between the DR3 receptor and its ligand TL1A, have reduced disease activity in patients with UC and CD in multiple clinical studies. We announced final results from a Phase 1 dose-escalation study in healthy participants at Digestive Disease Week (DDW) in May 2026. The results indicate that XmAb942 was well tolerated. Pharmacokinetic analysis of the single dose cohorts estimated a human half-life of 74.1 days, which supports a 12-week dosing interval during maintenance treatment. We initiated a Phase 2b study of XmAb942 in UC, the XENITH-UC Study, in the third quarter of 2025. XENITH-UC is a randomized, double-blind, placebo-controlled trial in patients with moderate-to-severe UC, whose disease has progressed after at least one conventional or advanced therapy. XmAb412 (TL1A x IL-23p19): XmAb412 is a novel bispecific antibody using the XenLock™ platform for dual targeting of inflammatory pathways in autoimmune and inflammatory disease. We presented preclinical characterization of XmAb412 at DDW in May 2026. XmAb412 robustly suppresses both TL1A and IL-23 inflammatory pathways and is predicted from preclinical pharmacokinetic data to have a human half-life between 60 and 70 days. XmAb412 supports high-concentration, low viscosity and citrate-free formulation suitable for subcutaneous dosing. We initiated a first-in-human study of XmAb412 in the third quarter of 2026. Plamotamab (CD20 x CD3): Plamotamab is a B-cell depleting bispecific T-cell engager that targets CD20, a target receptor on B cells. Based on clinical outcomes from a prior Phase 1 study in hematologic cancers, significant B-cell depletion, and the emergent biology supportive of B-cell targeted T-cell engagers for the treatment of patients with autoimmune diseases, we are evaluating plamotamab in a Phase 1b study for patients with rheumatoid arthritis (RA) who have progressed through prior standard of care treatment. XmAb657 (CD19 x CD3): XmAb657 is a potent, potentially long-acting CD19 x CD3 bispecific antibody, utilizing the XmAb 2+1 bispecific antibody format and Xtend Fc technology. In non-human primate studies, a single dose of 23 Table of Contents XmAb657 deeply reduced B cells by over 99.98% in the peripheral compartment, bone marrow and lymph nodes, which was sustained for at least 42 days. Half-life in non-human primates was estimated to be 15 days, which indicates a potential for durable B-cell depletion in human clinical studies. XmAb657 was well tolerated preclinically, with no clinical signs of cytokine release syndrome. XmAb657 is in development for patients with idiopathic inflammatory myopathies (IIM), systemic sclerosis (SSc) and Sjögren's disease. We are conducting a first-in-human, Phase 1 study to evaluate XmAb657 in healthy volunteers and patients with IIM, SSc and Sjögren's disease. Collaborations, Partnerships and Licensing Arrangements for Approved or Authorized Medicines and Clinical-Stage Programs Engineered with XmAb Fc Domains A key part of our business strategy is to leverage our protein engineering capabilities, XmAb Fc domains and drug candidates with partnerships, collaborations and licenses. Through these arrangements we generate revenues in the form of upfront payments, milestone payments and royalties. For partnerships for our drug candidates, we aim to retain a major economic interest in the form of keeping major geographic commercial rights; profit-sharing; co-development options; and the right to conduct studies with drug candidates developed in the collaboration. The types of arrangements that we have entered into with partners include product licenses, novel bispecific antibody collaborations, technology licensing agreements and strategic collaborations. Product Licenses Product licenses are arrangements in which we have internally developed drug candidates and, based on a strategic review, licensed partial or full rights to third parties to continue development and potential commercialization. We seek partners that can provide infrastructure and resources to successfully develop our drug candidates, have a track record of successfully developing and commercializing medicines, or have a portfolio of development-stage candidates and commercialized medicines that could potentially be developed in rational combinations with our drug candidates. Incyte: The FDA approved Monjuvi® (tafasitamab-cxix) under accelerated approval in July 2020. Monjuvi is a CD19-directed cytolytic antibody containing an XmAb Fc domain for improved cytotoxic potency and indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL), including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT). This indication is approved under accelerated approval based on overall response rate. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial(s). In December 2024, Incyte announced positive full results from the pivotal study of tafasitamab in combination with lenalidomide and rituximab in relapsed or refractory follicular lymphoma (FL) and submitted a supplemental Biologics License Application (“sBLA”), which was accepted in February 2025. In June 2025, the FDA approved Monjuvi in combination with rituximab and lenalidomide for the treatment of adult patients with relapsed or refractory FL. Incyte has also announced positive results from a pivotal study of Monjuvi as a first-line treatment for DLBCL, and Incyte’s global regulatory submissions for Monjuvi/Minjuvi as a treatment for patients with newly diagnosed DLBCL were accepted for review in the second quarter of 2026. Tafasitamab was created and initially developed by us. Tafasitamab is marketed by Incyte under the brand name Monjuvi in the U.S. and under the brand name Minjuvi® in Europe and Canada. Incyte has exclusive commercialization rights to tafasitamab outside the U.S. In February 2024, Incyte acquired exclusive global development and commercialization rights to tafasitamab from MorphoSys AG. Monjuvi® and Minjuvi® are registered trademarks of Incyte. Zenas: Zenas is advancing obexelimab, an antibody that targets CD19 with its variable domain, for the treatment of patients with autoimmune diseases. Obexelimab uses an XmAb Fc domain that was designed to inhibit the function of B cells, an important component of the immune system. Obexelimab was created and initially developed by us and was licensed to Zenas in November 2021. Zenas’ partner, Bristol Myers Squibb, holds exclusive development and commercialization rights for obexelimab in Japan, South Korea, Taiwan, Hong Kong, Singapore, and Australia. In January 2026, Zenas announced positive results from the Phase 3 INDIGO trial of obexelimab in patients with immunoglobulin G4-related disease (IgG4-RD), in which the primary endpoint was met. Zenas announced that it submitted a BLA to the FDA for the treatment of IgG4-RD in May 2026 and anticipates submitting a Marketing Authorization Application to the European Medicines Agency in the second half of 2026. Zenas is also conducting a Phase 2 study of obexelimab in patients with systemic lupus erythematosus and has reported positive results from the Phase 2 MoonStone trial of obexelimab in patients with relapsing multiple sclerosis, in which the primary endpoint was met. As of June 30, 2026, we own 3,098,380 shares of common stock in Zenas. Technology License Agreements We enter into technology licensing agreements in which we license access to one or more of our XmAb Fc domains on a restricted basis. Our partners are responsible for all research, development and commercialization activities of the drug 24 Table of Contents candidates. The plug-and-play nature of XmAb technologies allows us to license access to our platforms with limited or no internal research and development activities. Alexion: Alexion’s Ultomiris® uses Xtend Fc technology to enhance the half-life of Ultomiris to allow for a longer duration of action, less frequent dosing and reduced patient burden of therapy compared to the previous generation therapy, Soliris®. Ultomiris has received marketing authorizations in global markets for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), for certain patients with atypical hemolytic uremic syndrome (aHUS), for certain patients with generalized myasthenia gravis (gMG) and for certain patients with neuromyelitis optica spectrum disorder (NMOSD). Alexion is also evaluating Ultomiris in a broad development program across additional hematology, nephrology and neurology indications. In April 2026, Alexion announced positive high-level results from a prespecified interim analysis of the I CAN Phase 3 study in adults with immunoglobulin A nephropathy (IgAN) who are at risk of disease progression and that they will seek accelerated approval in key markets. Ultomiris and Soliris are registered trademarks of Alexion Pharmaceuticals, Inc. We are eligible to receive a low-single-digit percentage royalty on net sales of Ultomiris. Refer to Part I, Item 1, Note 2, Collaboration and Licensing Agreements and Note 13, Subsequent Events of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of the key terms of our arrangements. RESULTS OF OPERATIONS The following table summarizes our results of operations for the following periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 Change 2026 2025 Change (in thousands) Revenues: License $ — $ — $ — $ 100 $ — $ 100 Milestone 10,000 25,000 (15,000) 10,000 39,500 (29,500) Royalties 41,221 18,608 22,613 45,637 36,840 8,797 Total revenues 51,221 43,608 7,613 55,737 76,340 (20,603) Operating expenses: Research and development 71,905 61,665 10,240 136,574 120,243 16,331 General and administrative 16,384 15,115 1,269 34,093 32,452 1,641 Total operating expenses 88,289 76,780 11,509 170,667 152,695 17,972 Operating loss (37,068) (33,172) (3,896) (114,930) (76,355) (38,575) Other income (expense), net(1) 15,149 2,097 13,052 (35,625) (2,985) (32,640) Loss before income tax expense (benefit) and noncontrolling interest $ (21,919) $ (31,075) $ 9,156 $ (150,555) $ (79,340) $ (71,215) (1) Other income (expense), net, included interest income, interest expense, gain/loss on marketable equity securities and asset impairment charges. Revenues Total revenue increased by $7.6 million for the three months ended June 30, 2026 and decreased by $20.6 million for the six months