You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report and our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 3, 2026 (2025 Annual Report). This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements that are based upon current beliefs, plans, and expectations related to future events and our future financial performance that involve risks, uncertainties, and assumptions, such as statements regarding our intentions, plans, objectives, and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of numerous factors, including those set forth in the section of this Quarterly Report titled “Risk Factors.” See also the section of this Quarterly Report titled “Special Note Regarding Forward-Looking Statements.” Overview We were founded on the belief that engineered cells will be one of the most important transformations in medicine over the next several decades. The burden of diseases that can be addressed at their root cause through engineered cells is significant. We view engineered cells as having the potential to be as therapeutically disruptive as biologic drugs to clinical practice, enabling us to repair cells in the body when possible and replace them when needed. We have developed ex vivo and in vivo cell engineering platforms to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including type 1 diabetes, oncology, and B-cell mediated autoimmune diseases. For our ex vivo platform, we have made focused investments in our hypoimmune platform technology, which we refer to as our HIP technology, with the twin goals of engineering allogeneic cells that can "hide" from the patient's immune system to overcome the fundamental challenge of immune rejection and cell persistence, and that we can manufacture at scale. A successful therapeutic requires cells that can engraft, function, and persist in the body, and we believe our approach can unlock a wave of disruptive therapeutics, starting in type 1 diabetes. For in vivo therapies that aim to repair or control genes in the body, a successful product candidate requires both gene modification and in vivo delivery of the therapeutic payload. Our initial focus is on cell-specific delivery of genetic payloads, known as chimeric antigen receptors (CARs), to a patient’s T cells, resulting in the generation and proliferation of CAR T cells, which have been shown to deplete a patient’s disease-causing B cells. We are currently focused on advancing three distinct therapeutics, each of which leverages one of these platform technologies. SC451 is our HIP-edited product candidate for the treatment of type 1 diabetes. SG293 is our in vivo CAR T product candidate for the treatment of B cell malignancies and B cell mediated autoimmune diseases, and SG227 is our in vivo CAR T product candidate for the treatment of multiple myeloma. We retain worldwide rights to each of these product candidates. •Type 1 Diabetes: Almost ten million people suffer from type 1 diabetes (T1D) worldwide, and there has been limited progress in treatments for this disease since the advent of insulin injections over 100 years ago. We are developing SC451, a HIP-modified, stem cell-derived pancreatic islet cell therapy, for the treatment of T1D. The goal of this therapy is euglycemia, or normal blood glucose, without the need for exogenous insulin injections or immunosuppression. Through a first-in-human investigator-sponsored study (IST), we have shown that UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, can survive and function for 14 months post-transplant in a patient with T1D without the need for immunosuppression. We have incorporated this HIP technology into a more scalable manufacturing platform with SC451 and expect to file an investigational new drug application (IND) as well as begin a Phase 1/2 clinical trial for this therapy as early as this year. •In vivo CAR T cells: Using our fusogen platform, which enables cell-specific, in vivo delivery of various payloads, we are developing two in vivo CAR T cell product candidates, SG293 and SG227. In vivo CAR T cells have the potential to provide the clinical benefit of autologous, ex vivo manufactured CAR T cells while avoiding the need for lymphodepleting chemotherapy as well as significant complexity and bottlenecks related to manufacturing. oSG293 is a CD8-targeted fusosome that delivers genetic material to CD8+ T cells, which enables these cells to become CD19-targeting CAR T cells while avoiding potentially problematic delivery to tissues such as the liver and gonads. We plan to develop SG293 in a range of B cell cancers and B cell mediated autoimmune diseases and expect to generate initial clinical data in patients with non-Hodgkin lymphoma as early as this year. 24 oSG227 is a CD8-targeted fusosome that delivers the genetic material to make BCMA-directed CAR T cells. SG227 delivers a BCMA CAR that has been validated in the autologous CAR T setting for patients with multiple myeloma in a product that is currently approved in China. We plan to develop SG227 as a potential treatment for patients with multiple myeloma and are preparing to begin clinical testing as early as mid-2027, contingent upon the early clinical profile of SG293. In November 2025, in order to prioritize our resources and pursue promising data in the SC451 and fusogen programs, we announced our prioritization of further development of our SC451 and SG293 programs, and suspended development of our two allogeneic cell therapy CAR T programs – SC291 in B-cell mediated autoimmune diseases and SC262 in oncology. As part of these efforts, we are winding down the GLEAM Phase 1 clinical trial evaluating SC291 in B-cell mediated autoimmune diseases and the VIVID Phase 1 clinical trial evaluating SC262 in oncology. We believe the time is right to develop engineered cell therapies in various therapeutic areas. Substantial progress in the understanding of genetics, gene editing, protein engineering, stem cell biology, immunology, process analytics, and computational biology have converged to create an opportunity to markedly increase the breadth and depth of the potential impact of cellular medicines. We continue to make progress developing our ex vivo