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10-Q ________________________________________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2026 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-38841 ________________________________________________________ Precision BioSciences, Inc. (Exact Name of Registrant as Specified in its Charter) ________________________________________________________ Delaware 20-4206017 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 302 East Pettigrew St. , Suite A-100 Durham , North Carolina 27701 (Address of principal executive offices) (Zip Code) ( 919 ) 314-5512 (Registrant’s telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) ________________________________________________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.000005 per share DTIL The Nasdaq Capital Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company x . Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x As of October 29, 2026, the registrant had 27,935,719 shares of common stock, $0.000005 par value per share, outstanding. Table of Contents Table of Contents Page Forward-Looking Statements 3 Risk Factor Summary 5 PART I. FINANCIAL INFORMATION 7 Item 1. Financial Statements (unaudited) 7 Condensed Balance Sheets 7 Condensed Statements of Operations 8 Condensed Statements of Changes in Stockholders’ Equity 9 Condensed Statements of Cash Flows 10 Notes to Condensed Financial Statements 11 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3. Quantitative and Qualitative Disclosures About Market Risk 33 Item 4. Controls and Procedures 34 PART II. OTHER INFORMATION 35 Item 1. Legal Proceedings 35 Item 1A. Risk Factors 35 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 89 Item 3. Defaults Upon Senior Securities 89 Item 4. Mine Safety Disclosures 89 Item 5. Other Information 89 Item 6. Exhibits 90 Signatures 92 2 Table of Contents FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our future results of operations and financial position, business strategy and approach, including related results, prospective products, use and development of licensed products, planned preclinical studies and clinical trials, or discontinuance thereof, the status and results of our preclinical studies, expected release of interim data, expectations regarding the use and effects of ARCUS, including in connection with in vivo genome editing, collaborations and potential new partnerships or alternative opportunities for our product candidates, potential new application filings and regulatory approvals, research and development costs, timing, expected results and likelihood of success, as well as plans and objectives of management for future operations may be forward-looking statements. Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seeks,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in Part II. Item 1A. “Risk Factors” and Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These risks and uncertainties include, but are not limited to: • our ability to become profitable; • our ability to procure sufficient funding to advance our programs; • risks associated with raising additional capital and requirements under our current debt instruments and effects of restrictions thereunder; • our operating expenses and our ability to predict what those expenses will be; • our limited operating history; • the success of our programs and product candidates in which we expend our resources; • our limited ability or inability to assess the safety and efficacy of our product candidates; • the risk that other genome-editing technologies may provide significant advantages over our ARCUS technology; • our dependence on our ARCUS technology; • the initiation, cost, timing, progress, achievement of milestones and results of research and development activities and preclinical and clinical studies; • public perception about genome editing technology and its applications; • competition in the genome editing, biopharmaceutical, and biotechnology fields; • our or our collaborators’ ability to identify, develop and commercialize product candidates; • potential product liability lawsuits and penalties against us or our collaborators related to our technology and our product candidates; • the U.S. and foreign regulatory landscape applicable to our and our collaborators’ development of product candidates; • our or our collaborators’ or other licensees’ ability to advance product candidates into, and successfully design, implement and complete clinical trials; • potential manufacturing problems associated with the development or commercialization of any of our product candidates; 3 Table of Contents • delays or difficulties in our or our collaborators’ ability to enroll patients in clinical trials; • results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials; • changes in interim “top-line” and initial data that we announce or publish; • if our product candidates do not work as intended or cause undesirable side effects; • risks associated with applicable healthcare, data protection, privacy and security regulations and our compliance therewith; • effects of system failures, cyber-attacks, and security breaches; • our ability to obtain orphan drug designation, fast track designation, rare pediatric disease designation, or a priority review voucher for our product candidates, or to realize the expected benefits of these designations; • our or our collaborators’ ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations and/or warnings in the label of an approved product candidate; • the rate and degree of market acceptance of any of our product candidates; • our ability to effectively manage the growth of our operations; • our ability to attract, retain, and motivate executives and personnel; • insurance expenses and exposure to uninsured liabilities; • effects of tax rules; • the success of our existing collaboration or other licensees’ agreements and our ability to enter into new collaboration arrangements; • our current and future relationships with and reliance on third parties including suppliers and manufacturers; • our ability to obtain and maintain intellectual property protection for our technology and any of our product candidates; • potential litigation relating to infringement or misappropriation of intellectual property rights; • effects of natural and man-made disasters, public health emergencies and other natural catastrophic events; • effects of sustained inflation, supply chain disruptions and major central bank policy actions; • market and economic conditions; • risks related to ownership of our common stock, including fluctuations in our stock price; and • our ability to meet the requirements of and maintain listing of our common stock on Nasdaq or other public stock exchanges. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. You should read this Quarterly Report on Form 10-Q and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. All forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, references to “Precision,” the “Company,” “we,” “us,” and “our,” refer to Precision BioSciences, Inc. 4 Table of Contents RISK FACTOR SUMMARY Our business is subject to numerous risks and uncertainties, including those described in Part II. Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our common stock. Some of the principal risks and uncertainties include the following. • We have incurred significant operating losses since our inception and expect to continue to incur losses for the foreseeable future. We have not been profitable and may not achieve or maintain profitability. • We will need substantial additional funding, and if we are unable to raise a sufficient amount of capital when needed on acceptable terms, or at all, we may be forced to delay, reduce or eliminate some or all of our research programs, product development activities and commercialization efforts. • We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and may increase the risk of your investment. • ARCUS is a novel technology, making it difficult to predict the time, cost and potential success of product candidate development. We have not yet been able to assess the safety and efficacy of most of our product candidates in humans. • We are heavily dependent on the successful development and translation of ARCUS, and due to the early stages of our product development operations, we cannot give any assurance that any product candidates will be successfully developed and commercialized. • If our product candidates do not achieve projected development milestones or commercialization in the announced or expected timeframes, the further development or commercialization of such product candidates may be delayed, and our business will be harmed. • Adverse public perception of genome editing may negatively impact the developmental progress or commercial success of products that we develop alone or with collaborators. • We face significant competition in industries experiencing rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop product candidates or treatments that are safer or more effective than ours, which may harm our financial condition and our ability to successfully market or commercialize any of our product candidates. • Our future profitability, if any, will depend in part on our ability and the ability of our collaborators to commercialize any products that we or our collaborators may develop in markets throughout the world. Commercialization of products in various markets could subject us to risks and uncertainties. • Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any products that we develop alone or with collaborators. • The regulatory landscape that will apply to development of therapeutic product candidates by us or our collaborators is rigorous, complex, uncertain and subject to change, which could result in delays or termination of development of such product candidates or unexpected costs in obtaining regulatory approvals. • We may not be able to submit INDs to the FDA or CTAs to comparable foreign authorities to commence clinical trials on the timelines we expect, and even if we are able to, the FDA or comparable foreign authorities may not permit us to proceed. • Clinical trials are difficult to design and implement, expensive, time-consuming and involve an uncertain outcome, and the inability to successfully and timely conduct clinical trials and obtain regulatory approval for our product candidates would substantially harm our business. • Any product candidates that we or our collaborators or other licensees may develop will be novel and may be complex and difficult to manufacture, and if we experience manufacturing problems, it could result in delays in development and commercialization of such product candidates or otherwise harm our business. • Any delays or difficulties in our or our collaborators’ ability to enroll patients in clinical trials could delay or prevent receipt of regulatory approvals. • Results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials. Our product candidates may not have favorable results in later clinical trials, if any, or receive regulatory approval. 5 Table of Contents • Our business and operations may suffer in the event of information technology system failures, cyber-attacks or deficiencies in our security, which could materially affect our results. • Even if we obtain regulatory approval for any products that we develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements, which may result in significant additional expense. • Even if any product we develop alone or with collaborators receives marketing approval, such product may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success. • Our future success depends on our key executives, as well as attracting, retaining and motivating qualified personnel. • Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in the delisting of our common stock. 6 Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements. PRECISION BIOSCIENCES, INC. CONDENSED BALANCE SHEETS (In thousands, except share and per share amounts) (unaudited) September 30, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 81,698 $ 110,823 Accounts receivable — — Marketable securities 148 4,762 Prepaid expenses 4,724 3,110 Other current assets 5 45 Total current assets 86,575 118,740 Restricted cash 26,336 26,330 Property, equipment, and software—net 779 1,425 Intangible assets—net 1,062 1,166 Right-of-use assets—net 4,756 5,805 Investment in equity securities 744 744 Other assets 124 206 Total assets $ 120,376 $ 154,416 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 813 $ 296 Accrued compensation 3,476 4,747 Accrued research and development expenses 1,794 1,714 Lease liabilities 1,660 1,507 Other current liabilities 527 649 Total current liabilities 8,270 8,913 Loan payable 22,424 22,404 Lease liabilities 3,636 4,897 Warrant liability 23,969 15,695 Contract liabilities 10,000 10,000 Other noncurrent liabilities 302 259 Total liabilities 68,601 62,168 Stockholders’ equity: Preferred stock: $ 0.0001 par value— 10,000,000 shares authorized as of September 30, 2026 and December 31, 2025; no shares issued and outstanding as of September 30, 2026 and December 31, 2025 — — Common stock: $ 0.000005 par value— 200,000,000 shares authorized as of September 30, 2026 and December 31, 2025; 27,920,080 shares issued and 27,893,065 shares outstanding as of September 30, 2026; 24,115,346 shares issued and 24,088,425 shares outstanding as of December 31, 2025 1 1 Additional paid-in capital 639,593 621,387 Accumulated deficit ( 586,867 ) ( 528,188 ) Treasury stock ( 952 ) ( 952 ) Total stockholders’ equity 51,775 92,248 Total liabilities and stockholders’ equity $ 120,376 $ 154,416 See notes to condensed financial statements 7 Table of Contents PRECISION BIOSCIENCES, INC. CONDENSED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2026 2025 2026 2025 Revenue $ — $ 13 $ 10,838 $ 60 Operating expenses Research and development 12,745 13,352 38,249 39,708 General and administrative 7,683 7,328 21,253 25,008 Total operating expenses 20,428 20,680 59,502 64,716 Operating loss ( 20,428 ) ( 20,667 ) ( 48,664 ) ( 64,656 ) Other income (expense): (Loss) gain from equity method investment — ( 591 ) — 86 Loss on changes in other fair value adjustments ( 456 ) ( 3 ) ( 3,651 ) ( 2,418 ) Gain (loss) on change in fair value of warrant liability 12,724 ( 1,179 ) ( 8,274 ) ( 1,230 ) Interest expense ( 307 ) ( 362 ) ( 918 ) ( 1,074 ) Interest income 881 1,027 2,823 3,466 Gain (loss) on disposal of assets — 3 5 ( 31 ) Total other income (expense) 12,842 ( 1,105 ) ( 10,015 ) ( 1,201 ) Net loss $ ( 7,586 ) $ ( 21,772 ) $ ( 58,679 ) $ ( 65,857 ) Net loss per share Basic $ ( 0.28 ) $ ( 1.84 ) $ ( 2.26 ) $ ( 6.14 ) Diluted $ ( 0.28 ) $ ( 1.84 ) $ ( 2.26 ) $ ( 6.14 ) Weighted-average shares of common stock outstanding Basic 27,433,353 11,818,145 25,985,060 10,728,199 Diluted 27,433,353 11,818,145 25,985,060 10,728,199 See notes to condensed financial statements 8 Table of Contents PRECISION BIOSCIENCES, INC. CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In thousands, except share amounts) (Unaudited) Common Stock Additional Paid-In Capital Accumulated Deficit Treasury Stock Total Stockholders’ Equity Shares Amount Balance- December 31, 2024 8,229,730 $ 1 $ 539,808 $ ( 482,464 ) $ ( 952 ) $ 56,393 Issuance of common stock under employee stock purchase plan 30,999 — 140 — — $ 140 Share-based compensation expense — — 2,822 — — $ 2,822 Issuance of common stock to licensees 220,712 — 1,031 — — $ 1,031 Issuance of common stock through ATM facility, net of issuance cost 1,818,886 — 9,516 — — $ 9,516 Settlement of restricted stock units 275,540 — — — — — Net loss — — — ( 20,565 ) — $ ( 20,565 ) Balance- March 31, 2025 10,575,867 $ 1 $ 553,317 $ ( 503,029 ) $ ( 952 ) $ 49,337 Share-based compensation expense — — 2,937 — — 2,937 Issuance of common stock through ATM facility, net