Condensed Balance Sheets

Condensed Statements of Operations

Condensed Statements of Comprehensive Loss

Condensed Statements of Stockholders’ Equity

Condensed Statements of Cash Flows

Note 1. Organization

Note 2. Summary of Significant Accounting Policies

Fair Value Measurement

Note 3. Fair Value Measurement

Note 4. Accrued Liabilities

Note 5. License Agreements

Note 6. Stockholders' Equity

Common Stock and Non-Voting Common Stock

Note 7. Sanofi Agreement

Note 8. Stock-Based Compensation

Note 9. Restructuring Charges

Note 10. Impairment of Long-Lived Assets

Note 14. Subsequent Events

Results of Operations

Table of Contents

Condensed Balance Sheets

Condensed Statements of Operations

Condensed Statements of Comprehensive Loss

Condensed Statements of Stockholders’ Equity

Condensed Statements of Cash Flows

Note 1. Organization

Note 2. Summary of Significant Accounting Policies

Fair Value Measurement

Note 3. Fair Value Measurement

Note 4. Accrued Liabilities

Note 5. License Agreements

Note 6. Stockholders' Equity

Common Stock and Non-Voting Common Stock

Note 7. Sanofi Agreement

Note 8. Stock-Based Compensation

Note 9. Restructuring Charges

Note 10. Impairment of Long-Lived Assets

Note 11. Net Loss Per Share Attributable to Common Stockholders

Note 12. Related Party Transactions

Note 14. Subsequent Events

Results of Operations

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39045

IGM Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	77-0349194
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
325 E. Middlefield Road Mountain View, CA	94043
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 965-7873

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	IGMS	The Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2025, the registrant had 34,728,093 shares of common stock, $0.01 par value per share, and 25,386,983 shares of non-voting common stock, $0.01 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations	2
	Condensed Statements of Comprehensive Loss	3
	Condensed Statements of Stockholders’ Equity	4
	Condensed Statements of Cash Flows	5
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	75
Item 4.	Mine Safety Disclosures	75
Item 5.	Other Information	75
Item 6.	Exhibits	76
Signatures		77

Table of Contents

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” or “would,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: the implementation of our strategic plans, including our expectations regarding the 2024 Restructuring (defined below) the January 2025 Restructuring (defined below), and the April 2025 Restructuring (defined below); our expectations regarding the evaluation of potential strategic alternatives and reorganization options and the impact of any such strategic alternatives or reorganization options, if any are executed; our ability to utilize our IgM antibody platform to generate product candidates if we decide to pursue any future product development efforts; our ability to advance product candidates into clinical trials if we decide to pursue any future product development efforts; whether, and for how long, we will rely on third parties to manufacture product candidates and to package, label, store and distribute our investigational product candidates if we decide to pursue any future product development efforts; our ability and the potential to successfully manufacture and supply product candidates if we decide to pursue any future product development efforts; potential business disruptions affecting drug discovery if we decide to pursue any future product development efforts; expectations regarding the termination of our collaboration agreement with Genzyme Corporation, a wholly owned subsidiary of Sanofi S. A. (Sanofi); future strategic arrangements and/or collaborations and the potential benefits of such arrangements; our expectations regarding the impact of macroeconomic conditions, such as inflation, supply chain disruptions and economic volatility; our expectations regarding the impact of health epidemics, such as the COVID-19 pandemic, and other catastrophic events; our anticipated use of our existing resources; our estimates regarding expenses, future revenue, capital requirements and needs for additional financing and our ability to obtain additional capital if we decide to pursue any future product development efforts; the sufficiency of our existing cash, cash equivalents, and marketable securities to fund our future operating expenses and capital expenditure requirements; our expectations regarding the impact of recently issued accounting standards; our ability to retain the continued service of our key personnel and to identify, hire and retain additional qualified professionals if we decide to pursue any future product development efforts; the scope of protection we are able to establish and maintain for intellectual property rights; our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately if we decide to pursue any future product development efforts; if we decide to pursue any future product development efforts, developments relating to our competitors and our industry, including competing product candidates and therapies; and the ability of any future clinical trials to demonstrate the safety and efficacy of product candidates, and other positive results, if we decide to pursue any future product development efforts.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations, and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, or otherwise.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

IGM Biosciences, Inc.

(Unaudited)

(in thousands, except share and per share data)


	March 31,			December 31,
	2025			2024
Assets
Current assets:
Cash and cash equivalents	$	36,884		$	26,495
Restricted cash		—			167
Marketable securities		115,228			157,292
Prepaid expenses and other current assets		8,930			9,666
Total current assets		161,042			193,620
Property, plant and equipment, net		16,224			32,509
Operating lease right-of-use assets		28,796			38,524
Other non-current assets		827			1,059
Total assets	$	206,889		$	265,712

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,300		$	983
Accrued liabilities		17,129			26,883
Lease liabilities		7,017			7,121
Deferred revenue		2,752			2,651
Total current liabilities		28,198			37,638
Lease liabilities, non-current		36,944			38,065
Deferred revenue, non-current		140,871			141,471
Other liabilities, non-current		178			366
Total liabilities		206,191			217,540
Commitments and contingencies (Note 5)

Stockholders' equity:
Preferred stock, $0.01 par value; 200,000,000 shares authorized as of March 31, 2025 and December 31, 2024; no shares issued and outstanding as of March 31, 2025 and December 31, 2024		—			—
Common stock, $0.01 par value; 1,000,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 34,671,252 and 34,263,707 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		346			342
Non-voting common stock, $0.01 par value; 200,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 25,386,983 shares issued and outstanding as of March 31, 2025 and December 31, 2024		254			254
Additional paid-in-capital		1,069,942			1,064,454
Accumulated other comprehensive income		85			159
Accumulated deficit		(1,069,929	)		(1,017,037	)
Total stockholders’ equity		698			48,172
Total liabilities and stockholders’ equity	$	206,889		$	265,712

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

IGM Biosciences, Inc.

(Unaudited)

(in thousands, except share and per share data)


	Three Months Ended
	March 31,
	2025			2024
Collaboration revenue	$	499		$	497

Operating expenses:
Research and development		22,337			43,815
General and administrative		11,049			10,538
Impairment of long-lived assets		21,889			—
Total operating expenses		55,275			54,353
Loss from operations		(54,776	)		(53,856	)

Other income:
Interest income		1,884			4,040
Total other income		1,884			4,040
Net loss	$	(52,892	)	$	(49,816	)

Net loss per share, basic and diluted	$	(0.86	)	$	(0.83	)
Weighted-average common shares outstanding, basic and diluted		61,162,762			60,114,409

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

IGM Biosciences, Inc.

(Unaudited)

(in thousands)


	Three Months Ended
	March 31,
	2025			2024
Net loss	$	(52,892	)	$	(49,816	)
Other comprehensive loss:
Unrealized loss on marketable securities		(74	)		(279	)
Comprehensive loss	$	(52,966	)	$	(50,095	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

IGM Biosciences, Inc.

(Unaudited)

(in thousands, except share amounts)


					Non-Voting				Additional			Accumulated Other						Total
	Common Stock				Common Stock				Paid-In-			Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance—December 31, 2024		34,263,707	$	342		25,386,983	$	254	$	1,064,454		$	159		$	(1,017,037	)	$	48,172
Exercise of stock options		5,264		—		—		—		5			—			—			5
Issuance of common stock for vested restricted stock units		402,281		4		—		—		(4	)		—			—			—
Unrealized loss on marketable securities		—		—		—		—		—			(74	)		—			(74	)
Stock-based compensation expense		—		—		—		—		5,487			—			—			5,487
Net loss		—		—		—		—		—			—			(52,892	)		(52,892	)
Balance—March 31, 2025		34,671,252	$	346		25,386,983	$	254	$	1,069,942		$	85		$	(1,069,929	)	$	698


Balance—December 31, 2023	33,180,749	$	331	25,500,383		$	255		$	1,023,739		$	151		$	(821,242	)	$	203,234
Conversion of non-voting common stock into voting common stock	113,400		1	(113,400	)		(1	)		—			—			—			—
Exercise of stock options, net of shares withheld for taxes and exercise costs	113,314		1	—			—			191			—			—			192
Issuance of common stock for vested restricted stock units	156,439		2	—			—			(2	)		—			—			—
Unrealized loss on marketable securities	—		—	—			—			—			(279	)		—			(279	)
Stock-based compensation expense	—		—	—			—			7,922			—			—			7,922
Net loss	—		—	—			—			—			—			(49,816	)		(49,816	)
Balance—March 31, 2024	33,563,902	$	335	25,386,983		$	254		$	1,031,850		$	(128	)	$	(871,058	)	$	161,253

The accompanying notes are an integral part of these unaudited condensed financial statements.