cell engineering platform that leverages our HIP technology and our in vivo cell engineering platform that leverages our fusogen technology. Each of our programs provides the potential for meaningful standalone value while also supporting our potential ability to further exploit our platforms in a manner that leads to the development of broadly applicable medicines. With respect to our ex vivo cell engineering efforts, in July 2026, The New England Journal of Medicine published a peer-reviewed Letter to the Editor highlighting 14-month follow-up data from the IST, which demonstrated in a patient the continued safety of the transplanted pancreatic beta cells, as well as continued survival and function of these cells as measured by the presence of circulating C-peptide, a biomarker indicating that transplanted beta cells are producing insulin. C-peptide levels also increased during a mixed meal tolerance test, showing appropriate function of the transplanted islet cells. We continue preclinical development of SC451, which is currently completing nonclinical testing, manufacturing transfer, and clinical trial preparation. With respect to our in vivo cell engineering efforts, at the American Society of Gene & Cell Therapy (ASGCT) 2026 Annual Meeting in May 2026, we presented data from a preclinical study using a surrogate for SG293 that delivers a CD20 CAR capable of targeting non-human primate (NHP) B cells in cynomolgus macaques in the absence of lymphodepletion. A single intravenous injection of the SG293 surrogate to these NHPs resulted in robust in vivo generation of CAR T cells and deep B cell depletion in the peripheral blood and lymph nodes. The B cell depletion was further confirmed by lymph node biopsies showing clearance of B cells as well as by “reset” of the NHPs’ B cell repertoire toward naïve B cells. We believe that deep B cell depletion in this preclinical model is the most significant biomarker for potential efficacy in patients with B cell cancers and B cell mediated autoimmune diseases. Separately, in vitro studies using SG293 have shown selective gene delivery to CD8+ T cells with no detectable off-target transduction in tissues such as the liver and gonadal tissue, supporting the specificity of SG293. We are currently completing nonclinical testing, manufacturing transfer, and clinical trial preparation for SG293. We continue to make progress on advancing our product candidates into and through preclinical development and toward potential IND submissions. As our product candidates advance toward potential IND submissions, we are conducting good laboratory practices toxicology studies and establishing necessary scale-up for our manufacturing processes. We expect to continue to assess and prioritize our programs on an ongoing basis based on various factors, including internal and external opportunities and constraints, which may result in our decision to advance certain programs ahead or instead of others or suspend, discontinue, or divest certain programs that represent our current development focus. For details regarding our product candidates, see the section titled “Business—Overview” in Part I, Item 1 included in our 2025 Annual Report. Our ex vivo and in vivo technologies represent an aggregation of years of innovation and technology from multiple academic institutions and companies, including hypoimmune technology licensed from the President and Fellows of Harvard College (Harvard) and The Regents of the University of California, fusogen technology acquired from Cobalt Biomedicine, Inc. (Cobalt), and gene editing technology licensed from Beam Therapeutics Inc. (Beam), among others. For details regarding these acquisitions and license and collaboration agreements, see Note 4, Acquisitions and Note 5, License and collaboration agreements to our condensed consolidated financial statements included elsewhere in this Quarterly Report, as well as the section titled “Business— Key Intellectual Property Agreements” in Part I, Item 1 included in our 2025 Annual Report. 25 Our operations to date have included developing our ex vivo and in vivo cell engineering platforms, identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, conducting clinical trials of our product candidates, supporting clinical trials of product candidates developed using our technologies, acquiring technologies, staffing the company, business planning, establishing and maintaining our intellectual property portfolio, raising capital, and providing general and administrative support for these operations. All of our programs are currently in the development stage, and we do not have any products approved for sale. We have incurred net losses each year since our inception. Our net losses for the six months ended June 30, 2026 and 2025 were $110.8 million and $143.2 million, respectively. As of June 30, 2026, we had an accumulated deficit of $2.0 billion. Our net losses resulted primarily from our research and development programs, and, to a lesser extent, general and administrative costs associated with our operations. In April 2026, we entered into a stock purchase agreement (SPA) with Mayo Clinic pursuant to which Mayo Clinic purchased 7.5 million shares (the Initial Shares) of our common stock at a price of $3.33 per share for gross proceeds of approximately $25.0 million, and may elect, on or prior to August 31, 2026, to purchase an additional 7.5 million shares (the Additional Shares) of our common stock at a price of $3.33 per share for additional gross proceeds of approximately $25.0 million. As of the filing of this Quarterly Report, Mayo Clinic has not elected to purchase the Additional Shares. Pursuant to the SPA, we agreed to use the net proceeds from the sale of the Initial Shares and, if applicable, the Additional Shares, for the development of products upon which an affiliate of Mayo Clinic has the right to receive royalties pursuant to a collaboration and license agreement, dated April 10, 2026, between us and such affiliate (the License Agreement), including SC451 and certain genetically modified stem-cell derived islet cell products, as set forth in the License Agreement. In March 