Rallybio Corporation
03/16/2026 | Press release | Distributed by Public on 03/16/2026 15:19
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K, 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. See "Cautionary Note Regarding Forward-Looking Statements."
Our Business
We are a clinical-stage biotechnology company comprised of experienced biopharma industry leaders with extensive research, development, and rare disease expertise with a mission to develop and commercialize life-transforming therapies for patients with severe and rare diseases. Our lead program, RLYB116, is a differentiated complement C5 inhibitor with the potential to treat diseases of complement dysregulation. In addition, RLYB332, a long-acting MTP-2 antibody for the treatment of diseases of iron overload is currently in preclinical development.
Recent Developments
On March 1, 2026, we entered into the Merger Agreement with Candid, a clinical-stage biotechnology company advancing a leading portfolio of TCE therapeutics for autoimmune diseases, and Merger Sub, a wholly owned subsidiary of Rallybio. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will be merged with and into Candid, with Candid surviving as a wholly owned subsidiary of Rallybio. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
Concurrently with the execution and delivery of the Merger Agreement, certain investors entered into
subscription agreements with Candid, pursuant to which such investors have agreed to purchase, immediately
prior to the Merger, shares of Candid common stock representing an aggregate commitment of approximately
$505.5 million in the Concurrent Financing. The shares of Candid common stock that are issued in the Concurrent Financing will be or will have the right to be, respectively, converted into shares of Rallybio Common Stock in the Merger.
Subject to the terms and conditions of the Merger Agreement, at the Effective Time, (a) each then-outstanding share of common stock or preferred stock of Candid (each such share, a "Candid Share") (excluding any share described in clauses (b) or (c) below and Candid Shares held by stockholders who have exercised and perfected appraisal rights for such shares) will be converted into the right to receive a number of shares of Rallybio Common Stock, calculated in accordance with the Exchange Ratio, (b) each Candid Share issued in the Concurrent Financing will be converted into the right to receive a number of shares of Rallybio Common Stock calculated in accordance with the Merger Agreement, (c) any Candid Shares held as treasury shares or held or owned by Rallybio, Merger Sub or any subsidiary of Rallybio or Candid immediately prior to the Effective Time will be canceled and shall cease to exist, and no consideration shall be delivered in exchange therefor. Each then-outstanding option to purchase Candid Shares will be converted into an option to purchase Rallybio Common Stock, subject to adjustment as set forth in the Merger Agreement.
Under the Exchange Ratio and Concurrent Financing Exchange Ratio formulas in the Merger Agreement, immediately after the Closing, on a pro forma basis and based upon the number of shares of Rallybio Common Stock expected to be issued in connection with the Merger, pre-Merger equityholders of Candid (other than investors in the Concurrent Financing) are expected to own approximately 57.55% of the combined company,
pre-Merger equityholders of Rallybio are expected to own approximately 3.65% of the combined company and the Investors in the Concurrent Financing are expected to own approximately 38.80% of the combined company (assuming proceeds from the Concurrent Financing of $505.5 million), in each case, calculated on a fully diluted basis, using the treasury stock method, and subject to certain assumptions, including (i) a valuation for Rallybio of $47.5 million (assuming Rallybio Net Cash of $37.5 million as of the Closing), (ii) a fixed valuation for Candid of $750.0 million, and (iii) the relative capitalization of Rallybio and Candid. The percentage of the combined company that each party's equity holders will own following the Closing is subject to certain adjustments as described in the Merger Agreement, including the amount of the final Rallybio Net Cash at Closing.
