Source: sec
Source ID: 0001193125-26-337933
URL: https://www.sec.gov/Archives/edgar/data/1422142/000119312526337933/whwk-20260630.htm
Symbol: (WHWK)
Published: 2026-08-06 16:03:49 EDT
Time precision: minute
Title: 10-Q 10-Q

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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30,
2026
OR
☐
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:
001-38560
WHITEHAWK THERAPEUTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
61-1547850
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2 Headquarters Plaza
,
East Building, 11th Floor
Morristown
,
NJ
07960
(Address of principal executive offices)
(Zip Code)
(
551
)
321-2234
(Registrant’s telephone number, including area code)
(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, $0.0001 par value per share
WHWK
The Nasdaq Stock Market LLC
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
☒ No ☐
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
☒ No ☐
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
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of August 3
, 2026, the registrant had
57,009,010
s
hares of common stock, $0.0001 par value per share, outstanding.
Table of Contents
Ta
ble of Contents
Page
PART I.
FINANCIAL INFORMATION
2
Item 1.
Condensed Consolidated Financial Statements
2
Condensed Consolidated Balance Sheets – June 30, 2026 and December 31, 2025 (Unaudited)
2
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income –Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
3
Condensed Consolidated Statements of Stockholders’ Equity – Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
4
Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2026 and 2025 (Unaudited)
6
Notes to Condensed Consolidated Financial Statements (Unaudited)
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
29
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
39
Item 4.
Controls and Procedures
40
PART II.
OTHER INFORMATION
41
Item 1.
Legal Proceedings
41
Item 1A.
Risk Factors
41
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
115
Item 3.
Defaults Upon Senior Securities
115
Item 4.
Mine Safety Disclosures
115
Item 5.
Other Information
115
Item 6.
Exhibits
116
Signatures
117
Table of Contents
PART I—FINA
NCIAL INFORMATION
Item 1. Finan
cial Statements.
WHITEHAWK THERAPEUTICS, INC.
Condensed
C
onsolidated Balance Sheets
(In thousands, except share data and par value)
(Unaudited)
June 30,
2026
December 31,
2025
Assets
Current assets:
Cash and cash equivalents
$
85,234
$
37,568
Short-term investments
104,748
108,129
Prepaid expenses and other current assets
2,432
3,316
Total current assets
192,414
149,013
Property and equipment, net
1
3
Other assets
1,579
1,814
Total assets
$
193,994
$
150,830
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
1,105
$
917
Accrued liabilities
9,964
13,602
Total current liabilities
11,069
14,519
Total liabilities
11,069
14,519
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $
0.0001
par value,
10,000,000
shares authorized;
no
shares issued and outstanding as of June 30, 2026 and December 31, 2025
—
—
Common stock, $
0.0001
par value;
300,000,000
shares authorized;
57,009,010
and
47,145,719
shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively.
5
4
Additional paid-in capital
575,067
489,437
Accumulated other comprehensive (loss) income
(
63
)
120
Accumulated deficit
(
392,084
)
(
353,250
)
Total stockholders’ equity
182,925
136,311
Total liabilities and stockholders’ equity
$
193,994
$
150,830
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Table of Contents
WHITEHAWK THERAPEUTICS, INC.
Condensed Consolidated Statements of Ope
rations and Comprehensive (Loss) Income
(In thousands, except share data and earnings per share amounts)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Revenue
Product sales, net
$
—
$
—
$
—
$
7,145
Total revenue
—
—
—
7,145
Operating expenses
Selling, general and administrative
5,216
5,940
11,506
18,755
Research and development
12,893
48,809
30,125
57,597
Cost of goods sold
—
—
—
760
Total operating expenses
18,109
54,749
41,631
77,112
Loss from operations
(
18,109
)
(
54,749
)
(
41,631
)
(
69,967
)
Other income (expense)
Gain on sale of business
—
—
—
87,443
Foreign exchange loss
(
6
)
(
3
)
(
6
)
(
3
)
Other income
—
158
—
158
Interest income
1,475
1,979
2,803
2,770
Total other income (expense), net
1,469
2,134
2,797
90,368
Loss (income) before income tax expense
(
16,640
)
(
52,615
)
(
38,834
)
20,401
Income tax expense (benefit)
—
—
—
—
Net (loss) income
$
(
16,640
)
$
(
52,615
)
$
(
38,834
)
$
20,401
Other comprehensive (loss) income:
Unrealized (loss) gain on investments, net of tax
(
48
)
8
(
183
)
(
7
)
Comprehensive (loss) income
(
16,688
)
(
52,607
)
(
39,017
)
20,394
Net (loss) income per share:
Basic
$
(
0.20
)
$
(
0.76
)
$
(
0.51
)
$
0.37
Diluted
$
(
0.20
)
$
(
0.76
)
$
(
0.51
)
$
0.37
Weighted average shares outstanding:
Basic
82,886,196
69,083,127
76,099,275
54,443,309
Diluted
82,886,196
69,083,127
76,099,275
54,908,715
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
WHITEHAWK THERAPEUTICS, INC.
Condensed Consolidated Sta
tements of
Stockholders’ Equity
(In thousands, including share amounts)
(Unaudited)
For the Three and Six Months Ended June 30, 2026
Stockholders' Equity
Common Stock
Additional
Paid-In
Accumulated
Other
Comprehensive
Accumulated
Shares
Par Value
Capital
Income (Loss)
Deficit
Total
Balance at December 31, 2025
47,145
$
4
$
489,437
$
120
$
(
353,250
)
$
136,311
Share-based compensation expense
—
—
2,193
—
—
2,193
Issuance of common stock in conjunction with vesting of restricted stock units
51
—
—
—
—
—
Unrealized loss on investments, net of tax
—
—
—
(
135
)
—
(
135
)
Net loss
—
—
—
—
(
22,194
)
(
22,194
)
Balance at March 31, 2026
47,196
$
4
$
491,630
$
(
15
)
$
(
375,444
)
$
116,175
Share-based compensation expense
—
—
1,520
—
—
1,520
Issuance of common stock upon exercise of warrants
3,210
—
—
—
Issuance of common stock upon exercise of stock options
24
—
56
—
—
56
Issuance of common stock under the employee stock purchase plan
16
—
28
—
—
28
Issuance of common stock in conjunction with vesting of restricted stock units
2,232
—
—
—
—
—
Private placement, net of transaction costs
4,331
1
81,833
—
—
81,834
Unrealized loss on investments, net of tax
—
—
—
(
48
)
—
(
48
)
Net loss
—
—
—
—
(
16,640
)
(
16,640
)
Balance at June 30, 2026
57,009
$
5
$
575,067
$
(
63
)
$
(
392,084
)
$
182,925
4
Table of Contents
For the Three and Six Months Ended June 30, 2025
Stockholders' Equity
Common Stock
Additional
Paid-In
Accumulated
Other
Comprehensive
Accumulated
Shares
Par Value
Capital
Income
Deficit
Total
Balance at December 31, 2024
24,681
$
2
$
385,114
$
16
$
(
332,654
)
$
52,478
Share-based compensation expense
—
—
1,680
—
—
1,680
Issuance of common stock upon exercise of warrants
426
—
—
—
—
—
Issuance of common stock upon exercise of stock options
22
—
21
—
—
21
Issuance of common stock in conjunction with vesting of restricted stock units
63
—
—
—
—
—
Private placement, net of transaction costs
21,592
2
94,546
—
—
94,548
Unrealized loss on investments, net of tax
—
—
—
(
15
)
—
(
15
)
Net income
—
—
—
—
73,016
73,016
Balance at March 31, 2025
46,784
$
4
$
481,361
$
1
$
(
259,638
)
$
221,728
Share-based compensation expense
—
—
3,087
—
—
3,087
Issuance of shares under the employee stock purchase plan
16
—
24
—
—
24
Issuance of common stock upon exercise of stock options
3
—
5
—
—
5
Issuance of common stock in conjunction with vesting of restricted stock units
325
—
—
—
—
—
Private placement, net of transaction costs
—
—
(
171
)
—
—
(
171
)
Unrealized gain on investments, net of tax
—
—
—
8
—
8
Net loss
—
—
—
—
(
52,615
)
(
52,615
)
Balance at June 30, 2025
47,128
$
4
$
484,306
$
9
$
(
312,253
)
$
172,066
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Table of Contents
WHITEHAWK THERAPEUTICS, INC.
Condensed Consolidated Statements o
f Cash Flows
(In thousands)
(Unaudited)
Six months ended June 30,
2026
2025
Cash flows from operating activities:
Net (loss) income
$
(
38,834
)
$
20,401
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Share-based compensation expense
3,713
4,767
Gain on sale of business
—
(
87,443
)
Discount amortization on short-term investments
(
706
)
21
Non-cash lease expense
—
74
Depreciation expense
2
73
Changes in operating assets and liabilities:
Accounts receivable
—
(
1,000
)
Inventory
—
170
Prepaid expenses and other current assets
2,225
906
Other non-current assets
325
(
766
)
Operating lease liabilities
—
(
89
)
Accounts payable and accrued liabilities
(
3,462
)
(
1,733
)
Other liabilities
—
(
202
)
Net cash used in operating activities
(
36,737
)
(
64,821
)
Cash flows from investing activities:
Proceeds from sale of business, net cash, cash equivalents, and restricted cash
—
101,356
Purchases of property and equipment
—
(
552
)
Purchase of short-term investments
(
69,821
)
(
32,215
)
Maturity of short-term investments
72,384
18,083
Net cash provided by investing activities
2,563
86,672
Cash flows from financing activities:
Proceeds from sale of common stock and prefunded warrants in PIPE financing
87,500
100,002
Proceeds from issuance of common stock under employee stock purchase plan
28
24
Issuance of common stock upon exercise of stock options
56
26
Payment of PIPE financing related transaction costs
(
5,654
)
(
5,625
)
Deferred offering costs paid for financing
(
90
)
(
76
)
Net cash provided by financing activities
81,840
94,351
Net increase in cash and cash equivalents
47,666
116,202
Cash, cash equivalents and restricted cash, beginning of period
37,568
28,734
Cash and cash equivalents, end of period
$
85,234
$
144,936
Supplemental disclosure of cash flow information:
Costs incurred in connection with Private Placement included in accounts payable
$
12
$
—
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Table of Contents
WHITEHAWK THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
1. Nature of Organization and Operations
Whitehawk Therapeutics, Inc. (together with its subsidiary, the "Company") is a clinical-stage oncology therapeutics company applying advanced technologies to established tumor biology that are intended to efficiently develop improved cancer treatments. The Company has deep experience in chemistry, formulation, and drug delivery, as well as research, clinical, and commercial pharmaceutical development, and taking product candidates from the clinic to approval, launch, and commercialization.
Current ADC Business
On December 19, 2024, the Company entered into an intellectual property license agreement (the “License Agreement”) with WuXi Biologics (Shanghai FX) Co., Ltd. (“WuXi Biologics”) for the development and global commercialization of a portfolio of three next generation antibody drug conjugates (“ADCs”) targeting clinically validated, broadly overexpressed tumor antigens in high potential cancer indications with significant unmet need. Refer to Note 7 for further information on the WuXi Biologics License Agreement and its terms.
Legacy FYARRO Business
For the periods presented and through the FYARRO Divestiture (as defined below), the Company's lead drug product was FYARRO
®
(sirolimus protein-bound particles for injectable suspension (albumin-bound); nab-sirolimus). The Company exclusively licensed FYARRO, previously called ABI-009, nab-sirolimus, from Abraxis BioScience, LLC, a wholly owned subsidiary of Celgene Corporation, which is a wholly owned subsidiary of Bristol-Myers Squibb Company (“BMS”). The Company refers to the development, production and commercial sale of FYARRO herein as the “FYARRO Business”. On February 22, 2022, the Company launched FYARRO in the United States for treatment of advanced malignant perivascular epithelioid cell tumor ("PEComa").
On December 19, 2024, the Company entered into a Stock Purchase Agreement (the “Divestiture Agreement”) with KAKEN INVESTMENTS INC., a Delaware corporation (“KAKEN”), KAKEN PHARMACEUTICAL CO., LTD, and Aadi Subsidiary, Inc., a Delaware corporation and the Company's former wholly owned subsidiary and the operating company for the FYARRO Business (“Aadi Subsidiary”). Under the Divestiture Agreement, KAKEN acquired
100
% of the outstanding shares of capital stock of Aadi Subsidiary from the Company for a cash payment of $
102.4
million (before applicable purchase price adjustments under the Divestiture Agreement) (the "FYARRO Divestiture"). The FYARRO Divestiture closed on March 25, 2025 and, as a result, the Company no longer operates the FYARRO Business.