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IGM Biosciences, Inc.

(Unaudited)

(in thousands)


	Three Months Ended
	March 31,
	2025			2024
Cash flows from operating activities:
Net loss	$	(52,892	)	$	(49,816	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,272			2,176
Stock-based compensation expense		5,487			7,922
Purchase of net (premiums) discounts on marketable securities		(796	)		1,132
Net accretion of discounts on marketable securities		(88	)		(2,263	)
Non-cash lease expense		1,106			1,416
Impairment of long-lived assets		21,889			—
Changes in assets and liabilities:
Prepaid expenses and other current assets		1,739			987
Other non-current assets		102			204
Accounts payable		347			2,648
Accrued liabilities		(9,773	)		(6,631	)
Lease liabilities, net		(1,225	)		305
Deferred revenue		(499	)		(497	)
Other non-current liabilities		(188	)		—
Net cash used in operating activities		(32,519	)		(42,417	)

Cash flows from investing activities:
Purchases of property, plant and equipment		(31	)		(2,484	)
Purchases of marketable securities		(14,433	)		(54,789	)
Proceeds from maturities and sales of marketable securities		57,200			65,924
Net cash provided by investing activities		42,736			8,651

Cash flows from financing activities:
Proceeds from exercise of stock options		5			191
Payment of deferred offering costs		—			(40	)
Payment of employee taxes and exercise costs for shares withheld		—			1
Net cash provided by financing activities		5			152
Net increase (decrease) in cash, cash equivalents, and restricted cash		10,222			(33,614	)

Cash, cash equivalents, and restricted cash
Beginning of period		26,662			113,112
End of period	$	36,884		$	79,498

Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	36,884		$	79,173
Restricted cash		—			325
Cash, cash equivalents, and restricted cash	$	36,884		$	79,498

Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets recognized in exchange for lease obligations	$	—		$	117
Unpaid amounts related to purchase of property, plant and equipment	$	—		$	1,100

The accompanying notes are an integral part of these unaudited condensed financial statements.

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IGM Biosciences, Inc.

Notes to Unaudited Condensed Financial Statements

Description of the Business

IGM Biosciences, Inc. (the Company) was incorporated in the state of Delaware in August 1993 under the name Palingen, Inc. and the name was subsequently changed to IGM Biosciences, Inc. in 2010.

The Company’s headquarters are in Mountain View, California. IGM Biosciences, Inc. is a biotechnology company that has historically been focused on the development of IgM antibodies for the treatment of cancer and autoimmune and inflammatory diseases.

Prior to September 30, 2024, the Company consolidated two wholly owned subsidiaries. To simplify the corporate structure, the Company’s board of directors approved the merger (Merger) of the subsidiaries with and into the Company, with the Company being the surviving corporation, effective August 30, 2024.

Because the Merger was a reorganization of entities under common control, the net assets were transferred from its subsidiaries at historical carrying value and the effects of the transaction were applied retrospectively as if the Merger had occurred at the earliest date presented in the Company’s financial statements in accordance with Accounting Standard Codification (ASC) Topic 250, Accounting changes and error corrections (Topic 250). The Merger did not have an impact on the financial statements as the Company's financials have historically been presented on a consolidated basis.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), as defined by the Financial Accounting Standards Board (FASB), and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2024 has been derived from the audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments which are necessary for a fair statement of the Company’s financial information. The interim results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other interim period or for any other future year.

The accompanying interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2025.

Liquidity

The Company has incurred net operating losses and negative cash flows from operations since its inception and had an accumulated deficit of $1.1 billion as of March 31, 2025. As of March 31, 2025, the Company had cash, cash equivalents, and marketable securities of $152.1 million. Management believes that the existing financial resources are sufficient to continue operating activities at least one year past the issuance date of these condensed financial statements. The Company has historically financed its operations primarily through the sale of common stock and pre-funded warrants in its public offerings and private placement, the sale of convertible preferred stock and issuance of unsecured promissory notes in private placements, and funding received from our collaboration partners. To date, none of the Company’s product candidates have been approved for sale, and the Company has not generated any product revenue since inception. Management expects operating losses to continue for the foreseeable future, as the Company progresses its planned research and development activities for its product candidates. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry as discussed below. While the Company has been able to raise multiple rounds of financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all. Failure to raise sufficient capital when needed or generate sufficient cash flow from operations would impact the ability to pursue business strategies and could require the Company to delay, scale back or discontinue one or more product development programs, or other aspects of the Company's business objectives.

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Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed financial statements and accompanying notes. Such management estimates include, but are not limited to, those related to revenue recognition, marketable securities, manufacturing accruals, accrued research and development expenses, stock-based compensation, operating lease right-of-use (ROU) assets and liabilities, valuation of long-lived assets, income tax uncertainties and the valuation of deferred tax assets. The Company bases its estimates on its historical experience and also on assumptions that it believes are reasonable; however, actual results could significantly differ from those estimates. The most significant estimates and assumptions that management considers in the preparation of our financial statements relate to revenue recognition, accrued research and development costs, impairment of long-lived assets, and leases.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents, and marketable securities. The Company invests in money market funds, U.S. treasury securities, corporate bonds, commercial paper, and U.S. government agency securities. The Company maintains bank deposits in federally insured financial institutions and these deposits may exceed federally insured limits. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents, and restricted cash, and bond issuers to the extent recorded on the balance sheets. The Company’s investment policy limits investments to high credit quality securities issued by the U.S. government and its agencies, highly rated banks, and corporate issuers, subject to certain concentration limits and restrictions on maturities. The Company has not experienced any material losses on its deposits of cash, cash equivalents, and marketable securities.

The Company’s future results of operations involve a number of other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, the Company’s early stages of clinical drug development; the Company's activities to evaluate and pursue potential strategic alternatives and reorganization options; the Company's ability to realize any additional value in a strategic transaction; the Company's exposure to other operational and financial risks in the event of successfully completing a strategic transaction; the Company's ability to achieve the expected financial and operational benefits of its recent cash preservation activities; the Company's ability to retain the employees required to consummate a strategic transaction; whether the Company determines to develop any future product development efforts; the significant additional research and development efforts and costs required if the Company determines to pursue any future product development efforts; the Company’s ability to adequately demonstrate sufficient safety and efficacy of any future product candidates; the Company’s ability to enroll patients in any future clinical trials; the Company’s ability to successfully manufacture and supply any future product candidates for clinical trials; the Company’s ability to obtain additional capital to finance its operations, if needed; uncertainties related to the projections of the size of patient populations suffering from the diseases the Company may target in the future; the Company’s ability to obtain, maintain, and protect its intellectual property rights; developments relating to the Company’s competitors and its industry, including any future competing product candidates and therapies; general economic and market conditions; and other risks and uncertainties, including those more fully described in the “Risk Factors” section of this Quarterly Report on Form 10-Q.

The Company’s product candidates will require approvals from the U.S. Food and Drug Administration (FDA) and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company was denied approval, approval was delayed or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash and cash equivalents. Cash equivalents consist primarily of amounts invested in money market funds and commercial paper and are stated at fair value. As of December 31, 2024, restricted cash consisted of the remaining unused portion of a grant received from a non-profit organization. As of March 31, 2025, the grant expired, and the Company no longer has any restricted cash.

Marketable Securities

The Company’s marketable securities have been classified and accounted for as available-for-sale securities. Fixed income securities consist of U.S. treasury securities, U.S. government agency securities, corporate bonds, and commercial paper. The specific identification method is used to determine the cost basis of fixed income securities sold. These securities are recorded on the condensed balance sheets at fair value. Unrealized gains and losses on these securities are included as a separate component of accumulated other comprehensive loss. The cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in other income. All available-for-sale securities are considered available to support current operations and are classified as current assets. The Company presents any credit losses identified as an allowance rather than as a reduction in the amortized cost of the available-for-sale securities.

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For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in other income (expense) in the condensed statements of operations. If neither criteria is met, the Company evaluates whether the decline in fair value is related to credit-related factors or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. Credit-related impairment losses, limited by the amount that the fair value is less than the amortized cost basis, are recorded through an allowance for credit losses in other income.

Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit factors are recognized in accumulated other comprehensive income (loss), net of tax as a separate component of stockholders’ equity, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in other income in the condensed statements of operations.

For purposes of identifying and measuring credit-related impairments, the Company’s policy is to exclude applicable accrued interest from both the fair value and amortized cost basis of the related security. The Company has elected to write-off uncollectible accrued interest receivable balances in a timely manner, which is defined by the Company as when interest due becomes 90 days delinquent. The accrued interest write-off will be recorded by reversing interest income. Accrued interest receivable is recorded to prepaid expenses and other current assets on the condensed balance sheets.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are depreciated using the straight-line method over the shorter of the lease term or the estimated useful economic lives of the related assets. Assets are held in construction in progress until placed in service, upon which date, we begin to depreciate these assets.

Upon retirement or sale of the assets, the cost and related accumulated depreciation and amortization are removed from the condensed balance sheets and the resulting gain or loss are recorded to the condensed statements of operations. Repairs and maintenance are charged to the condensed statements of operations as incurred.

Leases

The Company determines if an arrangement is a lease at inception. In addition, the Company determines whether leases meet the classification criteria of a finance or operating lease at the lease commencement date considering: (1) whether the lease transfers ownership of the underlying asset to the lessee at the end of the lease term, (2) whether the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (3) whether the lease term is for a major part of the remaining economic life of the underlying asset, (4) whether the present value of the sum of the lease payments and residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset, and (5) whether the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of March 31, 2025, the Company's lease population consisted of real estate leases and the Company did not have finance leases.

Operating leases are included in operating lease ROU assets and lease liabilities in the Company’s condensed balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The Company determines the incremental borrowing rate based on an analysis of corporate bond yields with a credit rating similar to the Company.

The determination of the Company’s incremental borrowing rate requires management judgment including the development of a synthetic credit rating and cost of debt as the Company currently does not carry any debt. The Company believes that the estimates used in determining the incremental borrowing rate are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in the estimated amounts to vary. The operating lease ROU assets also include adjustments for prepayments and accrued lease payments and exclude lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease cost primarily relates to common area maintenance charges. Lease agreements that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on the Company’s condensed balance sheets.

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Impairment of Long-Lived Assets

At each reporting period, the Company evaluates the carrying amount of its long-lived assets, which include property and equipment, operating lease right-of-use assets and other long-lived assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset or asset group and its eventual disposition are less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value and is allocated to the group impacted on a relative fair value basis. During the three months ended March 31, 2025, there were non-cash impairment charges of $21.9 million on long-lived assets, including $12.9 million for property and equipment, $8.6 million for right-of-use assets, and $0.4 million for other long-lived assets. These charges are included in impairment of long-lived assets in the accompanying condensed statements of operations. There was no impairment of long-lived assets during the three months ended March 31, 2024 (see Note 10 – Impairment of Long-Lived Assets).

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the condensed financial statements on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

Financial instruments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, or historical pricing trends of a security relative to its peers.

Revenue Recognition

For arrangements or transactions between participants determined to be within the scope of ASC Topic 606, Revenue from Contracts with Customers (Topic 606) the Company performs the following steps to determine the appropriate amount of revenue to be recognized as the Company fulfills its obligations: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company has entered into and may enter into additional collaboration agreements in the future under which it may obtain upfront payments, milestone payments, royalty payments, profit sharing, and other fees. Promises under these arrangements may include intellectual property licenses, research and development services, and the participation in joint committees.

At contract inception, the Company assesses the goods or services promised and enforceable in a contract with a customer and identifies those distinct goods and services that represent a performance obligation. In assessing whether a promised good or service is distinct, and therefore a performance obligation, the Company considers factors such as the nature of the research, stage of development of the targets, manufacturing and commercialization capabilities of the customer and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, the Company combines that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct. Promised goods and services that are not material in the context of the contract are not considered performance obligations. Additional goods or services that are exercisable at a customer’s discretion, including substitution rights, are assessed to determine if they provide a material right to the customer and if so, they are considered performance obligations.

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Non-refundable upfront payments are considered fixed consideration and included in the transaction price.

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If an arrangement includes development, regulatory or commercial 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. The Company includes the amount of estimated variable consideration, including milestones, in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur. 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. For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and if the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

If it is determined that multiple performance obligations exist, the transaction price is allocated at the inception of the agreement to all identified performance obligations based on the relative standalone selling prices (SSP), unless the consideration is variable and meets the criteria to be allocated entirely to one or more, but not all, performance obligations in the contract. The relative SSP for each deliverable is estimated using objective evidence if it is available. If SSP is not directly observable the Company estimates the SSP at an amount that would result in the allocation of the transaction price in an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer, using methods such as the expected cost plus margin approach. Once the transaction price has been allocated to a performance obligation using the applicable methodology, it is not subject to reassessment for subsequent changes in standalone selling prices.

Collaboration revenue is recognized when, or as, the Company satisfies a performance obligation. The Company recognizes revenue over time by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input method based on the nature of the good or service promised to the customer. After contract inception, the transaction price is reassessed at every period end and updated for changes such as resolution of uncertain events.

Management may be required to exercise considerable judgment in estimating revenue to be recognized. Judgment is required in identifying performance obligations, estimating the transaction price, including variable consideration, estimating the standalone selling prices of identified performance obligations, and applying the input method for revenue recognition, including the estimated budgets for each performance obligation.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s condensed balance sheets. If the related performance obligation is expected to be satisfied within the next twelve months this will be classified in current liabilities. Amounts recognized as revenue prior to receipt are recorded as contract assets in the Company’s condensed balance sheets. If the Company expects to have an unconditional right to receive consideration in the next twelve months, this will be classified in current assets. A net contract asset or liability is presented for each contract with a customer.

Contract modifications occur when the price and/or scope of an arrangement changes. If the modification consists of adding new distinct goods or services in exchange for consideration that reflects standalone selling prices of these goods and services, the modification is accounted for as a separate contract with the customer. Otherwise, if the remaining goods and services are distinct from those previously provided, the existing contract is considered terminated, and the remaining consideration is allocated to the remaining goods and services as if this was a newly signed contract. If the remaining goods and services are not distinct from those previously provided, the effects of the modification are accounted for in a manner similar to the effect of a change in the estimated measure of progress, with cumulative catch-up in revenue recorded at the time of the modification. If some of the remaining goods and services are distinct from those previously provided and others are not, the Company applies principles consistent with the objectives of the modification guidance to account for the effects of the modification.

Collaborative Arrangements

The Company analyzes its agreements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of ASC Topic 808, Collaborative Arrangements (Topic 808). These assessments are performed throughout the life of the arrangements based on changes in the responsibilities of all parties in the arrangement.

Research and Development Expenses

The Company expenses research and development costs as they are incurred. Research and development expenses consist primarily of: (i) personnel expenses, including salaries, benefits and stock-based compensation expense, for personnel in the Company’s research and development functions; (ii) fees paid to third parties such as contractors, consultants and contract research organizations (CROs) for conducting clinical trials, and other costs related to clinical and preclinical testing; (iii) costs related to acquiring and manufacturing research and clinical trial materials, including under agreements with third parties such as contract manufacturing organizations (CMOs), and other vendors; (iv) costs related to the preparation of regulatory submissions; (v) expenses related to laboratory supplies and services; (vi) fees under license agreements where no alternative future use exists; and (vii) depreciation of equipment and facilities expenses.

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Accrued Research and Development Expenses

The Company records accruals for estimated costs of research, preclinical studies, clinical trials, and manufacturing, which are significant components of research and development expenses. A substantial portion of the Company’s ongoing research and development activities is conducted by third-party service providers, CROs and CMOs. The Company’s contracts with CROs generally include pass-through fees such as laboratory supplies and services, regulatory expenses, investigator fees, travel costs and other miscellaneous costs, including shipping and printing fees. The Company’s contracts with the CMOs generally include fees such as initiation fees, reservation fees, verification run costs, materials and reagents expenses, taxes, etc. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts. The Company accrues the costs incurred under agreements with these third parties based on estimates of actual work completed in accordance with the respective agreements. The Company determines the estimated costs through discussions with internal personnel and external service providers as to the progress, or stage of completion or actual timeline (start-date and end-date) of the services and the agreed-upon fees to be paid for such services. In the event the Company makes advance payments, the payments are recorded as a prepaid expense and recognized as the services are performed.

