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What changed in Q32 Bio Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Q32 Bio Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+570 added−585 removedSource: 10-K (2026-03-10) vs 10-K (2025-03-11)

Top changes in Q32 Bio Inc.'s 2025 10-K

570 paragraphs added · 585 removed · 393 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

138 edited+51 added−62 removed190 unchanged
Biggest changeCONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED S TOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (amounts in thousands, except share data) Series A Convertible Preferred Stock Series A-1 Convertible Preferred Stock Series B Convertible Preferred Stock Common Stock Additional Paid in Accumulated Other Comprehensive Accumulated Total Stockholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Capital Gain (Loss) Deficit (Deficit) Balance as of December 31, 2022 2,286,873 $ 47,458 312,094 $ 4,132 2,625,896 $ 59,855 343,550 $ 1 $ 2,625 $ — $ ( 133,338 ) $ ( 130,712 ) Issuance of common stock from option exercises — — — — — — 16,019 — 106 — — 106 Stock-based compensation expense — — — — — — — — 1,428 — — 1,428 Net loss — — — — — — — — — — ( 53,743 ) ( 53,743 ) Balance as of December 31, 2023 2,286,873 $ 47,458 312,094 $ 4,132 2,625,896 $ 59,855 359,569 $ 1 $ 4,159 $ — $ ( 187,081 ) $ ( 182,921 ) Conversion of convertible preferred stock to common stock in connection with the Merger ( 2,286,873 ) ( 47,458 ) ( 312,094 ) ( 4,132 ) ( 2,625,896 ) ( 59,855 ) 5,224,863 1 111,444 — — 111,445 Issuance of common stock in the pre- closing financing — — — — — — 1,682,045 — 42,000 — — 42,000 Issuance of common stock for conversion of convertible notes — — — — — — 1,433,410 — 22,705 — — 22,705 Issuance of common stock to Homology shareholders in reverse recapitalization — — — — — — 3,229,633 — 64,292 — — 64,292 Issuance of common stock from option exercises — — — — — — 255,486 — 1,694 — — 1,694 Issuance of common stock from RSU vesting — — — — — — 12,609 — — — — — Reverse recapitalization transaction costs — — — — — — — — ( 10,013 ) — — ( 10,013 ) Issuance of CVR at fair value — — — — — — — — ( 180 ) — — ( 180 ) Stock-based compensation expense — — — — — — — — 4,386 — — 4,386 Other comprehensive loss — — — — — — — — — — — — Net loss — — — — — — — — — — ( 47,733 ) ( 47,733 ) Balance as of December 31, 2024 — $ — — $ — — $ — 12,197,615 $ 2 $ 240,487 $ — $ ( 234,814 ) $ 5,675 The accompanying notes are an integral part of these consolidated financial statements.
Biggest changeCONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED S TOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (amounts in thousands, except share data) Series A Convertible Preferred Stock Series A-1 Convertible Preferred Stock Series B Convertible Preferred Stock Common Stock Additional Paid in Accumulated Total Stockholders’ Equity Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit (Deficit) Balance as of December 31, 2023 2,286,873 $ 47,458 312,094 $ 4,132 2,625,896 $ 59,855 359,569 $ 1 $ 4,159 $ ( 187,081 ) $ ( 182,921 ) Conversion of convertible preferred stock to common stock in connection with the Merger ( 2,286,873 ) ( 47,458 ) ( 312,094 ) ( 4,132 ) ( 2,625,896 ) ( 59,855 ) 5,224,863 1 111,444 — 111,445 Issuance of common stock in the pre- closing financing — — — — — — 1,682,045 — 42,000 — 42,000 Issuance of common stock for conversion of convertible notes — — — — — — 1,433,410 — 22,705 — 22,705 Issuance of common stock to Homology shareholders in reverse recapitalization — — — — — — 3,229,633 — 64,292 — 64,292 Issuance of common stock from option exercises — — — — — — 255,486 — 1,694 — 1,694 Issuance of common stock from RSU vesting — — — — — — 12,609 — — — — Reverse recapitalization transaction costs — — — — — — — — ( 10,013 ) — ( 10,013 ) Issuance of CVR at fair value — — — — — — — — ( 180 ) — ( 180 ) Stock-based compensation expense — — — — — — — — 4,386 — 4,386 Other comprehensive gain (loss) — — — — — — — — — — — Net loss — — — — — — — — — ( 47,733 ) ( 47,733 ) Balance as of December 31, 2024 — $ — — $ — — $ — 12,197,615 $ 2 $ 240,487 $ ( 234,814 ) $ 5,675 Issuance of common stock from RSU vesting — — — — — — 106,737 — — — — Issuance of common stock to Amgen — — — — — — 553,695 — 1,263 — 1,263 Stock-based compensation expense — — — — — — — — 5,255 — 5,255 Net income — — — — — — — — — 29,821 29,821 Balance as of December 31, 2025 — $ — — $ — — $ — 12,858,047 $ 2 $ 247,005 $ ( 204,993 ) $ 42,014 The accompanying notes are an integral part of these consolidated financial statements.
Legacy Q32 issued convertible notes (the “Convertible Notes”) totaling $ 30.0 million during the year ended December 31, 2022.
Convertible Notes Legacy Q32 issued convertible notes (the “Convertible Notes”) totaling $ 30.0 million during the year ended December 31, 2022.
Consistent with this decision-making process, the Company’s CODM uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets. When evaluating the Company’s overall performance, the CODM is focused on the timing and progress of its preclinical and clinical development activities.
Consistent with this decision-making process, the CODM uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets. When evaluating the Company’s overall performance, the CODM is focused on the timing and progress of its preclinical and clinical development activities.
As part of the recapitalization, the Company obtained the assets and liabilities listed below: Cash and cash equivalents $ 53,158 Short-term investments 19,905 Prepaid expenses 964 Equity method investment 4,900 Accounts payable and accrued liabilities ( 7,903 ) CVR liability ( 5,080 ) Net assets acquired $ 65,944 In addition, the Company recognized $ 2.1 million in personnel cost related to severance payments and retention bonuses to Homology employees and this amount was recorded in general and administrative expense in the accompanying consolidated statement of operations for the year ended December 31, 2024 .
As part of the recapitalization, the Company obtained the assets and liabilities listed below (in thousands): Cash and cash equivalents $ 53,158 Short-term investments 19,905 Prepaid expenses 964 Equity method investment 4,900 Accounts payable and accrued liabilities ( 7,903 ) CVR liability ( 5,080 ) Net assets acquired $ 65,944 In addition, the Company recognized $ 2.1 million in personnel cost related to severance payments and retention bonuses to Homology employees and this amount was recorded in general and administrative expense in the accompanying consolidated statement of operations for the year ended December 31, 2024 .
Agreements with Horizon From August 2022 until November 2023, Legacy Q32 was a party to the Collaboration and Option Agreement (the “Horizon Collaboration Agreement”) and the Asset Purchase Agreement (the “Purchase Agreement”), and together with the Horizon Collaboration Agreement, the “Horizon Agreements”), each between Legacy Q32 and Horizon Therapeutics Ireland DAC (“Horizon”), pursuant to which Legacy Q32 received $ 55.0 million in initial consideration and staged development funding for the completion of the two ongoing Phase 2 trials for bempikibart, and Horizon had an option to acquire the bempikibart program at a prespecified price, subject to certain adjustments.
Agreements with Horizon From August 2022 until November 2023, Legacy Q32 was a party to the Collaboration and Option Agreement (the “Horizon Collaboration Agreement”) and the Asset Purchase Agreement (the “Purchase Agreement,” and together with the Horizon Collaboration Agreement, the “Horizon Agreements”), each between Legacy Q32 and Horizon Therapeutics Ireland DAC (“Horizon”), pursuant to which Legacy Q32 received $ 55.0 million in initial consideration and staged development funding for the completion of the two ongoing Phase 2 trials for bempikibart, and Horizon had an option to acquire the bempikibart program at a prespecified price, subject to certain adjustments.
As discussed in Notes 1 and 3, at the effective time of the Merger, each person who as of immediately prior to the effective time of the Merger was a stockholder of record of Homology or had the right to receive Homology’s common stock received a CVR, issued by Homology subject to and in accordance with the terms and conditions of a CVR Agreement, representing the contractual right to receive cash payments from the combined company upon the receipt of certain proceeds from a disposition of Homology’s pre-merger assets, calculated in accordance with the CVR Agreement.
CVR liability As discussed in Notes 1 and 3, at the effective time of the Merger, each person who as of immediately prior to the effective time of the Merger was a stockholder of record of Homology or had the right to receive Homology’s common stock received a CVR, issued by Homology subject to and in accordance with the terms and conditions of a CVR Agreement, representing the contractual right to receive cash payments from the combined company upon the receipt of certain proceeds from a disposition of Homology’s pre-merger assets, calculated in accordance with the CVR Agreement.
In July 2024, the Company made a $ 4.0 million development milestone payment to BMS and recorded it as research and development expenses. As of December 31, 2024, no further events have occurred that would require payment of milestones, royalties or sublicense fees. Legal Proceedings The Company is not currently party to any material legal proceedings.
In July 2024, the Company made a $ 4.0 million development milestone payment to BMS and recorded it as research and development expenses. As of December 31, 2025, no further events have occurred that would require payment of milestones, royalties or sublicense fees. Legal Proceedings The Company is not currently party to any material legal proceedings.
As of December 31, 2024 , there were no additional shares available for future grant under the 2017 Plan. 2024 Stock Option and Incentive Plan On March 15, 2024, Homology’s board of directors adopted and subsequently, Homology’s stockholders approved the Q32 Inc. 2024 Stock Option and Incentive Plan (the “2024 Plan”), which became effective upon the closing of the Merger.
As of December 31, 2025 , there were no additional shares available for future grant under the 2017 Plan. 2024 Stock Option and Incentive Plan On March 15, 2024, Homology’s board of directors adopted and subsequently, Homology’s stockholders approved the Q32 Inc. 2024 Stock Option and Incentive Plan (the “2024 Plan”), which became effective upon the closing of the Merger.
The lease commencement date was January 1, 2022 and the Company did not take control or have the right to use the leased property until this time. The lease term ends in December 2031 . The Company has an option to extend the lease term for an additional five years .
The headquarters lease commencement date was January 1, 2022 and the Company did not take control or have the right to use the leased property until this time. The lease term ends in December 2031 . The Company has an option to extend the lease term for an additional five years .
In addition, the Company agreed to pay BMS (i) development and regulatory milestone payments in aggregate amounts ranging from $ 32 million to $ 49 million per indication for the first three indications and commercial milestone payments in an aggregate amount of up to $ 215 million on net sales of licensed products, (ii) tiered royalties ranging from rates in the mid-single digit percentages to up to 10 % of net sales, with increasing rates depending on the cumulative net sales, (iii) up to 60 % of sublicense income, which percentage decreases based on the development stage of F- 25 bempikibart at the time of the sublicensing event, and (iv) ongoing fees associated with the prosecution, maintenance, or filing of the licensed patents.
In addition, the Company agreed to pay BMS (i) development and regulatory milestone payments in aggregate amounts ranging from $ 32 million to $ 49 million per indication for the first three indications and commercial milestone payments in an aggregate amount of up to $ 215 million on net sales of licensed products, (ii) tiered royalties ranging from rates in the mid-single digit percentages to up to 10 % of net sales, with increasing rates depending on the cumulative net sales, (iii) up to 60 % of sublicense income, which percentage decreases based on the development stage of bempikibart at the time of the sublicensing event, and (iv) ongoing fees associated with the prosecution, maintenance, or filing of the licensed patents.
As the Convertible Notes are recorded at fair value, a gain of $ 15.9 million on the change in the fair value prior to the conversion of convertible notes is reflected in the consolidated statement of operations for the year ended December 31, 2024 (see Note 11). 6.
As the Convertible Notes are recorded at fair value, a gain of $ 15.9 million on the change in the fair value prior to the conversion of convertible notes is reflected in the consolidated statement of operations for the year ended December 31, 2024 (see Note 11).
Legacy Q32 was determined to be the accounting acquirer based on the terms of the Merger Agreement and other factors, including: (i) Legacy Q32’s shareholders own a majority of the voting rights in the combined company; (ii) Legacy Q32 designated a majority (seven of nine) of the initial members of the board of directors of the combined company; (iii) Legacy Q32's executive management team became the management team of the combined company; (iv) the pre-combination assets of Homology were primarily cash and cash equivalents, short-term investments, and other non-operating assets; and (v) the combined company was named Q32 Bio Inc. and is headquartered in Legacy Q32’s office in Waltham, Massachusetts.
Legacy Q32 was determined to be the accounting acquirer based on the terms of the Merger Agreement and other factors, including: (i) Legacy Q32’s shareholders own a majority of the F- 17 voting rights in the combined company; (ii) Legacy Q32 designated a majority (seven of nine) of the initial members of the board of directors of the combined company; (iii) Legacy Q32's executive management team became the management team of the combined company; (iv) the pre-combination assets of Homology were primarily cash and cash equivalents, short-term investments, and other non-operating assets; and (v) the combined company was named Q32 Bio Inc. and is headquartered in Legacy Q32’s office in Waltham, Massachusetts.
The Company recorded a gain on the change in fair value prior to the conversion of the Convertible Notes of $ 15.9 million in other income (expense), net during the year ended December 31, 2024.
The Company recorded a gain on the change in fair value prior to the conversion of the Convertible Notes of $ 15.9 million in other income (expense), net during the year ended December 31, 2024 . 12.
Pursuant to the Amended and Restated Limited Liability Company Agreement of OXB (US) LLC, at any time following the three-year anniversary of the closing of the transaction between OXB (US) LLC, Oxford Biomedica (US), Inc. and the Company (formerly known as Homology Medicines, Inc.) on March 10, 2022, (i) Oxford Biomedica (US), Inc. will have an option to cause the Company to sell and transfer to Oxford Biomedica (US), Inc., and (ii) the Company will have an option to cause Oxford Biomedica (US), Inc. to purchase from the Company, in each case, all of the Company’s equity ownership interest in OXB (US) LLC based on the Company's pro rata share of OXB (US) LLC (10%) times a predetermined multiple of revenue for the immediately preceding 12-month period increased by OXB (US) LLC's cash balance and decreased by OXB (US) LLC's debt balance as of the exercise date (together, the “Options”), subject to a maximum amount of $ 74.1 million.
Pursuant to the Amended and Restated Limited Liability Company Agreement of OXB (US) LLC, at any time following the three-year anniversary of the closing of the transaction between OXB (US) LLC, Oxford Biomedica (US), Inc. and the Company (formerly known as Homology Medicines, Inc.) on March 10, 2022, (i) Oxford Biomedica (US), Inc. had an option to cause the Company to sell and transfer to Oxford Biomedica (US), Inc., and (ii) the Company had an option to cause Oxford Biomedica (US), Inc. to purchase from the Company, in each case, all of the Company’s equity ownership interest in OXB (US) LLC based on the Company's pro rata share of OXB (US) LLC (10%) times a predetermined multiple of revenue for the immediately preceding 12-month period increased by OXB (US) LLC's cash balance and decreased by OXB (US) LLC's debt balance as of the exercise date (together, the “Options”), subject to a maximum amount of $ 74.1 million.
At the effective time of the Merger, each person who as of immediately prior to the effective time of the Merger was a stockholder of record of Homology or had the right to receive Homology’s common stock received a contractual contingent value right (“CVR”) issued by Homology representing the contractual right to receive cash payments from the combined company upon the receipt of certain proceeds from a disposition of Homology’s pre-merger assets (see Note 3 for more details surrounding the accounting for the Merger and the CVRs).
At the effective time of the Merger, each person who as of immediately prior to the effective time of the Merger was a stockholder of record of Homology or had the right to receive Homology’s common stock received a contractual contingent value right (“CVR”) issued by Homology representing the contractual right to receive cash payments from the combined company upon F- 9 the receipt of certain proceeds from a disposition of Homology’s pre-merger assets (see Note 3 for more details surrounding the accounting for the Merger and the CVRs).
Liquidity and Going Concern In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s ability to Continue as a Going Concern (Subtopic 205-40) , the Company has evaluated whether they are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
Liquidity and Going Concern In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s ability to Continue as a Going Concern (Subtopic 205-40) , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
The Company’s obligation to pay BMS royalties under subsection (ii) above commences, on a licensed product-by-licensed product and country-by-country basis on the first commercial sale of a licensed product in a country and expires on the later of (x) 12 years from the first commercial sale of such Licensed Product in such country, (y) the last to expire licensed patent right covering bempikibart or such licensed product in such country, and (z) the expiration or regulatory or marketing exclusivity for such licensed product in such country (Royalty Term).