2026, we entered into an amended and restated sales agreement (the Sales Agreement) with TD Securities (USA) LLC (TD Cowen), acting as sales agent, pursuant to which we may offer and sell through TD Cowen shares of our common stock from time to time in a series of one or more at the market equity offerings, and filed a prospectus supplement with the SEC pursuant to which we may offer and sell up to $150.0 million of shares of our common stock pursuant to the Sales Agreement (collectively, the ATM facility). During the quarter ended June 30, 2026, we sold an aggregate of 21.6 million shares of common stock under the Sales Agreement for net proceeds of $68.6 million, after deducting commissions and expenses. In August 2025, we completed an underwritten public offering (the Offering) pursuant to which we sold 24.3 million shares of our common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of our common stock for net proceeds of approximately $80.6 million, after deducting underwriting discounts and commissions and offering expenses. As of June 30, 2026, we had cash, cash equivalents, and marketable securities of $160.5 million. We will need to raise additional capital within the next 12 months and in the future to fund our operations, including conducting clinical trials and the commercialization of any approved product candidates. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and milestone, royalty, and other payments received under any future licenses, collaborations, or other arrangements. Additional capital may not be available on terms that are reasonable or acceptable to us, if at all. If we are unable to raise capital when needed or on attractive terms, our business, results of operations, and financial condition would be adversely affected. Management has determined that our present capital resources may not be sufficient to fund our planned operations for at least one year from the date of this Quarterly Report, and there is substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern will depend on, among other things, our ability to obtain additional funding and appropriately manage the amount of cash used to fund our operations. We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements. If we are unable to obtain such financing, we may be required to pursue alternative sources of capital which may not be available to us on favorable terms, if at all, or significantly modify our operational plans by delaying, reducing the scope of, or ceasing some or all of our research and development programs, or pursue strategic alternatives. 26 Although our historical portfolio prioritizations have enabled reduced operating expenses, our operating expenses may increase over the longer term if our future clinical trials are successful and if we expand our research and development efforts. Cost increases would be driven in large part by commencing and advancing our current and future product candidates through clinical trials; identifying additional product candidates; continuing to establish our manufacturing capabilities, including through third-party contract development and manufacturing organizations (CDMOs); initiating and advancing preclinical development of our current and future product candidates; advancing and expanding the capabilities of our ex vivo and in vivo cell engineering platforms; acquiring and licensing technologies aligned with our ex vivo and in vivo cell engineering platforms, or modifying the terms of existing acquisition or license arrangements; seeking regulatory approval of our current and future product candidates; engaging in commercialization activities for any of our product candidates for which we obtain marketing approval; increasing our personnel, including those required to support our research, clinical and preclinical development, manufacturing, and potential future commercialization efforts; expanding our operational, financial, and management systems; continuing to develop, prosecute, and defend our intellectual property portfolio; and continuing to incur legal, accounting, or other expenses to operate our business, including the costs associated with being a public company. We have invested in building world class capabilities in key areas of manufacturing sciences and operations, including development of our cell engineering platforms, product characterization, and process analytics. Our investments also include scaled research solutions, scaled infrastructure, and novel technologies to improve efficiency, characterization, and scalability of manufacturing. Macroeconomic and Other Considerations Our business and operations may be negatively affected by local and global economic, political, and regulatory developments and conditions, such as changes in trade policies (including sanctions, treaties, tariffs, regulatory requirements, and other limitations on cross-border operations and international trade), changes in inflation and fluctuations in interest rates, instability in the banking and financial services sector, declines in consumer confidence, declines in economic growth, uncertainty in the markets, geo-political and economic instability, changes in regulatory agencies having oversight of our operations, and tensions in ex-U.S. relations. Further, it is possible that government policy changes and related uncertainty could increase market volatility. The extent, severity, and duration of the impact of these events and conditions on our business cannot be predicted and may not be fully reflected in our results of operations until future periods. If economic uncertainty continues or increases, or if the global economy worsens, our business, financial condition, and results of operations may be harmed. For further discussion of the potential impacts of macroeconomic events and conditions on our business, financial condition, and operating results, see the section titled “Risk Factors” included in this Quarterly Report. Acquisitions We have completed various acquisitions since inception. For details regarding acquisitions involving technologies that we are currently developing, see the section titled “Business—Key Intellectual Property Agreements” included in our 2025 Annual Report, and Note 4, Acquisitions to our condensed consolidated financial statements included elsewhere in this Quarterly Report. License and collaboration agreements We have entered into license and collaboration agreements with various third parties. For details regarding these agreements, see the section titled “Business— Key Intellectual Property Agreements” included in our 2025 Annual Report, and Note 5, License and collaboration agreements to our condensed consolidated financial statements included elsewhere in this Quarterly Report. 