Immediately prior to the Effective Time, Rallybio and a rights agent are expected to enter into a CVR Agreement, pursuant to which holders of record of certain Rallybio securities as of the close of business on the last business day prior to the day on which the Effective Time occurs will receive one CVR for each outstanding share of Rallybio Common Stock, prefunded warrant, Rallybio restricted stock unit or In the Money Parent Option (as defined in the CVR Agreement) held as of such date. Pursuant to the CVR Agreement, each CVR holder will be entitled to receive their pro rata share of (i) all of the net proceeds (including cash the value of stock to the extent listed on a national exchange, at the time of disposition), if any, received by Rallybio as a result of payments made to Rallybio of any upfront, milestone, royalty and other payments received under any disposition agreement related to Rallybio's Legacy Assets, and (ii) all of the cash proceeds, if any, received from Recursion under the Membership Interest Purchase Agreement, dated July 8, 2025, by and among Recursion, Exscientia Ventures I, Inc., Rallybio Corporation and Rallybio IPB, LLC. For a period of one year after the Closing Date, Rallybio will use commercially reasonable efforts to effect the disposition of the Legacy Assets. Such net proceeds will be subject to certain permitted deductions, including for applicable tax payments, certain expenses incurred or other liabilities borne by Rallybio or its affiliates in respect of the Legacy Assets, and losses incurred by Rallybio or its affiliates due to a third-party proceeding in connection with such disposition.
We completed a confirmatory PK and PD study of RLYB116 in healthy volunteers in 2025 and reported data in the first quarter of 2026.
In July 2025, we entered into a Membership Interest Purchase Agreement (the "ENPP1 Purchase Agreement") with Recursion Exscientia Ventures I, Inc., an indirect wholly-owned subsidiary of Recursion ("Buyer") and Rallybio IPB, LLC, a wholly-owned subsidiary of Rallybio Corporation to sell our interest in REV102, an ENPP1 inhibitor in preclinical development for the treatment of patients with HPP, to Buyer (a subsidiary of our joint venture partner Recursion) (the "JV Sale"). In connection with the JV Sale, we received a total of $20.0 million in the third quarter of 2025 including $7.5 million from an upfront payment and $12.5 million from a milestone payment related to the initiation of additional preclinical studies. We are eligible to receive a $5.0 million milestone payment in connection with the initiation of dosing in a Phase 1 clinical study, as defined in the ENPP1 Purchase Agreement and low single-digit royalties on all future net sales by Recursion of products comprising or incorporating certain compounds developed by REV-I. We may also be eligible to receive certain payments in the event of Recursion's sale of the REV102 program.
In April 2025, we announced the discontinuation of our RLYB212 program for the prevention of FNAIT based on PK data from the Phase 2 clinical trial that demonstrated an inability of the RLYB212 dose regimen to achieve predicted target concentrations, as well as the minimum target concentration required for efficacy.
Complement Dysregulation
RLYB116 is an innovative, once-weekly, small volume, subcutaneously injected inhibitor of C5 in development for the treatment of patients with complement-related diseases. We have completed two Phase 1 clinical trials in healthy participants that included the study of RLYB116 as both a SAD and a MAD. After the first Phase 1 clinical trial, we completed manufacturing process enhancements that were designed to improve the tolerability of RLYB116. In 2025, we completed the confirmatory Phase 1 clinical trial evaluating the PK/PD properties of RLYB116. The confirmatory trial achieved its two key objectives including: a significant improvement in the tolerability of RLYB116 and demonstration of complete and sustained inhibition of terminal complement. These results support the study of RLYB116 as a potential best-in-class therapeutic for multiple complement mediated diseases.
Hematological Disorders
In May 2022, we obtained worldwide exclusive rights to RLYB331, a preclinical, monoclonal antibody that is designed to inhibit MTP-2. The inhibition of MTP-2 significantly increases levels of hepcidin, decreases iron load
and treats ineffective erythropoiesis. In 2024, we re-engineered RLYB331 to extend its half-life and completed non-clinical studies that demonstrated favorable tolerability, dose-dependent PK, and sustained PD effects with RLYB332, a long-acting version of RLYB331. These findings, which were presented in a poster at the 66th annual meeting of ASH, support the continued development of RLYB332 as a potentially best-in-class therapeutic for treating diseases of iron overload.