As actual costs become known, the Company adjusts its accruals. Although the Company does not expect its estimates to be materially different from amounts actually incurred, such estimates for the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in the Company reporting amounts that are too high or too low in any particular period. The Company’s accrual is dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors. Variations in the assumptions used to estimate accruals including, but not limited to, the number of patients enrolled, the rate of patient enrollment and the actual services performed, may vary from the Company’s estimates, resulting in adjustments to clinical trial expenses in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect its financial condition and results of operations. Through March 31, 2025, there have been no material differences from the Company’s estimated accrued research and development expenses to actual expenses.

Acquired In-Process Research and Development Expenses

The Company has entered into agreements (see Note 5 – License Agreements) with third parties to acquire the rights to develop and potentially commercialize certain products. Such agreements generally require an initial payment by the Company when the contract is executed. The purchase of license rights for use in research and development activities, including product development, are expensed as incurred and are classified as research and development expense. Additionally, the Company may be obligated to make future royalty payments in the event the Company commercializes the technology and achieves a certain sales volume. In accordance with ASC Topic 730, Research and Development (Topic 730), expenditures for research and development, including upfront licensing fees and milestone payments associated with products not yet been approved by the FDA, are charged to research and development expense as incurred. Future contract milestone and/or royalty payments will be recognized as expense after the achievement of the milestone and the corresponding milestone payment is legally due.

Stock-Based Compensation

The Company accounts for stock-based compensation by measuring and recognizing compensation expense for all share-based awards made to employees, non-employees and directors based on estimated grant-date fair values. The Company uses the straight-line method to allocate compensation cost to reporting periods over the requisite service period, which is generally the vesting period. The grant date fair value of restricted stock units is estimated based on the closing stock price of the Company’s common stock on the date of grant. The grant date fair value of stock options granted to employees and directors is estimated using the Black-Scholes option-pricing model. The Company accounts for forfeitures as they occur. The Company accounts for any changes in the terms or conditions of an award as a modification in accordance with ASC 718, Compensation - Stock Compensation (Topic 718). In calculating the incremental compensation cost of a modification, the fair value of the modified award is compared to the fair value of the original award measured immediately before its terms or conditions were modified. The fair value of each purchase right under the employee stock purchase plan (ESPP) is estimated at the beginning of the offering period using the Black-Scholes option pricing model and recorded as expense over the service period using the straight-line method.

Income Taxes

The Company accounts for income taxes using the liability method, whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance when it is more likely than not that some portion, or all of the Company’s deferred tax assets will not be realized.

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The Company accounts for income tax contingencies using a benefit recognition model. If it considers that a tax position is more likely than not to be sustained upon audit, based solely on the technical merits of the position, it recognizes the benefit. The Company measures the benefit by determining the amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. The Company is subject to taxation in the United States federal jurisdiction, and various state jurisdictions. The net operating loss and research and development credit carryforwards that are available for utilization in future years may be subject to examination by federal and state tax authorities. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of March 31, 2025, there were no significant accruals for interest related to unrecognized tax benefits or tax penalties.

Comprehensive Loss

Comprehensive loss represents the net loss for the period and other comprehensive loss. Other comprehensive loss reflects certain gains and losses that are recorded as a component of stockholders’ equity and are not reflected in the condensed statements of operations. The Company’s other comprehensive loss consists of changes in unrealized gains and losses on available-for-sale securities.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock (including non-voting common stock and pre-funded warrants) outstanding during the period, without consideration for all other common stock equivalents. Shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for the purposes of computing net loss per share because the shares may be issued for little or no consideration, are fully vested, and are exercisable after the original issuance date. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented.

Recently Issued Accounting Pronouncements

In October 2023, the FASB issued Accounting Standards Update (ASU) 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which will impact various disclosure areas. The amendments in ASU 2023-06 will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. The Company is currently evaluating the impacts of this standard on its related disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU's amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard for annual financial statements that have not yet been issued or made available for issuance. Adoption is permitted either prospectively or retrospectively. The Company will adopt this ASU on a prospective basis. The Company is currently evaluating the impact of this standard but does not expect any material impacts on its condensed financial statements and related disclosures.

The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring basis. The following tables set forth the fair value of the Company’s financial assets, which consist of cash equivalents and marketable securities measured and recognized at fair value (in thousands):


		March 31, 2025
	Fair Value Hierarchy Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	Level 1	$	21,397	$	—	$	—		$	21,397
Commercial paper	Level 2		13,775		—		(3	)		13,772
Marketable securities:
U.S. treasury securities	Level 1		75,688		64		(10	)		75,742
Corporate bonds	Level 2		14,500		18		—			14,518
Commercial paper	Level 2		7,261		—		(1	)		7,260
U.S. government agency securities	Level 2		17,691		19		(2	)		17,708
Total		$	150,312	$	101	$	(16	)	$	150,397

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		December 31, 2024
	Fair Value Hierarchy Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	Level 1	$	24,376	$	—	$	—		$	24,376
Marketable securities:
U.S. treasury securities	Level 1		105,219		117		(23	)		105,313
Corporate bonds	Level 2		20,437		36		(3	)		20,470
Commercial paper	Level 2		13,894		6		(1	)		13,899
U.S. government agency securities	Level 2		17,583		31		(4	)		17,610
Total		$	181,509	$	190	$	(31	)	$	181,668

The Company evaluates transfers between levels at the end of each reporting period. There were no transfers between Levels 1, 2 and 3 during the three months ended March 31, 2025 and 2024. As of March 31, 2025 and December 31, 2024, there were no financial instruments classified as Level 3.

The following table summarizes the available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of March 31, 2025 and December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position:


	March 31, 2025
	Less than 12 months					Greater than 12 months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. treasury securities	$	19,945	$	(10	)	$	—	$	—	$	19,945	$	(10	)
Commercial paper		19,035		(4	)		—		—		19,035		(4	)
U.S. government agency securities		5,232		(2	)		—		—		5,232		(2	)
Total	$	44,212	$	(16	)	$	—	$	—	$	44,212	$	(16	)


	December 31, 2024
	Less than 12 months					Greater than 12 months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. treasury securities	$	18,621	$	(23	)	$	—	$	—	$	18,621	$	(23	)
Corporate bonds		3,065		(3	)		—		—		3,065		(3	)
Commercial paper		6,064		(1	)		—		—		6,064		(1	)
U.S. government agency securities		5,199		(4	)		—		—		5,199		(4	)
Total	$	32,949	$	(31	)	$	—	$	—	$	32,949	$	(31	)

As of March 31, 2025 and December 31, 2024, the Company held 28 and 20 debt securities, respectively, with an unrealized loss position. The Company evaluated its securities for credit losses and considered the decline in market value to be primarily attributable to current economic and market conditions and not to a credit loss or other factors. Additionally, the Company does not intend to sell the securities in an unrealized loss position and does not expect it will be required to sell the securities before recovery of the unamortized cost basis. As of March 31, 2025 and December 31, 2024, an allowance for credit losses has not been recognized. Given the Company's intent and ability to hold such securities until recovery, and the lack of significant change in credit risk of these investments, it does not consider these marketable securities impaired as of March 31, 2025 and December 31, 2024.

There were no realized gains or losses on marketable securities for the three months ended March 31, 2025 and 2024. Interest on marketable securities is included in interest income. As of March 31, 2025 and December 31, 2024, the Company had accrued interest receivable of $0.9 million and $0.8 million, respectively, which was included in prepaid expenses and other current assets on the condensed balance sheets.

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The following table summarizes the contractual maturities of the Company’s cash equivalents and marketable securities as of March 31, 2025 and December 31, 2024 at estimated fair value (in thousands):


	March 31,		December 31,
	2025		2024
Due in less than one year	$	143,444	$	167,815
Due in more than one year		6,953		13,853
Total	$	150,397	$	181,668

Accrued liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2025		2024
Accrued research and development materials and services	$	11,078	$	15,452
Accrued professional services		1,077		983
Accrued compensation		4,558		10,196
Other		416		252
Total accrued liabilities	$	17,129	$	26,883

The Company enters into arrangements to in-license research and development technology rights with third parties relating to its clinical and pre-clinical programs and product candidates. These arrangements may include non-refundable, upfront payments, payments for options to acquire additional rights relating to its product candidates, as well as contingent obligations for potential development, regulatory and commercial performance milestone payments, and royalty payments. The Company’s obligation to make payments for contingent obligations is contingent upon the respective milestones being achieved as well as its continued involvement in the programs and/or the lack of any adverse events which could cause the discontinuance of the programs. The activities under these license agreements are performed with no guarantee of either technological or commercial success.