The Company’s obligation to pay BMS royalties under subsection (ii) above commences, on a licensed product-by-licensed product and country-by-country basis on the first commercial sale of a licensed product in a country and expires on the later of (x) F- 24 12 years from the first commercial sale of such Licensed Product in such country, (y) the last to expire licensed patent right covering bempikibart or such licensed product in such country, and (z) the expiration or regulatory or marketing exclusivity for such licensed product in such country (Royalty Term).
The tables below present information about the Company’s assets and liabilities that are regularly measured and carried at fair value on a recurring basis at December 31, 2024 and December 31, 2023 and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, which is described further within Note 2, Summary of Significant Accounting Policies .
The tables below present information about the Company’s assets and liabilities that are regularly measured and carried at fair value on a recurring basis at December 31, 2025 and December 31, 2024 and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, which is described further within Note 2, Summary of Significant Accounting Policies .
F- 9 Q32 BIO INC. NOTES TO CONS OLIDATED FINANCIAL STATEMENTS 1. Nature of the Business Q32 Bio Inc. (“Q32” or the “Company”) is a clinical stage biotechnology company focused on developing novel biologics to effectively and safely restore healthy immune balance in patients with autoimmune and inflammatory diseases driven by pathological immune dysfunction.
F- 8 Q32 BIO INC. NOTES TO CONS OLIDATED FINANCIAL STATEMENTS 1. Nature of the Business Q32 Bio Inc. (“Q32” or the “Company”) is a clinical stage biotechnology company focused on developing novel biologics to effectively and safely restore healthy immune balance in patients with autoimmune and inflammatory diseases driven by pathological immune dysfunction.
F- 11 Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, in determining how to allocate resources and in assessing performance. The Company has one reporting segment (see Note 20).
Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, in determining how to allocate resources and in assessing performance. The Company has one reporting segment (see Note 20).
Option Repricing On February 23, 2025, the Company's board of directors approved a stock option repricing (the “Option Repricing”), which was effective on February 24, 2025 (the “Repricing Date”).
Stock Option Modifications On February 23, 2025, the Company's board of directors approved a stock option repricing (the “Option Repricing”), which was effective on February 24, 2025 (the “Repricing Date”).
Any shares of Series B preferred stock issued to settle the Convertible Notes would then be convertible into shares of common stock. The Convertible Notes were excluded from the computation of diluted net loss per share attributable to common stockholders for the year ended December 31, 2023, because including them would have had an anti-dilutive effect .
Any shares of Series B preferred stock issued to settle the Convertible Notes would then be convertible into shares of common stock. The Convertible Notes were excluded from the computation of diluted net loss per share attributable to common stockholders for the year ended December 31, 2024, because including them would have had an anti-dilutive effect .
The Company's proportionate share of the net income or loss of the entity is included in consolidated net income (loss). Judgments regarding the level of influence over the equity method investment include consideration of key factors such as the Company's ownership interest, representation on the board of directors or other management body and participation in policy-making decisions.
The Company's proportionate share of the net income or loss of the entity is included in consolidated net income (loss). Judgments regarding the level of influence F- 12 over the equity method investment include consideration of key factors such as the Company's ownership interest, representation on the board of directors or other management body and participation in policy-making decisions.
License Agreement with Bristol-Myers Squibb Company In September 2019, the Company entered into a license agreement, as amended in August 2021 and July 2022 (the BMS License Agreement), with Bristol-Myers Squibb Company (“BMS”), pursuant to which the Company obtained sublicensable licenses from BMS to research, develop and commercialize licensed products, including bempikibart, for any and all uses worldwide.
License Agreement with Bristol-Myers Squibb Company In September 2019, the Company entered into a license agreement, as amended in August 2021 and July 2022 (the “BMS License Agreement”), with Bristol-Myers Squibb Company (“BMS”), pursuant to which the Company obtained sublicensable licenses from BMS to research, develop and commercialize licensed products, including bempikibart, for any and all uses worldwide.
Pursuant to such method, the Company adjusted the numerator for the gains or losses recognized during the period F- 34 in net income from the Convertible Notes and the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the Convertible Notes were converted as of the beginning the period.
Pursuant to such method, the Company adjusted the numerator for the gains or losses recognized during the period in net income from the Convertible Notes and the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the Convertible Notes were converted as of the beginning of the period.
The Loan Agreement also contains certain events of default, representations, warranties and non-financial covenants of the Company. If the Company fails to make payments when due or breaches any operational covenant or has any event of default, this could have a material adverse effect on its business and financial condition.
The Loan Agreement F- 25 also contains certain events of default, representations, warranties and non-financial covenants of the Company. If the Company fails to make payments when due or breaches any operational covenant or has any event of default, this could have a material adverse effect on its business and financial condition.
The Company records accrued liabilities for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the research activities, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued and prepaid balances at F- 15 the end of any reporting period.
The Company records accrued liabilities for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the research activities, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued and prepaid balances at the end of any reporting period.
Legacy Q32 concluded that the Convertible Notes and its related features are within the scope of FASB ASC Topic 825, Financial Instruments (ASC 825), as a combined financial instrument, and Legacy Q32 elected the fair value option where changes in fair value of the Convertible Notes are measured through the accompanying consolidated statement of operations until settlement.
Legacy Q32 concluded that the Convertible Notes and its related features are within the scope of FASB ASC Topic 825, Financial Instruments (“ASC 825”), as a combined financial instrument, and Legacy Q32 elected the fair value option where changes in fair value of the Convertible Notes are measured through the accompanying consolidated statement of operations until settlement.
If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.
If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in F- 15 the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.
Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.
Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is F- 16 recognized in the period that includes the enactment date.
The sale price is based on a formula using the Company's pro rata share of OXB (US) LLC (10%), times a predetermined multiple of revenue for the immediately preceding 12-month period increased by OXB (US) LLC's cash balance and decreased by OXB (US) LLC's debt balance as of the exercise date.
The sale price was based on a formula using the Company's pro rata share of OXB (US) LLC (10%), times a predetermined multiple of revenue for the immediately preceding 12-month period increased by OXB (US) LLC's cash balance and decreased by OXB (US) LLC's debt balance as of the exercise date.
The Company elected the short-term lease exemption and therefore does not recognize lease liabilities and right of use assets for lease arrangements with original lease terms of twelve months or less. Lease liabilities represent the Company’s obligation to make lease payments under a lease arrangement.
The Company F- 13 elected the short-term lease exemption and therefore does not recognize lease liabilities and right of use assets for lease arrangements with original lease terms of twelve months or less. Lease liabilities represent the Company’s obligation to make lease payments under a lease arrangement.
As a result of transactions by OXB (US) LLC, the Company’s investment was diluted to a 10 % equity interest in OXB (US) LLC on May 22, 2024, and the Company no longer has the ability to exert significant influence over the operating and financial policies of OXB (US) LLC.
As a result of transactions by OXB (US) LLC, the Company’s investment was diluted to a 10 % equity interest in OXB (US) LLC on May 22, 2024, and the Company no longer had the ability to exert significant influence over the operating and financial policies of OXB (US) LLC.
At each reporting period, the Company is required to make a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. If deemed impaired, the Company is required to estimate the fair value of the investment and recognize an impairment loss equal to the difference between the fair value of the investment and its carry amount.
At each reporting period, the Company was required to make a qualitative assessment considering impairment indicators to evaluate whether the investment was impaired. If deemed impaired, the Company was required to estimate the fair value of the investment and recognize an impairment loss equal to the difference between the fair value of the investment and its carry amount.
Programs currently under development will require significant additional research and development efforts, including preclinical F- 10 and clinical testing, and will need to obtain regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities.
Programs currently under development will require significant additional research and development efforts, including preclinical and clinical testing, and will need to obtain regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities.
F- 13 Investments in Equity Securities The Company uses the equity method of accounting to account for an investment in an entity that it does not control, but in which it has the ability to exercise significant influence over operating and financial policies.
Investments in Equity Securities The Company uses the equity method of accounting to account for an investment in an entity that it does not control, but in which it has the ability to exercise significant influence over operating and financial policies.
Estimated Useful Life (Years) Lab equipment 5 Furniture and fixtures 3 Computer equipment 3 Leasehold improvements Shorter of useful life or term of associated lease F- 14 Leases The Company evaluates whether an arrangement is or contains a lease at contract inception.
Estimated Useful Life (Years) Lab equipment 5 Furniture and fixtures 3 Computer equipment 3 Leasehold improvements Shorter of useful life or term of associated lease Leases The Company evaluates whether an arrangement is or contains a lease at contract inception.
Fair Value of Common Stock – Prior to the Merger, as there had been no public market for the Company’s common stock, the estimated fair value of its common stock was determined by the Company using estimates and assumptions on the respective grant dates of the awards.
F- 29 Fair Value of Common Stock – Prior to the Merger, as there had been no public market for the Company’s common stock, the estimated fair value of its common stock was determined by the Company using estimates and assumptions on the respective grant dates of the awards.
The CODM assesses performance and decides how to allocate resources based on consolidated net loss. This measure is F- 35 used to monitor budget versus actual results to assess performance of the segment. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.
The CODM assesses performance and decides how to allocate resources based on consolidated net loss. This measure is used to monitor budget versus actual results to assess performance of the segment. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.
Patent Costs The Company expenses all costs as incurred in connection with patent applications, including direct application fees, and the legal and consulting expenses related to making such applications, and such costs are included in general and administrative expenses within the Company’s statement of operations.
F- 14 Patent Costs The Company expenses all costs as incurred in connection with patent applications, including direct application fees, and the legal and consulting expenses related to making such applications, and such costs are included in general and administrative expenses within the Company’s statement of operations.
F- 16 If an arrangement includes development and regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.
If an arrangement includes development and regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.
Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying F- 17 amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
The financial statements as of December 31, 2024 and 2023 do not include liabilities with respect to royalty fees on the license agreement as the Company has not yet generated revenue and the achievement of certain milestones is not yet probable.
The financial statements as of December 31, 2025 and 2024 do not include liabilities with respect to royalty fees on the license agreement as the Company has not yet generated revenue and the achievement of certain milestones is not yet probable.
Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. Management must apply significant judgment in this process.
Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. Management F- 10 must apply significant judgment in this process.
As part of its fair value analysis, the Company determined that the Options are embedded in the Company’s ownership units of OXB (US) LLC because the Options are not legally detachable or separately exercisable.
As part of its fair value analysis, the Company determined that the Options were embedded in the Company’s ownership units of OXB (US) LLC because the Options were not legally detachable or separately exercisable.
The 2024 Plan replaced the 2017 Plan, as well as the Homology 2015 Stock Incentive Plan (the “Homology 2015 Plan”), and the Homology 2018 Plan (together with the Homology 2015 Plan, the “Homology Incentive Plans.”) Upon effectiveness of the 2024 Plan, the Company ceased granting new awards under the 2017 Plan and the Homology Incentive Plans.
The 2024 Plan replaced the 2017 Plan, as well as the Homology 2015 Stock Incentive Plan (the “Homology 2015 Plan”), and the Homology 2018 Plan (together with the Homology 2015 Plan, the “Homology Incentive Plans”). Upon effectiveness of the 2024 Plan, the Company ceased granting new awards under the 2017 Plan and the Homology Incentive Plans.
T he Company has received $ 55.0 million of the $ 55.0 million transaction price from Horizon. In October 2023, Amgen Inc. (“Amgen”) completed its acquisition of Horizon Therapeutics public limited company (“Horizon plc”).
The Company has received $ 55.0 million of the $ 55.0 million transaction price from Horizon. In October 2023, Amgen Inc. (“Amgen”) completed its acquisition of Horizon Therapeutics public limited company (“Horizon plc”).
F- 21 The Company recorded its equity method investment in OXB (US) LLC at fair value upon the effective date of the Merger. The fair value of the equity method investment was determined based on the market approach.
The Company recorded its equity method investment in OXB (US) LLC at fair value upon the effective date of the Merger. The fair value of the equity method investment was determined based on the market approach.
The Series A convertible preferred stock converted into an aggregate of 2,286,873 shares of Legacy Q32 common stock, the Series A-1 convertible preferred stock converted into an aggregate of 312,094 shares of Legacy Q32 F- 28 common stock and the Series B convertible preferred stock converted into an aggregate of 2,625,896 shares of Legacy Q32 common stock.
The Series A convertible preferred stock converted into an aggregate of 2,286,873 shares of Legacy Q32 common stock, the Series A-1 convertible preferred stock converted into an aggregate of 312,094 shares of Legacy Q32 common stock and the Series B convertible preferred stock converted into an aggregate of 2,625,896 shares of Legacy Q32 common stock.
As a result, the Company retained all F- 31 initial consideration and development funding received under the Horizon Collaboration Agreement (as defined below) and regained full development and commercial rights to bempikibart.
As a result, the Company retained all initial consideration and development funding received under the Horizon Collaboration Agreement (as defined below) and regained full development and commercial rights to bempikibart.
Commitments and Contingencies As of December 31, 2024, the Company had several ongoing clinical studies in various clinical trial stages. Its most significant contracts relate to agreements with CROs for clinical trials and preclinical studies and CDMOs for manufacturing which the Company enters into in the normal course of business.
Commitments and Contingencies As of December 31, 2025, the Company had ongoing clinical studies in various clinical trial stages. Its most significant contracts relate to agreements with CROs for clinical trials and preclinical studies and CDMOs for manufacturing which the Company enters into in the normal course of business.
Comprehensive Income (Loss) Comprehensive income (loss) includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders.
F- 11 Comprehensive Income (Loss) Comprehensive income (loss) includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders.
F- 12 The Company includes the restricted cash and restricted cash equivalents balance together with its cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows.
The Company includes the restricted cash and restricted cash equivalents balance together with its cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows.
Common Stock As of December 31, 2024 , the Company’s Certificate of Incorporation, as amended, authorized the Company to issue 400,000,000 shares of common stock, $ 0.0001 par value per share.
Common Stock As of December 31, 2025 , the Company’s Certificate of Incorporation, as amended, authorized the Company to issue 400,000,000 shares of common stock, $ 0.0001 par value per share.
The Company has provided a valuation allowance for the full amount of the deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period.
Based on this evaluation, the Company has provided a valuation allowance for the full amount of the net deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period.
Off Balance Sheet Risk As of December 31, 2024 and 2023 , the Company had no off balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
Off Balance Sheet Risk As of December 31, 2025 and 2024 , the Company had no off balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
The carrying value of the Company’s term loan as of December 31, 2024 (see Note 11) approximated fair value based on interest rates currently available to the Company.
The carrying value of the Company’s term loan as of December 31, 2025 (see Note 11) approximated fair value based on interest rates currently available to the Company.
F- 18 At the effective time of the Merger, substantially all of the assets of Homology consisted of cash and cash equivalents, short-term investments, as well as other non-operating assets.
At the effective time of the Merger, substantially all of the assets of Homology consisted of cash and cash equivalents, short-term investments, as well as other non-operating assets.
The Company’s CEO, as the chief operating decision maker ("CODM"), manages and allocates resources to the operations of the Company on a consolidated basis.
The Company’s CEO, as the chief operating decision maker (“CODM”), manages and allocates resources to the operations of the Company on a consolidated basis.
The Company utilized a monte carlo simulation model, also known as a probability simulation, to estimate the fair value of the CVR liability.
The Company utilized a monte carlo simulation model, F- 18 also known as a probability simulation, to estimate the fair value of the CVR liability.
The Company discontinued the equity method of accounting for the investment in OXB (US) LLC on May 22, 2024 and determined the remaining investment to be an equity security accounted for in accordance with FASB ASC Topic 321, Investments—Equity Securities (ASC 321) at the date the investment no longer qualifies for the equity method of accounting.
The Company discontinued the equity method of accounting for the investment in OXB (US) LLC on May 22, 2024 and determined the remaining investment to be an equity security accounted for in accordance with FASB ASC Topic 321, Investments—Equity Securities (“ASC 321”) at the date the investment no longer qualified for the equity method of accounting.
The Company concluded that the CVR liability is a derivative liability and is accounted for at fair value. The fair value of the CVR liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.
The Company concluded that the CVR liability was a derivative liability accounted for at fair value. The fair value of the CVR liability was based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.
There were no shares issued under the 2024 ESPP during the year ended December 31, 2024. Stock Options Stock options granted by the Company typically vest over a four-year period and have a ten-year contractual term.
There were no shares issued under the 2024 ESPP during the years ended December 31, 2025 and 2024. F- 27 Stock Options Stock options granted by the Company typically vest over a four-year period and have a ten-year contractual term.
