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

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. For a detailed discussion of our business environment, please read Item 1. Business, included in this Annual Report. As a result of many factors, including those factors set forth in Item 1A. Risk Factors of this Annual 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 biopharmaceutical company focused on creating precisely targeted therapies for patients with cancer. We leverage our team's deep expertise in chemistry and structure-based drug design to develop innovative small molecules that are designed with the aim to overcome the limitations of existing therapies for clinically proven kinase targets.

Limitations faced by currently available kinase inhibitors can include (i) kinase resistance, or the emergence of new mutations in the kinase target that can enable resistance to existing therapies, (ii) kinase selectivity, or the potential for existing therapies to inhibit other structurally similar kinase targets and lead to off-target adverse events, and (iii) limited brain penetrance, or the ability for the therapy to treat disease that has spread or metastasized to the brain. By prioritizing target selectivity, we believe our drug candidates have the potential to overcome resistance, avoid dose-limiting off-target adverse events, address brain metastases, and drive more durable responses. This may result in the potential to drive deeper, more durable responses with minimal adverse events, and we believe these potential benefits may support opportunities for clinical utility earlier in the treatment paradigm.

Candidate Overview

Zidesamtinib (NVL-520)

Our first lead product candidate, zidesamtinib (NVL-520), is being developed for patients with ROS proto-oncogene 1 (ROS1)-positive non-small cell lung cancer (NSCLC). Zidesamtinib is a novel ROS1-selective inhibitor designed with the aim to address the clinical challenges of emergent treatment resistance, central nervous system (CNS)-related adverse events, and brain metastases that may limit the use of currently available ROS1 tyrosine kinase inhibitors (TKIs). Zidesamtinib has received U.S. Food and Drug Administration (FDA) Breakthrough Therapy designation for the treatment of patients with locally advanced or metastatic (advanced) ROS1-positive NSCLC who have previously been treated with two or more prior ROS1 TKIs, and orphan drug designation for ROS1-positive NSCLC.

Our ARROS-1 clinical trial is a first-in-human global Phase 1/2, multicenter, open-label, dose-escalation and expansion study evaluating zidesamtinib as an oral monotherapy in patients with advanced ROS1-positive NSCLC and other solid tumors. Dosing was initiated in the Phase 1 portion of the ARROS-1 clinical trial in January 2022. From January 2022 to August 2023, the Phase 1 portion of the ARROS-1 trial enrolled 104 patients (99 NSCLC, 5 other solid tumors).

In September 2023, we announced the initiation of the Phase 2 portion of the ARROS-1 clinical trial, following alignment with the FDA on a recommended Phase 2 dose (RP2D) of 100 mg once daily (QD). The Phase 2 portion of the ARROS-1 clinical trial is designed to evaluate the safety and activity of zidesamtinib in patients with advanced ROS1-positive NSCLC and other solid tumors, examining several specific cohorts of patients based on the prior anti-cancer therapies that such patients have received. The Phase 2 cohorts have been designed to support potential registration in TKI-naïve and/or TKI pre-treated ROS1-positive NSCLC patients.

Between September 2023 and June 16, 2025, 435 patients were enrolled in the Phase 2 portion of the ARROS-1 clinical trial. In June 2025, we announced positive pivotal data for zidesamtinib in TKI pre-treated patients with advanced ROS1-positive NSCLC from the global ARROS-1 Phase 1/2 clinical trial, and in September 2025, we presented the pivotal dataset at the International Association for the Study of Lung Cancer 2025 World Conference on Lung Cancer. The primary efficacy analysis population for this pivotal dataset consisted of 117 TKI pre-treated patients with advanced ROS1-positive NSCLC with measurable disease who received zidesamtinib at the RP2D by May 31, 2024, with duration of response (DOR) follow-up of at least 6 months available for nearly all responders.