In December 2022, we entered into a strategic alliance to discover, develop, and commercialize novel antibody-based therapeutics for rare diseases. This multi-year, multi-target collaboration combined AbCellera Biologics Inc.'s ("AbCellera's") antibody discovery engine with our clinical and commercial expertise in rare diseases to identify optimal clinical candidates with a goal of delivering therapies to patients.
Our Operations
Since inception, we have devoted substantially all of our resources to raising capital, organizing and staffing the Company, business planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting our intellectual property portfolio, developing and progressing our product candidates, preparing for and conducting clinical trials and establishing arrangements with third parties for the manufacture of our product candidates and component materials, including activities relating to our preclinical development and manufacturing activities for each of our programs. We do not have any product candidates approved for sale and have not generated any revenue from product sales.
Since our inception, we have funded our operations primarily through equity financings. From our inception and prior to our initial public offering ("IPO"), we received proceeds of approximately $182.5 million from equity financings. In August 2021, we closed our IPO and issued and sold 891,250 shares of common stock, inclusive of 116,250 shares sold pursuant to the full exercise of the underwriters' option to purchase additional shares, at a public offering price of $104.00 per share. We received net proceeds of approximately $83.0 million, after deducting underwriting discounts and commissions and other offering costs.
In November 2022, we completed a follow-on offering of approximately $54.8 million pursuant to which we issued 725,456 shares of common stock, inclusive of 100,456 shares of common stock sold pursuant to the partial exercise of the underwriters' option to purchase additional shares at a price of $48.00 per share and to certain investors in lieu of common stock, pre-funded warrants to purchase up to an aggregate of 416,673 shares of common stock at a price of $47.9992, which represents the per share public offering price for the shares less the $0.0008 per share exercise price for each pre-funded warrant. The net proceeds from the November 2022 follow-on offering were approximately $50.8 million, after deducting underwriting discounts and commissions and other offering costs.
In April 2024, we entered into a securities purchase agreement (the "JJDC Securities Purchase Agreement") with Johnson & Johnson Innovation - JJDC, Inc. ("JJDC"), pursuant to which we sold to JJDC, in an unregistered offering, 454,545 shares of our common stock at a price of $14.56 per share, which represented a 10% premium on our closing stock price on April 9, 2024, for aggregate gross proceeds of approximately $6.6 million, before deducting offering expenses. We agreed, among other things, to file with the SEC a registration statement covering the resale of the shares, which we filed on May 10, 2024.
In July 2025, we announced that we had entered into the ENPP1 Purchase Agreement to sell our interest in REV102, an ENPP1 inhibitor in preclinical development for the treatment of patients with HPP, to Buyer (a subsidiary of our joint venture partner Recursion). In connection with the JV Sale, we received a total of $20.0 million in the third quarter of 2025 including $7.5 million from an upfront payment and $12.5 million from a milestone payment related to the initiation of additional preclinical studies. We are eligible to receive a $5.0 million milestone cash payment in connection with the initiation of dosing in a Phase 1 clinical study, as defined in the ENPP1 Purchase Agreement and low single-digit royalties on all future net sales by Recursion of products comprising or incorporating certain compounds developed by REV-I. We may also be eligible to receive certain payments in the event of Recursion's sale of the REV102 program.
As of December 31, 2025, we had cash, cash equivalents and marketable securities of $54.7 million. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into 2028, although we anticipate that the proposed merger with Candid will be completed in 2026. See "-Liquidity and Capital Resources."
We have incurred significant operating losses since inception, including net losses of $9.0 million and $57.8 million for the years ended December 31, 2025 and 2024, respectively. Our loss for the year ended December 31, 2025 included a $23.0 million gain in connection with the JV Sale in 2025. As of December 31, 2025, we had an accumulated deficit of $302.0 million. These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. We have not commercialized any products and have never generated revenue from the commercialization of any product. If we are unable to complete the proposed transaction with Candid, we may need to raise additional capital. There can be no assurances, however, that additional funding will be available on terms acceptable to us, or at all.