During the three months ended March 31, 2025 and 2024, the Company recorded $0.1 million and $0.6 million, respectively, as research and development expense in our condensed statements of operations related to license agreements.

As of March 31, 2025, the Company’s license agreements for technologies optioned by the Company, including the Medivir agreement described below, included potential future payments for development, regulatory, and sales milestones totaling approximately $361.9 million plus royalties on net sales that range from single digits to mid-teens. No milestones were achieved or deemed probable as of March 31, 2025.

Medivir Agreement

In January 2021, the Company entered into an exclusive license agreement with Medivir AB (Medivir) through which the Company received global, exclusive development and commercialization rights for birinapant, a clinical-stage Second Mitochondrial-derived Activator of Caspases (SMAC) mimetic. Under the terms of the agreement, the Company made an upfront payment of $1.0 million upon signing the agreement, and made an additional $1.5 million payment in November 2021 due to the Company's initiation of a Phase 1 clinical trial of aplitabart in combination with birinapant. Under the terms of the agreement, should birinapant be successfully developed and approved, the Company would be obligated to make additional milestone payments up to a total of approximately $348.5 million, plus tiered royalties from the mid-single digits up to mid-teens on net sales. No milestones were achieved or deemed probable as of March 31, 2025. On February 24, 2025, the Company notified Medivir that it was exercising its right to terminate the license agreement as of May 25, 2025 after which no further obligations are expected under the license agreement.

As of March 31, 2025 and December 31, 2024, the Company’s certificate of incorporation authorized the Company to issue 1,200,000,000 shares of common stock (including 200,000,000 shares of non-voting common stock) and 200,000,000 shares of preferred stock, at a par value of $0.01 per share. Each share of common stock (excluding non-voting common stock) is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s Board of Directors, subject to prior rights of the preferred stockholders. As of March 31, 2025 and December 31, 2024, no dividends have been declared.

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The Company had reserved common stock, on an as-converted basis, for future issuance as follows:


	March 31,		December 31,
	2025		2024
Stock options, issued and outstanding		4,989,404		5,561,663
Unreleased restricted stock units		1,664,818		2,559,753
Stock options and restricted stock units, future issuance		7,924,642		4,416,534
Employee stock purchase plan, available for future grants		2,340,167		1,780,167
Pre-funded warrants		1,334,332		1,334,332
Total		18,253,363		15,652,449

Pre-Funded Warrants

In December 2020, the Company issued pre-funded warrants to purchase up to 1,334,332 shares of common stock in an underwritten public offering at the offering price of the common stock, less the $0.01 per share exercise price of each warrant and were issued to two separate related party affiliates. The pre-funded warrants were recorded as a component of stockholders’ equity within additional paid-in-capital and will expire on the date any such warrant is exercised in full.

Subject to applicable law, upon exercise of a pre-funded warrant, a holder may elect to receive the same number of shares of non-voting common stock as the shares of common stock for which the pre-funded warrant is exercisable, provided that (i) at the time of such election there is a sufficient number of authorized but unissued and otherwise unreserved shares of non-voting common stock and (ii) the Company consents to such election.

The outstanding pre-funded warrants to purchase shares of common stock are exercisable at any time after their original issuance. However, the Company may not affect the exercise of any pre-funded warrants, and a holder will not be entitled to exercise any portion of any pre-funded warrants that, upon giving effect to such exercise, would cause: (i) the aggregate number of shares of the Company’s common stock beneficially owned by such holder (together with its affiliates) to exceed 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the exercise; or (ii) the combined voting power of the Company’s securities beneficially owned by such holder (together with its affiliates) to exceed 9.99% of the combined voting power of all of the Company’s securities outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrants. However, any holder of a pre-funded warrant may increase or decrease such percentage to any other percentage not in excess of 19.99% upon at least 61 days’ prior notice from the holder to the Company. As of March 31, 2025, no shares underlying the pre-funded warrants had been exercised. All of the outstanding pre-funded warrants are included in the weighted-average number of shares of common stock used to calculate basic net loss per share attributable to common stockholders (see Note 11 – Net Loss Per Share Attributable to Common Stockholders).

In March 2022, the Company entered into a global collaboration and license agreement (the Sanofi Agreement) with Genzyme Corporation, a wholly owned subsidiary of Sanofi (Sanofi), which became effective in May 2022. Under the terms of the Sanofi Agreement, the Company agreed to generate, develop, manufacture and commercialize IgM antibodies directed to six primary targets, three of which were oncology targets and three of which were immunology targets.

In April 2024, Sanofi exercised its right to terminate the oncology collaboration targets effective June 2024. As a result of this termination, the Company has no further obligations to conduct research and development activities for such terminated targets and Sanofi retains no substitution rights for such terminated targets, pursuant to the terms of the agreement, and the collaboration will now focus exclusively on the immunology collaboration targets. The termination of the oncology targets will not affect any rights and obligations under the Sanofi Agreement with respect to the immunology targets.

For each immunology target collaboration program, the Company will continue to lead research and development activities, and assume related costs, through the completion of the first Phase 1 clinical trials for up to two candidates directed to each immunology target, after which Sanofi will be responsible for all future development and commercialization activities and related costs, in exchange for up to $1.065 billion in aggregate development, regulatory and commercial milestones per immunology target. Following the completion of the first Phase 1 clinical trials for each immunology target, Sanofi will be responsible for subsequent development activities, commercialization efforts, and related costs. The Company is eligible to receive tiered high single-digit to low-teen royalties on global net sales for licensed products related to immunology targets, subject to certain reductions and offsets.

Subject to earlier expiration in certain circumstances, the Sanofi Agreement expires on a licensed product-by-licensed product and country-by-country basis until the expiration of the applicable profit and loss share term or royalty term, as the case may be. Sanofi has the right to terminate the Sanofi Agreement on an immunology collaboration target-by-immunology collaboration target basis or country-by-country basis with or without cause, upon specified prior notice.

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At the inception of the Sanofi Agreement, the Company identified promised goods and services, which consisted of the granting of intellectual property licenses and the performance of specified research, development and other various activities. The Company determined that for each of the six targets, the identified promised goods and services were not distinct from each other on a target-by-target basis. The licenses, considered to be functional intellectual property, were determined to not be capable of being distinct due to the specialized nature of the research, development, and other activities to be provided by the Company. Accordingly, the promised goods and services were combined together as one single performance obligation, on a target-by-target basis. The Company determined that the underlying promised goods and services for each of the six targets were both capable of being distinct and distinct within the context of the contract from each of the other targets. Therefore, the Company concluded that there were six performance obligations in the Sanofi Agreement, one for each target, that were comprised of the underlying promised goods and services. Other components and options within the Sanofi Agreement were determined to not provide Sanofi with free or discounted goods or services and therefore did not constitute a material right or were deemed immaterial in the context of the contract.

To determine the transaction price, the Company evaluates all the payments to be received during the duration of the contract. In May 2022, the Company received a $150.0 million upfront payment as part of the Sanofi Agreement. Additionally, in April 2022, Sanofi purchased non-voting common stock in connection with the Company’s public common stock offering. The Company concluded that at inception and as of March 31, 2025, the transaction price was $150.0 million and was comprised solely of the fixed non-refundable upfront payment. No consideration received from Sanofi as part of the April 2022 offering was deemed necessary to include in the transaction price as Sanofi purchased the shares at the same offering price as the other participating investors.

The potential development and regulatory milestone payments that the Company is eligible to receive were excluded from the transaction price, as the milestone amounts were fully constrained, since the milestones relate to successful achievement of certain development results and regulatory approvals, which might not be achieved. The Company determined that the royalties and commercial milestone payments relate predominantly to the license of intellectual property and are therefore excluded from the transaction price under the sales- or usage-based royalty exception of ASC 606. The Company will reevaluate the transaction price, including all constrained amounts, at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and the Company will adjust its estimate of the transaction price as necessary. The Company will recognize the royalties and commercial milestone payments as revenue when the associated sales occur, and relevant sales-based thresholds are met.

At the inception of the Sanofi Agreement, the Company allocated the transaction price based on the estimated SSP of each of the six performance obligations. The Company determined the SSP for each of the six performance obligations based on the estimated costs to complete the underlying activities of each performance obligation and included factors such as forecasted internal costs, estimated third-party expenditures, development timelines and scenarios, probability of target failures and selection of substitute targets, and program-specific factors. These estimated cost forecasts were based on observable data for both market and entity specific factors, such as considering the actual and expected costs of the Company’s existing research and development programs and adjusting for factors specific to the targets identified.