Company Name Change
In connection with the FYARRO Divestiture, the Company changed the Company's name from "Aadi Bioscience, Inc." to "Whitehawk Therapeutics, Inc." and the Company's common stock thereafter has been traded under the symbol "WHWK".
Merger with Aerpio Pharmaceuticals, Inc.
On August 26, 2021 (the “Closing Date”), Aadi Bioscience, Inc., a Delaware corporation (f/k/a Aerpio Pharmaceuticals, Inc.), completed its business combination with Aadi Subsidiary, Inc. (f/k/a Aadi Bioscience, Inc., or “Private Aadi”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated May 16, 2021, by and among the Company, Aspen Merger Subsidiary, Inc. (“Merger Sub”) and Private Aadi (the “Merger Agreement”), pursuant to which Merger Sub merged with and into Private Aadi, with Private Aadi surviving as a wholly owned subsidiary of the Company (the “Reverse Merger”) until the FYARRO Divestiture.
7
Table of Contents
Liquidity
Since inception, the Company has devoted substantially all of its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations. Prior to the FYARRO Divestiture, the Company also realized revenues from the commercial sale of FYARRO.
The Company has experienced net losses since its inception and expects to continue to incur net losses into the foreseeable future. The Company had an accumulated deficit of
$
392.1
million
as of June 30, 2026, and net loss of
$
38.8
million
and net income of
$
20.4
million
for the six months ended June 30, 2026 and 2025, respectively. The net income recorded for the six months ended June 30, 2025 is primarily attributable to the gain on sale related to the FYARRO Divestiture. Prior to the FYARRO Divestiture, the Company's operating losses were funded primarily from outside sources of invested capital through the issuance of convertible promissory notes, grant funding, the sale of securities, and proceeds from license agreements.
The Company
had cash, cash equivalents and short-term investments of
$
190.0
million
at June 30, 2026. Management believes the Company’s cash, cash equivalents and short-term investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the issuance of these financial statements. If the Company is unable to achieve and maintain profitability, it will need additional financing to support its continuing operations and pursue its strategic objectives. Additional financing may be achieved through a combination of equity offerings and debt financing. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all.
On March 17, 2022, the Company entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), pursuant to which the Company may offer and sell, from time to time at the Company’s sole discretion, shares of its common stock having an aggregate offering price of up to $
75.0
million through Cowen as its sales agent for an at-the-marketing-offering. Any sales under the Sales Agreement may result in dilution to existing shareholders. As of
June 30, 2026
, no shares of common stock had been sold under this Sales Agreement.
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements, and the related disclosures, have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and U.S. Securities and Exchange Commission ("SEC") regulations and, in the opinion of management include all adjustments necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows for each period presented. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The Company’s condensed consolidated financial statements are stated in U.S. dollars.
The financial statements noted above reflect the financial position and results of operations of the Company. The comparative period includes the results of operations of the Company and Aadi Subsidiary, prior to its sale on March 25, 2025. The transaction did not meet the criteria for discontinued operations under ASC 205-20, and therefore no reclassification has been made to prior period statements.
The condensed consolidated balance sheet as of June 30, 2026 and December 31, 2025 excludes the assets and liabilities of Aadi Subsidiary, which were divested as of the sale date. See Note 14 for additional information.
Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, the accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended
8
Table of Contents
December 31, 2025
, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2026.
Risks and Uncertainties
Following the FYARRO Divestiture, the Company is a clinical-stage biopharmaceutical company with a limited operating history and
two
clinical and
one
preclinical stage product candidates in development. The Company's ability to generate revenue and achieve profitability depends significantly on the ability to achieve several objectives relating to the discovery, development and commercialization of the Company's portfolio of three next generation antibody drug conjugates (the "ADC Therapies") and any other product candidates that may be developed in the future.
Comprehensive (Loss) Income
Comprehensive (loss) income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on short-term investments. Comprehensive (loss) income has been reflected in the condensed consolidated statements of operations and comprehensive (loss) income for all periods presented.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. In the opinion of management, all adjustments that are considered necessary for fair presentation have been included. The most significant estimates in the Company’s condensed consolidated financial statements relate to share-based compensation expense and accrued research and development costs. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions.
Restructuring Charges
Restructuring charges consist primarily of employee severance, contract termination costs and other costs. Liabilities for costs associated with a restructuring activity are recognized when the liability is incurred and are measured at fair value. For one-time employee terminations benefits, the Company recognizes the liability in full on the communication date when future services are not required or amortizes the liability ratably over the service period, if required. The fair value of termination benefits reflects the Company’s estimate of expected utilization of certain Company-funded post-employment benefits. One-time termination benefits include severance and continuation of health insurance coverage for certain employees.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents, and available-for-sale marketable debt securities. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has not experienced any losses on deposits since inception.
Customer Concentration
The Company did
no
t have customer revenue for the
three and six months ended June 30, 2026
. The Company did
no
t have customer revenue for the three months ended June 30, 2025. For the six months ended June 30, 2025, two customers represented
37
% and
60
% of the Company’s revenue.
The Company did
no
t have accounts receivable as of
June 30, 2026 and December 31, 2025
.
Cash and Cash Equivalents
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The Company considers all highly liquid marketable securities purchased with original maturities of three months or less at the time of purchase date to be cash equivalents.
Fair Value of Financial Instruments
The accounting guidance defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs, such as quoted prices in active markets
Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions which reflect those that a market participant would use
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
In determining the fair value of its financial instruments, the Company considers the source of observable market data inputs, liquidity of the instrument, the credit risk of the counterparty to the contract, and its risk of nonperformance. In the case fair value is not observable, for the items subject to fair value measurements, the Company applies valuation techniques deemed the most appropriate under the GAAP guidance based on the nature of the assets and liabilities being measured.
The carrying amounts of cash equivalents, accounts payable, and accrued liabilities are reasonable estimates of their fair value because of the short maturity of these items.
Short-Term Investments
The Company invests in various types of securities, including United States government treasury bills, commercial paper, and corporate debt securities. The Company classifies its investments as available-for-sale and records them at fair value based upon market prices at period end. Unrealized gains and losses that are deemed temporary in nature are recorded in accumulated other comprehensive income as a separate component of stockholders' equity. Dividend and interest income are recognized when earned. The Company recognizes purchase premiums and discounts as interest income using the interest method over the terms of the securities. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of investments sold. The Company classifies short-term investments with remaining maturities greater than one year as current assets because such short-term investments are available to fund the Company’s current operations.
At each balance sheet date, the Company assesses available-for-sale securities in an unrealized loss position to determine whether the decline in fair value below amortized cost is a result of credit losses or other factors, whether the Company expects to recover the amortized cost of the security, the Company's intent to sell and if it is more likely than not that the Company will be required to sell the securities before the recovery of amortized cost. The Company records changes in allowance for expected credit loss in other income (expense), net. There has been no allowance for expected credit losses recorded during any of the periods presented. See Note 4 for further information.
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Property and Equipment, Net
Property and equipment, consisting of computers and software and furniture and fixtures are stated at cost, less accumulated depreciation. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets, generally
three
to
five years
. Such costs are periodically reviewed for recoverability when impairment indicators are present.
Details of property and equipment are presented as follows (in thousands):
June 30, 2026
December 31, 2025
Computers and Software
$
341
$
341
Furniture and fixtures
36
36
Total
$
377
$
377
Accumulated depreciation
(
376
)
(
374
)
Property and equipment, net
$
1
$
3
Depreciation expense on property and equipment amounted to
$
1.0
thousand
and
$
15.3
thousand
for the three months ended June 30, 2026 and 2025, respectively. Depreciation expense on property and equipment amounted to
$
2.0
thousand
and
$
0.1
million
for the six months ended June 30, 2026 and 2025
, respectively.
Leases
At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use asset upon commencement of the lease using the implicit rate or a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company does not recognize assets or liabilities for leases with lease terms of less than 12 months.
The Company additionally evaluates leases at their inception to determine if they are to be accounted for as an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: (i) the lease has a purchase option that is reasonably certain of being exercised, (ii) the present value of the future cash flows is substantially all of the fair market value of the underlying asset, (iii) the lease term is for a significant portion of the remaining economic life of the underlying asset, (iv) the title to the underlying asset transfers at the end of the lease term, or (v) if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. Operating lease assets represent a right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease liabilities with a term greater than one year and their corresponding right-of-use assets are recognized at the commencement date of the lease based on the present value of lease payments over the expected lease term.
Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. As the Company’s leases do not typically provide an implicit rate, the Company utilizes the appropriate incremental borrowing rate, determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and in a similar economic environment. For finance leases, depreciation expense is recognized for the leased asset acquired and interest expense is recognized related to the portion of the financing in the condensed consolidated statements of operations and comprehensive loss. For operating leases, lease cost is recognized on a straight-line basis over the lease term and variable lease payments are recognized as operating expense in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space leased by the Company. The Company has elected the practical expedient to not separate between lease and non-lease components.
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Table of Contents
Commitments and Contingencies
The Company recognizes a liability with regard to loss contingencies when it believes it is probable that a liability has been incurred, and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When no amount within the range is a better estimate than any other amount the Company accrues the minimum amount in the range. The Company has
no
t recorded any such liabilities as of
June 30, 2026 and December 31, 2025
.
Revenue Recognition and Related Allowances
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”), the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Product Net Sales
FYARRO was approved by the FDA in November 2021. On February 22, 2022, the Company launched sales of FYARRO to specialty distributors (“SDs”) and a specialty pharmacy (“SP”). The Company recognizes product sales when the SDs and SP obtain control of the product. Product sales are recorded at the net sales price, which includes provisions for the following allowances which are reflected either as a reduction to the related account receivable or as an accrued liability, depending on how the allowance is settled:
Distribution Fees
: Distribution fees include distribution service fees paid to the SDs and SP based on a contractually fixed percentage of the wholesale acquisition cost (“WAC”). Distribution fees are recorded as an offset to product sales based on contractual terms at the time revenue from the sale is recognized.
Rebates
: Allowance for rebates includes mandated discounts under the Medicaid Drug Rebate Program and TRICARE program. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or statutory requirements. The allowance for rebates is based on contracted or statutory discount rates and expected utilization by benefit plan participants. The Company’s estimates for expected utilization of rebates are based on utilization data received from the SDs and SP since product launch. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity. If actual future rebates vary from estimates, the Company may need to adjust prior period accruals, which would affect product sales in the period of adjustment.
Chargebacks:
Chargebacks are discounts and fees that relate to contracts with government and other entities purchasing from the SDs and SP at a discounted price. The SDs and SP charge back to the Company the difference between the price initially paid by the SDs and SP and the discounted price paid to the SDs and SP by these entities. If actual future chargebacks vary from these estimates, the Company may need to adjust prior period accruals, which would affect product sales in the period of adjustment.
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Table of Contents
Co-Payment Assistance:
The Company offers co-payment assistance to commercially insured patients meeting certain eligibility requirements. Co-payment assistance is accrued at the time of product sale to SDs and SP based on estimated patient participation and average co-pay benefit to be paid per a claim. The Company estimated amounts are compared to actual program participation and co-pay amounts paid using data provided by third-party administrators. If actual amounts differ from the original estimates the assumptions being applied are updated and adjustment for prior period accruals will be adjusted in the current period.
Product Returns:
Consistent with industry practice, the Company offers the SDs and SP limited product return rights for damages, shipment errors, and expiring product, provided that the return is within a specified period around the product expiration date as set forth in the applicable individual distribution agreement. The Company does not allow product returns for product that has been dispensed to a patient. As the Company receives inventory reports from the SDs and SP and has the ability to control the amount of product that is sold to the SDs and SP the Company’s estimate of future potential product returns is based on the on-hand channel inventory data and sell-through data obtained from the SDs and SP. In arriving at its estimate, the Company also considers historical product returns, the underlying product demand, and industry data specific to the specialty pharmaceutical distribution industry.
