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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 September 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: 001-40925

Xilio Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

     Delaware

     85-1623397

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer
Identification Number)

     828 Winter Street, Suite 300
Waltham, Massachusetts

     02451

     (Address of principal executive offices)

     (Zip Code)

Registrant’s telephone number, including area code: (857) 524-2466

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 $0.0001 per share	XLO	Nasdaq Capital 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, a 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 ☒

Number of shares of the registrant’s common stock, $0.0001 par value per share, outstanding on November 11, 2025: 52,500,328

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References to Xilio

Unless otherwise stated, all references to “us,” “our,” “we,” “Xilio,” “Xilio Therapeutics,” “the Company” and similar references in this Quarterly Report on Form 10-Q refer to Xilio Therapeutics, Inc. and its consolidated subsidiaries. Xilio Therapeutics and its associated logos are registered trademarks of Xilio Therapeutics, Inc. Other brands, names and trademarks contained in this Quarterly Report on Form 10-Q are the property of their respective owners.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” or the negative of these words or other comparable terminology, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

the initiation, timing, progress and results of our research and development programs, including preclinical studies and clinical trials;

•

our estimates regarding expenses, future revenue and capital requirements and our expectations regarding our ability to fund our operating expenses and capital expenditure requirements with our cash and cash equivalents;

•

our ability to establish and maintain collaborations and strategic partnerships and realize the expected benefits of such arrangements, including our collaboration agreement with AbbVie Group Holdings Limited, or AbbVie, our license agreement with Gilead Sciences, Inc., or Gilead, and our clinical collaboration with F. Hoffmann-La Roche Ltd;

•

our expectations regarding milestones, option-related fees and other contingent payments under our collaboration agreement with AbbVie and our license agreement with Gilead;

•

the potential receipt of up to $100.0 million in additional gross proceeds if all of the Series B and Series C common stock warrants issued in connection with our June 2025 follow-on public offering are exercised;

•

our ability to secure sufficient additional capital or implement other strategies needed to alleviate the substantial doubt about our ability to continue as a going concern;

•

the potential advantages and benefits of our current and future product candidates, including our beliefs regarding the potential benefits of our current and future product candidates in combination with other agents;

•

our strategic plans to research, develop and, if approved, subsequently commercialize any product candidates we may develop;

•

our ability to identify additional products, product candidates or technologies with significant potential that are consistent with our research, development and commercial objectives;

•

our manufacturing capabilities and strategy, including our reliance on third parties to manufacture our current or future product candidates;

•

our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates;

•

the timing of and our ability to submit investigational new drug applications or biologic license applications for, and, if cleared or approved, maintain such regulatory applications or approvals for our product candidates;

•

our commercialization and marketing capabilities and strategy related to our product candidates, if approved;

•

the rate and degree of market acceptance of our product candidates, if approved;

•

our estimates regarding the addressable patient population and potential market opportunity for our current and future product candidates;

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•

developments relating to or impacting our competitors and our industry, including the impact of current or future government laws and regulations on us, third parties with whom we do business and our industry;

•

the impact of current or future government laws and regulations on us or third parties with whom we do business and our industry;

•

our competitive position and expectations regarding developments and projections relating to our current or future competitors and any competing therapies that are or become available;

•

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

•

the impact of general economic conditions, including inflation and the imposition of new or revised global trade tariffs.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly those described in the “Risk Factor Summary” and “Risk Factors” section in Part II, Item 1A of this Quarterly Report on Form 10-Q, that could cause actual results or events to differ materially from the forward-looking statements that we make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results, performance or achievements may be materially different from what we expect. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

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Risk Factor Summary

Our business is subject to numerous risks that, if realized, could materially and adversely affect our business, financial condition, results of operations and future growth prospects. These risks are discussed more fully in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. These risks include, but are not limited to, the following:

•

Our recurring losses from operations raise substantial doubt regarding our ability to continue as a going concern. If we are unable to raise sufficient additional capital, we will need to implement additional cost reduction strategies, which could include delaying, limiting, reducing or eliminating both internal and external costs related to our operations and research and development programs.

•

If we fail to regain compliance with the continued listing requirements of The Nasdaq Capital Market, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

•

Our business is highly dependent on the success of our current product candidates, which are in the early stages of development and will require significant additional preclinical and clinical development before we can seek regulatory approval for and commercially launch a product.

•

Our approach to the discovery and development of product candidates based on our technological approaches is unproven, and we do not know whether we will be able to develop any products of commercial value.

•

Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all, which would have an adverse effect on our business.

•

We may encounter substantial delays in the commencement or completion, or termination or suspension, of our clinical trials, which could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

•

Our product candidates may cause undesirable or unexpectedly severe side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

•

Interim top-line and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•

We expect to develop certain of our product candidates in combination with third-party drugs and we will have limited or no control over the safety, supply, regulatory status or regulatory approval of such drugs.

•

Manufacturing biologics is complex, and we may experience manufacturing problems that result in delays in our development or commercialization programs.

•

We face risk related to our reliance on our current and any future third-party contract development and manufacturing organizations, or CDMOs. For example, the CDMO on which we rely may not continue to meet regulatory requirements, may have limited capacity and may experience interruptions in supply, any of which could adversely affect our development and commercialization plans for our product candidates.

•

We expect to rely on third parties to conduct, supervise and monitor IND-enabling studies and clinical trials, and if these third parties perform in an unsatisfactory manner, it may harm our business, reputation and results of operations.

•

We have entered into, and may in the future seek to enter into, collaborations, licenses, or similar arrangements with third parties for the research, development and commercialization of certain of our current or future product candidates. If any such arrangements are not successful, we may not be able to capitalize on the market potential of those product candidates.

•

Certain of our research and development and manufacturing activities take place in China through WuXi Biologics (Hong Kong) Limited, or WuXi Biologics. A significant disruption in our ability to rely on WuXi Biologics could materially adversely affect our business, financial condition and results of operations.

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•

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

•

If we are unable to obtain and maintain patent protection for any product candidates we develop or for other proprietary technologies we may develop, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize product candidates and technology similar or identical to our product candidates and technology, and our ability to successfully commercialize any product candidates we may develop, and our technology may be adversely affected.

•

We rely on in-license agreements for patent rights with respect to our product candidates and may in the future acquire or in-license additional third-party intellectual property rights on which we may similarly rely. We face risks with respect to such reliance, including the risk that we could lose these rights that are important to our business if we fail to comply with our obligations under these licenses or that we may be unable to acquire or in-license third-party intellectual property that may be necessary or important to our business operations.

•

Even if we complete the necessary preclinical studies and clinical trials, the regulatory approval process is expensive, time consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. As a result, we cannot predict when or if, and in which territories, we will obtain marketing approval to commercialize a product candidate.

•

The price of our common stock has been and, in the future, could be subject to volatility related or unrelated to our operations, and purchasers of our common stock could suffer a decline in value.

Availability of Other Information About Xilio Therapeutics, Inc.

Investors and others should note that we communicate with our investors and the public using our company website (www.xiliotx.com), including but not limited to investor presentations and scientific presentations, filings with the U.S. Securities and Exchange Commission, press releases, public conference calls and webcasts. You can also connect with us on LinkedIn. The information that we post on these channels and websites could be deemed to be material information. As a result, we encourage investors, the media and others interested in our company to review the information that we post on these channels, including our investor relations website, on a regular basis. This list of channels may be updated from time to time on our investor relations website (ir.xiliotx.com) and may include other social media channels than the ones described above. The contents of our website or these channels, or any other website that may be accessed from our website or these channels, shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

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		Page

Part I	Financial Information	7

Item 1.	Financial Statements (unaudited)	7
	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	7
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024	8
	Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the three and nine months ended September 30, 2025 and 2024	9
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	11
	Notes to Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	41