The Company recognizes revenue using an input method of costs incurred as a percentage of total estimated costs for each of the performance obligations under the contract. Costs consist primarily of internal personnel costs and third-party contract expenses related to the programs of the Sanofi Agreement. The cumulative effect of revisions to estimated costs to complete the Company’s performance obligations is recorded in the period in which changes are identified and amounts can be reasonably estimated.

The Company determined that Sanofi’s exercise of its right to terminate the oncology collaboration targets in April 2024 was a contract modification because it changed the scope of the contract by reducing the number of performance obligations under the agreement. The remaining performance obligations relating to the three immunology collaboration targets are not distinct from themselves before and after the contract modification occurred; however, they are distinct from the terminated oncology target performance obligations. As a result, the Company allocated the unrecognized transaction price to the three remaining performance obligations based on their relative estimated SSP and calculated a cumulative catch-up adjustment of $0.8 million, which was recognized as collaboration revenue upon the contract modification date.

For the three months ended March 31, 2025 and 2024, the Company recognized collaboration revenue related to the Sanofi Agreement of $0.5 million. As of March 31, 2025 and December 31, 2024, $143.6 million and $144.1 million were recorded as deferred revenue related to the Sanofi Agreement, respectively, of which $2.8 million and $2.7 million was current on the condensed balance sheets. The deferred revenue is expected to be recognized over the research and development period of the programs through the completion of Phase 1 clinical trials. On May 5, 2025, the Company received a notice of termination of the Sanofi Agreement, pursuant to which Sanofi has elected to terminate the Sanofi Agreement, at will, in its entirety. See Note 14 – Subsequent Events for additional information.

Contract Balances from Customer Contract

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities on the condensed balance sheets. The Company recognizes license and development receivables based on billed services, which are settled upon reimbursement. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring

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goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met.

The following tables present changes in the Company’s customer contract liabilities for the periods presented (in thousands):


Three Months Ended March 31, 2025	December 31, 2024		Additions		Deductions			March 31, 2025
Contract liabilities:
Deferred revenue	$	144,122	$	—	$	(499	)	$	143,623


Three Months Ended March 31, 2024	December 31, 2023		Additions		Deductions			March 31, 2024
Contract liabilities:
Deferred revenue	$	146,801	$	—	$	(497	)	$	146,304

The Company had no customer contract assets during the three months ended March 31, 2025 and 2024.

The 2018 Omnibus Incentive Plan (the 2018 Plan) provides for an increase in the number of shares reserved for issuance on the first day of each fiscal year equal to the least of (i) 8,768,800 shares, (ii) 4% of the Company’s common stock and non-voting common stock outstanding at December 31 of the immediately preceding year, or (iii) such number of shares as determined by the Company’s Board of Directors. As a result of this provision, on January 1, 2025 and 2024, an additional 2,385,497 and 2,347,245 shares, respectively, became available for issuance under the 2018 Plan. As of March 31, 2025, the 2018 Plan had 7,924,642 shares of common stock available for future issuance.

Total stock-based compensation expense related to the Company’s equity incentive plan and employee stock purchase plan was recorded in the condensed statements of operations as follows (in thousands):


	Three Months Ended
	March 31,
	2025		2024
Research and development	$	2,334	$	4,362
General and administrative		3,153		3,560
Total stock-based compensation expense	$	5,487	$	7,922

The following table summarizes the Company's stock awards granted for each of the periods indicated:


	Three Months Ended March 31,
	2025				2024
	Grants		Weighted Average Grant Date Fair Value		Grants		Weighted Average Grant Date Fair Value
Stock options		—		—		1,522,493	$	7.82
Restricted stock units		8,608	$	2.65		1,365,343	$	9.92

In January 2025, the Company announced a strategic update to halt further development of imvotamab and IGM-2644. The Company also announced a reduction in workforce by approximately 73% (the January 2025 Restructuring) to preserve cash. During the three months ended March 31, 2025 and in connection with the January 2025 Restructuring, the Company recognized restructuring charges of $1.9 million. The restructuring charges included severance and one-time termination payments of $5.1 million offset by the reversal of previously recognized non-cash severance compensation of $2.2 million and stock-based compensation expense of $1.0 million. During the three months ended March 31, 2025 and subsequent to the January 2025 Restructuring announcement, the Company recognized $21.9 million in impairment of long-lived asset charges. See Note 10 – Impairment of Long-Lived Assets for further details of impairment charges.

In September 2024, the Company announced a strategic pivot to focus exclusively on autoimmunity. The Company also announced an extension of cash runway, driven by a reduction in workforce and a reduction in future spending on the research and development of aplitabart and other oncology candidates (the 2024 Restructuring). In connection with the 2024 Restructuring, the Company recognized no restructuring charges during the three months ended March 31, 2025 and recognized $14.2 million in restructuring charges during the three months ended December 31, 2024.

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As part of the 2024 Restructuring, the Company's Chief Executive Officer (CEO) and Chief Scientific Officer (CSO) resigned and entered into Transition and Consulting Agreements (TC Agreements) to provide consulting services through September 2026 and March 2026, respectively. The CEO and CSO will receive cash payments of approximately $0.8 million and $0.5 million, respectively, under the TC Agreements, which were recognized as severance and one-time termination expenses upon approval of the agreements. See Note 12 – Related Party Transactions for additional information.

In December 2023, the Company announced a strategic pipeline prioritization. The Company also announced an extension of cash runway, driven by a reduction in workforce of approximately 22% and a suspension of clinical development activities for certain product candidates in specific indications (the 2023 Restructuring). The restructuring charges incurred during the three months ended March 31, 2024 were primarily related to contract termination costs of $0.2 million and were recorded to the research and development expense category on the condensed statement of operations. As of March 31, 2024, all severance and one-time termination payments had been paid.

In connection with the restructuring activities discussed above, the Company recognized restructuring charges of $1.9 million and $0.2 million during three months ended March 31, 2025 and 2024, respectively.

A summary of the restructuring charges is as follows (in thousands):


	Three Months Ended March 31, 2025
	Severance and Related Compensation		Incentive and Stock-Based Compensation			Contract Termination and Other Costs		Total Restructuring Costs
Research and development	$	2,639	$	(896	)	$	34	$	1,777
General and administrative		212		(130	)		3		85
Total	$	2,851	$	(1,026	)	$	37	$	1,862


	Three Months Ended March 31, 2024
	Severance and Related Compensation		Incentive and Stock-Based Compensation			Contract Termination and Other Costs		Total Restructuring Costs
Research and development	$	4	$	(17	)	$	179	$	166
General and administrative		—		—			—		—
Total	$	4	$	(17	)	$	179	$	166

The following table summarizes the changes in the Company's accrued restructuring balance in the condensed balance sheets (in thousands):


	Beginning Balance December 31, 2024		Charges		Payments			Ending Balance March 31, 2025
Accrued severance	$	3,337	$	2,851	$	(3,317	)	$	2,871
Accrued contract termination costs		29		7		(29	)		7
Total accrued restructuring liability	$	3,366	$	2,858	$	(3,346	)	$	2,878


	Beginning Balance December 31, 2023		Charges		Payments			Ending Balance March 31, 2024
Accrued severance	$	2,397	$	—	$	(2,397	)	$	—
Accrued contract termination costs		—		107		—			107
Total accrued restructuring liability	$	2,397	$	107	$	(2,397	)	$	107

As of March 31, 2025 and December 31, 2024, $2.7 million and $3.0 million of the restructuring liability, respectively, was classified as current within accrued liabilities and $0.2 million and $0.4 million of the restructuring liability as of March 31, 2025 and December 31, 2024, respectively, was classified as non-current within other liabilities on the condensed balance sheets.

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At each reporting period, the Company reviews for impairment indicators for its long-lived assets. As a result of the January 2025 Restructuring, the Company identified certain triggering events, such as significant changes in its current and expected use of property and equipment and leased buildings and a sustained decline in the Company’s market capitalization as compared to the Company’s net asset value. In March 2025, the Company consolidated operations and concluded that certain leased buildings in Mountain View, California would not be used in long term operations. The Company also identified excess equipment that could be disposed and concluded that the equipment met the held for sale criteria in March 2025 and the carrying value should be written down to the estimated fair value, net of selling costs.