Components of Results of Operations
Revenue
We do not have any product candidates approved for sale and have not generated any revenue from product sales. In April 2024, we entered into a two-year collaboration agreement (the "J&J Collaboration Agreement") with Johnson & Johnson, through its wholly-owned subsidiary, Momenta Pharmaceuticals, Inc. ("J&J"). Our collaboration and license revenue to date is related to data collection and data submission performance obligations pursuant to the two-year J&J Collaboration Agreement to facilitate the advancement of research into products to address unmet needs relating to FNAIT. Pursuant to the J&J Collaboration Agreement, we received an upfront payment of $0.5 million from J&J for the information dissemination and data provision services under the agreement. We were also eligible to receive additional payments upon certain triggers related to the companies' FNAIT studies, however, in connection with our decision in April 2025 to discontinue development of RLYB212, we do not expect payments regarding the achievement of certain enrollment-related events.
We determined there were performance obligations as follows:
(1) Data collection and submission revenue - derived from Rallybio's ongoing management of the studies including the maintenance of a minimum site footprint, the license to utilize, and timely, semi-annual submission of the anonymized data, in the required formats.
(2) Dissemination of J&J materials & participant revenue - derived from Rallybio's dissemination of content, information or materials related to the J&J-Sponsored Studies that are developed by J&J and are provided by Rallybio for the purpose of disseminating such content, information, or materials to staff at Rallybio study sites to provide to potential eligible participants regarding J&J's independent study.
In April 2024, we also entered into the JJDC Securities Purchase Agreement. Under the terms of the JJDC Securities Purchase Agreement, JJDC made an equity investment purchasing 454,545 shares of common stock with a par value of $0.0001 per share for a share purchase price of $14.56 per share which includes a 10% premium for an aggregate purchase price of $6.6 million. The JJDC Securities Purchase Agreement contains provisions related to the registration of the shares and the restriction on the sale or transfer of the shares for a period of time. We determined the J&J Collaboration Agreement and JJDC Securities Purchase Agreement represented combined agreements. In accordance with Accounting Standards Codification 606, Revenue Recognitionand Accounting Standards Codification Topic 820, Fair Value Measurement, total consideration of $1.2 million for the shares of common stock from the JJDC Securities Purchase Agreement, which represents the premium of $0.7 million and discount for lack of marketability of $0.5 million, has been allocated to revenue and will be recognized over the two year expected performance period.
Operating Expenses
Research and Development Expenses
Research and development expenses consist of costs incurred in connection with our research and development activities, including our drug discovery efforts and the development of our product candidates. We expense research and development costs as incurred, which include:
▪external research and development expenses incurred under agreements with third parties, such as contract research organizations ("CROs") as well as investigative sites and consultants that conduct our clinical trials and other scientific development services;
▪costs related to manufacturing material for our clinical trials, including expenses related to the manufacturing scale-up and fees paid to contract manufacturing organizations ("CMOs");
▪employee-related expenses, including salaries, bonuses, benefits, share-based compensation and other related costs for those employees involved in research and development efforts;
▪costs of outside consultants, including their fees, and related travel expenses;
▪expenses to acquire technologies, such as intellectual property, to be used in research and development including in-process research and development ("IPR&D") that has no alternative future use at the time of asset acquisitions;
▪costs related to compliance with quality and regulatory requirements; and
▪facilities, depreciation and other indirect costs allocated to employees and activities supporting our research and development efforts.
Costs for certain activities are recognized based on an evaluation of the progress to completion of each specific contract using information and data provided to us by our vendors and analyzing the progress of our research studies or other services performed. Significant judgments and estimates are made in determining the expenses incurred at the end of any reporting period.
Our direct, external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our process development, manufacturing and clinical development activities. Our direct external research and development expenses also include fees incurred under license and intellectual property purchase agreements. We track these external research and development costs on a program-by-program basis.
