XOMA Royalty Corp (XOMA)

CIK: 0000791908. SIC: 2834 Pharmaceutical Preparations. Latest 10-K as of: 2026-03-18.

SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2834 Pharmaceutical Preparations

SEC company page: https://www.sec.gov/edgar/browse/?CIK=791908. Latest filing source: 0001104659-26-030872.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-18. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000791908.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000791908.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001104659-26-059369.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-12. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on current expectations, estimates and forecasts, as well as our management’s beliefs and assumptions and on information currently available to them, and are subject to risks and uncertainties that are difficult to predict. In some cases you can identify forward-looking statements by words such as “may,” “will,” “should,” “might,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “targets,” “forecasts,” “potential,” “intend” “goal,” “guidance,” “strategy,” “continue,” “design,” and similar words, expressions or the negative of such terms. Examples of forward-looking statements include, but are not limited to, statements regarding: the proposed merger with Ligand (the “Merger”), our ability to complete the proposed Merger in a timely manner or at all, including the satisfaction or waiver of various conditions to the consummation of the Merger, trend analyses and statements regarding future events, future financial performance, including future income related to VABYSMO and OJEMDA, anticipated growth, and industry prospects, our future operating expenses, our future losses, the success of our strategy as a royalty aggregator, the assumptions underlying our business model, the extent to which issued and pending patents may protect the products and processes in which we have an ownership or royalty interest and prevent the use of the covered subject matter by third parties, the potential of our existing product candidates to lead to the development of commercial products, our ability to receive potential milestone or royalty payments under license and collaboration agreements and the amount and timing of receipt of those payments, our ability to locate suitable assets to acquire, our ability to complete (on a timely basis or at all) and realize the benefits from acquisitions, uncertainties related to the acquisition of interest in development-stage and clinical-stage product candidates, fluctuations in and our ability to predict our operating results and cash flows, and the sufficiency of our capital resources. Forward-looking statements are based on assumptions that may not prove accurate. Actual results and outcomes, or the timing of actual results and outcomes, could differ materially from those anticipated due to certain risks, including risks inherent in the biotechnology industry and for our licensees engaged in the development of new products in a regulated market. Among other things: there can be no assurance that our revenues, income or expenses will meet any expectations or follow any trend(s); we may be unable to complete the proposed Merger in a timely manner or at all, including as a result of events that could give rise to the termination of the Merger Agreement; we may be unable to retain our key employees; litigation, arbitration or other disputes with third parties may not be resolved in our favor and have a material adverse effect on us; our product candidates subject to our out-license agreements are still being developed, and our licensees’ may require substantial funds to continue development which may not be available; we may not be successful in entering into out-license agreements for our product candidates; if our therapeutic product candidates do not receive regulatory approval, our third-party licensees will not be able to manufacture and market them; products or technologies of other companies may render some or all of our product candidates noncompetitive or obsolete; we do not know whether there will be, or will continue to be, a viable market for the products in which we have an ownership or royalty interest; even once approved, a product may be subject to additional testing or significant marketing restrictions, its approval may be withdrawn or it may be voluntarily taken off the market; we and our licensees are subject to various state and federal healthcare related laws and regulations that may impact the commercialization of our or our third-party licensee’s product candidates and could subject us or them to significant fines and penalties, and could be impacted by changes or disruptions at the FDA and other government agencies; we and our third-party licensees may be impacted by general macroeconomic and business conditions in key regions of the world, including inflationary pressures, general economic slowdown or a recession, high interest rates, changes in monetary policy, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, government shutdowns, instability in financial institutions and geopolitical instability (including conflicts in the Middle East and related volatility in commodity prices, including the price of oil). These and other risks and uncertainties are described in more detail in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the SEC.

Forward-looking statements are inherently uncertain and you should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future. Except as required by law,

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we do not undertake any obligation to revise or update publicly any forward-looking statements after completion of the filing of this Quarterly Report on Form 10-Q to reflect later events or circumstances, the occurrence of unanticipated events, or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that we have a reasonable basis for these statements, our information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

All references to “portfolio” in this Quarterly Report on Form 10-Q are to milestone and/or royalty rights associated with a basket of product candidates in development.

We use our trademarks, trade names, and services marks in this Quarterly Report as well as trademarks, trade names, and service marks that are the property of other organizations. Solely for convenience, trademarks and trade names referred to in this Quarterly Report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and trade names.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with the audited consolidated financial statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2025.

Overview

XOMA is a royalty aggregator. We have a sizable portfolio of economic rights to future potential milestone and royalty payments associated with over 120 commercial and pre-commercial therapeutic candidates. In 2017, we transformed our business model to become a royalty aggregator. We subsequently advanced our portfolio by building upon our existing out-licensing agreements for proprietary products and platforms through the acquisition of rights to future milestones, royalties and commercial payments. Currently, our portfolio is anchored by royalty streams and milestone payments derived from seven commercial-stage assets. In the first quarter of 2026, we received $16.1 million in commercial payments. Our royalty aggregator business is primarily focused on early to mid-stage clinical assets, primarily in Phase 1 and 2 development, which we believe have significant commercial sales potential and that are licensed to well-funded sponsors or developers with established expertise in developing and commercializing drugs. We also acquire milestone and royalty revenue streams on late-stage clinical assets and commercial assets that are designed to address unmet markets or have a therapeutic advantage over other treatment options, and have long duration of market exclusivity. We expect most of our future revenue and income to be based on payments we may receive for milestones and royalties associated with these assets as well as the periodic recognition of income under the EIR method.

The generation of future revenues and income related to licenses, milestone payments, and royalties is dependent on the achievement of milestones or product sales by our existing partners and licensees. We generated a net income of $4.5 million for the three months ended March 31, 2026, net cash provided by operating activities was $6.1 million for the three months ended March 31, 2026, and we had an accumulated deficit of $1.2 billion as of March 31, 2026. We generated a net income of $31.7 million, and net cash provided by operating activities was $2.9 million for the year ended December 31, 2025, and we had an accumulated deficit of $1.2 billion as of December 31, 2025.

