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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 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: 001-41855

Lexeo Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

     Delaware

     85-4012572

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer
Identification No.)


345 Park Avenue South, Floor 6
New York, NY		10010
(Address of principal executive offices)		(Zip Code)

(212) 547-9879

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock ($0.0001 par value)	LXEO	The Nasdaq Global 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.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

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 ☒

The Registrant had 54,001,214 shares of common stock outstanding as of August 12, 2025.

TABLE OF CONTENTS


			Page

	Special Note Regarding Forward Looking Statements		ii

PART I - FINANCIAL INFORMATION			1

	Item 1.	Financial Statements.	1

		Condensed Balance Sheets (unaudited)	2

		Condensed Statements of Operations and Comprehensive Loss (unaudited)	3

		Condensed Statements of Stockholders’ Equity (unaudited)	4

		Condensed Statements of Cash Flows (unaudited)	5

		Notes to Condensed Financial Statements (unaudited)	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	31

	Item 4.	Controls and Procedures.	31

PART II - OTHER INFORMATION			32

	Item 1.	Legal Proceedings.	32

	Item 1A.	Risk Factors.	32

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	94

	Item 3.	Defaults Upon Senior Securities.	94

	Item 4.	Mine Safety Disclosures.	94

	Item 5.	Other Information.	94

	Item 6.	Exhibits.	95

SIGNATURES			97

-i-

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “estimate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions intended to identify statements about the future. Forward-looking statements contained in this Quarterly Report include, without limitation, statements about:

•

the timing, progress and results of our preclinical studies and clinical trials of our product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs;

•

the timing of our planned investigational new drug, or IND, submissions, initiation of planned clinical trials and timing of expected clinical results for LX2006 and LX2020, if applicable, and our other future product candidates;

•

the timing for receipt and announcement of data from our preclinical studies and clinical trials;

•

the timing of any submission of filings for regulatory approval of and our ability to obtain and maintain regulatory approvals for LX2006, LX2020 and any other product candidates;

•

the impact of public health crises and other adverse global economic conditions on our operations and the potential disruption in the operations and business of third-party manufacturers, contract research organizations, or CROs, other service providers, and collaborators with whom we conduct business;

•

our ability to identify patients with the diseases treated by our product candidates, and to enroll patients in trials;

•

the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates;

•

the ability of our preclinical studies and clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;

•

our expectations regarding the size of the patient populations, market acceptance and opportunity for and clinical utility of our product candidates, if approved for commercial use;

•

our manufacturing capabilities and strategy, including the scalability and commercial viability of our manufacturing methods and processes;

•

our reliance on third party manufacturing partners to comply with significant regulations with respect to manufacturing our products;

•

our expectations regarding the scope of any approved indication for LX2006, LX2020 or any other product candidate;

•

our ability to successfully commercialize our product candidates, if approved;

•

our ability to leverage our platform to identify and develop future product candidates;

•

our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate any revenue from product sales;

•

our ability to establish or maintain collaborations or strategic relationships and any expected benefits related thereto;

•

our ability to identify, recruit and retain key personnel;

•

our reliance upon intellectual property licensed from third parties and our ability to obtain such licenses on commercially reasonable terms or at all;

-ii-

•

our ability to protect and enforce our intellectual property position for our product candidates, and the scope of such protection;

•

our financial performance;

•

our competitive position and the development of and projections relating to our competitors or our industry;

•

our estimates regarding future revenue, expenses and needs for additional financing;

•

our anticipated use of our cash, cash equivalents, and investments balances and any proceeds from the ATM Program (as defined below);

•

the impact of current and future laws and regulations; and

•

our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or JOBS Act.

We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report. 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 and are subject to a number of risks, uncertainties and assumptions described in the section titled “Item 1A. Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, 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 do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

-iii-

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.


	Page
Condensed Balance Sheets (unaudited)	2
Condensed Statements of Operations and Comprehensive Loss (unaudited)	3
Condensed Statements of Stockholders’ Equity (unaudited)	4
Condensed Statements of Cash Flows (unaudited)	5
Notes To Condensed Financial Statements (unaudited)	6

Lexeo Therapeutics, Inc.

Condensed Balance Sheets

(Unaudited, in thousands, except share and per share amounts)


	June 30,			December 31,
	2025			2024
Assets
Current assets:
Cash and cash equivalents	$	35,480		$	35,014
Current portion of investments in U.S. Treasury securities		97,413			86,504
Prepaid expenses and other current assets		7,169			4,603
Total current assets		140,062			126,121
Non-current portion of investments in U.S. Treasury securities		19,613			7,012
Long-term investment		3,390			-
Restricted cash		3,248			3,252
Property and equipment, net		1,115			1,028
Lease right-of-use assets - finance		1,300			1,460
Lease right-of-use assets - operating		7,340			8,069
Total assets	$	176,068		$	146,942

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	20,025		$	6,417
Accrued expenses and other current liabilities		8,912			13,759
Current portion of lease liabilities - finance		520			570
Current portion of lease liabilities - operating		2,136			2,100
Total current liabilities		31,593			22,846
Non-current liabilities
Non-current portion of lease liabilities - finance		577			817
Non-current portion of lease liabilities - operating		5,680			6,437
Total liabilities		37,850			30,100

Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.0001 par value, 500,000,000 shares authorized as of June 30, 2025; 54,001,214 shares issued and 53,998,492 shares outstanding as of June 30, 2025; 500,000,000 shares authorized as of December 31, 2024; 33,079,209 shares issued and 33,071,261 shares outstanding as of December 31, 2024		5			3
Treasury stock, at cost, 3,827 common shares as of June 30, 2025 and as of December 31, 2024		(17	)		(17	)
Additional paid-in capital		477,175			397,132
Accumulated other comprehensive loss		(13	)		(103	)
Accumulated deficit		(338,932	)		(280,173	)
Total stockholders' equity		138,218			116,842
Total liabilities and stockholders' equity	$	176,068		$	146,942

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

Lexeo Therapeutics, Inc.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited, in thousands, except share and per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Operating expenses
Research and development	$	14,721		$	16,560		$	31,892		$	32,302
General and administrative		15,967			6,990			32,601			14,539
Total operating expenses		30,688			23,550			64,493			46,841
Operating loss		(30,688	)		(23,550	)		(64,493	)		(46,841	)
Other income and expense
Gain on long-term investment		3,390			-			3,390			-
Other income (expense), net		(14	)		(1	)		(18	)		(6	)
Interest expense		(25	)		(35	)		(53	)		(72	)
Interest income		1,268			2,348			2,461			3,999
Amortization of premium on investments		(34	)		-			(46	)		-
Total other income and expense		4,585			2,312			5,734			3,921
Loss from operations before income taxes		(26,103	)		(21,238	)		(58,759	)		(42,920	)
Income taxes		-			-			-			-
Net loss	$	(26,103	)	$	(21,238	)	$	(58,759	)	$	(42,920	)
Other comprehensive gain
Net unrealized gain on investments		41			-			90			-
Total other comprehensive gain		41			-			90			-
Comprehensive loss	$	(26,062	)	$	(21,238	)	$	(58,669	)	$	(42,920	)
Net loss per common share, basic and diluted	$	(0.60	)	$	(0.64	)	$	(1.53	)	$	(1.41	)
Weighted-average number of shares outstanding used in computation of net loss per common share, basic and diluted		43,573,628			33,001,946			38,372,704			30,490,892

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

Lexeo Therapeutics, Inc.