ended June 30, 2026, compared to the corresponding periods in 2025. The change was primarily driven by the revenue recognition associated with Alexion and Incyte license agreements as discussed below. See Note 2, Collaboration and Licensing Agreements of the Notes to Consolidated Financial Statements of Part I, “Item 1. Financial Statements” for more information on revenue recognized under the collaboration and license agreements. Alexion: In January 2013, we entered into an Option and License Agreement (the “Alexion Agreement”) with Alexion. Under the terms of the Alexion Agreement, we granted to Alexion an exclusive research license, with limited sublicensing rights, to make and use our Xtend technology to evaluate and advance compounds. Alexion exercised its rights to one target program, ALXN1210, which is now marketed as Ultomiris®. On December 9, 2025, a new patent related to the Xtend™ Fc domain for antibodies targeting C5 was announced, extending the expected royalty term for Ultomiris® net sales into December 2028 in the United States. On March 4, 2026, Alexion informed us that it had taken the position that it did not owe additional royalties for U.S. sales of Ultomiris and did 25 Table of Contents not intend to make future payments for sales in the U.S. under the parties’ agreement. We disputed this position and, subsequent to June 30, 2026, entered into a settlement agreement with Alexion. See Note 13 for additional information. In the first quarter of 2026, we evaluated the effect of Alexion’s notice, including the variable consideration constraint and the sales‑ and usage‑based royalty guidance applicable to licenses of intellectual property. We concluded that royalties on disputed U.S. sales should be constrained to zero until the uncertainty was resolved. Accordingly, we recorded a reduction of $6.6 million to royalty revenue recorded in 2025 and a corresponding reduction to the related receivable in the first quarter of 2026. There was no cash impact from this entry in the period. Recognition of undisputed ex‑U.S. royalties was unaffected and continues in accordance with ASC Topic 606’s sales‑ and usage‑based royalty guidance. On July 29, 2026, we entered into a settlement agreement with Alexion, which resolved the uncertainty over the variable consideration earned related to U.S. Ultomiris royalties. As a result, we recognized $27.6 million of royalty revenue during the three and six months ended June 30, 2026, related to our royalty rights for U.S. Ultomiris sales from the period of dispute through June 30, 2026. Under the Alexion Agreement, we recognized $37.3 million and $16.8 million of royalty revenue during the three months ended June 30, 2026 and 2025, respectively, and $38.8 million and $32.3 million during the six months ended June 30, 2026 and 2025, respectively. Incyte: In June 2010, we entered into a Collaboration and License Agreement with MorphoSys AG, which was subsequently amended in 2012, 2020 and 2024 (as amended, the “MorphoSys Agreement”). The MorphoSys Agreement provides MorphoSys AG with an exclusive worldwide license to our patents and know-how to research, develop, and commercialize our XmAb5574 product candidate (subsequently renamed MOR208 and tafasitamab) with the right to sublicense under certain conditions. If certain developmental, regulatory and sales milestones are achieved, we are eligible to receive future milestone payments and royalties. In February 2024, Incyte assumed all of MorphoSys AG’s right, title and interest under the MorphoSys Agreement. In February 2025, the FDA accepted Incyte’s submission of a supplemental biologics license application, triggering a $12.5 million milestone payment to us, and approved the application in June 2025, triggering an additional $25.0 million milestone payment to us. Both milestone payments were received by us in 2025. In addition, Incyte dosed two patients in a Phase 2 study on December 29, 2025, one patient with immune thrombocytopenia and one patient with autoimmune hemolytic anemia, triggering a $4.0 million milestone payment to us, which was recognized as revenue in 2025 and collected in January 2026. During the second quarter of 2026, cumulative royalties payable to OMERS reached the $29.3 million maximum under the Monjuvi Royalty Sale Agreement. Under the MorphoSys Agreement, we recognized royalty revenue of $3.9 million and $6.8 million during the three and six months ended June 30, 2026, respectively, consisting of $3.1 million of non-cash royalty revenue and $0.8 million of royalties payable directly to us, compared to non-cash royalty revenue of $1.8 million and $4.5 million during the three and six months ended June 30, 2025, respectively. Zenas: In November 2020, we entered into a License Agreement (the “Zenas Agreement”) with Zenas, pursuant to which we granted Zenas exclusive worldwide rights to develop and commercialize three preclinical-stage Fc-engineered drug candidates. In November 2021, we entered into a second license agreement (the “Second Zenas Agreement”), pursuant to which we granted Zenas exclusive worldwide rights to develop and commercialize