Revenue and allowances described above were recorded through the FYARRO Divestiture date of March 25, 2025. The total amount deducted from gross product sales for the allowances described above for the three months ended June 30, 2026 and 2025
was $
0
. The total amount deducted from gross product sales for the allowances described above for the
six months ended June 30, 2026 and 2025
was $
0
and $
2.1
million, respectively.
The following table sets forth the changes in the accrued revenue allowances (in thousands):
Six Months Ended June 30, 2025
Balance at beginning of period
$
1,411
Provision for current period sales
2,085
Payments
(
1,686
)
Allowances transferred in sale of Aadi Subsidiary, Inc.
(
1,810
)
Balance at end of period
$
—
Cost of Goods Sold
Cost of goods sold consist primarily of royalties paid to BMS, costs incurred on sales of FYARRO and costs to manufacture and prepare the product for sales subsequent to the FDA approval in November 2021. Cost of goods sold were recorded through the FYARRO Divestiture date of March 25, 2025.
Research and Development
Research and development expenses consist of costs incurred in performing research and development activities, including salaries and benefits, materials and supplies, preclinical expenses, share-based compensation expense, contract services, and other external development expenses. The Company records research and development activities conducted by third-party service providers, which include work related to preclinical studies, clinical trials, and contract manufacturing activities, to research and development expense as incurred. The Company is required to estimate the amount of services provided but not yet invoiced and include these expenses in accrued expenses on the condensed consolidated balance sheets and within research and development expenses in the condensed consolidated statements of operations and comprehensive (loss) income. These expenses are a significant component of the Company’s
research and development expenses and require significant estimates and judgments. The Company accrues for these expenses based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers. As actual expenses become known, the Company adjusts its accrued expenses.
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Table of Contents
In-Process Research and Development (IPR&D)
Acquired in-process research and development expenses are recorded when incurred and reflect costs of externally-developed in-process research and development (“IPR&D”) projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront and pre-commercialization milestone payments related to various collaborations and the costs of rights to IPR&D projects.
Refer to Note 7 for further information on the License Agreement and its terms.
For the three months ended June 30, 2026 and 2025
, the Company recorded $
0
and $
40.4
million, respectively, in IPR&D for development milestone-related expense. The Company recorded $
5.3
million and $
40.4
million in IPR&D for development milestone-related expense for the
six months ended June 30, 2026 and 2025
, respectively.
Warrants
The Company determines the accounting classification of warrants it issues as either liability or equity classified by first assessing whether the warrants meet the liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480”), then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815”). If warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40. In order for a warrant to be classified in stockholders’ equity, the warrant must be (a) indexed to the Company’s equity and (b) meet the conditions for equity classification in ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Equity. If a warrant does not meet the conditions for equity classification, it is carried on the balance sheet as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in the statement of operations as change in fair value of warrants in other income (expense). If a warrant meets both conditions for equity classification, the warrant is initially recorded in additional paid-in capital on the balance sheets, and the amount initially recorded is not subsequently remeasured at fair value. The Company has classified its pre-funded warrants as equity.
Share-Based Compensation
The Company recognizes all share-based payments to employees, including grants of employee stock options and restricted stock units in the consolidated statements of operations and comprehensive loss based on their fair values. All of the Company’s share-based awards, to employees, non-employees, officers, and directors, are subject only to service-based vesting conditions. Compensation expense for awards to employees is calculated on a straight-line basis by recognizing the fair value over the associated service period of the award, which is generally the vesting term.
Options granted during the year have a maximum contractual term of
ten years
.
Employee Stock Purchase Plan
Share-based compensation expense for employee stock purchases under the Company’s 2021 Employee Stock Purchase Plan (the “2021 ESPP”) is recorded at the estimated fair value of the purchase as of the plan enrollment date and is recognized as an expense on a straight-line basis over the applicable
six-month
2021 ESPP offering period.
Other Income (Expense)
During the three and six months ended June 30, 2026, other income includes interest income earned on cash, cash equivalents and short-term investments, and foreign exchange loss. During the three months ended June 30, 2025, other income includes interest income earned on cash, cash equivalents, short-term investments, foreign exchange loss, and income received for billable services not part of the Company's ordinary activities provided by its employees to KAKEN under a Transition Services Agreement ("TSA"). The TSA was entered into in connection with the sale of the business on March 25, 2025 and expired September 30, 2025. During the six months ended June 30, 2025 other income includes
interest
income earned on cash, cash equivalents, short-term investments, gain on sale of a business, foreign exchange loss, and income received for
14
Table of Contents
billable
services not part of the Company's ordinary activities provided by its employees to KAKEN under a Transition Services Agreement TSA.
Income Taxes
Income taxes have been accounted for using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance against deferred tax assets is recorded if, based upon the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position, as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties related to uncertain tax positions, if any exist, in income tax expense (benefit).
Net (Loss) Income per Share
Basic net (loss) income per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Basic and diluted weighted average shares of common stock outstanding for the three and six months ended June 30, 2026
and 2025, includes the weighted average effect of
17,991,021
,
16,866,574
, and
2,000,037
pre-funded warrants, which were issued in May 2026, March 2025, and September 2022, respectively, for the purchase of shares of common stock, for which the remaining unfunded exercise price is $
0.0001
per share. See Note 8 for more information on the pre-funded warrants.
Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive.
The Company incurred net losses for the three and six months ended June 30, 2026
and therefore did
no
t include potentially dilutive common stock equivalents in the computation of diluted net loss per share.
For the three months ended June 30, 2025
, the Company incurred net losses and therefore did
no
t include potentially dilutive common stock equivalents in the computation of diluted net loss per share. For the
six months ended June 30, 2025 options to purchase common stock totaling
3,828,884
shares, were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive.
The computations for basic and diluted EPS were as follows (in thousands, except shares and per share amounts):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Net (loss) income for basic and diluted EPS
$
(
16,640
)
$
(
52,615
)
$
(
38,834
)
$
20,401
Weighted-average shares for basic EPS
82,886,196
69,083,127
76,099,275
54,443,309
Effect of dilutive stock options
—
—
—
71,128
Effect of dilutive restricted stock units
—
—
—
394,278
Weighted-average shares for diluted EPS
82,886,196
69,083,127
76,099,275
54,908,715
Net income (loss) per share:
Basic EPS
$
(
0.20
)
$
(
0.76
)
$
(
0.51
)
$
0.37
Diluted EPS
$
(
0.20
)
$
(
0.76
)
$
(
0.51
)
$
0.37
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Table of Contents
Recent Accounting Pronouncements
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. ASU 2024-03 requires additional disclosure of the nature of expenses included in the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2024-03 on the financial statements and related disclosures.
On December 08, 2025, the FASB issued Accounting Standards Update ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which primarily amends FASB Accounting Standards Codification 270, Interim Reporting, clarifying the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements. The amendments in ASU 2025-11 apply to all entities that provide interim financial statements and notes in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Early adoption is permitted. ASU 2025-11 can be applied prospectively or retrospectively and is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is evaluating the impact of ASU 2025-11 on the financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-12, "Codification Improvements." This ASU addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. The Company is evaluating the effect that ASU 2025-12 will have on its consolidated financial statements and related disclosures.
3. Fair Value Measurement
The following table sets forth the recurring fair value of the Company’s financial assets and liabilities, allocated into the Level 1, Level 2 and Level 3 hierarchy that were measured at fair value on a recurring basis (in thousands):
Fair Value Measurements as of June 30, 2026
Level 1
Level 2
Level 3
Total
Assets:
Money market funds (1)
$
84,984
$
—
$
—
$
84,984
U.S. government treasury bills
46,111
—
—
46,111
Commercial paper
16,963
16,963
Corporate bonds
—
41,674
—
41,674
Total financial assets
$
131,095
$
58,637
$
—
$
189,732
Fair Value Measurements as of December 31, 2025
Level 1
Level 2
Level 3
Total
Assets:
Money market funds (1)
$
37,318
$
—
$
—
$
37,318
U.S. government treasury bills
43,881
—
—
43,881
Commercial paper
—
16,262
—
16,262
Corporate bonds
—
47,986
—
47,986
Total financial assets
$
81,199
$
64,248
$
—
$
145,447
(1)
Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.
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4. Short-Term Investments and Cash Equivalents
The following table summarizes the Company's short-term investments (in thousands):
As of June 30, 2026
Maturity
(In Years)
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Money market funds
$
84,984
$
—
$
—
$
84,984
U.S. government treasury bills
Less than 1
46,143
—
(
32
)
46,111
Commercial paper
Less than 1
16,964
5
(
6
)
16,963
Corporate bonds
Less than 1
32,770
3
(
28
)
32,745
Corporate bonds
More than 1 less than 2
8,934
—
(
5
)
8,929
Total
$
189,795
$
8
$
(
71
)
$
189,732
As of December 31, 2025
Maturity
(In Years)
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Money market funds
$
37,318
$
—
$
—
$
37,318
U.S. government treasury bills
Less than 1
43,857
24
—
43,881
Commercial paper
Less than 1
16,239
23
—
16,262
Corporate bonds
Less than 1
44,907
66
44,973
Corporate bonds
More than 1 less than 2
3,006
7
—
3,013
Total
$
145,327
$
120
$
—
$
145,447
As of June 30, 2026, the available-for-sale debt securities are of high credit quality, and there were
no
realized losses recognized as of June 30, 2026 and December 31, 2025.
No
allowance for credit losses was recognized as of June 30, 2026 or December 31, 2025.
5. Accrued Liabilities
Details of accrued liabilities are presented as follows (in thousands):
June 30,
2026
December 31,
2025
Accrued professional fees
$
2,365
$
968
Accrued salaries and payroll
860
602
Accrued restructuring charges
—
192
Accrued bonus
1,719
3,160
Accrued contract manufacturing
1,431
3,935
Accrued clinical
202
12
Accrued research and development
3,280
4,627
Accrued other
107
106
Total accrued liabilities
$
9,964
$
13,602
6. Operating Leases
In April 2019, the Company entered into a
twenty-eight month
facility lease agreement for office space in Pacific Palisades, California (the “Pacific Palisades Lease”). The Pacific Palisades Lease commenced on May 1, 2019, included
four months
of rent abatement and a rent escalation clause and was set to expire on August 31, 2021. In August 2021, the Company exercised its option to extend the term of the Pacific Palisades Lease for an additional
three-year
period and entered into an amendment to the lease agreement (the “Pacific Palisades Lease Amendment”). Pursuant to the Pacific Palisades Lease Amendment, the Company and the landlord agreed to extend the term for an additional period of
three (3) years and six (6) months
, until February 28, 2025, with an option to renew for an additional three (
3
) years in accordance with the terms of the Pacific Palisades Lease. Included in the Pacific Palisades Lease Amendment were
nine months
of rent abatement and a rent escalation clause.
The Pacific Palisades Lease expired on February 28, 2025.
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Table of Contents
In April 2022, the Company entered into a lease agreement for office space in Morristown, New Jersey (the “Morristown Lease”). The Morristown Lease has a term of
seventy-three months
, unless terminated sooner, and includes rent abatement for the first
three months
and the forty-seventh and forty-eighth calendar months after lease commencement. Included in the Morristown Lease are fixed rent escalations of approximately
2
% on each anniversary year of the lease term.
In connection with the FYARRO Divestiture, KAKEN assumed the Morristown Lease. The Company entered into a short-term sublease with KAKEN and is currently in the process of extending the sublease arrangement upon the sublandlord's and landlord's consent. The Company has elected the short-term lease exemption under ASC 842. As such, this lease is not recorded on the balance sheet. Lease payments made are recognized on a straight-line basis over the lease term in the income statement.
Rent expense
for the three and six months ended June 30, 2026 and 2025 is presented on the following table (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Operating lease rent expense
$
35
$
34
$
46
$
108
Cash paid for leases and included in operating cash flows for the six months ended June 30, 2026 and 2025 is presented on the following table (in thousands):
Six Months Ended June 30,
2026
2025
Cash paid included in operating cash flows
$
—
$
99
7. L
icense Agreements
Former Bristol-Myers Squibb Company License Agreement
On April 9, 2014, the Company entered into a license agreement (as amended the “BMS License Agreement”) with BMS for exclusive rights for certain patents and a non-exclusive license for certain technology and know-how pertaining to FYARRO.