Condensed Statements of Stockholders’ Equity

(Unaudited, in thousands, except share amounts)


										Accumulated
								Additional		Other						Total
	Common Stock				Treasury			Paid-in		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Stock			Capital		Income (Loss)			Deficit			Equity
Balances at December 31, 2024		33,071,261	$	3	$	(17	)	$	397,132	$	(103	)	$	(280,173	)	$	116,842
Issuance of common stock upon vesting and settlement of restricted stock units		52,446		-		-			-		-			-			-
Issuance of common stock under 2023 ESPP		65,342		-		-			170		-			-			170
Amounts reclassified from deposit liabilities upon the vesting of early-exercised stock options previously subject to repurchase		2,816		-		-			13		-			-			13
Unrealized comprehensive gain on investments		-		-		-			-		49			-			49
Stock-based compensation expense		-		-		-			3,697		-			-			3,697
Net loss		-		-		-			-		-			(32,656	)		(32,656	)
Balances at March 31, 2025		33,191,865	$	3	$	(17	)	$	401,012	$	(54	)	$	(312,829	)	$	88,115
Issuance of common stock upon vesting and settlement of restricted stock units		14,097		-		-			-		-			-			-
Issuance of common stock, pre-funded warrants and warrants to purchase common stock upon May 2025 Private Placement Offering, net of commissions and offering costs of $6,917		20,790,120		2		-			73,080		-			-			73,082
Amounts reclassified from deposit liabilities upon the vesting of early-exercised stock options previously subject to repurchase		2,410		-		-			12		-			-			12
Unrealized comprehensive gain on investments		-		-		-			-		41			-			41
Stock-based compensation expense		-		-		-			3,071		-			-			3,071
Net loss		-		-		-			-		-			(26,103	)		(26,103	)
Balances at June 30, 2025		53,998,492	$	5	$	(17	)	$	477,175	$	(13	)	$	(338,932	)	$	138,218


												Accumulated
									Additional			Other					Total
	Common Stock					Treasury			Paid-in			Comprehensive		Accumulated			Stockholders'
	Shares			Amount		Stock			Capital			Income (Loss)		Deficit			Equity
Balances at December 31, 2023		26,646,378		$	3	$	-		$	295,372		$	-	$	(181,840	)	$	113,535
Exercise of stock options		942			-		-			10			-		-			10
Amounts reclassified from deposit liabilities upon the vesting of early-exercised stock options previously subject to repurchase		1,916			-		-			3			-		-			3
Issuance of common stock upon March 2024 Private Placement Offering, net of commissions and offering costs of $6,246		6,278,905			-		-			88,753			-		-			88,753
Stock-based compensation expense		-			-		-			2,331			-		-			2,331
Net loss		-			-		-			-			-		(21,682	)		(21,682	)
Balances at March 31, 2024		32,928,141		$	3	$	-		$	386,469		$	-	$	(203,522	)	$	182,950
Exercise of stock options		108,912			-		-			419			-		-			419
Amounts reclassified from deposit liabilities upon the vesting of early-exercised stock options previously subject to repurchase		5,849			-		-			26			-		-			26
Additional offering costs incurred related to issuance of common stock upon private placement offering		-			-		-			(42	)		-		-			(42	)
Treasury stock repurchase		(2,991	)		-		(13	)		-			-		-			(13	)
Stock-based compensation expense		-			-		-			2,846			-		-			2,846
Net loss		-			-		-			-			-		(21,238	)		(21,238	)
Balances at June 30, 2024		33,039,911		$	3	$	(13	)	$	389,718		$	-	$	(224,760	)	$	164,948

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

Lexeo Therapeutics, Inc.

Condensed Statements of Cash Flows

(Unaudited, in thousands)


	Six Months Ended June 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(58,759	)	$	(42,920	)
Adjustments to reconcile net loss to net cash used in operating activities:
Reduction in the carrying amount of ROU assets, operating		729			661
Reduction in the carrying amount of ROU assets, finance		160			165
Stock-based compensation expense		6,768			5,177
Depreciation and amortization expense		122			146
Non-cash gain on long-term investment		(3,390	)		-
Amortization of premium on investments		46			-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(2,566	)		660
Accounts payable		13,507			1,698
Accrued expenses and other current liabilities		(4,822	)		19
Lease liabilities, operating		(721	)		(636	)
Lease liabilities, finance		(9	)		11
Net cash used in operating activities		(48,935	)		(35,019	)
Cash flows from investing activities:
Purchase of internal use software		-			(13	)
Purchase of property and equipment		(108	)		(398	)
Purchases of investments		(55,366	)		-
Proceeds from maturities of investments		31,900			-
Net cash used in investing activities		(23,574	)		(411	)
Cash flows from financing activities:
Proceeds from exercise of stock options		-			429
Payments on finance leases		(281	)		(183	)
Proceeds from common stock issuances under 2023 ESPP		170			-
Treasury stock repurchase		-			(13	)
Proceeds from issuance of common stock upon March 2024 Private Placement Offering		-			94,999
Third-party commissions and offering costs incurred upon March 2024 Private Placement Offering		-			(6,287	)
Proceeds from issuance of common stock, pre-funded warrants and warrants to purchase common stock upon May 2025 Private Placement Offering		79,999			-
Third-party commissions and offering costs incurred upon May 2025 Private Placement Offering		(6,917	)		-
Net cash provided by financing activities		72,971			88,945
Net change in cash, cash equivalents and restricted cash		462			53,515
Cash, cash equivalents and restricted cash at beginning of period		38,266			124,718
Cash, cash equivalents and restricted cash at end of period	$	38,728		$	178,233
Supplemental disclosure of non-cash activities
Unpaid offering costs included in accounts payable and accrued expenses	$	905		$	389
Unrealized gain on investments	$	90		$	-
Issuance costs related to convertible debt included in accounts payable and accrued expenses	$	-		$	24
Net property and equipment purchased in the current period included in accounts payable (net property and equipment purchased in the prior period previously included in accounts payable and paid in the current period)	$	101		$	(116	)
Finance lease right-of use assets and finance lease liabilities recognized	$	-		$	22
Amounts reclassified from deposit liabilities upon the vesting of early-exercised stock options previously subject to repurchase, net of proceeds received from early exercise of unvested stock options subject to repurchase and recorded as deposit liabilities	$	25		$	28

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

Lexeo Therapeutics, Inc.

Notes to Condensed Financial Statements

(Unaudited, table amounts in thousands, except share, per share, year, and percentage amounts)

1. Description of Business and Basis of Presentation

Description of Business—Lexeo Therapeutics, Inc. (the “Company”) is a clinical stage genetic medicine company with a focus on hereditary and acquired diseases of high unmet need. The Company’s investigational therapies have the potential to offer gene therapy-based treatments to address many diseases that have eluded today’s existing drug delivery platforms. The Company utilizes adeno-associated viruses (“AAV”) that have been engineered to transfer genes to patients. The Company’s therapeutic investigational treatments include gene therapies primarily in the early clinical and late pre-clinical stages of research and development.

The Company is located in New York, NY and was first formed on February 17, 2017, as an LLC under the laws of the State of Delaware under the legal name Lexeo Therapeutics, LLC. The Company filed and executed a certificate of conversion to corporation on November 20, 2020, to convert the LLC to Lexeo Therapeutics, Inc., a Delaware corporation. All of the Company’s tangible assets are held in the United States (“U.S.”).

Basis of Presentation and Principles of Consolidation—The Company’s fiscal year ends on December 31, and its fiscal quarters end on March 31, June 30, and September 30.