We do not allocate employee costs, facility costs, including depreciation, or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources and third-party consultants primarily to conduct our research and development activities as well as for managing our process development, manufacturing and clinical development activities.
The successful development of any product candidate is highly uncertain. If we are unable to complete the proposed transaction with Candid and continue to progress our product candidates, we will need to raise substantial additional capital in the future to fund the future development of our current programs. We intend to focus our near term research and development efforts on completing the ongoing activities and preparing our programs for a potential transaction or sale.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits and share-based compensation for our personnel in executive, legal, business development, finance and accounting, and other administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees paid for accounting, auditing, tax and consulting services, insurance costs, travel expenses and direct and allocated facility costs not otherwise included in research and development expenses. We expect our general and administrative expenses to increase in the short term in connection with activities to support the completion of the potential transaction with Candid.
Total Other Income, Net
Total other income, net, includes interest income earned on cash, cash equivalents and marketable securities, and income and expense items, including income related to the proceeds from the JV Sale.
Loss on Investment in Joint Venture
We recognize the pro-rata share of losses in the joint venture with Recursion (as successor in interest to Exscientia) on the consolidated statements of operations and comprehensive loss within the loss on investment in joint venture line item, with a corresponding change to the joint venture investment asset on the consolidated balance sheets for equity method investments for which we do not have a controlling interest in. In July 2025, we sold our interest in REV102 to Recursion.
Comparison of the years ended December 31, 2025 and 2024
The following table summarizes our results of operations:
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FOR THE YEAR ENDED DECEMBER 31, |
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| (in thousands) | 2025 | 2024 | CHANGE | ||||||||||||||
| Revenue: | |||||||||||||||||
| Collaboration and license revenue | $ | 858 | $ | 636 | $ | 222 | |||||||||||
| Total revenue | 858 | 636 | 222 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 19,597 | 41,507 | (21,910) | ||||||||||||||
| General and administrative | 14,325 | 19,625 | (5,300) | ||||||||||||||
| Total operating expenses | 33,922 | 61,132 | (27,210) | ||||||||||||||
| Loss from operations | (33,064) | (60,496) | 27,432 | ||||||||||||||
| Total other income, net | 24,960 | 4,960 | 20,000 | ||||||||||||||
| Loss before equity in losses of joint venture | (8,104) | (55,536) | 47,432 | ||||||||||||||
| Loss on investment in joint venture | 874 | 2,239 | (1,365) | ||||||||||||||
| Net loss | $ | (8,978) | $ | (57,775) | $ | 48,797 | |||||||||||
Revenue
Collaboration and license revenue was $0.9 million for the year ended December 31, 2025, compared to $0.6 million for the year ended December 31, 2024. The increase of $0.2 million in 2025 as compared to 2024 was due to our entrance into the J&J Collaboration Agreement in the second quarter of 2024 and the recognition of revenue related to the collaboration performance obligations.
Operating Expenses
Research and Development Expenses
The following table summarizes our research and development costs for each of the periods presented:
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FOR THE YEAR ENDED DECEMBER 31, |
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| (in thousands) | 2025 | 2024 | CHANGE | ||||||||||||||
| Direct research and development by program | |||||||||||||||||
| RLYB212 | $ | 6,291 | $ | 21,287 | $ | (14,996) | |||||||||||
| RLYB116 | 3,786 | 4,841 | (1,055) | ||||||||||||||
| Other program candidates | (29) | 1,901 | (1,930) | ||||||||||||||
| Other unallocated research and development costs | |||||||||||||||||
| Personnel expenses (including share-based compensation) | 8,798 | 12,488 | (3,690) | ||||||||||||||
| Other expenses | 751 | 990 | (239) | ||||||||||||||
| Total research and development expenses | $ | 19,597 | $ | 41,507 | $ | (21,910) | |||||||||||
Research and development expenses were $19.6 million for the year ended December 31, 2025, compared to $41.5 million for the year ended December 31, 2024. The decrease of $21.9 million was primarily due to:
▪a $15.0 million decrease in costs related to the development of RLYB212, primarily related to a decrease in clinical development costs, manufacturing costs and other related development costs as a result of our discontinuation of the FNAIT program in April 2025;
▪a $1.1 million decrease in costs related to the development of RLYB116, primarily related to a decrease in manufacturing costs; which were partially offset by an increase in clinical development costs and other related development costs;
▪a $1.9 million decrease in costs related to the development of other program candidates, primarily related to RLYB332 manufacturing costs and other related development costs; and
▪a $3.7 million decrease in payroll and personnel-related expenses, primarily due to lower ongoing headcount during the year ended December 31, 2025 as compared to the same period in 2024; offset by an increase in personnel-related expenses due to the severance expense recognized in the second quarter of 2025 in connection with the workforce reduction, effective May 2, 2025.