of issuance cost 1,036,488 — 5,300 — — 5,300 Settlement of restricted stock units 51,641 — — — — — Net loss — — — ( 23,520 ) — ( 23,520 ) Balance- June 30, 2025 11,663,996 $ 1 $ 561,554 $ ( 526,549 ) $ ( 952 ) $ 34,054 Share-based compensation expense — — 2,386 — — $ 2,386 Issuance of common stock under employee stock purchase plan 18,745 — 78 — — 78 Issuance of common stock through ATM facility, net of issuance cost 382,571 — 1,888 — — 1,888 Settlement of restricted stock units 44,368 — — — — — Net loss — — — ( 21,772 ) — ( 21,772 ) Balance- September 30, 2025 12,109,680 $ 1 $ 565,906 $ ( 548,321 ) $ ( 952 ) $ 16,634 Balance- December 31, 2025 24,115,346 $ 1 $ 621,387 $ ( 528,188 ) $ ( 952 ) $ 92,248 Issuance of common stock under employee stock purchase plan 23,233 — 83 — — 83 Share-based compensation expense — — 1,549 — — 1,549 Issuance of common stock to licensees 201,504 — 662 — — 662 Issuance of common stock from pre-funded warrants 875,000 — — — — — Settlement of restricted stock units 617,830 — — — — — Net loss — — — ( 18,441 ) — ( 18,441 ) Balance- March 31, 2026 25,832,913 $ 1 $ 623,681 $ ( 546,629 ) $ ( 952 ) $ 76,101 Share-based compensation expense — — 1,844 — — 1,844 Issuance of common stock from pre-funded warrants 525,000 — — — — — Settlement of restricted stock units 102,660 — — — — — Net loss — — — ( 32,652 ) — ( 32,652 ) Balance- June 30, 2026 26,460,573 $ 1 $ 625,525 $ ( 579,281 ) $ ( 952 ) $ 45,293 Issuance of common stock under employee stock purchase plan 28,186 — 104 — — 104 Share-based compensation expense — — 2,958 — — 2,958 Issuance of common stock through ATM facility, net of issuance costs 1,408,833 — 10,856 — — 10,856 Proceeds from issuance of common stock 22,488 — 150 — — 150 Net loss — — — ( 7,586 ) — ( 7,586 ) Balance- September 30, 2026 27,920,080 $ 1 $ 639,593 $ ( 586,867 ) $ ( 952 ) $ 51,775 See notes to condensed financial statements 9 Table of Contents PRECISION BIOSCIENCES, INC. CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Nine Months Ended September 30, 2026 2025 Cash flows used in operating activities: Net loss $ ( 58,679 ) $ ( 65,857 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 774 1,123 Share-based compensation 6,351 8,145 (Gain) loss on disposal of assets ( 5 ) 31 Non-cash interest expense 121 164 Amortization of right-of-use assets 1,049 952 Loss on changes in other fair value adjustments 3,651 2,418 Gain from equity method investment — ( 86 ) Amortization of discount on note receivable — ( 682 ) Loss on change in fair value of warrant liability 8,274 1,230 Issuance of common stock in exchange for services 150 — Changes in operating assets and liabilities: Prepaid expenses ( 1,614 ) 584 Marketable securities 958 464 Accounts receivable — 225 Contract asset — 1,469 Other assets and other current assets 122 ( 151 ) Accounts payable 497 313 Other liabilities and other current liabilities ( 1,052 ) ( 3,913 ) Deferred revenue — ( 52 ) Lease liabilities ( 1,108 ) ( 970 ) Net cash used in operating activities ( 40,511 ) ( 54,593 ) Cash flows used in investing activities: Purchases of property, equipment and software ( 18 ) ( 66 ) Purchases of intangible assets ( 300 ) ( 265 ) Proceeds from sale of equipment 5 22 Net cash used in investing activities ( 313 ) ( 309 ) Cash flows provided by financing activities: Proceeds from employee stock purchase plan 187 218 Proceeds from issuance of common stock through ATM facility, net of issuance cost 10,856 16,397 Proceeds from issuance of common stock to collaboration partners and licensees 662 1,031 Net cash provided by financing activities 11,705 17,646 Net decrease in cash and cash equivalents ( 29,119 ) ( 37,256 ) Cash, cash equivalents, and restricted cash — beginning of period 137,153 108,468 Cash, cash equivalents, and restricted cash — end of period $ 108,034 $ 71,212 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 81,698 $ 44,870 Restricted cash $ 26,336 $ 26,342 Total of cash, cash equivalents and restricted cash $ 108,034 $ 71,212 Supplemental disclosures of cash flow information: Intangible asset additions included in accounts payable and accrued expenses and other current liabilities $ — $ 400 Property, equipment and software additions included in accounts payable and accrued expenses and other current liabilities $ 6 $ — Cash paid for interest $ 901 $ 1,030 See notes to condensed financial statements 10 Table of Contents Precision BioSciences, Inc. Notes to Condensed Financial Statements (Unaudited) NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Precision BioSciences, Inc. (the “Company”) was incorporated on January 26, 2006 under the laws of the State of Delaware and is based in Durham, North Carolina. The Company is a gene editing company dedicated to improving life by developing in vivo therapies for genetic and infectious diseases with the application of the Company’s wholly-owned proprietary ARCUS genome editing platform. Since its inception, the Company has devoted substantially all of its efforts to research and development activities, recruiting skilled personnel, establishing its intellectual property portfolio and providing general and administrative support for these operations. The Company is subject to a number of risks similar to those of other companies conducting early-stage research and development of product candidates. Principal among these risks are the Company’s dependence on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development and clinical manufacturing of its product candidates. The Company’s success is dependent upon its ability to continue to raise additional capital in order to fund ongoing research and development, obtain regulatory approval of its products, successfully commercialize its products, generate revenue, meet its obligations, and, ultimately, attain profitable operations. Unaudited Interim Financial Information The accompanying unaudited condensed financial statements and notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), have been condensed or omitted pursuant to those rules and regulations. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026. The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the Company’s condensed financial position as of September 30, 2026 and its condensed results of operations and cash flows for the three and nine months ended September 30, 2026 and 2025, have been made. The Company’s condensed results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026. Summary of Significant Accounting Policies The Company’s complete listing of significant accounting policies is set forth in Note 1, Description of Business and Summary of Significant Accounting Policies , to the Notes to Condensed Financial Statements on its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no changes to these policies as of September 30, 2026. Accounting Standards Updates Recently Issued Accounting Standards In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , to improve disclosures around an entity’s expenses. Upon adoption, companies will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted, and can be applied either prospectively or retrospectively. The 11 Table of Contents Company plans to adopt the standard in the year ending December 31, 2027 and is currently assessing its effect on the Company’s financial statement disclosures. 12 Table of Contents NOTE 2: FAIR VALUE MEASUREMENTS The following represents assets and liabilities measured at fair value on a recurring basis by the Company (in thousands): September 30, 2026 Fair Value Level 1 Level 2 Level 3 Assets: Money market funds $ 15,699 $ 15,699 $ — $ — Investment in iECURE 744 — — 744 Imugene Marketable Securities 148 148 — — $ 16,591 $ 15,847 $ — $ 744 Liabilities: Final payment fee $ 188 $ — $ 188 $ — Warrant liability 23,969 — — 23,969 $ 24,157 $ — $ 188 $ 23,969 December 31, 2025 Fair Value Level 1 Level 2 Level 3 Assets: Money market funds $ 15,286 $ 15,286 $ — $ — Investment in iECURE 744 — — 744 Imugene Marketable Securities 4,762 4,762 — — $ 20,792 $ 20,048 $ — $ 744 Liabilities: Final payment fee $ 208 $ — $ 208 $ — Warrant Liability 15,695 — — 15,695 $ 15,903 $ — $ 208 $ 15,695 The following represents a reconciliation of assets measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the nine months ended September 30, 2026 (in thousands). The warrant reconciliation is disclosed in Note 11, Warrants : Investment in iECURE Balance December 31, 2025 $ 744 (Loss) gain from changes in fair value included in earnings — Balance September 30, 2026 $ 744 The carrying amounts of the Company’s accounts receivable, accounts payable, and accrued expenses and other current liabilities, approximate their respective fair values due to their short-term nature. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis and to minimize the use of unobservable inputs when determining their fair value. The three tiers are defined as follows: Level 1—Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities Level 2—Inputs, other than quoted prices in active markets, which are observable either directly or indirectly Level 3—Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. 13 Table of Contents NOTE 3: DEBT Loan and Security Agreement On July 31, 2024, the Company entered into an amended and restated loan and security agreement (the “2024 Loan and Security Agreement”) with Banc of California pursuant to which Banc of California provided the Company with a term loan with a principal amount of $ 22.5 million (the “2024 Term Loan”). The 2024 Term Loan bears interest at an annual rate equal to the greater of (i) 1.50 % below the Prime Rate (as defined in the 2024 Loan and Security Agreement) then in effect or (ii) 4.50 %. On June 10, 2026, the Company and Banc of California entered into a First Amendment to Amended and Restated Loan and Security Agreement (the “First Amendment”). The First Amendment amended the 2024 Term Loan between the Company and Banc of California (as amended, including the First Amendment, the “Loan and Security Agreement”). The First Amendment extended the maturity date of the Term Loan, as defined in the Loan and Security Agreement, from June 30, 2027 to December 31, 2029. As of September 30, 2026, the stated interest rate on the Loan and Security Agreement was 5.50 % and the effective interest rate was 5.69 %. Additionally, as of September 30, 2026, $ 22.5 million in borrowings were outstanding under the Loan and Security Agreement and the unamortized debt discount balance was less than $ 0.1 million. Refer to Note 12, Debt , to the Company’s audited financial statements included in the Company’s Annual Report for the fiscal year ended December 31, 2025, for more information related to the Loan and Security Agreement. NOTE 4: COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to various legal matters and claims in the ordinary course of business. Although the results of legal proceedings and claims cannot be predicted with certainty, in the opinion of management, there are currently no such known matters that will have a material effect on the financial condition, results of operations or cash flows of the Company. Servier Program Purchase Agreement On April 9, 2021, the Company entered into a program purchase agreement (the “Program Purchase Agreement”) with Les Laboratoires Servier and Institut de Recherches Internationales Servier (collectively, “Servier”), pursuant to which the Company reacquired all of its global development and commercialization rights previously granted to Servier pursuant to the Development and Commercial License Agreement by and between Servier and the Company, dated February 24, 2016, as amended (the “Servier Agreement”), and mutually terminated the Servier Agreement. The Program Purchase Agreement requires the Company to make certain payments to Servier based on the achievement of regulatory and commercial milestones for each product. Management assessed the likelihood of each of the regulatory and commercial milestones included in the Program Purchase Agreement in accordance with ASC 450, Contingencies . If the assessment of a contingency indicates that it is probable that the milestone will be achieved and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s condensed financial statements. Accordingly, contingent liabilities of $ 10.0 million related to the Program Purchase Agreement are accrued and included in contract liabilities in the condensed balance sheets as of September 30, 2026 and December 31, 2025. 14 Table of Contents Leases The Company has an operating lease for real estate in North Carolina and does not have any finance leases. The elements of lease expense were as follows: For the Nine Months Ended September 30, (in thousands) 2026 2025 Lease Cost Operating lease cost $ 1,448 $ 1,447 Short-term lease cost 348 586 Variable lease cost 310 353 Sublease income ( 467 ) — Total Lease Cost $ 1,639 $ 2,386 Other Information Operating cash flows used for operating leases 1,506 1,463 Operating Leases Weighted-average remaining lease term (in years) 2.8 3.8 Operating Leases Weighted-average discount rate 9.2 % 9.2 % Future minimum lease payments under non-cancelable operating leases with terms of greater than one year as of September 30, 2026, were as follows: (in thousands) Amount 2026 (remainder of year) $ 513 2027 2,078 2028 2,140 2029 1,269 Total lease payments $ 6,000 Less: imputed interest 705 Total operating lease liabilities $ 5,295 Supply Agreements The Company enters into contracts in the normal course of business with contract manufacturing organizations (“CMOs”) for the manufacture of clinical trial materials and contract research organizations (“CROs”) for clinical trial services. These agreements provide for termination at the request of either party with less than one-year’s notice and are, therefore, cancellable contracts. If canceled, these agreements are not anticipated to have a material effect on the financial condition, results of operations, or cash flows of the Company. Compensatory Arrangements of Certain Officers On August 26, 2025, the Company entered into amended and restated employment agreements that included, among other things, a requirement to fund the cash severance and expenses in an escrow account. Such agreements were entered into to help retain each of its then-serving executive officers: Michael Amoroso, the Company’s President and Chief Executive Officer; Alex Kelly, the Company’s then Chief Financial Officer (who has served as the Company’s Chief Operating Officer since August 1, 2026); Dario Scimeca, the Company’s then General Counsel and Secretary (who has served as the Company’s Chief Legal Officer and Corporate Secretary since August 1, 2026); and Jeff Smith, the Company’s Chief Research Officer. As a result, the Company entered into escrow arrangements with JPMorgan Chase Bank, N.A. and the 15 Table of Contents executives with respect to the funded amounts. Interest earned from the escrow account accrues to the Company and any unused funds return to the Company. As of September 30, 2026, the escrow account cash balance was $ 3.8 million. NOTE 5: STOCKHOLDERS’ EQUITY Capital Structure On March 1, 2024, the Company entered into an underwriting agreement relating to a public offering of (i) 2,500,000 shares of the Company’s common stock, par value $ 0.000005 per share, and (ii) warrants to purchase up to an aggregate of 2,500,000 shares of the Company’s common stock (the “March 2024 Public Offering”). The warrants have a five-year term and an exercise price of $ 20.00 per share. Each warrant is exercisable immediately upon issuance, subject to certain limitations on beneficial ownership. The price to the public in the March 2024 Public Offering was $ 16.00 per share of common stock and accompanying warrants, which resulted in approximately $ 37.0 million of net proceeds to the Company after deducting the underwriting discount and offering expenses of approximately $ 3.0 million. On