These unaudited condensed financial statements and these notes reflect the operations of the Company that have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. These unaudited condensed financial statements and accompanying notes should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2024 (the “Annual Financial Statements”) included in the Company's Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission on March 24, 2025. The unaudited condensed balance sheet at December 31, 2024 has been derived from the audited financial statements at that date. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the financial position of the Company and its results of operations and cash flows for the periods presented have been included. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025, for any other interim period, or for any other future year.

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The Company has no unconsolidated subsidiaries. Certain prior period balances have been reclassified to conform to the current period presentation.

Need for Additional Capital—Since inception, the Company has incurred net losses and negative cash flows from operations, including net losses of $58.8 million and $98.3 million during the six months ended June 30, 2025 and the year ended December 31, 2024, respectively. As of June 30, 2025, the Company had cash, cash equivalents, and investments in U.S. Treasury securities of $152.5 million and an accumulated deficit of $338.9 million and expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future. During the years ended December 31, 2021 and December 31, 2020, the Company raised aggregate total net proceeds of $185.0 million in connection with the issuance of series A and series B convertible preferred stock. During the year ended December 31, 2023 the Company raised $100.3 million of total net proceeds in connection with the closing of its initial public offering ("IPO") on November 7, 2023 and subsequent partial exercise of the underwriters' option to purchase additional shares, as well as $3.9 million of net proceeds from the issuance of a convertible Simple Agreement for Future Equity (“SAFE”) note (the "convertible SAFE Note") in August 2023. During the year ended December 31, 2024, the Company received total net proceeds of $88.8 million after deducting approximately $6.2 million of commissions and offering expenses in the March 2024 Private Placement (as defined below) (see Note 8). During the three and six months ended June 30, 2025, the Company received total net proceeds of approximately $73.1 million after deducting approximately $6.9 million of commissions and offering expenses in the May 2025 Private Placement (as defined below) (see Note 8). Management estimates that the Company's current cash, cash equivalents, and investments in U.S. Treasury securities balances are sufficient to fund its operations for at least 12 months from the issuance date of these financial statements.

If the Company is unable to obtain additional funding before achieving sufficient profitability and positive cash flows from operations, if ever, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue plans to obtain additional funding before achieving sufficient profitability and positive cash flows from operations, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

Risks and Uncertainties—The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, successful discovery and development of its product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the ability to secure additional capital to fund operations, and commercial success of its product candidates. Any of the Company’s current product candidates and future product candidates that it may develop will require extensive non-clinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance- reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

2. Summary of Significant Accounting Policies

There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Financial Statements.

Use of Estimates—The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expense during the reporting period. The most significant estimates relate to the accruals of research and development costs, including accruals of research contract costs, and assumptions used to estimate the fair value of the Company’s stock option awards and, prior to its IPO, to determine the fair value of its common stock. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates.

Net Loss per Share—The Company follows the two-class method when computing net income (loss) per common share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per common share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income (loss) available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company considers the shares issued upon the early exercise of stock options that are subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock. There is no allocation required under the two-class method during periods of loss since the participating securities do not have a contractual obligation to share in the losses of the Company.

Basic net income (loss) per common share is computed by dividing the net income (loss) per common share by the weighted-average number of common shares and pre-funded warrants to purchase shares of common stock outstanding for the period. In accordance with ASC Topic 260, Earnings per Share, the pre-funded warrants are included in the computation of basic net loss per share because the exercise price is negligible and they are fully vested and exercisable at any time after the original issuance date. Diluted net income (loss) per common share is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per common share is computed by dividing the diluted net loss by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares.

In periods in which the Company reported a net loss, diluted net loss per common share was the same as basic net loss per common share since dilutive common shares were not assumed to have been issued if their effect was anti-dilutive. During the three and six months ended June 30, 2025 and June 30, 2024, 19,234,106 (for each of the periods in 2025) and 3,728,009 (for each of the periods in 2024) total potential common shares, respectively, related to the exercise of outstanding stock options, settlement of outstanding restricted stock units ("RSUs"), settlement of outstanding RSUs that vest upon the achievement of certain performance conditions ("PRSUs"), and exercise of outstanding warrants were excluded from the computation of diluted net loss per common share because including them would have had an anti-dilutive effect as the Company reported net losses for those periods.

Stock Based Compensation Expense—The Company accounts for stock-based payment awards granted to employees and non-employees, as well as shares issued to its employees under the Company's 2023 Employee Stock Purchase Plan (the "2023 ESPP"), as stock-based compensation expense at fair value. The Company issues stock-based awards to employees and non-employees in the form of stock options and also issues stock-based awards to employees in the form of RSUs and PRSUs. The measurement date for employee stock option, RSU, and PRSU awards is the date of grant, and stock-based compensation costs for employee non-performance awards are recognized as expense over the employees’ requisite service period, which is the vesting period, on a graded basis. Compensation expense for equity awards with performance conditions, including PRSUs, is recognized if and when the Company concludes that it is probable that the performance conditions will be achieved. The Company reassesses the probability of vesting at each reporting period for equity awards with such performance conditions and adjusts compensation expense based on its probability assessment. The measurement date for non-employee awards is the date of grant without changes in the fair value of the award, and stock-based compensation costs for non-employees are recognized as expense over the vesting period on a graded basis. The measurement date for shares issued under the 2023 ESPP is the first date of each employee stock purchase plan offering period, and stock-based compensation costs are recognized as expense over the offering period on a straight-line basis. Stock-based compensation expense for all equity awards is classified in the accompanying statement of operations based on the function to which the related services are provided. As the Company is permitted to repurchase shares legally issued for unvested stock options exercised at their exercise price under the Company's 2021 Equity Incentive Plan (the "2021 Plan"), (i) cash received for unvested stock options exercised under the 2021 Plan is recorded as a deposit liability as a reclassification from additional paid-in capital in the Company’s balance sheet, which is relieved to additional paid-in capital as such awards vest, (ii) stock based compensation expense is recognized over the requisite service period for each such award, and (iii) the amount and number of shares of common stock outstanding in the Company’s balance sheet and statement stockholders’ equity are reduced until such awards vest. Forfeitures are recorded as they occur.

The fair value of each stock option grant under the 2021 Plan and the Company's 2023 Equity Incentive Plan (the "2023 Plan", and together with the 2021 Plan, the “Plans”), and shares issued under the 2023 ESPP, are estimated on the date of stock option grant or on the first date of each employee stock purchase plan offering period, respectively, using the Black-Scholes option-pricing model, while the fair value of each RSU and PRSU granted under the 2023 Plan is equal to the closing price of the Company's common stock on the date of the grant. Prior to its IPO on November 3, 2023, the Company was a private company and lacked company-specific historical and implied volatility information for stock options granted. Therefore, the Company estimated its expected stock volatility entirely based on the historical volatility of a publicly traded set of peer companies for stock options granted prior to its IPO, and estimates its expected stock price volatility primarily based on the historical volatility of a publicly traded set of peer companies for stock options granted since its IPO, each for a period equal to the expected life of the stock options granted, and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options granted has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options and expects to continue to do so until such time as it has adequate historical data regarding the expected term of its own stock options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is zero as the Company has never paid cash dividends on its common stock and does not expect to pay any cash dividends in the foreseeable future.

Long-term Investment—The Company accounts for its long-term investment in nonredeemable convertible preferred stock in accordance with the provisions of ASC Topic 321, Investments - Equity Securities, and elected to use the measurement alternative therein. The fair value of the nonredeemable convertible preferred stock received was based upon an observable price of cash paid for an identical security in an orderly transaction with a third-party and was capitalized as a long-term investment in the Company's balance sheet and recorded as an unrealized gain to other non-operating income in the Company's statement of operations and comprehensive loss. The long-term investment will be remeasured upon future observable price change(s) in orderly transaction(s) or upon impairment, if any.