General and Administrative Expenses
General and administrative expenses were $14.3 million for the year ended December 31, 2025, compared to $19.6 million for the year ended December 31, 2024. The decrease of $5.3 million was primarily due to:
▪a $4.7 million decrease in personnel-related expenses, primarily related to lower ongoing headcount during the year ended December 31, 2025 as compared to the same period in 2024; offset by an increase in personnel-related expenses due to severance expense recognized in the second quarter of 2025 in connection with the workforce reduction, effective May 2, 2025; and
▪a $0.6 million decrease primarily related to professional fees and other related general and administrative expenses; offset by an increase in legal fees.
Total Other Income, Net
Total other income, net, for the year ended December 31, 2025 was $25.0 million compared to $5.0 million for the year ended December 31, 2024. The increase in total other income of $20.0 million was primarily related to an increase in other income related to the JV Sale; offset by a decrease in interest income from marketable securities due to a lower excess cash balance.
Loss on Investment in Joint Venture
Loss on investment in joint venture for the year ended December 31, 2025 was $0.9 million compared to $2.2 million for the year ended December 31, 2024. The change was primarily due to the sale of our interest in REV102 in July 2025.
Liquidity and Capital Resources
Sources of Liquidity
On February 6, 2026, we executed a reverse stock split of our issued and outstanding common stock, par value $0.0001, at a ratio of 1-for-8 with a record date of December 30, 2025 (the "Reverse Stock Split"). All common stock, per share and related information included below have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.
Since our inception, we have funded our operations primarily through equity financings. From our inception and prior to our IPO, we received proceeds of approximately $182.5 million from equity financings. In August 2021, we closed our IPO and issued and sold 891,250 shares of common stock, inclusive of 116,250 shares sold pursuant to the full exercise of the underwriters' option to purchase additional shares, at a public offering price of $104.00 per share. We received net proceeds of approximately $83.0 million, after deducting underwriting discounts and commissions and other offering costs.
In August 2022, we filed a Registration Statement on Form S-3 (the "Shelf") with the SEC in relation to the registration and potential future issuance of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof in the aggregate amount of up to $300.0 million. The Shelf was declared effective on August 15, 2022. Pursuant to General Instruction I.B.6 to Form S-3 ("Instruction I.B.6"), a company with a public float of less than $75.0 million measured at certain time periods may not issue securities under Registration Statements on Form S-3 in excess of one-third of its public float in a 12-month period. We are subject to the limitations of Instruction I.B.6, which may limit the amount of funds we can raise using the Shelf or any other Registration Statement on Form S-3. In connection with the Shelf, we also simultaneously entered into a Sales Agreement with TD Securities (USA) LLC (f/k/a Cowen and Company, LLC) ("TD Cowen"), which was amended on March 13, 2025 (as amended, the "Sales Agreement"). In accordance with the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to
$9.55 million from time to time at prices through TD Cowen acting as our agent. Pursuant to the Sales Agreement, sales of our common stock, if any, will be made in sales deemed to be "at the market offerings" as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the "Securities Act"). Under the Sales Agreement, TD Cowen will be entitled to compensation equal to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. As of December 31, 2025, we had not sold any shares of common stock pursuant to the Sales Agreement.