In June 2025, we also shared preliminary data from the Phase 2 TKI-naïve cohort in the ARROS-1 clinical trial, in which enrollment is ongoing. Encouraging preliminary data were available for 35 TKI-naïve patients with advanced ROS1-positive NSCLC treated with zidesamtinib at RP2D as of August 31, 2024. As of June 16, 2025, a total of 104 patients had been enrolled in the ongoing TKI-naïve cohort of the ARROS-1 trial.

In November 2025, the FDA accepted for filing our New Drug Application (NDA) for zidesamtinib for the treatment of adult patients with locally advanced or metastatic ROS1-positive NSCLC who received at least 1 prior ROS1 TKI. The application has been assigned a Prescription Drug User Fee Act target action date of September 18, 2026. Additionally, we plan to submit data from the ongoing TKI-naïve cohort in the Phase 2 portion of the ARROS-1 clinical trial to the FDA to support a potential label expansion of zidesamtinib in TKI-naïve patients with advanced ROS1-positive NSCLC in the second half of 2026.

Neladalkib (NVL-655)

Our second lead product candidate, neladalkib (NVL-655), is being developed for patients with anaplastic lymphoma kinase (ALK)-positive NSCLC. Neladalkib is a brain-penetrant ALK-selective inhibitor designed with the aim to address the clinical challenges of emergent treatment resistance, CNS-related adverse events, and brain metastases that may limit the use of first-generation (1G; crizotinib), second-generation (2G; ceritinib, alectinib, or brigatinib), and third-generation (3G; lorlatinib) ALK inhibitors. Neladalkib has received FDA Breakthrough Therapy designation for the treatment of patients with locally advanced or metastatic ALK-positive NSCLC who have been previously treated with two or more ALK TKIs, and orphan drug designation for ALK-positive NSCLC.

Our ALKOVE-1 clinical trial is a first-in-human global Phase 1/2, multicenter, open-label, dose-escalation and expansion study evaluating neladalkib as an oral monotherapy in patients with advanced ALK-positive NSCLC and other solid tumors. Dosing was initiated in the Phase 1 portion of the ALKOVE-1 clinical trial in June 2022. From June 2022 to February 2024, the Phase 1 portion of the ALKOVE-1 clinical trial enrolled 133 patients (131 NSCLC, 2 other solid tumors).

In February 2024, we announced the initiation of the Phase 2 portion of the ALKOVE-1 clinical trial, following alignment with the FDA on a RP2D of 150 mg QD. The Phase 2 portion of the ALKOVE-1 clinical trial is designed to evaluate the safety and activity of neladalkib in several expansion cohorts of patients defined based on the number and type of prior anti-cancer therapies they have received. The Phase 2 cohorts are designed with registrational intent for TKI pre-treated patients with ALK-positive NSCLC and to enable preliminary evaluation for patients with ALK-positive NSCLC who are TKI-naïve.

In July 2025, we announced the initiation of the ALKAZAR Phase 3 clinical trial with registrational intent for TKI-naïve patients with advanced ALK-positive NSCLC. The ALKAZAR clinical trial is a global, randomized, controlled trial designed to evaluate neladalkib versus the current standard of care. Patients are randomized 1:1 to receive neladalkib monotherapy or ALECENSA (alectinib) monotherapy, reflecting input from collaborating physician-scientists and alignment with global regulatory agencies. The ALKAZAR clinical trial is designed to enroll approximately 450 patients with TKI-naïve ALK-positive NSCLC. The primary endpoint is progression-free survival (PFS) based on Blinded Independent Central Review (BICR). Secondary endpoints include overall survival, PFS based on investigator's assessment, time to intracranial response, and BICR assessment of intracranial objective response rate, intracranial duration of response, objective response rate, DOR, time to intracranial progression, and safety.

At the European Society for Medical Oncology Congress in October 2025, we presented preliminary data for neladalkib in patients with advanced ALK-positive solid tumors outside of NSCLC from the ongoing ALKOVE-1 clinical trial. Neladalkib demonstrated encouraging preliminary activity across a diverse set of ALK TKI-naïve and previously treated advanced ALK-positive solid tumors, and was considered generally safe and well-tolerated with a preliminary overall safety profile consistent with its ALK-selective, tropomyosin receptor kinase-sparing design, and with previously reported data.