27 Success payments and contingent consideration Cobalt success payment and contingent consideration Pursuant to the terms and conditions of the Cobalt acquisition agreement, we are obligated to pay to certain former Cobalt stockholders contingent consideration (Cobalt Contingent Consideration) of up to an aggregate of $500.0 million upon our achievement of certain specified development milestones and a success payment (Cobalt Success Payment) of up to $500.0 million, each of which is payable in cash or stock. The Cobalt Success Payment can become payable over a maximum of 20 years from the date of the acquisition, but this period could be shorter upon the occurrence of certain events. The Cobalt Success Payment is payable if our market capitalization equals or exceeds $8.1 billion, and we are advancing a product based on the fusogen technology in a clinical trial pursuant to an IND, or are in the process of filing or have filed for, or received approval for, a biologics license application or new drug application for a product based on the fusogen technology. The Cobalt Success Payment would alternatively be payable upon a change of control if at least one of our products based on the fusogen technology is the subject of an active research program at the time of such change of control. If our market capitalization is below $8.1 billion as of the date of such change of control, the amount of the potential Cobalt Success Payment will decrease, and the amount of potential Cobalt Contingent Consideration will increase. As of June 30, 2026, the Cobalt Success Payment had not been triggered. See Note 4, Acquisitions to our condensed consolidated financial statements included elsewhere in this Quarterly Report for details on the amount of the potential Cobalt Success Payment and potential Cobalt Contingent Consideration based on various thresholds for our market capitalization on the date of a change of control. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “—Critical accounting policies and significant judgments and estimates—Success payments” and “—Critical accounting policies and significant judgments and estimates—Contingent consideration” included in our 2025 Annual Report for more information on the accounting treatment of the Cobalt Success Payment and Cobalt Contingent Consideration. Harvard success payments Pursuant to the terms of the Harvard agreement, we may be required to make up to an aggregate of $175.0 million in success payments to Harvard (Harvard Success Payments), payable in cash, based on increases in the per share fair market value of our common stock. The potential Harvard Success Payments are based on multiples of increasing value ranging from 5x to 40x based on a comparison of the per share fair market value of our common stock relative to the original issuance price of $4.00 per share at ongoing pre-determined valuation measurement dates. The Harvard Success Payments can be achieved over a maximum of 12 years from the effective date of the agreement. If a higher success payment tier is met at the same time a lower tier is met, both tiers will be owed. Any previous Harvard Success Payments made are credited against the Harvard Success Payment owed as of any valuation measurement date so that Harvard does not receive multiple success payments in connection with the same threshold. As of June 30, 2026, a Harvard Success Payment had not been triggered. See Note 5, License and collaboration agreements to our condensed consolidated financial statements included elsewhere in this Quarterly Report for details on the various per share common stock values that trigger a Harvard Success Payment. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “—Critical accounting policies and significant judgments and estimates—Success payments” included in our 2025 Annual Report for more information on the accounting treatment of the Harvard Success Payments. Components of operating results Operating expenses Research and development To date, research and development expenses have been related primarily to the discovery and development of our platform technologies and product 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 recorded as prepaid expenses, until the goods or services are received. Research and development expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, external research and development expenses incurred under arrangements with third parties, including CDMO manufacturing costs (including pass-through costs) and clinical trial costs, costs for laboratory supplies, costs to acquire and license technologies aligned with our ex vivo and in vivo cell engineering platforms, and facility expenses, including rent and depreciation, and allocated overhead costs. The timing and amount of costs to acquire and license technologies in the future cannot be reliably estimated and may fluctuate from quarter to quarter and year to year. 28 We deploy our employee and infrastructure resources across multiple research and development programs for developing our ex vivo and in vivo cell engineering platforms, identifying and developing product candidates, and establishing manufacturing capabilities. Due to our early stage of development, the number of ongoing projects, and our ability to use resources across several projects, most of our research and development costs are not recorded on a program-specific basis. These include costs for personnel, laboratory, and other indirect facility and operating costs. Research and development activities account for a significant portion of our operating expenses. Excluding