In consideration for the license, the Company made an upfront payment to BMS of $ 8 million, issued 6,628,788 Series A preferred shares to BMS and agreed to use commercially reasonable efforts to develop and commercialize at least one licensed product in key geographic markets.
In consideration for the license, the Company made an upfront payment to BMS of $ 8 million, issued 318,278 Series A preferred shares to BMS and agreed to use commercially reasonable efforts to develop and commercialize at least one licensed product in key geographic markets.
CONSOLIDATED STATEME NTS OF COMPREHENSIVE LOSS (amounts in thousands, except share and per share data) Years Ended December 31, 2024 2023 Net loss $ ( 47,733 ) $ ( 53,743 ) Other comprehensive income (loss): Change in unrealized gain (loss) on available for sale securities, net — — Total other comprehensive gain (loss) — — Comprehensive loss $ ( 47,733 ) $ ( 53,743 ) The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEME NTS OF COMPREHENSIVE INCOME (LOSS) (amounts in thousands, except share and per share data) Years Ended December 31, 2025 2024 Net income (loss) $ 29,821 $ ( 47,733 ) Other comprehensive income (loss): Change in unrealized gain (loss) on available for sale securities, net — — Total other comprehensive gain (loss) — — Comprehensive income (loss) $ 29,821 $ ( 47,733 ) The accompanying notes are an integral part of these consolidated financial statements.
Accordingly, the equity method investment and the Options represent one unit of account and the fair value recorded reflects the value of the equity interest and the Options (refer to Note 3 for more information for how the fair value was determined).
Accordingly, the equity method investment and the Options represented one unit of account and the fair value recorded reflected the value of the equity interest and the Options (refer to Note 3 for more information for how the fair value was determined).
As of December 31, 2023, the Company’s potentially dilutive securities, which include convertible preferred stock, convertible notes, stock options and warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.
As of December 31, 2024, the Company’s potentially dilutive securities, which include stock options and warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.
During the years ended December 31, 2024 and 2023, there were no transfers between Level 1, Level 2 and Level 3 measurements. There have been no impairments of the Company’s assets measured and carried at fair value during the years ended December 31, 2024 and 2023.
During the years ended December 31, 2025 and 2024, there were no transfers between Level 1, Level 2 and Level 3 measurements. There have been no impairments of the Company’s assets measured and carried at fair value during the years ended December 31, 2025 and 2024 . F- 20 6 .
Q32 has multiple product candidates across a variety of autoimmune and inflammatory diseases. The Company was formed in 2017 as Admirx, Inc. under the laws of the state of Delaware and is headquartered in Waltham, Massachusetts. On March 20, 2020, the Company changed its name to Q32 Bio Inc. Merger with Homology On March 25, 2024, Kenobi Merger Sub, Inc.
Q32 has multiple product candidates across a variety of autoimmune and inflammatory diseases. The Company was formed in 2017 as Admirx, Inc. under the laws of the state of Delaware and is headquartered in Waltham, Massachusetts. On March 20, 2020, the Company changed its name to Q32 Bio Inc.
As of the Repricing Date, the Eligible Options were repriced such that the exercise price per share for such Eligible Options was reduced to the closing price of the common stock on the Nasdaq Global Market on the Repricing Date (the “ Repriced Exercise Price”). The total number of shares of common stock underlying all Eligible Options was 1,904,998 .
As of the Repricing Date, the Eligible Options were repriced such that the exercise price per share for such Eligible Options was reduced to the closing price of the common stock on the Nasdaq Global Market on the Repricing Date (the “Repriced Exercise Price”). The total number of shares of common stock underlying all Eligible Options was 1,871,416 .
The Company determined that adopting the amendments in ASU 2023-07 had no impact on the Company’s reportable segment identified and additional required disclosures have been included. Recently Issued Accounting Standards Not Yet Adopted On December 14, 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”).
The Company determined that adopting the amendments in ASU 2023-07 had no impact on the Company’s reportable segment identified and additional required disclosures have been included. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”).
In addition, the Company paid a fee of $ 0.1 million upon closing and is required to pay a fee of 2.0 % of the aggregate F- 26 amount of advances under the Loan Agreement at maturity.
In addition, the Company paid a fee of $ 0.1 million upon closing and is required to pay a fee of 3.5 % of the aggregate amount of advances under the Loan Agreement at maturity.
As of December 31, 2024 , there were 1,760,657 shares available for future grant under the 2024 Plan. F- 29 2024 Employee Stock Purchase Plan On March 15, 2024, Homology’s board of directors adopted and subsequently, Homology’s stockholders approved the Q32 Inc. 2024 Employee Stock Purchase Plan (the “2024 ESPP”).
As of December 31, 2025 , there were 1,997,964 shares available for future grant under the 2024 Plan. 2024 Employee Stock Purchase Plan On March 15, 2024, Homology’s board of directors adopted and subsequently, Homology’s stockholders approved the Q32 Inc. 2024 Employee Stock Purchase Plan (the “2024 ESPP”).
(“Merger Sub”), a wholly-owned subsidiary of Homology Medicines, Inc. (“Homology”), completed its merger with and into Q32 Bio Operations Inc. (previously named Q32 Bio Inc. and referred to herein as “Legacy Q32”), with Legacy Q32 continuing as the surviving entity as a wholly-owned subsidiary of Homology.
Merger with Homology On March 25, 2024, Kenobi Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of Homology Medicines, Inc. (“Homology”), completed its merger with and into Q32 Bio Operations Inc. (previously named Q32 Bio Inc. and also referred to herein as “Legacy Q32”), with Legacy Q32 continuing as the surviving entity as a wholly-owned subsidiary of Homology.
The effective rate on the Loan Agreement, including the amortization of the debt discount and issuance costs was 9.55 % and 10.42 %, respectively, at each of December 31, 2024 and 2023 .
The effective rate on the Loan Agreement, including the amortization of the debt discount and issuance costs was 9.45 % and 9.55 %, respectively, at each of December 31, 2025 and 2024 .
ASU 2023-09 provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and incomes taxes paid information. For public companies, the amendments are effective for annual periods beginning after December 15, 2024 and should be applied prospectively.
ASU 2023-09 provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and incomes taxes paid information. For public companies, the amendments are effective for annual periods beginning after December 15, 2024, and should be applied prospectively. The Company adopted this standard as of January 1, 2025.
No impairment losses occurred in 2024 and 2023 . The Company had no losses on disposal of fixed assets in 2024 and 2023 . F- 22 8.
No impairment losses occurred in 2025 and 2024 . The Company had no losses on disposal of fixed assets in 2025 and 2024 . F- 21 8.
As and when circumstances and facts change, the Company will evaluate the Company’s ability to significantly influence operational and financial policy to establish a basis for converting the investment accounted for using the cost method to the equity method of accounting and vice versa.
As and when circumstances and facts change, the Company will evaluate the Company’s ability to significantly influence operational and financial policy to establish a basis for converting the investment accounted for using the cost method to the equity method of accounting and vice versa. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation.
Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 are summarized as follows (in thousands): Description Balance as of December 31, 2024 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Cash equivalents: Money market funds $ 76,089 $ 76,089 $ — $ — Total cash equivalents $ 76,089 $ 76,089 $ — $ — Total financial assets $ 76,089 $ 76,089 $ — $ — Liabilities CVR liability $ 2,900 $ — $ — $ 2,900 Total financial liabilities $ 2,900 $ — $ — $ 2,900 Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 are summarized as follows (in thousands): Description Balance as of December 31, 2023 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Cash equivalents: Money market funds $ 24,100 $ 24,100 $ — $ — Total cash equivalents $ 24,100 $ 24,100 $ — $ — Restricted cash equivalents: Money market funds $ 5,000 $ 5,000 $ — $ — Total restricted cash equivalents $ 5,000 $ 5,000 $ — $ — Total financial assets $ 29,100 $ 29,100 $ — $ — Liabilities Convertible notes $ 38,595 $ — $ — $ 38,595 Total financial liabilities $ 38,595 $ — $ — $ 38,595 F- 20 Money market funds were valued by the Company using quoted prices in active markets for identical securities, which represent a Level 1 measurement within the fair value hierarchy.
Financial assets measured at fair value on a recurring basis as of December 31, 2025 are summarized as follows (in thousands): Description Balance as of December 31, 2025 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Cash equivalents: Money market funds $ 46,941 $ 46,941 $ — $ — Total cash equivalents $ 46,941 $ 46,941 $ — $ — Total financial assets $ 46,941 $ 46,941 $ — $ — F- 19 Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 are summarized as follows (in thousands): Description Balance as of December 31, 2024 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Assets Cash equivalents: Money market funds $ 76,089 $ 76,089 $ — $ — Total cash equivalents $ 76,089 $ 76,089 $ — $ — Total financial assets $ 76,089 $ 76,089 $ — $ — Liabilities CVR liability $ 2,900 $ — $ — $ 2,900 Total financial liabilities $ 2,900 $ — $ — $ 2,900 Money market funds Money market funds were valued by the Company using quoted prices in active markets for identical securities, which represent a Level 1 measurement within the fair value hierarchy.
Future minimum lease payments under non-cancelable lease agreement as of December 31, 2024 and a reconciliation to the carrying amount of the lease liabilities presented in the consolidated balance sheet are as follows (in thousands): Minimum Rental Payments 2025 $ 1,060 2026 1,092 2027 1,124 2028 1,158 2029 1,193 Thereafter 2,494 Total minimum lease payments 8,121 Less imputed interest ( 1,873 ) Total lease liability $ 6,248 Lease liability, current portion 612 Lease liability, net of current portion 5,636 Total $ 6,248 Prior to the Merger, Homology was subleasing office and research and development laboratory space in Bedford, Massachusetts, under a sublease agreement with OXB (US) LLC that expired in December 2024.
Future minimum lease payments under non-cancelable lease agreement as of December 31, 2025 and a reconciliation to the carrying amount of the lease liabilities presented in the consolidated balance sheet are as follows (in thousands): Minimum Rental Payments 2026 $ 1,092 2027 1,124 2028 1,158 2029 1,193 2030 1,229 Thereafter 1,265 Total minimum lease payments 7,061 Less imputed interest ( 1,425 ) Total lease liability $ 5,636 Lease liability, current portion 693 Lease liability, net of current portion 4,943 Total $ 5,636 Prior to the Merger, Homology was subleasing office and research and development laboratory space in Bedford, Massachusetts, under a sublease agreement with OXB (US) LLC that expired in December 2024.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOnly limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage. Any failure to obtain or maintain patent protection with respect to our product candidates or their uses could adversely affect our business, financial condition, results of operations and prospects.
Biggest changeAny failure to obtain or maintain patent protection with respect to our product candidates or their uses could adversely affect our business, financial condition, results of operations and prospects. 39 Our rights to develop and commercialize our product candidates are, and in the future, may be subject to the terms and conditions of licenses granted to us by others.
Among other things, these provisions: • establish a classified board of directors such that all members of the board are not elected at one time; • do not provide for cumulative voting in the election of directors; • allow the authorized number of our directors to be changed only by resolution of our board of directors; • provide that only the board of directors may fill vacancies on the board of directors created by the expansion of the board of directors or the resignation, death or removal of a director; • limit the manner in which stockholders can remove directors from the board; • establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on at stockholder meetings; • require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; • limit who may call a special meeting of stockholders; 74 • authorize our board of directors to issue preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and • require the approval of the holders of at least 66.67% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
Among other things, these provisions: • establish a classified board of directors such that all members of the board are not elected at one time; • do not provide for cumulative voting in the election of directors; • allow the authorized number of our directors to be changed only by resolution of our board of directors; • provide that only the board of directors may fill vacancies on the board of directors created by the expansion of the board of directors or the resignation, death or removal of a director; • limit the manner in which stockholders can remove directors from the board; • establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on at stockholder meetings; • require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; • limit who may call a special meeting of stockholders; • authorize our board of directors to issue preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and • require the approval of the holders of at least 66.67% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
The factors that may limit any potential competitive advantage provided by our intellectual property rights include: • pending patent applications that we may file or license may not lead to issued patents; • patents, should they issue, that we own or license, may not provide us with any competitive advantages, or may be challenged and held invalid or unenforceable • others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology but that is not covered by the claims of any of our owned or in-licensed patents, should any such patents issue; • third parties may compete with us in jurisdictions where we do not pursue and obtain patent protection; • we (or our licensors) might not have been the first to make the inventions covered by a pending patent application that we own or license; • we (or our licensors) might not have been the first to file patent applications covering a particular invention; • others may independently develop similar or alternative technologies without infringing our intellectual property rights; • we may not be able to obtain and/or maintain necessary licenses on reasonable terms or at all; • third parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights, or any rights at all, over that intellectual property; • we may not be able to maintain the confidentiality of our trade secrets or other proprietary information; • we may not develop or in-license additional proprietary technologies that are patentable; and • the patents of others may have an adverse effect on our business.
The factors that may limit any potential competitive advantage provided by our intellectual property rights include: • pending patent applications that we may file or license may not lead to issued patents; • patents, should they issue, that we own or license, may not provide us with any competitive advantages, or may be challenged and held invalid or unenforceable • others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology but that is not covered by the claims of any of our owned or in-licensed patents, should any such patents issue; • third parties may compete with us in jurisdictions where we do not pursue and obtain patent protection; • we (or our licensors) might not have been the first to make the inventions covered by a pending patent application that we own or license; • we (or our licensors) might not have been the first to file patent applications covering a particular invention; • others may independently develop similar or alternative technologies without infringing our intellectual property rights; • we may not be able to obtain and/or maintain necessary licenses on reasonable terms or at all; • third parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights, or any rights at all, over that intellectual property; • we may not be able to maintain the confidentiality of our trade secrets or other proprietary information; • we may not develop or in-license additional proprietary technologies that are patentable; and 50 • the patents of others may have an adverse effect on our business.
If a third party alleges that we infringed its patents or trademarks or misappropriate or violate its other intellectual property rights, we may face a number of issues, including, but not limited to: • patent and trademark infringement and other intellectual property misappropriation or violation which, regardless of merit, may be expensive and time-consuming to litigate and may divert our management’s attention from our core business; • substantial damages for infringement, misappropriation or violation, which we may have to pay if a court decides that the product candidate or technology at issue infringes on, misappropriates or violates the third-party’s rights; • an injunction prohibiting us from manufacturing, marketing or selling our product candidates, or from using our proprietary technologies, unless the third party agrees to license its patent rights to us; • even if a license is available from a third party, we may have to pay substantial royalties, upfront fees and other amounts, and/or grant cross-licenses to intellectual property rights protecting our product candidates or processes; and • we may be forced to try to redesign our product candidates or processes so they do not infringe third-party patents or trademarks or misappropriate or violate other third party intellectual property rights, an undertaking which may not be possible or which may require substantial monetary expenditures and time.
If a third party alleges that we infringed its patents or trademarks or misappropriate or violate its other intellectual property rights, we may face a number of issues, including, but not limited to: • patent and trademark infringement and other intellectual property misappropriation or violation which, regardless of merit, may be expensive and time-consuming to litigate and may divert our management’s attention from our core business; • substantial damages for infringement, misappropriation or violation, which we may have to pay if a court decides that the product candidate or technology at issue infringes on, misappropriates or violates the third-party’s rights; 47 • an injunction prohibiting us from manufacturing, marketing or selling our product candidates, or from using our proprietary technologies, unless the third party agrees to license its patent rights to us; • even if a license is available from a third party, we may have to pay substantial royalties, upfront fees and other amounts, and/or grant cross-licenses to intellectual property rights protecting our product candidates or processes; and • we may be forced to try to redesign our product candidates or processes so they do not infringe third-party patents or trademarks or misappropriate or violate other third party intellectual property rights, an undertaking which may not be possible or which may require substantial monetary expenditures and time.
Our bylaws further provide that, unless we consent in writing to an alternative forum, federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, which for purposes of this risk factor is referred to herein as the “Federal Forum Provision.” In addition, our certificate of incorporation and bylaws that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the foregoing Delaware Forum Provision and Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed to have waived its compliance with the U.S. federal securities laws and the rules and regulations thereunder.
Our bylaws further provide that, unless we consent in writing to an alternative forum, federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, which for purposes of this risk factor is referred to herein as the “Federal Forum Provision.” In addition, our certificate of incorporation and bylaws that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the foregoing Delaware Forum Provision and Federal Forum Provision; provided, however, that 72 stockholders cannot and will not be deemed to have waived its compliance with the U.S. federal securities laws and the rules and regulations thereunder.