November 10, 2025, the Company entered into an underwriting agreement relating to the issuance and sale of 10,815,000 shares of the Company ’ s common stock, par value $ 0.000005 per share, and accompanying one-half warrants to purchase up to 5,407,500 shares of the Company’s common stock at a combined price of $ 6.14 per share. Further, in lieu of common stock to certain investors, the Company issued pre-funded warrants to purchase up to 1,400,000 shares of the Company ’ s common stock and accompanying one-half warrants to purchase up to 700,000 shares of the Company ’ s common stock at a combined price of $ 6.139995 per share. Each whole warrant has a five -year term and an exercise price of $ 7.25 per share. The offering resulted in approximately $ 70.0 million of net proceeds to the Company after deducting the underwriting discount and offering expenses of approximately $ 5.0 million. During the nine months ended September 30, 2026, pre-funded warrants were exercised to purchase 1,400,000 shares of the Company’s common stock. No pre-funded warrants remained outstanding as of September 30, 2026. NOTE 6: COLLABORATION AND LICENSE AGREEMENTS TG Therapeutics On January 7, 2024, the Company entered into a license agreement (the “TG License Agreement”) with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc. (“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”), pursuant to which the Company granted TG Subsidiary certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize azer-cel for autoimmune diseases and other indications outside of cancer pursuant to the terms of the TG License Agreement. Under the TG License Agreement, the Company received an upfront cash payment of $ 10.0 million (the “Upfront Payment”) comprised of (i) a $ 5.25 million cash payment that was paid to the Company on February 5, 2024, (ii) a $ 2.25 million cash payment that was paid to the Company on February 5, 2024 in exchange for 97,360 shares of the Company’s common stock, based on a price per share equal to a 100 % premium to the VWAP of the Company’s common stock for the 30 trading days prior to the date of the TG License Agreement, and (iii) a deferred cash payment of $ 2.5 million that was paid to the Company on January 6, 2025 in exchange for 220,712 shares of the Company’s common stock at a price per share of $ 11.33 , which represented a 100 % premium to the VWAP of the Company’s common stock for the 30 trading days prior to the date of payment. The Company also received a cash payment of $ 7.5 million from TG Therapeutics on March 12, 2026 following the achievement of a clinical milestone (the “Initial Milestone Payment”). The Initial Milestone payment of $ 7.5 million consisted of (i) $ 5.25 million cash milestone payment and (ii) a $ 2.25 million cash payment in exchange for 201,504 shares of the Company’s common stock based on the minimum price of $ 11.1660 determined in accordance with Nasdaq Listing Rule 5635(d). The Company is also entitled to receive additional payments upon the achievement of additional specified milestones of up to $ 288.6 million. The 201,504 shares purchased at a purchase price of $ 11.1660 per share in connection with the Initial Milestone represented a premium paid over the Company’s stock value at the milestone achievement date. Management concluded that the stock premium was to be combined with the cash consideration received in connection with the achievement of the milestone in accordance with ASC 606. Of the total $ 7.5 million received for the Initial Milestone achievement, the Company applied equity accounting guidance to measure the $ 0.7 million recorded in equity upon issuance of the shares, and $ 6.8 million was identified as the transaction price of the milestone that would be allocated to revenue. As such, during the nine months ended September 30, 2026, the Company recognized $ 6.8 million revenue under the TG License 16 Table of Contents Agreement. During the nine months ended September 30, 2025, the Company recognized no revenue under the TG License Agreement. Collaboration and License Agreement with Novartis During the nine months ended September 30, 2026, the Company recognized no revenue under the collaboration and license agreement between the Company and Novartis Pharma AG (the “Novartis Agreement”) as the Novartis Agreement was terminated in the prior year. During the nine months ended September 30, 2025, the Company recognized revenue under the Novartis Agreement of less than $ 0.1 million. There is no deferred revenue related to the Novartis Agreement as of September 30, 2026 or December 31, 2025. Development and License Agreement with iECURE The Company adjusts the carrying value of the iECURE, Inc. (“iECURE”) equity to fair value each reporting period with any changes in fair value recorded to other (expense) income. There was no change in the fair value of the iECURE equity during the nine months ended September 30, 2026 and a $ 2.5 million decrease in the fair value of the iECURE equity during the nine months ended September 30, 2025. Research and License Agreement with an Agriculture Industry Collaboration Partner During the nine months ended September 30, 2026, the Company recognized $ 4.0 million in revenue under a legacy ARCUS gene editing research and license agreement milestone from an agriculture industry collaboration partner. The collaboration was concluded in April 2026. NOTE 7: SHARE-BASED COMPENSATION The Company previously granted stock options under its 2015 Stock Incentive Plan (the “2015 Plan”). As of September 30, 2026 there were 15,549 stock options outstanding under the 2015 Plan and no remaining stock options available to be granted under the 2015 Plan. The 2019 Incentive Award Plan (as amended and restated, the “2019 Plan”) provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. The 2019 Plan had 35,626 stock options and 2,899,866 restricted stock units (“RSUs”) outstanding as of September 30, 2026. The number of shares available for issuance under the 2019 Plan initially equaled 158,333 shares of common stock. The 2019 Plan provides for an annual increase to the number of shares of common stock available for issuance on the first day of each calendar year beginning January 1, 2020 and ending on and including January 1, 2029 by an amount equal to the lesser of (i) 4 % of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the board of directors. As of September 30, 2026, the aggregate number of shares available for issuance under the 2019 Plan has been increased by 1,825,822 pursuant to this provision. Additionally, the number of shares available for issuance under the plan was increased by an additional 630,000 shares in connection with the amendment and restatement of the 2019 Plan approved at the Company’s annual meeting of stockholders on June 4, 2024 and by an additional 3,800,000 shares in connection with the amendment and restatement of the 2019 Plan approved at the Company’s annual meeting of stockholders on May 21, 2026. Any shares that are subject to awards outstanding under the Company’s 2006 Plan and 2015 Plan as of the effective date of the 2019 Plan that expire, lapse, or are terminated, exchanged for cash, surrendered, repurchased, or canceled without having been fully exercised or forfeited, to the extent so unused, will become available for award grants under the 2019 Plan. As of September 30, 2026, 2,317,512 shares were available to be issued under the 2019 Plan. The purchase price of the shares under the 2019 ESPP, in the absence of a contrary designation, will be 85 % of the lower of the fair market value of our common stock on the first trading day of the offering period or on the purchase date. As of September 30, 2026, we had issued 158,329 shares under the 2019 ESPP. As of September 30, 2026, 315,625 shares were available to be issued under the 2019 ESPP. The Company recognized share-based compensation expense related to the 2019 ESPP of less than $ 0.1 million during each of the nine months ended September 30, 2026 and the nine months ended September 30, 2025. 17 Table of Contents The 2021 Employment Inducement Incentive Award Plan (as amended, the “Inducement Award Plan”) provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock, RSUs and other share-based awards to newly hired employees who have not previously been an employee or member of the board, or an employee who is being rehired following a bona fide period of non-employment by the Company. No more than 1,100,000 shares of the Company’s common stock may be issued under the Inducement Award Plan. As of September 30, 2026, 863,426 shares were available to be issued under the Inducement Award Plan. The Inducement Award Plan had 94,938 stock options and 128,426 RSUs outstanding as of September 30, 2026. The Company recorded employee and nonemployee share-based compensation expense as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 Employee $ 2,769 $ 2,226 $ 5,876 $ 7,606 Nonemployee 189 160 475 539 $ 2,958 $ 2,386 $ 6,351 $ 8,145 Share-based compensation expense is included in the following line items in the condensed statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 Research and development $ 810 $ 464 $ 1,642 $ 1,365 General and administrative 2,148 1,922 4,709 6,780 $ 2,958 $ 2,386 $ 6,351 $ 8,145 The following table summarizes activity in the Company’s stock option plans for the nine months ended September 30, 2026: Outstanding Option Shares Weighted-Average Exercise Price Balance as of December 31, 2025 168,993 $ 165.54 Granted — — Exercised — — Forfeited/canceled ( 22,880 ) 255.83 Balance as of September 30, 2026 146,113 $ 151.40 The fair value of each RSU was determined based on the closing market price of the Company’s common stock on the date of grant. The fair value of the RSUs will be recognized as expense over the requisite vesting period. The following table summarizes the Company’s RSU activity for the nine months ended September 30, 2026: RSU Awards Weighted-Average Grant Date Fair Value Unvested RSUs as of December 31, 2025 1,623,933 $ 7.36 Granted 2,142,967 7.08 Forfeited ( 18,118 ) 4.94 Vested ( 720,490 ) 8.40 Unvested RSUs as of September 30, 2026 3,028,292 $ 6.93 There was approximately $ 15.8 million of total unrecognized compensation cost related to unvested stock options and RSUs as of September 30, 2026, which is expected to be recognized over a weighted-average period of 2.1 years. 18 Table of Contents NOTE 8: INCOME TAXES The Company estimates an annual effective tax rate of 0 % for the year ending December 31, 2026 as the Company incurred losses for financial statement and tax purposes for the nine months ended September 30, 2026. The Company is forecasting additional net losses for financial statement and tax purposes for the remainder of the year ending December 31, 2026. Therefore, no federal or state income taxes are expected, and none have been recorded at this time. Income taxes have been accounted for using the liability method in accordance with ASC 740, Income Taxes . Due to the Company’s history of losses since inception, there is not enough evidence at this time to support that the Company will generate future income of a sufficient amount and nature to utilize the benefits of its net deferred tax assets. Accordingly, the deferred tax assets have been reduced by a full valuation allowance, since the Company does not currently believe that realization of its deferred tax assets is more likely than not. As of September 30, 2026, the Company had no unrecognized tax benefits that would reduce the Company’s effective tax rate if recognized. NOTE 9: EARNINGS PER SHARE The Company calculates basic net loss per share by dividing net loss for each respective period by the weighted-average number of common shares outstanding for each respective period. The Company computes diluted net loss per share after giving consideration to the dilutive effect of unvested RSUs, stock options, unsettled ESPP contributions, and warrants that are outstanding during the period, except where such securities would be anti-dilutive. The computations of basic and diluted net loss per share attributable to common stockholders are as follows: Three months ended September 30, Nine months ended September 30, 2026 2025 2026 2025 Net loss (in thousands) $ ( 7,586 ) $ ( 21,772 ) $ ( 58,679 ) $ ( 65,857 ) Basic weighted-average common shares 27,433,353 11,818,145 25,985,060 10,728,199 Dilutive impact of share-based awards — — — — Diluted weighted-average common shares (1) 27,433,353 11,818,145 25,985,060 10,728,199 Basic net loss per share: Basic net loss per share ( 0.28 ) ( 1.84 ) ( 2.26 ) ( 6.14 ) Diluted net loss per share: Diluted net loss per share ( 0.28 ) ( 1.84 ) ( 2.26 ) ( 6.14 ) (1) For the three and nine months ended September 30, 2026 and September 30, 2025, all outstanding total common stock equivalents were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The Company excluded the following potential common shares, based on amounts outstanding at period end, from the computation of diluted net loss per share because including them would have had an anti-dilutive effect under the treasury stock method: 434,589 unvested RSUs, 1,116 unsettled ESPP contributions, and 464,921 warrants for the three months ended September 30, 2026 and 160,379 unvested RSUs and 748 unsettled ESPP contributions for the nine months ended September 30, 2026. NOTE 10: SEGMENT REPORTING Operating segments are identified as components of an entity about which separate discrete financial information is available for evaluation by the chief operating decision maker or decision-making group (“CODM”) in making decisions on how to allocate resources and assess performance. The Company’s CODM, the Chief Executive Officer, views the Company’s operations as one operating segment, which includes the discovery and development of therapies utilizing our 19 Table of Contents novel proprietary ARCUS platform. Our clinical and preclinical candidates were developed using the ARCUS platform to treat various forms of infectious and genetic disease. The Company has not generated any revenue from product sales to date and expects to incur significant expenses and operating losses for the foreseeable future as it advances product candidates through development and clinical trials. As such, the CODM uses cash forecast models in managing and allocating resources on a total company basis, such as pursuing clinical development or entering into potential strategic collaborations. The CODM assesses the overall level of resources available and how to best deploy these resources across functions and research and development projects that are in line with the Company’s long-term strategic goals. Consistent with its management reporting, results of operations are reported on a Company-wide basis for purposes of segment reporting. The CODM uses Company-wide financial information, including net income (loss) and comprehensive income (loss), net cash used in operating activities for the period, and cash on hand for purposes of evaluating operating results and performance. As the Company operates in one operating segment, all measures of the segment assets are reported on the balance sheets as total assets. Please refer to the financial statements for further information related to these measures of segment performance. The tables below summarize the significant research and development and general and administrative expense categories regularly provided to the CODM for the three months ended September 30, 2026 and September 30, 2025 and the nine months ended September 30, 2026 and September 30, 2025. Due to the pause in development of the PBGENE-3243 program to prioritize the Company’s two lead programs, PBGENE-HBV and PBGENE-DMD, expenses for PBGENE-3243 have been recast for the periods presented below. The amounts previously reported under “PBGENE-3243 external development costs” are now reported