any one-time items, we expect our research and development expenses to be materially flat or slightly lower in 2026 compared to 2025. Research and development expenses may increase over the longer term due to a variety of factors, including if our future clinical trials are successful and if we expand our research and development efforts. Cost increases, if they occur, would be driven in large part by advancing our current and future product candidates into and through clinical trials; identifying additional product candidates; continuing to establish our manufacturing capabilities, including through CDMOs, initiating and advancing preclinical development of our current and future product candidates; advancing and expanding the capabilities of our ex vivo and in vivo cell engineering platforms; acquiring and licensing technologies aligned with our ex vivo and in vivo cell engineering platforms, or modifying the terms of existing acquisition or license arrangements; seeking regulatory approval of our current and future product candidates; and increasing our workforce to support our expanded research, clinical, and preclinical development efforts. A change in the outcome of any of these factors could result in a significant change in the costs and timing associated with the development of our product candidates. In addition, recent and potential future developments in international trade, including tariffs imposed on imports from other countries, could cause unanticipated increases in our research and development costs, primarily through increased CDMO costs and costs of our laboratory and manufacturing supplies, and we may not be able to accurately forecast their impacts on our business. Research and development related success payments and contingent consideration Research and development related success payments and contingent consideration include the change in the estimated fair value of our Cobalt and Harvard Success Payment liabilities and Cobalt Contingent Consideration liability. The expense or gain associated with our research and development related success payments and contingent consideration is unpredictable, in part, because our success payments are impacted by changes in our common stock price and market capitalization at the end of each reporting period, and continues to vary significantly from quarter to quarter and year to year due to changes in the assumptions used in the calculations. General and administrative General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation for our employees in finance, legal, executive, human resources, and information technology functions, legal and consulting fees, insurance fees, and facility costs not otherwise included in research and development expenses. Legal fees include those related to corporate, patent, and litigation matters. Excluding any one-time items, we expect our general and administrative expenses to be materially flat in 2026 compared to 2025. General and administrative expenses may increase over the longer term to support potential expanded research and development activities. Impairment of long-lived assets Impairment of long-lived assets recorded in the second quarter of 2025 consist of non-cash losses recognized for the impairment of the right-of-use (ROU) asset, construction in progress, and laboratory equipment for our manufacturing facility in Bothell, Washington, and the ROU asset, leasehold improvements, and laboratory equipment for certain office and laboratory space in Seattle, Washington. We also recognized additional non-cash impairment losses for other long-lived assets in the second quarter of 2025. The losses were recorded in operating expenses in the statement of operations. Refer to Note 11, Impairment of long-lived assets for further information. 29 Results of operations Comparison of the three and six months ended June 30, 2026 and 2025 The following table summarizes our results of operations for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 Change 2026 2025 Change (in thousands) Operating expenses: Research and development $ 30,729 $ 29,761 $ 968 $ 59,448 $ 66,950 $ (7,502 ) Research and development related success payments and contingent consideration 23,913 10,262 13,651 32,346 12,219 20,127 General and administrative 10,778 10,341 437 22,240 21,825 415 Impairment of long-lived assets - 44,611 (44,611 ) - 44,611 (44,611 ) Total operating expenses 65,420 94,975 (29,555 ) 114,034 145,605 (31,571 ) Loss from operations (65,420 ) (94,975 ) 29,555 (114,034 ) (145,605 ) 31,571 Interest income, net 1,129 577 552 2,080 1,569 511 Other income, net 656 598 58 1,109 847 262 Net loss $ (63,635 ) $ (93,800 ) $ 30,165 $ (110,845 ) $ (143,189 ) $ 32,344 Research and development expenses The following table summarizes the components of our research and development expenses for the periods presented: Three Months Ended June 30, 2026 2025 Change (in thousands) Research, development, and laboratory $ 5,133 $ 2,737 $ 2,396 Third-party manufacturing 2,460 1,016 1,444 Personnel 11,797 13,958 (2,161 ) Facility and other allocated costs 10,411 11,525 (1,114 ) Other 928 525 403 Total research and development expense $ 30,729 $ 29,761 $ 968 Research and development expenses were $30.7 million and $29.8 million for the three months ended June 30, 2026 and 2025, respectively. The increase of $0.9 million was primarily due to: •an increase of $2.4 million in research, laboratory, and clinical development costs related to the SC451 and SG293 programs; and •an increase of $1.4 million in third-party manufacturing costs at CDMOs for SC451 and SG293. These increases were partially offset by: •a decrease of $2.2 million in personnel-related expenses, including non-cash stock-based compensation, primarily due to lower research and development headcount; and •a decrease of $1.1 million in facility and other allocated costs primarily related to depreciation, allocated personnel, and other allocated costs. 