Source: sec
Source ID: 0001193125-26-335140
URL: https://www.sec.gov/Archives/edgar/data/1858848/000119312526335140/tnya-20260630.htm
Symbol: (TNYA)
Published: 2026-08-05 16:15:33 EDT
Time precision: minute
Title: 10-Q 10-Q

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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:
001-40656
TENAYA THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware
81-3789973
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
171 Oyster Point Boulevard
,
Suite 500
South
San Francisco
,
CA
94080
(Address of principal executive offices)
(Zip Code)
(
650
)
825-6990
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.0001 per share
TNYA
Nasdaq
Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ 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, 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 July 30, 2026, the registrant had
224,230,012
shares of common stock, $0.0001 par value per share, outstanding.
Table of Contents
Page
PART I—FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
5
Condensed Balance Sheets as of June 30, 2026 and December 31, 2025
5
Condensed Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025
6
Condensed Statements of Stockholders’ Equity
for the three and six months ended June 30, 2026 and 2025
7
Condensed Statements of Cash Flows for the six months ended June 30, 2026 and 2025
9
Notes to Unaudited Condensed Financial Statements
10
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
23
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
34
Item 4.
Controls and Procedures
34
PART II—OTHER INFORMATION
Item 1.
Legal Proceedings
36
Item 1A.
Risk Factors
36
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
90
Item 3.
Defaults Upon Senior Securities
90
Item 4.
Mine Safety Disclosures
90
Item 5.
Other Information
90
Item 6.
Exhibits
91
SIGNATURES
92
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (Quarterly Report), contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, investors can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements about:
•
our vision to change the treatment paradigm for heart disease;
•
the ability of our ongoing preclinical studies and ongoing or planned clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;
•
the timing, dosing, patient enrollment and populations, progress, and results of preclinical studies and ongoing or planned clinical trials for our current product candidates and other product candidates we may develop;
•
the timing, scope and likelihood of regulatory filings, approvals, and alignment, including timing of investigational new drugs (INDs), clinical trial applications (CTAs), U.S. Food and Drug Administration (FDA) approvals, engagement with regulators, and final regulatory approval of our current product candidates and any other future product candidates;
•
our ability to develop and advance our current product candidates and programs into, and successfully complete, clinical trials;
•
the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;
•
our manufacturing, commercialization, and marketing capabilities and strategy;
•
our competitive position, potential advantages of our products compared to our competitors, and the success of competing therapies that are or may become available;
•
our plans relating to the further development of our product candidates, including additional indications and targets we may pursue, and our belief in the potential applications of our current product candidates to additional indications and targets;
•
our collaboration with Alnylam, including potential targets, research and development strategy, the timing and duration of the collaboration, expected payments, and the achievement of milestones;
•
the impact of existing laws and regulations and regulatory developments in the United States (U.S.), Europe and other jurisdictions;
•
the impact of tariffs, trade restrictions, and other trade policy changes on our costs and supply chain;
•
our intellectual property position, including the scope and length of protection we are able to establish and maintain for intellectual property rights covering our current product candidates and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
•
our continued reliance on third parties to conduct additional preclinical studies and clinical trials of our product candidates, and for the development and manufacture of our product candidates for preclinical studies and clinical trials;
3
•
our ability to obtain, and negotiate favorable terms of, any collaboration, partnership, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
•
our ability to regain or maintain compliance with Nasdaq's continued listing requirements;
•
the pricing and reimbursement of our current product candidates and other product candidates we may develop, if approved, including any increase in demand as a result of the availability of reimbursement from the government and third-party payors;
•
the rate and degree of market acceptance and clinical utility of our current product candidates and other product candidates we may develop;
•
our estimates regarding expenses, operating losses, future revenue, cash outlays, capital requirements and needs for additional financing, including expenses arising as a result of being a public company;
•
our financial performance;
•
our facilities;
•
the period over which we estimate our existing cash, cash equivalents and investments in marketable securities will be sufficient to fund our future operating expenses and capital expenditure requirements;
•
the impact of critical accounting policies on investors’ ability to understand our financial performance; and
•
our expectations regarding the period during which we will remain an emerging growth company under the
Jumpstart Our Business Startups Act of 2012 (
JOBS Act).
We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, investors should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.
In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
4
PART I – FINANC
IAL INFORMATION
Item 1. Financi
al Statements.
TENAYA THERAPEUTICS, INC.
Condensed Ba
lance Sheets
(In thousands)
(Unaudited)
June 30,
December 31,
2026
2025
ASSETS
Current assets:
Cash and cash equivalents
$
78,085
$
100,547
Accounts receivable
371
—
Prepaid expenses and other current assets
7,552
5,039
Total current assets
86,008
105,586
Property and equipment, net
2,494
27,672
Operating lease right-of-use assets
2,966
9,417
Other noncurrent assets
2,072
4,246
Total assets
$
93,540
$
146,921
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
2,902
$
3,581
Accrued and other current liabilities
7,514
8,835
Contract liabilities, current
5,726
—
Operating lease liabilities, current
2,879
3,020
Total current liabilities
19,021
15,436
Contract liabilities, noncurrent
3,937
—
Operating lease liabilities, noncurrent
1,070
7,810
Other noncurrent liabilities
103
410
Total liabilities
24,131
23,656
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $
0.0001
par value;
200,000,000
shares authorized as of June 30, 2026 and December 31, 2025;
no
shares issued and outstanding as of June 30, 2026 and December 31, 2025
—
—
Common stock, $
0.0001
par value;
1,000,000,000
shares authorized as of June 30, 2026 and December 31, 2025;
224,230,012
and
216,760,283
shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively
22
21
Additional paid-in capital
737,060
728,252
Accumulated deficit
(
667,673
)
(
605,008
)
Total stockholders’ equity
69,409
123,265
Total liabilities and stockholders’ equity
$
93,540
$
146,921
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
TENAYA THERAPEUTICS, INC.