obexelimab (XmAb5871). We satisfied our performance obligations under the Zenas agreements in 2021. In May 2026, Zenas submitted a BLA to the FDA for obexelimab in IgG4-RD, which triggered a $10.0 million milestone payment to us under the Zenas Agreement that we received during the second quarter of 2026. Vir Bio: In 2019, we entered into a Patent License Agreement (the “Vir Bio Agreement”) with Vir Bio, granting a non-exclusive license to its Xtend technology for up to two targets, including tobevibart. In March 2025, Vir Bio initiated a Phase 3 study for tobevibart, triggering a $2.0 million milestone payment to us, which was paid in the second quarter of 2025. We recognized nominal amounts of royalty revenue for the three and six months ended June 30, 2026 and 2025. Research and Development (R&D) Expenses R&D expenses include both external and internal costs related to discovering and developing product candidates and new technologies. External costs primarily consist of preclinical studies, clinical trials, and payments to CROs and CMOs for services such as trial management, manufacturing, toxicology studies, and drug formulation, while internal costs include personnel expenses, supplies, and allocated overhead like facilities. These expenses can fluctuate based on factors 26 Table of Contents such as trial stage, patient enrollment, and program activity, and are expected to increase as programs advance. Although R&D activities are largely managed internally, many execution components are outsourced, with external costs tracked by program (except in early discovery stages), while internal costs are managed on an aggregate basis. The following tables summarize our research and development expenses for the following periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) External R&D expenses per program: XmAb942 (Xtend TL1A) $ 14,395 $ 2,963 $ 21,806 $ 5,365 XmAb819 (ENPP3 x CD3) 8,090 6,338 16,946 11,148 XmAb412 (TL1A x IL-23p19) 2,918 1,275 10,056 1,275 XmAb541 (CLDN6 x CD3) 5,230 2,834 8,526 4,975 XmAb657 (CD19 x CD3) 1,544 5,778 2,413 10,177 Plamotamab (CD20 x CD3) 712 2,095 1,029 3,641 XmAb808 (B7-H3 x CD28) 199 1,679 (347) 3,875 Other programs including research and early stage 8,930 5,509 14,016 7,601 Wind down costs of terminated programs 470 3,113 1,615 10,768 Total external R&D expenses $ 42,488 $ 31,584 $ 76,060 $ 58,825 Internal research and development expenses 24,737 23,686 50,756 47,741 Stock based compensation 4,680 6,395 9,758 13,677 Total R&D expenses $ 71,905 $ 61,665 $ 136,574 $ 120,243 R&D expenses increased by $10.2 million and $16.3 million for the three and six months ended June 30, 2026, respectively, compared to the same period in 2025. The increase was primarily driven by higher external and internal costs incurred associated with the programs listed above, which are aligned with our strategic research and development priorities, partially offset by lower stock-based compensation expense in the current period. R&D expenses may fluctuate from period to period depending on the timing, progress, and level of activity of each program. General and Administrative Expenses General and administrative expenses consist of salaries, stock compensation, professional services related to legal, audit, consulting, patent filings, business insurance and technology expenses, facilities, and depreciation and amortization. General and administrative expenses for the three and six months ended June 30, 2026 remained relatively consistent with the same period in 2025. Other Income (Expense), Net Other income (expense), net primarily consists of interest income and expense, gains and losses on marketable equity securities, and asset impairment charges. Other income increased by $13.1 million and other expense increased by $32.6 million for the three and six months ended June 30, 2026, respectively, compared to the same period in 2025. The changes were primarily driven by unrealized gains and losses recognized on our investment in Zenas. LIQUIDITY AND CAPITAL RESOURCES We have historically financed our operations through payments received from product development partnerships and licensing arrangements, private placements of equity securities, and public offerings of common stock. Research and development activities have required significant capital investment since our inception and are expected to continue to require significant cash expenditure as our pipeline continues to expand. On February 25, 2026, we filed an automatic universal shelf registration statement on Form S-3 (File No. 333-270030) as a well-known seasoned issuer as defined in Rule 405 under the Securities Act of 1933, as amended, which became effective upon filing (the “Shelf Registration Statement”). The Shelf Registration Statement allows us to offer an indeterminate amount of securities, including equity securities, debt securities, warrants, rights, units and depositary shares, from time to time as described therein. The specific terms of any offering under the Shelf Registration Statement will be established at the time of such offering. The Shelf Registration Statement will expire on February 25, 2029. 