Concentrations of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and investments. The Company’s cash and restricted cash balances exceed Federal Deposit Insurance Corporation insurance limits. The Company’s cash equivalents consist of investments in U.S. government money market funds, and the Company's investments consist of U.S. Treasury securities. The Company’s cash, cash equivalents, and restricted cash are held with large financial institutions that management believes to be of high credit quality. To date, the Company has not recognized any losses caused by uninsured balances.

3. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of inputs that may be used to measure fair value are as follows:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities 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 related assets or liabilities.

Level 3—Inputs are unobservable inputs for the asset or liability.

The Company’s cash equivalents consist of investments in U.S. government money market funds stated at carrying value, which approximates fair value and is based on quoted prices in active markets for identical securities. Cash is stated at carrying value, which approximates fair value due to its short-term nature. The Company classifies its investments in U.S. Treasury securities as Level 2 assets as these assets are not traded in an active market and have been valued through a third-party pricing service based on quoted prices for similar assets. The carrying values of the Company’s prepaid expenses, other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term nature.

The following table presents information about the Company’s financial assets and investments measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values:


	As of June 30, 2025:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market)	$	13,125	$	-	$	-	$	13,125
Current portion of investments in U.S. Treasury securities		-		97,413		-		97,413
Investments:
Non-current portion of investments in U.S. Treasury securities		-		19,613		-		19,613
	$	13,125	$	117,026	$	-	$	130,151


	As of December 31, 2024:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market)	$	17,636	$	-	$	-	$	17,636
Current portion of investments in U.S. Treasury securities		-		86,504		-		86,504
Investments:
Non-current portion of investments in U.S. Treasury securities		-		7,012		-		7,012
	$	17,636	$	93,516	$	-	$	111,152

Investments, which are classified as available-for-sale securities, consisted of the following as of June 30, 2025 and December 31, 2024:


	As of June 30, 2025:
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. Treasury securities	$	117,039	$	-	$	(13	)	$	117,026
	$	117,039	$	-	$	(13	)	$	117,026


	As of December 31, 2024:
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. Treasury securities	$	93,619	$	-	$	(103	)	$	93,516
	$	93,619	$	-	$	(103	)	$	93,516

All investments classified as available-for-sale securities held as of June 30, 2025 and December 31, 2024 had contractual maturities of less than two years. There have been no material realized gains or losses on investments classified as available-for-sale securities for the periods presented.

Aggregate fair values of investments classified as available-for-sale securities with unrealized losses and gains were as follows as of June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
Available-for-sale securities:
Due within one year	$	97,413	$	86,504
Due after one year through five years		19,613		7,012
	$	117,026	$	93,516

4. Property and Equipment

The following is the summary of the Company’s property and equipment and related accumulated depreciation as of June 30, 2025 and December 31, 2024:


	Useful Life	June 30, 2025			December 31, 2024
Furniture and fixtures	5 years	$	386		$	386
Lab equipment	7 years		1,053			844
Leasehold improvements	7 years		272			272
Total property and equipment			1,711			1,502
Less: accumulated depreciation			(596	)		(474	)
Total property and equipment, net		$	1,115		$	1,028

5. Long-term Investment

In June 2025, the Company entered into a collaboration and license agreement (the "June 2025 CLA") and a preferred stock purchase agreement (the "June 2025 Preferred Stock Purchase Agreement") with a privately-held Delaware corporation (the "Investee"). In exchange for access to certain of the Company's technology, intellectual property, and know-how granted to the Investee under the terms of the June 2025 CLA, the Company received 10,000,000 shares of the Investee's nonredeemable convertible preferred stock issued under the June 2025 Preferred Stock Purchase Agreement, representing approximately 12% of the Investee's issued and outstanding voting stock as of June 30, 2025. Under the terms of the June 2025 CLA, the Company is entitled to certain future milestone payments, royalties, and opt-in rights to certain program(s).

The Company accounts for its investment in the Investee in accordance with the provisions of ASC Topic 321, Investments - Equity Securities, and elected to use the measurement alternative therein. The fair value of the nonredeemable convertible preferred stock received of approximately $3.4 million, or approximately $0.338983 per share, was based upon an observable price of cash paid for an identical security in an orderly transaction between the Investee and a third-party and was capitalized as a long-term investment in the Company's balance sheet and recorded as an unrealized gain to other non-operating income in the Company's statement of operations and comprehensive loss. The long-term investment will be remeasured upon future observable price change(s) in orderly transaction(s) or upon impairment, if any.

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	June 30, 2025		December 31, 2024
Accrued research and development expenses	$	5,356	$	6,696
Accrued compensation and other personnel costs		2,211		4,112
Accrued general and administrative expenses and other professional fees		1,159		2,406
Other current liabilities		186		545
Total accrued expenses and other current liabilities	$	8,912	$	13,759

7. Leases

Operating Lease Right-of-Use Asset

In January 2022, the Company entered into a lease agreement for an office facility and laboratory space in New York, New York that commenced in April 2022 and ends in July 2029 with an additional five-year option to extend the lease beyond July 2029 at the then-prevailing effective market rental rate. Upon commencement of this lease, the Company recorded operating lease right-of-use assets and operating lease liabilities of $11.6 million based on the present value of payments over the lease term using an estimated incremental borrowing rate of 8.53% in accordance with the provisions of ASC Topic 842, Leases (“ASC 842”). In connection with the Company’s lease of office space and laboratory space, the Company provided a security deposit to the landlord in the form of a letter of credit totaling $1.2 million. The cash collateralizing the letter of credit was included in long-term restricted cash in the Company’s condensed balance sheets as of June 30, 2025 and December 31, 2024. This lease was classified as an operating lease in accordance with the provisions of ASC 842. The Company did not recognize any right-of-use assets and lease liabilities associated with the potential option to renew or extend. The Company’s operating lease agreement does not contain any significant residual value guarantees or restrictive covenants.

The remaining lease terms and payment terms as of June 30, 2025 and December 31, 2024 were 4.1 years and 4.6 years, respectively. The components of this operating lease were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Operating lease expense	$	533	$	537	$	1,065	$	1,074
Variable lease expense		126		115		252		228
Total operating lease expense	$	659	$	652	$	1,317	$	1,302
Cash paid for amounts included in the measurement of lease liabilities, included in operating cash flows	$	537	$	520	$	1,074	$	1,050

The following table provides a reconciliation of the Company’s remaining undiscounted contractual rent obligations due within each year ended December 31 to the operating lease liabilities recognized as of June 30, 2025:


Year ended December 31	Operating Leases
2025	$	1,087
2026		2,206
2027		2,261
2028		2,318
2029		1,372
Thereafter		-
Total lease payments		9,244
Less: present value adjustment		(1,428	)
Total operating lease liabilities	$	7,816
Included in the balance sheet:
Current portion of lease liabilities - operating	$	2,136
Non-current portion of lease liabilities - operating		5,680
Total operating lease liabilities	$	7,816

Equipment Finance Leases

Commencing in April 2022, the Company leases certain laboratory equipment under financing arrangements accounted for as finance leases in accordance with the provisions of ASC 842 that are classified in the Company’s condensed balance sheet as finance lease liabilities with related right-of-use assets recorded and depreciated on a straight-line basis over the estimated useful life of 7 years. In connection with the Company’s leases of laboratory equipment, the Company provided a security deposit to the lessor in the form of a letter of credit totaling $1.9 million and assigned all rights and interests in the equipment to the lessor. The cash collateralizing the letter of credit is included in long-term restricted cash in the Company’s condensed balance sheet as of June 30, 2025. The total gross, accumulated amortization, and net book values of equipment finance lease right-of-use assets capitalized under such finance lease arrangements at June 30, 2025 were $2.2 million, $0.9 million and $1.3 million, respectively. Under the terms of the equipment finance lease agreements executed through the issuance of these unaudited condensed financial statements, the principal balances plus interest for the equipment are to be repaid in full after 60 monthly installments following lease commencement, with lease commencement dates ranging from April 1, 2022 to April 1, 2023, annual imputed interest rates ranging from 7.90% to 9.30%, and monthly installment payment amounts ranging from approximately $4,000 to $18,000. As of June 30, 2025, the total aggregate monthly installment payment amount was approximately $49,000 for equipment finance lease agreements.