The BMS License Agreement will remain in effect from the effective date of April 9, 2014 until expiration of all milestone and royalty payment obligations under the agreement, unless terminated by either of the parties pursuant to the terms of the BMS License Agreement, including providing advance notice as specified in the agreement. Under the terms of the BMS License Agreement, BMS agreed to supply the Company with licensed products of FYARRO necessary for clinical or non-clinical development.
Under the terms of the BMS License Agreement, BMS is entitled to receive royalties on net sales from licensed products under the agreement and any sublicense fees. During the three months ended June 30, 2026 and 2025
, royalties on net product sales were $
0
. During the
six months ended June 30, 2026 and 2025
, royalties on net product sales were $
0
and $
0.5
million, respectively.
No
payments related to sublicense fees were paid during the
three and six months ended June 30, 2026 and 2025.
As part of its purchase of the FYARRO Business, KAKEN acquired the Company's rights and responsibilities under the BMS License Agreement.
WuXi Biologics License Agreement
On December 19, 2024, the Company entered into an Intellectual Property License Agreement (the “License Agreement”) with
WuXi Biologics (Shanghai FX) Co., Ltd. (“WuXi Biologics”) for exclusive rights to certain patents and know-how pertaining to WuXi Biologics’ preclinical antibody drug conjugate programs leveraging Hangzhou DAC Biotechnology Co., Ltd.’s (“Hangzhou DAC”) linker-payload technology targeting each of the ADC Therapies.
Under the License Agreement, the Company paid WuXi Biologics a non-refundable, partial upfront payment of $
6.0
million on December 20, 2024. An additional non-refundable, upfront payment of $
38.0
million was due within one-hundred twenty (
120
) days after the effective date of the License Agreement for the rights and licenses granted to the Company by WuXi Biologics and was paid on April 16, 2025.
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In accordance with the License Agreement, WuXi Biologics is eligible to receive from the Company (a) up to an aggregate of $
265.0
million upon the achievement of certain development milestones, and (b) up to an aggregate of $
540.0
million upon the achievement of certain commercial milestones, across all ADC Therapies. WuXi Biologics is also entitled to running royalties ranging from low-single-digit to upper-single-digit percentages of annual net sales of licensed products in the territory on a product-by-product and region-by-region basis from the first commercial sale of the applicable licensed product in a particular region until the date which is the later of (i) expiration of the last to expire valid claim of a license patent in such region covering the sale of such licensed product in such region or (ii)
ten years
after the first commercial sale of such licensed product in such region.
Each party may terminate the License Agreement in its entirety, or on a program-by-program basis, as applicable, if the other party remains in material breach of the License Agreement following a cure period to remedy the material breach or if the other party is declared insolvent or in similar financial distress. In addition, WuXi Biologics may terminate the License Agreement on a program-by-program basis if the Company does not meet certain development due diligence milestones. The Company may terminate the License Agreement in its entirety, or on a program-by-program basis, as applicable, with or without cause.
8. Stockholders’ Equity
Preferred Stock
As of June 30, 2026 and
December 31, 2025
, under the Company’s certificate of incorporation, as amended and restated, the Company has
10,000,000
shares of preferred stock, par value $
0.0001
per share, in authorized capital with
no
shares outstanding.
Common Stock and Pre-Funded Warrants
As of June 30, 2026 and December 31, 2025
, the Company had
300,000,000
shares of authorized common stock, par value of $
0.0001
per share, under the Company's certificate of incorporation, as amended and restated. As of
June 30, 2026 and December 31, 2025
, the shares of common stock outstanding were
57,009,010
and
47,145,719
, respectively.
In March 2022, the Company entered into a Sales Agreement (the "Sales Agreement") with Cowen and Company LLC (“Cowen”), with respect to an “at the market offering” program pursuant to which the Company may offer and sell, from time to time at its sole discretion, shares of common stock having aggregate gross proceeds of up to $
75.0
million through Cowen as its sales agent. The Company will pay Cowen
3.0
% of the aggregate gross proceeds from each sale of shares of common stock under the Sales Agreement. As of
June 30, 2026
,
no
shares of common stock had been sold pursuant to the Sales Agreement.
On September 22, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) for a private investment in public equity financing (the “2022 PIPE Financing”) with certain investors (the “2022 PIPE Investors”) for the sale by the Company of (i)
3,373,526
shares of the Company’s common stock for a price of $
12.50
per share and (ii) pre-funded warrants (the "2022 Pre-Funded Warrants") to purchase an aggregate of
2,426,493
shares of the Company's common stock at a purchase price of $
12.4999
per 2022 Pre-Funded Warrant. The 2022 PIPE Financing closed on September 26, 2022. Aggregate net proceeds, after deducting certain expenses incurred of $
0.3
million related to the issuance of the securities, were $
72.2
million. As of
June 30, 2026
,
2,000,037
of the 2022 Pre-Funded Warrants were still outstanding.
On December 19, 2024, the Company entered into the Subscription Agreement for a private investment in public equity financing (the "2024 PIPE Financing") with certain investors (the "2024 PIPE Investors"), pursuant to which the Company agreed to sell to the 2024 PIPE Investors (i)
21,592,000
shares of the Company’s common stock, par value $
0.0001
per share, at a purchase price of $
2.40
per share, and (ii) pre-funded warrants to purchase an aggregate of
20,076,500
shares of the Company's common stock (the "2024 Pre-Funded Warrants"), at a purchase price of $
2.3999
per 2024 Pre-Funded Warrant, for aggregate net proceeds of $
94.4
million, after deducting certain expenses incurred of $
5.6
million related to the issuance of shares. The 2024 PIPE Financing was conditioned upon the Company's shareholders approving the 2024 PIPE Financing and closed on March 4, 2025 after such approval was obtained. As of
June 30, 2026,
16,866,574
of the 2024 Pre-Funded Warrants were outstanding.
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On May 13, 2026, the Company entered into a securities purchase agreement for a private investment in public equity financing (the "2026 PIPE Financing") with certain investors (the "2026 PIPE Investors"), pursuant to which the Company agreed to sell to the 2026 PIPE Investors (i)
4,330,866
shares of the Company’s common stock, par value $
0.0001
per share, at a purchase price of $
3.92
per share, and (ii) pre-funded warrants to purchase an aggregate of
17,991,021
shares of the Company's common stock (the "2026 Pre-Funded Warrants" and together with the 2022 Pre-Funded Warrants and 2024 Pre-Funded Warrants, the "Pre-Funded Warrants"), at a purchase price of $
3.9199
per 2026 Pre-Funded Warrant, for aggregate net proceeds of $
81.8
million, after deducting certain expenses incurred of $
5.7
million related to the issuance of shares. As of
June 30, 2026
, all
17,991,021
of the 2026 Pre-Funded Warrants were outstanding.
For each of the 2022 PIPE Financing, 2024 PIPE Financing and 2026 PIPE Financing, the Pre-Funded Warrants are exercisable at an exercise price of $
0.0001
per share of the Company's common stock and will be exercisable until exercised in full. The holders of such Pre-Funded Warrants may not exercise a Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than
4.99
% or
9.99
%, at the election of the holder, of the number of shares of the Company's common stock outstanding immediately after giving effect to such exercise. The holders of such Pre-Funded Warrants may increase or decrease such percentages not in excess of
19.99
% by providing at least
61
days’ prior notice to the Company.
The Pre-Funded Warrants are indexed to the Company's common stock and meet the conditions for equity classification in accordance with ASC 815-40. As such, the Pre-Funded Warrants are classified as additional paid-in capital within the stockholders' equity on the Company's consolidated balance sheets.
Dividends
The holders of common stock are entitled to receive cash dividends, if and when declared by the board of directors of the Company (the “board of directors”). Since the Company’s inception,
no
cash dividends have been declared or paid to the holders of common stock.
Liquidation
In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the Company, the holders of common stock are entitled to share ratably in the Company’s assets.
Voting
The holders of common stock are entitled to
one
vote at all meetings of stockholders for each share of common stock held by such stockholders as of the record date.
9. Share-Based Compensation
2014 Plan (as amended and restated in February 2017, the “Private Aadi Plan”)
In connection with the Reverse Merger, the Company assumed the Private Aadi Plan, which was amended and restated in February 2017, and the issued and outstanding stock options under the Private Aadi Plan (the Private Aadi common stock underlying the awards was adjusted for shares of the Company’s common stock pursuant to the Merger Agreement).
The Private Aadi Plan allowed for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock unit awards and other stock awards. In connection with the closing of the Reverse Merger and the adoption of the 2021 Plan (as defined below),
no
further awards will be issued under the Private Aadi Plan.
The options that are granted from the Private Aadi Plan are exercisable at various dates as determined upon grant and will expire no more than
ten years
from their date of grant. The Private Aadi Plan stock options generally vest over a
four-year
term.
2011 Plan and 2017 Plan
In
connection with the closing of the Reverse Merger, the Company assumed the Aerpio 2011 Equity Incentive Plan (the “2011 Plan”) and the Aerpio 2017 Stock Option and Incentive Plan (the “2017 Plan,” and together with the 2011 Plan, the
20
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“Prior
Plans”).
No
new awards will be granted under the Prior Plans effective as of the closing of the Reverse Merger and the adoption of the 2021 Plan (as defined below).
2021 Plan
At the closing of the Reverse Merger, the Company adopted the Aadi Bioscience, Inc. 2021 Equity Incentive Plan, which is now named the Whitehawk Therapeutics, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), which permits the award of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance grants to employees, members of the board of directors, and outside consultants.
Subject to the adjustment provisions contained in the 2021 Plan and the evergreen provision described below, a total of
2,070,784
shares of common stock were initially reserved for issuance pursuant to the 2021 Plan. In addition, the shares reserved for issuance under the 2021 Plan include any shares of common stock (i) subject to awards of stock options or other awards granted under the Prior Plans that expire or otherwise terminate without having been exercised in full and shares of common stock granted under the Prior Plans that are forfeited or repurchased by the Company, and (ii) any shares of common stock subject to stock options or similar awards granted under the Private Aadi Plan that were assumed in the Reverse Merger (provided that the maximum number of shares that may be added to the 2021 Plan pursuant to this provision is
764,154
shares).
From the adoption of the 2021 Plan until February 28, 2025, the number of shares available for issuance under the 2021 Plan included an annual increase, or the evergreen feature, on the first day of each of the Company’s fiscal years, beginning with the Company’s fiscal year 2022, equal to the least of:
•
2,070,784
shares of common stock;
•
a number of shares equal to
4
% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year; or
•
such number of shares as the board of directors or its designated committee may determine.
On February 28, 2025, the Company’s stockholders approved the amendment and restatement of the 2021 Plan to (i) increase the number of shares available for future grant under the 2021 Plan from
2,000,284
shares to
8,300,284
shares and (ii) modify the 2021 Plan’s default annual automatic share reserve increase occurring on January 1 of each year to be equal to the least of
8,300,284
shares,
5
% of outstanding shares on the last day of the immediately preceding fiscal year, or such number of shares as the board of directors or its designated committee may determine. Upon stockholder approval, such amendment and restatement of the 2021 Plan became effective.
As a result of the evergreen increase, a total of
2,357,286
shares of common stock were added to the 2021 Plan on January 1, 2026 and
987,228
shares of common stock were added to the 2021 Plan on January 1, 2025.
Shares issuable under the 2021 Plan are authorized, but unissued, or reacquired shares of common stock. If an award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, restricted stock units, performance units or performance shares, is forfeited to or repurchased by the combined company due to failure to vest, the unpurchased shares (or for awards other than stock options or stock appreciation rights, the forfeited or repurchased shares) will become available for future grant or sale under the 2021 Plan (unless the 2021 Plan has terminated).
2023 Inducement Equity Incentive Plan
On September 27, 2023 the Company adopted the 2023 Inducement Equity Incentive Plan (the “Inducement Plan”), pursuant to which the Company may from time to time make equity grants to new employees as a material inducement to their employment. The Company reserved
600,000
shares
of common stock for issuance under the Inducement Plan. The only
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persons
eligible to receive awards under the Inducement Plan are individuals who are new employees and satisfy the standards for inducement grants under applicable Nasdaq listing rules.
As of June 30, 2026
,
105,469
,
15,036
,
10,672,169
, and
490,000
shares were outstanding under the Private Aadi Plan, 2017 Plan, 2021 Plan, and 2023 Inducement Plan, respectively.