Ligand Merger Agreement

On April 27, 2026, we entered into a definitive agreement with Ligand under which Ligand will acquire us for $39.00 per share of common stock in cash, for a total equity value of approximately $739.0 million, plus one non-transferable CVR per share entitling the holder to receive a portion of 75% of the net proceeds, if any, that may result from ongoing litigation initiated by us against Janssen. The transaction was approved by the boards of directors of both companies; furthermore, XOMA’s officers, directors and certain funds affiliated with BVF Partners Parent, which

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collectively beneficially own approximately 47% of outstanding shares (assuming the conversion of XOMA’s Series X Convertible Stock), entered into voting agreements in support of the acquisition. XOMA’s outstanding shares of Series A Preferred Stock and Series B Preferred Stock are expected to be redeemed in connection with the transaction. The merger is anticipated to close in the third quarter of 2026, subject to customary closing conditions and approval by our stockholders, among other conditions.

Recent Business Developments

Completed Acquisitions

Generation Bio Acquisition

In February 2026, we acquired Generation Bio through a tender offer for $4.2913 in cash per share of Generation Bio common stock and one non-transferable CVR per share of Generation Bio common stock, resulting in total purchase consideration of $34.4 million.

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Under the Generation Bio CVR Agreement, CVR holders are entitled to a portion of net proceeds from any product-level financing or from the sale, transfer, license, or other disposition of Generation Bio IP occurring within five years after the merger closing, with payments over a ten-year period ranging from 70% to 30% of the net proceeds. CVR holders are also entitled to a share of net proceeds from the Moderna Collaboration and License Agreement, ranging from 90% to 50% of the net proceeds in years one through ten following the merger closing. CVR holders

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-03-18. Report date: 2025-12-31.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

XOMA is a royalty aggregator. We have a sizable portfolio of economic rights to future potential milestone and royalty payments associated with over 120 commercial and pre-commercial therapeutic candidates. In 2017, we transformed our business model to become a royalty aggregator. We subsequently advanced our portfolio by building upon our existing out-licensing agreements for proprietary products and platforms through the acquisition of rights to future milestones, royalties and commercial payments. Currently, our portfolio is anchored royalty streams and milestone payments derived from seven commercial-stage assets. In 2025, we received $33.6 million in commercial payments and $16.9 million from milestone payments and other fees, for total cash receipts of $50.5 million. Our royalty aggregator business is primarily focused on early to mid-stage clinical assets, primarily in Phase 1 and 2 development, which we believe have significant commercial sales potential and that are licensed to well-funded sponsors or developers with established expertise in developing and commercializing drugs. We also acquire milestone and royalty revenue streams on late-stage clinical assets and commercial assets that are designed to address unmet markets or have a therapeutic advantage over other treatment options, and have long duration of market exclusivity. We expect most of our future revenue and income to be based on payments we may receive for milestones and royalties associated with these assets as well as the periodic recognition of income under the EIR method.

The generation of future revenues and income related to licenses, milestone payments, and royalties is dependent on the achievement of milestones or product sales by the sponsors, marketers, and licensees. We generated a net income of $31.7 million and net cash provided by operating activities was $2.9 million for the year ended December 31, 2025. We generated a net loss of $13.8 million and net cash used in operating activities was $13.7 million for the year ended December 31, 2024. We had an accumulated deficit of $1.2 billion as of December 31, 2025.

Recent Business Developments

Completed Acquisitions

Mural Acquisition

In December 2025, we acquired Mural for $2.035 per ordinary share and RSU, for a total purchase price of approximately $37.6 million. The transaction included the acquisition of short-term financial assets, such as cash and prepaid expenses. Because the fair value of these net assets exceeded the purchase price, we recognized a $3.2 million bargain purchase gain in other income (expense), net for the year ended December 31, 2025.

LAVA Acquisition

In November 2025, we acquired LAVA through a tender offer for $1.04 in cash per LAVA ordinary share and one non-transferable CVR per share, resulting in total purchase consideration of $39.0 million. As a part of the acquisition, we acquired IP assets related to LAVA’s existing partnered programs with J&J and Pfizer, as well as LAVA-1266, a clinical program for acute myeloid leukemia and myelodysplastic syndrome. We have no plans to develop LAVA-1266, which is instead targeted for divestiture through sale or licensing. The value of the acquired IP assets was reduced by the excess of the fair value of the net assets acquired over the initial consideration based on the relative fair value of each IP. We are entitled to 25% of the net proceeds related to sales or licenses of these programs.

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Under the LAVA CVR Agreement, CVR holders are entitled to 75% of the net proceeds from ongoing and future collaborations related to the partnered programs over a 10-year period, 75% of the net proceeds from the disposition of LAVA-1266, 100% of the amount by which LAVA’s closing net cash exceeds the amount of closing net cash as determined by the LAVA Merger Agreement, minus any permitted deductions, as well as 100% of the tax reserve in the amount of approximately $6.3 million minus any permitted tax reserve matter expenses. In March 2026, we distributed $2.1 million to the LAVA CVR holders representing the excess net cash received in the transaction.

HilleVax Acquisition

In September 2025, we acquired HilleVax through a tender offer for $1.95 in cash per share of HilleVax common stock, plus one non-transferable CVR per share of HilleVax common stock, totaling approximately $105.3 million in purchase consideration. As part of the merger, we acquired IP assets related to HIL-216, a pre-clinical vaccine candidate, and assumed existing lease and sublease agreements. We have no plans to develop HIL-216, which is instead targeted for divestiture through sale or licensing. Under the HilleVax CVR Agreement, CVR holders are entitled to 90% of the net proceeds from the disposition of HIL-216 if sold within two years of the merger, 100% of the remaining unused funds in the related expense fund at the end of the two-year period, any adjustment of HilleVax’s closing net cash, 100% of security deposit receipts associated with the Boston Lease, and 100% of lease payment obligations saved or the amount received from any subtenant associated with the Boston Lease if subleased within twelve months and 90% if subleased after twelve months. As a result of the acquisition, we recognized a $17.9 million bargain purchase gain included in other income (expense), net for the year ended December 31, 2025.