The weighted-average remaining lease payment term, weighted-average remaining amortization term, and weighted-average effective interest rate for the Company's equipment finance lease agreements as of June 30, 2025 were 2.2 years, 4.3 years, and 8.60%, respectively. The weighted-average remaining lease payment term, weighted-average remaining amortization term, and weighted-average effective interest rate for the Company's equipment finance lease agreements as of December 31, 2024 were 2.7 years, 4.8 years, and 8.59%, respectively. The components of the equipment finance leases were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Reduction in the carrying amount of ROU assets, finance	$	80	$	80	$	160	$	165
Interest on finance lease liabilities		25		23		62		60
Total finance lease expense	$	105	$	103	$	222	$	225
Cash paid for amounts included in the measurement of lease liabilities, included in financing cash flows	$	122	$	74	$	281	$	183

The following table provides a reconciliation of the Company’s remaining equipment finance lease obligations due within each year ending December 31 to the equipment finance lease liabilities recognized at June 30, 2025:


Year ended December 31	Equipment Finance Leases
2025	$	245
2026		587
2027		359
2028		11
2029		-
Thereafter		-
Total lease payments		1,202
Less: imputed interest		(105	)
Total finance lease liabilities	$	1,097
Included in the balance sheet:
Current portion of lease liabilities - finance	$	520
Non-current portion of lease liabilities - finance		577
Total finance lease liabilities	$	1,097

8. Capital Stock

As of June 30, 2025 and December 31, 2024, the Company’s amended and restated certificate of incorporation provided that the authorized capital stock of the Company was 510,000,000 shares consisting of 500,000,000 shares of common stock and 10,000,000 shares of undesignated preferred stock, both with a par value of $0.0001 per share. As of June 30, 2025 and December 31, 2024, 54,001,214 shares and 33,079,209 shares, respectively, of the Company's common stock authorized were issued, including 2,722 shares and 7,948 shares, respectively, that were legally issued upon the early exercise of unvested stock options and that are excluded from the number of shares outstanding until the right to repurchase subsequently lapses upon vesting. The Company did not repurchase any shares of its common stock during the three and six months ended June 30, 2025, and repurchased a total of 3,827 shares of its common stock issued pursuant to the early exercise of stock options granted under the 2021 Plan for a total of approximately $17,000 during the year ended December 31, 2024, which was recorded to treasury stock in the Company's balance sheet (see Note 9). Each common share entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, if any, as may be declared by the Company’s Board of Directors. No cash dividends have been declared or paid by the Company.

On March 11, 2024, the Company entered into a common stock purchase agreement to issue and sell an aggregate of 6,278,905 shares of its common stock at a price of $15.13 per share, in a private placement that closed on March 13, 2024 (the "March 2024 Private Placement"). The gross and net proceeds received from the March 2024 Private Placement were approximately $95.0 million and $88.8 million, respectively, after deducting approximately $6.2 million of commissions and other offering costs.

On March 24, 2025, the Company entered into a sales agreement (the "Sales Agreement") with Leerink Partners LLC ("Leerink") to sell shares of the Company's common stock having an aggregate offering price of up to $75.0 million from time to time through an at-the-market equity offering program (the "ATM Program") under which Leerink is acting as the Company's agent. Leerink is entitled to compensation for its services in an amount equal to 3% of the gross proceeds of any of the shares of the Company's common stock sold under the Sales Agreement. No shares of the Company's common stock have been sold under the Sales Agreement through June 30, 2025.

On May 28, 2025, pursuant to a securities purchase agreement, the Company issued and sold an aggregate of 20,790,120 shares of its common stock, as well as pre-funded warrants to purchase 6,963,556 shares of its common stock to certain purchasers, together with accompanying warrants to purchase 13,876,838 shares of its common stock, at a purchase price of $2.8825 per share of common stock and accompanying common warrant, or $2.8824 per pre-funded warrant and accompanying warrant (the "May 2025 Private Placement"). The gross and net proceeds received from the May 2025 Private Placement were approximately $80.0 million and $73.1 million, respectively, after deducting approximately $6.9 million of commissions and other offering costs. The warrants and pre-funded warrants issued in the May 2025 Private Placement are immediately exercisable at exercise prices of $2.82 per share and $0.0001 per share, respectively, except that the warrants and pre-funded warrants cannot be exercised by the holder if, after giving effect thereto, the holder would beneficially own more than 9.99% of the Company’s common stock (the "Maximum Percentage"). The Maximum Percentage can be changed at the holder's election to any other percentage not in excess of 19.99%, and any increase in the Maximum Percentage will not be effective until the 61st day after the holder provides notice to the Company of the desired increase. The warrants are exercisable until May 28, 2029, and the pre-funded warrants do not expire. The warrants and pre-funded warrants are classified as equity in accordance with ASC Topic 815-40, Derivatives and Hedging - Contracts in an Entity's Own Equity. Upon issuance, the total pre-allocated fair value of the warrants of approximately $26.8 million, or approximately $1.93 per warrant share, was estimated using a Black-Scholes option pricing model with the following assumptions:


Stock Price	$	2.74
Exercise Price	$	2.82
Risk-free interest rate		4.00	%
Expected term (in years)		4.00
Expected volatility		100.35	%
Expected dividend yield		0.00	%

Approximately $44.3 million, $20.8 million and $14.9 million of the total gross proceeds received in the May 2025 Private Placement were allocated to the shares of common stock, warrants and pre-funded warrants, respectively, on a relative fair value basis, and were recorded as credits to additional paid-in capital, and are not subject to remeasurement. As of June 30, 2025, none of the warrants or pre-funded warrants had been exercised.

The Company had reserved the following number of shares of common stock for the exercise of outstanding warrants, exercise of outstanding pre-funded warrants, exercise of outstanding stock options, settlement of outstanding RSUs and PRSUs, and future issuances of stock-based awards:


	June 30, 2025		December 31, 2024
Warrants to purchase shares of common stock		13,876,838		-
Pre-funded warrants to purchase shares of common stock		6,963,556		-
Options to purchase shares of common stock under the 2021 Plan and 2023 Plan		4,401,477		3,457,918
RSUs and PRSUs subject to settlement in shares of common stock under the 2023 Plan		955,791		266,300
Shares available for issuance under the 2023 Plan		2,143,031		2,185,328
Shares available for issuance under the 2023 ESPP		770,734		505,284
Total shares of common stock reserved for future issuance		29,111,427		6,414,830

9. Stock-based Compensation

In February 2021, the Company adopted the 2021 Plan for the issuance of stock options granted to the Company’s key directors, officers, employees and consultants, as a means to secure the benefits arising from capital stock ownership. In connection with the Company’s IPO in November 2023, the Company adopted the 2023 Plan for the issuance of equity awards granted to the Company's directors, officers, employees, and consultants, and for the issuance of shares purchased under the 2023 ESPP to the Company's employees, as a means to secure the benefits arising from capital stock ownership. The purposes of the Plans and the 2023 ESPP are also to promote the alignment of the interests of directors, officers, employees, and consultants with the success of the Company and to provide compensation opportunities to attract, retain and motivate directors, officers, employees, and consultants of the Company. Upon adoption of the 2023 Plan, no further grants may be made under the 2021 Plan.