The following table summarizes the stock option activity during the
six months ended June 30, 2026:
Stock
Option
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
(in Years)
Aggregate
Intrinsic
Value
(in thousands)
Outstanding as of December 31, 2025
8,120,654
$
6.31
8.19
$
2,642
Granted
3,070,847
3.60
Exercised
(
24,286
)
2.29
Cancelled/Forfeited
(
41,539
)
9.76
Outstanding as of June 30, 2026
11,125,676
$
5.56
8.29
$
17,066
Options exercisable as of June 30, 2026
4,761,919
$
9.05
7.07
$
6,039
Vested and expected to vest as of June 30, 2026
11,125,676
$
5.56
8.29
$
17,066
As of June 30, 2026
, there was $
12.9
million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of
1.59
years.
The total intrinsic value of the options exercised during the three months ended June 30, 2026
, and 2025, was $
48.7
thousand and $
0
, respectively. The total intrinsic value of the options exercised during the
six months ended June 30, 2026 and 2025
was $
48.7
thousand and $
43.6
thousand, respectively.
As of June 30, 2026, and December 31, 2025
,
1,971,797
and
2,520,585
shares were reserved for future awards under the 2021 Plan, respectively. As of
June 30, 2026 and December 31, 2025
,
110,000
shares were reserved for future awards under the 2023 Inducement Plan.
Restricted Stock Units
Restricted stock consists of restricted stock unit awards ("RSUs") which have been granted to employees. The value of an RSU award is based on the Company’s stock price on the date of grant. Employee grants vest over
one
to
four years
. Forfeitures of RSUs are recognized as they occur. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of the Company’s common stock.
Activity with respect to the Company’s restricted stock units during the
six months ended June 30, 2026 is as follows:
Shares
Weighted Average
Grant Date Fair
Value
Nonvested shares at December 31, 2025
2,452,690
$
1.73
Granted
—
—
Vested/Issued
(
2,282,458
)
1.70
Forfeited
(
13,234
)
1.74
Nonvested shares at June 30, 2026
156,998
$
2.04
As of June 30, 2026
, there was $
0.2
million of unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted average period of
1.06
years.
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Compensation Expense Summary
The Company recognized the following compensation cost related to employee and non-employee share-based compensation activity for the periods presented (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Selling, general and administrative
$
869
$
2,156
$
2,328
$
3,140
Research and development
651
931
1,385
1,627
Total
$
1,520
$
3,087
$
3,713
$
4,767
The Company uses the Black-Scholes option pricing model to determine the estimated fair value for share-based option awards. Option pricing and models require the input of various assumptions, including the option’s expected life, expected dividend yield, price volatility and risk-free interest rate of the underlying stock. Forfeitures are recognized and accounted for as they occur.
The calculation was based on the following assumptions:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Weighted average grant date fair value (per share)
$
2.60
$
1.74
$
2.59
$
1.85
Risk-free interest rate
4.06
% -
4.25
%
3.97
% -
4.19
%
3.72
% -
4.25
%
3.97
% -
4.19
%
Expected volatility
79.13
% -
81.53
%
84.03
% -
84.81
%
79.13
% -
82.12
%
84.03
% -
89.48
%
Expected term (in years)
5.50
-
6.08
5.49
-
6.08
5.50
-
6.08
5.49
-
6.08
Expected dividend yield
—
—
—
—
The Company determines the assumptions used in the option pricing model in the following manner:
Risk-Free Interest Rate
–
For the determination of the risk-free interest rates, the Company utilizes the U.S. Treasury yield curve for instruments in effect at the time of measurement with a term commensurate with the expected term assumption.
Expected Volatility
– The Company based its estimate of expected volatility on a weighted average using the Company's limited historical stock price volatility data, supplemented with the estimated and expected volatilities of a guideline group of publicly traded companies. For these analyses, the Company selected companies with comparable characteristics including enterprise value, risk profiles, and with historical share price information sufficient to meet the expected life of the share-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its share-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.
Expected Dividend
– The expected dividend yield is assumed to be zero because the Company has never paid dividends and does not have current plans to pay any dividends on its common stock.
Expected Term
– The Company estimates the expected term of its stock options granted to employees and non-employee directors using the simplified method, whereby, the expected term equals the average of the vesting term and the original contractual term of the option. The Company utilizes this method since it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.
10. Employee Stock Purchase Plan
On August 17, 2021, a special meeting of the Company’s stockholders was held to approve the Reverse Merger and related matters, at which the Company's stockholders considered and approved the Company’s 2021 ESPP which permits participants to contribute up to
15
% of their eligible compensation during defined rolling
six-month
offering
periods to
23
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purchase
the Company's common stock. The purchase price of the shares will be
85
% of the lower of the fair market value of the Company's common stock on the first day of trading of the offering period or on the applicable purchase date. Upon approval of the 2021 ESPP by the stockholders, Aerpio’s Amended and Restated 2017 Employee Stock Purchase Plan terminated. An aggregate of
519,563
shares of common stock was initially reserved for issuance under the 2021 ESPP. The number of shares of common stock available for issuance under the 2021 ESPP is automatically increased on the first day of each fiscal year beginning with the 2022 fiscal year in an amount equal to the least of:
•
310,617
shares of common stock;
•
one percent (
1
%) of the outstanding shares of all classes of common stock on the last day of the immediately preceding fiscal year; or
•
an amount to be determined by the board of directors or its designated committee no later than the last day of the immediately preceding fiscal year.
Under this mechanism, a total of
310,617
and
246,807
shares of common stock were added to the 2021 ESPP on January 1, 2026 and 2025, respectively. Shares of common stock issuable under the 2021 ESPP will be authorized, but unissued, or reacquired shares of common stock. If the Company’s capital structure changes because of a stock dividend, stock split or similar event, the number of shares that can be issued under the 2021 ESPP will be appropriately adjusted. The Company opened enrollment into the 2021 ESPP in May 2022.
The Company uses the Black-Scholes model to determine the estimated fair value for purchases under the 2021 ESPP. Black-Scholes models require the input of various assumptions, including the expected life, expected dividend yield, price volatility and risk-free interest rate of the underlying stock. The expected volatility used in calculating the estimated fair value for purchases under the 2021 ESPP is based on the historical volatility of the Company's common stock.
The calculation was based on the following assumptions:
Three and Six Months Ended June 30, 2026
Three and Six Months Ended June 30, 2025
Strike price (per share)
$
1.82
- $
4.00
$
1.69
- $
2.11
Risk-free interest rate
3.77
% -
3.80
%
4.29
% -
4.44
%
Expected volatility
73.73
% -
80.01
%
55.26
% -
88.23
%
Expected term (in years)
0.5
0.5
Expected dividend yield
—
—
As of June 30, 2026, and December 31, 2025
,
1,318,718
and
1,023,856
shares of common stock were available for issuance under the 2021 ESPP, respectively. The Company had an outstanding liability of $
42.0
thousand and $
24.0
thousand as of
June 30, 2026, and December 31, 2025
, respectively, which will be recognized over
six months
. For
the six months ended June 30, 2026 and 2025
,
15,755
and
16,337
shares were issued under the 2021 ESPP, respectively.
11. Income Taxes
The Company recorded
no
income tax expense for the
six months ended June 30, 2026 and 2025
. The Company continues to maintain a full valuation allowance.
12. Commitments and Contingencies
Litigation
From time to time, the Company could be subject to various legal proceedings and claims that arise in the ordinary course of its business activities. Regardless of the outcome, legal proceedings can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company has no ongoing legal proceedings or claims where a liability has been recorded as of June 30, 2026 and December 31, 2025.
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Purchase Commitments
The Company has ongoing contracts with vendors for clinical trials, research and development, and contract manufacturing. These contracts are generally cancellable, with notice, at the Company’s option. The Company recorded accrued expenses of
$
4.9
million
and
$
8.6
million
for expenditures incurred by clinical, research and development, and contract manufacturing vendors as of June 30, 2026, and December 31, 2025
, respectively.
13. Restructuring
On August 21, 2024, the Company announced a restructuring plan to reduce the Company’s workforce by approximately
32
% in response to the Company's announcement on August 20, 2024 that it planned to halt the registration-intended PRECISION1 trial of nab-sirolimus in patients with solid tumors harboring
TSC1
or
TSC2
inactivating alterations. The Company recorded a total restructuring charge of $
2.6
million, which consisted of one-time termination benefits such as severance costs and related benefits. As of
June 30, 2026
,
no
one-time termination benefits remain payable. As of
December 31, 2025
, $
0.2
million of one-time termination benefits remained payable and were recorded within the accrued liabilities and other liabilities line items on the Company's condensed consolidated balance sheet. The Company paid $
0
and $
0.2
million of the liability during the
three and six months ended June 30, 2026
, respectively. The Company paid $
0.3
million and $
0.7
million during the
three and six months ended June 30, 2025
, respectively. There were
no
restructuring charges for the
three and six months ended June 30, 2026
and 2025. Restructuring payments commenced in September 2024 and were completed in March 2026.
14. Divestiture of FYARRO
On December 19, 2024, the Company entered into the Divestiture Agreement with
KAKEN, KAKEN PHARMACEUTICAL CO., LTD, and Aadi Subsidiary for the sale to KAKEN of
100
% of the outstanding shares of capital stock of Aadi Subsidiary and thereby all of the Company’s assets related to the FYARRO Business. Per the terms and subject to the conditions of the Divestiture Agreement, KAKEN paid to the Company a cash payment of $
102.4
million (following applicable purchase price adjustments under the Divestiture Agreement) at the closing of the FYARRO Divestiture on March 25, 2025.
The Company recorded a net gain on sale of the FYARRO Divestiture of $
87.4
million at the closing thereof, which has been recorded on the unaudited condensed consolidated statement of operations and comprehensive (loss) income.
The $
87.4
million gain represents the aggregate consideration of $
102.4
million, less the assets and liabilities transferred, which are listed below (in thousands):
March 25, 2025
Assets
Current assets:
Cash and cash equivalents
$
(
1,000
)
Accounts receivable, net
(
6,903
)
Inventory
(
5,141
)
Prepaid expenses and other current assets
(
866
)
Total current assets
(
13,910
)
Property and equipment, net
(
6,836
)
Operating lease right-of-use assets
(
707
)
Other assets
(
64
)
Total assets
$
(
21,517
)
Current liabilities:
Accounts payable
$
(
852
)
Accrued liabilities
(
4,951
)
Operating lease liabilities, current portion
(
201
)
Total current liabilities
(
6,004
)
Operating lease liabilities, net of current portion
(
536
)
Total liabilities
(
6,540
)
Net assets disposed of
$
(
14,977
)
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The Company evaluated various qualitative and quantitative factors related to the disposition of the FYARRO Business and determined the transaction did not meet the criteria for discontinued operations under ASC 205-20, and therefore no reclassification has been made to prior period statements.
15. Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company has identified its
Chief Executive Officer
as the chief operating decision maker and the Company views its operations and manages its business in
one
operating segment, applying advanced technologies to established tumor biology that are intended to efficiently develop improved cancer treatments.
The CODM assesses performance for the Company's single operating segment and decides how to allocate resources based on research and development expenses incurred and
on net (loss) income
as reported on the statement of operations and comprehensive (loss) income.
The measure of segment assets is reported on the balance sheet as total assets. Further, segment depreciation expense and segment asset additions are consistent with amounts reported within the statement of cash flows given the Company's operations are aggregated within a
single
reportable segment. The Company's revenues relate to sales of FYARRO, which was divested as of March 25, 2025. Refer to Note 2 for further information. All the assets and operations of the Company’s sole operating and reportable segment are located in the United States.
Significant segment expenses which are regularly reported to the CODM for purposes of making decisions regarding the allocation of resources are included within the table below and are reconciled to net (loss) income (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Total Revenue
$
—
$
—
$
—
$
7,145
Less:
ADC assets - research and development expenses
9,101
43,454
21,138
43,454
ADC assets - contract manufacturing
3,792
5,402
8,980
8,877
FYARRO - research and development expenses
—
(
47
)
7
5,266
FYARRO - commercial and marketing expenses
—
(
14
)
—
280
Finance and accounting expenses (1)
1,697
2,033
3,775
5,249
Legal expenses
1,230
984
2,282
3,571
Other segment items (2)
820
803
2,652
(
79,953
)
Net (loss) income
$
(
16,640
)
$
(
52,615
)
$
(
38,834
)
$
20,401
(1)
Finance and accounting expenses primarily include shared-based compensation, insurance, salaries and wages, and other outside consulting services.
