Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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

The following discussion should be read in conjunction with the attached financial statements and notes thereto. This Annual Report on Form 10-K, including the following sections, contains forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed or implied by such forward-looking statements. For a detailed discussion of these risks and uncertainties, see the "Risk Factors" section in Item 1A of this Annual Report on Form 10-K. We caution the reader not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this Form 10-K. We undertake no obligation to update forward-looking statements, which reflect events or circumstances occurring after the date of this Form 10-K.

For a discussion related to the results of operations for 2024 compared to 2023, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Years Ended December 31, 2024 and 2023" in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 6, 2025.

Overview

We are a clinical-stage, oncology-focused biopharmaceutical company dedicated to developing innovative therapies to address major unmet need in oncology. CytomX has led the field of conditionally activated, masked biologics through the development of its PROBODY technology platform. This versatile, multi-modality platform is built on a strong foundation of tumor biology expertise, including deep knowledge of tumor-associated enzymes known as proteases. Our masking strategy is designed to reduce binding of biologic therapeutics to their targets until the mask is removed by proteases in the tumor microenvironment, providing more selective targeting of the tumor and optimizing the predicted therapeutic index of our clinical candidates.

CytomX's experience and leadership with the PROBODY platform for over 15 years has led to a highly focused strategy for the application of its technology in product development that has resulted in a current pipeline of novel clinical-stage and pre-clinical stage programs. In identifying and designing potential PROBODY therapeutics, we evaluate the following:

CytomX's two current clinical programs, varsetatug masetecan ("Varseta-M") and CX-801 are in Phase 1 clinical development and are examples of our focused program development strategy. We aim to continue to advance our clinical pipeline towards later stage development and ultimately build a commercial enterprise to maximize our impact on the treatment of cancer.

Varsetatug Masetecan (Varseta-M)

Our most advanced clinical-stage program is Varseta-M, an investigational, conditionally activated antibody-drug conjugate ("ADC") targeting epithelial cell adhesion molecule ("EpCAM"). Varseta-M is initially focused on the lead indication of colorectal cancer ("CRC"). Varseta-M is designed to bring the promise of ADCs, which have made a meaningful clinical difference in other solid tumors such as lung and breast cancer, to CRC by leveraging EpCAM as a potentially ideal CRC antigen to target this disease. Varseta-M is a high affinity EpCAM antibody that is designed to preferentially bind EpCAM in the tumor microenvironment and minimize toxicities in healthy tissues, which have limited prior attempts in the field to target EpCAM systemically. Varseta-M is armed with a topoisomerase-1 inhibitor payload. Topoisomerase-1 inhibitors are known to have clinical activity in CRC, including irinotecan chemotherapy which is a standard component of the approved standard of care in CRC.

EpCAM is a high potential oncology target based on its documented high expression in many solid tumors, including CRC where it was first discovered due to its very high and uniform expression. Historically, previous efforts across the drug development landscape to target this antigen systemically have been limited by dose-limiting toxicities. For example, high affinity EpCAM antibodies were limited by pancreatitis and liver toxicities and discontinued. However, EpCAM has been validated as a cancer target, including by the drug KORJUNY®, which is approved for the treatment of malignant ascites in Europe. KORJUNY®, however, must be given directly into the peritoneum due to systemic toxicity, but its approval provides evidence that local delivery of an EpCAM therapeutic to the tumor can be effective.

The Varseta-M payload is a topoisomerase-1 inhibitor licensed from AbbVie (formerly ImmunoGen), tailored to have anti-tumor activity against EpCAM-expressing cancer types. The payload-antibody linker is specifically designed to drive bystander killing of neighboring tumor cells, contributing to robust anti-tumor activity.

Overall, the design of Varseta-M seeks to establish a clinically meaningful therapeutic window for the systemic treatment of patients with EpCAM-expressing cancers, for the first time.

Varseta-M is designed to potentially address a broad range of EpCAM-expressing tumors, but is initially focused in CRC which is one of the largest unmet needs in oncology with over 1.9 million cases diagnosed annually around the world. It is also a disease that is expected to grow and estimated that there will be over 3 million cases globally by 2040. CRC is the second leading cause of cancer death worldwide and has a 5 year survival rate in the metastastic setting of only 13%. CRC is also the leading cause of cancer death in the U.S. for patients under the age of 50 and has been growing in incidence in younger patients over the last 3 decades.

Varseta-M clinical development is initially being focused on late-line metastatic CRC where there is significant unmet need and treatment options are highly inadequate. In third line or later metastatic CRC, patients have typically progressed through multiple chemotherapy-based regimens. Later stage treatment is limited to therapies that provide single digit percentage response rates, median progression free survival of 2 to 5.6 months and overall survival outcomes ranging from approximately 6 to 11 months. It is estimated that there are more than 35,000 patients in the U.S. with 3rd line or later metastatic CRC, with the number expected to grow over the next decade.

While Varseta-M is initially being developed in late-line metastatic CRC, the program was developed with the vision to help a broad population of metastatic CRC patients, including those in the first- and second-line settings. Given Varseta-M's mechanism of action, our longer-term development vision is to make Varseta-M a core component of the CRC treatment landscape in earlier lines of therapy, consistent with the development strategy that has been employed for other solid tumor ADCs. We plan to pursue combination strategies to progress this vision to move Varseta-M to earlier lines of therapy starting in 2026.

Additionally, given the broad solid tumor expression profile of EpCAM, Varseta-M has the potential to be an innovative new treatment option in a wide range of solid tumors. High expression of EpCAM has been documented in other tumors such as gastric, gastroesophageal, pancreatic, ovarian, endometrial, non-small cell lung and triple negative breast cancers. We plan to potentially initiate development in indications outside of CRC in the second half of 2026, with the ultimate vision to develop Varseta-M as a pan-tumor therapy.

Varsetatug Masetecan Development

The investigational new drug application ("IND") for Varseta-M was allowed to proceed by the FDA in January 2024, and a Phase 1 clinical trial in patients with EpCAM-expressing solid tumors, with an initial focus on metastatic CRC, commenced in April 2024. No pre-screening of CRC patients by EpCAM expression has been conducted due to the anticipated high and uniform EpCAM expression in CRC. As of May 2025, the Phase 1 study had reached the seventh dose escalation level and had enrolled only mCRC patients.

In May 2025, we announced positive interim Phase 1 data as of an April 7, 2025 data cutoff in advanced metastatic CRC. The data encompassed results from 25 CRC patients treated with Varseta-M at 5 dose levels ranging from 2.4 mg/kg to 10 mg/kg, administered every three weeks ("Q3W"). The 2.4 mg/kg and 4.8 mg/kg doses were single patient dose escalation cohorts not anticipated to be therapeutically active. At the 7.2 mg/kg, 8.6 mg/kg, and 10 mg/kg doses, 23 patients were treated, 18 of whom were efficacy evaluable, having had at least one post-baseline tumor assessment as of the data cutoff. Patients enrolled in the study at the time of data cutoff had previously received a median of 4 prior lines of therapy and all patients had previously been treated with irinotecan. 64% of patients had liver metastases, 64% had KRAS mutations, and 96% were microsatellite stable. Patients were not preselected based on EpCAM expression levels.

As of the data cutoff, 18 patients were efficacy-evaluable at doses of 7.2 mg/kg, 8.6 mg/kg, and 10 mg/kg Q3W. Five of eighteen (28%) patients demonstrated confirmed partial responses per RECIST v1.1. Three of seven (43%) efficacy evaluable patients at the dose of 10 mg/kg Q3W demonstrated confirmed partial responses per RECIST v1.1. Seventeen of eighteen patients (94%) had disease control, defined as having an objective response or stable disease. Preliminary median progression free survival ("PFS") was 5.8 months as of the data cutoff with 10 of 18 patients remaining on study treatment.

As of the data cutoff, 25 patients were evaluable for safety. Varseta-M was generally well-tolerated as of the data cutoff with manageable adverse events, with no dose limiting toxicities. Most treatment related adverse events ("TRAEs") were Grade 1 or Grade 2 in severity. The most common reported TRAEs were diarrhea (18 patients, 5 Grade 3), nausea (11 patients, 1 Grade 3), vomiting (8 patients, No Grade 3), fatigue (8 patients, 1 Grade 3), anemia (5 patients, 3 Grade 3), hypokalemia (3 patients, 1 Grade 3), neutrophil count decrease (2 patients, 2 Grade 3) and neutropenia (2 patients, 1 Grade 3). TRAEs included serious adverse events ("SAEs") in 5 patients (1 Grade 2, 4 Grade 3). The SAEs included Grade 3 Diarrhea (1 patient), Grade 3 Anemia (1 patient), Grade 3 colitis (1 patient), Grade 3 Diarrhea and Acute kidney injury (1 patient) and Grade 2 Asthenia (1 patient). No Grade 4 or 5 TRAEs were observed as of the April 7, 2025 data cutoff. No events of interstitial lung disease or febrile neutropenia were reported as of the data cutoff. On August 13, 2025, we announced that a single Grade 5 treatment-related acute kidney injury occurred in a patient with a complex medical history, including having a solitary kidney. The Grade 5 event was believed to be secondary to nausea, vomiting and

diarrhea. We reported the event to the FDA in accordance with regulatory requirements. The CTMX-2051-101 Safety Review Committee reviewed the event and supported continued study execution.

Based on the positive interim Phase 1 dose escalation data in May 2025, dose expansions were initiated at the dose levels of 7.2 mg/kg, 8.6 mg/kg, and 10 mg/kg, administered Q3W and are currently ongoing.

Varsetatug Masetecan March 2026 Interim Data Update from Phase 1 Dose Expansions

In March 2026, we announced positive interim results from the ongoing Phase 1 dose expansions as of a January 16, 2026 data cutoff date. As of the data cutoff, a total of 93 patients with late-line metastatic CRC had been enrolled in the study. 60 patients were enrolled across the Phase 1 expansion dose range of 7.2 mg/kg, 8.6 mg/kg, and 10 mg/kg of which 56 were efficacy evaluable as of the data cutoff.

Starting in October 2025, the expansion doses of 8.6 mg/kg and 10 mg/kg were prioritized for dose optimization utilizing optimized adverse event management guidelines and adjusted ideal body weight (AIBW) dosing. 20 patients had been enrolled in expanded dose optimization as of the January 16thdata cutoff towards an enrollment goal of 40 patients.

Patients enrolled in the study had previously received a median of 3 prior lines of therapy in the metastatic setting and 96% of patients had previously been treated with irinotecan. 76% of patients had liver metastases and 71% had KRAS mutations. Patients were not preselected based on EpCAM expression levels. All patients with evaluable tumor biopsies had high EpCAM levels as measured by immunohistochemistry.5

As of the data cutoff, 56 patients were efficacy-evaluable at the expansion doses of 7.2 mg/kg, 8.6 mg/kg, and 10 mg/kg Q3W. Median duration of follow-up across the efficacy-evaluable patient population was approximately 8 months. Efficacy data across the Phase 1 Expansion doses are summarized below in Table 1.

Table 1. Varseta-M Efficacy Summary by Phase 1 Expansion Dose

At the 8.6 mg/kg dose, the confirmed response rate was 20% with an estimated median PFS of 6.8 months and at the 10 mg/kg dose, the confirmed response rate was 32% with an estimated median PFS of 7.1 months. The disease control rate was 88% (49/56) across the expansion doses of 7.2 - 10 mg/kg.

The doses of 8.6 mg/kg and 10 mg/kg have been prioritized for further evaluation with the goal of selecting a dose or doses for a registrational study. Dose optimization at 8.6 mg/kg and 10 mg/kg utilizing AIBW dosing and updated prophylaxis for adverse event management is ongoing.

At the doses of 11 mg/kg Q3W and 12 mg/kg Q3W, which were not expanded for further evaluation, the overall response rate was 30% (3/10).

As of the data cutoff, 93 patients were evaluable for safety including 80 patients across the expansion dose range of 7.2 mg/kg to 10 mg/kg. Varseta-M's safety profile was generally consistent with data presented in Phase 1 dose escalation. Most TRAEs were Grade 1 or Grade 2 in severity. No interstitial lung disease, febrile neutropenia or pancreatitis were observed. The most common TRAE was diarrhea which was generally manageable and reversible.

In Phase 1 dose expansions starting in Q2 2025, prophylactic strategies for diarrhea management were investigated. In dose optimization starting in Q4 2025, an updated prophylaxis regimen of anti-motility medication (loperamide or diphenoxylate/atropine) plus budesonide was implemented.6In the 20 patients receiving the updated prophylactic regimen at the Varseta-M expansion doses of 8.6 mg/kg and 10 mg/kg, Grade 3 diarrhea was 10%.7,8

Overall, as of the January 16th2026 data cutoff, in the 80 patients treated at expansion and optimization doses ranging between 7.2 mg/kg to 10 mg/kg, the most common TRAEs were diarrhea (68 pts, 19 Gr 3), nausea (44 pts, 4 Gr 3), vomiting (29 pts, 3 Gr 3),

fatigue (32 pts, 2 Gr 3), hypokalemia (21 pts, 13 Gr 3+), and anemia (13 pts, 6 Gr 3). Serious treatment related adverse events (SAEs) in > 1 patient included diarrhea (4), vomiting (3), hypokalemia (3), dehydration (3), acute kidney injury (2), and colitis (2).

As previously reported on August 13, 2025, there was one treatment-related grade 5 acute kidney injury (AKI) in a patient treated at the 7.2 mg/kg dose. The patient had a complex medical history including having a solitary kidney, and the AKI was determined to be secondary to Grade 3 nausea and Grade 2 diarrhea. No other Grade 5 TRAEs have been reported as of the January 16th2026 data cutoff.

At the 11 mg/kg and 12 mg/kg doses, there were no dose limiting toxicities in dose escalation. The most common TRAEs across the patients in the 11 mg/kg dose (n=8) and 12 mg/kg dose (n=3) were diarrhea (9 pts, 6 GR 3), nausea, (8 pts, 0 Gr 3), and vomiting (8 pts, 1 Gr 3). Patients treated at the 11 and 12 mg/kg doses did not receive the optimized prophylactic regimen or adjusted ideal body weight dosing.

We plan to present additional Phase 1 Varseta-M data at a medical meeting in 2026 and aim to align with the FDA in 2026 on a potential registrational study designed for Varseta-M monotherapy in advanced late-line CRC.

Additionally, in the first quarter of 2026, a Phase 1 study of Varseta-M in combination with bevacizumab has been initiated, data from which is intended to inform potential Varseta-M development in earlier lines of CRC therapy. Initial data from the combination study with bevacizumab is expected by the first half of 2027. A Phase 1b/2 study in combination with bevacizumab and chemotherapy is expected to start by the end of 2026.

We also continue to evaluate additional non-CRC, EpCAM positive indications for potential Varseta-M development and anticipate initiating Phase 1 expansion cohorts in one or more additional indications in the second half of 2026.

CX-801

In addition to Varseta-M, our pipeline includes CX-801, an investigational, masked version of interferon alpha-2b ("IFNα2b"), currently in a Phase 1 clinical trial. CX-801 leverages a similarly focused application of the PROBODY technology platform in that it leverages a well validated and high potential mechanism that has been limited by systemic toxicity. Interferon-alpha was one of the first immunotherapies approved, but has fallen out of broad use because of poor tolerability. Like EpCAM, IFNα2b has also been validated as a localized therapy, including the approved therapy ADSTILADRIN® for bladder cancer, which is a gene therapy encoding the protein IFNα2b that is administered directly into the bladder as a single agent, providing evidence that localized IFNα2b can be a powerful and effective therapy.

IFNα2b is also an attractive cytokine in that it is a potent and multi-faceted modulator of the immune system that also has direct anti-tumor cell killing effects, providing a potentially superior approach to activating anti-tumor immune responses compared with other cytokines such as IL-2, IL-12 or IL-15.

We have applied our significant masking and protein engineering expertise to the design of CX-801, which is a dually-masked, conditionally activated version of IFNα2b that is designed to be inactive in the periphery. The dual masks on CX-801 include a peptide mask on the cytokine domain designed to limit binding in normal tissues as well as a steric Fc mask designed to further mitigate systemic activity as well as extend CX-801's half-life.

For CX-801, we have also employed a focused initial development strategy in Phase 1, centered on the treatment of late-line melanoma where patient options are limited once they have typically progressed through earlier line checkpoint-based therapies. With CX-801, our initial focus is to treat patients with CX-801 in the late-line setting to potentially re-activate the immune system and improve patient outcomes in combination with PD-1 inhibition. Our ultimate vision for CX-801 is to potentially become a cornerstone of combination immunotherapy for a wide range of tumor types, including cancers beyond melanoma.

CX-801 Development

The IND for CX-801 was allowed to proceed by the FDA in January 2024, and in the third quarter of 2024 the first patient was dosed in the CX-801 Phase 1 dose escalation study in solid tumors. The Phase 1 dose escalation study is focused on patients with advanced melanoma. In Phase 1 dose escalation, the study will evaluate safety, translational biomarkers and signs of clinical activity for CX-801 monotherapy and in combination with KEYTRUDA®. In the second quarter of 2024, CytomX announced a clinical collaboration with Merck to supply KEYTRUDA for evaluation of its combination with CX-801 in the Phase 1 study. The Phase 1 study is currently in the fourth monotherapy dose escalation cohort. In May 2025, Phase 1 dose escalation enrollment of CX-801 in combination with KEYTRUDA®(pembrolizumab) in advanced melanoma was initiated and is currently enrolling at the second dose level.

Phase 1 CX-801 monotherapy translational data in melanoma patients was presented at the Society of Immunotherapy of Cancer ("SITC") 2025 Annual Meeting in November 2025, providing evidence that the CX-801 mechanism of action was working as designed. As of the November 8, 2025 SITC presentation, CX-801 had been generally well tolerated and the translational data presented suggest consistently increased expression of interferon-stimulated genes in paired tumor biopsies. Upregulation of immune checkpoint genes, including PD-1 and PD-L1, and activation of immune cell populations, was also observed, providing a rationale for evaluating the combination of CX-801 and pembrolizumab. Pharmacokinetics ("PK") analysis also demonstrated dose-proportional

exposure of CX-801, which remained predominantly in its intact (masked) form in circulation.Phase 1 clinical data from the CX-801 and KEYTRUDA®combination dose escalation portion of the study are expected by the end of 2026.

Preclinical PROBODY Program and Platform

In addition to our clinical program focus on PROBODY ADCs such as Varseta-M and PROBODY cytokines such as CX-801, we view the field of masked biologics as having broad potential applicability across a range of therapeutic modalities, reflecting the versatility of our platform technology. A key focus of our current work with collaboration partners is T-cell engaging bispecific therapies ("TCEs") where we have significant ongoing efforts with partners such as Bristol Myers Squibb and Regeneron and maintain significant research expertise.

For example, at SITC 2025, we presented preclinical data for CX-908, a dually-masked PROBODY TCE targeting CDH3 and CD3. CX-908 potently induced tumor regressions in established breast and lung cancer xenograft tumor models and demonstrated a 100-fold improvement in tolerability, including significantly reduced cytokine release vs. an unmasked CDH3xCD3 molecule. We view masking as a key strategy to widen a therapeutic window for TCEs and view strategic partnering in this area as an important way to extend the reach of the PROBODY platform.

We do not have any products approved for sale, and we continue to incur significant research and development as well as general and administrative expenses related to our operations. As of December 31, 2025 and 2024, we had an accumulated deficit of $711.9 million and $691.6 million, respectively.

Global health authorities, including the FDA, regulate many aspects of a product candidate's life cycle, including research and development and preclinical and clinical testing. We will need to commit significant time, resources, and funding to develop our wholly-owned and partnered product candidates in clinical trials. We are unable to provide the nature, timing, and estimated costs of the efforts necessary to complete the development of our product candidates because, among other reasons, of regulatory uncertainty, manufacturing limitations, and the pace of enrollment of our clinical trials, which is a function of many factors, including the availability and proximity of patients with the relevant condition.

We currently have no manufacturing capabilities and do not intend to establish any such capabilities in the near term. As such, we are dependent on third parties to supply our product candidates according to our specifications, in sufficient quantities, on time, in compliance with appropriate regulatory standards and at competitive prices.

Restructuring

On January 6, 2025, we announced a restructuring plan (the "2025 Restructuring Plan") to streamline our organization and prioritize Varseta-M, CX-801 and our activities to support our research collaborations. The restructuring plan resulted in a reduction of approximately 40% of our workforce and was substantially completed in the first quarter of 2025. We recorded total restructuring charges of approximately $2.8 million, primarily related to one-time severance payments and other employee-related costs. This includes $1.7 million of research and development expenses and $1.1 million of general and administrative expenses that were recorded for the year ended December 31, 2025.

Components of Results of Operations

Revenue

Our revenue to date has been primarily derived from non-refundable license payments, milestone payments and reimbursements for research and development expenses under our research, collaboration, and license agreements. We recognize revenue from upfront payments over the term of our estimated period of performance under the agreement using an input method for the entire performance obligation. In applying the input method of revenue recognition, we use actual full-time equivalent ("FTE") hours incurred relative to estimated total FTE hours expected to be incurred for each combined performance obligation over the estimated research service period of each collaboration target. In addition to receiving upfront payments, we are entitled to variable payments related to research and development services provided and may be entitled to milestone and other contingent payments upon achieving predefined objectives. Revenue from variable payments related to research and development or milestones and other contingent payments, when it is probable that there will not be a significant revenue reversal, is also recognized over the performance period based on a similar method.

For the foreseeable future, we do not expect to generate any revenue from the sale of products unless and until such time as our product candidates have advanced through clinical development and obtained regulatory approval. We expect that any revenue we generate in the foreseeable future will fluctuate from year to year as a result of the timing and amount of milestones and other payments from our collaboration agreements with Astellas, Regeneron, Bristol Myers Squibb, Moderna and any other collaboration partners, and as a result of the fluctuations in the research and development expenses we incur in the performance of assigned activities under these agreements.

Research and Development Expenses

Our research and development expenses consist primarily of costs incurred to conduct research, such as the discovery and development of our product candidates, clinical development, including activities with third parties, and contract development and manufacturing organizations ("CMO"), and the manufacture of drug products used in clinical trials, as well as the development of product candidates pursuant to our research, collaboration and license agreements. Research and development expenses include personnel costs, including stock-based compensation expense, contractor services, laboratory materials and supplies, depreciation and maintenance of research equipment, and an allocation of related facilities costs. We expense research and development costs as incurred.

We expect our research and development expenses could vary substantially in the future as we prioritize our pipeline opportunities, advance our product candidates through clinical trials, initiate additional clinical trials, and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our product candidates.

General and Administrative Expenses

General and administrative expenses include personnel costs, expenses for outside professional services and other allocated expenses. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation. Outside professional services consist of accounting and audit services, legal and other consulting fees. Allocated expenses primarily consist of rent expense related to our office and information technology related costs.

Comparison of Years Ended December 31, 2025 and 2024

Revenue

The following table summarizes our revenue by collaboration partner during the respective periods:

The decrease in revenue of $61.9 million for 2025 compared to 2024 was primarily due to:

Operating Costs and Expenses

Research and Development Expenses

The following table summarizes our research and development expenses by program incurred during the respective periods presented:

The decrease in research and development expenses of $14.7 million for 2025 compared to 2024 was primarily due to:

External research and development expenses are expected to be primarily focused on Varseta-M and CX-801 in 2026.

General and Administrative Expenses

General and administrative expenses remained flat for 2025 compared to 2024, primarily driven by $1.1 million of one-time restructuring expenses partially offset by reduced personnel related expenses and legal and consulting related expenses.

Restructuring

During 2025, we recognized aggregate restructuring cost of approximately $2.8 million, primarily related to severance and benefits. This included $1.7 million in research and development expenses and $1.1 million in general and administrative expenses. The restructuring was substantially completed in the first quarter of 2025.

Interest Income and Other Income (Expense), Net

Interest Income

Interest income decreased by $1.9 million during 2025 compared to 2024. The decrease was primarily driven by lower interest rates.

Liquidity and Capital Resources

Sources of Liquidity

As of December 31, 2025, we had cash, cash equivalents and short-term investments of $137.1 million and an accumulated deficit of $711.9 million, compared to cash, cash equivalents and investments of $100.6 million and an accumulated deficit of $691.6 million as of December 31, 2024. To date, we have financed our operations primarily through sales of our common stock in conjunction with the IPO, subsequent stock offerings and through our at-the-market offering, sales of our convertible preferred securities prior to our IPO, payments received under our collaboration agreements and proceeds from private placements of our common stock, warrants and pre-funded warrants. In March 2024, we achieved a clinical candidate milestone for a second collaboration target as well as the GLP toxicology studies milestone for the first collaboration target nominated in January 2023 under the Astellas Agreement; as a result, we collected the two milestone payments totaling $10.0 million in April 2024. In the first quarter of 2025, we achieved the GLP toxicology studies for the second collaboration target nominated in March 2024 under the Astellas Agreement. As a result, we collected the $5.0 million milestone payment in March 2025.

On January 6, 2025, we announced the 2025 Restructuring Plan to streamline our organization and prioritize Varseta-M investment and activities to support our research collaborations. The 2025 Restructuring Plan resulted in a reduction to our workforce by approximately 40% and was substantially completed in the first quarter of 2025.

In February 2020, we initiated an at-the-market offering program ("ATM") pursuant to a sales agreement with Jefferies, LLC (as amended on March 4, 2022 and August 9, 2024, the "Sales Agreement"). In 2024, we sold 3,925,202 shares at a weighted average price of $1.82 per share under our ATM offering for net proceeds of approximately $6.9 million after deducting sales commissions and related issuance cost. In 2025, we sold 4,872,861 shares at a weighted average price of $3.44 per share under our ATM offering for net proceeds of approximately $16.3 million after deducting sales commissions and related issuance cost.

In May 2025, we completed an underwritten public offering of 76,923,076 shares of common stock at a price of $1.30 per share and received net proceeds of approximately $93.4 million, after deducting underwriting discounts and commissions of $6.0 million and offering expenses of $0.6 million.

Based upon our current operating plan and liquidity requirements, we expect our existing capital resources will be sufficient to fund operations into the second quarter of 2027. However, if the anticipated operating results are not achieved in future periods, our planned expenditures may need to be reduced in order to extend the time period over which the then-available resources would be able to fund the operations. The amounts and timing of our actual expenditures depend on numerous factors, including the progress of our preclinical and clinical development efforts, the results of any clinical trials and other studies, our operating costs and expenditures and other factors described under the caption "Risk Factors" in this Annual Report on Form 10-K. The cost and timing of developing our product candidates is highly uncertain and subject to substantial risks and changes. As such, we may alter our expenditures as a result of contingencies such as the failure of one or all of our product candidates currently in clinical development, the acceleration of one or all of our product candidates in clinical development, the initiating of clinical trials for additional product candidates, the identification of more promising product candidates in our research efforts or unexpected operating costs and expenditures. We will need to raise additional capital to fund our operations in the future. There can be no assurance, however, that such efforts will be successful; or if they are successful, that the terms and conditions of such financing will be favorable to us.

Summary Statement of Cash Flows

The following table summarizes our cash flows for the periods indicated:

Cash Flows from Operating Activities

Net cash used in operating activities of $75.6 million and $86.2 million for 2025 and 2024, respectively, was largely due to ongoing research and development activities and general and administrative expenses to support those activities. Net loss for 2025 and net income for 2024 included, among other items, non-cash charges of stock-based compensation, non-cash lease expense, depreciation and amortization and impairment loss, partially offset by net accretion of discounts on short-term investments.

Cash Flows from Investing Activities

During the year ended December 31, 2025, net cash used in investing activities was $59.7 million, primarily due to increased purchases of short term investments following the funds received from our equity via the underwritten public issuance offering in May 2025 and from our ATM program. These purchases were partially offset by proceeds from the maturities of marketable securities.

During the year ended December 31, 2024, net cash provided by investing activities was $99.7 million, primarily due to proceeds from the maturities of short term investments partially offset by purchases of short-term investments.

Cash Flows from Financing Activities

During the year ended December 31, 2025, net cash provided by financing activities of $110.4 million was primarily due to net proceeds from equity issuance via the underwritten public issuance offering in May 2025 and under our ATM program.

During the year ended December 31, 2024, net cash provided by financing activities of $7.5 million was primarily due to net proceeds from issuance of common stock, net of issuance cost.

Contractual Obligations

The following table summarizes our contractual obligations that become due within the next year (in thousands):

(1) We lease our current facility under a long-term operating lease, which expires in 2026. The lease provides us with one option to extend the lease term for a period of five years at the then fair market rental value. See Part II. Item 8. Financial Statements and Supplementary Data, Note 11 - "Leases" in the accompanying Notes to the financial statements for more information.

(2) We have minimum royalty obligations under the terms of certain exclusive licensed patent rights. The royalty obligations are cancellable any time by giving notice to the licensor, with the termination being effective 60 days after giving notice. See Part II. Item 8. Financial Statements and Supplementary Data, Note 9 - "License Agreement" in the accompanying Notes to the financial statements for more information. Sublicense fees payable to UCSB for potential milestones that are probable to be earned by us in 2026 are not included.

(3) We have annual license maintenance fees under the terms of certain license agreement with UCSB. See Part II. Item 8. Financial Statements and Supplementary Data, Note 9 - "License Agreement" in the accompanying Notes to the financial statements for more information.

We enter into agreements in the normal course of business with vendors for clinical and pre-clinical studies and other services and products for operating purposes, which are cancelable at any time by us, generally upon 30 to 180 days with prior written notice. These payments are not included in the above table of contractual obligations. The above table also excludes unrecognized tax benefits and related interest and penalties of $4.4 million as of December 31, 2025.

Segment Information

We have one primary business activity and operate as one reportable segment.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"). The preparation of these financial statements requires our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates.

Revenue Recognition

We recognize revenue when our customer obtains control of the promised goods or services, in an amount that reflects the consideration which we have received or expect to receive in exchange for those goods or services.

Our revenues are primarily derived through our license, research, development and commercialization agreements. The terms of these types of agreements may include (i) licenses for our technology or programs, (ii) research and development services, and (iii) services or obligations in connection with participation in research or steering committees. Payments to us under these arrangements typically include one or more of the following: non-refundable upfront and license fees, research funding, milestone and other contingent payments to us for the achievement of defined collaboration objectives and certain preclinical, clinical, regulatory and sales-based events, as well as royalties on sales of any commercialized products. We assess whether the promises in our arrangements with customers are considered as distinct performance obligations that should be accounted for separately. Judgment is required to determine whether the license to our intellectual property is distinct from the research and development services or participation on steering committees.