The number of shares of common stock reserved for issuance under the 2023 Plan will automatically increase on January 1 of each year, beginning on January 1, 2024, and continuing through and including January 1, 2033, by 5% of the total number of shares of common stock outstanding on December 31 of the immediately preceding calendar year, or a lesser number of shares determined by the Company’s Board of Directors prior to the applicable January 1. The number of shares of common stock reserved for issuance under the 2023 ESPP will automatically increase on January 1 of each calendar year, beginning on January 1, 2024 and continuing through and including January 1, 2033, by the lesser of (i) 1% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, (ii) 477,200 shares, and (iii) a number of shares determined by the Company’s Board of Directors. Shares subject to purchase rights granted under the 2023 ESPP that terminate without having been exercised in full do not reduce the number of shares available for issuance under the 2023 ESPP.

On January 1, 2025, the number of shares of common stock reserved for issuance under the 2023 Plan and the 2023 ESPP automatically increased by 1,653,960 shares and 330,792 shares, respectively, to totals of 7,724,384 shares and 836,076 shares, respectively. As of June 30, 2025, 2,143,031 shares and 770,734 shares were available for future issuance under the 2023 Plan and 2023 ESPP, respectively. A total of 65,342 shares have been issued under the 2023 ESPP through June 30, 2025.

Stock option activity

Stock options granted under the 2021 Plan are issued from new shares upon exercise, have a contractual term of 10 years from grant date, and generally (i) are subject to requisite service requirements, (ii) vest over a four-year period with 25% of the options granted vesting after one year and the remainder vesting in equal monthly installments over the following 36 months, and (iii) allow for early exercise subject to repurchase. Stock options granted under the 2021 Plan to certain of the Company’s non-employees vest in equal monthly installments over a four-year period or vested upon the achievement of a certain milestone event. The Company did not repurchase any shares of its common stock during the three and six months ended June 30, 2025, and repurchased a total of 3,827 shares of its common stock issued pursuant to the early exercise of stock options granted under the 2021 Plan for a total of approximately $17,000 during the year ended December 31, 2024, which was recorded to treasury stock in the Company's balance sheet (see Note 8).

Stock options granted under the 2023 Plan are issued from new shares upon exercise, have a contractual term of 10 years from grant date, and generally vest over a four-year period with 25% of the options granted vesting after approximately one year and the remainder vesting in equal monthly installments over the following 36 months, subject to requisite service requirements. Stock options granted under the 2023 Plan to certain of the Company's non-employee directors vest in equal annual installments over a three-year period for initial grants or over a one-year period for subsequent annual grants, subject to requisite service requirements.

The following table summarizes the stock option activity under the 2021 Plan and the 2023 Plan for the six months ended June 30, 2025:


	Number of			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic
	Shares			(per share)		(in years)		Value
Outstanding as of December 31, 2024		3,457,918		$	11.37		8.18	$	2,851
Granted		1,151,404			5.77
Exercised		-			-				-
Forfeited		(179,273	)		12.36
Expired		(28,572	)		12.32
Outstanding as of June 30, 2025		4,401,477		$	9.86		8.04	$	705
Options exercisable at June 30, 2025		2,364,489		$	9.67		7.03	$	693

The weighted-average grant date fair value of stock options granted during the six months ended June 30, 2025 and June 30, 2024 was $4.33 per share and $11.77 per share, respectively.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. No stock options were exercised during the six months ended June 30, 2025, and therefore there was no corresponding intrinsic value. The total aggregate intrinsic value of stock options exercised during the six months ended June 30, 2024 was $1.1 million.

The total grant date fair values of stock options vested during the three months ended June 30, 2025 and June 30, 2024 were $3.2 million and $0.7 million, respectively. The total grant date fair values of stock options vested during the six months ended June 30, 2025 and June 30, 2024 were $7.1 million and $1.6 million, respectively.

The Company estimated the fair value of options granted using a Black-Scholes option pricing model with the following assumptions presented on a weighted-average basis during the six months ended June 30, 2025 and June 30, 2024:


	Six Months Ended
	June 30,
	2025			2024
Risk-free interest rate		4.37	%		4.14	%
Expected term (in years)		5.72			6.02
Expected volatility		90.89	%		85.83	%
Expected dividend yield		0.00	%		0.00	%

The expected dividend yields are 0.00% as the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

As of June 30, 2025 there was $11.3 million of unrecognized stock-based compensation expense related to stock options estimated to be recognized over a weighted-average period of 2.50 years.

RSU and PRSU activity

RSUs granted under the 2023 Plan generally vest over a four-year period with 25% of the RSUs vesting after approximately one year and the remainder vesting in equal quarterly installments over the following 12 quarters, subject to requisite service requirements. During the six months ended June 30, 2025, a total of 217,500 PRSUs were granted to certain employees under the 2023 Plan that vest upon the achievement of certain performance conditions generally over an approximate 18-month period, subject to requisite service requirements. Additionally, during the six months ended June 30, 2025, a total of 77,650 RSUs were granted to employees under the 2023 Plan that vest over a two-year period with 50% of the RSUs vesting after approximately one year and the remainder vesting in equal quarterly installments over the following four quarters, subject to requisite service requirements.

The following table summarizes the RSU activity under the 2023 Plan for the six months ended June 30, 2025:


	Number of			Weighted- Average Grant Date Fair Value
	Shares			(per share)
Unvested as of December 31, 2024		266,300		$	15.59
Granted		616,434			5.50
Vested		(66,543	)		15.27
Forfeited		(77,900	)		8.90
Unvested as of June 30, 2025		738,291		$	7.90

The following table summarizes the PRSU activity under the 2023 Plan for the six months ended June 30, 2025:


	Number of		Weighted- Average Grant Date Fair Value
	Shares		(per share)
Unvested as of December 31, 2024		-	$	-
Granted		217,500		7.25
Vested		-		-
Forfeited		-		-
Unvested as of June 30, 2025		217,500	$	7.25

As of June 30, 2025 there was $4.8 million of unrecognized stock-based compensation expense related to RSUs and PRSUs estimated to be recognized over a weighted-average period of 3.14 years.

Employee Stock Purchase Plan

Under the 2023 ESPP, eligible employees may purchase shares of the Company's common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning of the offering period or the end of each six-month purchase period. Each offering period of two years will consist of four six-month purchase periods, subject to reset on the first day of each purchase period depending on the fair market values of the Company's stock. Employees may not purchase more than 6,000 shares of the Company's common stock during any purchase period. The first purchase period within the first offering period under the 2023 ESPP commenced during the three months ended December 31, 2024 and concluded during the three months ended March 31, 2025, and the first purchase period within the second offering period commenced during the three months ended March 31, 2025 following reset. As of and during the three and six months ended June 30, 2025, stock-based compensation expense recorded, as well as the estimated fair value of unearned and unrecognized stock-based expense expected to be recorded, related to the 2023 ESPP were not material. During the six months ended June 30, 2025, a total of 65,342 shares were issued under the 2023 ESPP at a purchase price of $2.61 per share with total proceeds of approximately $0.2 million received by the Company.