We cannot predict: • if and when patents may issue based on our patent applications; • the scope of protection of any patent issuing based on our patent applications; • whether the claims of any patent issuing based on our patent applications will provide protection against competitors; • whether or not third parties will find ways to invalidate or circumvent our patent rights; • whether or not others will obtain patents claiming aspects similar to those covered by our patents and patent applications; • whether we will need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose; and • whether the patent applications that we own will result in issued patents with claims that cover our product candidates or uses thereof in the United States or in other foreign countries.
We cannot predict: • if and when patents may issue based on our patent applications; • the scope of protection of any patent issuing based on our patent applications; • whether the claims of any patent issuing based on our patent applications will provide protection against competitors; • whether or not third parties will find ways to invalidate or circumvent our patent rights; • whether or not others will obtain patents claiming aspects similar to those covered by our patents and patent applications; 41 • whether we will need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose; and • whether the patent applications that we own will result in issued patents with claims that cover our product candidates or uses thereof in the United States or in other foreign countries.
We or our collaborators also may experience numerous unforeseen events during, or as a result of, any current or future clinical trials that could delay or prevent our ability to receive marketing approval or commercialize bempikibart or any other product candidates, including: • regulators or Institutional Review Boards, or IRBs, the FDA or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trial sites deviating from trial protocol or dropping out of a trial; • clinical trials of any product candidates may fail to show safety or efficacy, produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials or we may decide to abandon product development programs; • the number of subjects required for clinical trials of any our product candidates may be larger than we anticipate, especially if regulatory bodies require completion of non-inferiority or superiority trials compared to approved products, enrollment in these clinical trials may be slower than we anticipate or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; 36 • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators, or expand the scope of our planned clinical trials to accrue sufficient data from such trials; • we may elect to, or regulators, IRBs or ethics committees may require that we or our investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants in our trials are being exposed to unacceptable health risks; • the cost of clinical trials of any of our product candidates may be greater than we anticipate; • the quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be inadequate to initiate or complete a given clinical trial; • our inability to manufacture sufficient quantities of our product candidates for use in clinical trials; • reports from clinical testing of other therapies may raise safety or efficacy concerns about our product candidates; • our failure to establish an appropriate safety profile for a product candidate based on clinical or preclinical data for such product candidate as well as data emerging from other therapies in the same class as our product candidates; and • the FDA or other regulatory authorities may require us to submit additional data such as long-term toxicology studies or impose other requirements before permitting us to initiate a clinical trial.
We or our collaborators also may experience numerous unforeseen events during, or as a result of, any current or future clinical trials that could delay or prevent our ability to receive marketing approval or commercialize bempikibart or any other product candidates, including: • regulators or Institutional Review Boards (“IRBs”), the FDA or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; 31 • we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trial sites deviating from trial protocol or dropping out of a trial; • clinical trials of any product candidates may fail to show safety or efficacy, produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials or we may decide to abandon product development programs; • the number of subjects required for clinical trials of any our product candidates may be larger than we anticipate, especially if regulatory bodies require completion of non-inferiority or superiority trials compared to approved products, enrollment in these clinical trials may be slower than we anticipate or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators, or expand the scope of our planned clinical trials to accrue sufficient data from such trials; • we may elect to, or regulators, IRBs or ethics committees may require that we or our investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants in our trials are being exposed to unacceptable health risks; • the cost of clinical trials of any of our product candidates may be greater than we anticipate; • the quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be inadequate to initiate or complete a given clinical trial; • our inability to manufacture sufficient quantities of our product candidates for use in clinical trials; • reports from clinical testing of other therapies may raise safety or efficacy concerns about our product candidates; • our failure to establish an appropriate safety profile for a product candidate based on clinical or preclinical data for such product candidate as well as data emerging from other therapies in the same class as our product candidates; and • the FDA or other regulatory authorities may require us to submit additional data such as long-term toxicology studies or impose other requirements before permitting us to initiate a clinical trial.
The continuing efforts of the government, insurance companies, managed care organizations and other payers of healthcare services to contain or reduce costs of healthcare may adversely affect: • the demand for any of our product candidates, if approved; • the ability to set a price that we believe is fair for any of our product candidates, if approved; 58 • our ability to generate revenues and achieve or maintain profitability; • the level of taxes that we are required to pay; and • the availability of capital.
The continuing efforts of the government, insurance companies, managed care organizations and other payers of healthcare services to contain or reduce costs of healthcare may adversely affect: • the demand for any of our product candidates, if approved; • the ability to set a price that we believe is fair for any of our product candidates, if approved; • our ability to generate revenues and achieve or maintain profitability; • the level of taxes that we are required to pay; and • the availability of capital.
Pursuant to the terms of the license agreements with our licensors, such licensors may have the right to control enforcement of our licensed patents or defense of any claims asserting the invalidity of such patents and, even if we are permitted to pursue such enforcement or defense, we cannot ensure the cooperation of our licensors or, in some cases, other necessary parties, such as any co-owners of patents or other intellectual property from which 44 we have not yet obtained a license.
Pursuant to the terms of the license agreements with our licensors, such licensors may have the right to control enforcement of our licensed patents or defense of any claims asserting the invalidity of such patents and, even if we are permitted to pursue such enforcement or defense, we cannot ensure the cooperation of our licensors or, in some cases, other necessary parties, such as any co-owners of patents or other intellectual property from which we have not yet obtained a license.
Applicable data privacy and security obligations may require us to notify relevant 67 stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts.
Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts.
If the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize our product candidates. Patent terms may be inadequate to protect our competitive position with respect to our product candidates for an adequate amount of time.
If the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize our product candidates. 43 Patent terms may be inadequate to protect our competitive position with respect to our product candidates for an adequate amount of time.
The risks we face in connection with acquisitions, include: • diversion of management time and focus from operating our business to addressing acquisition integration challenges; • coordination of research and development efforts; • retention of key employees from the acquired company; • changes in relationships with strategic partners because of product acquisitions or strategic positioning resulting from the acquisition; • cultural challenges associated with integrating employees from the acquired company into our company; 63 • the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies; • liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violation of laws, commercial disputes, tax liabilities, and other known liabilities; • unanticipated write-offs or charges; and • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
The risks we face in connection with acquisitions, include: • diversion of management time and focus from operating our business to addressing acquisition integration challenges; • coordination of research and development efforts; • retention of key employees from the acquired company; • changes in relationships with strategic partners because of product acquisitions or strategic positioning resulting from the acquisition; • cultural challenges associated with integrating employees from the acquired company into our company; 59 • the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies; • liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violation of laws, commercial disputes, tax liabilities, and other known liabilities; • unanticipated write-offs or charges; and • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
We may not generate or sustain revenue 41 from sales of the product due to factors such as whether the product can be sold at a competitive cost and whether it will otherwise be accepted in the market. There are several approved products and product candidates in later stages of development for the treatment of AA.
We may not generate or sustain revenue from sales of the product due to factors such as whether the product can be sold at a competitive cost and whether it will otherwise be accepted in the market. There are several approved products and product candidates in later stages of development for the treatment of AA.
After March 2013, under the Leahy-Smith Act, the U.S. transitioned to a first-to-file system in which, assuming that the other statutory requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
After March 2013, under the Leahy-Smith Act, the U.S. transitioned to a first-to-file system in which, assuming that the other statutory requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of 44 whether a third party was the first to invent the claimed invention.
Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third parties involved in developing our product candidates or as a result of questions regarding co-ownership of potential joint inventions.
Inventorship disputes may arise from 45 conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third parties involved in developing our product candidates or as a result of questions regarding co-ownership of potential joint inventions.
Consequently, we may not be able to prevent third parties from practicing our or any of our licensors’ inventions in all countries outside the United States, even in jurisdictions where we or any of our current or future licensors do pursue patent protection, or from selling or importing products made using our or any of our licensors’ inventions in and into the United States or other 46 jurisdictions.
Consequently, we may not be able to prevent third parties from practicing our or any of our licensors’ inventions in all countries outside the United States, even in jurisdictions where we or any of our current or future licensors do pursue patent protection, or from selling or importing products made using our or any of our licensors’ inventions in and into the United States or other jurisdictions.
If we or our licensors fail to maintain the patents and patent applications covering our drug candidates or if we or our licensors otherwise allow our patents or patent applications to be abandoned or lapse, our competitors might be able to enter the market, which would hurt our competitive 47 position and could impair our ability to successfully commercialize our drug candidates in any indication for which they are approved.
If we or our licensors fail to maintain the patents and patent applications covering our drug candidates or if we or our licensors otherwise allow our patents or patent applications to be abandoned or lapse, our competitors might be able to enter the market, which would hurt our competitive position and could impair our ability to successfully commercialize our drug candidates in any indication for which they are approved.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable 50 intellectual property rights. An inability to incorporate such technologies or features would harm our business and may prevent us from successfully commercializing our technologies or product candidates.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. An inability to incorporate such technologies or features would harm our business and may prevent us from successfully commercializing our technologies or product candidates.
If a competitor independently develops a technology that we protect as a trade secret and files a patent application on that technology, then we may not be able to patent that technology in the future, may require a license from the competitor to use its own know-how, and if the license is not available on commercially viable terms, then we may not be able to launch our product candidate.
If a competitor independently develops a technology that we protect as a 48 trade secret and files a patent application on that technology, then we may not be able to patent that technology in the future, may require a license from the competitor to use its own know-how, and if the license is not available on commercially viable terms, then we may not be able to launch our product candidate.
During this 12-year period of exclusivity, another company 57 may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.
During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.
If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume to decline. Our quarterly and annual operating results may fluctuate in the future.
If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume to decline. 70 Our quarterly and annual operating results may fluctuate in the future.
In either case, such a license may not be available on commercially reasonable terms or at all. If we are unable to obtain a necessary license to 52 a third-party patent on commercially reasonable terms, or at all, our ability to commercialize our product candidates may be impaired or delayed, which could in turn significantly harm our business.
In either case, such a license may not be available on commercially reasonable terms or at all. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, our ability to commercialize our product candidates may be impaired or delayed, which could in turn significantly harm our business.
In addition, foreign CDMOs may be subject to sanctions, trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of material available to us, delay the procurement or supply of such material or have an adverse effect on our ability to manufacture our product candidates.
In addition, foreign CDMOs may be subject to sanctions, tariffs, trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of material available to us, delay the procurement or supply of such material or have an adverse effect on our ability to manufacture our product candidates.
In addition, even after an orphan drug is approved, the FDA can subsequently approve the same product for the same condition if the FDA concludes that the later product is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
In addition, even after an orphan drug is approved, the FDA can subsequently approve the same product for the same approved use or condition if the FDA concludes that the later product is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
Although we believe we currently maintain adequate product liability insurance for our product candidates, it is possible that our liabilities could exceed our insurance coverage or that in the future we may not be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise.
Although we believe we currently maintain adequate product liability insurance for our product candidates, it is possible that our liabilities could exceed our insurance coverage or that in the future we may not be able 66 to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise.
We are investing a majority of our efforts and financial resources into the research and development of bempikibart. We are developing bempikibart to treat autoimmune and inflammatory diseases, with the aim of achieving the optimal balance of efficacy, tolerability and convenience for patients via infrequently administered subcutaneous doses.
We are investing a majority of our efforts and financial resources into the research and development of bempikibart. We are developing bempikibart to treat autoimmune and inflammatory diseases, with the aim of achieving the optimal balance of efficacy, 32 tolerability and convenience for patients via infrequently administered subcutaneous doses.
In addition, the information we choose to publicly disclose regarding a particular preclinical study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate 40 information to include in our disclosure.
In addition, the information we choose to publicly disclose regarding a particular preclinical study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.
As such, we do not know the degree of future protection that we will have on our product candidates. While we will endeavor to try to protect our product candidates with intellectual property rights, such as patents, as appropriate, the process of obtaining patents is time consuming, expensive and unpredictable.
As such, we do not know the degree of future 42 protection that we will have on our product candidates. While we will endeavor to try to protect our product candidates with intellectual property rights, such as patents, as appropriate, the process of obtaining patents is time consuming, expensive and unpredictable.
Events that may prevent successful or timely initiation or completion of clinical trials include: • inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical trials; • delays in reaching a consensus with regulatory authorities on study design or implementation of the clinical trials; • delays or failure in obtaining regulatory authorization to commence a trial; • delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • delays in identifying, recruiting and training suitable clinical investigators; • delays in obtaining required IRB or ethics committee approval at each clinical trial site; • difficulties in patient enrollment in our clinical trials for a variety of reasons; • delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; • failure by our CROs, other third parties or us to adhere to clinical trial protocols; • failure to perform in accordance with the FDA’s or any other regulatory authority’s Good Clinical Practices, or GCPs, or regulations or applicable regulations or regulatory guidelines in other countries; • changes to the clinical trial protocols; • clinical sites deviating from trial protocol or dropping out of a trial; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; • selection of clinical endpoints that require prolonged periods of observation or analyses of resulting data; • transfer of manufacturing processes to larger-scale facilities operated by a CDMO, and delays or failure by our CDMOs or us to make any necessary changes to such manufacturing processes; and 39 • third parties being unwilling or unable to satisfy their contractual obligations to us.
Events that may prevent successful or timely initiation or completion of clinical trials include: • inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical trials; • delays in reaching a consensus with regulatory authorities on study design or implementation of the clinical trials; • delays or failure in obtaining regulatory authorization to commence a trial; • delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • delays in identifying, recruiting and training suitable clinical investigators; • delays in obtaining required IRB or ethics committee approval at each clinical trial site; 34 • difficulties in patient enrollment in our clinical trials for a variety of reasons; • delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing; • failure by our CROs, other third parties or us to adhere to clinical trial protocols; • failure to perform in accordance with the FDA’s or any other regulatory authority’s Good Clinical Practices (“GCPs”), or regulations or applicable regulations or regulatory guidelines in other countries; • changes to the clinical trial protocols; • clinical sites deviating from trial protocol or dropping out of a trial; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; • selection of clinical endpoints that require prolonged periods of observation or analyses of resulting data; • transfer of manufacturing processes to larger-scale facilities operated by a CDMO, and delays or failure by our CDMOs or us to make any necessary changes to such manufacturing processes; and • third parties being unwilling or unable to satisfy their contractual obligations to us.
Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary 53 information of their former employers, or that our consultants have used or disclosed trade secrets or other proprietary information of their former or current clients.
Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers, or that our consultants have used or disclosed trade secrets or other proprietary information of their former or current clients.
Under current law, our federal NOLs 70 generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of its taxable income annually for tax years beginning after December 31, 2020.
Under current law, our federal NOLs generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of its taxable income annually for tax years beginning after December 31, 2020.
Our future capital requirements depend on many factors, including factors that are not within our control. We will also incur additional costs associated with operating as a public company. We will require substantial additional funding to continue our operations.
Our future capital requirements depend on many factors, including factors that are not within our control. We will continue to incur costs associated with operating as a public company. We will require substantial additional funding to continue our operations.
As an organization, we have limited experience as a company in preparing, submitting and prosecuting regulatory filings. We may not be able to initiate or complete our planned clinical trials in accordance with our desired timelines.
As an organization, we have limited experience 37 as a company in preparing, submitting and prosecuting regulatory filings. We may not be able to initiate or complete our planned clinical trials in accordance with our desired timelines.
We anticipate that our expenses will increase substantially if and as we: • advance our existing and future programs through preclinical and clinical development, including expansion into additional indications; • seek to identify additional programs and additional product candidates; • maintain, expand, enforce, defend and protect our intellectual property portfolio; • seek regulatory and marketing approvals for product candidates; • seek to identify, establish and maintain additional collaborations and license agreements; • ultimately establish a sales, marketing and distribution infrastructure to commercialize any drug products for which we may obtain marketing approval, either by ourselves or in collaboration with others; • commence commercial sales of products for which we receive marketing approval; • hire additional personnel including research and development, clinical and commercial; • add operational, financial and management information systems and personnel, including personnel to support product development; • acquire or in-licenses products, intellectual property and technologies; and • establish commercial-scale current good manufacturing practices, or cGMP, capabilities through a third-party or our own manufacturing facility.
We anticipate that our expenses will increase substantially if and as we: • advance our existing and future programs through preclinical and clinical development, including expansion into additional indications; • seek to identify additional programs and additional product candidates; • maintain, expand, enforce, defend and protect our intellectual property portfolio; • seek regulatory and marketing approvals for product candidates; • seek to identify, establish and maintain additional collaborations and license agreements; • ultimately establish a sales, marketing and distribution infrastructure to commercialize any drug products for which we may obtain marketing approval, either by ourselves or in collaboration with others; • commence commercial sales of products for which we receive marketing approval; • hire additional personnel including research and development, clinical and commercial; 28 • add operational, financial and management information systems and personnel, including personnel to support product development; • acquire or in-licenses products, intellectual property and technologies; and • establish commercial-scale current good manufacturing practices (“cGMP”) capabilities through a third-party or our own manufacturing facility.