The Company determined the asset groups based on the lowest level of identifiable cash flows under the Company’s strategic plans and assessed the impairment for each of the asset groups. The consolidated operational group was assessed as a single asset group and determined to be recoverable. The carrying values of the remaining asset groups, consisting of buildings and their contents that would no longer be used going forward, were determined to not be recoverable. Accordingly, the Company determined the fair values for the unrecoverable asset groups using a discounted cash flow method, incorporating assumptions such as projected sublease income and a risk-adjusted discount rate, representing Level 3 nonrecurring fair value measurements.

During the three months ending March 31, 2025, the Company recognized non-cash impairment charges of $21.9 million, including $12.9 million for property and equipment, $8.6 million for operating lease right-of-use assets, and $0.4 million for other long-lived assets. The Company recognized no impairment charges during the three months ended March 31, 2024. The Company recorded impairment charges as impairment of long-lived assets in the condensed statement of operations and included $1.2 million in assets held for sale in prepaid expenses and other current assets on the condensed balance sheet as of March 31, 2025.

The Company will continue to assess whether its long-lived assets are impaired in future periods. As the Company determines the appropriate actions based on strategic planning, and as market conditions change, it is reasonably possible that additional impairment charges may be recognized.

Basic and diluted net loss per share is computed by dividing net loss by the weighted-average number of common stock and pre-funded warrants outstanding for the period. Shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for the purposes of computing net loss per share because the shares may be issued for little or no consideration, are fully vested, and are exercisable after the original issuance date. For periods in which the Company generated a net loss, the Company does not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive.

The following equity instruments were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:


	March 31,
	2025		2024
Stock options, issued and outstanding		4,989,404		7,760,615
Estimated shares issuable under the employee stock purchase plan		27,245		121,885
Unreleased restricted stock units		1,664,818		1,858,992
Total		6,681,467		9,741,492

In August 2024, a non-employee member of the Company’s Board of Directors entered into a consulting agreement with the Company, under which the board member would receive $250,000 per year for consulting services and receive 125,000 shares of restricted stock units with quarterly vesting through April 30, 2026. The Company paid $0.1 million during the three months ended March 31, 2025 to the board member under the consulting agreement. As of March 31, 2025, the Company had no outstanding liability to the related party.

In September 2024 as part of the 2024 Restructuring, the Company entered into TC Agreements with two former employees. See Note 9 – Restructuring Charges for additional information. The Company paid $0.2 million under the TC Agreements during the three months ended March 31, 2025. As of March 31, 2025, the Company had an outstanding liability of $0.9 million to the related parties.

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Note 13. Segment Reporting

The Company conducts business as a single operating segment for its IgM therapeutics, which is the business of developing engineered IgM antibodies for the treatment of autoimmune and inflammatory diseases. The Company’s chief executive officer, who is the chief operating decision maker (“CODM”), reviews financial information on an aggregate basis for allocating and evaluating financial performance. The single operating segment is further based upon the Company’s organizational and management structure and other factors.

The key measure of segment profit and loss that the CODM uses to allocate resources and assess performance is the Company’s net loss, which is utilized to evaluate the progress of the Company’s various product candidates. The table below shows a reconciliation of the Company’s net loss, including the significant expense categories regularly provided to and reviewed by the CODM, as computed under U.S. GAAP to the Company’s total net loss in the statements of operations (in thousands):


	Three Months Ended
	March 31,
	2025			2024
Operating revenue by external customer:
Sanofi collaboration revenue	$	499		$	497
Operating expenses:
Research and development
Deprioritized clinical programs:
Imvotamab – Autoimmune programs	$	2,738		$	2,871
Aplitabart		1,786			7,772
Other deprioritized programs		(225	)		3,726
Preclinical and other R&D (1)		1,908			6,708
Personnel		11,402			16,498
Depreciation and facilities		4,728			6,240
General and administrative:
Personnel		6,971			7,003
Other general and administrative (2)		4,078			3,535
Impairment of long-lived assets		21,889			—
Other income:
Interest income		1,884			4,040
Net loss	$	(52,892	)	$	(49,816	)

(1)

Preclinical and other R&D expense includes sample analysis, preclinical testing, R&D licensing agreements, and drug product services.

(2)

Other general and administrative expense includes professional services, accounting services, software, rent, and other overhead expense.

Assets provided to the CODM are consistent with those reported on the balance sheets.

All long-lived assets are maintained in, and all losses and revenue are attributable to, the United States of America.

In April 2025, the Company entered into three Lease Termination Agreements (the Termination Agreements) for three buildings with the respective landlords. Two leases were terminated effective April 30, 2025 and one lease is scheduled to terminate on May 31, 2025. In exchange for the early termination of the leases pursuant to the Termination Agreements, the Company made termination payments totaling $18.0 million, of which $0.4 million were security deposits associated with the leases and classified in the condensed balance sheets as other non-current assets as of March 31, 2025. On the condensed balance sheets, the leases were classified under operating lease right-of-use assets and operating lease liabilities – current and lease liabilities – non-current as of March 31, 2025.

In April 2025, the Company implemented an approximately 80% reduction in its remaining workforce (the April 2025 Restructuring) and closed most of its remaining lab and office facilities to preserve cash. The Company is continuing to evaluate the impact of the April 2025 Restructuring.

Additionally, on May 5, 2025, the Company received a notice of termination of the Sanofi Agreement, pursuant to which Sanofi has elected to terminate the Sanofi Agreement, at will, in its entirety. The effective date of the termination is thirty (30) days after the date of such notice.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.

Overview

We are a biotechnology company that has historically been focused on the development of IgM antibodies for the treatment of cancer and autoimmune and inflammatory diseases.

In January 2025, we announced a strategic update to halt further development of imvotamab and IGM-2644 for autoimmune diseases and a reduction in workforce by approximately 73% (the January 2025 Restructuring) to preserve cash. Further, in April 2025 we implemented an approximately 80% reduction in our remaining workforce (the April 2025 Restructuring) and closed most of our remaining lab and office facilities to preserve cash. Additionally, on May 5, 2025, we received a notice of termination of the Sanofi Agreement, pursuant to which Sanofi has elected to terminate the Sanofi Agreement, at will, in its entirety. The effective date of such termination is thirty (30) days after the date of such notice. We are currently evaluating potential strategic alternatives and reorganization options with the goal of maximizing value for our stockholders.

Following the January 2025 Restructuring, the April 2025 Restructuring, and the termination of the Sanofi Agreement, we are not currently developing any product candidates. Unless the context otherwise requires, any references to or discussion of "product candidates" in this Quarterly Report on Form 10-Q refer to any product candidates that we may in the future develop, if we decide to pursue any future product development efforts. Further, unless the context otherwise requires, any references to or discussion of "clinical trials," "preclinical studies," "clinical development," "preclinical development," or similar terms in this Quarterly Report on Form 10-Q refer to any such clinical trials, preclinical studies, clinical development, or preclinical development that we may in the future conduct or otherwise pursue in the future, if we decide to pursue any future product development efforts.

Since the commencement of our operations, we have focused substantially all of our resources on conducting research and development activities, including drug discovery, preclinical studies and clinical trials, establishing and maintaining our intellectual property portfolio, the manufacturing of clinical and research material, developing our in-house manufacturing capabilities, hiring personnel, raising capital and providing general and administrative support for these operations. Since 2010, such activities have primarily focused on the research, development and manufacture of IgM antibodies and to building our proprietary IgM antibody technology platform. We are not currently developing any product candidates, we do not have any products approved for sale, and we have not generated any revenue from product sales.

We have incurred significant net losses to date. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more future product candidates, if we decide to pursue any future product development efforts. Our net losses were $52.9 million and $49.8 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $1.1 billion. These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. We expect our expenses and operating losses to decrease for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the outcome of our strategic process and depending on whether we decide to pursue any future product development efforts.

We expect our expenses and capital requirements to fluctuate in connection with our ongoing activities if and as we:

▪

complete the January 2025 Restructuring and April 2025 Restructuring;

▪

maintain and protect our intellectual property portfolio, including patents, trade secrets and know-how;

▪

maintain operational, financial and management information systems; and

▪

retain management and administrative personnel required to consummate a strategic transaction.

If we decide to pursue any future product development efforts, we expect to use third-party service providers, including contract research organizations (CROs) and contract manufacturing organizations (CMOs), to carry out preclinical development and manufacture and supply materials to be used during the development of any product candidates.