30 The following table summarizes the components of our research and development expenses for the periods presented: Six Months Ended June 30, 2026 2025 Change (in thousands) Personnel $ 24,210 $ 31,109 $ (6,899 ) Facility and other allocated costs 20,794 24,011 (3,217 ) Third-party manufacturing 3,182 3,983 (801 ) Research, development, and laboratory 9,151 6,733 2,418 Other 2,111 1,114 997 Total research and development expense $ 59,448 $ 66,950 $ (7,502 ) Research and development expenses were $59.4 million and $67.0 million for the six months ended June 30, 2026 and 2025, respectively. The decrease of $7.5 million was primarily due to: •a decrease of $6.9 million in personnel-related expenses, including non-cash stock-based compensation, primarily due to lower research and development headcount; •a decrease of $3.2 million in facility and other allocated costs primarily related to depreciation, allocated personnel, and other allocated costs; and •a decrease of $0.8 million in third-party manufacturing costs at CDMOs primarily related to costs incurred in the six months ended June 30, 2025 for the suspended allogeneic CAR T programs that did not recur in 2026, partially offset by an increase in third-party manufacturing at CDMOs for SC451 and SG293. These decreases were partially offset by an increase of $2.4 million in cost for research, laboratory, and clinical development for SC451 and SG293. Research and development related success payments and contingent consideration The following table summarizes the expenses associated with research and development related success payments and contingent consideration for the periods presented: Three Months Ended June 30, 2026 2025 Change (in thousands) Cobalt success payment $ 7,167 $ 3,611 $ 3,556 Harvard success payments 384 351 33 Contingent consideration 16,362 6,300 10,062 Total research and development related success payments and contingent consideration $ 23,913 $ 10,262 $ 13,651 The expense related to the change in the estimated fair value of our Cobalt Success Payment was $7.2 million for the three months ended June 30, 2026, compared to $3.6 million for the same period in 2025. The changes in value were primarily due to changes in our market capitalization during the relevant periods. The expense related to the change in the estimated fair value of our Harvard Success Payments was $0.4 million for each of the three months ended June 30, 2026 and 2025. The changes in value were primarily due to changes in our common stock price during the relevant periods. The expense related to the change in the estimated fair value of our Cobalt Contingent Consideration was $16.4 million for the three months ended June 30, 2026 compared to $6.3 million for the same period in 2025. The changes in value were due primarily to changes in the timing and probability of the achievement of milestones during the relevant periods. 31 The following table summarizes the expenses (gains) associated with research and development related success payments and contingent consideration for the periods presented: Six Months Ended June 30, 2026 2025 Change (in thousands) Cobalt success payment $ 5,344 $ 3,716 $ 1,628 Harvard success payments (105 ) 339 (444 ) Contingent consideration 27,107 8,164 18,943 Total research and development related success payments and contingent consideration $ 32,346 $ 12,219 $ 20,127 The expense related to the change in the estimated fair value of our Cobalt Success Payment was $5.3 million for the six months ended June 30, 2026, compared to $3.7 million for the same period in 2025. The changes in value were primarily due to changes in our market capitalization during the relevant periods. The gain related to the change in the estimated fair value of our Harvard Success Payments was $0.1 million for the six months ended June 30, 2026, compared to an expense of $0.4 million for the same period in 2025. The changes in value were primarily due to changes in our common stock price during the relevant periods. The expense related to the change in the estimated fair value of our Cobalt Contingent Consideration was $27.1 million for the six months ended June 30, 2026 compared to $8.2 million for the same period in 2025. The changes in value were due primarily to changes in the timing and probability of the achievement of milestones during the relevant periods. General and administrative expenses General and administrative expenses were $10.8 million and $22.2 million for the three and six months ended June 30, 2026, respectively, compared to $10.3 million and $21.8 million for the same periods in 2025, respectively. The increases for each of the three and six months ended June 30, 2026 and 2025 were primarily due to increases in facility and other allocated costs. Impairment of long-lived assets Impairment of long-lived assets was $44.6 million for the three and six months ended June 30, 2025. There was no impairment of long-lived assets for the three and six months ended June 30, 2026. See Note 11, Impairment of long-lived assets to our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information. Interest income, net Interest income, net, was $1.1 million and $2.1 million for the three and six months ended June 30, 2026, respectively, compared to $0.6 million and $1.6 million for the same periods in 2025, respectively, and consisted primarily of interest earned on our cash and marketable securities balances. Liquidity, capital resources, and capital requirements Sources of liquidity As of June 30, 2026, we had $160.5 million in cash, cash equivalents, and marketable securities. Since inception through June 30, 2026, we have raised an aggregate of approximately $1.8 billion in net proceeds from sales of our equity securities. In April 2026, we entered into the SPA with Mayo Clinic pursuant to which Mayo Clinic purchased the Initial Shares at a price of $3.33 per share for gross proceeds of approximately $25.0 million, and may elect, on or prior to August 31, 2026, to purchase the Additional Shares at a price of $3.33 per share for additional gross proceeds of approximately $25.0 million. As of the filing of this Quarterly Report, Mayo Clinic has not elected to purchase the Additional Shares. Pursuant to the SPA, we agreed to use the net proceeds from the sale of the Initial Shares and, if applicable, the Additional Shares, for the development of products upon which an affiliate of Mayo Clinic has the right to receive royalties pursuant to the License Agreement, including SC451 and certain genetically modified stem-cell derived islet cell products, as set forth in the License Agreement. 