within the “Platform development and early-stage research expense” line items: Three months ended September 30, (in thousands) 2026 2025 Revenue $ — $ 13 Operating expenses Research and development Direct research and development expenses by product candidate: PBGENE-HBV external development costs 3,013 1,596 PBGENE-DMD external development costs 3,537 3,738 Platform development and early-stage research expenses: Employee-related costs (including share-based compensation) 4,943 5,457 Laboratory supplies and services 316 329 CMOs and outsourced research and development 150 788 Facility-related costs, laboratory equipment, and maintenance 483 684 Depreciation and amortization 201 309 Licensing fees and other research and development costs 102 451 Total research and development expenses $ 12,745 $ 13,352 General and administrative expense Employee-related costs (including share-based compensation) 4,818 4,431 Consulting and professional services 1,634 1,412 Other operating expenses and all other costs 1,231 1,485 Total general and administrative expenses $ 7,683 $ 7,328 Total operating expenses $ 20,428 $ 20,680 Operating loss ( 20,428 ) ( 20,667 ) Total other income (expense) 12,842 ( 1,105 ) Net loss $ ( 7,586 ) $ ( 21,772 ) 20 Table of Contents Nine months ended September 30, (in thousands) 2026 2025 Revenue $ 10,838 $ 60 Operating expenses Research and development Direct research and development expenses by product candidate: PBGENE-HBV external development costs 6,879 4,575 PBGENE-DMD external development costs 11,794 10,339 Platform development and early-stage research expenses: Employee-related costs (including share-based compensation) 14,182 15,523 Laboratory supplies and services 998 1,437 CMOs and outsourced research and development 407 3,136 Facility-related costs, laboratory equipment, and maintenance 1,829 2,219 Depreciation and amortization 706 979 Licensing fees and other research and development costs 1,454 1,500 Total research and development expenses $ 38,249 $ 39,708 General and administrative expense Employee-related costs (including share-based compensation) 12,632 15,621 Consulting and professional services 4,570 4,613 Other operating expenses and all other costs 4,051 4,774 Total general and administrative expenses $ 21,253 $ 25,008 Total operating expenses $ 59,502 $ 64,716 Operating loss ( 48,664 ) ( 64,656 ) Total other expenses ( 10,015 ) ( 1,201 ) Net loss $ ( 58,679 ) $ ( 65,857 ) NOTE 11: WARRANTS The warrants issued in the March 2024 Public Offering and November 2025 Public Offering are classified as liabilities in accordance with ASC 815, since these warrants met the definition of a derivative instrument and did not qualify for equity classification. These warrant agreements include a fundamental transaction clause whereby, in the event that another person or entity becomes the beneficial owner of 50 % of the outstanding shares of the Company’s common stock, and if other conditions are met, the Company may be required to purchase the warrants from the holders by paying cash in an amount equal to the Black-Scholes value of the remaining unexercised portion of the warrants on the date of such fundamental transaction. This liability is subject to remeasurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the Company’s condensed statements of operations. The fair value adjustment of the March 2024 Public Offering for the nine months ended September 30, 2026 was $ 0.5 million using the Black-Scholes option-pricing model. As of September 30, 2026, all of the 2,500,000 warrants are outstanding. The Company estimated the fair value of the warrant liability using the following assumptions as of September 30, 2026: Estimated dividend yield 0.00 % Weighted-average expected stock price volatility 69.82 % Weighted-average risk-free interest rate 4.93 % Expected term (in years) 2.42 Weighted-average fair value per warrant $ 0.94 21 Table of Contents The fair value adjustment of the November 2025 Public Offering for the nine months ended September 30, 2026 was $ 7.8 million using the Black-Scholes option-pricing model. As of September 30, 2026, all of the 6,107,500 warrants are outstanding. The Company estimated the fair value of the warrant liability using the following assumptions as of September 30, 2026: Estimated dividend yield 0.00 % Weighted-average expected stock price volatility 74.99 % Weighted-average risk-free interest rate 5.05 % Expected term (in years) 4.11 Weighted-average fair value per warrant $ 3.54 The following table summarizes the Company’s warrant liability (in thousands): Balance at December 31, 2025 $ 15,695 Issuance of warrants — Change in fair value of warrant liability 8,274 Balance at September 30, 2026 $ 23,969 NOTE 12: SUBSEQUENT EVENTS The Company has evaluated all subsequent events through the issuance date of these financial statements and no subsequent events occurred that required disclosure. 22 Table of Contents Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Financial Statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in Part II. Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied by, these forward-looking statements. As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Precision” refer to Precision BioSciences, Inc. Overview We are a clinical stage gene editing company dedicated to improving life by developing in vivo therapies for genetic and infectious diseases with the application of our wholly-owned proprietary ARCUS genome editing platform. The foundation of ARCUS is a natural homing endonuclease which allows us to replicate precise gene editing as it evolved in nature for sophisticated gene edits, including gene insertion, excision, and elimination. ARCUS is also unique in its relatively small size which potentially allows delivery to a wider range of cells and tissues using viral and non-viral gene delivery methods. Wholly-Owned Portfolio PBGENE-HBV is our wholly owned in vivo gene editing program being evaluated in ELIMINATE-B, a global clinical trial, as a potential viral cure for chronic hepatitis B. PBGENE-HBV targets and eliminates covalently closed circular DNA (“cccDNA”), the sole source of viral replication, leading to durable loss of pregenomic RNA, the precursor for hepatitis B virus (“HBV”) DNA infectious particles. PBGENE-HBV is the first and only in vivo gene elimination approach to prospectively employ repeat lipid nanoparticle administration in chronic hepatitis B with the goal of viral elimination and viral cure. During the third quarter, we continued to advance the ELIMINATE-B trial, enrolling additional patients and expanding the 0.4 mg/kg and 0.65 mg/kg cohorts to support selection of the optimal dosing schedule for Phase 2 expansion. Additional biopsies and blood biomarker data are being collected to further validate and characterize cccDNA elimination findings demonstrated in the late-breaking EASL data presented in May 2026. In October 2026, we announced that the PBGENE-HBV abstract had been selected for the late-breaking oral presentation at the upcoming Liver Meeting 2026 during the 77th annual meeting of the American Association for the Study of Liver Diseases. The embargoed abstract will become public on November 5, 2026 and the late-breaking oral presentation will occur on November 8, 2026. PBGENE-DMD is our investigational drug for Duchenne muscular dystrophy (“DMD”), designed to restore near full-length functional dystrophin protein through a gene excision approach using two ARCUS nucleases delivered in a single adeno-associated virus (“AAV”). We believe this approach of restoring the body’s native dystrophin gene after excising the frequently-mutated hotspot region including exons 45-55 may be applicable for the majority of patients with DMD. In August 2026, we dosed the first patient in the Phase 1/2 FUNCTION-DMD study at Arkansas Children's Hospital, a PPMD-certified Duchenne Care Center and designated MDA Care Center in Little Rock, marking the first time a clinical stage gene editing approach aimed at restoring near full length dystrophin protein from the native gene has been evaluated in patients with DMD. Multiple clinical trial sites are now active, with Washington University School of Medicine in St. Louis also recruiting patients. The study is enrolling ambulatory DMD patients between the ages of 2 and 7 with mutations between exons 45 and 55 , representing up to 60% of boys living with DMD. Initial safety data are targeted for year-end 2026, with efficacy data at distinct timepoints expected to follow in the first and second half of 2027. Partnered In Vivo Gene Editing Program In partnership with iECURE, ECUR-506 is an ARCUS-mediated in vivo targeted gene insertion program currently in a first-in-human trial, OTC-HOPE, evaluating ECUR-506 as a potential treatment for neonatal-onset ornithine transcarbamylase (“OTC”) deficiency. iECURE previously announced alignment with the U.S. Food and Drug 23 Table of Contents Administration (“FDA”) on key study elements that could support a potential Biologics License Application (“BLA”). The OTC-HOPE study is ongoing in the U.K., the U.S., Australia, and Spain. In August 2026, iECURE presented updated clinical data in an oral platform presentation at the Annual Symposium of the Society for the Study of Inborn Errors of Metabolism in Helsinki, Finland. Preliminary safety observations showed ECUR-506 was generally well tolerated, with no unexpected treatment-related safety events observed. Phase 1/2 dosing has been completed across all dose cohorts and participant evaluations are ongoing. Updated low-dose cohort data demonstrated a 57% reduction in the annualized rate of hyperammonemic events (“HAEs”) and a 74% reduction in annualized hyperammonemic crises (“HACs”) following ECUR-506 administration. HAEs are episodes of elevated ammonia, with more severe episodes known as HACs. HACs are acute medical emergencies characterized by elevated ammonia levels with neurologic symptoms and can lead to hospitalization, irreversible neurologic injury, and death. Partnered Ex Vivo Programs Azer-cel is being evaluated by TG Therapeutics, Inc. (“TG Therapeutics”) in a Phase 1 trial in progressive multiple sclerosis (“MS”). TG Therapeutics present ed a late-breaking oral presentation highlighting initial results from the Phase 1 azer-cel study in patients with primary progressive multiple sclerosis at the 10th Joint ACTRIMS-ECTRIMS Meeting, also referred to as MSToronto2026, on October 23, 2026, in Toronto, Canada. Across dose levels evaluated to date, azer-cel showed an encouraging preliminary safety profile with no high-grade CAR-T associated toxicities observed. Additionally, 89% of evaluable participants had stable or improved disability scores at Day 90, despite documented progression prior to enrollment on high-efficacy therapies. Early pharmacokinetics/pharmacodynamics, biomarker, and clinical outcomes support continued evaluation of azer-cel in progressive MS. We previously announced the achievement of a clinical milestone under our license agreement with TG Therapeutics. As a result, we have earned a cash payment of $7.5 million in proceeds, inclusive of $5.25 million cash and $2.25 million for the purchase of 201,504 shares of our common stock by TG Therapeutics at $11.17 per share. Separately, Imugene continues development of azer-cel in diffuse large B-cell lymphoma and has received written guidance from the FDA regarding the registrational pathway for azer-cel. The guidance provided clear alignment with the FDA across key elements required to support advancement into a pivotal study, including dosing regimen, patient population, endpoints, and manufacturing readiness. Azer-cel data presented at the 2026 American Society of Clinical Oncology Annual Meeting in May 2026 demonstrated that among 24 patients evaluable for response following their first disease assessment at Day 28, response rates ranging from 50%-100% were observed across all six cancer subtypes. In October 2026, Imugene reported two further responses, including one complete response in cohort 2 (CAR T naïve) and one partial response in cohort 3 (BTKi combination), bringing the overall response rate to 81% in cohort 2 and 86% in cohort 3. Components of our Results of Operations Revenue To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales in the foreseeable future. We record revenue from collaboration agreements, including amounts related to upfront payments, milestone payments, fees for licenses of our intellectual property and research and development funding. Research and Development Expenses Research and development expenses consist primarily of costs incurred for our clinical trials and research activities, including our discovery efforts and the development of our product candidates. These include the following: • salaries, benefits and other related costs, including share-based compensation expense, for personnel engaged in research and development functions; • expenses incurred under agreements with third parties, including third parties that conduct preclinical research and development activities on our behalf; • costs of manufacturing drug products for use in our preclinical studies, including the costs of contract manufacturing organizations (“CMOs”); 24 Table of Contents • costs of outside consultants; • costs of laboratory supplies and acquiring, developing and manufacturing preclinical study materials; • license payments made for intellectual property used in research and development activities; and • facility-related expenses, which include direct depreciation costs and expenses for rent and maintenance of facilities and other operating costs if specifically identifiable to research activities. We expense research and development costs as incurred. We track external research and development costs by product candidate beginning when it is publicly named as a development program. Internal and external costs that are not identifiable to specific development candidates are included in the platform development expenses category. Research and development activities are central to our business model. We expect that our research and development expenses will increase over the long term and will comprise a larger percentage of our total expenses as we progress development of our product candidates. We cannot determine with certainty the duration and costs of future clinical trials for our product candidates we may develop or if, when or to what extent we will generate revenue from the commercialization and sale of any product candidate for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any product candidate. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including: • the scope, rate of progress, expense and results of current and future clinical trials of our product candidates and other research and development activities that we may conduct; • the ability to collaborate and partner with third parties to fund any or all of our programs; • uncertainties in clinical trial design and patient enrollment rates; • the actual probability of success for our product candidates, including their safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability; • significant and changing government regulation and regulatory guidance; • the timing and receipt of any marketing approvals; and • the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to slower than expected patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development. General and Administrative Expenses General and administrative expenses consist primarily of salaries, consulting fees, recruitment-related costs and other employee-related costs, including share-based compensation, for personnel in our executive, finance, business development, operations and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters; information technology costs; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and expenses for rent and maintenance of facilities and other operating costs that are not specifically attributable to research activities. Change in Equity Method Investment Changes in fair value on our equity method investment represents changes in the investment value of our equity method investee, Elo Life Systems, Inc. (“Elo”). In 2026, Elo is no longer classified as an equity method investment. Any subsequent changes to the investment’s fair value will be recorded through the other fair value adjustments line item. 25 Table of Contents Changes in Other Fair Value Adjustments The change in fair value represents the assessed changes in assets and liabilities carried at fair value. We adjust the carrying value of the ordinary shares issued from Imugene to its fair value each reporting period with any changes in fair value recorded to other income (expense). We adjust the carrying value of the iECURE investment under the iECURE Equity Agreement to its fair value each reporting period with any changes in fair value recorded to other (expense) income. Change in Fair Value of Warrant Liability The change in fair value of warrant liability represents the mark-to-market fair value adjustments to the outstanding warrants issued in connection with the March 2024 Public Offering and November 2025 Public Offering. Refer to Note 11, Warrants , in the accompanying notes to the financial statements for more information on the fair value assumptions. Interest Expense Interest expense consists of interest payments incurred and discount amortization on debt outstanding. Interest Income Interest income consists of interest income earned on our cash and cash equivalents. Gain (Loss) on Disposal of Assets Gain (loss) on disposal of assets represents the difference between the sale price and remaining net book value of sold assets at the time of their sale. Results of Operations Comparison of the Three Months Ended September 30, 2026 and September 30, 2025 The following table summarizes our results of operations for the three months ended September 30, 2026 and September 30, 2025, together with the changes in those items: For the Three Months Ended September 30, (in thousands) 2026 2025 Change Revenue $ — $ 13 $ (13) Operating expenses Research and development 12,745 13,352 (607) General and administrative 7,683 7,328 355 Total operating expenses 20,428 20,680 (252) Operating loss (20,428) (20,667) 239 Other income (expense): Loss from equity method investment — (591) 591 Loss on changes in other fair value adjustments (456) (3) (453) Gain (loss) on change in fair value of warrant liability 12,724 (1,179) 13,903 Interest expense (307) (362) 55 Interest income 881 1,027 (146) Gain on disposal of assets — 3 (3) Total other income (expense) 12,842 (1,105) 13,947 Net loss $ (7,586) $ (21,772) $ 14,186 26 Table of Contents Revenue No revenue was recognized for the three months ended September 30, 2026 compared to less than $0.1 million for the three months ended September 30, 2025. Revenue from the prior period was generated from the Novartis Agreement. Research and Development Expenses Due to the pause in development of PBGENE-3243 to prioritize our two lead programs, PBGENE-HBV and PBGENE-DMD, expenses for PBGENE-3243 have been recast for the periods presented below. The amounts previously reported under “PBGENE-3243 external development costs” are now reported within the “Platform development and early-stage research expense” line items. Three months ended September 30, (in thousands) 2026 2025 Change Direct research and development expenses by product candidate: PBGENE-HBV external development costs $ 3,013 $ 1,596 $ 1,417 PBGENE-DMD external development costs 3,537 3,738 (201) Platform development and early-stage research expenses: Employee-related costs (including share-based compensation) 4,943 5,457 (514) Laboratory supplies and services 316 329 (13) CMOs and outsourced research and development 150 788 (638) Facility-related costs, laboratory equipment, and maintenance 483 684 (201) Depreciation and amortization 201 309 (108) Licensing fees and other research and development costs 102 451 (349) Total research and development expenses $ 12,745 $ 13,352 $ (607) Research and development expenses for the three months ended September 30, 2026 were $12.7 million, compared to $13.4 million for the three months ended September 30, 2025. The decrease of approximately $0.7 million was primarily due to reductions in research including completion of pre-investigational new drug (“IND”) research expenses for both the PBGENE-HBV and PBGENE-DMD programs, partially offset by an increase in the PBGENE-HBV clinical program costs driven by advancement and cohort expansion of the Phase 1 ELIMINATE-B trial. General and Administrative Expenses General and administrative expenses were $7.7 million for the three months ended September 30, 2026, compared to $7.3 million for the three months ended September 30, 2025. The increase of approximately $0.4 million was primarily a result of increases in employee-related costs and consulting services. Loss from Equity Method Investment For the three months ended September 30, 2025, the $0.6 million non-cash loss from equity investment was the result of our proportionate share of Elo’s loss under equity method accounting. In the three months ended September 30, 2026, Elo was not classified as an equity method investment. There were no changes to the investment value for the three months ended September 30, 2026 and any subsequent changes in the investment’s fair value will be recorded through other fair value adjustments. Loss on Changes in Other Fair Value Adjustments The loss on changes in other fair value adjustments of $0.5 million for the three months ended September 30, 2026 is attributable to the non-cash decrease in fair value on the ordinary shares held for Imugene Limited. The loss on changes in other fair value adjustments of less than $0.1 million for the three months ended September 30, 2025 was primarily attributable to the change in fair value of the final payment fee under the 2024 Term Loan. 27 Table of Contents Gain (Loss) on Change in Fair Value of Warrant Liability The non-cash gain from change in fair value of the warrant liability was $12.7 million for the three months ended September 30, 2026 compared to a non-cash loss of $1.2 million for the three months ended September 30, 2025 represents the mark-to-market fair value adjustment to the outstanding warrants issued in connection with the March 2024 Public Offering and November 2025 Public Offering. Interest Expense Interest expense was $0.3 million for the three months ended September 30, 2026 compared to $0.4 million for the three months ended September 30, 2025 primarily driven by declining interest rates on the 2024 Term Loan over the comparison period. Interest Income Interest income was $0.9 million during the three months ended September 30, 2026 compared to $1.0 million during the three months ended September 30, 2025. The decrease of approximately $0.1 million was primarily driven by the Elo note receivable interest accrued for in the prior year as well as declining interest rates which was partially offset by a higher cash balance for the current period. Gain on Disposal of Assets There was no gain or loss on disposal of assets during the three months ended September 30, 2026 compared to the gain on disposal of assets of less than $0.1 million during the three months ended September 30, 2025. Comparison of the Nine Months Ended September 30, 2026 and September 30, 2025 The following table summarizes our results of operations for the nine months ended September 30, 2026 and September 30, 2025, together with the changes in those items: For the Nine Months Ended September 30, (in thousands) 2026 2025 Change Revenue $ 10,838 $ 60 $ 10,778 Operating expenses Research and development 38,249 39,708 (1,459) General and administrative 21,253 25,008 (3,755) Total operating expenses 59,502 64,716 (5,214) Operating loss (48,664) (64,656) 15,992 Other income (expense): Gain from equity method investment — 86 (86) Loss on changes in other fair value adjustments (3,651) (2,418) (1,233) Loss on change in fair value of warrant liability (8,274) (1,230) (7,044) Interest expense (918) (1,074) 156 Interest income 2,823 3,466 (643) Gain (loss) on disposal of assets 5 (31) 36 Total other expense (10,015) (1,201) (8,814) Net loss $ (58,679) $ (65,857) $ 7,178 Revenue Revenue for the nine months ended September 30, 2026 was $10.8 million compared to less than $0.1 million for the nine months ended September 30, 2025. Revenue from the prior period was generated from the Novartis Agreement. The increase in revenue during the nine months ended September 30, 2026 was the result of revenue recognized under the TG License Agreement and a legacy ARCUS agriculture gene editing agreement. 28 Table of Contents Research and Development Expenses Nine months ended September 30, (in thousands) 2026 2025 Change Direct research and development expenses by product candidate: PBGENE-HBV external development costs 6,879 4,575 $ 2,304 PBGENE-DMD external development costs 11,794 10,339 1,455 Platform development and early-stage research expenses: Employee-related costs (including share-based compensation) 14,182 15,523 (1,341) Laboratory supplies and services 998 1,437 (439) CMOs and outsourced research and development 407 3,136 (2,729) Facility-related costs, laboratory equipment, and maintenance 1,829 2,219 (390) Depreciation and amortization 706 979 (273) Licensing fees and other research and development costs 1,454 1,500 (46) Total research and development expenses $ 38,249 $ 39,708 $ (1,459) Research and development expenses for the nine months ended September 30, 2026 were $38.2 million, compared to $39.7 million for the nine months ended September 30, 2025. The decrease of $1.5 million was primarily due to reductions in research including completion of pre-IND research expenses for both the PBGENE-HBV and PBGENE-DMD programs, partially offset by an increase in our direct expenses in PBGENE-HBV and PBGENE-DMD program costs. The decrease in platform development and early-stage research expenses of $5.2 million was primarily the result of paused development of the PBGENE-3243 program as well as a reduction in employee-related costs. Direct expenses in PBGENE-DMD increased by $1.5 million as we activated clinical trial sites for the FUNCTION-DMD Phase 1/2 clinical trial, and direct expenses in PBGENE-HBV increased by $2.3 million as we continue to advance the Phase 1 ELIMINATE-B clinical trial. General and Administrative Expenses General and administrative expenses were $21.3 million for the nine months ended September 30, 2026, compared to $25.0 million for the nine months ended September 30, 2025. The decrease of approximately $3.7 million was primarily a result of operational discipline and lower employee-related costs. Gain from Equity Method Investment For the nine months ended September 30, 2025, the $0.1 million non-cash gain from equity investment was the result of a $2.3 million gain recorded from our proportionate share of Elo’s proceeds from a Series A-2 financing in such period, partially offset by our proportionate share of Elo’s loss over the period. In the nine months ended September 30, 2026, Elo was not classified as an equity method investment. There were no changes to the investment value for the nine months ended September 30, 2026 and any subsequent changes in the investment’s fair value will be recorded through other fair value adjustments. Loss on Changes in Other Fair Value Adjustments The non-cash loss on changes in other fair value adjustments was $3.7 million for the nine months ended September 30, 2026, which is attributable to the decrease in fair value on the ordinary shares held for Imugene Limited. The non-cash loss on changes in other fair value adjustments was $2.4 million for the nine months ended September 30, 2025, which was primarily attributable to the decrease in fair value of the iECURE investment in the prior period. Loss on Change in Fair Value of Warrant Liability The non-cash loss from change in fair value of the warrant liability was $8.3 million for the nine months ended September 30, 2026 compared to a non-cash loss of $1.2 million for the nine months ended September 30, 2025, which represents the mark-to-market fair value adjustment to the outstanding warrants issued in connection with the March 2024 Public Offering and November 2025 Public Offering. 29 Table of Contents Interest Expense Interest expense was $0.9 million for the nine months ended September 30, 2026 compared to $1.1 million for the nine months ended September 30, 2025 primarily driven by declining interest rates on the 2024 Term Loan over the comparison period. Interest Income Interest income was $2.8 million during the nine months ended September 30, 2026 compared to $3.5 million during the nine months ended September 30, 2025. The decrease of approximately $0.7 million was primarily driven by the Elo note receivable interest accrued for in the prior year as well as declining interest rates which was partially offset by a higher cash balance for the current period. Gain (Loss) on Disposal of Assets Gain on disposal of assets was less than $0.1 million during the nine months ended September 30, 2026 compared to the loss on disposal of assets of less than $0.1 million during the nine months ended September 30, 2025. Liquidity and Capital Resources Since our formation in 2006, we have devoted substantially all of our resources to developing ARCUS, conducting research and development activities, recruiting skilled personnel, developing manufacturing processes, establishing our intellectual property portfolio and providing general and administrative support for these operations. We have incurred significant operating losses since our inception and have not generated any revenue from the sale of products. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates or the product candidates of our collaborators or other licensees for which we may receive milestone payments or royalties. As of September 30, 2026, we had an accumulated deficit of $586.9 million. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the development of our product candidates. We expect that our research and development and general and administrative costs will increase over the long term, including in connection with conducting preclinical studies and potential clinical trials for our product candidates, contracting with CROs and CMOs, expanding our intellectual property portfolio and providing general and administrative support for our operations. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing and distribution. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources. As of September 30, 2026, we had $108.0 million of cash, cash equivalents, and restricted cash under the 2024 Term Loan and compensatory arrangements with certain of our officers. Refer to Note 4, Commitments and Contingencies , in the accompanying notes to the financial statements for more information on these compensatory arrangements. Pursuant to our July 31, 2024 amended and restated loan and security agreement with Banc of California, as amended (the “2024 Loan and Security Agreement”), we are not entitled to borrow any additional amounts under the 2024 Term Loan and are required to maintain an aggregate balance in a cash security account with Banc of California (the “Cash Security Account”) at least equal to the outstanding principal amount of the 2024 Term Loan then outstanding. As described in Part II. Item 1A. “ Risk Factors ,” we believe that, as of the date of this Quarterly Report on Form 10-Q, existing cash and cash equivalents, continued fiscal and operating discipline, and availability of our at-the-market (“ATM”) facility will be sufficient to fund our operating expenses and capital expenditure requirements through 2028. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all, particularly in light of current global macroeconomic conditions. If we are unable to obtain sufficient financing on a timely basis or on favorable terms, we may be required to significantly delay, alter, reduce or eliminate one or more of our research or product development programs and/or commercialization efforts, or to grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves. We may also be otherwise unable to execute our business plan or growth strategy, or capitalize on business opportunities as desired. Any of these events could materially adversely affect our financial condition and business prospects. 30 Table of Contents Because of the numerous risks and uncertainties associated with the development of therapeutic products, we are unable to predict the timing or amount of our future expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be required to raise additional capital, potentially on terms that are unfavorable to us, or we may be unable to continue our operations at planned levels and be forced to reduce or terminate operations. Cash Flows Our cash, cash equivalents, and restricted cash totaled $108.0 million and $71.2 million as of September 30, 2026 and September 30, 2025, respectively. The following table summarizes our sources and uses of cash for the periods presented: For the Nine Months Ended September 30, (in thousands) 2026 2025 Change Cash flows used in operating activities: Net loss $ (58,679) $ (65,857) $ 7,178 Non-cash adjustments 20,365 13,295 7,070 Changes in operating assets and liabilities (2,197) (2,031) (166) Net cash used in operating activities (40,511) (54,593) 14,082 Net cash used in investing activities (313) (309) (4) Net cash provided by financing activities 11,705 17,646 (5,941) Decrease in cash, cash equivalents, and restricted cash $ (29,119) $ (37,256) $ 8,137 Cash Used in Operating Activities Our primary use of cash is to fund operating expenses, which consist primarily of research and development and general and administrative costs. Cash used in operating activities during the nine months ended September 30, 2026 was $40.5 million compared to $54.6 million during the nine months ended September 30, 2025. The $14.1 million decrease in cash used in operating activities was driven by lower operating expenditures compared to the prior period, an increase of $7.1 million in non-cash adjustments and a $7.2 million decrease in net loss. The decrease was partially offset by $0.2 million in changes in operating assets and liabilities over the comparison period. The increase in non-cash adjustments was primarily driven by the net change in fair value of warrants during the nine months ended September 30, 2026 compared to during the nine months ended September 30, 2025. Also contributing to the increase in non-cash adjustments was the change in fair value of the Imugene ordinary shares during the nine months ended September 30, 2026. Cash Used in Investing Activities Cash used in investing activities primarily relates to cash expenditures to acquire leasehold additions, equipment, software and intangible assets. Net cash used in investing activities was $0.3 million in each of the nine months ended September 30, 2025 and nine months ended September 30, 2026 and was used for intangible asset purchases. Cash Provided by Financing Activities Net cash provided by financing activities during the nine months ended September 30, 2026 was $11.7 million, compared to $17.6 million during the nine months ended September 30, 2025. The $5.9 million decrease in cash provided by financing activities during the nine months ended September 30, 2026 was primarily due to $16.4 million in net proceeds from the issuance of common stock through our ATM facility during the nine months ended September 30, 2025 compared to $10.9 million in net proceeds from the issuance of common stock through our ATM facility during the nine months ended September 30, 2026. 31 Table of Contents Debt Obligations The stated interest rate under the 2024 Term Loan is equal to the greater of 1.50% below the Prime Rate or 4.5%. As of September 30, 2026, the outstanding principal balance on the 2024 Term Loan was $22.5 million, the stated interest rate was 5.50% and the effective interest rate was 5.69%. Under the terms of the 2024 Loan and Security Agreement, we granted Banc of California a security interest in the Cash Security Account. We are required to maintain an aggregate unencumbered balance in the Cash Security Account at least equal to the outstanding principal amount of the 2024 Term Loan then outstanding. Funding Requirements We will continue to have funding requirements in connection with the continuation of our research and development efforts, potential investigational new drug (“IND”) and/or clinical trial application (“CTA”) submissions, potential clinical trials, and expected growth in our in vivo portfolios. We believe that, as of the date of this Quarterly Report on Form 10-Q, existing cash and cash equivalents, continued fiscal and operating discipline, and availability of our ATM facility will be sufficient to fund our operating expenses, including our PBGENE-HBV and PBGENE-DMD clinical data milestones, and capital expenditure requirements through 2028. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, it is difficult to estimate with certainty the amount of our working capital requirements. Our future funding requirements will depend on many factors, including: • the ability to collaborate and partner with third parties to fund any or all of our programs; • the progress, costs and results of our additional research and preclinical development programs including our in vivo pipeline and our planned IND or CTA submissions and potential BLA submissions; • the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities; • our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements; • the scope, progress, results and costs of any product candidates that we may derive from ARCUS or any other product candidates we may develop alone or with collaborators; • the extent to which we in-license or acquire rights to other products, product candidates or technologies; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims; and • the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any product candidates for which we or our collaborators obtain marketing approval. Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of public or private equity or debt financings, collaboration agreements, other third‑party funding, strategic alliances, licensing arrangements and marketing and/or distribution arrangements. See “ Risk Factors–– We will need substantial additional funding, and if we are unable to raise a sufficient amount of capital when needed on acceptable terms, or at all, we may be forced to delay, reduce or eliminate some or all of our research programs, product development activities and commercialization efforts. ” in Part II. Item 1A. of this Quarterly Report on Form 10-Q for a further discussion of our ability to generate and obtain adequate amounts of funding in connection with our continuing operations. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our shareholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, product development and research programs 32 Table of Contents or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to significantly delay, alter, reduce or eliminate one or more of our research or product development programs and/or commercialization efforts, or to grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves. We may also be otherwise unable to execute our business plan, growth strategy, or capitalize on business opportunities as desired. Common Stock Offering In November 2025, we entered into an underwriting agreement relating to the offering, issuance and sale of an aggregate of 10,815,000 shares of our common stock and accompanying one-half warrants to purchase up to an aggregate of 5,407,500 shares of our common stock at a combined offering price of $6.14 per share. Additionally, in lieu of common stock to certain investors, pre-funded warrants to purchase up to 1,400,000 shares of common stock and accompanying one-half warrants to purchase up to 700,000 shares of common stock at a combined offering price of $6.139995. Each whole warrant has a five year term and an exercise price of $7.25 per share. The offering was made pursuant to a registration statement on Form S-3. Gross proceeds from the transaction were $75.0 million before deducting underwriting discounts and commissions and offering expenses of approximately $5.0 million. We intend to use the net proceeds of the offering to fund ongoing and planned research and development, and for working capital and other general corporate purposes. Contractual Obligations and Commitments In addition to the contractual obligations and commitments as described elsewhere in this Quarterly Report on Form 10-Q with respect to leases, the 2024 Term Loan, and intellectual property licenses, we also enter into contracts in the normal course of business with CMOs, universities, and other third parties for preclinical research studies, testing, manufacturing services, and other services and products for operating purposes. There have been no material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We do not have any material capital expenditure commitments as of September 30, 2026. Critical Accounting Policies and Use of Estimates Our critical accounting policies and estimates are described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K. We have reviewed those critical accounting policies and estimates for the nine months ended September 30, 2026. There have been no significant changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Smaller Reporting Company Status We are a “smaller reporting company” as defined under applicable regulations promulgated by the SEC. We will continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. As a smaller reporting company, we are able to take advantage of certain exemptions from disclosure requirements, including presenting only the two most recent fiscal years of audited financial statements and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict whether investors will find our common stock less attractive if we rely on the exemptions available to smaller reporting companies. If investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be reduced or more volatile. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. Our interest-earning assets consist of cash and cash equivalents, which are denominated in U.S. dollars. We had cash, cash equivalents and restricted cash of $108.0 million, or approximately 90% of our total assets, on September 30, 2026 and $137.2 million, or approximately 89% of our total assets, on December 31, 2025. Interest income 33 Table of Contents earned was $2.8 million and $3.5 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. Our interest income is sensitive to changes in the general level of interest rates, primarily U.S. interest rates, however, we do not anticipate fluctuations in interest rates to have a material impact on our condensed financial statements. A hypothetical 10% change in interest rates would not have a material impact on the value of our cash and cash equivalents as of September 30, 2026. Item 4. Controls and Procedures. Limitations on Effectiveness of Controls and Procedures In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2026. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 34 Table of Contents PART II—OTHER INFORMATION Item 1. Legal Proceedings. From time to time, we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. We are not currently party to any material legal proceedings. Item 1A. Risk Factors. Investing in our common stock involves a high degree of risk. Before investing in our common stock, you should consider carefully the risks described below, together with the other information included or incorporated by reference in this Quarterly Report on Form 10-Q. The occurrence of any of the following risks could materially adversely affect our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment. Risks Related to Our Financial Condition, Limited Operating History and Need for Additional Capital We have incurred significant operating losses since our inception and expect to continue to incur losses for the foreseeable future. We have not been profitable and may not achieve or maintain profitability. We do not expect to be profitable in the foreseeable future. Since inception, we have incurred significant operating losses. If our product candidates are not successfully developed and approved, we may never generate any revenue from product sales. Our net loss was $58.7 million for the nine months ended September 30, 2026. As of September 30, 2026, we had an accumulated deficit of $586.9 million. In addition, we have not commercialized any products and have never generated any revenue from product sales. Substantially all of our losses have resulted from expenses incurred in connection with our research and development activities, including our preclinical development activities, and from general and administrative costs associated with our operations. We have financed our operations primarily through proceeds from upfront and milestone payments from collaboration and licensing agreements, our IPO, private placements of our common stock, convertible preferred stock and convertible debt financings, underwritten and ATM offerings of common stock and warrants, and borrowings on credit facilities. The amount of our future net losses will depend, in part, on the amount and growth rate of our expenses and our ability to generate revenues. All of our current or future product candidates will require substantial additional development time and resources before we may realize revenue from product sales, if at all. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate our expenses will increase if and as we: • continue our current research and development programs, including conducting laboratory and preclinical studies for product candidates; • initiate potential clinical trials for product candidates; • seek to identify, assess, acquire or develop additional research programs or product candidates; • maintain, expand and protect our intellectual property portfolio; • seek marketing approvals for any product candidates that may successfully complete development; • establish a sales, marketing and distribution infrastructure to commercialize any products that may obtain marketing approval; • change or add additional manufacturers or suppliers of biological materials or product candidates; • further develop our genome editing technology; • acquire or in-license other technologies; • seek to attract new and retain existing personnel; • expand our facilities; and • incur increased costs as a result of operating as a public company. It will be several years, if ever, before we obtain regulatory approval for, and are ready for commercialization of, a therapeutic product candidate. Even if a therapeutic product candidate receives regulatory approval, future revenues for 35 Table of Contents such product candidate will depend upon many factors, such as, as applicable, the size of any markets in which such product candidate is approved for sale, the market share captured by such product candidate, including as a result of the market acceptance of such product candidate and the effectiveness of manufacturing, sales, marketing and distribution operations related to such product candidate, the terms of any collaboration, license, or other strategic arrangement we may have with respect to such product candidate and levels of reimbursement from third-party payors. If we are unable to develop and commercialize one or more product candidates either alone or with collaborators, or if revenues from any product candidate that receives marketing approval or is commercialized are insufficient, we may not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability. If we are unable to achieve and maintain profitability, the value of our common stock will be materially adversely affected. We will need substantial additional funding, and if we are unable to raise a sufficient amount of capital when needed on acceptable terms, or at all, we may be forced to delay, reduce or eliminate some or all of our research programs, product development activities and commercialization efforts. The process of identifying product candidates and conducting preclinical studies and potential clinical trials is time-consuming, expensive, uncertain and takes years to complete. We expect our expenses to increase in connection with our ongoing activities, particularly as we identify, continue the research and development of, initiate potential clinical trials of, and seek marketing approval for, product candidates. In addition, if any therapeutic product candidate that we develop alone or with collaborators obtains marketing approval, we may incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution efforts. Furthermore, we have incurred, and expect to continue to incur, additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to obtain sufficient funding on a timely basis or on favorable terms, we may be required to significantly delay, alter, reduce, or eliminate one or more of our research or product development programs and/or commercialization efforts, or to grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves. We may also be otherwise unable to execute our business plan or growth strategy or capitalize on business opportunities as desired. Any of these events could materially adversely affect our financial condition and business prospects. We believe that, as of the date of this Quarterly Report on Form 10-Q, existing cash and cash equivalents, continued fiscal and operating discipline, and availability of our ATM facility will be sufficient to fund our operating expenses and capital expenditure requirements through 2028. We expect our cash runway to be sufficient to fund PBGENE-HBV and PBGENE-DMD clinical data milestones through 2028. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our operating plans and other demands on our cash resources may change as a result of many factors, including the outcomes of preclinical studies and clinical trials, our ability to obtain regulatory approval, investor interest in and the likelihood of commercial success of particular product candidates and programs, and other factors unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations and licensing arrangements, or abandon one or more product candidates or programs in the event that sufficient funding is not available. Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop product candidates. Our future capital requirements will depend on many factors, including: • the timing, scope, progress, costs, results and analysis of results of research activities, preclinical studies and potential clinical trials for any of our product candidates; • the costs of future activities, including product manufacturing, sales, marketing and distribution activities for any product candidates that receive regulatory approval; • the success of our existing or future collaborative and other out-licensing relationships; • the extent to which we exercise any development or commercialization rights under collaborative relationships; • our ability to establish and maintain additional collaborative or other out-licensing relationships on favorable terms, or at all; • the extent to which we expand our operations and the timing of such expansion, including with respect to facilities, employees and product development platforms; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending intellectual property-related claims; • the extent to which we acquire or in-license other technologies or product candidates; 36 Table of Contents • the extent to which we acquire or invest in other businesses; • the costs of continuing to operate as a public company; and • the amount of revenues, if any, received from commercial sales of any products that we develop alone or with collaborators that receive regulatory approval. Even if we believe we have sufficient funds for our current or future operating plans, we may continue to seek additional capital if market conditions are favorable or in light of specific strategic considerations. Adequate additional financing may not be available to us on acceptable terms, or at all. Provisions of our debt instruments may restrict our ability to pursue our business strategies, and our ability to access credit on favorable terms, if necessary, for the funding of our operations, trials and programs may be limited due to changes in credit markets. In July 2024, we entered into an amended and restated loan and security agreement, as amended (the “2024 Loan and Security Agreement”), with Banc of California pursuant to which Banc of California provided us with a term loan with a principal amount of $22.5 million (the “2024 Term Loan”). Pursuant to the terms of the 2024 Loan and Security Agreement, we granted Banc of California a security interest in the Cash Security Account. The 2024 Loan and Security Agreement requires us to comply with various covenants that limit our ability to, among other things: • change our name, location, executive office or executive management, business, fiscal year, or control; • complete mergers with or into other entities; • incur indebtedness; and • maintain less than $22.5 million of unencumbered cash in the Cash Security Account. In addition, the agreements and instruments governing future indebtedness that we may enter into may include such restrictions or additional restrictions and financial covenants. Restrictions in our current and future indebtedness could inhibit our ability to pursue our business strategies. Additionally, the credit markets and the financial services industry have been experiencing disruption characterized by the bankruptcy, failure, collapse or sale of various financial institutions, increased volatility in securities prices, diminished liquidity and credit availability and intervention from the U.S. and other governments. As a result, the cost and availability of credit has been and may continue to be adversely affected. We cannot be certain that funding will be available when and as needed, and if available, on acceptable terms if at all. If we are unable to obtain funding when needed and on acceptable terms, our financial condition and business prospects could be adversely impacted. Raising additional capital may cause dilution to our stockholders, restrict our operations, or require us to relinquish rights to our technologies or product candidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity and/or debt financings and collaborations, licensing agreements or other strategic arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, including in underwritten and ATM offerings, stockholders’ ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect common stockholders’ rights. For example, in 2025, 4.4 million shares were sold through the ATM facility. Additionally, in March 2024, we entered into an underwriting agreement relating to the offering, issuance and sale of an aggregate of 2,500,000 shares of our common stock and warrants to purchase up to an aggregate of 2,500,000 shares of our common stock at a combined offering price of $16.00 per share. On November 10, 2025, we also entered into an underwriting agreement relating to the issuance and sale of 10,815,000 shares of our common stock and accompanying one-half warrants to purchase up to 5,407,500 shares of our common stock at a combined price of $6.14 per share. Further, in lieu of common stock to certain investors, we issued pre-funded warrants to purchase up to 1,400,000 shares of our common stock and accompanying one-half warrants to purchase up to 700,000 shares of our common stock at a combined price of $6.139995 per share, b oth of which resulted in dilution to our existing stockholders. Moreover, there is a provision in each warrant under which we may be required to purchase the warrants from the holders by paying cash in an amount equal to the Black-Scholes value of the remaining unexercised portion of the warrants in certain specified situations involving a “fundamental transaction” (as defined in the warrants), which generally includes a merger with another person or entity, the sale, transfer or other disposition of all or substantially 37 Table of Contents all of our assets, another person or entity becoming the beneficial owner of 50% of the outstanding shares of our common stock, any reclassification, reorganization or recapitalization of our common stock, any compulsory share exchange pursuant to which our common stock is effectively converted into or exchanged for other securities, cash or property, any plan or proposal for our voluntary or involuntary dissolution, liquidation or the winding up of our affairs, or if other conditions are met. It may be uncertain whether a particular transaction or series of transactions will trigger the cash-settlement provision or if the provision is triggered, what the actual payment due to a warrant holder would be in such circumstance, but any such payment could be material to us and could materially and adversely affect our financial condition. Furthermore, we may find it more difficult to raise additional equity capital needed for our business or to pursue strategic alternatives or other corporate transactions while the warrants are outstanding. To the extent that we raise additional capital through debt financing, it would result in increased fixed payment obligations and a portion of our operating cash flows, if any, being dedicated to the payment of principal and interest on such indebtedness. In addition, debt financing may involve agreements that include restrictive covenants that impose operating restrictions, such as restrictions on the incurrence of additional debt, the making of certain capital expenditures or the declaration of dividends. To the extent we raise additional capital through arrangements with collaborators or otherwise, we may be required to relinquish some of our technologies, research programs, product development activities, product candidates and/or future revenue streams, license our technologies and/or product candidates on unfavorable terms or otherwise agree to terms unfavorable to us. Furthermore, any capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to advance research programs, product development activities or product candidates. We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and may increase the risk of your investment. We are a genome editing company with a limited operating history. We formed our company in 2006 and spent the first nine years of our company’s history developing and refining our core technology, and only during the past several years have we focused our efforts on advancing the development of product candidates. Investment in biopharmaceutical product development is a highly speculative endeavor. It entails substantial upfront capital expenditures, and there is significant risk that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, obtain any required regulatory approvals or become commercially viable. Our genome editing platform and the technologies we are using are new and unproven. We have not yet demonstrated an ability to successfully complete any clinical trials, obtain any required marketing approvals, manufacture products, conduct sales, marketing and distribution activities, or arrange for a third party to do any of the foregoing on our behalf. Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing products. Additionally, we encounter risks and difficulties frequently experienced by new and growing companies in rapidly developing and changing industries, particularly the nascent and swiftly evolving gene editing field, including challenges in forecasting accuracy, determining appropriate investments of our limited resources, gaining market acceptance of our technology, managing a complex regulatory landscape and developing new product candidates, which may make it more difficult to evaluate our likelihood of success. Our current operating model may require changes in order for us to adjust to these challenges or scale our operations efficiently. Our limited operating history, particularly in light of the rapidly evolving nature of the biopharmaceutical industry and the genome editing field, may make it difficult to evaluate our technology and business prospects or to predict our future performance. Additionally, due to the stage of our operations, we expect that our financial condition and operating results may fluctuate significantly from quarter to quarter as a result of many factors as we build our business, and you should not rely upon the results of any particular quarterly or annual period as indications of future operating performance. We may expend our limited resources on pursuing particular research programs or product candidates that may be less successful or profitable than other programs or product candidates. Research programs to identify new product candidates and product development platforms require substantial technical, financial and human resources. We are continually evaluating our business strategy and may modify this strategy in light of developments in our business and other factors. We may focus our efforts and resources on potential programs, product candidates or product development platforms that ultimately prove to be unsuccessful. Any time, effort and financial resources we expend on identifying and researching new product candidates and product development platforms may divert our attention from, and adversely affect our ability to continue, development and commercialization of existing research 38 Table of Contents programs, product candidates and product development platforms. Clinical trials of any of our product candidates may never commence despite the expenditure of significant resources in pursuit of their development, and our spending on current and future research and development programs, product candidates and product development platforms may not yield any commercially viable products. As a result of having limited financial and managerial resources, we may forego or delay pursuit of opportunities that later prove to have greater commercial potential. For example, as part of a strategic prioritization exercise in 2023, we announced that while we will continue to pursue gene knock-out opportunistically, the proof-of-concept data continues to lead toward prioritizing programs involving complex edits and gene insertion. There is no guarantee that this ongoing prioritization review will ultimately lead to any viable commercial products, profitable market opportunities or other value-enhancing activities. Our resource allocation decisions may cause us to fail to timely capitalize on viable commercial products or profitable market opportunities. Additionally, if we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other strategic arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. Risks Related to the Identification, Development and Commercialization of Our Product Candidates ARCUS is a novel technology, making it difficult to predict the time, cost and potential success of product candidate development. We have not yet been able to assess the safety and efficacy of most of our product candidates in humans. Our success depends on our ability to develop and commercialize product candidates using our novel genome editing technology. The novel nature of our technology makes it difficult to accurately predict the developmental challenges we