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Turnstone Acquisition

In August 2025, we acquired Turnstone through a tender offer for $0.34 in cash per share of Turnstone common stock and one non-transferable CVR per share of Turnstone common stock, resulting in total purchase consideration of approximately $9.6 million. As part of the merger, we acquired certain short-term financial assets, primarily consisting of cash, receivables, prepaid expenses, and other current assets. Under the Turnstone CVR Agreement, CVR holders are entitled to 100% of the net proceeds from specified Turnstone tax receivables and a lease security deposit. As a result of the acquisition, we recognized a $1.8 million bargain purchase gain included in other income (expense), net for the year ended December 31, 2025.

Other Business Developments

Generation Bio Acquisition

In February 2026, we acquired Generation Bio through a tender offer for a base price of $4.2913 in cash per Generation Bio’s ordinary share and one non-transferrable CVR per share.

Repare Acquisition and XenoTherapeutics Arranger Letter

In November 2025, the Repare Acquisition Agreement was executed, pursuant to which we acted as structuring agent in connection with the acquisition of Repare’s issued and outstanding common shares by Xeno. Xeno agreed to pay us an arranger fee of $3.0 million following the closing of the Repare acquisition for the services we rendered, which fee was received in January 2026. BVF, a related party of the Company, owned approximately 24.0% of Repare before its acquisition by Xeno. The Repare acquisition closed on January 28, 2026.

ESSA Acquisition and XenoTherapeutics Arranger Letter

In October 2025, we acted as structuring agent in connection with the acquisition of ESSA’s issued and outstanding common shares by Xeno. As part of the ESSA Acquisition Agreement, we agreed, among other things, to provide bridge financing to Xeno. To facilitate the closing of the acquisition, we extended a short-term loan of $5.9 million to Xeno, which was repaid in October 2025. Additionally, Xeno paid us an arranger fee of $3.0 million following the closing of the ESSA acquisition for the services we rendered in October 2025, which fee was received in October 2025. BVF, a related party of the Company, owned approximately 24.7% of ESSA before its acquisition by Xeno.

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2025 Common Stock ATM Agreement

On October 3, 2025, we entered into a new ATM Agreement with Leerink under which we may offer and sell from time to time at our sole discretion shares of our common stock through Leerink as our sales agent, in an aggregate amount not to exceed $75.0 million. Leerink may sell the shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act and will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares up to the amount specified. We will pay Leerink a commission of up to 3% of the gross proceeds of any shares of common stock sold under the 2025 Common Stock ATM Agreement. From October 3, 2025 through December 31, 2025, we sold 8,966 shares of our common stock under the 2025 Common Stock ATM Agreement for net proceeds of approximately $0.3 million, and paid approximately $10,000 in commissions.

2025 Series B Preferred Stock ATM Agreement

On October 3, 2025, we also entered into a new ATM agreement with HCW under which we may offer and sell from time to time at our sole discretion depositary shares, each representing 1/1000th of a share of our Series B Preferred Stock, through HCW as our sales agent, in an aggregate amount not to exceed $50.0 million. HCW may sell the depositary shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act and will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the depositary shares up to the amount specified. We will pay HCW a commission of up to 3% of the gross proceeds of any depositary shares sold under the 2025 Series B Preferred Stock ATM Agreement. From October 3, 2025 through December 31, 2025, we sold 160,500 shares of our Series B Depository Shares under the 2025 Series B Preferred Stock ATM Agreement for net proceeds of approximately $4.0 million, and paid approximately $0.1 million in commissions with $0.1 million of fees waived.

Common Stock Buyback

In December 2025, we repurchased 539,131 shares of our common stock from one of our stockholders, for aggregate consideration of $13.6 million.

Portfolio Updates

Rezolute License Agreement

In May 2025, Rezolute dosed the last patient in its first Phase 3 trial of ersodetug (RZ358), and we earned a $5.0 million milestone payment pursuant to our Rezolute License Agreement. In December 2025, Rezolute announced the Phase 3 clinical study for ersodetug did not meet its primary and key secondary endpoints. In February 2026, Rezolute announced that it is undertaking extensive analysis of the trial results and other endpoints. Rezolute expects to meet with the FDA prior to the end of the first quarter of 2026 under its Breakthrough Therapy Designation to determine next steps for the program.

BioInvent License Agreement

In 2003, BioInvent granted us a non-exclusive license to BioInvent's product patents and know-how in exchange for future milestones and royalty payments from us under the BioInvent License Agreement. In 2006, we collaborated with Takeda to discover and develop antibodies, leading to the joint development of mezagitamab (TAK-079), which leveraged BioInvent's patents and know-how under the BioInvent License Agreement.

In May 2025, we entered into the BioInvent Agreement to acquire all of BioInvent's remaining rights to milestone payments and royalties owed by us under the BioInvent License Agreement. We paid BioInvent $20.0 million at closing and will be obligated to make an additional $10.0 million contingent payment upon FDA approval of mezagitamab.

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Kinnate Acquisition

As of April 2, 2025, we completed the sale of all five pipeline assets that were acquired in the acquisition of Kinnate in April 2024. We are eligible to receive up to $270.0 million in upfront and milestone payments, as well as future royalty payments at rates ranging from the low single digits to mid-teens on commercial sales. Pursuant to the terms of Kinnate Merger Agreement, holders of the Kinnate CVRs will receive 85% of the net proceeds of such payments received by us prior to April 2, 2029. Funds related to modest upfront payments were distributed to Kinnate CVR holders in July 2025.

Takeda Collaboration Agreement and Takeda Revenue Share Agreement

In March 2025, Takeda dosed the first patient in its Phase 3 clinical trial of mezagitamab (TAK-079), and we earned a $3.0 million milestone payment pursuant to the Takeda Collaboration Agreement.