(2)
Other segment items primarily include other SGA departmental expenses, cost of sales, other inc
ome, and gain on sale of business.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains express or implied forward-looking statements which are made pursuant to the safe harbor provisions of 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”), that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Quarterly Report may include, but are not limited to, statements about:
•
our estimates regarding expenses, capital requirements, needs for additional financing and the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements, including our belief that, based on our current plans, our existing cash, cash equivalents and short-term investments will enable us to conduct our planned operations into the second half of 2028;
•
our ability to obtain and maintain regulatory approval for our portfolio of three next generation antibody drug conjugates (the “ADC Therapies”) or any other product candidates we may develop, and any related restrictions, limitations or warnings in the label of an approved product candidate;
•
the timing, progress and results of preclinical studies and clinical trials for our programs and product candidates (including our anticipated timing of FDA's clearance of our investigational new drug (“IND”) application for HWK-206 with the U.S. Food and Drug Administration by mid-2026 and submission of IND applications for multiple new programs over the next 12-24 months in connection with our option agreement with Hangzhou DAC), the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs;
•
the anticipated timing of releasing data for current or future clinical trials, including our expected timing of the data readouts for the HWK-007 and HWK-016 Phase 1 clinical trials in the first half of 2027;
•
the anticipated timing of commencement, enrollment, and completion of any current or future clinical trials for the ADC Therapies or any other product candidates we may develop;
•
our belief that, with the three ADC Therapies, we have the ability to pursue multiple cancer indications with high potential in large addressable patient populations, including and beyond those indications currently expected to be targeted in the upcoming Phase 1 trials;
•
our belief that the ADC Therapies will be able to target cancers expressing specified tumor markers precisely and deliver the potent, cytotoxic Topoisomerase I ("TOP1") inhibitor at the site of cancer;
•
our view that we are positioned to unlock the high potential of the ADC Therapies due to our track record of strong execution of novel drug formulation, research, clinical development, and commercialization in oncology, combined with our deep understanding of antibody drug conjugates ("ADCs");
•
our belief that our team is well positioned to execute on our strategy to develop and, if approved, commercialize the ADC Therapies and future pipeline assets to ultimately bring broad benefit to cancer patients worldwide;
•
our manufacturing capabilities and strategy;
•
the expectations regarding the beneficial characteristics, safety, efficacy and therapeutic effects of the ADC Therapies and any other product candidates that we may develop;
•
the implementation of our business model and our strategic plans for our business;
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•
our ability to contract with and rely on third parties to assist in conducting our clinical trials and manufacturing the ADC Therapies and any other product candidates we may develop;
•
the size and growth potential of the markets for the ADC Therapies and any other product candidates we may develop, if approved, and our ability to serve those markets, either alone or in partnership with others;
•
our ability to obtain funding for our operations, including funding necessary to complete development, approval and, if approved, commercialization of the ADC Therapies and any other product candidates we may develop;
•
the potential for our business development efforts to maximize the potential value of our portfolio;
•
our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates;
•
our financial performance; and
•
our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals.
Forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions, and projections about the business and future financial results of the pharmaceutical industry, and other legal, regulatory and economic developments. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “intend,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “continue,” “likely,” and similar expressions (including their use in the negative) intended to identify forward-looking statements although not all forward-looking statements contain these identifying words. Actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including, but not limited to, those described in Part II, Item 1A (Risk Factors) of this Quarterly Report.
You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.
The forward-looking statements in this Quarterly Report represent our views as of the date of this Quarterly Report. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report.
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Item 2. Management’s Discussion and Ana
lysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto appearing elsewhere in this Quarterly Report and our audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026. Some of the information contained in this discussion and analysis including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risk, uncertainties and assumptions. Our actual results could differ materially from those discussed in our forward-looking statements for many reasons, including those risks. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. You should read this Quarterly Report completely, including Part II, Item 1A (Risk Factors) of this Quarterly Report and the “Cautionary Statement Regarding Forward-Looking Statements” sections of this Quarterly Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by our forward-looking statements contained in the following discussion and analysis. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
References in the following discussion to “we,” “our,” “us,” or “Whitehawk” refer to Whitehawk Therapeutics, Inc and its subsidiary.
Throughout this document we refer to FYARRO (nab-sirolimus, sirolimus protein-bound particles for injectable suspension (albumin-bound)) as FYARRO in the context of commercialization for the treatment of advanced malignant perivascular epithelioid cell tumor (PEComa), investigational use, our historical clinical trials, regulatory matters such as orphan drug designation, and our former agreements with Bristol-Myers Squibb Company, all further discussed throughout this document.
Overview
We are a clinical-stage oncology therapeutics company applying advanced technologies to established tumor biology that are intended to efficiently develop improved cancer treatments. We have deep experience in chemistry, formulation, and drug delivery, as well as research, clinical, and commercial pharmaceutical development, successfully taking product candidates from the clinic to approval, launch, and commercialization.
License Agreement and ADC Therapies
In December 2024, we entered into an intellectual property license agreement (the “License Agreement”) with WuXi Biologics (Shanghai FX) Co., Ltd. (“WuXi Biologics”) for the development and global commercialization of a portfolio of three next generation antibody drug conjugates (“ADCs”) targeting clinically validated, broadly overexpressed tumor antigens in high potential cancer indications with significant unmet need. These ADCs are constructed utilizing an advanced linker-payload platform called CPT113 that has been shown to provide high stability in blood circulation and deliver targeted release of a Topoisomerase I (“TOP1”) inhibitor payload into cancer cells.
These in-licensed assets originated through the collaborative efforts of WuXi Biologics, a leading global contract research, development and manufacturing organization (“CRDMO”), and Hangzhou DAC Biotechnology (“Hangzhou DAC”), a global leader in ADC innovation, where Hangzhou DAC’s CPT113 linker-payload has been conjugated to novel antibodies developed by WuXi Biologics against three tumor targets: Protein Tyrosine Kinase 7 (“PTK7”), Mucin 16 (“MUC16”) and Seizure-related Protein 6 (“SEZ6”). We believe the resulting ADCs will be able to target cancers expressing these respective tumor markers precisely and deliver the potent, cytotoxic TOP1 inhibitor at the site of cancer. Each of these ADCs has demonstrated tumor cell binding, tumor cell line cytotoxicity, and
in vivo
antitumor activity in preclinical models mimicking tumor progression. We refer to these in-licensed ADC assets as the "ADC Therapies" herein.
The U.S. Food and Drug Administration (“FDA”) cleared our investigational new drug (“IND”) applications for HWK-007, for the treatment of solid tumors, including non-small cell lung cancer (“NSCLC”) and ovarian cancer, and HWK-016, for
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the treatment of cancers of female origin, in the fourth quarter of 2025 and first quarter of 2026, respectively, and the Phase 1 trials for each asset are now actively recruiting. We expect data readouts in the first half of 2027 for each trial. We anticipate FDA clearance of our IND for HWK-206 for the treatment of small cell lung cancer ("SCLC") and neuroendocrine tumors (“NETs”) in mid-2026. With these three assets, we believe we have the ability to pursue multiple cancer indications with high potential in large addressable patient populations, including and beyond those indications currently expected to be targeted in our ongoing and upcoming Phase 1 trials.
Our track record of strong execution of novel drug formulation, research, clinical development, and commercialization in oncology, combined with our deep understanding of ADCs positions us to unlock the high potential of this differentiated ADC portfolio. Our management team has extensive experience in the discovery, development, and commercialization of cancer therapeutics, including in senior roles at leading oncology companies. We are supported by our board of directors and specialized scientific advisors, who contribute their deep understanding of drug discovery and development. Furthermore, our investor base includes top life science investors. We believe that our team is well positioned to execute on our strategy to develop and, if approved, commercialize the ADC Therapies and future pipeline assets to ultimately bring broad benefit to cancer patients worldwide.
Legacy FYARRO Business
For the periods presented and through the FYARRO Divestiture (as defined below), our lead drug product was FYARRO
®
(sirolimus protein-bound particles for injectable suspension (albumin-bound); nab-sirolimus). Nab-sirolimus is a potent inhibitor of the mTOR biological pathway with demonstrated anti-cancer activity in advanced malignant perivascular epithelioid cell tumor (“PEComa”), a rare cancer. We exclusively licensed FYARRO, previously called ABI-009, nab-sirolimus, from Abraxis BioScience, LLC, a wholly owned subsidiary of Celgene Corporation, which is a wholly owned subsidiary of Bristol-Myers Squibb Company (“BMS”). We refer to the development, production and commercial sale of FYARRO herein as the “FYARRO Business”. On February 22, 2022, we launched FYARRO in the United States for treatment of advanced malignant PEComa and recognized net product sales of $0 for the three and six months ended June 30, 2026, and $0 and $7.1 million for the three and six months ended June 30, 2025, respectively. See “Results of Operations” for further discussion of our results.
On December 19, 2024, we entered into a Stock Purchase Agreement (the “Divestiture Agreement”) with KAKEN INVESTMENTS INC., a Delaware corporation (“KAKEN”), KAKEN PHARMACEUTICAL CO., LTD (“Guarantor”), and Aadi Subsidiary, Inc., a Delaware corporation and our former wholly owned subsidiary and the operating company for the FYARRO Business (“Aadi Subsidiary”). Under the Divestiture Agreement, KAKEN acquired 100% of the outstanding shares of capital stock of Aadi Subsidiary from us at the closing for a cash payment of $102.4 million (following applicable purchase price adjustments under the Divestiture Agreement) (the "FYARRO Divestiture"). The divestiture transaction closed on March 25, 2025 and, as a result, we no longer operate the FYARRO Business.
Legacy FYARRO Business Agreements
Former BMS License Agreement.
We had exclusive rights for certain patents and a non-exclusive license for certain technology and know-how pertaining to ABI-009 (which we refer to as FYARRO) pursuant to an amended and restated license agreement, dated November 15, 2019, as amended August 31, 2021 (the “BMS License Agreement”) with Abraxis BioScience, LLC, a wholly owned subsidiary of Celgene Corporation, which is a wholly owned subsidiary of BMS. Under the BMS License Agreement, BMS is entitled to receive certain development milestone payments, royalties on net sales from licensed products under the agreement and any sublicense fees. Under the terms of this agreement, we recorded royalties on net product sales of $0 during the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, we recorded royalties on net product sales of $0 and $0.5 million, respectively. No development payments related to milestones were paid during the three and six months ended June 30, 2026 and 2025 under the agreement. See Note 7 to the financial statements for more information about the BMS License Agreement.
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WuXi Biologics License Agreement
On December 19, 2024, we entered into the License Agreement with
WuXi Biologics for exclusive rights to certain patents and know-how pertaining to WuXi Biologics’ preclinical ADC Therapies leveraging Hangzhou DAC linker-payload technology targeting each of MUC16, PTK7 and SEZ6. Under the License Agreement, we paid WuXi Biologics a non-refundable, partial upfront payment of $6.0 million on December 19, 2024 and we paid an additional non-refundable, upfront payment of $38.0 million on April 16, 2025, in each case, for the rights and licenses granted to us by WuXi Biologics. In accordance with the License Agreement, WuXi Biologics is eligible to receive from us (a) up to an aggregate of $265.0 million upon the achievement of certain development milestones, and (b) up to an aggregate of $540.0 million upon the achievement of certain commercial milestones, across all ADC Therapies programs. WuXi Biologics is also entitled to running royalties ranging from low-single-digit to upper-single-digit percentages of annual net sales of licensed products in the territory on a product-by-product and region-by-region basis from the first commercial sale of the applicable licensed product in a particular region until the date which is the later of (i) expiration of the last to expire valid claim of a license patent in such region covering the sale of such licensed product in such region or (ii) ten years after the first commercial sale of such licensed product in such region.
Each party may terminate the License Agreement in its entirety, or on a program-by-program basis, as applicable, if the other party remains in material breach of the License Agreement following a cure period to remedy the material breach or if the other party is declared insolvent or in similar financial distress. In addition, WuXi Biologics may terminate the License Agreement on a program-by-program basis if we do not meet certain development due diligence milestones. We may terminate the License Agreement in its entirety, or on a program-by-program basis, as applicable, with or without cause.