27 Table of Contents On July 29, 2026, we entered into Settlement Agreement with Alexion with respect to a commercial dispute related to U.S. royalties on Ultomiris. Pursuant to the Settlement Agreement, we will receive an aggregate of $105.0 million from Alexion, payable in two equal installments of $52.5 million: the first payment is anticipated to be received in August 2026, and the second payment is due following the one-year anniversary of the date of the Settlement Agreement. Following the settlement, Alexion has no further obligation to pay royalties on U.S. sales of Ultomiris. The Settlement Agreement does not affect the Company’s right to receive royalties on ex-U.S. sales of Ultomiris under the existing terms of the Alexion Agreement, as amended. As of June 30, 2026, we had $486.4 million of cash, cash equivalents, and marketable debt securities compared to $610.8 million as of December 31, 2025. We expect to continue receiving payments from our collaborators for potential additional milestone, opt-ins, contingent payments, royalties, and research and development services rendered, if any. The receipt of future milestone and contingent payments is dependent on the achievement of certain research and development milestones by us or our partners and, as such, remains uncertain at this time. We believe our current financial resources are sufficient to fund our operations through at least the next twelve months from the date of the issuance of these unaudited consolidated financial statements. Funding Requirements We have not generated any revenue from the sale of products developed by us to date and do not expect to do so until we obtain regulatory approval of and commercialize one or more of our internal product development candidates. As we are currently in the clinical stage of development, it will be some time before we expect to achieve this, and it is uncertain that we will ever commercialize one or more of our internal product development candidates. We expect that we will continue to increase our operating expenses in connection with ongoing and additional clinical and preclinical development of product candidates in our pipeline and candidates that we are co-developing with our partners. Although it is difficult to predict our funding requirements, based upon our current operating plan, we expect that our existing cash, cash equivalents, marketable securities and certain potential milestone payments will fund our operating expenses and capital expenditure requirements through 2028. We have based these estimates on assumptions that may prove to be wrong which would cause us to use our capital resources sooner than we currently expect. Cash Flows The following table sets forth the primary sources and uses of cash for each of the periods presented below: Six Months Ended June 30, 2026 2025 Change (in thousands) Cash Flow from: Operating activities $ (123,286) $ (52,589) $ (70,697) Investing activities 111,797 54,144 57,653 Financing activities 1,981 1,911 70 Net (decrease) increase in cash, cash equivalents, and restricted cash $ (9,508) $ 3,466 $ (12,974) During the six months ended June 30, 2026, cash flow used in operating activities was $123.3 million, which was primarily due to the ongoing expenses related to our research and development programs and general and administrative expenses. The change was primarily driven by lower milestone receipts in 2026, as the prior year period included higher milestone collections, as well as higher operating expenditures in 2026 related to ongoing business activities. Cash provided by investing activities amounted to $111.8 million, primarily reflecting proceeds of $185.6 million from sales and maturities of marketable securities, offset by purchases of marketable securities totaling $72.7 million. Cash provided by financing activities of $2.0 million was primarily related to cash received from stock option exercises and ESPP purchases. During the six months ended June 30, 2025, cash flow used in operating activities was $52.6 million, which was primarily due to the ongoing expenses related to our research and development programs and general and administrative expenses. Cash provided by investing activities amounted to $54.1 million, primarily reflecting proceeds of $232.8 million from sales and maturities of marketable securities, offset by purchases of marketable securities totaling $176.8 million. Cash provided by financing activities of $1.9 million was primarily related to cash received from stock option exercises, offset by payment to acquire noncontrolling interest. 28 Table of Contents Contractual Obligations and Commitments There were no material changes outside of the ordinary course of business to our specific contractual obligations during the three and six months ended June 30, 2026. Critical Accounting Policies There has been no material change in the Company’s critical accounting policies that the Company disclosed in Note 1, Organization and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of its Annual Report on Form 10-K for the year ended December 31, 2025.