Our product candidates may compete with other product candidates in development for similar indications, and if approved, bempikibart or other product candidates will face significant competition and our failure to effectively compete may prevent us from achieving significant 35 market penetration.
Our product candidates may compete with other product candidates in development for similar indications, and if approved, bempikibart or other product candidates will face significant competition and our failure to effectively compete may prevent us from achieving significant market penetration.
To counter infringement, misappropriation or unauthorized use, we or any future licensors may be required to file infringement or misappropriation claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel.
To counter infringement, misappropriation or unauthorized use, we or any future licensors may be required to file infringement or misappropriation claims, which can be expensive and time consuming and divert the time and 46 attention of our management and scientific personnel.
The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. For example, the U.S.
The FDA’s and other regulatory authorities’ 51 policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. For example, the U.S.
See the sections titled “ Business-Government Regulation-Coverage and Reimbursement ” and “ -Regulation in the EU ” elsewhere in this Annual Report on Form 10-K for a more detailed description of the government regulations and third-party payor practices that may affect our ability to commercialize our product candidates. 59 We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-money laundering laws and regulations.
See the sections titled “ Business-Government Regulation-Coverage and Reimbursement ” and “ -Regulation in the EU ” elsewhere in this Annual Report on Form 10-K for a more detailed description of the government regulations and third-party payor practices that may affect our ability to commercialize our product candidates. 55 We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-money laundering laws and regulations.
We could also encounter delays if a clinical trial is placed on clinical hold, suspended or terminated by us, the FDA, the competent authorities of the EU Member States or other regulatory authorities or the IRBs or ethics committees of the institutions in which such trials are being conducted, if a clinical trial is recommended for suspension or termination by the data safety monitoring board, or DSMB, or equivalent body for such trial, or on account of changes to federal, state, or local laws.
We could also encounter delays if a clinical trial is placed on clinical hold, suspended or terminated by us, the FDA, the competent authorities of the EU Member States or other regulatory authorities or the IRBs or ethics committees of the institutions in which such trials are being conducted, if a clinical trial is recommended for suspension or termination by the data safety monitoring board (“DSMB”), or equivalent body for such trial, or on account of changes to federal, state, or local laws.
Moreover, if a third party has intellectual property rights that cover the practice of our technology, we may not be able to fully exercise or extract value 54 from our intellectual property rights.
Moreover, if a third party has intellectual property rights that cover the practice of our technology, we may not be able to fully exercise or extract value from our intellectual property rights.
The loss of the service of any of the members of our senior management or other key employees could delay our research and 68 development programs and materially harm our business, financial condition, results of operations and prospects.
The loss of the service of any of the members of our senior management or other key employees could delay our research and development programs and materially harm our business, financial condition, results of operations and prospects.
Our market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. Our estimates and forecasts relating to size and expected growth of our target 69 market may prove to be inaccurate.
Our market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. Our estimates and forecasts relating to size and expected growth of our target market may prove to be inaccurate.
Failure to execute our manufacturing requirements, either by us or by one of our third-party vendors, could adversely affect our business. 65 Our relationships with healthcare providers, physicians, and third-party payors will be subject to applicable anti-kickback, fraud and abuse, anti-bribery and other healthcare laws and regulations, which could expose it to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.
Failure to execute our manufacturing requirements, either by us or by one of our third-party vendors, could adversely affect our business. 61 Our relationships with healthcare providers, physicians, and third-party payors will be subject to applicable anti-kickback, fraud and abuse, anti-bribery and other healthcare laws and regulations, which could expose it to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.
A product candidate could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: • the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; • we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for our proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; 55 • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to a product candidate, which may result in inquiries from or actions by regulatory authorities to address such events; • we may be unable to demonstrate that a candidate’s clinical and other benefits outweigh our safety risks; • the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of a product candidate may not be acceptable or sufficient to support the submission of a Biologics License Application, or BLA, a new drug application, or NDA, or similar marketing application to obtain regulatory approval in the U.S. or elsewhere, and we may be required to conduct additional clinical trials; • the FDA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of a product candidate; • the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we may contract for clinical and commercial supplies; and • the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
A product candidate could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: • the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; • we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for our proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to a product candidate, which may result in inquiries from or actions by regulatory authorities to address such events; • we may be unable to demonstrate that a candidate’s clinical and other benefits outweigh our safety risks; • the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of a product candidate may not be acceptable or sufficient to support the submission of a Biologics License Application (“BLA”), a new drug application (“NDA”), or similar marketing application to obtain regulatory approval in the U.S. or elsewhere, and we may be required to conduct additional clinical trials; • the FDA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of a product candidate; • the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we may contract for clinical and commercial supplies; and • the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
We, the FDA, the European Medicines Agency, or the EMA, or other applicable regulatory authorities, or an IRB or ethics committee, may suspend any clinical trials of bempikibart or any other product candidates at any time for various reasons, including a belief that subjects or patients in such trials are being exposed to unacceptable health risks or adverse side effects.
We, the FDA, the European Medicines Agency (the “EMA”), or other applicable regulatory authorities, or an IRB or ethics committee, may suspend any clinical trials of bempikibart or any other product candidates at any time for various reasons, including a belief that subjects or patients in such trials are being exposed to unacceptable health risks or adverse side effects.
Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations and prospects.
Any of the foregoing 40 could have a material adverse effect on our competitive position, business, financial condition, results of operations and prospects.
Moreover, even if we received accelerated approval, any post-approval studies required to confirm and verify clinical benefit may not show such benefit, which could lead to withdrawal of any approvals we have obtained. In addition, receiving accelerated approval does not assure that the product’s accelerated approval will eventually be converted to a traditional approval.
Moreover, even if we received accelerated approval, any post-approval trials required to confirm and verify clinical benefit may not show such benefit, which could lead to withdrawal of any approvals we have obtained. In addition, receiving accelerated approval does not assure that the product’s accelerated approval will eventually be converted to a traditional approval.
Orphan drug designation must be requested before submitting an NDA or a BLA. A similar regulatory scheme governs orphan products in the EU. 61 Orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and application fee waivers.
Orphan drug designation must be requested before submitting an NDA or a BLA. A similar regulatory scheme governs orphan products in the EU. 57 Orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and application fee waivers.
FDORA also gives the FDA increased authority to withdraw approval of a drug or biologic granted accelerated approval on an expedited basis if the sponsor fails to conduct such studies in a timely manner, send the necessary updates to the FDA, or if such post-approval studies fail to verify the drug’s predicted clinical benefit.
FDORA also gives the FDA increased authority to withdraw approval of a drug or biologic granted accelerated approval on an expedited basis if the sponsor fails to conduct such trials in a timely manner, send the necessary updates to the FDA, or if such post-approval trials fail to verify the drug’s predicted clinical benefit.
Changes in either the patent laws or interpretation of patent laws in the U.S., including patent reform legislation such as the Leahy-Smith America Invents Act, or the Leahy-Smith Act, could increase the uncertainties and costs surrounding the prosecution of our future owned and in-licensed patent applications and the maintenance, enforcement or defense of our owned and in-licensed issued patents.
Changes in either the patent laws or interpretation of patent laws in the U.S., including patent reform legislation such as the Leahy-Smith America Invents Act (the “Leahy-Smith Act”), could increase the uncertainties and costs surrounding the prosecution of our future owned and in-licensed patent applications and the maintenance, enforcement or defense of our owned and in-licensed issued patents.
Our future capital requirements will depend on many factors, including: • the timing and progress of preclinical and clinical development activities, including our ongoing Phase 2 clinical trial for bempikibart in alopecia areata, or AA; • the number and scope of preclinical and clinical programs we pursue; • our ability to establish an acceptable safety profile with IND-enabling toxicology studies to enable clinical trials; • successful patient enrollment in, and the initiation and completion of, larger and later-stage clinical trials; • per subject trial costs; • the number and extent of trials required for regulatory approval; • the countries in which the trials are conducted; • the length of time required to enroll eligible subjects in clinical trials; • the number of subjects that participate in the trials; • the drop-out and discontinuation rate of subjects; • potential additional safety monitoring requested by regulatory agencies; • the duration of subject participation in the trials and follow-up; • the extent to which we encounter any serious adverse events in our clinical trials; • the timing of receipt of regulatory approvals from applicable regulatory authorities; • the timing, receipt and terms of any marketing approvals and post-marketing approval commitments from applicable regulatory authorities; 34 • the extent to which we establish or maintain collaborations, strategic partnerships, or other strategic arrangements with third parties, if any, and the performance of any such third parties in connection therewith; • hiring and retaining research and development personnel; • our arrangements with our contract development and manufacturing organizations, or CDMOs, and contract research organizations, or CROs; • development and timely delivery of clinical and commercial-grade drug formulations that can be used in our planned clinical trials and for commercial launch, respectfully; • the impact of any business interruptions to our operations or to those of the third parties with whom we work; and • obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights.
Our future capital requirements will depend on many factors, including: • the timing and progress of preclinical and clinical development activities, including our ongoing Phase 2 clinical trial for bempikibart in alopecia areata (“AA”); • the number and scope of preclinical and clinical programs we pursue; • our ability to establish an acceptable safety profile with IND-enabling toxicology studies to enable clinical trials; • successful patient enrollment in, and the initiation and completion of, larger and later-stage clinical trials; • per subject trial costs; • the number and extent of trials required for regulatory approval; • the countries in which the trials are conducted; 29 • the length of time required to enroll eligible subjects in clinical trials; • the number of subjects that participate in the trials; • the drop-out and discontinuation rate of subjects; • potential additional safety monitoring requested by regulatory agencies; • the duration of subject participation in the trials and follow-up; • the extent to which we encounter any serious adverse events in our clinical trials; • the timing of receipt of regulatory approvals from applicable regulatory authorities; • the timing, receipt and terms of any marketing approvals and post-marketing approval commitments from applicable regulatory authorities; • the extent to which we establish or maintain collaborations, strategic partnerships, or other strategic arrangements with third parties, if any, and the performance of any such third parties in connection therewith; • hiring and retaining research and development personnel; • our arrangements with our contract development and manufacturing organizations (“CDMOs”), and contract research organizations (“CROs”); • development and timely delivery of clinical and commercial-grade drug formulations that can be used in our planned clinical trials and for commercial launch, respectfully; • the impact of any business interruptions to our operations or to those of the third parties with whom we work; and • obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates, and uncertainty about economic stability.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates, international tariffs and uncertainty about economic stability.
If the FDA or comparable regulatory authorities requires us to revise or amend a clinical study, generate additional pre-clinical data in support of clinical conduct (e.g., toxicology studies), conduct additional trials or enroll additional patients, our development timelines may be delayed.
If the FDA or comparable regulatory authorities requires us to revise or amend a clinical trial, generate additional pre-clinical data in support of clinical conduct (e.g., toxicology studies), conduct additional trials or enroll additional patients, our development timelines may be delayed.
We cannot be sure that submission of an IND, clinical trial application, or CTA, or similar application will result in the FDA or comparable foreign regulatory authorities, as applicable, allowing clinical trials to begin in a timely manner, if at all.
We cannot be sure that submission of an IND, clinical trial application (“CTA”) or similar application will result in the FDA or comparable foreign regulatory authorities, as applicable, allowing clinical trials to begin in a timely manner, if at all.
Upon submission of an IND or CTA, the FDA or EMA may recommend changes to the proposed study designs, which may impact the number and size of registrational clinical trials required to be conducted in such development programs and may change predicted timelines for clinical development.
Upon submission of an IND or CTA, the FDA or EMA may recommend changes to the proposed trial designs, which may impact the number and size of registrational clinical trials required to be conducted in such development programs and may change predicted timelines for clinical development.
Federal NOLs generated in taxable years beginning before January 1, 2018, however, have a 20-year carryforward period, but are not subject to the 80% limitation. Our state NOLs expire at various dates from 2040 through 2044.
Federal NOLs generated in taxable years beginning before January 1, 2018, however, have a 20-year carryforward period, but are not subject to the 80% limitation. Our state NOLs expire at various dates from 2040 through 2045.
Designation as a breakthrough therapy is within the discretion of the FDA. 60 Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation.
Designation as a breakthrough therapy is within the discretion of the FDA. 56 Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation.
Under FDORA, the FDA is empowered to act, such as issuing fines, against companies that fail to conduct with due diligence any post-approval confirmatory study or submit timely reports to the agency on their progress.
Under FDORA, the FDA is empowered to act, such as issuing fines, against companies that fail to conduct with due diligence any post-approval confirmatory trial or submit timely reports to the agency on their progress.
We have completed a Phase 1 double-blind, placebo-controlled, single ascending dose and multiple dose study to assess the safety, pharmacokinetic, or PK, and pharmacodynamic, or PD, of bempikibart after subcutaneous administration in healthy subjects. This study supported further evaluation of bempikibart, including through demonstration of a PK/PD profile supporting evaluation of every two-week subcutaneous dosing in clinical trials.
We have completed a Phase 1 double-blind, placebo-controlled, single ascending dose and multiple dose study to assess the safety, pharmacokinetic (“PK”) and pharmacodynamic (“PD”) of bempikibart after subcutaneous administration in healthy subjects. This study supported further evaluation of bempikibart, including through demonstration of a PK/PD profile supporting evaluation of every two-week subcutaneous dosing in clinical trials.
Bempikibart is directed at target pathways, IL-7 and thymic stromal lymphopoietin, or TSLP, signaling, that have been implicated in several inflammatory and autoimmune diseases. However, the scientific research that forms the basis of efforts to develop bempikibart is ongoing and has not been successfully proven in clinical trials. The long-term safety and exposure profile of bempikibart is also unknown.
Bempikibart is directed at target pathways, IL-7 and thymic stromal lymphopoietin (“TSLP”) signaling, that have been implicated in several inflammatory and autoimmune diseases. However, the scientific research that forms the basis of efforts to develop bempikibart is ongoing and has not been successfully proven in clinical trials. The long-term safety and exposure profile of bempikibart is also unknown.
Item 1A. Risk F actors. You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission, or SEC. We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties.
Item 1A. Risk F actors. You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission (the “SEC”). We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties.
Since our inception in 2017, we have incurred significant operating losses and have utilized substantially all of our resources to conduct research and development activities (including with respect to our bempikibart and ADX-097 programs) and undertake preclinical studies of product candidates, as well as for conducting clinical trials of our most advanced product candidates and the manufacturing of such product candidates, business planning, developing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these activities.
Since our inception in 2017, we have incurred significant operating losses and have utilized substantially all of our resources to conduct research and development activities (including with respect to our bempikibart program) and undertake preclinical studies of product candidates, as well as for conducting clinical trials of our most advanced product candidates and the manufacturing of such product candidates, business planning, developing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these activities.
Patent and Trademark Office, or USPTO, and foreign patent agencies over the lifetime of a patent. In addition, the USPTO and other foreign patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process.
Patent and Trademark Office (the “USPTO”) and foreign patent agencies over the lifetime of a patent. In addition, the USPTO and other foreign patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process.
FDORA also requires sponsors to send updates to the FDA every 180 days on the status of such studies, including progress toward enrollment targets, and the FDA must promptly post this information publicly.
FDORA also requires sponsors to send updates to the FDA every 180 days on the status of such trials, including progress toward enrollment targets, and the FDA must promptly post this information publicly.
This includes synthesizing the active ingredient, developing an acceptable formulation, performing tests to adequately characterize the formulated product, documenting a repeatable manufacturing process and demonstrating that our products meet stability requirements. Meeting these chemistry, manufacturing and control, or CMC, requirements is a complex task that requires specialized expertise.
This includes synthesizing the active ingredient, developing an acceptable formulation, performing tests to adequately characterize the formulated product, documenting a repeatable manufacturing process and demonstrating that our products meet stability requirements. Meeting these chemistry, manufacturing and control (“CMC”) requirements is a complex task that requires specialized expertise.
If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit.
If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory trials to verify and describe the drug’s clinical benefit.
Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different products can be approved for the same condition.
Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different products can be approved for the same approved use or condition.
Further, any of these relationships may require us to increase our near and long-term expenditures, issue 62 securities that dilute our existing stockholders or disrupt our management and business.