Recent Developments
•
PIPE Financing.
On May 13, 2026, we entered into a securities purchase agreement for a private investment in public equity financing (the "2026 PIPE Financing") with certain investors (the "2026 PIPE Investors") for the sale of (i) 4,330,866 shares of our common stock, par value $0.0001 per share, at a purchase price of $3.92 per share, and (ii) 17,991,021 pre-funded warrants, at a purchase price of $3.9199 per pre-funded warrant, for aggregate net proceeds of $81.8 million.
•
Pipeline Expansion
. In May 2026, we entered into a new option agreement with Hangzhou DAC for access to CPT113, their core linker-payload technology, for use in up to five additional ADC programs. Per the terms of the option agreement, we will select targets and source antibodies, while retaining global rights and full program control for the new ADC programs. We anticipate submitting IND applications for multiple new programs over the next 12-24 months.
In addition, in June 2026, we entered into a global collaboration with Biocytogen to develop bispecific antibody-drug conjugates ("BsADC"). Biocytogen will provide access to up to five bispecific antibodies using its proprietary RenLite
®
platform, and we will evaluate these in combination with our ADC linker-payload platform technologies. We then have the option to advance any resulting BsADC candidates as part of our pipeline.
•
Data Presentations
. In April 2026, we presented new preclinical data across our ADC Therapies at the American Association for Cancer Research (AACR) Annual Meeting 2026. The preclinical data showed a consistent preclinical profile for each of the ADC Therapies, characterized by potent tumor regressions, high plasma stability and favorable tolerability in non‑human primates, coupled with low systemic levels of free payload.
In April 2026, we presented three posters from a real-world analysis supporting the therapeutic potential of targeting MUC16 with a next-generation ADC for the treatment of ovarian and endometrial cancers at the Society of Gynecologic Oncology (SGO) 2026 Annual Meeting on Women's Cancer. The data showed MUC16 as the highest-expressing ADC target in ovarian cancer, at least two-fold higher than other emerging targets, and showed MUC16 is highly and stably expressed in the most aggressive and most common subtypes of endometrial cancer.
Impact of Negative Global or National Events
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Businesses have been and will continue to be impacted by a number of challenging global and national events and circumstances that continue to evolve, including the implementation of tariffs (and, as applicable, their subsequent actual or threatened modification or removal), recent turmoil in the global banking system, public health epidemics, such as the COVID-19 pandemic, extreme weather conditions, increased economic and regulatory uncertainty, inflation, rising interest rates, and geopolitical instability, including trade disputes and negotiations and the military conflicts in Ukraine, the Middle East and in other countries. The extent of the impact of these events and circumstances on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and scope of the events and their impact on our development activities, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. We have been and continue to actively monitor the potential impacts that these various events and circumstances may have on our business and we take steps, where warranted, to minimize any potential negative impacts on our business resulting from these events and circumstances.
At this point, the extent to which these global or national events and circumstances may affect our future business, operations and development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain. We will continue to evaluate the impact that these events could have on our operations, financial position, results of operations and cash flows for the remainder of fiscal year 2026.
Key Trends and Factors Affecting Comparability Between Periods
•
We recorded a net gain on sale of $87.4 million for the FYARRO Divestiture in the first quarter of 2025.
•
Commercial sale of FYARRO was launched on February 22, 2022, for the treatment of patients with advanced malignant PEComa. We recorded net product sales of $0 for the three months ended June 30, 2026 and 2025, respectively, and $0 and $7.1 million for the six months ended June 30, 2026 and 2025, respectively. As a result of the FYARRO Divestiture, we no longer commercialize FYARRO as of March 25, 2025. As the commercial sale of FYARRO constituted our sole source of revenue, we do not expect to generate further revenue for the foreseeable future.
•
We had built a cross-functional commercial team consisting of marketing, market access and commercial operations. Expenses related to our commercialization of FYARRO, including personnel expenses, sales support, and marketing are included in selling, general and administrative expenses for the six months ended June 30, 2025. We expect these expenses to decrease, as compared to prior periods, due to the FYARRO Divestiture which closed on March 25, 2025.
•
We expect to increase our investment in research and development related to the ADC Therapies. We will continue to incur significant research and development and other expenses related to such ongoing operations. Under the License Agreement, we paid non-refundable license fees of $6.0 million and $38.0 million to WuXi Biologics in the fourth quarter of 2024 and the second quarter of 2025, respectively,
plus a 6% VAT fee. Additionally, we recognized
$5.3 million of development milestone-related expense for the six months ended June 30, 2026.
Liquidity and Capital Resources
As of June 30, 2026, we had $190.0 million of cash, cash equivalents and short-term investments.
Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will enable us to conduct our planned operations into the second half of 2028.
As of June 30, 2026, we had an accumulated deficit of $392.1 million.
Our net loss was $38.8 million and net income of $20.4 million for the six months ended June 30, 2026 and 2025, respectively. We have incurred net losses in each year since inception except for the six months ended June 30, 2025 as we incurred net income due to the sale of a business. These losses have resulted principally from costs incurred in connection with research and development activities, selling, general and administrative costs associated with our operations, costs associated with the Reverse Merger, the FYARRO Divestiture, and the in-licensing of the ADC Therapies. We expect to continue to incur significant expenses and operating losses for the foreseeable future due to the cost of research and development, including conducting preclinical
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and clinical trials of the ADC Therapies and identifying and designing product candidates and the regulatory approval process for any product candidates we may develop.
Basis of Presentation
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the condensed consolidated balance sheets and condensed consolidated statements of operations and comprehensive (loss) income presented herein. The following discussion and analysis are based on our financial statements contained in this Quarterly Report, which we have prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). You should read the discussion and analysis together with such condensed consolidated financial statements and the related notes thereto.
Components of Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
Revenue
Product Sales, Net
FYARRO was approved by the FDA in November 2021 for treating adult patients with locally advanced unresectable or metastatic malignant PEComa. On February 22, 2022, we launched sales of FYARRO to specialty distributors (“SDs”) and a specialty pharmacy (“SP”). We recognize product sales when the SDs and SP obtain control of the product, which occurs upon delivery. Product sales are recorded at the net sales price, which includes provisions for the following allowances which are reflected either as a reduction to the related account receivable or as an accrued liability, depending on how the allowance is settled:
•
Distribution Fees
: Distribution fees include distribution service fees paid to the SDs and SP based on a contractually fixed percentage of the wholesale acquisition cost (“WAC”). Distribution fees are recorded as an offset to product sales based on contractual terms at the time the sale is recognized.
•
Rebates
: Allowance for rebates include mandated discounts under the Medicaid Drug Rebate Program and TRICARE program. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or statutory requirements. The allowance for rebates is based on contracted or statutory discount rates and expected utilization by benefit plan participants. Our estimates for expected utilization of rebates are based on utilization data received from the SDs and SP since product launch. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity. If actual future rebates vary from estimates, we may need to adjust prior period accruals, which would affect product sales in the period of adjustment.
•
Chargebacks:
Chargebacks are discounts and fees that relate to contracts with government and other entities purchasing from the SDs and SP at a discounted price. The SDs and SP charge back to us the difference between the price initially paid by the SDs and SP and the discounted price paid to the SDs and SP by these entities. If actual future chargebacks vary from these estimates, we may need to adjust prior period accruals, which would affect product sales in the period of adjustment.
•
Co-Payment Assistance:
We offer co-payment assistance to commercially insured patients meeting certain eligibility requirements. Co-payment assistance is accrued at the time of product sale to the SDs and SP based on estimated patient participation and average co-pay benefit to be paid per claim. Our estimated amounts are compared to actual program participation and co-pay amounts paid using data provided by third-party administrators. If actual amounts differ from the original estimates the assumptions being applied are updated and adjustment for prior period accruals will be adjusted in the current period.
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•
Product Returns:
Consistent with industry practice, we offer the SDs and SP limited product return rights for damages, shipment errors, and expiring product, provided that the return is within a specified period around the product expiration date as set forth in the applicable individual distribution agreement. We do not allow product returns for product that has been dispensed to a patient. As we receive inventory reports from the SDs and SP and have the ability to control the amount of product that is sold to the SDs and SP, we estimate future potential product returns based on the on-hand channel inventory data and sell-through data obtained from the SDs and SP. In arriving at our estimate, we also consider historical product returns, the underlying product demand, and industry data specific to the specialty pharmaceutical distribution industry.
Operating Expenses
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and related benefits, including share-based compensation, related to our executive, finance, business development, sales and marketing, and other corporate functions. Other general and administrative expenses include professional fees for legal, auditing, tax and business consulting services, insurance costs, intellectual property and patent costs, facility costs and travel costs.
Research and Development Expenses
Research and development expenses, which consist primarily of costs associated with our product research and development efforts, are expensed as incurred. Research and development expenses consist primarily of: (i) employee related costs, including salaries, benefits and share-based compensation expense for employees engaged in scientific research and development functions; (ii) third-party contract costs relating to research, formulation, manufacturing, nonclinical studies and clinical trial activities; (iii) external costs of outside consultants who assist with technology development, regulatory affairs, clinical development and quality assurance; (iv) payments made under our third-party licensing agreements; and (v) allocated facility-related costs.
Costs for certain activities, such as manufacturing, nonclinical studies and clinical trials are generally recognized based on the evaluation of the progress of completion of specific tasks using information and data provided by our vendors and collaborators. Research and development activities are central to our business. We expect to increase our investment in research and development related to the ADC Therapies. We will continue to incur significant research and development and other expenses related to such ongoing operations.
Cost of Goods Sold
Cost of goods sold consist primarily of royalties paid to BMS, costs incurred on sales of FYARRO and costs to manufacture and prepare the product for sales.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income earned on cash, cash equivalents and short-term investments, and foreign exchange loss for the three and six months ended June 30, 2026. During the three months ended June 30, 2025, other income includes interest income earned on cash, cash equivalents, and short-term investments, foreign exchange loss, and income received for billable services not part of our ordinary activities provided by our employees to KAKEN under a Transition Services Agreement ("TSA"). The TSA was entered into in connection with the sale of the business on March 25, 2025 and expired September 30, 2025. During the six months ended June 30, 2025, other income includes interest income earned on cash, cash equivalents, short-term investments, gain on sale of a business, foreign exchange loss, and income received for billable services not part of our ordinary activities provided by our employees to KAKEN under the TSA.
Income Tax Expense
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During the three and six months ended June 30, 2026 and 2025, we recognized no income tax expense on the condensed consolidated statements of operations and comprehensive loss. Since our formation in 2011, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or our earned tax credits, due to our uncertainty of realizing a benefit from those items.
Results of Operations:
The following table presents the results of operations for the periods indicated (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Revenue
Product sales, net
$
—
$
—
$
—
$
7,145
Other revenue
—
—
—
—
Total revenue
—
—
—
7,145
Operating expenses
Selling, general and administrative
5,216
5,940
11,506
18,755
Research and development
12,893
48,809
30,125
57,597
Cost of goods sold
—
0
0
760
Total operating expenses
18,109
54,749
41,631
77,112
Loss from operations
(18,109
)
(54,749
)
(41,631
)
(69,967
)
Other income (expense), net
1,469
2,134
2,797
90,368
Net (loss) income
$
(16,640
)
$
(52,615
)
$
(38,834
)
$
20,401
Comparison of the Three and Six Months Ended June 30, 2026 and 2025
Product Sales, Net
Our product sales, net consist of sales of FYARRO. Product sales, net for the three months ended June 30, 2026 and 2025 were $0. Product sales, net for the six months ended June 30, 2026 and 2025, were $0 and $7.1 million, respectively. As a result of the FYARRO Divestiture, we no longer sell FYARRO as of March 25, 2025.
Operating Expenses
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended June 30, 2026 and 2025, were $5.2 million and $5.9 million, respectively. The decrease of $0.7 million was primarily driven by a decrease of $0.7 million in personnel expenses and $0.3 million in consulting and insurance expenses, offset by an increase of $0.3 million in legal and other expenses.