In November 2022, we completed a follow-on offering of approximately $54.8 million consisting of 725,456 shares of common stock, inclusive of 100,456 shares of common stock sold pursuant to the partial exercise of the underwriters' option to purchase additional shares at the price of $48.00 per share, and to certain investors in lieu of common stock, pre-funded warrants to purchase up to an aggregate of 416,673 shares of common stock at a price of $47.9992, which represents the per share public offering price for the shares less the $0.0008 per share exercise price for each pre-funded warrant. The net proceeds from the November 2022 follow-on offering were approximately $50.8 million, after deducting underwriting discounts and commissions and other offering costs.
In April 2024, we entered into the JJDC Securities Purchase Agreement, pursuant to which we sold to JJDC in an unregistered offering, 454,545 shares of our common stock at a price of $14.56 per share, which represented a 10% premium on our closing stock price on April 9, 2024, for aggregate gross proceeds of approximately $6.6 million, before deducting offering expenses. We agreed, among other things, to file with the SEC a registration statement covering the resale of the shares within 120 days following the closing of the offering. We filed this registration statement on May 10, 2024.
In July 2025, we announced that we had entered into the ENPP1 Purchase Agreement to sell our interest in REV102, an ENPP1 inhibitor in preclinical development for the treatment of patients with HPP, to Buyer (a subsidiary of our joint venture partner, Recursion). In the third quarter of 2025, we received a total of $20.0 million in connection with the JV Sale, including $7.5 million from an upfront payment and $12.5 million from a milestone payment related to the initiation of additional preclinical studies. We are eligible to receive a $5.0 million milestone cash payment in connection with the initiation of dosing in a Phase 1 clinical study, as defined in the ENPP1 Purchase Agreement and low single-digit royalties on all future net sales by Recursion of products comprising or incorporating certain compounds developed by REV-I. We may also be eligible to receive certain payments in the event of Recursion's sale of the REV102 program.
As of December 31, 2025, we had $54.7 million of cash, cash equivalents and marketable securities.
Uses of Liquidity
We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years. See "Contractual Obligations" below.
Funding Requirements
We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements for at least 12 months of the filing of this Annual Report on Form 10-K, and we anticipate that the proposed merger with Candid will be completed in 2026.
Because of the numerous risks and uncertainties, length of time and scope of activities associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the actual amount of funds we will require for development, approval and any approved marketing and commercialization activities. Our future capital requirements will depend primarily on our ability to complete the proposed transaction with Candid.
If we do not complete the proposed transaction with Candid and until such time, if ever, as we generate significant revenue from product sales, we expect to finance our operations through the sale of equity, debt financings, marketing and distribution arrangements and collaborations, strategic alliances and licensing arrangements or other sources. We currently have no credit facility or committed sources of capital. Any future sales of equity will result in dilution to our existing stockholders. If we raise additional funds through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and we may need to dedicate a substantial additional portion of any operating cash flows to the payment of principal and interest on such indebtedness. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies,
intellectual property, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate product candidate development or future commercialization efforts.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
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FOR THE YEAR ENDED DECEMBER 31, |
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| (in thousands) | 2025 | 2024 | |||||||||
| Net cash used in operating activities | $ | (29,813) | $ | (49,282) | |||||||
| Net cash provided by investing activities | 47,268 | 33,492 | |||||||||
| Net cash provided by financing activities | 16 | 5,199 | |||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 17,471 | $ | (10,591) | |||||||
Operating Activities
During the year ended December 31, 2025, net cash used in operating activities was $29.8 million as compared to $49.3 million for the year ended December 31, 2024. The decrease in net cash used in operating activities was primarily related to a decrease in research and development and general and administrative activities and changes in working capital.