In November 2025, we announced positive topline data for neladalkib in TKI pre-treated patients with advanced ALK-positive NSCLC from the global ALKOVE-1 Phase 1/2 clinical trial. The primary analysis population for this topline dataset consisted of 253 TKI pre-treated patients with advanced ALK-positive NSCLC with measurable disease who received neladalkib at the RP2D by September 30, 2024, with DOR follow-up of at least 6 months available for nearly all responders.

In November 2025, we also shared preliminary data from the Phase 2 exploratory cohort for TKI-naïve patients with advanced ALK-positive NSCLC from the ALKOVE-1 study. Encouraging preliminary data were available for 44 TKI-naïve patients with advanced ALK-positive NSCLC treated with neladalkib at RP2D as of August 29, 2025.

We have completed our pre-NDA meeting with the FDA and plan to move forward with an NDA submission of the data for TKI pre-treated patients with advanced ALK-positive NSCLC from our ALKOVE-1 study of neladalkib in the first half of 2026. We plan to present detailed study results at a future medical meeting.

NVL-330

Our third product candidate, NVL-330, is a brain-penetrant human epidermal growth factor receptor 2 (HER2)-selective inhibitor designed with the aim to address the combined medical needs of treating tumors driven by HER2 mutations and alterations, including HER2 exon 20 insertion mutations (HER2ex20), treating brain metastases, and avoiding treatment-limiting adverse events including due to off-target inhibition of wild-type epidermal growth factor receptor (EGFR). Preclinical data have shown that NVL-330 inhibited a broad range of HER2 oncogenic alterations, including HER2ex20, in cell-based assays, was brain penetrant and was selective for HER2 oncogenic alterations over the structurally related wild-type EGFR. Additionally, new preclinical data were presented at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in October 2025, further supporting NVL-330's potentially differentiated brain-penetrant profile. Compared to several currently available and investigational HER2 TKIs in the same preclinical assays, NVL-330 demonstrated a favorable efflux ratio and brain partitioning, metrics that are potentially positive predictors of brain exposure in humans. In preclinical models of intracranial activity, NVL-330 induced deep intracranial regression in mice. In the same models, the approved therapies Enhertu (T-DXd) and Hernexeos (zongertinib) did not induce intracranial regression at their clinically relevant doses. Additionally, NVL-330 induced intracranial tumor regression in mice that had progressed in the CNS on zongertinib.

We are currently enrolling patients in the HEROEX-1 clinical trial, a global Phase 1a/1b, multicenter, open-label, dose-escalation and expansion trial evaluating NVL-330 in pre-treated patients with advanced HER2-altered NSCLC, including those with HER2ex20 mutations. In July 2024, we announced that the first patient was dosed with NVL-330 in the HEROEX-1 trial. The HEROEX-1 trial is evaluating the overall safety and tolerability of NVL-330. Additional objectives include determination of the RP2D, characterization of the pharmacokinetic profile, and preliminary evaluation of anti-tumor activity.

Discovery Programs

We have prioritized a number of additional small molecule research programs following an assessment of medical need. Research for these programs is ongoing, and we plan to disclose a new development candidate by year-end 2026.

Financial Overview

Since commencing significant operations in 2018, we have focused substantially all of our efforts and financial resources on research and development activities for our programs, including zidesamtinib, neladalkib and NVL-330, establishing and maintaining our intellectual property portfolio, organizing and staffing our Company, business planning, raising capital, preparing for potential commercialization and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated revenue from product sales or any other source.