Selling, general and administrative expenses for the six months ended June 30, 2026 and 2025 were $11.5 million and $18.8 million, respectively. The decrease of $7.3 million was primarily driven by a decrease of $4.7 million in consulting and insurance expenses, $1.3 million in legal and other expenses, $1.0 million in personnel expenses, and $0.3 million in commercial and marketing expenses.
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Research and Development Expenses
The following table presents our research and development expenses for the periods indicated (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Personnel expenses
$
3,175
$
2,301
$
6,122
$
6,102
Consultants
849
417
1,674
799
External clinical development
6,148
41,737
15,528
44,126
Clinical drug product manufacturing
2,681
4,280
6,752
6,365
Other expenses
40
74
49
205
Total research and development expenses
$
12,893
$
48,809
$
30,125
$
57,597
Research and development expenses for the three months ended June 30, 2026 and 2025 were $12.9 million and $48.8 million, respectively. The decrease of $35.9 million was primarily driven by a decrease of $35.6 million in external clinical development expense which included the $38.0 million up-front license fee paid to WuXi Biologics in 2025 and a decrease of $1.6 million in clinical drug manufacturing, offset by an increase of $0.9 million in personnel expenses and $0.4 million in consulting expenses.
Research and development expenses for the six months ended June 30, 2026 and 2025 were $30.1 million and $57.6 million, respectively. The decrease of $27.5 million was primarily driven by a decrease of $28.6 million in external clinical development expense which included the $38.0 million up-front license fee paid to WuXi Biologics in 2025, $0.2 million in other expenses, offset by an increase of $0.9 million in consulting expenses and $0.4 million in clinical drug product manufacturing. For the six months ended June 30, 2026, external clinical development includes $5.3 million in milestone development expenses.
Cost of Goods Sold
Cost of goods sold was $0 for the three months ended June 30, 2026 and 2025. Cost of goods sold was $0 and $0.8 million for the six months ended June 30, 2026 and 2025, respectively, primarily reflecting royalties incurred on product sold. The decrease of cost of goods sold was due to the FYARRO Divestiture on March 25, 2025.
Other Income (Expense), Net
Other income (expense), net for the three months ended June 30, 2026 and 2025 was $1.5 million and $2.1 million, respectively. The decrease of $0.6 million was primarily driven by a decrease in short-term investments held.
Other income (expense), net for the six months ended June 30, 2026 and 2025 was $2.8 million and $90.4 million, respectively. The decrease of $87.6 million was primarily driven by a gain on sale of a business related to the FYARRO Divestiture recognized during the six months ended June 30, 2025.
Liquidity and Capital Resources
Overview
As of June 30, 2026 we had $190.0 million of cash, cash equivalents and short-term investments. Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will enable us to conduct our planned operations into the second half of 2028.
As of June 30, 2026, we had an accumulated deficit of $392.1 million. Our net loss was $38.8 million and net income of $20.4 million for the six months ended June 30, 2026 and 2025, respectively. We have incurred net losses in each year since inception except for the six months ended June 30, 2025 as we incurred net income due to the sale of a business. Losses have resulted principally from costs incurred in connection with research and development activities and selling, general and
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administrative costs associated with our operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future due to the cost of research and development, including conducting preclinical and clinical trials of the ADC Therapies and identifying and designing product candidates and the regulatory approval process for any product candidates we may develop.
On March 17, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), with respect to an “at the market offering” pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock having aggregate gross proceeds of up to $75.0 million through Cowen as our sales agent. Under the Sales Agreement, we will set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number or dollar value of shares that may be sold in any one trading day and any minimum price below which sales may not be made. We will pay Cowen 3.0% of the aggregate gross proceeds from each sale of shares of common stock under the Sales Agreement. As of June 30, 2026, no shares of common stock had been sold under the Sales Agreement.
The shares of our common stock to be offered and sold under the Sales Agreement will be issued and sold pursuant to our shelf registration statement on the Form S-3 (File No. 333-277018) (the “Shelf Registration Statement”), which was filed with the SEC on February 12, 2024 and which became effective April 30, 2024. No securities have yet been sold under the Shelf Registration Statement. We filed a prospectus supplement with the SEC on April 25, 2025 in connection with the offer and sale of the shares pursuant to the Sales Agreement.
The Shelf Registration Statement allows us to sell from time to time up to $150.0 million of common stock, preferred stock, debt securities, warrants, or units comprised of any combination of these securities, for our own account in one or more offerings and is intended to provide us flexibility to conduct registered sales of our securities, subject to market conditions and our future capital needs. The terms of any offering thereunder will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.
On September 22, 2022, we entered into the purchase agreement for the 2022 PIPE Financing with the 2022 PIPE Investors for the sale of 3,373,526 shares of our common stock for a price of $12.50 per share and Pre-Funded Warrants (the "2022 Pre-funded Warrants") to purchase an aggregate of 2,426,493 shares of our common stock, at a purchase price of $12.4999 per 2022 Pre-Funded Warrant. The 2022 Pre-Funded Warrants are exercisable at an exercise price of $0.0001 and will be exercisable until exercised in full. The 2022 PIPE Financing closed on September 26, 2022. Aggregated net proceeds, after deducting certain expenses incurred of $0.3 million related to the issuance of the securities, were $72.2 million. As of June 30, 2026, 2,000,037 of the 2022 Pre-Funded Warrants are still outstanding.
On December 19, 2024, we entered into the Subscription Agreement (the "Subscription Agreement") with certain investors (the "2024 PIPE Investors"), pursuant to which we agreed to sell to the 2024 PIPE Investors (i) 21,592,000 shares of the our common stock, par value $0.0001 per share, at a purchase price of $2.40 per share, and (ii) pre-funded warrants to purchase an aggregate of 20,076,500 shares of our common stock (the "2024 Pre-Funded Warrants"), at a purchase price of $2.3999 per 2024 Pre-Funded Warrant, for aggregate net proceeds of $94.4 million, after deducting certain expenses incurred of $5.6 million related to the issuance of shares. The 2024 PIPE Financing closed on March 4, 2025. As of June 30, 2026, 16,866,574 of the 2024 Pre-Funded Warrants are still outstanding.
On May 13, 2026, we entered into a securities purchase agreement for a private investment in public equity financing (the "2026 PIPE Financing") with certain investors (the "2026 PIPE Investors"), pursuant to which we agreed to sell to the 2026 PIPE Investors (i) 4,330,866 shares of our common stock, par value $0.0001 per share, at a purchase price of $3.92 per share, and (ii) pre-funded warrants to purchase an aggregate of 17,991,021 shares of our common stock (the "2026 Pre-Funded Warrants" and together with the 2022 Pre-Funded Warrants and 2024 Pre-Funded Warrants, the "Pre-Funded Warrants"), at a purchase price of $3.9199 per 2026 Pre-Funded Warrant, for aggregate net proceeds of $81.8 million, after deducting certain expenses incurred of $5.7 million related to the issuance of shares. As of June 30, 2026, all 17,991,021 of the 2026 Pre-Funded Warrants were outstanding.
For each of the 2022 PIPE Financing, 2024 PIPE Financing and 2026 PIPE Financing, the Pre-Funded Warrants have an exercise price of $0.0001 per share of the Company's common stock and are exercisable and will remain exercisable until
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exercised in full. The holders of such Pre-Funded Warrants may not exercise a Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than 4.99% or 9.99%, at the election of the holder, of the number of shares of the Company's common stock outstanding immediately after giving effect to such exercise. The holders of such Pre-Funded Warrants may increase or decrease such percentages not in excess of 19.99% by providing at least 61 days’ prior notice.
The following table summarizes our cash flows for the periods indicated (in thousands):
Six Months Ended June 30,
2026
2025
Net cash used in operating activities
$
(36,737
)
$
(64,821
)
Net cash provided by investing activities
2,563
86,672
Net cash provided by financing activities
81,840
94,351
Net increase in cash and cash equivalents
$
47,666
$
116,202
Operating Activities
Our cash used in operating activities primarily results from our net loss adjusted for non-cash expenses, changes in working capital components, amounts due to contract research organizations to conduct our clinical programs and employee-related expenditures for research and development and selling, general and administrative activities. Our cash flows from operating activities will continue to be affected by spending to advance our research and development of the ADC Therapies and identifying and designing product candidates and the regulatory approval process for any product candidates we may develop.
For the six months ended June 30, 2026, cash used in operating activities was $36.7 million and resulted from (i) our net loss of $38.8 million, (ii) a $0.9 million net negative impact on cash used due to changes in net operating assets and liabilities, and (iii) $3.0 million of non-cash adjustments, which were primarily related to share based compensation, depreciation, and discount amortization on short-term investments.
For the six months ended June 30, 2025, cash used in operating activities was $64.8 million and resulted from (i) our net income of $20.4 million, (ii) a $2.7 million net negative impact on cash used due to changes in net operating assets and liabilities, and (iii) $82.5 million of non-cash adjustments, which were primarily related to gain on sale of a business, share based compensation, discount amortization on short-term investments, lease expense, and depreciation.
Investing Activities
Cash provided by investing activities for the six months ended June 30, 2026 related to the maturities of short-term investments of $72.4 million, offset by purchases of short-term investments of $69.8 million.
Cash provided by investing activities for the six months ended June 30, 2025 related to proceeds from the sale of business, maturities of short-term investments of $18.1 million, offset by purchases of short-term investments of $32.2 million and purchases of property and equipment of $0.6 million.
Financing Activities
For the six months ended June 30, 2026 cash provided by financing activities was $81.8 million and resulted from $87.5 million in proceeds received from the sale of common stock and pre-funded warrants as part of the 2026 PIPE Financing, offset by payment of 2026 PIPE Financing related transaction costs of $5.7 million.
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For the six months ended June 30, 2025 cash provided by financing activities was $94.4 million and resulted from $100.0 million of proceeds received in the 2024 PIPE Financing (which closed in March 2025), offset by payment of 2024 PIPE Financing related transaction costs of $5.6 million.
Contractual Obligations and Commitments
In April 2022, we entered into a lease for 10,615 square feet of office space in Morristown, New Jersey. The term of the lease is seventy-three months unless terminated sooner. In connection with the FYARRO Divestiture, KAKEN assumed our sublease for the New Jersey office space, but we agreed to co-inhabit the office with KAKEN. We and KAKEN are currently in the process of extending the co-inhabitation arrangement upon the sublandlord's and landlord's consent.
In August 2021, we entered into an amendment to extend the lease of our 2,760 square feet of office space in Pacific Palisades, California. We
exercised an option, under our prior lease agreement, to extend the term of the lease for an additional three-year period. Included in the renewal were nine months of rent abatement and a rent escalation clause.
The Pacific Palisades lease expired on February 28, 2025.
Rent expense is being recorded on a straight-line basis. Rent expense related to the New Jersey office space was $35 thousand and $34 thousand for the three months ended June 30, 2026 and 2025, respectively
. Rent expense was $46 thousand and $0.1 million for the six months ended June 30, 2026 and 2025, respectively. See Note 6 to the condensed consolidated financial statements for additional details.
We also have contracts with various organizations to conduct research and development activities, including clinical trial organizations to manage clinical trial activities. The scope of the services under these research and development contracts can be modified and the contracts cancelled by us upon written notice. In the event of cancellation, we would be liable for the cost and expenses incurred to date as well as any close out costs of the service arrangement.
On December 19, 2024, we entered into the License Agreement with
WuXi Biologics for exclusive rights to certain patents and know-how pertaining to WuXi Biologics’ preclinical ADC Therapies leveraging Hangzhou DAC linker-payload technology targeting each of MUC16, PTK7 and SEZ6. Under the License Agreement, we paid $6.0 million and $38.0 million to WuXi Biologics in the fourth quarter of 2024 and the second quarter of 2025, respectively,
plus a 6% VAT fee,
in each case, for the rights and licenses granted to us by WuXi Biologics.
Additionally, we paid
$5.3 million of development milestone-related expense under the License Agreement in the first quarter of 2026.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. Historically, revisions to our estimates have not resulted in a material change to our financial statements.
For a discussion of our critical accounting estimates, please read Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026. There have been no material changes to the critical accounting estimates previously disclosed in our Annual Report on Form 10-K.
Item 3. Quantitative and Qualitat
ive Disclosures About Market Risk.
We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide information under this Item.
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Item 4. Controls and P
rocedures.
Management’s Evaluation of our Disclosure Controls and Procedures
Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2026, the end of the period covered by this Quarterly Report. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded,