Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis ofFinancial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (Quarterly Report), and our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 5, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" and "Special Note Regarding Forward-Looking Statements" sections of this Quarterly Report, 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 focused on developing a robust pipeline of T cell receptor (TCR)-engineered T cell, or TCR-T, therapies for the treatment of patients with cancer. Our approach is based on the central premise that we can learn from patients who are winning their fight against cancer to treat those who are not. Over the past several years, we have built our ImmunoBank, a repository of therapeutic TCRs that recognize diverse targets and are associated with multiple human leukocyte antigen (HLA) types. We then use these TCRs to manufacture enhanced TCR-Ts to treat a broad population of patients with both hematologic (heme) and solid tumor malignancies. Every TCR in our ImmunoBank has come from our proprietary platform technologies, and we are continuing to expand our ImmunoBank.

Our lead product candidate, TSC-101, is in development for the treatment of patients with heme malignancies, such as acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS), who are undergoing allogeneic hematopoietic cell transplantation (HCT). TSC-101 is designed to eliminate residual disease and promote complete donor chimerism, thereby preventing relapse. TSC-101 targets HA-2, which is a minor histocompatibility antigen that is present on all blood cells, malignant or benign. We are currently conducting a Phase 1 clinical study of TSC-101, the ALLOHA™ Phase 1 heme trial (NCT05473910). During the fourth quarter of 2025, following a productive End-of-Phase 1 meeting with the U.S. Food and Drug Administration (FDA), we reached agreement on a registrational path forward for the TSC-101 program as a potential treatment for AML and MDS. The pivotal study will mirror our ongoing Phase 1 study, using a biologically-assigned internal control arm to support relapse-free survival as the primary endpoint.

We plan to further expand our heme program with the addition of TCRs targeting other HLA types. TSC-102-A0301 and TSC-102-A0101 are allogeneic, donor derived TCR-T therapy candidates targeting epitopes derived from CD45. Like TSC-101, these candidates are designed to eliminate residual cancer cells and prevent relapse in patients undergoing HCT. TSC-102-A0301 and TSC-102-A0101 are designed for patients with HLA types A*03:01 and A*01:01, respectively.

We are also developing multiple TCR-T therapy candidates for the treatment of solid tumors. One of the challenges of treating solid tumors is that they are heterogeneous - not every tumor cell expresses a given target and some tumor cells lose half their HLA genes. To address this challenge, we have developed what we refer to as multiplex TCR-T in which we treat a patient with more than one TCR-T therapy product candidate at a time. We designed these multiplex treatments to be a simultaneous administration of up to three highly active TCR-Ts, selected from our ImmunoBank, that are customized for each patient based on which targets are expressed in their tumors. We are currently engaged in preclinical development of lentiviral-based agents that enable in vivo engineering of T cells using the TCRs in our ImmunoBank.

While primarily focused on oncology, we believe our TargetScan technology is well suited to identify unknown targets that cause T cell-driven autoimmune disorders. We have identified a set of indications in which T cells play a key role and are currently identifying targets and developing potential treatment options for these disorders. Initial indications include ankylosing spondylitis, ulcerative colitis and scleroderma. In addition, the Company is continuing to discover targets for Crohn's disease in partnership with Amgen.

Since our inception in 2018, we have devoted our efforts to raising capital, obtaining financing, filing, prosecuting and maintaining intellectual property rights, organizing and staffing our Company and incurring research and development costs related to the identification of novel targets for TCRs and development of TCR-T therapy product candidates to target and eliminate cancer cells. We do not have any therapies approved for sale and have not generated any revenue from product sales. To date, we have funded our operations primarily with proceeds from sales of capital stock, revenue received under our collaboration agreements, as well as debt facilities.

We have incurred significant operating losses since our inception. We reported net losses of $106.8 million and $91.7 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $481.9 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We expect that our expenses and capital expenditure requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

We will not generate revenue from sales of our therapies unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support the sales, marketing and distribution of those therapies. Further, we expect to continue to incur costs associated with operating as a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from sales of our therapies, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, or other capital sources, including collaborations with other companies, and other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

Because of the numerous risks and uncertainties associated with TCR-T therapy product candidate development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate sales of our therapies, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

On July 4, 2025, the One Big Beautiful Bill Act was enacted (the "OBBBA"). The OBBBA includes significant changes to U.S. tax law, including changes to the IRC Section 174, mandatory research and development capitalization. The impact of the changes to the Company are being analyzed, while regulations and guidance from the Department of Treasury are forthcoming.

We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our current operating plan into the second half of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. For additional information regarding our liquidity, see "Liquidity and Capital Resources" and "Risk Factors-Risks related to our financial position and need for additional capital."

Results of Operations

Three months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands):

Revenue

Revenue for the third quarter of 2025 was $2.5 million, compared to $1.0 million for the third quarter of 2024. The increase was primarily due to the timing of research activities performed pursuant to our collaboration agreement with Amgen which commenced in May 2023.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended September 30, 2025 and 2024 (in thousands):

Research and development expenses increased $5.4 million and was primarily attributable to a $1.9 million increase in laboratory supplies, research materials and studies driven by timing of manufacturing activities. There was also a $1.7 million increase in clinical expenses due to timing of ongoing trial activities, a $1.6 million increase in personnel expenses, and a $0.3 million decrease in depreciation expense. Research and development expenses included non-cash stock compensation expense of $1.7 million and $1.2 million for the third quarter of 2025 and 2024, respectively.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended September 30, 2025 and 2024 (in thousands):

General and administrative expenses increased by $0.5 million and was primarily attributable to a $0.5 million increase in personnel expenses. There was also a $0.1 million increase in facility-related and other expenses and a $0.1 million decrease in legal and professional fees. General and administrative expenses included non-cash stock compensation expense of $1.3 million and $1.3 million for the third quarter of 2025 and 2024, respectively.

Other (Expense) Income

Other income has decreased $1.4 million in the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a decrease in interest income attributable to lower cash balances available for investment.

Nine months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):

Revenue

Revenue for the nine months ended September 30, 2025 and 2024 was $7.8 million and $2.2 million, respectively. The increase was primarily due to the timing of research activities performed pursuant to our collaboration agreement with Amgen which commenced in May 2023.

Research and Development Expenses

The following table summarizes our research and development expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

Research and development expenses increased $16.1 million and was primarily attributable to a $8.0 million increase in laboratory supplies, research materials and studies driven by timing of manufacturing activities. There was also a $4.3 million increase in personnel expenses, a $3.4 million increase in facility-related expenses due to commencement of rent payments for the 830 Winter Street expansion space in December 2024, a $0.1 million increase in clinical expenses due to timing of ongoing trial activities, and a $1.2 million decrease in depreciation expense. Research and development expenses included non-cash stock compensation expense of $5.1 million and $3.5 million for the nine months ended September 30, 2025 and 2024, respectively.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

General and administrative expenses increased by $3.3 million and was primarily attributable to a $1.6 million increase in personnel expenses. There was also a $0.3 million increase in facility-related and other expenses and a $0.1 million increase in legal and professional fees. General and administrative expenses included non-cash stock compensation expense of $4.6 million and $3.3 million for the nine months ended September 30, 2025 and 2024, respectively.

Other (Expense) Income

Other income has decreased $1.3 million in the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to a decrease in interest income attributable to lower cash balances available for investment offset by a decrease in interest expense attributable to refinancing of debt.

Liquidity and Capital Resources

Sources of Liquidity

We have not generated any revenue from product sales and have incurred net losses and negative cash flows from our operations. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Under the terms of the Amgen Agreement, we received an upfront payment of $30.0 million in July 2023. In addition, we are eligible to earn success-based milestone payments of over $500 million, based upon the achievement of certain clinical development and commercial milestones, as well as tiered single-digit royalty payments on net sales of products developed from the collaboration, subject to reductions set forth in the Amgen Agreement.

On June 1, 2023, we completed an underwritten public offering of (a) 23,287,134 shares of the Company's Voting Common Stock, inclusive of the underwriters' 30-day option to purchase 297,660 additional shares of Voting Common Stock, at a price of $2.00 per share, and (b) the Pre-Funded Warrants to purchase up to 47,010,526 shares of the Voting Common Stock with an exercise price of $0.0001 per share. The Pre-Funded Warrants were issued at a purchase price of $1.9999 per warrant, resulting in aggregate net proceeds from the offering of $134.7 million after deducting underwriting discounts, commissions and other offering expenses.

On April 24, 2024, we completed an underwritten public offering resulting in the issuance and sale of (a) 4,958,068 shares of Voting Common Stock, including the partial exercise of the underwriters' option to purchase 2,485,487 additional shares of Voting Common Stock, at the closing market price on April 16, 2024, of $7.13 per share, and (b) Pre-Funded Warrants to purchase up to 18,577,419 shares of the Voting Common Stock with an exercise price of $0.0001 per share. The Pre-Funded Warrants were issued at a purchase price of $7.1299 per warrant, resulting in aggregate net proceeds of approximately $161.4 million after deducting underwriting discounts, commissions and other estimated offering expenses.

Pursuant to the K2HV Loan Agreement dated September 9, 2022, K2HV extended an initial convertible term loan of $30.0 million to the Company. On November 20, 2024, K2HV converted $15.0 million outstanding principal under the loan in exchange for 3,134,796 shares of our Voting Common Stock. On December 20, 2024, we entered into the SVB Loan Agreement, terminated the K2HV Loan Agreement and repaid all remaining outstanding loan obligations to K2HV. The SVB Loan Agreement provides for term loans up to an aggregate principal amount of $52.5 million, of which $32.5 million was provided on the closing date. We have the option to draw a second tranche of $20.0 million at the lender's sole discretion on or prior to June 30, 2026. See "Notes to Condensed Consolidated Financial Statements" and "Item 1A. Risk factors-The terms of our loan agreement place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our operating and financial flexibility" for additional details regarding the SVB Loan Agreement.

On December 27, 2024, we completed a registered direct offering with an existing investor for the issuance of Pre-Funded Warrants to purchase up to 7,500,000 shares of the Company's Voting Common Stock with an exercise price of $0.0001 per warrant.

The Pre-Funded Warrants were issued at a purchase price of $4.00 per warrant, resulting in gross proceeds of approximately $30.0 million, before deducting offering expenses of $0.2 million.

On November 3, 2025, following our alignment with the U.S. Food and Drug Administration (FDA) on the registrational path forward for the TSC-101 program, we made the strategic decision to prioritize clinical development of our heme program and pause further enrollment in our solid tumor Phase 1 trial, while focusing our preclinical efforts on in vivo engineering for solid tumors and target discovery in autoimmunity. Pursuant to this strategy, we also implemented a workforce reduction of approximately 30%, or 66 roles.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $184.5 million, excluding restricted cash of $5.0 million, which is expected to fund operations into the second half of 2027.

Funding requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance our research programs into preclinical and clinical development. In addition, we expect to continue to incur additional costs associated with operating as a public company. The timing and amount of our operating expenditures will depend largely on:

We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our current operating plan into the second half of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. In the event a convertible debt facility is converted to shares of common stock, such conversion could result in additional and substantial dilution to our existing and future stockholders. If we raise additional funds through additional collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

We have not yet received regulatory approval for or commercialized any of our product candidates and do not expect to generate revenue from product sales for several years, if at all. We do not expect to generate any product revenue unless and until we (1) complete development of any of our product candidates; (2) obtain applicable regulatory approvals; and (3) successfully commercialize or enter into collaborative agreements for our product candidates. We do not know with certainty when, or if, any of these items will ultimately occur. We expect to incur continuing significant losses for the foreseeable future and our losses to increase as we ramp up our preclinical and clinical development programs. We may encounter unforeseen expenses, difficulties, complications, delays and other currently unknown factors that could adversely affect our business.