Since inception, we have funded our operations primarily from the sale of voting and non-voting common stock and pre-funded warrants in our public offerings and a private placement, the sale of convertible preferred stock and the issuance of unsecured promissory notes in private placements, and payments from our collaboration partners.

Recent Developments

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In April 2025, we entered into three Lease Termination Agreements (the Termination Agreements) for three buildings with the respective landlords. Two leases were terminated effective April 30, 2025 and one lease is scheduled to terminate on May 31, 2025. In exchange for the early termination of the leases pursuant to the Termination Agreements, we made termination payments totaling $18.0 million, of which $0.4 million were security deposits associated with the leases and classified in the condensed balance sheets as other non-current assets as of March 31, 2025. On the condensed balance sheets, the leases were classified under operating lease right-of-use assets and operating lease liabilities – current and lease liabilities – non-current as of March 31, 2025.

Components of Results of Operations

Revenue

We have historically recognized collaboration revenue pursuant to the Sanofi Agreement. Following the termination of the Sanofi Agreement in May 2025, we do not expect to receive any further payments under the agreement. To date, we have not generated any revenue from the sale of products and do not expect to generate any revenue from the sale of products in the near future.

Operating Expenses

Research and Development

Research and development expenses consist primarily of costs incurred for the discovery and development of product candidates, which include:

Direct expenses consisting of:

▪

Fees paid to third parties such as consultants, contractors and CROs, for conducting clinical trials, and other costs related to preclinical and clinical testing;

▪

Costs related to acquiring and manufacturing research and clinical trial materials, including under agreements with third parties such as CMOs and other vendors;

▪

Costs related to the preparation of regulatory submissions;

▪

Expenses related to laboratory supplies and services; and

▪

Fees under license agreements where no alternative future use exists.

Indirect expenses consisting of:

▪

Personnel expenses, including salaries, benefits and stock-based compensation expense, for personnel in our research and development functions; and

▪

Depreciation of equipment and facilities expenses.

We expense research and development costs in the periods in which they are incurred. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and as services are performed. All direct research and development expenses are tracked by stage of development. We do not track our indirect research and development costs by product candidate or program.

We expect our research and development expenses to decrease for the foreseeable future, following the termination of the Sanofi Agreement, and in connection with the implementation of our plans under the January 2025 Restructuring and April 2025 Restructuring; and the evaluation of our strategic alternatives and reorganization options with the goal of maximizing value for our stockholders. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. To the extent that we decide to pursue any future product development efforts, our expenses will increase and may become more variable. If we decide to pursue any future product development efforts, the actual probability of success for product candidates may be affected by a variety of factors, including the safety and efficacy of product candidates, investment in clinical programs, manufacturing capability and competition with other products. As a result of these variables, we may be unable to determine the duration and completion costs of research and development projects or if, when and to what extent we would generate revenue from the commercialization and sale of such product candidates. We may never succeed in achieving regulatory approval for any product candidates.

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General and Administrative

Our general and administrative expenses consist primarily of personnel expenses for our executive, finance, corporate and other administrative functions, intellectual property, facilities and other allocated expenses, other expenses for outside professional services, including legal, human resources, audit and accounting services, and insurance costs. Personnel expenses consist of salaries, benefits, recruiting costs, and stock-based compensation. We expect our general and administrative expenses to fluctuate for the foreseeable future. If we decide to pursue any future product development efforts, we expect our general and administrative expenses to increase to support expanding research and development activities and increased costs of operating as a public company, including compliance with the rules and regulations of the Securities and Exchange Commission (SEC) and those of any national securities exchange on which our securities are traded, legal, auditing, additional insurance expenses, investor relations activities and other administrative and professional services.

Impairment of Long-Lived Assets

At each reporting period, we review for impairment indicators for our long-lived assets. As a result of the January 2025 Restructuring, we identified certain triggering events, such as significant changes in our current and expected use of property and equipment and leased buildings and a sustained decline in our market capitalization as compared to our net asset value. In March 2025, we consolidated operations and concluded that certain leased buildings in Mountain View, California would not be used in long term operations. We also identified excess equipment that could be disposed and concluded that the equipment met the held for sale criteria in March 2025 and the carrying value should be written down to the estimated fair value, net of selling costs.

We determined the asset groups based on the lowest level of identifiable cash flows under our strategic plans and assessed the impairment for each of the asset groups. The consolidated operational group was assessed as a single asset group and determined to be recoverable. The carrying values of the remaining asset groups, consisting of buildings and their contents that would no longer be used going forward, were determined to not be recoverable. Accordingly, we determined the fair values for the unrecoverable asset groups using a discounted cash flow method, incorporating assumptions such as projected sublease income and a risk-adjusted discount rate, representing Level 3 nonrecurring fair value measurements. We recognized an impairment charge during the three months ended March 31, 2025.

Interest Income

Interest income includes interest income earned on our cash, cash equivalents, marketable securities, and restricted cash and non-cash interest income related to the accretion of discounts on marketable securities.

Comparison of Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024, together with the changes in those items in dollars:


	Three Months Ended
	March 31,
(in thousands)	2025			2024			Change
Collaboration revenue	$	499		$	497		$	2

Operating expenses:
Research and development		22,337			43,815			(21,478	)
General and administrative		11,049			10,538			511
Impairment of long-lived assets		21,889			—			21,889
Total operating expenses		55,275			54,353			922
Loss from operations		(54,776	)		(53,856	)		(920	)

Other income:
Interest income		1,884			4,040			(2,156	)
Total other income		1,884			4,040			(2,156	)
Net loss	$	(52,892	)	$	(49,816	)	$	(3,076	)

Collaboration Revenue

Collaboration revenue was $0.5 million for the three months ended March 31, 2025 and 2024 and relates solely to revenue generated from the Sanofi Agreement. Total revenue generated was in connection with the Sanofi Agreement and attributable to research

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activities to generate and develop oncology and immunology antibodies. Please refer to Note 7 – Sanofi Agreement to the condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional revenue recognition disclosures.

Research and Development Expenses

The following table summarizes our research and development expenses incurred during the periods indicated:


	Three Months Ended
	March 31,
(in thousands)	2025			2024		Change
Direct expenses
Deprioritized clinical programs (1)
Imvotamab – Autoimmune programs	$	2,738		$	2,871	$	(133	)
Aplitabart		1,786			7,772		(5,986	)
Other deprioritized clinical programs		(225	)		3,726		(3,951	)
Total deprioritized clinical programs		4,299			14,369		(10,070	)
Preclinical and other R&D		1,908			6,708		(4,800	)
Indirect expenses
Personnel		11,402			16,498		(5,096	)
Depreciation and facilities		4,728			6,240		(1,512	)
Total research and development expenses	$	22,337		$	43,815	$	(21,478	)

(1)

The three months ended March 31, 2025 and 2024 include direct expenses related to our deprioritized clinical programs and related preclinical costs prior to trial initiation.

Research and development expenses were $22.3 million and $43.8 million for the three months ended March 31, 2025 and 2024, respectively. The decrease of $21.5 million was primarily driven by lower expenses related to deprioritized clinical programs, personnel, preclinical programs, and depreciation and facilities expenses.

▪

Deprioritized clinical program expenses decreased by $10.1 million, primarily driven by the wind down of aplitabart and other deprioritized programs, including imvotamab in oncology and autoimmune diseases, IGM-2644 in oncology, and IGM-7354.

▪

Preclinical and other R&D expenses decreased by $4.8 million, primarily driven by a decrease in research related activities and professional services as a result of the 2024 Restructuring and the January 2025 Restructuring.

▪

Personnel expenses decreased by $5.1 million primarily due to the effect of the 2024 Restructuring and the January 2025 Restructuring.

▪

Depreciation and facilities expenses decreased by $1.5 million, primarily due to the January 2025 Restructuring.

General and Administrative Expenses

General and administrative expenses were $11.0 million and $10.5 million for the three months ended March 31, 2025 and 2024, respectively. The increase of $0.5 million was primarily driven by higher professional services.

Impairment of Long-Lived Assets

Impairment of long-lived assets was $21.9 million for the three months ended March 31, 2025, and included $12.9 million for property and equipment, $8.6 million for operating lease right-of-use assets, and $0.4 million for other long-lived assets. No impairment charges were recognized during the three months ended March 31, 2024.

Interest Income

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Non-accelerated filer

Smaller reporting company

Emerging growth company

IGM Biosciences, Inc. 10-Q