In December 2025, we entered into the Takeda Revenue Share Agreement and amended the Takeda Collaboration Agreement to exchange a portion of our rights to future royalties and certain expense reimbursement on mezagitamab under the Takeda Collaboration Agreement for development and commercial milestone payments and royalties from a basket of nine development-stage assets that are held within Takeda’s portfolio.

Castle Creek Royalty Purchase Agreement

In February 2025, we contributed $5.0 million to Castle Creek’s $75.0 million syndicated royalty financing transaction led by Ligand. Through this transaction, we acquired a royalty interest in D-Fi (FCX-007), a Phase 3 asset being developed by Castle Creek. D-Fi is being studied in DEB, a rare progressive and debilitating skin disorder. D-Fi has been granted Orphan Drug Designation for the treatment of DEB, as well as Rare Pediatric Disease, Fast Track, and Regenerative Medicine Advanced Therapy designations by the FDA.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, income and expenses, and related disclosures of contingent assets and liabilities. We routinely evaluate our estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues, income, and expenses that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions and conditions.

Critical accounting estimates are those estimates that involve a significant level of judgment and/or estimation uncertainty and could have or are reasonably likely to have a material impact on our financial condition or results of operations. We believe the following critical accounting policies and estimates describe the more significant judgments and estimates used in the preparation of our consolidated financial statements.

Purchase of Rights to Future Milestones, Royalties and Commercial Payments

We have purchased rights to receive a portion of certain future developmental, regulatory and commercial sales milestone payments, royalties and option fees on sales of products currently in clinical development or recently commercialized. We acquire such rights from various entities and record the amount paid for these rights as long-term royalty receivables. Agreements to purchase such rights do not have contractual terms typical of loans (such as contractual principal and interest amounts). As U.S. GAAP does not provide specific authoritative guidance covering such agreements, we have analogized and accounted for the purchased rights as a financial asset in accordance with ASC 310 as we believe our contractual rights to cash flows most closely resemble that of loans (see Note 4 to the consolidated financial statements).

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Royalty and Commercial Payment Receivables (Cost Recovery Method)

We account for milestone and royalty rights related to developmental pipeline or recently commercialized products on a non-accrual basis using the cost recovery method for products where we are not able to reliably estimate the timing and amount of future cash flows. Our developmental pipeline products are non-commercial, non-approved products that require FDA or other regulatory approval and, thus, have uncertain cash flows. As of December 31, 2025, the Company is unable to reliably estimate the timing and/or amount of future cash flows associated with certain commercial product receivables and thus accounts for them under the cost recovery method. The carrying values of receivables for commercial and non-commercial products are classified as current receivables based on whether payments to be received in the near term are presumed to become probable and reasonably estimable. Under the cost recovery method, any milestone, royalty, or other payment received is recorded as a direct reduction of the recorded purchased receivable balance. When the recorded purchased receivable balance has been fully collected, any additional amounts collected will be recognized as income from purchased receivables under the cost recovery method.

We rely on third-party information to calculate the income recognized during the period. If the information upon which such income amounts are derived is provided to us from partners or other third parties in arrears, the amount of income recognized is the amount that is not expected to be subsequently reversed in future periods. Any difference between the estimated and actual income amounts will be recognized in subsequent periods.

Royalty and Commercial Payment Receivables (Effective Interest Rate Method)

We account for milestone and royalty rights related to commercial products that have reliably estimable cash flows at amortized cost under the prospective effective interest rate method. Under the effective interest rate method, we calculate the effective interest rate by forecasting the expected cash flows to be received and paid over the life of the asset. The effective interest rate is recalculated at each reporting period as differences between expected cash flows and actual cash flows are realized and as there are changes to expected future cash flows. We estimate the expected cash flows based on information available to us from partners or other third parties. However, a shortened royalty term could result in a reduction in the effective interest rate, a decline in the carrying value of the receivable balance, or reductions in milestone or royalty payments compared to expectations.

We estimate the income recognized by multiplying the carrying value of the respective receivable under the effective interest rate method by the periodic interest rate. Variables affecting the recognition of income from purchased receivables under the effective interest rate method include any one of the following: (1) changes in expected cash flows of the underlying products, (2) regulatory approval of additional indications which leads to new cash flow streams, (3) changes to the estimated duration of the cash flows (e.g., patent expiration date) and (4) changes in amounts and timing of projected cash receipts and milestone payments. Any changes in the variables affecting the recognition of income from purchased receivables under the effective interest method is applied prospectively. The recognition of income from purchased receivables requires us to make estimates and assumptions around many factors, including those impacting the variables noted above.

Our prospective application of the effective interest rate method to measure royalty and commercial payment receivables requires our judgment in forecasting future expected cash flows and reliance on third-party information. We forecast expected sales based on sales projections of the underlying commercial products that are published in research analyst reports over the periods that we are entitled to rights to cash flows from royalties or milestones. Market research is generally based on analysis of factors such as commercial product growth in global economies, industry trends, and product life cycles. We consider commercial performance updates on regulatory approval for new indications or geographic areas or discontinuation of certain indications or geographic areas in our forecasting of future expected cash flows. We also consider royalty duration of the commercial products, which may be based on factors including but not limited to regulatory and marketing approval dates, patent expiration dates, first commercial sale, and generic sales. Loss of regulatory exclusivity, patent protection, or other additional factors that may be communicated to us by our partners or through third-party information may impact the royalty duration we use in forecasting future expected cash flows.

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Contingent Payments

We may be obligated to make contingent payments related to certain product development milestones and sales-based milestones.

Under the cost recovery method, the contingent payments are evaluated to determine if they are subject to the provisions of ASC 815. Contingent payments subject to the scope of ASC 815 are measured at fair value at the inception of the arrangement, and subject to remeasurement to fair value during each reporting period. Any changes in the estimated fair value are recorded in the consolidated statements of operations. Contingent consideration payments that do not fall within the scope of ASC 815 are recognized when the amount is probable and estimable according to ASC 450.