Part II	Other Information	42

Item 1A.	Risk Factors	42
Item 5.	Other Information	106
Item 6.	Exhibits	107

Signatures		108

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

XILIO THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	September 30,			December 31,
	2025			2024
ASSETS
Current assets
Cash and cash equivalents	$	103,764		$	55,291
License agreement receivable		17,500			—
Prepaid expenses and other current assets		2,825			4,943
Total current assets		124,089			60,234
Restricted cash		1,801			1,782
Property and equipment, net		3,679			4,472
Operating lease right-of-use asset		4,125			4,587
Total assets	$	133,694		$	71,075
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable	$	2,300		$	2,574
Accrued expenses		8,952			9,981
Deferred revenue, current portion		43,846			13,518
Operating lease liability, current portion		1,303			1,188
Total current liabilities		56,401			27,261
Deferred revenue, net of current portion		25,498			19,262
Operating lease liability, net of current portion		5,960			6,954
Common stock warrant liabilities		53,930			—
Total liabilities		141,789			53,477
Commitments and contingencies (Note 7)
Stockholders’ (deficit) equity
Preferred stock, $0.0001 par value; 5,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.0001 par value; 600,000,000 shares authorized at September 30, 2025 and 200,000,000 shares authorized at December 31, 2024; 51,829,013 shares issued and outstanding at September 30, 2025; 45,756,773 shares issued and outstanding at December 31, 2024		5			5
Additional paid-in capital		421,049			401,346
Accumulated deficit		(429,149	)		(383,753	)
Total stockholders’ (deficit) equity		(8,095	)		17,598
Total liabilities and stockholders’ (deficit) equity	$	133,694		$	71,075

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

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XILIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue
Collaboration and license revenue	$	19,066		$	2,263		$	30,080		$	4,620
Total revenue		19,066			2,263			30,080			4,620
Operating expenses
Research and development	$	14,321		$	10,759		$	37,917		$	32,375
General and administrative		6,674			6,307			22,309			18,261
Restructuring		—			(41	)		—			937
Total operating expenses		20,995			17,025			60,226			51,573
Loss from operations		(1,929	)		(14,762	)		(30,146	)		(46,953	)
Other income (expense), net
Change in fair value of common stock warrant liabilities		(15,380	)		—			(15,430	)		—
Other income (expense), net		1,022			742			180			1,805
Total other income (expense), net		(14,358	)		742			(15,250	)		1,805
Net loss and comprehensive loss	$	(16,287	)	$	(14,020	)	$	(45,396	)	$	(45,148	)
Net loss per share, basic and diluted	$	(0.11	)		(0.22	)	$	(0.43	)	$	(0.91	)
Weighted average common shares outstanding, basic and diluted		144,106,869			63,465,063			105,339,205			49,762,800

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

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XILIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

For the three months ended September 30, 2025 and 2024

(In thousands, except share data)

(Unaudited)


										Total
					Additional					Stockholders'
	Common Stock				Paid-In		Accumulated			(Deficit)
	Shares		Amount		Capital		Deficit			Equity
Balance at June 30, 2025		51,827,910	$	5	$	419,926	$	(412,862	)	$	7,069
Exercise of stock options		1,103		—		—		—			—
Stock-based compensation expense		—		—		1,123		—			1,123
Net loss		—		—		—		(16,287	)		(16,287	)
Balance at September 30, 2025		51,829,013	$	5	$	421,049	$	(429,149	)	$	(8,095	)


					Additional					Total
	Common Stock				Paid-In		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity
Balance at June 30, 2024		43,951,922	$	4	$	390,052	$	(356,640	)	$	33,416
Exercise of stock options		6,152		—		4		—			4
Stock-based compensation expense		—		—		1,574		—			1,574
Net loss		—		—		—		(14,020	)		(14,020	)
Balance at September 30, 2024		43,958,074	$	4	$	391,630	$	(370,660	)	$	20,974

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

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XILIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

For the nine months ended September 30, 2025 and 2024

(In thousands, except share data)

(Unaudited)


										Total
					Additional					Stockholders'
	Common Stock				Paid-In		Accumulated			(Deficit)
	Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2024		45,756,773	$	5	$	401,346	$	(383,753	)	$	17,598
Issuance of prefunded warrants in connection with a follow-on public offering, net of issuance costs		—		—		10,818		—			10,818
Issuance of common stock in connection with the AbbVie stock purchase agreement, net of issuance costs		4,347,826		—		2,810		—			2,810
Issuance of common stock in connection with at-the-market offerings, net of issuance costs		1,550,000		—		2,017		—			2,017
Issuance of common stock under employee stock purchase plan		45,505		—		40		—			40
Vesting of restricted stock units		111,375		—		—		—			—
Exercise of stock options		17,534		—		9		—			9
Stock-based compensation expense		—		—		4,009		—			4,009
Net loss		—		—		—		(45,396	)		(45,396	)
Balance at September 30, 2025		51,829,013	$	5	$	421,049	$	(429,149	)	$	(8,095	)


					Additional					Total
	Common Stock				Paid-In		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2023		27,607,646	$	3	$	362,336	$	(325,512	)	$	36,827
Issuance of common stock and prefunded warrants to Gilead and certain accredited investors in private placements, net of issuance costs		9,298,598		—		17,513		—			17,513
Issuance of common stock in connection with at-the-market offerings, net of issuance costs		7,000,000		1		6,824		—			6,825
Issuance of common stock under employee stock purchase plan		38,998		—		34		—			34
Vesting of restricted common stock		5,617		—		—		—			—
Exercise of stock options		7,215		—		5		—			5
Stock-based compensation expense		—		—		4,918		—			4,918
Net loss		—		—		—		(45,148	)		(45,148	)
Balance at September 30, 2024		43,958,074	$	4	$	391,630	$	(370,660	)	$	20,974

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

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XILIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(45,396	)	$	(45,148	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,218			1,268
Stock-based compensation expense		4,009			4,918
Change in fair value of common stock warrant liabilities		15,430			—
Issuance costs allocated to common stock warrant liabilities		2,284			—
Loss on disposal of property and equipment		—			2
Changes in operating assets and liabilities:
License agreement receivable		(17,500	)		—
Prepaid and other assets		2,580			1,769
Accounts payable		(276	)		(76	)
Accrued expenses and other liabilities		(1,907	)		(1,458	)
Deferred revenue		36,564			34,504
Net cash used in operating activities		(2,994	)		(4,221	)
Cash flows from investing activities:
Purchases of property and equipment		(423	)		(30	)
Net cash used in investing activities		(423	)		(30	)
Cash flows from financing activities:
Repayments of debt principal		—			(3,333	)
Payments of finance lease		—			(49	)
Proceeds from issuance of common stock under employee stock purchase plan		40			34
Proceeds from exercise of stock options		9			5
Proceeds from issuance of prefunded warrants and common stock warrants in connection with a follow-on public offering, net of issuance costs		47,033			—
Proceeds from issuance of common stock in connection with the AbbVie stock purchase agreement, net of issuance costs		2,810			—
Proceeds from issuance of common stock in connection with at-the-market offerings, net of issuance costs		2,017			6,824
Proceeds from issuance of common stock and prefunded warrants to Gilead and certain accredited investors in private placements, net of issuance costs		—			17,513
Net cash provided by financing activities		51,909			20,994
Increase in cash, cash equivalents and restricted cash		48,492			16,743
Cash, cash equivalents and restricted cash, beginning of period		57,073			46,291
Cash, cash equivalents and restricted cash, end of period	$	105,565		$	63,034
Supplemental cash flow disclosure:
Cash paid for interest	$	—		$	62
Supplemental disclosure of non-cash activities:
Transfer of finance lease asset to property and equipment	$	—		$	85
Reconciliation to amounts within the consolidated balance sheets:
Cash and cash equivalents	$	103,764		$	61,259
Restricted cash		1,801			1,775
Cash, cash equivalents and restricted cash, end of period	$	105,565		$	63,034

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

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XILIO THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(Unaudited)

1. Description of Business, Liquidity and Going Concern

Xilio Therapeutics, Inc. (“Xilio” or the “Company”) is a clinical-stage biotechnology company dedicated to discovering and developing tumor-activated immuno-oncology (“I-O”) therapies with the goal of significantly improving outcomes for people living with cancer without the systemic side effects of current I-O treatments. The Company was incorporated in Delaware in June 2020, and its headquarters are located in Waltham, Massachusetts.

In June 2025, the Company received initial gross proceeds of $50.0 million upon the closing of a follow-on public offering of prefunded warrants and accompanying common stock warrants. If certain of the common stock warrants are exercised in cash at their initial exercise price of $0.75 per warrant, the Company will receive up to $100.0 million of additional gross proceeds by the second half of 2026. See Note 8 for additional information.

Since its inception, the Company has devoted substantially all of its financial resources and efforts to research and development activities. As of September 30, 2025, the Company had an accumulated deficit of $429.1 million and has incurred significant operating losses, including net losses of $45.4 million and $45.1 million for the nine months ended September 30, 2025 and 2024, respectively. The Company expects its operating losses and negative operating cash flows to continue for the foreseeable future as it continues to advance its pipeline of novel, tumor-activated I-O molecules through preclinical and clinical development, maintains the infrastructure necessary to support these activities and continues to incur costs associated with operating as a public company. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within twelve months from the date of the issuance of these condensed consolidated financial statements.

In order to fund its operations, the Company will need to raise additional capital, which could be obtained through the cash exercise of common stock warrants issued in connection with the June 2025 follow-on public offering, the receipt of milestone payments, option-related fees or other contingent payments under the Company’s existing agreements with Gilead Sciences, Inc. (“Gilead”) and AbbVie Group Holdings Limited (“AbbVie”), additional public or private equity offerings, debt financings, additional collaborations, partnerships or licensing arrangements or other sources. In the fourth quarter of 2025, the Company received a $17.5 million development milestone payment from Gilead. However, there can be no assurance that the Company will receive additional proceeds from the exercise of the common stock warrants or from contingent payments under its existing agreements with Gilead or AbbVie or that the Company will be able to complete any additional transactions on acceptable terms or otherwise. If the Company is not able to secure sufficient additional capital when needed, the Company may need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to its operations and research and development programs. In addition, the Company has based its estimates on assumptions that may prove to be wrong, and the Company could exhaust its available capital resources sooner than it anticipates.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”), and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited

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financial statements as of and for the year ended December 31, 2024 and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2025. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of September 30, 2025 and the results of its operations for the three and nine months ended September 30, 2025 and 2024 and cash flows for the nine months ended September 30, 2025 and 2024. Such adjustments are of a normal and recurring nature. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or for any future period.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Xilio Development, Inc. (“Xilio Development”), a Delaware corporation, and Xilio Securities Corporation, a Massachusetts security corporation. All intercompany accounts and transactions have been eliminated in consolidation.

Significant Accounting Policies

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements are described in Note 2, “Summary of Significant Accounting Policies” of the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Except as described below, there have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Common Stock Warrants

The Company accounts for warrants to purchase shares of its common stock in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The Company classifies warrants issued for the purchase of shares of its common stock as either equity or liability instruments based on an assessment of the specific terms and conditions of each respective contract. Such assessment includes determining whether the warrants are freestanding financial instruments or embedded in a host instrument, whether the warrants are liabilities within the scope of ASC 480, whether the warrants meet the definition of a derivative in ASC 815 and whether the warrants meet the requirements for equity classification pursuant to the indexation and equity classification criteria in ASC 815.

The Company determines the classification for its warrants at the time of issuance and updates its assessment as necessary. Warrants that meet all of the criteria for equity classification are recorded as a component of additional paid-in capital and are not subsequently remeasured. Warrants that are classified as liabilities are recorded at fair value on the issuance date and remeasured to fair value at each reporting period, with the change in fair value recorded as a component of other income (expense), net, on the condensed consolidated statements of operations and comprehensive loss.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments that may affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the related reporting of revenue and expenses during the reporting period. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Factors that may affect estimates include expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Significant estimates of accounting reflected in these condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued expenses, the valuation of the common stock warrant liabilities, the valuation of

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stock-based compensation, including stock options and restricted stock units, useful life of long-lived assets and income taxes. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company holds all cash and cash equivalents at accredited financial institutions. Bank accounts in the United States are generally insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Substantially all of the Company’s cash and cash equivalents are FDIC insured, including funds held through an insured cash sweep program. The Company has not experienced any losses in its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Segments

The Company has one operating and reportable segment, the consolidated Company operations, reflecting the integrated nature of its business focused on discovering and developing tumor-activated I-O therapies. The Company’s chief operating decision maker (“CODM”) is its chief executive officer. The CODM allocates resources and assesses performance on a consolidated basis, focused on the Company’s cash resources and an assessment of the probability of success of its ongoing research and development activities. Resource allocation decisions are informed by forecasted cash expenditures and actual expenses incurred to date. The CODM is not regularly provided with disaggregated actual expense information, other than the actual expense information included in the consolidated statements of operations and comprehensive loss, as the Company’s integrated operating model emphasizes shared resources and centralized decision-making.

All of the Company’s collaboration and license revenue is generated in the United States and all of the Company’s long-lived assets are held in the United States.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company anticipates that the adoption of ASU 2023-09 will expand its income tax footnote disclosures, including a more detailed effective tax rate reconciliation.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for public companies for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its condensed consolidated financial statements and related disclosures.

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3. Fair Value Measurements

The Company measures the following liabilities at fair value on a recurring basis:


	Quoted
	Prices in
	Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Series A warrant to purchase common stock	$	—	$	—	$	35,150	$	35,150
Series B warrant to purchase common stock		—		—		11,070		11,070
Series C warrant to purchase common stock		—		—		7,710		7,710
Total financial liabilities	$	—	$	—	$	53,930	$	53,930

The fair value of the common stock warrant liabilities, which are described in more detail in Note 8, are calculated utilizing a Black-Scholes option pricing model for the Series A warrants and a Monte Carlo simulation model for the Series B warrants and the Series C warrants. The Black-Scholes option pricing model and the Monte Carlo simulation model both require the use of assumptions, certain of which are not observable in the market, which represent Level 3 measurements within the fair value hierarchy. The Black-Scholes pricing model and the Monte Carlo simulation model assumptions include the warrant exercise price, the expected life of the warrant, the current price of the Company’s common stock, expected volatility, the risk-free interest rate for the expected life of the warrant and expected dividend yield. The Monte Carlo simulation assumptions also include the potential impacts of the warrant strike price reset features.

The inputs used in the fair market value of the Company’s common stock warrants liabilities as of the issuance date and September 30, 2025 were the following:


	June 5, 2025				September 30,
	(issuance date)				2025
Closing price of common stock	$		0.68		$		0.84
Warrant exercise price	$		0.75		$		0.75
Expected volatility			70	%			70	%
Risk free interest rate			3.91	%			3.67	%
Expected dividend yield			—				—
Expected term (in years)		0.57 - 5.00				0.17 - 4.68

The following table summarizes the changes in the fair market value of the Company’s common stock warrant liabilities, which are classified within the Level 3 fair value hierarchy:



							Total level 3
							financial
	Series A		Series B		Series C		liabilities
Balance at December 31, 2024	$	—	$	—	$	—	$	—
Initial fair value of common stock warrant liabilities		26,840		6,600		5,060		38,500
Change in fair value of common stock warrant liabilities		8,310		4,470		2,650		15,430
Balance at September 30, 2025	$	35,150	$	11,070	$	7,710	$	53,930

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4. Property and Equipment, Net

Property and equipment, net consists of the following as of September 30, 2025 and December 31, 2024:


	September 30,			December 31,
	2025			2024
Laboratory equipment	$	6,334		$	5,911
Computers and software		—			183
Furniture and fixtures		681			681
Leasehold improvements		5,124			5,124
Total property and equipment		12,139			11,899
Less: accumulated depreciation		(8,460	)		(7,427	)
Property and equipment, net	$	3,679		$	4,472

The Company recognized depreciation and amortization expense related to property and equipment of $0.3 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively. The Company recognized depreciation and amortization expense related to property and equipment of $1.2 million for each of the nine months ended September 30, 2025 and 2024.

5. Accrued Expenses

Accrued expenses consist of the following as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024
External research and development	$	3,488	$	4,899
Personnel-related		4,194		4,208
Professional and consulting fees		1,182		743
Other		88		131
Total accrued expenses	$	8,952	$	9,981

6. Collaboration and License Agreements

Collaboration, License and Option Agreement with AbbVie

In February 2025, Xilio Development entered into a collaboration, license and option agreement (the “Collaboration Agreement”) with AbbVie for up to four programs leveraging the Company’s proprietary tumor-activation technology and platform, consisting of (i) an exclusive license for a program to develop and commercialize a masked antibody-based immunotherapy (the “Collaboration Program”) and (ii) an exclusive option for (a) an initial program to discover, develop and commercialize masked T cell engager molecules for an agreed upon initial target and backup target (“Initial Option Program”), and (b) subject to the terms of the Collaboration Agreement, up to two additional programs (each, an “Additional Option Program” and together with the Initial Option Program, the “Option Programs”).

In connection with the Collaboration Program, Xilio Development is responsible for conducting all preclinical development through lead generation (“Collaboration Program Services”). For the Initial Option Program, AbbVie’s option right is exercisable beginning on the effective date of the Collaboration Agreement, and for each Additional Option Program, AbbVie’s option right is exercisable following delivery of written notice of nomination of such Additional Option Program. During the three-year period following the effective date of the Collaboration Agreement, AbbVie has the right to initiate up to two Additional Option Programs by (a) selecting an initial target and backup target for each such Additional Option Program (excluding the target known as prostate-specific membrane antigen and any other target for which Xilio Development has completed specified activities prior to lead selection) and (b) paying Xilio Development an additional program nomination fee for each Additional Option Program. For each Option Program, prior to option exercise, Xilio Development is responsible for conducting preclinical discovery and development up to the completion of investigational new drug application (“IND”) enabling studies, subject to AbbVie paying Xilio Development option extension fees upon completion of specified stages of preclinical discovery and development (“Option Program Services”). Unless AbbVie elects to extend preclinical development through the next stage and pays the applicable option extension fee, AbbVie’s option right terminates within a specified

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time period following completion of each stage of preclinical development. Upon exercising its option for an Option Program, AbbVie will be responsible for any remaining preclinical development, if applicable, and all clinical development, regulatory and commercialization activities with respect to licensed products under the applicable Option Program.

In addition, on an Option Program-by-Option Program basis, prior to the initiation of specified activities related to lead optimization and selection for the initial target for such Option Program, AbbVie has a one-time right to substitute the initial target with the backup target agreed upon by the parties at the time of Option Program initiation, subject to the payment by AbbVie of a one-time substitution fee with respect to such substituted target and the other terms of the Collaboration Agreement.

In connection with the execution of the Collaboration Agreement, in February 2025, the Company also entered into a stock purchase agreement with AbbVie Inc. pursuant to which the Company issued and sold 4,347,826 shares of its common stock to AbbVie Inc. in a private placement at a purchase price of $2.30 per share for an aggregate purchase price of $10.0 million.

As of September 30, 2025, the Company has received $52.0 million in payments under the AbbVie agreements, consisting of a $42.0 million upfront cash payment under the Collaboration Agreement and $10.0 million in gross proceeds from the private placement under the stock purchase agreement. In addition, as of September 30, 2025, the Company is eligible to receive up to approximately $2.1 billion in additional contingent payments under the Collaboration Agreement, consisting of (i) up to $305.0 million in aggregate program nomination fees, preclinical development option extension fees and option fees for the Option Programs and (ii) up to $1.8 billion in aggregate development, regulatory and sales-based milestones for all Option Programs and the Collaboration Program. In addition, the Company is eligible to receive tiered royalties ranging in the high single digits on annual global net product sales for the Option Program and is eligible to receive tiered royalties ranging in the mid-single digits on annual global net product sales for the Collaboration Program.

The Company considered the criteria of ASC 606, Revenue from Contracts with Customers (“ASC 606”) for combining contracts and determined the Collaboration Agreement and the stock purchase agreement should be combined into a single contract because they were negotiated and entered into in contemplation of one another. The Company accounted for the common stock issued to AbbVie Inc. based on the fair market value of the common stock on the date of issuance. The fair market value of the common stock issued to AbbVie Inc. was $2.9 million, based on the closing price of the Company’s common stock on the date of issuance, resulting in a $7.1 million premium. The Company determined that the premium paid by AbbVie Inc. for the common stock purchased should be attributed to the transaction price of the Collaboration Agreement.

The Company determined that the Collaboration Agreement represents a contract with a customer within the scope of ASC 606 and identified the following promises under the Collaboration Agreement: (i) the exclusive license granted to AbbVie related to the Collaboration Program, (ii) the Collaboration Program Services and (iii) the Option Program Services for the Initial Option Program. In addition, the Company identified several customer options that were evaluated to determine if such options represented material rights, each of which would be considered a performance obligation at contract inception only if the option provides a material right to AbbVie that it would not receive without entering into that contract.

The Company determined that the exclusive license and development services related to the Collaboration Program Services were not capable of being distinct on the basis that the services to be provided by Xilio Development are specialized in nature, specifically with respect to its specialized expertise in developing masked antibody-based immunotherapies and the Company’s proprietary platform for tumor-activated biologics. Accordingly, the Company concluded that these promises should be a combined performance obligation consisting of the exclusive license and the development services for the Collaboration Program Services. As such, the Company identified the following performance obligations at contract inception: (i) the performance obligation consisting of the exclusive license and the Collaboration Program Services (the “Collaboration Program Performance Obligation”); (ii) the Option Program Services for the Initial Option Program (the “Initial Option Program Performance Obligation”); (iii) a material right to receive an exclusive license to the Initial Option Program; (iv) a material right to receive additional services related to the Initial Option Program; and (v) a material right related to AbbVie’s one-time right to substitute the initial target with the backup target for the Initial Option Program.

For purposes of ASC 606, the transaction price at the outset of the arrangement was determined to be $49.1 million, which consisted of the upfront cash payment of $42.0 million under the Collaboration Agreement and the $7.1 million premium on the sale of common stock to AbbVie Inc. The Company used the most likely amount method to estimate variable consideration. All contingent payments are fully constrained as of September 30, 2025, as the achievement of the milestones underlying such contingent payments is based on either the Company or AbbVie’s ability to execute under the development plan which is not certain at contact inception. Accordingly,

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all such contingent payments are excluded from the transaction price. The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and may adjust the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company plans to recognize such revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

The Company allocated the transaction price to the performance obligations on a relative selling price basis as follows: (i) $32.4 million related to the Collaboration Program Performance Obligation; (ii) $6.9 million related to the Initial Option Program Performance Obligation; (iii) $8.2 million related to the material right to receive an exclusive license to the Initial Option Program; (iv) $1.1 million related to the material right to receive additional services related to the Initial Option Program; and (v) $0.5 million related to the material right for AbbVie’s one-time right to substitute the initial target with the backup target for the Initial Option Program. The Company determined the estimated standalone selling price for the licenses using an adjusted market assessment approach, whereby the Company adjusted a comparable transaction previously entered into by the Company and comparable third-party transactions to reflect the stage of development of the Company’s assets under the Collaboration Agreement. The Company determined the estimated standalone selling price for services based on estimated costs to be incurred plus a reasonable margin. The Company determined the estimated standalone selling price for material rights by estimating the standalone selling price of the underlying performance obligations included in the material right and estimating the probability that AbbVie will exercise such material right.

Revenue associated with the Collaboration Program Performance Obligation and the Initial Option Program Performance Obligation is recognized as the underlying services are provided as control is transferred over time. The Company measures progress based on the amount of costs incurred relative to the total costs expected to fulfill the combined performance obligation. In management’s judgment, this input method is the best measure of progress towards satisfying the combined performance obligation and reflects a faithful depiction of the transfer of goods and services. Revenue associated with the material rights will be recognized upon expiry if the option is not exercised. If the material right is exercised, the Company will evaluate the performance obligations underlying the option exercised and recognize the amount allocated to the material right and any additional consideration over the appropriate recognition period associated with the underlying performance obligations.

During the three and nine months ended September 30, 2025, the Company recognized collaboration and license revenue of $8.3 million and $13.9 million, respectively, under the Collaboration Agreement and the stock purchase agreement. As of September 30, 2025, the Company recorded deferred revenue of $35.3 million, of which $24.3 million was recorded as a current liability on the Company’s condensed consolidated balance sheet. The deferred revenue is expected to be recognized as collaboration and license revenue through at least 2026 depending on (i) the timing of services being provided for the Collaboration Program and the Initial Option Program and (ii) the timing of AbbVie’s exercise or expiration of the material rights.

License Agreement with Gilead Sciences, Inc.

In March 2024, Xilio Development entered into a license agreement with Gilead, pursuant to which it granted Gilead an exclusive global license to develop and commercialize efarindodekin alfa (XTX301), the Company’s tumor-activated IL-12 product candidate, and specified other molecules directed to IL-12. Xilio Development is responsible for conducting clinical development for efarindodekin alfa through an initial Phase 2 clinical trial. Following the delivery by Xilio Development of a specified clinical data package for efarindodekin alfa related to the Phase 1 clinical trial and the initial Phase 2 clinical trial, Gilead can elect to transition responsibilities for the development and commercialization of efarindodekin alfa to Gilead, subject to the terms of the license agreement and payment by Gilead of a $75.0 million transition fee.

In connection with the execution of the license agreement, in March 2024, the Company also entered into a stock purchase agreement with Gilead. Under the stock purchase agreement, Gilead purchased $25.0 million of the Company’s common stock and prefunded warrants in three private placements, consisting of an aggregate of 9,105,451 shares of common stock and prefunded warrants to purchase up to an aggregate of 9,975,266 shares of its common stock. The prefunded warrants are exercisable any time at an exercise price of $0.0001 per share, subject to Gilead not being deemed a beneficial owner of greater than 19.9% of the Company’s common stock upon the exercise of the prefunded warrants.

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As of September 30, 2025, the Company has received $55.0 million in payments under the Gilead agreements, consisting of the $30.0 million upfront cash payment under the license agreement and $25.0 million in gross proceeds from private placements under the stock purchase agreement. As of September 30, 2025, the Company is eligible to receive up to $592.5 million in additional contingent payments, which consist of a $17.5 million development milestone prior to opt-in, a $75.0 million transition fee if Gilead exercises its option for the IL-12 program and up to $500.0 million in specified development, regulatory and sales-based milestones after opt-in. The Company achieved the $17.5 million development milestone in the third quarter of 2025 in connection with the initiation of the Phase 2 trial and recorded the milestone as a receivable on the condensed consolidated balance sheet as of September 30, 2025. The Company received payment of the milestone from Gilead during the fourth quarter of 2025. In addition, the Company is eligible to receive tiered royalties ranging from high single digits to mid-teens on annual global net product sales.

The Company considered the ASC 606 criteria for combining contracts and determined the license agreement and the stock purchase agreement should be combined into a single contract because they were negotiated and entered into in contemplation of one another. The Company concluded the initial private placement and the additional private placements do not represent freestanding financial instruments as such instruments are not legally detachable due to contractual transfer restrictions. The Company accounted for the common stock issued to Gilead in the initial private placement based on the fair market value of the common stock on the date of issuance. The fair market value of the common stock issued to Gilead in the initial private placement was $4.4 million, based on the closing price of the Company’s common stock on the date of issuance, resulting in a $9.1 million premium. The Company determined that the premium paid by Gilead for the common stock purchased in the initial private placement should be attributed to the transaction price of the license agreement.

The Company determined that the license agreement represents a contract with a customer within the scope of ASC 606 and identified two promises under the license agreement: (i) the exclusive licenses granted to Gilead related to the Company’s IL-12 program and (ii) the provision by Xilio Development and its affiliates of development services related to ongoing and planned clinical trials for efarindodekin alfa through an initial Phase 2 clinical trial. The Company determined that the exclusive license and development services were not capable of being distinct on the basis that the development services to be provided by Xilio Development are specialized in nature, specifically with respect to its specialized expertise related to efarindodekin alfa, the IL-12 program and the Company’s proprietary platform for tumor-activated biologics. Accordingly, the Company concluded that there is a single identified combined performance obligation consisting of the exclusive license and the development services.

For purposes of ASC 606, the transaction price of the license agreement at the outset of the arrangement was determined to be $39.1 million, which consisted of the upfront cash payment of $30.0 million under the license agreement and the $9.1 million premium on the sale of common stock to Gilead in the initial private placement, which was allocated to the single combined performance obligation. The Company used the most likely amount method to estimate variable consideration. During the three and nine months ended September 30, 2025, the overall transaction price was adjusted to include the achievement of the $17.5 million development milestone in the third quarter of 2025. All additional contingent payments are fully constrained as of September 30, 2025, as the achievement of the milestones underlying such contingent payments are uncertain and highly susceptible to factors outside of the Company’s control. Accordingly, all such additional contingent payments are excluded from the transaction price. The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and may adjust the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company plans to recognize such revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Revenue associated with the combined performance obligation is recognized as services are provided as control is transferred over time. The Company measures progress based on the amount of costs incurred relative to the total costs expected to fulfill the combined performance obligation. In management’s judgment, this input method is the best measure of progress towards satisfying the combined performance obligation and reflects a faithful depiction of the transfer of goods and services.

During the three and nine months ended September 30, 2025, the Company recognized collaboration and license revenue of $10.7 million and $16.2 million, respectively, under the license agreement and the stock purchase agreement with Gilead. Each of the three and nine months ended September 30, 2025 included a cumulative catch-up of revenue of $7.0 million related to the adjustment of the overall transaction price due to the achievement of the $17.5 million development milestone during the third quarter of 2025. During the three and nine months ended September 30, 2024, the Company recognized collaboration and license revenue of $2.3 million and $4.6 million, respectively, under the license agreement and the stock purchase agreement with Gilead. As of September 30, 2025, the

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Company recorded deferred revenue under the license agreement and the stock purchase agreement of $34.1 million, of which $19.6 million was recorded as a current liability on the Company’s condensed consolidated balance sheet. The deferred revenue is expected to be recognized as collaboration and license revenue through at least 2027 depending on the timing of certain clinical development activities.

Summary of Contract Assets and Liabilities

The following table presents changes in the balances of the Company's contract liabilities:


	Gilead			AbbVie			Total
Deferred revenue as of December 31, 2024	$	32,780		$	—		$	32,780
Additions		17,500			49,144			66,644
Collaboration and license revenue recognized		(16,188	)		(13,892	)		(30,080	)
Deferred revenue as of September 30, 2025	$	34,092		$	35,252		$	69,344

Clinical Trial Collaboration with F. Hoffmann-La Roche Ltd

In July 2023, the Company and F. Hoffmann-La Roche Ltd (“Roche”) entered into a clinical trial collaboration pursuant to a clinical supply agreement to evaluate vilastobart in combination with atezolizumab (Tecentriq®) in a Phase 1/2 clinical trial consisting of Phase 1 dose escalation assessing the combination in patients with advanced solid tumors and Phase 2 assessing the combination in patients with microsatellite stable metastatic colorectal cancer.

Under the clinical supply agreement, the Company is eligible to receive specified cost-sharing payments from Roche, and each company will supply its respective anti-cancer agent to support the Phase 1/2 clinical trial. As of September 30, 2025, the Company has received $8.0 million in total cost-sharing payments from Roche. The Company is responsible for conducting the Phase 1/2 clinical trial and retains global development and commercialization rights to vilastobart.

7. Commitments and Contingencies

The Company has an operating lease for its headquarters and a finance lease for certain lab equipment. In August 2019, the Company entered into a facility lease agreement with a landlord providing funding for tenant improvements and occupancy of approximately 27,830 square feet of office and laboratory space (the “premises”) at 828 Winter Street, Waltham, Massachusetts. The initial term of the lease expires in March 2030, unless terminated earlier in accordance with the terms of the lease. The Company has an option to extend the lease for an additional term of five years at then-market rates. The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement, and management of the leased premises, which it began paying simultaneous with the rent commencement date in March 2020. As of September 30, 2025 and December 31, 2024, the Company had a letter of credit for the benefit of its landlord in the amount of $1.8 million, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.

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8. Preferred Stock and Common Stock

Undesignated Preferred Stock

As of September 30, 2025 and December 31, 2024, the Company’s restated certificate of incorporation, as amended, authorizes the Company to issue up to 5,000,000 shares of undesignated preferred stock at $0.0001 par value per share. As of September 30, 2025 and December 31, 2024, there were no shares of preferred stock issued or outstanding.

Common Stock

As of September 30, 2025, the Company’s restated certificate of incorporation, as amended, authorized the Company to issue up to 600,000,000 shares of common stock, $0.0001 par value per share. As of December 31, 2024, the Company’s restated certificate of incorporation, as amended, authorized the Company to issue up to 200,000,000 shares of common stock, $0.0001 par value per share.

Follow-On Public Offering

In June 2025, the Company closed a follow-on public offering of prefunded warrants and accompanying common stock warrants and received initial gross proceeds of $50.0 million before deducting underwriting discounts and commissions and offering expenses payable by the Company. In connection with the offering, the Company issued prefunded warrants to purchase 66,676,000 shares of common stock, accompanied by Series A warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants) (the “Series A warrants”), Series B warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants) (the “Series B warrants”), and Series C warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants) (the “Series C warrants”). The combined public offering price of one prefunded warrant, one Series A warrant, one Series B warrant and one Series C warrant, which were sold together but are immediately separable, was $0.7499, which was equal to the combined offering price of the prefunded warrants, Series A warrants, Series B warrants and Series C warrants, less the $0.0001 per share exercise price of the prefunded warrants.

The exercisability of the prefunded warrants and common stock warrants is subject to limitations on exercise. Specifically, a holder will be prohibited from exercising any portion of any warrant if immediately prior to or following such exercise such holder (together with its affiliates) would beneficially own more than 4.99% (or up to 19.99% at the election of the holder) of the Company’s issued and outstanding common stock immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrant. However, any holder of any warrant may increase or decrease such percentage to any other percentage not in excess of 19.99%, provided that any such increase will not be effective until the 61st day after notice from the holder is delivered to the Company.

Each Series A warrant will be exercisable on the earlier of (i) December 1, 2025 and (ii) the trading day immediately following a period of five consecutive trading days on which the closing sale price of the Company’s common stock is a minimum of $1.50 per share for one share of common stock and will have an exercise price of $0.75 per share of common stock. In addition, each Series A warrant will expire upon the earlier of (i) June 5, 2030 or (ii) immediately upon the exercise of the corresponding prefunded warrant held by a holder in proportion to the extent that such corresponding prefunded warrant is exercised prior to December 1, 2025; provided that this term (ii) will no longer apply to the Series A warrants beginning on the first trading day immediately following a period of five consecutive trading days on which the closing sale price of the Company’s common stock is a minimum of $1.50 per share for one share of common stock.

Each Series B warrant is exercisable beginning on November 1, 2025, with an exercise price of $0.75 per share of common stock, and will expire on December 2, 2025, provided that if the closing sale price of the Company’s common stock is below the exercise price on such date, the exercise price will reset to the closing sale price on December 1, 2025 and the expiration time will be extended to December 31, 2025.

Each Series C warrant will be exercisable on or after June 1, 2026, with an exercise price of $0.75 per share of common stock, and will expire on the earlier of (i) December 2, 2026 and (ii) the expiration time of the Series B warrant held by a holder in proportion to the extent that the corresponding Series B warrant expires without being exercised. In addition, if the closing sale price of the Company’s common stock is below the exercise price on December 2, 2026, the exercise price will reset to the closing sale price on December 1, 2026 and the expiration time will be extended to December 31, 2026.

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The prefunded warrants and Series A warrants may be exercised for cash or on a net exercise or “cashless” basis, and the Series B warrants and Series C warrants may be exercised for cash or on a net exercise or “cashless” basis in the event there is no effective registration statement or prospectus available which covers the Series B warrants and Series C warrants and shares of common stock issuable upon exercise of the Series B warrants and Series C warrants. There can be no assurance that any of the warrants will be exercised for cash or at all, and it is possible that the common stock warrants may expire without being exercised. If all of the Series B warrants and the Series C warrants sold in the offering are exercised in cash at their initial exercise price, the Company will receive additional gross proceeds of approximately $100.0 million by the end of 2026.

In the event of certain fundamental transactions, each holder of the prefunded warrants and the common stock warrants has the right to receive, upon exercise of such warrant, the same amount and kind of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if it had been, immediately prior to such fundamental transaction, the holder of the number of shares of common stock underlying such holder’s warrant without regard to any limitations on exercise contained in such holder’s warrant. The holders of Series A warrants are alternatively entitled to elect to receive consideration in an amount equal to the Black Scholes value of the unexercised portion of such holder’s Series A warrants and if the fundamental transaction is within the Company’s control, the Series A warrant holders can require the Black Scholes value to be paid in cash.

In addition, for each dollar of non-dilutive capital received by the Company prior to the exercise or expiration of the Series B warrants and Series C warrants, the Company may elect to cancel a number of warrant shares equal to $1.00 divided by the $0.75 warrant exercise price (or one and one-third warrants) without any compensation paid by the Company to the warrant holders. For example, if the Company received $30.0 million in non-dilutive capital, it could elect to cancel 40.0 million of warrant shares. Subject to certain specified exceptions, non-dilutive capital includes: upfront payments under any future collaboration, license or similar agreement; milestone payments and option fees under any current or future collaboration, license or similar agreement; and net proceeds pursuant to any equity issuance where the purchase price per share is above $1.50.

The Company concluded that the prefunded warrants, the Series A warrants, the Series B warrants and the Series C warrants are freestanding financial instruments because each of these instruments can be transferred or assigned by the holder subject to compliance with the applicable securities laws and are legally detachable and separately exercisable. The Company determined the classification of each warrant based on the guidance in ASC 480 and ASC 815. As part of this assessment under ASC 815, the Company was required to allocate its available authorized shares of common stock to its outstanding contracts and commitments. The Company applied an accounting policy to first allocate available authorized shares of common stock based on the earliest issuance date of the contract. To the extent more than one contract or commitment made was issued on the same date, the available shares of common stock were allocated first to the contract with the earliest potential exercise date. The Company concluded that the prefunded warrants are classified as equity. The Company concluded the Series A warrants, the Series B warrants and the Series C warrants are required to be initially classified as liabilities as a result of their settlement provisions. The Series A warrants, the Series B warrants and the Series C warrants will continue to be classified as liabilities until such time as the applicable warrant is exercised, expires, or qualifies for equity classification.

The Company received initial gross proceeds from the offering of $50.0 million, before deducting approximately $3.0 million in aggregate issuance costs related to the offering, which consisted of underwriting discounts and commissions and offering expenses payable by the Company. The Company allocated the initial gross proceeds as follows: $26.8 million to the Series A warrants, $6.6 million to the Series B warrants and $5.1 million to the Series C warrants, in each case, based on the fair value of each instrument on the date of issuance with the remaining $11.5 million allocated to the prefunded warrants. The Company allocated the issuance costs to the financial instruments in a manner consistent with the allocation of the proceeds. The Company allocated approximately $2.3 million in issuance costs to the common stock warrants that are classified as liabilities, which was recorded as a component of other income (expense), net, on the condensed consolidated statements of operations and comprehensive loss during the nine months ended September 30, 2025. The Company allocated approximately $0.7 million in issuance costs to the prefunded warrants that are classified in equity, which was recorded as a reduction to additional paid in capital on the condensed consolidated balance sheets as of September 30, 2025.

During each of the three and nine months ended September 30, 2025, the Company recognized a loss of $15.4 million, related to the change in fair value of the common stock warrants, which is recorded as a component of the change in fair value of common stock warrant liabilities on the condensed consolidated statements of operations and comprehensive loss.

Private Placement

In March 2024, the Company entered into a securities purchase agreement with certain existing accredited investors pursuant to which the Company issued and sold an aggregate of 1,953,125 shares of its common stock at a purchase price of $0.64 per share and, in lieu

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of shares of the Company’s common stock, prefunded warrants to purchase up to an aggregate of 15,627,441 shares of its common stock at a purchase price of $0.6399 per prefunded warrant, through a private placement. The prefunded warrants are exercisable any time at an exercise price of $0.0001 per share. The private placement closed in April 2024. The Company received aggregate gross proceeds of $11.3 million from the private placement, before deducting placement agent fees and expenses payable by the Company. The shares of common stock issued and sold in the private placement were registered for resale pursuant to the Company’s registration statement on Form S-3 filed with the SEC on April 30, 2024, which became effective on May 6, 2024.

“At-The-Market” Offering Program

In November 2022, the Company filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $250.0 million of its common stock, preferred stock, debt securities, units and warrants, which the Company could issue and sell from time to time in one or more offerings, which became effective on November 18, 2022 (333-268264) (the “Prior S-3 Shelf”). In November 2022, the Company entered into a sales agreement (the “Cowen Sales Agreement”) with Cowen and Company LLC under which the Company could issue and sell shares of its common stock, from time to time, having an aggregate offering price of up to $75.0 million under a sales agreement prospectus filed as part of the Prior S-3 Shelf. During the year ended December 31, 2024, the Company issued and sold 7,000,000 shares of its common stock pursuant to the Cowen Sales Agreement at a price of $1.00 per share for aggregate gross proceeds of $7.0 million. During the nine months ended September 30, 2025, the Company issued and sold an additional 1,550,000 shares of its common stock pursuant to the Cowen Sales Agreement at a weighted average price of $1.3348 per share for aggregate gross proceeds of approximately $2.1 million. In March 2025, the Company filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $250.0 million of its common stock, preferred stock, debt securities, units and warrants, which the Company may issue and sell from time to time in one or more offerings, which became effective on May 8, 2025 (333-285703) (the “New S-3 Shelf”). In March 2025, the Company terminated the Cowen Sales Agreement, and the Company entered into a new sales agreement with Leerink Partners, LLC (the “Leerink Sales Agreement”), under which the Company may issue and sell shares of its common stock from time to time at an aggregate offering price of up to $50.0 million. Prior to the effectiveness of the New S-3 Shelf, the offering of shares under the Leerink Sales Agreement was registered under the Prior S-3 Shelf. In connection with the effectiveness of the New S-3 Shelf, the registration of such offering under the Prior S-3 Shelf was terminated and such offering was registered under the New S-3 Shelf.

Shares Reserved for Future Issuance

The Company has reserved for future issuances the following shares of common stock underlying the securities issued below as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024
Stock options and unvested restricted stock units		13,992,630		11,328,134
Employee stock purchase plan		1,314,384		901,208
Prefunded warrants		92,278,707		25,602,707
Common stock warrants		200,030,631		2,631
Total shares reserved for future issuance		307,616,352		37,834,680

9. Stock-Based Compensation

Equity Incentive Plans

2020 Stock Incentive Plan

Under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the Company was authorized to issue shares of common stock to the Company’s employees, officers, directors, consultants and advisors in the form of options, restricted stock awards or other stock-based awards.

2021 Stock Incentive Plan

In September 2021, the Company’s board of directors and stockholders adopted the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective immediately prior to the Company’s initial public offering of common stock (“IPO”) in October 2021. Upon effectiveness of the 2021 Plan, the Company ceased granting awards under the 2020 Plan. The 2021 Plan provides for the grant of

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incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The Company initially reserved 6,579,016 shares of common stock under the 2021 Plan. The 2021 Plan provides that the number of shares reserved and available for issuance under the 2021 Plan will be cumulatively increased on January 1 of each calendar year by 5% of the number of shares of common stock outstanding on such date or such lesser amount determined by the Company’s board of directors. On January 1, 2025, the number of shares reserved for issuance under the 2021 Plan automatically increased by 2,293,405 shares. As of September 30, 2025, there were 1,907,013 shares of common stock available for future issuance under the 2021 Plan.

2022 Inducement Plan

In 2022, the Company’s board of directors adopted the 2022 Inducement Stock Incentive Plan pursuant to Nasdaq Rule 5635(c)(4) (the “2022 Inducement Plan”). In accordance with Rule 5635(c)(4), stock-based incentive awards under the 2022 Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona fide period of non-employment by the Company as a material inducement to the employee’s entering into employment with the Company. The Company initially reserved 275,000 shares of the Company’s common stock for issuance under the 2022 Inducement Plan. In November 2024, the number of shares reserved for issuance under the 2022 Inducement Plan increased by 500,000 shares. In March 2025, the number of shares reserved for issuance under the 2022 Inducement Plan increased by an additional 500,000 shares. As of September 30, 2025, there were 238,300 shares of common stock available for future issuance under the 2022 Inducement Plan.

2021 Employee Stock Purchase Plan

In 2021, the Company’s board of directors and stockholders adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective immediately prior to the IPO in October 2021. The Company initially reserved 292,031 shares of common stock for issuance under the 2021 ESPP. The 2021 ESPP provides that the number of shares of common stock reserved for issuance under the 2021 ESPP will be cumulatively increased on January 1 of each calendar year by 1% of the number of shares of the Company’s common stock outstanding on such date or such lesser amount determined by the Company’s board of directors (up to a maximum increase of 584,062 shares of common stock per year). On January 1, 2025, the number of shares reserved for issuance under the 2021 ESPP was increased by 458,681 shares. During the nine months ended September 30, 2025 and 2024, the Company issued 45,505 shares of common stock and 38,998 shares of common stock under the 2021 ESPP, respectively. As of September 30, 2025, there were 1,314,384 shares available for future issuance under the 2021 ESPP.

Stock-Based Compensation Expense

During the three and nine months ended September 30, 2025 and 2024, the Company recorded compensation expense related to stock options, restricted stock units and restricted common stock for employees and non-employees and share purchases under the 2021 ESPP for employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Research and development expense	$	319	$	384	$	1,054	$	1,275
General and administrative expense		804		1,190		2,955		3,643
Total stock-based compensation expense	$	1,123	$	1,574	$	4,009	$	4,918

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Stock Options

A summary of stock option activity under the Company’s 2020 Plan, 2021 Plan and 2022 Inducement Plan is as follows:


						Weighted
						Average
						Remaining		Aggregate
				Weighted		Contractual		Intrinsic
	Number of			Average		Term		Value (1)
	Stock Options			Exercise Price		(In years)		(In thousands)
Outstanding as of December 31, 2024		8,333,932		$	4.15		8.0	$	282
Granted		3,882,830		$	0.90
Exercised		(17,534	)	$	0.58
Forfeited		(686,036	)	$	3.70
Outstanding as of September 30, 2025		11,513,192		$	3.09		7.9	$	263
Exercisable as of September 30, 2025		6,453,329		$	4.55		7.0	$	68

(1)

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 as of the end of the period.

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the nine months ended September 30, 2025 and 2024 was $0.71 per share and $0.68 per share, respectively. The following assumptions were used in determining the fair value of options granted during the nine months ended September 30, 2025 and 2024:


	Nine Months Ended September 30,
	2025			2024
Risk-free interest rate	3.9 - 4.4		%		3.7 - 4.6		%
Expected dividend yield		0	%			0	%
Expected term (in years)	5.5 - 6.1				5.5 - 6.1
Expected volatility	94.5 - 100.8		%		87.7 - 91.4		%

As of September 30, 2025, the Company had unrecognized stock-based compensation expense of $4.1 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted-average period of 2.8 years.

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Restricted Stock Units

In January 2024, the Company awarded 481,500 restricted stock units to certain employees of the Company. The restricted stock units vest in four equal annual installments beginning on the first anniversary of the grant date. The restricted stock units are generally forfeited if the individual’s service relationship with the Company or any subsidiary terminates prior to vesting.

A summary of the Company’s restricted stock unit activity and related information is as follows:


	Number			Weighted
	of Shares			Average
	of Restricted			Grant Date
	Stock Units			Fair Value
Unvested as of December 31, 2024		445,500		$	0.55
Granted		—		$	—
Vested		(111,375	)	$	0.55
Forfeited		—		$	—
Unvested as of September 30, 2025		334,125		$	0.55

For each of the nine months ended September 30, 2025 and 2024, the Company recognized less than $0.1 million of stock-based compensation expense related to these awards. As of September 30, 2025, the Company had unrecognized stock-based compensation expense of $0.2 million related to these restricted stock units, which is expected to be recognized over 2.3 years.

The Company calculates basic net loss per share by dividing net loss by the weighted average number of shares of common stock outstanding. The weighted average number of shares of common stock used in the basic and diluted net loss per share calculation includes the prefunded warrants to purchase common stock issued in connection with the Company’s private placements with certain existing investors and Gilead and the Company’s follow-on public offering, as the prefunded warrants are exercisable at any time for nominal cash consideration. As of September 30, 2025, no prefunded warrants have been exercised and 92,278,707 prefunded warrants are outstanding.