We have incurred significant net losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development of, receipt of marketing approval from regulatory authorities for, and eventual commercialization of our product candidates. We reported net losses of $425.4 million, $260.8 million and $126.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $972.4 million. We expect to incur significant expenses for the foreseeable future in connection with ongoing activities, particularly if and as we:

We will not generate revenue from product sales unless and until we successfully complete clinical development of, obtain regulatory approval for and successfully commercialize one or more of our product candidates. As a result, we may need additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by general economic conditions, both inside and outside the U.S., including disruptions to, and instability and volatility in, the credit and financial markets in the U.S. and worldwide, including heightened inflation, interest rate and currency rate fluctuations, and economic slowdown or recession as well as concerns related to public health emergencies, natural disasters or geopolitical events, including actual or threatened tariffs or other changes in trade policy, civil or political unrest or military conflicts. In addition, market instability and volatility, high levels of inflation and interest rate fluctuations may increase our cost of financing or restrict our access to potential sources of future liquidity. Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to have to delay, reduce or eliminate our product development or commercialization efforts. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.

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

As of December 31, 2025, we had cash, cash equivalents and marketable securities of $1.4 billion. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into 2029. Our existing cash, cash equivalents and marketable securities may not be sufficient to fund all of our product candidates through regulatory approval, and we may need to raise additional capital to complete the development and commercialization of our product candidates. See "-Liquidity and Capital Resources."

Components of Our Results of Operations

Operating expenses

Our operating expenses are comprised of research and development expenses and general and administrative expenses.

Research and development expenses

Research and development expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel engaged in research and development functions; costs incurred in connection with the advancement of our discovery programs and product candidates in preclinical and clinical studies, including under agreements with contract research organizations (CROs); and the cost of developing and scaling our manufacturing process, including under agreements with contract manufacturing organizations (CMOs), to manufacture drug substance and drug product for use in our research and preclinical and clinical studies and manufacture commercial-scale validation batches in preparation for the commercial launch of our product candidates that obtain regulatory approval.

We track our direct external research and development expenses on a program-by-program basis, including costs incurred with our CROs and CMOs, in connection with our preclinical, clinical and manufacturing activities. Costs incurred prior to nominating a development candidate are included in discovery programs. We do not allocate employee costs or other indirect costs to specific product development programs because these costs are deployed across multiple programs and, as such, are not separately classified.

We expect to incur substantial research and development expenses as we continue to advance zidesamtinib, neladalkib and NVL-330 in clinical development, and expand our discovery, research and preclinical activities in the near term and in the future. Although the ALKAZAR Phase 3 clinical trial, the Phase 2 portions of our ARROS-1 and ALKOVE-1 clinical trials and the HEROEX-1 Phase 1 clinical trial are ongoing, at this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any product candidates we may develop. A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate. The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:

Any changes in the outcome of any of these factors could significantly impact the costs, timing and viability associated with the development of our product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, commercial and administrative functions. General and administrative expenses also include professional fees for legal, patent, consulting, investor and public relations and accounting and audit services, as well as expenses relating to commercialization preparation activities. We anticipate that our general and administrative expenses will increase over time as we increase our headcount to support the growth of our organization as well as prepare for the commercial launch of our product candidates that obtain regulatory approval.

Other income (expense)

Change in fair value of related party revenue share liability

We have a revenue sharing agreement with Deerfield Healthcare Innovations Fund, L.P. and Deerfield Private Design Fund IV, L.P. (collectively, Deerfield), each an investor in the Company, to pay Deerfield a fixed low single-digit percentage rate of net sales of certain commercial products. We account for the liability to Deerfield at fair value with changes recognized in the consolidated statements of operations and comprehensive loss.

Interest income and other income (expense), net

Interest income and other income (expense), net consists of interest income earned on our cash, cash equivalents and marketable securities and other income (expense) unrelated to our core operations.

Results of Operations

The following discussion and analysis of our results of operations includes a comparison of the year ended December 31, 2025 to the year ended December 31, 2024. For the discussion and analysis of our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (SEC) on February 27, 2025 (the 2024 Form 10-K), which is incorporated herein by reference.