Under the effective interest rate method, the amount and timing of contingent payments are included in the forecasted expected cash flows used to estimate royalty and commercial payment receivables and income from purchased receivables.

Allowance for Current Expected Credit Losses

We review our allowance for current expected credit losses on a quarterly basis based on updates from our partners, press releases and other publicly disclosed information on the status of clinical trials. Our current expected credit losses are based on an estimate of discounted future cash flows for our purchased receivables, which relies on assumptions including probability of technical success and discount rate. Changes to these assumptions could have a material impact on our financial statements.

Intangible Assets

Our intangible assets consist of IP from the acquisition of Pulmokine, the contract-based BioInvent intangible asset, and IP from the acquisition of LAVA. Intangible assets are amortized based on our best estimate of the distribution of the economic value of the respective intangible assets, which is generally the expected regulatory exclusivity. We review our intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount of an asset group to the future net undiscounted cash flows that the assets are expected to generate. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

Stock-Based Compensation

Stock-based compensation expense for stock options and other stock awards is estimated at the grant date based on the award’s fair value-based measurement. The valuation of stock-based compensation awards is determined on the date of grant using the Black-Scholes Model. This model requires highly complex and subjective inputs, such as the expected term of the option and expected volatility. These inputs are subjective and generally require significant analysis and judgment to develop. Our current estimate of volatility is based on the historical volatility of our stock price. To the extent volatility in our stock price increases in the future, our estimates of the fair value of options granted in the future could increase, thereby increasing stock-based compensation expense recognized in future periods. To establish an estimate of expected term, we consider the vesting period and contractual period of the award and our historical experience of stock option exercises, post-vesting cancellations and volatility. The risk-free rate is based on the yield available on U.S. Treasury zero-coupon issues. Forfeitures are recognized as they occur.

The grant date fair values of PSUs with market conditions are determined using the Monte Carlo valuation model. This model requires highly complex and subjective inputs, such as probability estimates. We record compensation expense for PSUs based on graded expense attribution over the requisite service periods.

We review our valuation assumptions quarterly and update our valuation assumptions used to value stock-based awards granted in future periods utilizing then-current data. In future periods, as additional empirical evidence regarding input estimates becomes available, we may change or refine our approach of deriving these input estimates. These changes

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could impact our fair value-based measurement of stock options granted in the future. Changes in the fair value-based measurement of stock awards could materially impact our operating results.

Results of Operations

Income and Revenues

Total income and revenues for the years ended December 31, 2025 and 2024, were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

December 31, 

​

​

​

​

2025

  ​ ​ ​

2024

  ​ ​ ​

Change

Income from purchased receivables under the EIR method

​

$

26,745

​

$

15,066

​

$

11,679

Income from purchased receivables under the cost recovery method

​

​

13,744

​

​

3,201

​

​

10,543

Revenue from contracts with customers

​

​

10,350

​

​

6,650

​

​

3,700

Revenue recognized under units-of-revenue method

​

1,310

​

3,570

​

​

(2,260)

Total income and revenues

​

$

52,149

​

$

28,487

​

$

23,662

​

Income from Purchased Receivables under the EIR Method and Cost Recovery Method

The following table summarizes income recognized from purchased receivables under the EIR method and cost recovery method during the years ended December 31, 2025 and 2024 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended December 31, 

​

​

​

​

​

2025

​

2024

​

Change

Affitech (VABYSMO)

​

$

23,957

​

$

14,800

​

$

9,157

Aptevo (IXINITY)

​

​

989

​

​

266

​

​

723

LadRx (MIPLYFFA)

​

​

1,799

​

​

—

​

​

1,799

Total income from purchased receivables under the EIR method

​

$

26,745

​

$

15,066

​

$

11,679

​

​

​

​

​

​

​

​

​

​

Viracta (OJEMDA)

​

$

13,716

​

$

3,201

​

$

10,515

Talphera (DSUVIA)

​

​

28

​

​

—

​

​

28

Total income from purchased receivables under the cost recovery method

​

$

13,744

​

$

3,201

​

$

10,543

​

Income from purchased receivables under the EIR method for the year ended December 31, 2025, included estimated income under the EIR method related to sales of VABYSMO of $24.0 million, sales of MIPLYFFA of $1.8 million, and sales of IXINITY of $1.0 million. Income from purchased receivables under the EIR method for the year ended December 31, 2024, included estimated income under the EIR method related to sales of VABYSMO of $14.8 million and sales of IXINITY of $0.3 million. We expect income related to VABYSMO to increase in future periods based on projected sales estimates; however, the increase in income may not be at the same rate as the increase from 2024 to 2025. We expected income related to MIPLYFFA to increase in future periods based on projected sales estimates.

Income from purchased receivables under the cost recovery method for the year ended December 31, 2025, included $13.7 million for OJEMDA, including a one-time $4.0 million milestone payment related to Day One’s MAA filing with the EMA, a $2.0 million milestone payment related to Day One’s NDA filing in Japan, and $7.7 million in royalties. Income from purchased receivables under the cost recovery method for the year ended December 31, 2024, included $2.7 million in estimated income under the cost recovery method related to sales of OJEMDA and $0.5 million related to a milestone payment under the Viracta RPA. OJEMDA was launched in the second quarter of 2024, and we expect income from related royalties to increase in future periods based on projections reported by Day One.

Revenue from Contracts with Customers

Revenue from contracts with customers includes upfront fees, annual license fees and milestone payments related to the out-licensing of our legacy product candidates and technologies. Revenue from contracts with customers for the year ended December 31, 2025, primarily included a milestone payment of $5.0 million pursuant to our Rezolute License

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Agreement, $4.1 million pursuant to the Takeda Collaboration Agreement, including $3.0 million from a milestone payment and $1.1 million in other revenue, and $1.3 million in other milestone payments. Revenue from contracts with customers for the year ended December 31, 2024, primarily included a milestone payment of $5.0 million pursuant to our license agreement with Rezolute, a $0.5 million option fee under our license agreement with Alexion, and a milestone payment of $1.0 million pursuant to a license agreement with an undisclosed licensee.