Further, any of these relationships may require us to increase our near and long-term expenditures, issue securities that dilute our 58 existing stockholders or disrupt our management and business.
For example, we may experience manufacturing delays or other delays with IND-or CTA-enabling studies, including with suppliers, study sites, or third-party contractors and vendors on whom we depend.
For example, we may experience manufacturing delays or other delays with IND-or CTA-enabling studies, including with suppliers, trial sites, or third-party contractors and vendors on whom we depend.
See the section titled “Business-Government Regulation-Other Healthcare Laws and Compliance Requirements” elsewhere in this Annual Report on Form 10-K for a more detailed description of the laws that may affect our ability to operate. Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
See the section titled “ Business-Government Regulation-Other Healthcare Laws and Compliance Requirements ” elsewhere in this Annual Report on Form 10-K for a more detailed description of the laws that may affect our ability to operate. Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
Supreme Court stripped federal agencies of this presumptive deference and held that courts must exercise their independent judgment when deciding whether an agency such as the FDA acted within its statutory authority under the Administrative Procedure Act, or the APA.
Supreme Court stripped federal agencies of this presumptive deference and held that courts must exercise their independent judgment when deciding whether an agency such as the FDA acted within its statutory authority under the Administrative Procedure Act (the “APA”).
Replacement of any of the third parties we may engage 64 could require significant effort and expertise because there may be a limited number of qualified replacements.
Replacement of any of the third parties we may engage 60 could require significant effort and expertise because there may be a limited number of qualified replacements.
For example, we depend on the availability of non-human primates, or NHPs, to conduct certain preclinical studies that we are required to complete prior to submitting an IND and initiating clinical development. There is currently a global shortage of certain types of NHPs available for Good Laboratory Practice, or GLP, testing for drug development.
For example, we depend on the availability of non-human primates (“NHPs”) to conduct certain preclinical studies that we are required to complete prior to submitting an IND and initiating clinical development. There is currently a global shortage of certain types of NHPs available for Good Laboratory Practice (“GLP”) testing for drug development.
Subsequent to this study, we advanced bempikibart into two Phase 2a clinical trials. The Phase 2a SIGNAL-AD trial evaluated the use of bempikibart for the treatment of atopic dermatitis, or AD, and the Phase 2a SIGNAL-AA trial is evaluating bempikibart for the treatment of alopecia areata, or AA.
Subsequent to this study, we advanced bempikibart into two Phase 2a clinical trials. The Phase 2a SIGNAL-AD trial evaluated the use of bempikibart for the treatment of atopic dermatitis (“AD”) and the Phase 2a SIGNAL-AA trial is evaluating bempikibart for the treatment of alopecia areata (“AA”).
Also, there are detailed rules and requirements regarding the patents that may be submitted to the FDA for listing in the Licensed Biological Products with Reference Product Exclusivity and Biosimilarity or Interchangeability Evaluations, or the 48 Purple Book, a searchable, online database that contains information about biological products, including biosimilar and interchangeable biological products, licensed (approved) by the FDA under the Public Health Service Act.
Also, there are detailed rules and requirements regarding the patents that may be submitted to the FDA for listing in the Licensed Biological Products with Reference Product Exclusivity and Biosimilarity or Interchangeability Evaluations (the “Purple Book”), a searchable, online database that contains information about biological products, including biosimilar and interchangeable biological products, licensed (approved) by the FDA under the Public Health Service Act.
Department of Treasury, the Federal Reserve Board, or the Federal Reserve, and the FDIC released a statement that indicated that all depositors of SVB would have access to all of their funds, including funds held in uninsured deposit accounts, after only one business day of closure. The U.S.
Department of Treasury, the Federal Reserve Board (the “Federal Reserve”), and the FDIC released 68 a statement that indicated that all depositors of SVB would have access to all of their funds, including funds held in uninsured deposit accounts, after only one business day of closure. The U.S.
In addition, the United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act, or Bayh-Dole Act, including a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit.
In addition, the United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act (the “Bayh-Dole Act”), including a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit.
The Federal Reserve has raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.
The Federal Reserve had raised interest rates multiple times in response to concerns about inflation until recently, and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.
Moreover, in 2012, the European Union Patent Package, or EU Patent Package, regulations were passed with the goal of providing a single pan-European Unitary Patent, or UP, covering all participating European Union member states, and a new European Unified Patent Court, UPC, for litigation involving European patents including all UPs. The EU Patent Package was implemented on June 1, 2023.
Moreover, in 2012, the European Union Patent Package (“EU Patent Package”) regulations were passed with the goal of providing a single pan-European Unitary Patent (“UP”), covering all participating European Union member states, and a new European Unified Patent Court, UPC, for litigation involving European patents including all UPs. The EU Patent Package was implemented on June 1, 2023.
Commencing clinical trials in the U.S. is subject to the FDA allowing an Investigational New Drug Application, or IND, to proceed after an evaluation of the proposed clinical trial design.
Commencing clinical trials in the U.S. is subject to the FDA allowing an Investigational New Drug Application (“IND”) to proceed after an evaluation of the proposed clinical trial design.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cyb ersecurity. Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. We designed and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF).
Biggest changeItem 1C. Cyb ersecurity. Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. We designed and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).
Our management team stays informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include: briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources; and alerts and reports produced by security tools deployed in our IT environment. 79
Our management team stays informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include: briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources; and alerts and reports produced by security tools deployed in our IT environment. 74

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOur management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations or financial condition. Item 4. Mine Safety Dis closures. Not applicable. 80 PART II
Biggest changeOur management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations or financial condition. Item 4. Mine Safety Dis closures. Not applicable. 75 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket Information Our common stock is currently listed on the Nasdaq Global Market under the symbol “QTTB.” Prior to the consummation of the Merger, the common stock was listed on the Nasdaq Global Select Market under the symbol “FIXX.” Holders As of March 1, 2025, we had approximately 12,197,615 shares of common stock issued and outstanding held of record by approximately 29 registered holders.
Biggest changeMarket Information Our common stock is currently listed on the Nasdaq Capital Market under the symbol “QTTB.” Prior to the consummation of the Merger, the common stock was listed on the Nasdaq Global Select Market under the symbol “FIXX.” Holders As of March 1, 2026, we had approximately 14,629,463 shares of common stock issued and outstanding held of record by approximately 23 registered holders.
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser We did not repurchase any of our equity securities or issue any securities that were not registered under the Securities Act during the year ended December 31, 2024. Use of Proceeds Not applicable. Item 6. [Reser ved] 81
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser We did not repurchase any of our equity securities or issue any securities that were not registered under the Securities Act during the year ended December 31, 2025. Use of Proceeds Not applicable. Item 6. [Reser ved] 76

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changePrior to May 22, 2024, we accounted for our investment in Oxford Biomedica (US) LLC, or OXB (US) LLC, using the equity method of accounting and recorded our share of gains or losses from OXB (US) LLC on a quarterly basis. 87 Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Change (in thousands) Collaboration arrangement revenue $ — $ (6,651 ) $ 6,651 Operating expenses: Research and development 48,143 31,729 16,414 General and administrative 17,959 9,875 8,084 Total operating expenses 66,102 41,604 24,498 Loss from operations (66,102 ) (48,255 ) (17,847 ) Change in fair value of convertible notes 15,890 (6,193 ) 22,083 Other income (expense), net 4,125 1,023 3,102 Total other income (expense), net 20,015 (5,170 ) 25,185 Loss before provision for income taxes and loss from equity method investment (46,087 ) (53,425 ) 7,338 Provision for income taxes (21 ) (318 ) 297 Loss from equity method investment (1,625 ) — (1,625 ) Net loss $ (47,733 ) $ (53,743 ) $ 6,010 Collaboration Arrangement Revenue We recognized no collaboration arrangement revenue for the year ended December 31, 2024, compared to negative $6.7 million for the year ended December 31, 2023.
Biggest changePrior to May 22, 2024, we accounted for our investment in Oxford Biomedica (US) LLC (“OXB (US) LLC”) using the equity method of accounting and recorded our share of gains or losses from OXB (US) LLC on a quarterly basis. 83 Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the years ended December 31, 2025 and 2024: Year Ended December 31, 2025 2024 Change (in thousands) Collaboration arrangement revenue $ 53,737 $ — $ 53,737 Operating expenses: Research and development 19,156 48,143 (28,987 ) General and administrative 17,679 17,959 (280 ) Total operating expenses 36,835 66,102 (29,267 ) Income (loss) from operations 16,902 (66,102 ) 83,004 Change in fair value of convertible notes — 15,890 (15,890 ) Gain on sale of asset 11,737 — 11,737 Other income (expense), net 1,182 4,125 (2,943 ) Total other income (expense), net 12,919 20,015 (7,096 ) Income (loss) before provision for income taxes and loss from equity method investment 29,821 (46,087 ) 75,908 Provision for income taxes — (21 ) 21 Loss from equity method investment — (1,625 ) 1,625 Net income (loss) $ 29,821 $ (47,733 ) $ 77,554 Collaboration Arrangement Revenue Collaboration arrangement revenue for the year ended December 31, 2025, is comprised of the recognition of $53.7 million of non-cash revenue related to the Amgen Amendment, which effectively terminated all obligations to and from Amgen, and is therefore not expected to continue in future years.
Financing Activities For the year ended December 31, 2024, net cash provided by financing activities consisted of $53.2 million of cash acquired as part of the Merger, $42.0 million of proceeds from the issuance of common stock in the pre-closing financing, $7.0 million of proceeds from the borrowings under a new loan and security agreement and $1.7 million of proceeds from the exercise of stock options, slightly offset by payments of $8.7 million of transaction costs related to the Merger.
For the year ended December 31, 2024, net cash provided by financing activities consisted of $53.2 million of cash acquired as part of the Merger, $42.0 million of proceeds from the issuance of common stock in the pre-closing financing, $7.0 million of proceeds from the borrowings under a new loan and security agreement and $1.7 million of proceeds from the exercise of stock options, slightly offset by payments of $8.7 million of transaction costs related to the Merger.
Shares of Legacy Q32’s common stock issued pursuant to the Pre-Closing Financing were converted into the right to receive 1,682,045 shares of Homology common stock, after taking into account the Reverse Stock Split.
Shares of Legacy Q32’s common stock issued pursuant to the Pre-Closing Financing were converted into the right to receive 1,682,045 shares of Homology common stock, after taking into account the Reverse Stock Split.
Our future funding requirements will depend on many factors, including: • the scope, timing, progress, results, and costs of researching and developing bempikibart and conducting larger and later-stage clinical trials; • the scope, timing, progress, results, and costs of researching and developing other product candidates that we may pursue; • the costs, timing, and outcome of regulatory review of our product candidates; • the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution, for any of our product candidates for which we receive marketing approval; • the costs of manufacturing commercial-grade products and sufficient inventory to support commercial launch; • the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; • the cost and timing of attracting, hiring, and retaining skilled personnel to support our operations and continued growth; 91 • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our ability to establish, maintain, and derive value from collaborations, partnerships or other marketing, distribution, licensing, or other strategic arrangements with third parties on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies, if any.
Our future funding requirements will depend on many factors, including: • the scope, timing, progress, results, and costs of researching and developing bempikibart and conducting larger and later-stage clinical trials; • the scope, timing, progress, results, and costs of researching and developing other product candidates that we may pursue; • the costs, timing, and outcome of regulatory review of our product candidates; 87 • the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution, for any of our product candidates for which we receive marketing approval; • the costs of manufacturing commercial-grade products and sufficient inventory to support commercial launch; • the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; • the cost and timing of attracting, hiring, and retaining skilled personnel to support our operations and continued growth; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our ability to establish, maintain, and derive value from collaborations, partnerships or other marketing, distribution, licensing, or other strategic arrangements with third parties on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies, if any.
Under such agreements, we are contractually obligated to make certain payments 92 to vendors to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination and the exact terms of the relevant agreement and cannot be reasonably estimated.
Under such agreements, we are contractually obligated to make certain payments to vendors to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination and the exact terms of the relevant agreement and cannot be reasonably estimated.
We expect that future changes to our research and development expenses will depend significantly on the success of our clinical data. We expect that research and development expenses will increase substantially as we continue to advance our programs into and through clinical development.
We expect that future changes to our research and development expenses will depend significantly on the success of our clinical data. We expect that research and development expenses will increase substantially as we continue to advance our 81 programs into and through clinical development.
BMS may terminate the BMS License Agreement if we fail to meet our diligence obligations under the BMS License Agreement, for our insolvency, or if we or our affiliates challenges the validity, scope, enforceability, or patentability of any of the licensed patents.
BMS may terminate the BMS License Agreement if we fail to meet our 89 diligence obligations under the BMS License Agreement, for our insolvency, or if we or our affiliates challenges the validity, scope, enforceability, or patentability of any of the licensed patents.
These increases are partially offset by interest expense of $1.1 million on our venture debt and an other-than-temporary impairment charge of approximately $0.7 million we recorded because it was determined that the fair value of our equity investment in OXB (US) LLC was less than its carrying value.
These amounts are partially offset by interest expense of $1.1 million on our venture debt and an other-than-temporary impairment charge of approximately $0.7 million we recorded because it was determined that the fair value of our equity investment in OXB (US) LLC was less than its carrying value.
The Company concluded that the $55.0 million of arrangement consideration previously recognized should be fully constrained as a result of the contingent consideration payable to Horizon, and accordingly, the amounts previously recognized were reversed in the fourth quarter of 2023 and a refund liability was established for the $55.0 million cash received during the term of the Horizon Collaboration Agreement.
We concluded that the $55.0 million of arrangement consideration previously recognized should be fully constrained as a result of the contingent consideration payable to Horizon, and accordingly, the amounts previously recognized were reversed in the fourth quarter of 2023 and a refund liability was established for the $55.0 million cash received during the term of the Horizon Collaboration Agreement.
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, which was March 25, 2024, all issued and outstanding shares of the Legacy Q32’s common stock (including common stock issued upon the conversion of all Legacy Q32’s Series A, Series A-1 and Series B preferred stock, conversion of Legacy Q32 convertible notes, but excluding the common stock issued in Pre-Closing Financing) converted into the right to receive 7,017,842 shares of Homology’s common stock based on the final exchange ratio of 0.0480, or the Exchange Ratio.
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, which was March 25, 2024, all issued and outstanding shares of the Legacy Q32’s common stock (including common stock issued upon the conversion of all Legacy Q32’s Series A, Series A-1 and Series B preferred stock, conversion of Legacy Q32 convertible notes, but excluding the common stock issued in Pre-Closing Financing) converted into the right to receive 7,017,842 shares of Homology’s common stock based on the final exchange ratio of 0.0480 (the “Exchange Ratio”).
At the effective time of the Merger, each person who as of immediately prior to the effective time of the Merger was a stockholder of record of Homology or had the right to receive Homology’s common stock received a contractual contingent value right, or CVR, issued by Homology subject to and in accordance with the terms and conditions of a Contingent Value Rights Agreement between Homology and the rights agent, or the CVR Agreement, representing the contractual right to receive cash payments from the combined company upon the receipt of certain proceeds from a disposition of Homology’s pre-merger assets, calculated in accordance with the CVR Agreement.
At the effective time of the Merger, each person who as of immediately prior to the effective time of the Merger was a stockholder of record of Homology or had the right to receive Homology’s common stock received a contractual contingent value right (“CVR”), issued by Homology subject to and in accordance with the terms and conditions of a Contingent Value Rights Agreement between Homology and the rights agent (the “CVR Agreement”), representing the contractual right to receive 79 cash payments from the combined company upon the receipt of certain proceeds from a disposition of Homology’s pre-merger assets, calculated in accordance with the CVR Agreement.
On March 26, 2024, the combined company’s common stock began trading on the Nasdaq Global Market, or Nasdaq, under the ticker symbol “QTTB.” The business of Legacy Q32 continues as the business of 83 the combined company.
On March 26, 2024, the combined company’s common stock began trading on the Nasdaq Global Market under the ticker symbol “QTTB.” The business of Legacy Q32 continues as the business of the combined company.
External expenses include: • expenses incurred in connection with our research and development activities, including costs related to agreements with third parties such as consultants, contractors and clinical research organizations, or CROs; • costs related to contract development and manufacturing organizations, or CDMOs, that are primarily engaged to provide drug substance and product for our preclinical studies, clinical trials and research and development programs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services; 85 • costs related to compliance with quality and regulatory requirements; • employee-related expenses, including salaries, benefits, and stock-based compensation expense, for personnel engaged in research and development functions; • facilities-related expenses, depreciation, supplies, travel expenses and other allocated expenses; and • payments made under third-party licensing agreements.