While we remain an emerging growth company and a smaller reporting company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, as we continue to evolve as a business, we will incur increased costs related to legal and financial compliance.

We will require additional capital to develop our product candidates and fund our operations into the foreseeable future. We anticipate that we will eventually need to raise substantial additional capital, the requirements for which will depend on many factors, including:

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we will continue to require additional capital to meet operational needs and capital requirements associated with such operating plans. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments or engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

Adequate funding may not be available to us on acceptable terms or at all. If we are unable to raise capital when needed, it could have a negative impact on our financial condition and our ability to pursue our business strategies. We may need to delay, reduce, or terminate some or all development programs and clinical trials. We may also be required to sell or license our rights to product candidates in certain territories or indications that we would otherwise prefer to develop and commercialize ourselves. If we are required to enter into collaborations and other arrangements to address our liquidity needs, we may have to give up certain rights that limit our ability to develop and commercialize our product candidates or may have other terms that are not favorable to us or our stockholders, which could materially and adversely affect our business and financial prospects. See Part II, Item 1A. "Risk Factors" of this Quarterly Report for

additional risks associated with our substantial capital requirements.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

Operating Activities

During the nine months ended September 30, 2025, net cash used in operating activities of $103.3 million was primarily driven by our net loss of $106.8 million, partially offset by non-cash charges of $9.8 million related to depreciation expense, accretion of marketable securities, stock-based compensation, and non-cash interest expense related to note payable. During the nine months ended September 30, 2025, working capital changes resulted in a use of $6.4 million. The change in working capital was primarily driven by revenue recognition related to the Amgen Agreement and changes in accrued expenses related to research and development activities.

During the nine months ended September 30, 2024, net cash used in operating activities of $83.4 million was primarily driven by our net loss of $91.7 million, partially offset by non-cash charges of $8.5 million related to depreciation expense, accretion of marketable securities, stock-based compensation, and non-cash interest expense related to note payable. During the nine months ended September 30, 2024, working capital changes resulted in a use of $0.2 million.

Investing Activities

During the nine months ended September 30, 2025, net cash provided by investing activities was $94.5 million, primarily related to the purchases and maturities of marketable securities, and the purchases of property and equipment.

During the nine months ended September 30, 2024, net cash used in investing activities was $79.9 million, primarily related to the purchases and maturities of marketable securities, and the purchases of property and equipment.

Financing Activities

During the nine months ended September 30, 2025, net cash used in financing activities was $0.4 million, consisting of cash paid for debt issuance and financing costs previously accrued, offset by proceeds from the issuance of common stock under the employee stock purchase plan.

During the nine months ended September 30, 2024, net cash provided by financing activities was $163.1 million, consisting of net proceeds of $161.4 million from our follow-on public offering in April 2024 and $1.7 million of proceeds from the exercise of stock options.

Critical Accounting Policies and Estimates

Our condensed financial statements are prepared in accordance with GAAP. The preparation of financial statements and related disclosures require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses. We base our estimates on historical experience, known trends and events and on various other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes and other financial information included in our Annual Report on Form 10-K filed with the SEC on March 5, 2025. The Company has applied the Company's revenue recognition policies to the Amgen Agreement as fully described in Note 6 to the condensed consolidated financial statements.

Emerging Growth Company and Smaller Reporting Company Status

The Jumpstart Our Business Startups Act of 2012 (JOBS Act) permits an "emerging growth company" to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company qualifies as an "emerging growth company" under the JOBS Act and has

elected to "opt in" to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

We are also a "smaller reporting company" meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of the IPO is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our common stock held by non-affiliates is less than $250 million, or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our common stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.