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands):

Research and development expenses

The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024 (in thousands):

Research and development expenses were $307.0 million for the year ended December 31, 2025, compared to $217.8 million for the year ended December 31, 2024. The increase in direct external research and development expenses related to neladalkib of $37.7 million was primarily due to costs related to the ongoing Phase 2 portion of the ALKOVE-1 clinical trial and the Phase 3 ALKAZAR clinical trial, which was initiated in July 2025, and professional services. The increase in direct external research and development expenses related to NVL-330 of $13.5 million was primarily due to costs related to the ongoing HEROEX-1 Phase 1 clinical trial and manufacturing costs. The increase in personnel-related expenses of $33.4 million was primarily due to an increase of $16.7 million in stock-based compensation expense and an increase in headcount. For the years ended December 31, 2025 and 2024, stock-based compensation expense was $48.1 million and $31.4 million, respectively.

General and administrative expenses

The following table summarizes our general and administrative expenses for the years ended December 31, 2025 and 2024 (in thousands):

General and administrative expenses were $107.3 million for the year ended December 31, 2025, compared to $62.6 million for the year ended December 31, 2024. The increase in personnel-related expenses of $21.6 million was primarily due to an increase in headcount and an increase of $9.2 million in stock-based compensation expense. For the years ended December 31, 2025 and 2024, stock-based compensation expense was $38.4 million and $29.2 million, respectively. The increase in commercial preparation and other expenses of $19.0 million was primarily due to costs incurred in preparation for the potential commercial launch of our product candidates.

Other income (expense)

Change in fair value of related party revenue share liability

The change in fair value of the related party revenue share liability was $55.2 million and $17.9 million for the years ended December 31, 2025 and 2024, respectively. For the years ended December 31, 2025 and 2024, the change in fair value of the related party revenue share liability was due to changes in certain assumptions in the model used to calculate fair value such as the probability and timing of obtaining regulatory approval due to the progression of our product candidates in clinical development towards potential commercialization, and estimated future product revenues.

Interest income and other income (expense), net

Interest income and other income (expense), net for the years ended December 31, 2025 and 2024, consisted primarily of interest income of $44.8 million and $38.4 million, respectively. The increase in interest income was primarily due to an increase in cash, cash equivalents and marketable securities.

Liquidity and Capital Resources

Since our inception, we have incurred significant net losses. We have not yet commercialized any of our product candidates and our ability to generate revenue from product sales will depend heavily on the successful clinical development of, receipt of marketing

approval from regulatory authorities for, and eventual commercialization of one or more of our product candidates. Through December 31, 2025, we have funded our operations primarily with proceeds from the sales of convertible preferred stock, the issuance of convertible notes, debt financing from stockholders and proceeds from the sale of common stock in our public offerings. As of December 31, 2025, we had cash, cash equivalents and marketable securities of $1.4 billion and accounts payable and accrued expenses and other current liabilities of $91.2 million.

In November 2025, we issued and sold 4,950,496 shares of our Class A common stock in an underwritten public offering at a public offering price of $101.00 per share. We received net proceeds of $471.8 million, after deducting equity issuance costs and underwriting discounts and commissions.

The following discussion and analysis of a summary of our cash flows includes a comparison of the year ended December 31, 2025 to the year ended December 31, 2024. For the discussion and analysis that compares our summary of cash flows for the year ended December 31, 2024 to the year ended December 31, 2023, refer to Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2024 Form 10-K, which is incorporated herein by reference.

Cash Flows

The following table summarizes our cash flows for each of the years ended December 31, 2025 and 2024 (in thousands):

Operating activities

During the year ended December 31, 2025, operating activities used $275.2 million of cash, resulting from our net loss of $425.4 million adjusted for non-cash items, primarily stock-based compensation expense of $86.5 million, change in fair value of related party revenue share liability of $55.2 million and net accretion on marketable securities of $11.1 million, and net cash provided by changes in our operating assets and liabilities of $19.2 million. Our net loss was primarily due to clinical trial and manufacturing costs to support the development of our product candidates, personnel-related expenses due to the growth of our Company, costs related to professional services and costs incurred in preparation for the potential commercial launch of our product candidates, partially offset by interest income due to our cash, cash equivalents and marketable securities. Net cash provided by changes in our operating assets and liabilities was primarily due to increases in accounts payable and accrued expenses and other liabilities of $36.1 million, partially offset by increases in other assets and prepaid expenses and other current assets of $16.9 million.