may face for product candidates as they proceed through research, preclinical studies and clinical trials. There have been a limited number of clinical trials of products created with genome editing technologies, four of which have utilized our technology. Because our therapeutic research programs are all in preclinical or early clinical stages, we have only been able to assess limited safety and efficacy data of our product candidates in human trials. Current or future product candidates may not meet safety and efficacy requirements for continued development or ultimate approval in humans and may cause significant adverse events or toxicities. All of our product candidates are designed to act at the level of DNA, and because animal DNA differs from human DNA, it will be difficult for us to test our therapeutic product candidates in animal models for either safety or efficacy, and any testing that we conduct may not translate to their effects in humans. Moreover, animal models may not exist for some of the targets, diseases or indications that we intend to pursue. Our product candidates may not be able to properly implement desired genetic edits with sufficient accuracy to be viable therapeutic products, and there may be long-term effects associated with them that we cannot predict at this time. Any problems we experience related to the development of our genome editing technology or any of our or our collaborators’ research programs or product candidates may cause significant delays or unanticipated costs, and we may not be able to satisfactorily solve such problems. These factors may prevent us or our collaborators from completing our preclinical studies or any clinical trials that we or our collaborators have ongoing or may initiate, or profitably commercializing any product candidates on a timely basis, or at all. We may also experience delays in developing a sustainable, reproducible and scalable manufacturing process as we develop and prepare to commercialize product candidates. These factors make it more difficult for us to predict the time, cost and potential success of product candidate development. If our product development activities take longer or cost more than anticipated, or if they ultimately are not successful, it would materially adversely affect our business and results of operations. The genome editing field is relatively new and evolving rapidly, and other existing or future technologies may provide significant advantages over our ARCUS platform, which could materially harm our business. To date, we have focused our efforts on optimizing our proprietary genome editing technology and exploring its potential applications. ARCUS is a novel genome editing technology using sequence-specific DNA-cutting enzymes, or nucleases, that is designed to perform modifications in the DNA of living cells and organisms. Other companies have previously undertaken research and development of genome editing technologies using zinc finger nucleases, transcription activator-like effector nucleases (“TALENs”) and clustered regularly interspaced short palindromic repeats associated protein-9 nuclease (“CRISPR/Cas9”), although none has obtained marketing approval for an in vivo gene editing product candidate developed using such technologies. Other genome editing technologies in development or commercially available, or other existing or future technologies, may lead to treatments or products that may be considered better suited for use in human therapeutics, which could reduce or eliminate our commercial opportunity. 39 Table of Contents We are heavily dependent on the successful development and translation of ARCUS, and due to the early stages of our product development operations, we cannot give any assurance that any product candidates will be successfully developed and commercialized. We are at an early stage of development of the product candidates currently in our programs and are continuing to develop our ARCUS technology. To date, we have invested substantially all of our efforts and financial resources to develop ARCUS and advance our current product development programs, including conducting preclinical studies, early stage clinical trials and other early research and development activities, and providing general and administrative support for these operations. Due to the strategic transaction with Imugene for our azer-cel for cancer, as well as our CAR T infrastructure and cell therapy teams, and the TG License Agreement, we are now solely focused on leveraging our ARCUS genome editing platform to advance a new potential class of gene editing programs that go beyond gene knockouts in the liver and carry out sophisticated edits such as gene insertions, gene excision, and gene elimination in human therapeutics. We are also currently using our ARCUS technology to develop our lead in vivo gene editing programs targeting HBV and DMD, among other indications. Our future success is dependent on our ability to successfully develop and, where applicable, obtain regulatory approval for, including marketing approval for, and then successfully commercialize, product candidates, either alone or with collaborators. We have not yet developed and commercialized any product candidates, and we may not be able to do so, alone or with collaborators. Our research and development programs may not lead to the successful identification, development or commercialization of any products. The success of our business depends primarily upon our ability to identify, develop and commercialize products using our genome editing technology. Our named in vivo development programs, PBGENE-HBV and PBGENE-DMD, are early stage clinical programs. We may be unsuccessful in advancing these programs into later stage clinical development or in identifying and developing additional product candidates. Our ability to identify and develop product candidates is subject to the numerous risks associated with preclinical and early stage biotechnology development activities, including that: • the use of ARCUS may be ineffective in identifying additional product candidates; • we may not be able to assemble sufficient resources to acquire or discover additional product candidates; • we may not be able to enter into collaborative arrangements to facilitate development of product candidates, the terms of our collaborative arrangements may change, or our collaborative arrangements may be terminated; • competitors may develop alternatives that render our product candidates obsolete or less attractive; • our product candidates may be covered by third parties’ patents or other exclusive rights; • the regulatory pathway for a product candidate may be too complex, expensive or otherwise difficult to navigate successfully; or • our product candidates may be shown to not be effective, have harmful side effects or otherwise pose risks not outweighed by such product candidate’s benefits or have other characteristics that may make the products impractical to manufacture, unlikely to receive any required marketing approval, unlikely to generate sufficient market demand or otherwise not achieve profitable commercialization. Our current development programs and future product candidates may never be approved. Failure to successfully identify and develop new product candidates and obtain regulatory approvals for our products would have a material adverse effect on our business and financial condition and could cause us to cease operations. If our product candidates do not achieve projected development milestones or commercialization in the announced or expected timeframes, the further development or commercialization of such product candidates may be delayed, and our business will be harmed. We sometimes estimate, or may in the future estimate, the timing of the accomplishment of various scientific, clinical, manufacturing, regulatory and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies or clinical trials, the submission of regulatory filings, the receipt of marketing approval or the realization of other commercialization objectives. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, including assumptions regarding capital resources, constraints and priorities, progress of and results from development activities, participation of third parties including outside collaborators or vendors, the receipt of key regulatory approvals or actions, and other factors, any of which may cause the timing of achievement of the milestones to vary considerably from our 40 Table of Contents estimates. If we or our collaborators fail to achieve announced milestones in the expected timeframes, the commercialization of the product candidates may be delayed, our credibility may be undermined, our business and results of operations may be harmed, and the trading price of our common stock may decline. Adverse public perception of genome editing may negatively impact the developmental progress or commercial success of products that we develop alone or with collaborators. The developmental and commercial success of our current development programs or future product candidates, or any that we develop alone or with collaborators in the future, will depend in part on public acceptance of the use of genome editing technology for the prevention or treatment of human diseases. Adverse public perception of applying genome editing technology for these purposes may negatively impact our ability to raise capital or enter into strategic agreements for the development of product candidates. Any therapeutic product candidates may involve editing the human genome. The commercial success of any such potential therapeutic products, if successfully developed and approved, may be adversely affected by claims that genome editing is unsafe, unethical or immoral. This may lead to unfavorable public perception and the inability of any therapeutic product candidates to gain the acceptance of the public or the medical community. Unfavorable public perceptions may also adversely impact our or our collaborators’ ability to enroll clinical trials for therapeutic product candidates. Moreover, success in commercializing any therapeutic product candidates that receive regulatory approval will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of such product candidates in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available. Publicity of any adverse events in, or unfavorable results of, preclinical studies or clinical trials for any current or future product candidates, including, without limitation, patient deaths, or with respect to the studies or trials of our competitors or of academic researchers utilizing genome editing technologies, even if not ultimately attributable to our technology or product candidates, could negatively influence public opinion. Negative public perception about the use of genome editing technology in human therapeutics, whether related to our technology or a competitor’s technology, could result in increased governmental regulation, delays in the development and commercialization of product candidates or decreased demand for the resulting products, any of which may have a negative impact on our business and financial condition. We face significant competition in industries experiencing rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop product candidates or treatments that are safer or more effective than ours, which may harm our financial condition and our ability to successfully market or commercialize any of our product candidates. The development and commercialization of new drug products is highly competitive, and the genome editing field is characterized by rapidly changing technologies, significant competition and a strong emphasis on intellectual property. We will face competition with respect to our current and future therapeutic product candidates from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization of products. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we have research programs. Some of these competitive products and therapies are based on scientific approaches that are similar to our approach, and others are based on entirely different approaches. We principally compete with others developing and utilizing genome editing technology in the human health sector. We expect that our operations focused on developing products for in vivo gene editing will face substantial competition from others focusing on gene therapy treatments, especially those that may focus on conditions that our product candidates target. Moreover, any human therapeutics products that we develop alone or with collaborators will compete with existing standards of care for the diseases and conditions that our product candidates target and other types of treatments, such as small molecule, antibody or protein therapies. Many of our current or potential competitors, either alone or with their collaborators, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly 41 Table of Contents through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products we develop alone or with collaborators or that would render any such products obsolete or non-competitive. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we or our collaborators may obtain approval for any that we develop, which could result in our competitors establishing a strong market position before we are able to enter the market. Additionally, technologies developed by our competitors may render our product candidates uneconomical or obsolete, and we or our collaborators may not be successful in marketing any product candidates we may develop against competitors. The availability of our competitors’ products could limit the demand, and the price we are able to charge, for any products that we develop alone or with collaborators. Our future profitability, if any, will depend in part on our ability and the ability of our collaborators or other licensees to commercialize any products that we, our collaborators, or our other licensees may develop in markets throughout the world. Commercialization of products in various markets could subject us to risks and uncertainties, including: • obtaining, on a country-by-country basis, the applicable marketing authorization from the competent regulatory authority; • the burden of complying with complex and changing regulatory, tax, accounting, labor and other legal requirements in each jurisdiction that we or our collaborators pursue; • reduced protection for intellectual property rights; • differing medical practices and customs affecting acceptance in the marketplace; • import or export licensing requirements; • governmental controls, trade restrictions or changes in tariffs; • economic weakness, including inflation, political instability in particular foreign economies and markets, or civil unrest or war, such as the current conflict between Russia and Ukraine; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; • longer accounts receivable collection times; • longer lead times for shipping; • language barriers; • foreign currency exchange rate fluctuations; • foreign reimbursement, pricing and insurance regimes; and • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute. We have limited or no prior experience in these areas, and our collaborators may have limited experience in these areas. Failure to successfully navigate these risks and uncertainties may limit or prevent market penetration for any products that we or our collaborators may develop, which would limit their commercial potential and our revenues. Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any products that we develop alone or with collaborators. We face an inherent risk of product liability and professional indemnity exposure related to the testing in clinical trials of our product candidates. We will face an even greater liability risk if we commercially sell any products that we or our 42 Table of Contents collabor