Our collaboration and license agreements may include contingent payments related to specified research, development and regulatory milestones. Such milestone payments are typically payable under the collaborations when the collaboration partner claims or selects a target, or initiates or advances a covered product candidate in preclinical or clinical development, upon submission for marketing approval of a covered product with regulatory authorities; or upon receipt of actual marketing approvals of a covered product or for additional indications. To date, we have concluded that these contingent payments should be fully constrained until the conditions are met. At each reporting date, we re-evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price by using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price in such period of determination.

Our collaboration and license agreements may also include contingent payments related to sales-based milestones. Sales-based milestones are typically payable when annual sales of a covered product reach specified levels. Sales-based milestones are recognized at the later of when the associated performance obligation has been satisfied or when the sales occur. Unlike other contingency payments, such as regulatory milestones, sales-based milestones are not included in the transaction price based on estimates at the inception of the contract, but rather, are included when the sales or usage occur. As of December 31, 2025, no sales-based milestones have been recognized.

The transaction price in each arrangement is allocated to the identified performance obligations based on the relative standalone selling price ("SSP") of each distinct performance obligation, which requires judgment. In instances where SSP is not directly observable, such as when a license or service is not sold separately, SSP is determined using information that may include market conditions and other observable inputs. Due to the early stage of our licensed technology, the license of such technology is typically combined with research and development services and steering committee participation as one performance obligation. In the event that we receive non-cash consideration such as consideration in the form of a research license and research support services from the counterparty, the transaction price of a non-monetary exchange that has commercial substance is estimated based on the fair value of the non-cash consideration received, which may be determined through a valuation analysis.

Most of our collaboration arrangements are related to delivering a combined performance obligation satisfied over time. Revenue is recognized over the estimated research period using an input measure based on our actual full-time employee ("FTE") hours incurred as a percentage of projected FTE hours for completing the performance obligation. We evaluate the measure of progress each reporting period and, if necessary, we adjust the measure of performance and related revenue recognition. There have been changes in estimates of research service periods and/or the related estimated FTE hours-to-completion of certain of our research development programs in each reporting period. Such adjustment is accounted for on a prospective basis in our revenue recognition. Changes in our

estimated research service periods resulted in recognition of higher total revenue of $13.8 million for 2025 as compared to the estimated research service periods in place at the end of 2024, and a decrease of net loss per share by $0.10 for 2025.

Any consideration payable to our customers is treated as a reduction to the transaction price and revenue, unless the payment to the customer is in exchange for distinct good and services.

Research and Development Expenses

We record accrued liabilities for estimated costs of research, preclinical and clinical studies and contract manufacturing activities, which are a significant component of research and development expenses. A substantial portion of our ongoing research and development activities is conducted by third-party service providers. We accrue the costs incurred under agreements with these third parties based on actual work completed in accordance with the respective agreements. In the event we make advance payments, they are recorded as prepaid expenses and recognized as the services are performed. We determine the estimated costs through discussions with internal personnel and external service providers as to the progress of stage of completion of the services and the agreed-upon fees to be paid for such services.

We make estimates in determining the accrual balance in each reporting period. As actual costs become known, we adjust our accruals accordingly. While we do not expect our estimates to differ materially from the actual amounts incurred, differences in the status and timing of services performed relative to vendor reporting and invoicing may result in modest period-to-period variability. Our accruals depend, in part, on the timely and accurate reporting of services performed by third-party vendors. Differences between estimated and actual amounts, including but not limited to those related to patient enrollment levels, enrollment timing, and services performed, may result in adjustments to clinical trial expenses in future periods.

Uncertain Tax Position

We file income taxes in the U.S. federal jurisdiction, the state of California and various other U.S. states. The state of California contested our tax position on revenue apportionment for upfront and milestone payments resulting from our collaboration and licensing agreements for the years 2017 and 2018. In September 2023, we received a Notice of Proposed Assessment ("NOPA") from the Franchise Tax Board. We recorded an uncertain tax position of $4.4 million in long term liabilities for the proposed tax assessment, penalties and interest through December 31, 2025. Additional utilization of carryforward attributes and indirect federal tax effects of the assessment would result in a reduction in deferred tax assets of $5.0 million as of December 31, 2025. We filed a protest to contest the proposed assessment in November 2023. Due to the ongoing nature of the examination and discussions with the state of California, we are unable to estimate a date by which this matter will be resolved.