External expenses include: • expenses incurred in connection with our research and development activities, including costs related to agreements with third parties such as consultants, contractors and clinical research organizations (“CROs”); • costs related to contract development and manufacturing organizations (“CDMOs”), that are primarily engaged to provide drug substance and product for our preclinical studies, clinical trials and research and development programs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services; • costs related to compliance with quality and regulatory requirements; • employee-related expenses, including salaries, benefits, and stock-based compensation expense, for personnel engaged in research and development functions; • facilities-related expenses, depreciation, supplies, travel expenses and other allocated expenses; and • payments made under third-party licensing agreements.
Pre-Closing Financing In connection with the Merger Agreement, certain third parties entered into the Pre-Closing Financing as described above under “—Recent Developments—Merger with Homology and the Pre-Closing Financing.” On the Closing Date, following approval by the stockholders of Legacy Q32 and Homology, the Pre-Closing Financing closed immediately prior to the consummation of the Merger.
Pre-Closing Financing In connection with the Merger Agreement, certain third parties entered into the Pre-Closing Financing as described above under “Merger with Homology and the Pre-Closing Financing.” On the Closing Date, following approval by the stockholders of Legacy Q32 and Homology, the Pre-Closing Financing closed immediately prior to the consummation of the Merger.
Collaboration and License Agreements Bempikibart—License Agreement – Bristol-Myers Squibb Company In September 2019, Legacy Q32 entered into a license agreement, as amended in August 2021 and July 2022, or the BMS License Agreement, with Bristol-Myers Squibb Company, or BMS, pursuant to which we obtained sublicensable licenses from BMS to research, develop and commercialize licensed products, including bempikibart, for any and all uses worldwide.
Collaboration and License Agreements Bempikibart—License Agreement – Bristol-Myers Squibb Company In September 2019, Legacy Q32 entered into a license agreement, as amended in August 2021 and July 2022 (the “BMS License Agreement”) with Bristol-Myers Squibb Company (“BMS”), pursuant to which we obtained sublicensable licenses from BMS to research, develop and commercialize licensed products, including bempikibart, for any and all uses worldwide.
Our obligation to pay BMS royalties under subsection (ii) above commences, on a licensed product-by-licensed product and country-by-country basis, on the first commercial sale of a licensed product in a country and expires on the later of (x) 12 years from the first commercial sale of such licensed product in such country, (y) the last to expire licensed patent right covering bempikibart or such licensed product in such country, and (z) the expiration or regulatory or marketing exclusivity for such licensed product in such country, or the Royalty Term.
Our obligation to pay BMS royalties under subsection (ii) above commences, on a licensed product-by-licensed product and country-by-country basis, on the first commercial sale of a licensed product in a country and expires on the later of (x) 12 years from the first commercial sale of such licensed product in such country, (y) the last to expire licensed patent right covering bempikibart or such licensed product in such country, and (z) the expiration or regulatory or marketing exclusivity for such licensed product in such country (the “Royalty Term”).
Pursuant to the Merger Agreement, Merger Sub merged with and into Legacy Q32, with Legacy Q32 continuing as the surviving company and as a wholly-owned subsidiary of Homology, or the Merger. Homology changed its name to Q32 Bio Inc., or Q32, and Legacy Q32, which remains as a wholly-owned subsidiary of Q32, changed its name to Q32 Bio Operations Inc.
Pursuant to the Merger Agreement, Merger Sub merged with and into Legacy Q32, with Legacy Q32 continuing as the surviving company and as a wholly-owned subsidiary of Homology (the “Merger”). Homology changed its name to Q32 Bio Inc. (“Q32”), and Legacy Q32, which remains as a wholly-owned subsidiary of Q32, changed its name to Q32 Bio Operations Inc.
On March 25, 2024, in connection with, and prior to the completion of the Merger, Homology effected a one-for-eighteen reverse stock split, or the Reverse Stock Split, of its then outstanding common stock.
On March 25, 2024, in connection with, and prior to the completion of the Merger, Homology effected a one-for-eighteen reverse stock split (the “Reverse Stock Split”) of its then outstanding common stock.
ADX-097—License Agreement – The Regents of the University of Colorado In August 2017, Legacy Q32 entered into an exclusive license agreement, as amended in February 2018, September 2018, and April 2019, or the Colorado License Agreement, with The Regents of the University of Colorado, or Colorado, pursuant to which we obtained worldwide, royalty-bearing, sublicensable licenses under certain patents and know-how owned by Colorado and Medical University of South Carolina, or MUSC, relating to the research, development and commercialization of ADX-097.
ADX-097—License Agreement – The Regents of the University of Colorado In August 2017, Legacy Q32 entered into an exclusive license agreement, as amended in February 2018, September 2018, and April 2019 (the “Colorado License Agreement”) with The Regents of the University of Colorado (“Colorado”), pursuant to which we obtained worldwide, royalty-bearing, sublicensable licenses under certain patents and know-how owned by Colorado and Medical University of South Carolina (“MUSC”), relating to the research, development and commercialization of ADX-097.
Merger with Homology and Pre-Closing Financing On November 16, 2023, Legacy Q32 entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, with Homology and Kenobi Merger Sub, Inc., a wholly-owned subsidiary of Homology, or Merger Sub. The Merger was completed on March 25, 2024.
Merger with Homology and Pre-Closing Financing On November 16, 2023, Legacy Q32 entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Homology and Kenobi Merger Sub, Inc., a wholly-owned subsidiary of Homology (“Merger Sub”). The Merger was completed on March 25, 2024.
Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. Management must apply significant judgment in this process.
We consider many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. We must apply significant judgment in this process.
These potential payments to the customer are not in exchange for a distinct good or service; therefore, we are accounting for consideration payable to a customer as a reduction of the transaction price under ASC 606.
These potential payments to the customer were not in exchange for a distinct good or service; therefore, we accounted for the consideration payable to a customer as a reduction of the transaction price under ASC 606.
The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America, or GAAP.
The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Change in Fair Value of Convertible Notes Legacy Q32 recognized a liability as a result of the issuance of convertible promissory notes, or the Convertible Notes. We account for all convertible notes issued under the fair value option election of FASB ASC Topic 825, Financial Instruments , or ASC 825.
Change in Fair Value of Convertible Notes Legacy Q32 recognized a liability as a result of the issuance of convertible promissory notes (the “Convertible Notes”). We account for all convertible notes issued under the fair value option election of FASB ASC Topic 825, Financial Instruments (“ASC 825”).
In July 2024, we made a $4.0 million development milestone payment to BMS. 93 Bempikibart – Collaboration and Option Agreement, Asset Purchase Agreement and Termination Agreement – Horizon Therapeutics Ireland DAC From August 2022 until November 2023, Legacy Q32 was a party to the Horizon Agreements, pursuant to which Legacy Q32 received $55.0 million in initial consideration and staged development funding to complete two ongoing Phase 2 trials for bempikibart, and granted Horizon an option to acquire the bempikibart program at a prespecified price, subject to certain adjustments.
Bempikibart – Collaboration and Option Agreement, Asset Purchase Agreement and Termination Agreement – Horizon Therapeutics Ireland DAC From August 2022 until November 2023, Legacy Q32 was a party to the Horizon Agreements, pursuant to which Legacy Q32 received $55.0 million in initial consideration and staged development funding to complete two ongoing Phase 2 trials for bempikibart, and granted Horizon an option to acquire the bempikibart program at a prespecified price, subject to certain adjustments.
In connection with the Merger Agreement, certain parties entered into a subscription agreement with us to purchase shares of our common stock for an aggregate purchase price of $42.0 million, or the Pre-Closing Financing.
In connection with the Merger Agreement, certain parties entered into a subscription agreement with us to purchase shares of our common stock for an aggregate purchase price of $42.0 million (the “Pre-Closing Financing”).
On March 25, 2024, or the Closing Date, following approval by our stockholders and by Homology’s stockholders, the Pre-Closing Financing closed immediately prior to the consummation of the Merger.
On March 25, 2024 (the “Closing Date”), following approval by our stockholders and by Homology’s stockholders, the Pre-Closing Financing closed immediately prior to the consummation of the Merger.
Furthermore, our operating plans may change in the future, and we may need additional capital to meet the capital requirements associated with such operating plans. We believe that, based on our current operating plan, our cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements to the second half of 2026.
Furthermore, our operating plans may change in the future, and we may need additional capital to meet the capital requirements associated with such operating plans. We believe that, based on our current operating plan, our cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2027.
The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods.
The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods.
Bempikibart (ADX-914), our most advanced product candidate, is a fully human anti–interleukin-7 receptor alpha, or IL-7Rα, antagonist monoclonal antibody designed to re-regulate adaptive immune function by blocking signaling mediated by interleukin-7, or IL-7, and thymic stromal lymphopoietin, or TSLP.
Bempikibart (ADX-914) Bempikibart (ADX-914), our most advanced product candidate, is a fully human anti–interleukin-7 receptor alpha (“IL-7Rα”), antagonist monoclonal antibody designed to re-regulate adaptive immune function by potently blocking signaling mediated by interleukin-7 (“IL-7”), and thymic stromal lymphopoietin (“TSLP”).
General and administrative expenses include stock-based compensation expense of $3.3 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively.
General and administrative expenses include stock-based compensation expense of $4.3 million and $3.3 million for the years ended December 31, 2025 and 2024, respectively.
Since inception, Legacy Q32 has not recorded any U.S. federal or state income tax benefits for the net losses it has incurred in each year or for its earned research and development tax credits, due to its uncertainty of realizing a benefit from those items. As of December 31, 2023, Legacy Q32 had no gross unrecognized tax benefits.
Since inception, we have not recorded any U.S. federal or state income tax benefits for net losses incurred in each year or for earned research and development tax credits, due to our uncertainty of realizing a benefit from those items. As of December 31, 2025, we have had no gross unrecognized tax benefits.
The Termination Agreement is accounted for as a modification because it does not result in the addition of distinct goods or services.
The Horizon Termination Agreement was accounted for as a modification because it did not result in the addition of distinct goods or services.
This is due to the numerous risks and uncertainties associated with product development, including the following: • the timing and progress of preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; • the ability to raise additional funds necessary to complete clinical development of and commercialize our product candidates; • the successful initiation, enrollment and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; • the receipt and related terms of regulatory approvals from applicable regulatory authorities for any product candidates; • the availability of raw materials for use in production of our product candidates; • establishing agreements with third-party manufacturers for supply of product candidate components for our clinical trials; • our ability to maintain our current research and development programs and to establish new programs; • significant and changing government regulations; • our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both in the United States and internationally; • our ability to protect our other rights in our intellectual property portfolio; • commercializing product candidates, if and when approved, whether alone or in collaboration with others; and • obtaining and maintaining third-party insurance coverage and adequate reimbursement for any approved products. 86 General and Administrative Expenses General and administrative expenses primarily consist of salaries, bonuses, related benefits, and stock-based compensation expense for personnel in executive, finance, and administrative functions; professional fees for corporate legal and patent matters, consulting, accounting, and audit services; and travel expenses, insurance, technology costs and other allocated expenses.
This is due to the numerous risks and uncertainties associated with product development, including the following: • the timing and progress of preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; • the ability to raise additional funds necessary to complete clinical development of and commercialize our product candidates; • the successful initiation, enrollment and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; • the receipt and related terms of regulatory approvals from applicable regulatory authorities for any product candidates; • the availability of raw materials for use in production of our product candidates; • establishing agreements with third-party manufacturers for supply of product candidate components for our clinical trials; • our ability to maintain our current research and development programs and to establish new programs; • significant and changing government regulations; • our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both in the United States and internationally; • our ability to protect our other rights in our intellectual property portfolio; • commercializing product candidates, if and when approved, whether alone or in collaboration with others; and • obtaining and maintaining third-party insurance coverage and adequate reimbursement for any approved products.
Prior to the termination agreement, Legacy Q32 concluded that the arrangement was within the scope of ASC 606. Specifically, Legacy Q32 concluded that the research services required to be performed as part of the Horizon Collaboration Agreement represented an output of Legacy Q32’s ordinary activities, and this represented a contract with a customer.
Specifically, Legacy Q32 concluded that the research services required to be performed as part of the Horizon Collaboration Agreement represented an output of Legacy Q32’s ordinary activities, and this represented a contract with a customer.
To date, we have funded our operations primarily from proceeds from the sales of our convertible preferred stock, convertible notes, venture debt, and proceeds from the 89 Horizon Collaboration Agreement and from the Merger with Homology and accompanying Pre-Closing Financing.
To date, we have funded our operations primarily through proceeds from the sales of our convertible preferred stock and convertible notes, as well as proceeds from our venture debt, the ADX-097 Asset Sale, the Horizon Collaboration Agreement, the Merger with Homology and accompanying Pre-Closing Financing.
Across the trials, at the 200mg Phase 2a dose, we achieved our desired receptor occupancy, or RO, and observed favorable pharmacokinetics, or PK, / pharmacodynamic, or PD, properties, consistent with those from the Phase 1 clinical trial. Minimal anti-drug antibodies, or ADAs, were observed in the trials.
Across the trials, at the 200mg Phase 2a dose, we achieved our desired receptor occupancy (“RO”) and observed favorable pharmacokinetics (“PK”) / pharmacodynamic (“PD”) properties, consistent with those from the Phase 1 clinical trial. Minimal anti-drug antibodies (“ADAs”) were observed in the trials.
Cash Flows The following table summarizes our cash flows for the periods indicated: Years Ended December 31, 2024 2023 (in thousands) Net cash used in operating activities $ (67,715 ) $ (18,677 ) Net cash provided by (used in) investing activities 19,925 (5 ) Net cash provided by financing activities 95,138 406 Increase/(decrease) in cash, cash equivalents and restricted cash $ 47,348 $ (18,276 ) Operating Activities Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support our business.
Cash Flows The following table summarizes our cash flows for the periods indicated: Years Ended December 31, 2025 2024 (in thousands) Net cash used in operating activities $ (33,543 ) $ (67,715 ) Net cash provided by investing activities 7,000 19,925 Net cash provided by (used in) financing activities (3,125 ) 95,138 Increase/(decrease) in cash, cash equivalents and restricted cash $ (29,668 ) $ 47,348 Operating Activities Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support our business.
As the Convertible Notes are recorded at fair value, a noncash gain of $15.9 million on the change in fair value prior to the conversion of convertible notes is reflected in the consolidated statement of operation for the year ended December 31, 2024.
As the Convertible Notes are recorded at fair value, a noncash gain of $15.9 million on the change in fair value prior to the conversion of convertible notes is reflected in the consolidated statement of operation for the year ended December 31, 2024. 82 Gain on Sale of Asset On November 28, 2025, we completed the ADX-097 Asset Sale.
Actual results could materially differ from those estimates. 94 While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, management believes that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
While our critical accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, management believes that the following accounting policy is the most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
As of December 31, 2024, we also had federal and state research and development tax credit carryforwards of $6.2 million and $2.3 million, respectively, that expire at various dates through 2040.
As of December 31, 2025, we also had federal and state research and development tax credit carryforwards of $6.3 million and $2.4 million, respectively, that expire at various dates beginning in 2038.
Patients in the SIGNAL Phase 2a clinical trials were dosed with 200mg subcutaneous, or SC, bempikibart every two weeks. In the SIGNAL-AA trial, 44 patients with severe and very severe AA were enrolled. Patients were dosed for 24 weeks and followed for an additional 12 weeks off-treatment.
Patients in the SIGNAL Phase 2a clinical trials were dosed with 200mg subcutaneous (“SC”) bempikibart every two weeks. In SIGNAL-AA Part A, 44 patients with severe and very severe AA were enrolled. Patients were dosed for 24 weeks and followed for an additional 12 weeks following the end of treatment.
Research and Development Expenses Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal expenses incurred in connection with the discovery and development of our product candidates.
Operating Expenses Operating expenses since inception have consisted solely of research and development costs and general and administrative costs. Research and Development Expenses Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal expenses incurred in connection with the discovery and development of our product candidates.
These potential payments to Horizon are not in exchange for a distinct good or service and therefore, the Company accounts for consideration payable to Horizon as a reduction of the transaction price under the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASC, Topic 606, Revenue from Contracts with Customers , or ASC 606.
These potential payments to Horizon are not in exchange for a distinct good or service and therefore, we accounted for consideration payable to Horizon as a reduction of the transaction price under the Financial Accounting Standards Board 78 (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).
Investing Activities For the year ended December 31, 2024, net cash provided by investing activities consisted of maturities of short-term investments during the period since the Merger, partially offset by purchases of property and equipment. For the year ended December 31, 2023, net cash used in investing activities consisted of purchases of property and equipment.