Revenue Recognized under Units-of-Revenue Method

Revenue recognized under the units-of-revenue method includes the amortization of unearned revenue from the sale of royalty interests to HCRP in 2016. Changes in revenues recognized in each year presented are related to the changes in estimated royalties received by HCRP.

R&D Expenses

Total research and development expenses for the years ended December 31, 2025 and 2024, were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

December 31, 

​

​

​

​

2025

​

2024

​

Change

Research and development

​

$

1,712

​

$

2,875

​

$

(1,163)

​

R&D expense was $1.7 million for the year ended December 31, 2025, compared with $2.9 million for the year ended December 31, 2024. The decrease of $1.2 million was primarily due to a decrease of $2.4 million in clinical trial costs related to the wind-down activities of KIN-3248 subsequent to our acquisition of Kinnate in April 2024, partially offset by increases of $1.0 million in pass-through license fees reimbursed through a license agreement and $0.3 million related to our wind-down activities of HilleVax. We may incur increased R&D costs associated with our contemplated acquisitions.

G&A Expenses

Total general and administrative expenses for the years ended December 31, 2025 and 2024, were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

December 31, 

​

​

​

​

2025

  ​ ​ ​

2024

  ​ ​ ​

Change

General and administrative

​

$

36,092

​

$

34,478

​

$

1,614

G&A expenses include salaries and related personnel costs, professional fees, and facilities costs. For the year ended December 31, 2025, G&A expenses were $36.1 million, compared with $34.5 million for the year ended December 31, 2024. The increase of $1.6 million was primarily due to an increase in business development and deal-related costs of $3.7 million, an increase in lease costs of $1.0 million primarily related to the HilleVax acquisition, partially offset by $3.6 million in costs related to exit packages for Kinnate senior leadership in 2024 and a decrease of $1.0 million in share-based compensation.

G&A expenses for the year ended December 31, 2025 also include an increase of approximately $1.1 million associated with ongoing litigation initiated by us against Janssen asserting claims for breach of contract and unjust enrichment arising from Janssen's unauthorized use of our intellectual property in the commercialization of TREMFYA (guselkumab). We expect to continue to incur legal fees and other professional service costs associated with pursuing this litigation. Litigation is inherently uncertain, and there can be no assurance regarding the outcome of the matter or the timing or amount of any potential recovery.

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G&A expenses included non-cash share-based compensation expenses of $9.3 million and $10.3 million for the years ended December 31, 2025 and 2024, respectively.

Credit Losses on Purchased Receivables

There were no credit losses on purchased receivables for the year ended December 31, 2025.

Credit losses on purchased receivables were $30.9 million for the year ended December 31, 2024, and consisted of $9.0 million related to our Aronora RPA in the second quarter of 2024, $14.0 million related to our Agenus RPA in the third quarter of 2024, and $7.9 million related to our Talphera CPPA in the fourth quarter of 2024.

Other Income (Expense), Net

Interest Expense

Interest expense includes the accretion of debt discount and debt issuance costs. Interest expense for the years ended December 31, 2025 and 2024, was as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

December 31, 

​

​

​

​

2025

​

2024

​

Change

Accrued interest expense

​

$

11,644

​

$

12,490

​

$

(846)

Accretion of debt discount and debt issuance costs

​

1,387

​

1,350

​

37

Total interest expense

​

$

13,031

​

$

13,840

​

$

(809)

​

Interest expense incurred for the years ended December 31, 2025 and 2024, was related to our Blue Owl Loan. The decrease for the year ended December 31, 2025, was due to a decrease in the principal balance.

Gains on Acquisitions

During the year ended December 31, 2025, we recognized a gain on acquisition of HilleVax of $17.9 million, a gain on acquisition of Turnstone of $1.8 million, a gain on acquisition of Mural of $3.2 million, and a reduction to the gains on acquisitions of $1.7 million to remove a previously recognized prepaid asset for the Kinnate acquisition that occurred in the quarter ended June 30, 2024.

Change in Fair Value of Embedded Derivative Related to RPA

Throughout the year ended December 31, 2025, the estimated fair value of embedded derivatives related to RPA remained negligible. During the year ended December 31, 2024, we recognized an $8.1 million change in fair value of an embedded derivative related to RPA associated with a payment of $8.1 million for the sale of a priority review voucher by Day One, which we earned pursuant to the Viracta RPA.

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Other Income, Net

Other income, net for the years ended December 31, 2025 and 2024, was as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Year Ended

  ​ ​ ​

​

​

​

December 31, 

​

​

​

​

2025

​

2024

​

Change

Other income, net

​

​

​

​

​

​

​

​

​

Gain on sale of equity securities

​

$

3,663

​

$

—

​

$

3,663

Investment income

​

​

3,470

​

​

6,493

​

​

(3,023)

Arranger fee from ESSA transaction

​

​

3,000

​

​

—

​

​

3,000

Sublease income

​

​

840

​

​

272

​

​

568

Unrealized gain from change in fair value of equity securities

​

​

90

​

​

131

​

​

(41)

Other miscellaneous income, net

​

​

1,175

​

​

25

​

​

1,150

Total other income, net

​

$

12,238

​

$

6,921

​

$

5,317

​

During the year ended December 31, 2025, we recognized a gain of $3.7 million from the sale of equity securities.

The decrease of $3.0 million in investment income for the year ended December 31, 2025, as compared to 2024 was due to lower cash balances.

For the year ended December 31, 2025, the increase in other miscellaneous income, net was primarily due to $0.7 million from the HilleVax final net cash reconciliation and $0.5 million in upfront fees in connection with the sale of the legacy Kinnate assets in the second quarter of 2025, net of $0.6 million of related distributions to Kinnate CVR holders.