The following table sets forth the outstanding shares of common stock equivalents, presented based on amounts outstanding at each period end, that were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have been anti-dilutive:


	Nine Months Ended
	September 30,
	2025		2024
Unvested restricted stock units		334,125		445,500
Outstanding stock options		11,513,192		8,006,371
Common stock warrants		200,030,631		2,631
Unvested employee stock purchase plan shares		62,339		37,097
Total common stock equivalents		211,940,287		8,491,599

11. Subsequent Events

On October 20, 2025, the Company filed a proxy statement seeking stockholder approval of the following: (i) a one-time repricing of certain outstanding employee stock options and (ii) the Xilio Therapeutics, Inc. 2025 Stock Incentive Plan, with an aggregate of 32.0 million shares of common stock reserved for issuing stock options to employees. The stockholder meeting to vote on the proposals stated within the proxy statement is scheduled to be held on November 21, 2025.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage biotechnology company discovering and developing tumor-activated, or masked, immuno-oncology, or I-O, therapies with the goal of significantly improving outcomes for people living with cancer without the systemic side effects of current I-O treatments. We are leveraging our proprietary platform to advance a pipeline of novel, tumor-activated I-O molecules that are designed to optimize the therapeutic index by localizing anti-tumor activity within the tumor microenvironment, including masked antibodies, bispecifics, cytokines and immune cell engagers. Current I-O therapies have curative potential for patients with cancer. However, their potential is significantly curtailed by systemic toxicity that results from activity of the therapeutic molecule outside the tumor microenvironment. Our molecules are engineered to localize activity within the tumor microenvironment with minimal systemic effects, resulting in the potential to achieve enhanced anti-tumor activity and increasing the population of patients who may be eligible to receive our medicines. To date, we have presented data across our clinical-stage programs showing clinical validation for our tumor-activation platform. Our most advanced clinical-stage product candidates are vilastobart, a tumor-activated, Fc-enhanced anti-CTLA-4 monoclonal antibody, or mAb, and efarindodekin alfa (XTX301), a tumor-activated, engineered interleukin 12, or IL-12, therapy. We are currently advancing clinical development for vilastobart in combination with atezolizumab (Tecentriq®) in a Phase 2 clinical trial in patients with microsatellite stable metastatic colorectal cancer, or MSS mCRC, under a co-funded clinical trial collaboration with F. Hoffmann-La Roche Ltd, or Roche. In November 2025, we announced new data from the ongoing Phase 2 clinical trial at the Society for Immunotherapy of Cancer (SITC) 40th Annual Meeting in patients with MSS mCRC without liver metastases and high plasma tumor mutational burden, or TMB, and we anticipate reporting additional data from the Phase 2 trial in the first half of 2026. Based on the promising clinical activity and safety profile demonstrated by vilastobart to date as a combination therapy, including in patients who had high plasma TMB, we are actively seeking a partner to develop vilastobart in combination with PD-(L)1 or PD1-VEGF in MSS mCRC and other tumor types. For efarindodekin alfa, in the third quarter of 2025, we initiated a Phase 2 trial in patients with advanced solid tumors and achieved a $17.5 million development milestone under our exclusive license agreement with Gilead Sciences, Inc., or Gilead. We have completed enrollment in the Phase 1A monotherapy dose escalation and Phase 1B monotherapy dose expansion portions of our ongoing Phase 1/2 clinical trial, and evaluation of patients is ongoing. In addition to our clinical-stage product candidates, we are leveraging our proprietary tumor-activation platform to advance multiple preclinical programs for XTX501, a bispecific PD-1/masked IL-2 and our masked T cell engager molecules, including wholly owned programs targeting the tumor-associated antigens for PSMA, CLDN18.2 and STEAP1 and an additional program under our collaboration, license and option agreement with AbbVie Group Holdings Limited, or AbbVie.

Liquidity and Going Concern Overview

To date, we have financed our operations primarily from proceeds raised through private placements of preferred units, convertible preferred stock, common stock and prefunded warrants; sales of common stock in our initial public offering, or IPO, and through “at-the-market” offerings; the sale of prefunded warrants and common stock warrants in a follow-on public offering; and upfront payments under our collaboration and license agreements with AbbVie and Gilead. We have not generated any revenue from product sales and do not expect to generate any revenue from product sales for at least the next several years, if at all. All of our programs are in early clinical or preclinical development. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve profitability. Even if we are able to generate revenue from product sales, we may not become profitable.

In June 2025, we closed a follow-on public offering of prefunded warrants and accompanying common stock warrants and received net proceeds of $47.0 million after deducting underwriting discounts and commissions and offering expenses payable by us. In connection

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with the offering, we issued prefunded warrants to purchase 66,676,000 shares of common stock, accompanied by Series A warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants), Series B warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants) and Series C warrants to purchase 66,676,000 shares of common stock (or, in certain circumstances, prefunded warrants). If all of the Series B warrants and Series C warrants are exercised in cash at their initial exercise price of $0.75 per warrant, we will receive up to $100.0 million of additional gross proceeds by the second half of 2026. For more information, refer to Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Since inception, we have incurred significant operating losses, including net losses of $45.4 million and $45.1 million for the nine months ended September 30, 2025 and 2024, respectively, and a net loss of $58.2 million for the year ended December 31, 2024. As of September 30, 2025, we had an accumulated deficit of $429.1 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future, particularly to the extent we:

•

continue to advance our current research programs and conduct additional research programs;

•

advance our current product candidates and any future product candidates we may develop into preclinical and clinical development;

•

seek marketing approvals for product candidates that successfully complete clinical trials, if any;

•

obtain, expand, maintain, defend and enforce our intellectual property;

•

continue to discover, validate and develop additional product candidates;

•

continue to manufacture increasing quantities of our current or future product candidates for use in preclinical studies, clinical trials and for any potential commercialization;

•

acquire or in-license other product candidates, technologies or intellectual property;

•

hire additional personnel to support current or future programs;

•

establish a commercial and distribution infrastructure to commercialize products for which we may obtain marketing approval, if any; and

•

incur additional costs associated with current and future research, development and commercialization efforts and operations as a public company.

As a result, we will need substantial additional capital to support our continuing operations and pursue our strategy. As of September 30, 2025, we had cash and cash equivalents of $103.8 million. In the fourth quarter of 2025, we received a $17.5 million development milestone under our license agreement with Gilead. Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of September 30, 2025, together with the $17.5 million development milestone received under our license agreement with Gilead, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027. However, we have based our estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we anticipate. In addition, we expect our operating losses and negative operating cash flows to continue for the foreseeable future as we continue to advance our pipeline of novel, tumor-activated I-O molecules through preclinical and clinical development, maintain the infrastructure necessary to support these activities and continue to incur costs associated with operating as a public company. These conditions raise substantial doubt about our ability to continue as a going concern. In order to fund our operations, we will need to raise additional capital, which could be obtained through the cash exercise of the Series B warrants and Series C warrants issued in connection with our June 2025 follow-on public offering, the receipt of milestone payments, option-related fees or other contingent payments under our existing agreements with Gilead and AbbVie, additional public or private equity offerings, debt financings, additional collaborations, partnerships or licensing arrangements or other sources. However, there can be no assurance that we will receive additional proceeds from the exercise of the common stock warrants or from contingent payments under our existing agreements with Gilead or AbbVie or that we will be able to complete any such transaction on acceptable terms or otherwise. If we are not able to secure sufficient additional capital when needed, we may need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to our operations and research and development programs.

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For more information regarding our liquidity and going concern, refer to “—Liquidity and Capital Resources—Capital Requirements and Going Concern” below and Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. For more information regarding the terms of the warrants we issued in our June 2025 follow-on public offering, refer to Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

1. Description of Business, Liquidity and Going Concern

Basis of Presentation

Principles of Consolidation

Significant Accounting Policies

3. Fair Value Measurements

4. Property and Equipment, Net

5. Accrued Expenses

6. Collaboration and License Agreements

Collaboration, License and Option Agreement with AbbVie

License Agreement with Gilead Sciences, Inc.

Clinical Trial Collaboration with F. Hoffmann-La Roche Ltd

7. Commitments and Contingencies

8. Preferred Stock and Common Stock

Undesignated Preferred Stock

Common Stock

9. Stock-Based Compensation

Equity Incentive Plans

2022 Inducement Plan

Stock-Based Compensation Expense

Stock Options

Restricted Stock Units

10. Net Loss Per Share

11. Subsequent Events

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

Overview

Xilio Therapeutics, Inc. 10-Q