Investing Activities
Net cash provided by investing activities was $47.3 million for the year ended December 31, 2025 as compared to $33.5 million for the year ended December 31, 2024. The increase of $13.8 million in net cash provided by investing activities was primarily related to proceeds of $46.5 million from maturities of highly-rated debt securities, in addition to an increase of $18.5 million primarily related to the proceeds of $20.0 million from the JV Sale, partially offset by purchases of highly-rated debt securities of $17.7 million during the year ended December 31, 2025, as compared to proceeds from maturities of highly-rated debt securities of $84.4 million, partially offset by purchases of highly-rated debt securities of $48.9 million during the year ended December 31, 2024.
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was $16 thousand, representing proceeds from the issuance of common stock under the stock purchase plan. Net cash provided by financing activities for the year ended December 31, 2024 was $5.2 million, primarily representing proceeds from the issuance of common stock pursuant to the JJDC Securities Purchase Agreement, after deducting offering costs and accounting for the total consideration allocation related to the J&J Collaboration Agreement of $1.2 million.
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2025:
| PAYMENTS DUE BY PERIOD | |||||||||||||||||||||||||||||
| (in thousands) | TOTAL |
LESS THAN 1 YEAR |
1-3 YEARS | 3-5 YEARS |
MORE THAN 5 YEARS |
||||||||||||||||||||||||
| Operating lease obligations | $ | 190 | $ | 106 | $ | 84 | $ | - | $ | - | |||||||||||||||||||
The contractual obligation amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions and the approximate timing of the actions under the contracts.
Purchase and Other Obligations
We enter contracts in the normal course of business with CROs and other third-party vendors for clinical trials and testing and manufacturing services. Aside from those included in the table above, most contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments that may be due upon cancellation consist of payments for services provided or expenses incurred. These payments are not included in the table above as the amount and timing of such payments are not known.
We may incur contingent payments upon our achievement of clinical, regulatory and commercial milestones, as applicable under agreements we have entered into with various third-party entities pursuant to which we have
acquired or in-licensed intellectual property. Due to the uncertainty of the achievement and timing of the events that require payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time and have not been included in the table above. See "Business-License Agreements" and "Business-Asset Purchase Agreements" included elsewhere in this Annual Report on Form 10-K for a description of these agreements.
Critical Accounting 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 "Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation" to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, 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.
Research and Development Expenses
As part of the process of preparing our consolidated financial statements, we are required to estimate our research and development expenses that are incurred as of each reporting period. This process involves reviewing open contracts and purchase orders, communicating with our personnel and with vendors to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.
We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. 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 research and development expense. 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 our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
Share-Based Compensation
We account for share-based compensation in accordance with the Accounting Standards Codification 718, Compensation-Stock Compensation. Generally, share-based compensation is measured at the grant date for all equity-based awards made to employees based on the fair value of the awards and is recognized over the requisite service period, which is generally the vesting period. Share-based compensation for awards with performance conditions are recognized over the service period when achievement of the performance condition is probable. We have elected to recognize the actual forfeitures by reducing the share-based compensation in the same period as the forfeitures occur. We classify share-based compensation in the consolidated statements of operations and comprehensive loss in the same manner in which the award recipients' payroll costs are classified.
The Black-Scholes option-pricing model uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our common stock options, the risk-free interest rate for a period that approximates the expected term of our common stock options, and our expected dividend yield. See Note 2 "Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation" of our consolidated financial statements for additional information on the assumptions utilized in the Black-Scholes option-pricing model.
Emerging Growth Company and Smaller Reporting Company
As an EGC under the JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act, for EGCs include presentation of only two years of audited financial statements in a registration statement for an IPO, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements. Additionally, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an EGC. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. Therefore, the reported results of operations contained in our consolidated financial statements may not be directly comparable to those of other public companies.
We are also a "smaller reporting company" meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Off-Balance Sheet Arrangements
As of December 31, 2025 and 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and footnote disclosures is disclosed in Note 2 "Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation" to our consolidated financial statements for the year ended December 31, 2025 appearing elsewhere in this Annual Report on Form 10-K.
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