Income Taxes Benefit (Expense)

We recorded income tax expense of approximately $0.1 million for the year ended December 31, 2025, primarily related to the recognition of a deferred tax liability associated with the acquisitions of HilleVax and LAVA, reflecting expected withholding taxes on the anticipated repatriation of earnings from the Company’s Swiss and Australian subsidiaries. This compares to an income tax benefit of $5.7 million for the year ended December 31, 2024, primarily related to the release of valuation allowance resulting from the deferred tax liability recorded on intangible assets acquired in the Pulmokine acquisition. We continue to maintain a full valuation allowance against our net deferred tax assets. We had a total of $5.9 million of gross unrecognized tax benefits as of December 31, 2025, none of which would impact our effective tax rate to the extent that we continue to maintain a full valuation allowance against our deferred tax assets. We do not expect our unrecognized tax benefits to change significantly over the next twelve months.

Liquidity and Capital Resources

Our cash and cash equivalents, restricted cash, and cash flow activities as of and for each of the years presented were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 

​

December 31, 

​

​

​

​

​

2025

​

2024

​

Change

Cash and cash equivalents

​

$

82,908

​

$

101,654

​

$

(18,746)

Short-term restricted cash

​

$

5,441

​

$

1,330

​

$

4,111

Long-term restricted cash

​

$

45,361

​

$

3,432

​

$

41,929

Net increase in cash, cash equivalents, and restricted cash

​

​

​

​

​

​

​

$

27,294

​

The decrease in cash and cash equivalents of $18.7 million from December 31, 2024 to December 31, 2025 was primarily driven by $50.5 million of cash received from our purchased receivables and contracts with customers offset by $22.5 million in principal and interest payments for the Blue Owl Loan, $20.7 million purchase of BioInvent intangible asset, $16.0 million repurchase of common stock, and $8.0 million in payments related to RPAs. The increase of $46.0

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million in restricted cash from December 31, 2024 to December 31, 2025 was primarily due to additions of $51.4 million of restricted cash acquired from the various acquisitions during the year, net of restricted cash changes related to the Blue Owl Loan and payments on the Boston Lease.

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

December 31, 

​

​

​

​

​

2025

​

2024

​

Change

Net cash provided by (used in) operating activities

​

$

2,871

​

$

(13,748)

​

$

16,619

Net cash provided by (used in) investing activities

​

50,886

​

​

(28,259)

​

79,145

Net cash used in financing activities

​

(26,463)

​

(11,127)

​

(15,336)

Net increase (decrease) in cash, cash equivalents, and restricted cash

​

$

27,294

​

$

(53,134)

​

$

80,428

​

Net cash provided by operating activities was $2.9 million for the year ended December 31, 2025, compared with net cash used in operating activities of 13.7 million for the year ended December 31, 2024. The change was primarily driven by cash receipts during the year (see further details in the Capital Resources section below).

Net cash provided by investing activities was $50.9 million for the year ended December 31, 2025, compared with net cash used in investing activities of $28.3 million for the year ended December 31, 2024. The difference was primarily driven by the net cash acquired in the HilleVax acquisition of $46.4 million, net cash acquired in the LAVA acquisition of $15.3 million, the sale of equity securities for $7.0 million, net cash acquired in the Mural acquisition of $4.5 million, cash receipts from royalty and commercial payments of $3.3 million, and net cash acquired in the Turnstone acquisition of $3.9 million, partially offset by the payment for the BioInvent contract-based intangible asset of $20.7 million, payments related to the Castle Creek royalty financing of $5.0 million, and payments of contingent consideration under RPAs, CPPAs, and PIPAs of $3.0 million.

Net cash used in financing activities for the year ended December 31, 2025 was $26.5 million, compared with $11.1 million for the year ended December 31, 2024. The difference was primarily due to repurchases of common stock of $16.0 million, principal repayments on our Blue Owl Loan of $10.6 million (compared with $6.9 million in principal repayments in the year ended December 31, 2024), partially offset by net proceeds from issuances of Series B Preferred Stock of $4.0 million.

​

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Capital Resources

​

We have historically financed our operations and acquisitions through debt facilities, the issuance of our common stock, Series A and Series B Preferred Stock, and amounts received as milestone payments under our license agreements. Cash received from commercial payments related to sales of VABYSMO will be used to pay down the principal amount and interest due on our Blue Owl Loan until the loan is repaid in full. We also receive cash payments from our purchased receivables, and these receipts have been increasing in recent years as our portfolio matures. Below is a summary of the cash received from our purchased receivables and contracts with customers for the years ended December 31, 2025 and 2024 (in thousands):

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

December 31, 

​

​

2025

​

2024

Royalties and commercial payments

​

​

​

​

​

​

VABYSMO

​

$

22,507

​

$

16,888

OJEMDA

​

​

6,404

​

​

1,413

MIPLYFFA

​

​

2,884

​

​

—

IXINITY

​

​

1,724

​

​

1,613

OTHER

​

​

32

​

​

97

Total royalties and commercial payments

​

​

33,551

​

​

20,011

Other receipts from purchased receivables

​

​

6,000

​

​

19,250

Receipts from contracts with customers

​

​

10,900

​

​

7,100

Total cash receipts

​

$

50,451

​

$

46,361

​

We have historically incurred significant operating losses and as of December 31, 2025, we had an accumulated deficit of $1.2 billion. As of December 31, 2025, we had $82.9 million in unrestricted cash and cash equivalents and $50.8 million in restricted cash. Based on our current cash balance and our planned discretionary spending, such as royalty or other acquisitions, we believe that our current financial resources are sufficient to fund our planned operations, commitments, and contractual obligations for a period of at least one year following the filing date of this Annual Report.

​

The generation of future income and revenue related to royalties and milestone payments is dependent on the achievement of product sales or milestones by our existing partners. Milestone payments earned in prior periods are not indicative of anticipated milestone payments in future periods. We may seek additional capital through our 2025 Common Stock ATM Agreement or our 2025 Series B Preferred Stock ATM Agreement (see Note 14 to the consolidated financial statements), or through other public or private debt or equity transactions. Our ability to raise additional capital in the equity and debt markets, should we choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for our common and preferred stock, which are subject to a number of development and business risks and uncertainties, our creditworthiness and whether were are able to raise such additional capital at a price or on terms that are favorable to us, if at all. If we are unable to raise additional funds when we need them, our business and operations may be adversely affected.