32 In March 2026, we entered into the Sales Agreement with TD Cowen, acting as sales agent, and filed a prospectus supplement with the SEC, pursuant to which we may offer and sell up to $150.0 million of shares of our common stock from time to time under the ATM facility. During the quarter ended June 30, 2026, we sold an aggregate of 21.6 million shares of common stock under the Sales Agreement for net proceeds of $68.6 million, after deducting commissions and expenses. In August 2025, we completed the Offering pursuant to which we sold 24.3 million shares of our common stock, including 3.4 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 1.5 million shares of our common stock for net proceeds of approximately $80.6 million, after deducting underwriting discounts and commissions and offering expenses. Since our inception, we have not generated any revenue from product sales or any other sources, and we have incurred significant operating losses. We have not yet commercialized any products, and we do not expect to generate revenue from sales of any product candidates for a number of years, if ever. Future funding requirements We expect to incur additional losses for the foreseeable future as we conduct our research and development efforts, including conducting preclinical studies and clinical trials, developing new product candidates, continuing to establish our external manufacturing capabilities, and funding our operations generally. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. Management has determined that our present capital resources may not be sufficient to fund our planned operations for at least one year from the date of this Quarterly Report, and there is substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern will depend on, among other things, our ability to obtain additional funding and appropriately manage the amount of cash used to fund our operations. We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements. If we are unable to obtain such financing, we may be required to pursue alternative sources of capital which may not be available to us on favorable terms, if at all, or significantly modify our operational plans by delaying, reducing the scope of, or ceasing some or all of our research and development programs, or pursue strategic alternatives. Our future capital requirements will depend on many factors, including: •the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current or future product candidates, including the development of companion diagnostics to such product candidates; •the number and scope of clinical trials required for regulatory approval of our current or future product candidates; •the costs, timing, and outcome of regulatory review of our current or future product candidates and any companion diagnostics to such product candidates; •the cost, timing, and scope of our manufacturing capabilities and our uses of our existing facilities, as well as costs associated with the manufacturing of clinical and commercial supplies of our current and future product candidates; •the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval; •the costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights; •our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements, and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty, or other payments due under any such agreement; •the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; •the expenses required to attract, hire, and retain skilled personnel; •the impact of global supply chain issues and changing rates of inflation on the costs of laboratory consumables, supplies, and equipment required for our ongoing operations; •the costs of operating as a public company; 33 •our ability to effectively manage the amount of cash used in our operations; •our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party, including government, payors; •potential interruptions or delays resulting from global geo-political, economic, and other factors beyond our control; •the effect of competing technological and market developments; and •the extent to which we acquire or invest in businesses, products, and technologies. Until such time, if ever, as we can generate significant revenue from product sales, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and milestone, royalty, and other payments received under any future licenses, collaborations, or other arrangements. In the event that additional financing is required, we may not be able to raise it on terms that are acceptable to us or at all. Our ability to raise additional financing may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from public health crises, the conflicts in Ukraine and the Middle East, or other regions, changes in inflation, interest rate uncertainty, disruptions in global trade caused by political tensions and conflicts between countries, and other factors creating market risk. Bank failures have also caused increased concerns about liquidity in the broader financial services industry, and our business, business partners, or industry as a whole may be adversely impacted in ways that we cannot predict at this time. If we raise additional funds through the issuance of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing, if available, may result in increased fixed payment obligations, and the existence of securities with rights that may be senior to those of our common stock, and involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, or acquiring, selling, or licensing intellectual property rights or assets, which could adversely impact our ability to conduct our business. If we raise funds through strategic collaborations or licensing or other arrangements, we may have to relinquish significant rights or grant licenses on terms that are not favorable to us. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected. Cash flows The following table summarizes our cash flows for the periods indicated: Six Months Ended June 30, 2026 2025 (in thousands) Net cash provided by (used in): Operating activities $ (70,169 ) $ (81,758 ) Investing activities (38,082 ) 24,283 Financing activities 93,454 1,543 Net increase (decrease) in cash, cash equivalents, and restricted cash $ (14,797 ) $ (55,932 ) 34 Operating activities During the six months ended June 30, 2026, net cash used in operating activities was $70.2 million, consisting primarily of net loss of $110.8 million and the change in net operating assets and liabilities of $5.4 million, offset by non-cash adjustments of $46.0 million. The non-cash adjustments of $46.0 million consisted of expenses of $27.1 million and $5.2 million for revaluation of our contingent consideration and success payment liabilities, respectively, $11.0 million of non-cash stock-based compensation, and depreciation expense of $4.6 million, partially offset by other non-cash adjustments of $1.9 million. During the six months ended June 30, 2025, net cash used in operating activities was $81.8 million, consisting primarily of net loss of $143.2 million and the change in net operating assets and liabilities of $14.2 million, offset by non-cash adjustments of $75.6 million. The non-cash adjustments of $75.6 million consisted of $44.6 million for impairment of long-lived assets, $13.7 million of non-cash stock-based compensation, expenses of $8.2 million and $4.1 million for the revaluation of our contingent consideration and success payment liabilities, respectively, and depreciation expense of $6.5 million, partially offset by other non-cash adjustments of $1.5 million. Investing activities Cash used in investing activities was $38.1 million during the six months ended June 30, 2026, and cash provided by investing activities was $24.3 million during the six months ended June 30, 2025. For the six months ended June 30, 2026, this consisted primarily of net purchases and maturities of marketable securities of $36.5 million and net purchases of property and equipment of $1.6 million. For the six months ended June 30, 2025, this consisted of net purchases and maturities of marketable securities of $23.7 million and net sales of property and equipment of $0.6 million. Financing activities During the six months ended June 30, 2026 and 2025, cash provided by financing activities was $93.5 million and $1.5 million, respectively, and consisted primarily of net proceeds from issuance of common stock. Contractual obligations and commitments The following table summarizes our significant contractual obligations and commitments as of June 30, 2026: Payments Due by Period Less than 1 Year 1 to 3 Years 3 to 5 Years More than 5 Years Total (in thousands) Operating lease obligations(1) $ 21,512 $ 33,317 $ 17,103 $ 38,667 $ 110,599 (1) Management is continuing to evaluate options to optimize its real estate footprint, which includes the potential amendment of a facility lease to reduce square footage. If finalized, we expect that this amendment would reduce each of our operating lease ROU assets and long-term lease liabilities by approximately $12.0 million and result in a one-time fee of approximately $3.8 million within the current fiscal year. Other than as disclosed in the table above, the payment obligations under our license, collaboration, and acquisition agreements as of June 30, 2026 are contingent upon future events such as our achievement of specified development, regulatory, and commercial milestones or royalties on net product sales. See the section titled “Business—Key Intellectual Property Agreements” in Part I, Item 1 included in our 2025 Annual Report for more information about these payment obligations. We are also obligated to make a success payment to Cobalt of up to $500.0 million, payable in cash or stock, pursuant to the terms and conditions in the Cobalt acquisition agreement, and up to an aggregate of $175.0 million in success payments to Harvard, payable in cash. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “—Critical accounting policies and significant judgments and estimates—Success payments” included in our 2025 Annual Report and Note 4, Acquisitions and Note 5, License and collaboration agreements to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information on the success payments. As of June 30, 2026, the timing and likelihood of achieving the milestones and success payments and generating future product sales are uncertain, and therefore any related payments are not included in the table above. We also enter into agreements in the normal course of business for sponsored research, preclinical studies, clinical trials, contract manufacturing, and other services and products for operating purposes, which are generally cancelable upon written notice. These obligations and commitments are not included in the table above. 35 Off-balance sheet arrangements Since our inception, we have not engaged in any off-balance sheet arrangements as defined under the rules and regulations of the SEC. JOBS Act accounting election We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). We will remain an emerging growth company until the earliest to occur of (1) December 31, 2026, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the fair market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our independent registered public accounting firm provide an attestation report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use the extended transition period for any new or revised accounting standards during the period in which we remain an emerging growth company; however, we may adopt certain new or revised accounting standards early if the standard allows early adoption. Critical accounting policies and significant judgments and estimates Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are described in more detail in the notes to our condensed consolidated financial statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025, and are consistent with those discussed in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “—Critical accounting policies and significant judgments and estimates” included in our 2025 Annual Report. 36