During the year ended December 31, 2024, operating activities used $185.1 million of cash, resulting from our net loss of $260.8 million adjusted for non-cash items, including stock-based compensation expense of $60.6 million, change in fair value of related
party revenue share liability of $17.9 million and net accretion on marketable securities of $14.7 million, and net cash provided by changes in our operating assets and liabilities of $11.8 million. Net cash provided by changes in our operating assets and liabilities was due to an increase in accrued expenses and other current liabilities of $26.9 million, partially offset by an increase in prepaid expenses and other current assets of $7.6 million, a decrease in accounts payable of $4.0 million, and an increase in other assets of $3.4 million.

Changes in prepaid expenses and other current assets, other assets, accounts payable, and accrued expenses and other liabilities were generally due to growth in our business, the advancement of our research and development programs and the timing of vendor invoicing and payments.

Investing activities

During the year ended December 31, 2025, net cash used in investing activities was $124.1 million, primarily due to purchases of marketable securities of $1.1 billion, partially offset by proceeds from maturities of marketable securities of $932.8 million.

During the year ended December 31, 2024, net cash used in investing activities was $573.5 million, primarily due to purchases of marketable securities of $1.0 billion, partially offset by proceeds from maturities of marketable securities of $450.5 million.

Financing activities

During the year ended December 31, 2025, net cash provided by financing activities was $515.3 million, primarily due to proceeds from an underwritten public offering of $472.5 million, net of underwriting discounts and commissions, and proceeds from the exercise of options to purchase common stock of $42.0 million.

During the year ended December 31, 2024, net cash provided by financing activities was $568.9 million, primarily due to proceeds from an underwritten public offering of $540.5 million, net of underwriting discounts and commissions, and proceeds from the exercise of options to purchase common stock of $28.8 million.

Funding Requirements

We expect to incur significant expenses in connection with our ongoing activities, particularly as we advance our preclinical, clinical, and commercialization preparation activities for our product candidates in development and any future product candidates. The timing and amount of our operating expenditures will depend largely on:

As of December 31, 2025, we had cash, cash equivalents and marketable securities of $1.4 billion. We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into 2029. Our existing cash, cash equivalents and marketable securities may not be sufficient to fund all of our product candidates through regulatory approval, and we may need to raise additional capital to complete the development and commercialization of our product candidates. Our estimate as to how long we expect our existing cash, cash equivalents and marketable securities to fund our operations does not include potential product revenue and is based on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including those listed above.

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. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. 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. If we raise additional funds through 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 commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Other Commitments

We have an obligation under a revenue sharing agreement with Deerfield to pay Deerfield a fixed low single-digit percentage rate of net sales of certain commercial products. We are also party to a revenue sharing agreement with our scientific founder, Matthew Shair, Ph.D., pursuant to which we were obligated to pay Dr. Shair 1.5% of net sales of certain commercial products. In December 2025, Dr. Shair assigned the revenue sharing agreement to Royalty Pharma plc (Royalty Pharma) and, as a result, any payments we are obligated to make under this agreement will be made to Royalty Pharma. See Note 10 in the notes to the consolidated financial statements included elsewhere in this Annual Report for additional information regarding our obligations under the revenue sharing agreements.

We lease office space for our corporate headquarters, which is located in Cambridge, Massachusetts. We enter into contracts in the normal course of business with our CMOs, CROs and other third parties to support research and development, commercial preparation, and other business activities. These contracts are generally terminable by us for convenience or for breach after reasonable cure periods.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Related party revenue share liability

We account for the related party revenue share liability with Deerfield at fair value. The revenue sharing agreement with Deerfield obligates us to pay a fixed low single-digit percentage rate of net sales of certain commercial products. In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, Financial Instruments, we elected the fair value option. Each reporting period, we remeasure the liability to estimated fair value using a discounted cash flow model based on the most recent assumptions such as the probability and timing of product approval, future product revenues and discount rate. These assumptions are estimates and can change based on factors such as the progression of our product candidates in clinical development and potential commercialization, current market conditions, competition, estimated clinical benefit and pricing. Changes to these assumptions can result in a material impact to our consolidated financial statements. Changes in fair value in each reporting period are recognized as a component of other income (expense) in the consolidated statements of operations and comprehensive loss. The estimated fair value as of December 31, 2025 and 2024 was determined to be $73.2 million and $17.9 million, respectively. We have not recorded any net sales and, as a result, have not paid any amounts under this obligation.

Accrued research and development expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of services performed and the associated cost incurred for the services when we have not yet been invoiced or otherwise notified of actual costs. We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include activities with vendors in connection with preclinical and clinical development activities, CROs in connection with preclinical and clinical studies and testing, and CMOs in connection with the process development and scale up activities and the production of materials.

We base the expense recorded related to contract research, manufacturing, or other vendors on our estimates of the services received and efforts expended pursuant to the terms of the individual agreements with the CROs, CMOs, or other vendors that conduct services and supply materials. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses. While the majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met, some require advance payments. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. We record these as prepaid expenses and other current assets and other assets on our consolidated balance sheets.

Stock-based compensation

We account for our stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation - Stock Compensation (ASC 718). We have granted stock options and restricted stock units (RSUs), both of which are subject to service-based vesting conditions, and RSUs with performance-based vesting conditions (PSUs). In accordance with ASC 718, we recognize stock-based compensation expense in the consolidated statements of operations and comprehensive loss based on a stock-based award's grant-date fair value.

We use the Black-Scholes option-pricing model to determine the fair value of stock options granted. For RSUs and PSUs, the fair value is equal to the market price of a share of our Class A common stock on the grant date. We recognize forfeitures as they occur. Stock-based compensation expense for stock awards with service-based vesting conditions is recognized on a straight-line basis based on the grant-date fair value over the associated service period of the award, which is generally the vesting period. Stock awards with service-based vesting conditions generally vest over three- or four-year service periods and stock options expire after ten years. Stock-based compensation expense for stock awards with performance-based vesting conditions is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the underlying stock award when the performance-based vesting condition is deemed probable to occur. We reassess the probability of vesting at each reporting period and adjust stock-based compensation expense, if applicable, based on our probability assessment.

We record stock-based compensation expense to research and development expense or general and administrative expense based on the underlying function of the individual that was granted the stock-based compensation award. Shares issued upon stock option exercise and RSU and PSU vesting are newly-issued shares.

The assumptions used in our Black-Scholes option-pricing model for stock options are as follows:

Expected Term- As we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term, we utilize the "simplified" method, as prescribed in the SEC's Staff Accounting Bulletin No. 107, whereby the expected term equals the arithmetical average of the vesting term and the original contractual term of the stock option.

Expected Volatility- The expected volatility is based on our historical volatility and that of similar entities within our industry for periods corresponding with the expected term of the grant.

Risk-Free Interest Rate- The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant for a period that corresponds with the expected term of the grant.

Expected Dividends- The expected dividend yield is 0% as we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our common stock.

The assumptions used in our Black-Scholes option-pricing model are inherently subjective and represent management's best estimates. These assumptions involve a number of variables, uncertainties and the application of management's judgment. If any assumptions change, our stock-based compensation expense could be materially different in the future.

Stock-based compensation expense for stock awards with service-based vesting conditions was $86.5 million, $60.6 million and $25.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. The performance-based vesting conditions under the PSUs have not been deemed probable to occur, and accordingly, no stock-based compensation expense has been recognized.

As of December 31, 2025, total unrecognized compensation cost, excluding unrecognized compensation costs related to PSUs, was $170.4 million, which is expected to be recognized over a weighted-average period of 2.3 years. As of December 31, 2025, total unrecognized compensation cost related to PSUs was $11.1 million, which will be recognized when the performance-based vesting conditions are deemed probable to occur.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements included in this Annual Report.