Material Cash Requirements

​

Our material cash requirements in the short and long term consist of the following:

​

Operating Expenditures: Our primary uses of cash for our operating expenses include employee and related costs, consultant fees to support our administrative and business development efforts, legal and accounting fees, insurance costs, and costs associated with our investor relations and IT services.

​

To support our royalty aggregator business model, we engage third parties to assist in the evaluation of potential acquisitions of milestone payments and royalty streams. Additional operating expenses, including consulting and legal costs, may continue to increase in 2026 in response to an anticipated increase in the volume of royalty or acquisition targets evaluated or completed.

​

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We have an operating lease for our headquarters in Emeryville, California that expires in April 2029. As of December 31, 2025, we expect to incur incremental undiscounted costs of $0.3 million associated with our building lease.

​

In September 2025, as part of the HilleVax acquisition, we acquired the Boston Lease that expires on December 31, 2032. Of the total cash we received in the HilleVax acquisition, a corresponding $40.7 million was reserved as of December 31, 2025, to pay the future Boston Lease obligations. As of December 31, 2025, undiscounted lease payments of $28.7 million were reserved as part of the restricted cash held for Boston Lease payments. If the Boston Lease is terminated, assigned, or subleased within twelve months of the HilleVax Merger Closing Date, 100% of the amount received from any subtenant will be distributed to CVR holders. If the Boston Lease is terminated, assigned, or subleased after twelve months of the HilleVax Merger Closing Date, 90% of the applicable receipts will be distributed to CVR holders.

​

Stock Repurchase Program: On January 2, 2024, our Board authorized our stock repurchase program, which permits us to purchase up to $50.0 million of our common stock through January 2027. During the year ended December 31, 2025, we repurchased a total of 648,048 shares of common stock pursuant to the stock repurchase program for $16.0 million. Our repurchases exceeded the $1.0 million annual de minimis threshold established by Internal Revenue Code Section 4501, resulting in a 1% excise tax of $68,000 for the year ended December 31, 2025, related to stock repurchases. The excise tax was recorded as a non-cash reduction to stockholders’ equity and did not impact our net income or operating cash flows. As of December 31, 2025, we repurchased a total of 648,708 shares of common stock pursuant to the stock repurchase program for $16.1 million.

​

Cash-Out Arrangement: On October 13, 2025, the compensation committee of the Board approved a cash-out arrangement for certain stock options held by Thomas Burns, our former Chief Financial Officer. In January 2026, we announced Mr. Burns’ resignation, following which the Cash-Out Agreement was terminated and no cash was disbursed.

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Long-Term Debt: Under the Blue Owl Loan Agreement, the outstanding principal balance bears interest at an annual rate of 9.875%. XRL began making payments of interest under the Blue Owl Loan Agreement semi-annually in March 2024 using the royalties received on worldwide net sales of VABYSMO, pursuant to the Affitech CPPA. On each interest payment date, any shortfall in interest payment will be paid from the interest reserve, any uncured shortfall in interest payment that exceeds the interest reserve will increase the outstanding principal amount of the loan, and any royalty payments in excess of accrued interest on the loan will be used to repay the principal of the loan until the balance is fully repaid. As of December 31, 2025, XRL held restricted cash of $2.2 million in reserve accounts that may only be used to pay interest and administrative fees and XRL’s operating expenses pursuant to the Blue Owl Loan Agreement. As of December 31, 2025, the current and non-current portion of the initial term loan was $12.5 million and $96.5 million, respectively, and $2.0 million of the restricted cash was classified as non-current.

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RPAs, AAAs, and CPPAs: A significant component of our business model is to acquire rights to potential future milestone payments and royalty payment streams. We expect to continue deploying capital toward these acquisitions in the near and long term.

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We will be obligated to pay an additional $11.0 million for each successive $22.0 million received by us under the Daré RPAs after achievement of a return threshold of $88.0 million.

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In addition, we have potential sales-based milestone payments that may become due under our agreement with Kuros. All of these milestones and royalty payments represent a portion of the funds we may receive in the future pursuant to this agreement, and therefore we expect these payments to be fully funded by the related royalty or commercial payment receipts.

Collaborative Agreements, Royalties and Milestone Payments: We may need to make potential future milestone payments and pay legal fees to third parties as part of our licensing and development programs. Payments under these agreements become due and payable only upon the achievement of certain developmental, regulatory, and commercial milestones by our licensees. Because it is uncertain if and when these milestones will be achieved, such contingencies, aggregating up to $12.1 million (assuming one product per contract meets all milestone events) have not been recorded on our consolidated balance sheet as of December 31, 2025, including the $10.0 million BioInvent

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contingent consideration. We are unable to determine precisely when and if our payment obligations under the agreements will become due as these obligations are based on milestone events, the achievement of which is subject to a significant number of risks and uncertainties. We expect all payments due to be funded by a portion of the related milestone or royalty revenue we receive or we expect these payments to be reimbursed by our licensees.

Dividends: Holders of our Series A Preferred Stock are entitled to receive, when and as declared by our Board, cumulative cash dividends at the rate of 8.625% of the $25.00 liquidation preference per year (equivalent to $2.15625 per share of Series A Preferred Stock per year). Holders of Series B Depositary Shares are entitled to receive, when and as declared by our Board, cumulative cash dividends at the rate of 8.375% of the $25,000 liquidation preference per share of Series B Preferred Stock ($25.00 per depositary share) per year, which is equivalent to $2,093.75 per year per share of Series B Preferred Stock ($2.09375 per year per depositary share). Dividends on the Series A and Series B Preferred Stock are payable in arrears on or about the 15th day of January, April, July, and October of each year. Since original issuance, all dividends have been paid as scheduled. We expect to continue making these dividend payments as scheduled using our existing capital resources.

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Recent Accounting Pronouncements

See Note 2 to the consolidated financial statements for information regarding new accounting pronouncements.