Stock-based compensation expense

Stock-based compensation expense was classified as follows in the Company’s unaudited condensed statements of operations and comprehensive loss:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Research and development expense	$	1,387	$	1,437	$	3,264	$	2,520
General and administrative expense		1,684		1,409		3,504		2,657
Total stock-based compensation expense	$	3,071	$	2,846	$	6,768	$	5,177

10. Net Loss per Share

Basic and diluted net loss per common share attributable to common stockholders was calculated as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Numerator:
Net loss attributable to common stockholders	$	(26,103	)	$	(21,238	)	$	(58,759	)	$	(42,920	)
Denominator:
Weighted-average common shares outstanding, basic and diluted		43,573,628			33,001,946			38,372,704			30,490,892
Net loss per share attributable to common stockholders, basic and diluted	$	(0.60	)	$	(0.64	)	$	(1.53	)	$	(1.41	)

11. Commitments and Contingencies

Leases—As of June 30, 2025, the Company had entered into commitments under lease agreements to rent laboratory and office space and finance equipment (see Note 7).

Commitments—As of June 30, 2025, the Company had entered into commitments under license, acquisition, research collaboration and sponsored research agreements with third parties (see Note 12). In addition, the Company has entered into services agreements with third parties for pharmaceutical manufacturing and research activities in the normal course of business, which can generally be terminated by the Company with 30- to 60-days’ written notice, unless otherwise indicated. Further, certain of the Company’s manufacturing agreements could require early termination and wind-down payments due from the Company upon either the termination of its clinical trials or if the Company terminates such agreements for convenience.

Contingencies—From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company recognizes any associated legal fees as incurred and accrues a liability for such contingent liability matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. For all periods presented, the Company was not a party to any pending material litigation or other material legal proceedings, except that on October 12, 2023, Rocket Pharmaceuticals, Inc. (“Rocket”) filed a lawsuit in the U.S. District Court for the Southern District of New York against the Company and two former employees that claimed, among other things, misappropriation of confidential information and trade secrets. The complaint alleged the individual defendants downloaded confidential Rocket company documents and other proprietary materials prior to leaving Rocket in 2021 and that the Company used this information to advance its programs after they became employed at the Company. The complaint sought unspecified damages and asked the court to enjoin the Company from competing and working in the market for gene therapy treatments targeting cardiac diseases. In August 2024, the Company asserted counterclaims against Rocket and Spacecraft Seven LLC, a wholly owned subsidiary of Rocket, for misappropriation of trade secrets, correction of inventorship of certain patents, breach of contract, and tortious interference with contract. The Company's counterclaims sought equitable relief, damages, attorneys' fees and costs from Rocket and Spacecraft Seven LLC. In June 2025, the litigation was resolved amicably and without admission of liability by any party, and all claims have been dismissed with prejudice.

Indemnification Agreements—In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. For all periods presented, the Company has not incurred any material costs as a result of such indemnifications.

12. License, Acquisition, Research and Collaboration and Sponsored Research Agreements

Adverum Biotechnologies—On January 25, 2021, the Company entered into an exclusive license agreement with Adverum Biotechnologies Inc. (“Adverum”) to in-license materials and technology related to the treatment of cardiomyopathy due to Friedreich's ataxia ("FA") (the “Adverum Agreement”). In connection with the Adverum Agreement, the Company gained access to a portfolio of inventions, patent rights, technology, and licensed methods that the Company continues to develop, and the Company will assume all development and commercialization activities worldwide. Pursuant to the Adverum Agreement, the Company paid a one-time up-front non-refundable fee of $7.5 million, and is obligated to pay aggregate development and regulatory milestones of up to $17.5 million including a $3.5 million development milestone that was achieved and paid in the first quarter of 2023, and aggregate sales event and commercialization milestones of up to $49.0 million. The Company is obligated to pay Adverum tiered royalties ranging from high single-digits to sub teens based on annual aggregate worldwide net sales of Products (as defined in the Adverum Agreement). As of June 30, 2025, there were no research and development expenses recorded by the Company or payments made to Adverum under the terms of the Adverum Agreement other than the one-time up-front non-refundable fee of $7.5 million and the $3.5 million development milestone that was achieved and paid in the first quarter of 2023.

The Adverum Agreement remains in effect until termination at the date of the last royalty term to expire. The Company can terminate the Adverum Agreement with 120 days’ written notice. The Adverum Agreement can also be terminated as a result of a patent challenge, material breach of contractual terms, or insolvency by either party.

Cornell University—On May 28, 2020, the Company entered into two exclusive license agreements with Cornell University (“Cornell”) (the “First Cornell License Agreement” and the “Second Cornell License Agreement,” collectively the “May 2020 Cornell License Agreements”). The First Cornell License Agreement is for the in-license of technology related to portfolios for APOE-associated Alzheimer’s disease and Anti-Tau, although the Company’s license is not restricted by such indications and it includes assignment to the Company of Cornell’s IND for the use of AAVrh10.hAPOE2 vector to treat APOE4 homozygous patients who are at risk for or have Alzheimer’s disease to support development of the Company’s LX1001 program. The Second Cornell License Agreement is for the in-license of technology related to a portfolio for FA although the Company’s license is not restricted by such indications, and it includes assignment to the Company of Cornell’s IND for the use of AAVrh.10cUhCLN2 to treat children with CLN2 Batten disease to support development of the Company’s LX1004 program. Through the May 2020 Cornell License Agreements, the Company gains access to a portfolio of inventions, patent rights, technology, and licensed methods that the Company continues to develop. Under the terms of the May 2020 Cornell License Agreements, the Company has assumed all development and commercialization activities worldwide with respect to the licensed technology.

As initial consideration for the May 2020 Cornell License Agreements, the Company paid Cornell an upfront payment in cash of $0.3 million and issued $1.3 million of notes (the “Cornell Notes”). In November 2020, the Cornell Notes with outstanding principal of $1.3 million were cancelled in exchange for 1,337,610 shares of series A convertible preferred stock, which converted into 126,258 shares of common stock upon the closing of the Company's IPO on November 7, 2023. As additional consideration, the Company is required to pay Cornell up to $8.4 million upon the achievement of specific clinical and regulatory milestones under the First Cornell License Agreement and up to $4.3 million in two portfolios and up to $0.6 million for a third portfolio upon the achievement of specific clinical and regulatory milestones under the Second Cornell License Agreement. In the second quarter of 2022, a clinical and regulatory milestone of $0.1 million was recognized and paid to Cornell in connection with the Second Cornell License Agreement. The Company is also required to pay Cornell a flat royalty in the mid-single-digits based on net sales of the products covered by the licenses, subject to certain adjustments.

Upon expiration of the royalty term of a given licensed product in a country, the respective license becomes non-exclusive and royalty-free. In addition, each of the May 2020 Cornell License Agreements may be terminated by the Company for any reason upon ninety (90) days’ advance notice to Cornell and by Cornell upon the Company’s material uncured breach, and all licenses and rights granted by either party under such agreement will concurrently terminate.