Investing Activities For the year ended December 31, 2025, net cash provided by investing activities consisted of proceeds from the sale of ADX-097 to Akebia. For the year ended December 31, 2024, net cash provided by investing activities consisted of maturities of short-term investments during the period since the Merger, partially offset by purchases of property and equipment.
The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates.
The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and we must select an amount that falls within that range of reasonable estimates. Actual results could materially differ from those estimates.
Liquidity and Capital Resources Sources of Liquidity Since inception, we have incurred significant operating losses and negative cash flows from operations. We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all.
We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all.
The following table summarizes our contractual obligations and commitments as of December 31, 2024 (in thousands): Payments Due by Period Total 1 to 3 years 3 to 5 years More than 5 years Operating lease obligation $ 8,121 $ 3,276 $ 3,580 $ 1,265 We have agreements with certain vendors for various services, including services related to preclinical and clinical operations and support, for which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors.
Contractual Obligations and Commitments Lease Obligations We lease space under an operating lease for administrative offices and lab space in Waltham, Massachusetts, which expires in December 2031. 88 The following table summarizes our contractual obligations and commitments as of December 31, 2025 (in thousands): Payments Due by Period Total 1 to 3 years 3 to 5 years More than 5 years Operating lease obligation $ 7,061 $ 3,374 $ 2,421 $ 1,266 We have agreements with certain vendors for various services, including services related to preclinical and clinical operations and support, for which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors.
Unless otherwise indicated or the context otherwise requires, references to “Legacy Q32” refers to the business and operations of Q32 Bio Operations (previously Q32 Bio Inc.) and its consolidated subsidiaries prior to the Merger, and references to “the Company,” “we,” “us,” “our” and other similar terms refer to the business and operations of Q32 Bio Inc.
(previously Q32 Bio Inc.) and its consolidated subsidiaries prior to the Merger, and references to “the Company,” “we,” “us,” “our” and other similar terms refer to the business and operations of Q32 Bio Inc. (previously Homology Medicines, Inc., or Homology) and its consolidated subsidiary following the Merger.
We have the right to terminate the agreement for any reason upon written notice, and therefore, this agreement has not been included in the discussion above.
We have the right to terminate the agreement for any reason upon written notice, and therefore, this agreement has not been included in the discussion above. In July 2024, we made a $4.0 million development milestone payment to BMS.
(previously Homology Medicines, Inc., or Homology) and its consolidated subsidiary following the Merger. Overview We are a clinical stage biotechnology company focused on developing novel biologics to effectively and safely restore healthy immune balance in patients with autoimmune and inflammatory diseases driven by pathological immune dysfunction.
Overview We are a clinical stage biotechnology company focused on developing novel biologics to effectively and safely restore healthy immune balance in patients with alopecia areata (“AA”) and other autoimmune and inflammatory diseases driven by pathological immune dysfunction.
Provision for Income Taxes Provision for income taxes was less than $0.1 million for the year ended December 31, 2024, compared to $0.3 million for the year ended December 31, 2023.
Provision for Income Taxes Provision for income taxes was less than $0.1 million for the year ended December 31, 2024. There was no provision for income taxes recorded for the year ended December 31, 2025.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Annual Report on Form 10-K.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Annual Report on Form 10-K. Unless otherwise indicated or the context otherwise requires, references to “Legacy Q32” refers to the business and operations of Q32 Bio Operations Inc.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Change (in thousands) Direct research and development expense by program: Bempikibart $ 28,726 $ 11,722 $ 17,004 ADX-097 5,253 7,185 (1,932 ) Discovery and other 856 894 (38 ) Unallocated expenses: Personnel-related and consulting (including stock-based compensation) 10,435 9,629 806 Indirect research and development expense 2,873 2,299 574 Total research and development expenses $ 48,143 $ 31,729 $ 16,414 Research and development expenses were $48.1 million for the year ended December 31, 2024, compared to $31.7 million for the year ended December 31, 2023.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024: Year Ended December 31, 2025 2024 Change (in thousands) Direct research and development expense by program: Bempikibart $ 6,713 $ 28,726 $ (22,013 ) ADX-097 1,920 5,253 (3,333 ) Discovery and other 155 856 (701 ) Unallocated expenses: Personnel-related and consulting (including stock-based compensation) 7,778 10,435 (2,657 ) Indirect research and development expense 2,590 2,873 (283 ) Total research and development expenses $ 19,156 $ 48,143 $ (28,987 ) Research and development expenses were $19.2 million for the year ended December 31, 2025, compared to $48.1 million for the year ended December 31, 2024.
Additional discovery and earlier development efforts from our complement inhibitor platform include ADX-096, a C3d mAb – CR1 fusion protein which demonstrated preclinical data supportive of its use in ophthalmologic indications, as well as other C3d mAb fusions and nanobodies designed for tissue-targeted complement inhibition.
Other assets developed from our proprietary platform include ADX-096, a C3d mAb – CR 11-10 fusion protein with preclinical data supportive of its use in ophthalmologic indications as well as potential utility in a broad range of other indications, and C3d mAb fusions and nanobodies designed for tissue-targeted complement inhibition.
The increase in other income (expense), net is primarily due to the change in fair value of the CVR liability that was not present in the prior year, as well as a higher average cash balance resulting in higher interest income for the year ended December 31, 2024.
The decrease in other income (expense), net is primarily due to a smaller gain recorded in the current year for the change in fair value of the CVR liability as compared to the prior year, as well as lower interest income as a result of a lower average cash balance at December 31, 2025.
In November 2023, Legacy Q32 entered into a termination agreement with Horizon, or the Horizon Termination Agreement, pursuant to which Horizon’s option to acquire the bempikibart program was terminated. As a result, Legacy Q32 retained the initial consideration and development funding received under the Horizon Collaboration Agreement and regained full development and commercial rights to bempikibart.
As a result, Legacy Q32 retained the initial consideration and development funding received under the Horizon Collaboration Agreement and regained full development and commercial rights to bempikibart.
Prior to its termination, the Purchase Agreement also provided Horizon the option to purchase bempikibart, which would have triggered a prespecified payment to Legacy Q32, if exercised. Legacy Q32 was also entitled to receive from Horizon additional payments based on the achievement of future development and regulatory milestones as well as royalty payments on annual net sales.
Legacy Q32 was also entitled to receive from Horizon additional payments based on the achievement of future development and regulatory milestones as well as royalty payments on annual net sales. Prior to the Horizon Termination Agreement, Legacy Q32 concluded that the arrangement was within the scope of ASC 606.
The change in the fair value of the convertible notes was $6.2 million for the year ended December 31, 2023. Other Income (Expense), Net Other income (expense), net was $4.1 million for the year ended December 31, 2024, compared to $1.0 million for the year ended December 31, 2023.
Other Income (Expense), Net Other income (expense), net was $1.1 million for the year ended December 31, 2025, compared to $4.1 million for the year ended December 31, 2024.
The change in net operating assets and liabilities was primary attributable to an increase in a 90 contingent liability, accounts payables, accrued expenses and other current liabilities, prepaid expenses and other current assets and other non-current assets of $52.6 million, partially offset by a decrease in deferred revenue and operating lease liability of $26.3 million.
The change in net operating assets 86 and liabilities was primarily attributable to a decrease in accrued expenses and other current liabilities of $3.3 million, a decrease in accounts payable of $2.1 million, and a decrease in our operating lease liability of $0.6 million, partially offset by a decrease in other noncurrent assets of $1.9 million and a decrease in prepaid expenses and other current assets of $0.1 million.
Other Income (Expense), net Other income (expense), net consists of interest income primarily earned on money market fund accounts and interest expense related to our debt obligations. We use the cost method to account for an investment in an entity in which we do not have the ability to exercise significant influence over operating and financial policies.
We use the cost method to account for an investment in an entity in which we do not have the ability to exercise significant influence over operating and financial policies.
As of December 31, 2024, we had federal and state net operating loss carryforwards of $121.3 million and $112.1 million, respectively, that expire at various dates through 2040, to the extent subject to expiration.
As of December 31, 2025, we had federal and state net operating loss carryforwards of $217.4 million and $205.9 million, respectively. The federal NOLs are not subject to expiration and the state NOLs expire at various dates beginning in 2040.
As of the date of this Annual Report on Form 10-K, we cannot predict with complete certainty all of the particular uses for our current cash and cash equivalents or the actual amounts that we will spend on the uses set forth above. 84 Components of Results of Operations Revenue Since its inception, Legacy Q32 has not generated any revenue from product sales, and our management does not expect the combined company to generate any revenue from the sale of products in the foreseeable future.
As of the date of this Annual Report on Form 10-K, we cannot predict with complete certainty all of the particular uses for our current cash and cash equivalents or the actual amounts that we will spend on the uses set forth above.
Recently Issued and Adopted Accounting Pronouncements A description of recently issued and certain recently adopted accounting pronouncements that have or may potentially impact our financial position and results of operations is included in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. 91 Recently Issued and Adopted Accounting Pronouncements A description of recently issued and certain recently adopted accounting pronouncements that have or may potentially impact our financial position and results of operations is included in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
On December 10, 2024, we announced topline results from both of these trials, as well as our intention to advance bempikibart for the treatment of AA and enroll patients into Part B of the SIGNAL-AA trial in the first half of 2025.
We have completed two Phase 2a clinical trials evaluating bempikibart, SIGNAL-AA Part A, for the treatment of AA, and SIGNAL-AD, for the treatment of atopic dermatitis (“AD”). In December 2024, we announced topline results from both of these trials, as well as our intention to advance bempikibart for the treatment of AA.
For the year ended December 31, 2024, we recorded a loss from equity method investment of $1.6 million, representing our share of OXB (US) LLC’s net loss. See Notes 2 and 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding the equity method of accounting.
For the year ended December 31, 2024, we recorded a loss from equity method investment of $1.6 million, representing our share of OXB (US) LLC’s net loss.
The increase in personnel-related and consultant costs was primarily related to higher headcount as compared to the same period in the prior year. Personnel-related and consultant costs for the year ended December 31, 2024 and 2023 included stock-based compensation expense of $1.1 million and $0.5 million, respectively.
Personnel-related and consultant costs for the year ended December 31, 2025 and 2024 included stock-based compensation expense of $0.9 million and $1.1 million, respectively. General and Administrative Expenses General and administrative expenses were $17.7 million for the year ended December 31, 2025, compared to $18.0 million for the year ended December 31, 2024.
Legacy Q32 entered into the Horizon Agreements on August 12, 2022. Per the terms of the Horizon Collaboration Agreement, Legacy Q32 received a total of $55.0 million upon initiation of certain development activities associated with the planned clinical trials and related activities.
Per the terms of the Horizon Collaboration Agreement, Legacy Q32 received a total of $55.0 million upon initiation of certain development activities associated with the planned clinical trials and related activities. Prior to its termination, the Purchase Agreement also provided Horizon the option to purchase bempikibart, which would have triggered a prespecified payment to Legacy Q32, if exercised.
Across all clinical trials, bempikibart has been dosed in 130 patients to-date and has demonstrated a favorable safety and tolerability profile, with no Grade 3 or higher related adverse events.
Across all clinical trials, bempikibart has been dosed in over 150 participants to-date and has demonstrated a favorable safety and tolerability profile, with no Grade 3 or higher related adverse events. The Part B portion of SIGNAL-AA is an open-label clinical trial dosing severe or very severe AA patients with a maximum duration of current episode of four years.
We also received $30.0 million from the sales of convertible notes, $12.5 million from our venture debt, $61.3 million, net of issuance costs, in connection with the Merger with Homology and $42.0 million pursuant to the Pre-Closing Financing. As of December 31, 2024, we had cash and cash equivalents of $78.0 million.
In addition, we received $55.0 million in payments under the Horizon Collaboration Agreement, $12.5 million in proceeds from our venture debt, $61.3 million, net of issuance costs, in connection with the Merger with Homology, $42.0 million pursuant to the Pre-Closing Financing and $7.0 million pursuant to the ADX-097 Asset Sale.
From inception through December 31, 2024, we raised $111.4 million in aggregate cash proceeds, net of issuance costs, from the sales of our Series A convertible preferred stock, Series A-1 convertible preferred stock and Series B convertible preferred stock and received payments of $55.0 million in connection with the Horizon Collaboration Agreement.
From inception through December 31, 2025, we have raised $136.0 million in aggregate cash proceeds, net of issuance costs, from the sale of our convertible preferred stock and convertible notes.
Critical Accounting Policies and Significant Judgments and Estimates Management’s discussion and analysis of its financial condition and results of operations is based on its consolidated financial statements, which have been prepared in accordance with GAAP.
On November 28, 2025, in connection with the ADX-097 Asset Sale, the Colorado License Agreement was amended and restated and all of our rights and obligations thereunder were transferred to Akebia. 90 Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
We have not yet commercialized any product and do not expect to generate revenue from sales of any products for several years, if at all. As of December 31, 2024, we had cash and cash equivalents of $78.0 million.
We expect negative cash flows from operations and net losses for the foreseeable future as we continue to invest significantly in research and development of our product candidates and platform. We have not yet commercialized any product and do not expect to generate revenue from sales of any products for several years, if at all.
The non-cash operating expenses consisted of a $6.2 million change in fair value of convertible notes, stock-based compensation expense of $1.4 million, non-cash lease expenses of $0.5 million, and depreciation and amortization of $0.6 million .
These gains are partially offset by stock-based compensation expense of $5.3 million, non-cash lease expenses of $0.6 million and depreciation expense of $0.4 million.
ADX-097, a Phase 2 asset and the lead product candidate from our complement inhibitor platform, is a humanized anti-C3d monoclonal antibody, or mAb, fusion protein. ADX-097 is designed to restore complement regulation – an integral part of the innate immune system – through a tissue targeted mechanism.
ADX-097 In addition to bempikibart, our strategy has been focused on the advancement of our proprietary tissue-targeted complement inhibitor platform. ADX-097, a Phase 2 asset from this platform, is a humanized anti-C3d monoclonal antibody (“mAb”) fusion protein that completed Phase 1 clinical trials.
Going Concern We have incurred significant operating losses since inception and, as of December 31, 2024, had an accumulated deficit of $234.8 million. We expect negative cash flows from operations and net losses for the foreseeable future as we continue to invest significantly in research and development of our product candidates and platform.
As of December 31, 2025, we had cash and cash equivalents of $48.3 million. Going Concern We have incurred significant operating losses since inception and, as of December 31, 2025, had an accumulated deficit of $205.0 million.
We expect that our cash and cash equivalents as of December 31, 2024, will be sufficient to fund our operations to the second half of 2026.
We expect that our cash and cash equivalents as of December 31, 2025, combined with gross proceeds from our registered direct offering completed in February 2026 and guaranteed near-term milestone payments from the ADX-097 Asset Sale, will be sufficient to fund our operations into the fourth quarter of 2027.
Upon the execution of the Horizon Termination Agreement, Legacy Q32 became obligated to pay Horizon up to $75.1 million contingent on regulatory and sales-based milestones or up to $20.1 million in excess of the cash received.
Upon the execution of the Horizon Termination Agreement, Legacy Q32 became obligated to pay Horizon up to $75.1 million contingent on regulatory and sales-based milestones, consisting of a $5.0 million payment upon the first regulatory approval in the U.S. or in any of five specified major western European markets, and up to $70.1 million ranging from mid-single digit to low-double digit millions of dollars upon the achievement of specified annual sales thresholds, which range from 80 exceeding $250 million to exceeding $1.5 billion.
We plan to enroll approximately 20 additional AA patients through 36 weeks of treatment in a Part B expansion of the SIGNAL-AA Phase 2a clinical trial and report initial data from SIGNAL-AA Part B in the first half of 2026. 82 In February 2025, we announced a corporate restructuring to focus on the advancement of bempikibart for the treatment of patients with AA.
Bempikibart is being evaluated for the treatment of AA in the ongoing Part B of the SIGNAL-AA Phase 2a clinical trial. Enrollment has been completed in the Part B portion of the clinical trial, with 33 patients enrolled and dosing remains ongoing. We expect to report 36-week topline data from the SIGNAL-AA Part B trial in mid-2026.
Financial Overview As of December 31, 2024, we had cash and cash equivalents of $78.0 million. We expect that our cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements to the second half of 2026.
We expect that our cash and cash equivalents, combined with gross proceeds from our registered direct offering completed in February 2026 and guaranteed near-term milestone payments from the ADX-097 Asset Sale, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2027.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitati ve and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. 98
Biggest changeItem 7A. Quantitati ve and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. 92

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