On April 21, 2024, the Company entered into the Third License Agreement (the “Third Cornell License Agreement,” together with the May 2020 Cornell License Agreements, the “Cornell License Agreements”) with Cornell. Pursuant to the Third Cornell License Agreement, Cornell has granted the Company an exclusive license to practice under certain patent rights generated in animal studies conducted by Cornell on behalf of the Company and a non-exclusive license to know-how concerning a gene therapy for FA cardiomyopathy and current and future data generated in an ongoing investigator-initiated Phase 1A trial of AAVrh.10hFXN to treat FA cardiomyopathy. Both licenses are worldwide and cover products with human and non-human prophylactic and therapeutic uses. Cornell has also granted the Company a right of reference to Cornell’s Investigation New Drug application for a gene therapy for FA cardiomyopathy.

Under the Third Cornell License Agreement, the Company paid a license issue fee and an initial data transfer fee to Cornell totaling $0.6 million. Additionally, the Company will be paying an annual data transfer fee of $50,000 until data is no longer being gathered. The Company has agreed to pay annual license maintenance fees ranging from $2,500 to $25,000 until such time the Company commercializes a licensed product. In addition, the Company will pay Cornell up to an aggregate of $2.1 million in regulatory milestones and up to an aggregate of $100 million in commercial milestones, plus low single digit royalties on net sales.

The Third Cornell License Agreement contains other customary license terms including terms related to sublicensing, development, commercialization, milestones, royalties, intellectual property, and termination. Upon expiration of the applicable royalty term for a product in a given country, the Company shall retain a non-exclusive, royalty free license to the data and know-how, including to continue selling such product in that country.

Cornell may terminate the Third Cornell License Agreement if the Company (i) breaches the Third Cornell License Agreement (subject to a cure period), (ii) participates in any proceeding challenging the validity of the licensed patents, (iii) publishes the licensed data without Cornell’s prior written consent, or (iv) does not reach certain milestones. Cornell may also terminate the Third Cornell License Agreement in part on product-by-product basis if the Company does not diligently develop and sale a product. The Company may terminate the Third Cornell License Agreement, in whole or in part with respect to the right of reference, or the licensed data, know-how, or patent rights, with 90 days’ prior written notice to Cornell.

During each of the three and six months ended June 30, 2025, the Company incurred and paid $0.1 million in connection with the Cornell License Agreements. During the three months ended June 30, 2024, the Company incurred and paid $0.6 million in connection with the Cornell License Agreements. During the six months ended June 30, 2024, the Company incurred and paid $0.7 million in connection with the Cornell License Agreements.

Stelios Therapeutics, Inc.—Stelios Therapeutics, Inc. (“Stelios”) was an early-stage company developing novel adeno-associated AAV-based gene therapies for rare cardiac conditions including arrhythmogenic cardiomyopathy and TNNI3-associated hypertrophic cardiomyopathy. On July 16, 2021, the Company acquired 100% of the outstanding stock of Stelios that was accounted for as an asset acquisition pursuant FASB ASC 805, Business Combinations. The Company is required to pay up to a remaining aggregate of $12.5 million to the selling shareholders of Stelios upon the achievement of certain development milestones, excluding a $6.0 million development milestone that was achieved in the third quarter of 2024 and paid in the fourth quarter of 2024. Dr. Eric Adler, the Company's Chief Medical Officer and Head of Research, was a co-founder of Stelios and a selling shareholder. Of the $6.0 million development milestone payment, Dr. Adler received approximately $1.3 million. Stelios was merged into the Company on December 15, 2022 and ceased to exist.

Regents of the University of California, San Diego—Stelios entered into exclusive worldwide license agreements on April 23, 2020, and August 6, 2020 (the “First UCSD Agreement” and the “Second UCSD Agreement,” respectively) with the Regents of UCSD to in-license materials and intellectual property related to gene therapies for arrhythmogenic right ventricular cardiomyopathy and hypertrophic cardiomyopathy, respectively. The First UCSD Agreement and the Second UCSD Agreement relate to the Company’s development efforts for its LX2021 and LX2022 programs, respectively. In connection with the First UCSD Agreement and the Second UCSD Agreement, the Company gained access to inventions, patent rights, technology, and licensed methods that it continues to develop, and it has assumed all worldwide development and commercialization activities with respect to the licensed technologies. The First UCSD Agreement and Second UCSD Agreement required Stelios to pay one-time up-front non-refundable cash fees of $20,000 for each agreement and requires the Company to pay aggregate development and commercialization milestones of up to $4.8 million and $2.4 million, respectively, and low- to mid-single digit royalties and low-single digit royalties, respectively, based on aggregate net sales. The only research and development expenses incurred by Stelios or the Company and payments made to the Regents of UCSD through June 30, 2025 under the terms of the First UCSD Agreement and the Second UCSD Agreement were the one-time up-front non-refundable cash fees of $20,000 for each agreement. The Company has the right to terminate the First UCSD Agreement and the Second UCSD Agreement at any time upon sixty (60)-days’ written notice to the Regents of UCSD.

On October 4, 2021, the Company entered into an exclusive worldwide license agreement (the “Third UCSD Agreement” and collectively with the First UCSD Agreement and the Second UCSD Agreement, the “UCSD Agreements”) with the Regents of UCSD to in-license materials and intellectual property related to LX2020, a gene therapy for arrhythmogenic right ventricular cardiomyopathy. The Third UCSD Agreement relates to the Company’s development efforts for its LX2020 program. In connection with the Third UCSD Agreement, the Company gained access to inventions, patent rights, technology, and licensed methods that it continues to develop, and it has assumed all worldwide development and commercialization activities with respect to the licensed technology. The Third UCSD Agreement required the Company to pay a one-time up-front non-refundable cash fee of $20,000 and requires the Company to pay aggregate development and commercialization milestones of up to $4.0 million, and low- to mid-single digit royalties based on aggregate net sales. Research and development expenses incurred by the Company and payments made to the Regents of UCSD under the terms of the Third UCSD Agreement include the one-time up-front non-refundable cash fee of $20,000 as well as a $0.1 million development milestone that was achieved during the third quarter of 2024. The Company has the right to terminate the Third UCSD Agreement at any time upon sixty (60)-days’ written notice to the Regents of UCSD.

On December 3, 2021, the Company entered into two sponsored research agreements with the Regents of UCSD (the "First UCSD SRA", the "Second UCSD SRA", and collectively, the “Initial UCSD SRAs”) for the Company’s LX2020, LX2021 and LX2022 programs in connection with the UCSD Agreements. Under the terms of the Initial UCSD SRAs, the Company has the first rights to obtain non-exclusive or exclusive, sublicensable, royalty-bearing, perpetual and transferable worldwide licenses in any resulting inventions owned by the Regents of UCSD or resulting inventions jointly owned between the Company and the Regents of UCSD, and the Company retains the rights to any resulting inventions owned by the Company. The Initial UCSD SRAs each have a two-year term and may be terminated early by the Company at any time upon the giving of thirty (30) days’ written notice to the Regents of UCSD. The total costs to be invoiced to the Company over the terms of the Initial UCSD SRAs are $5.6 million.

On April 13, 2024, the Company entered into a third sponsored research agreement with the Regents of UCSD (the “Third UCSD SRA”) for the Company’s LX2022 program in connection with the Second UCSD Agreement. Under the terms of the Third UCSD SRA, the Company has the first rights to obtain non-exclusive or exclusive, sublicensable, royalty-bearing, perpetual and transferable worldwide licenses in any resulting inventions owned by the Regents of UCSD or resulting inventions jointly owned between the Company and the Regents of UCSD, and the Company retains the rights to any resulting inventions owned by the Company. The Third UCSD SRA has a two-year

Lexeo Therapeutics, Inc. 10-Q