Condensed Statements of Opera
tions and Comprehensive Loss
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Revenue
Collaboration revenue
$
1,110
$
—
$
1,335
$
—
Operating expenses:
Research and development
16,603
17,370
31,447
38,446
General and administrative
5,406
6,712
10,853
13,174
Impairment loss
21,821
—
21,821
—
Loss on lease termination, net
1,368
—
1,368
—
Total operating expenses
45,198
24,082
65,489
51,620
Loss from operations
(
44,088
)
(
24,082
)
(
64,154
)
(
51,620
)
Other income, net:
Interest income
697
815
1,491
1,449
Other (loss) income, net
(
2
)
(
16
)
(
2
)
24
Total other income, net
695
799
1,489
1,473
Net loss before income tax expense
(
43,393
)
(
23,283
)
(
62,665
)
(
50,147
)
Income tax expense
—
—
—
—
Net loss
(
43,393
)
(
23,283
)
(
62,665
)
(
50,147
)
Other comprehensive loss
Net unrealized gain (loss) on marketable securities
—
9
—
(
29
)
Comprehensive loss
$
(
43,393
)
$
(
23,274
)
$
(
62,665
)
$
(
50,176
)
Net loss per share, basic and diluted
$
(
0.20
)
$
(
0.14
)
$
(
0.29
)
$
(
0.37
)
Weighted-average shares used in computing net loss per share, basic and diluted
217,574,637
162,791,579
217,230,811
136,476,623
The accompanying notes are an integral part of these unaudited condensed financial statements.
6
TENAYA THERAPEUTICS, INC.
Condensed Statements
o
f Stockholders’ Equity
(In thousands, except share data)
(Unaudited)
Common Stock
Additional
Paid-In
Accumulated Other Comprehensive
Accumulated
Total Stockholders’
Shares
Amount
Capital
Income (Loss)
Deficit
Equity
Balance as of January 1, 2026
216,760,283
$
21
$
728,252
$
—
$
(
605,008
)
$
123,265
Issuance of common stock upon vesting of restricted stock units
238,593
—
—
—
—
—
Stock-based compensation
—
—
2,196
—
—
2,196
Other comprehensive loss
—
—
—
—
—
—
Net loss
—
—
—
—
(
19,272
)
(
19,272
)
Balance as of March 31, 2026
216,998,876
$
21
$
730,448
$
—
$
(
624,280
)
$
106,189
Issuance of common stock pursuant to employee stock purchase plan
74,780
—
43
—
—
43
Issuance of common stock upon exercise of warrants
6,955,000
1
4,868
—
—
4,869
Issuance of common stock upon vesting of restricted stock units
201,356
—
—
—
—
—
Stock-based compensation
—
—
1,701
—
—
1,701
Other comprehensive income
—
—
—
—
—
—
Net loss
—
—
—
—
(
43,393
)
(
43,393
)
Balance as of June 30, 2026
224,230,012
$
22
$
737,060
$
—
$
(
667,673
)
$
69,409
7
Common Stock
Additional
Paid-In
Accumulated Other Comprehensive
Accumulated
Total Stockholders’
Shares
Amount
Capital
Income (Loss)
Deficit
Equity
Balance as of January 1, 2025
86,542,340
$
8
$
607,229
$
28
$
(
514,411
)
$
92,854
Issuance of common stock and warrants in follow-on offering, net of issuance costs of $
3,699
75,000,000
8
48,793
—
—
48,801
Issuance of common stock upon vesting of restricted stock units
295,191
—
—
—
—
—
Issuance of common stock in connection with at-the market sales, net of issuance costs of $
280
822,566
—
912
—
—
912
Stock-based compensation
—
—
3,731
—
—
3,731
Other comprehensive loss
—
—
—
(
38
)
—
(
38
)
Net loss
—
—
—
(
26,864
)
(
26,864
)
Balance as of March 31, 2025
162,660,097
$
16
$
660,665
$
(
10
)
$
(
541,275
)
$
119,396
Issuance of common stock pursuant to employee stock purchase plan
119,998
—
70
—
—
70
Issuance of common stock upon vesting of restricted stock units
196,007
—
—
—
—
—
Stock-based compensation
—
—
3,636
—
—
3,636
Other comprehensive income
—
—
—
9
—
9
Net loss
—
—
—
—
(
23,283
)
(
23,283
)
Balance as of June 30, 2025
162,976,102
$
16
$
664,371
$
(
1
)
$
(
564,558
)
$
99,828
The accompanying notes are an integral part of these unaudited condensed financial statements.
8
TENAYA THERAPEUTICS, INC.
Condensed Statemen
ts of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30,
2026
2025
Cash flows from operating activities:
Net loss
$
(
62,665
)
$
(
50,147
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
3,461
4,745
Amortization (accretion) of premium (discount) on marketable securities
—
300
Stock-based compensation
3,897
7,367
Non-cash operating lease expense
1,324
1,208
Impairment loss
21,821
—
Other
1,148
230
Changes in operating assets and liabilities:
Accounts receivable
(
371
)
—
Prepaid expenses and other current assets
1,490
1,488
Other noncurrent assets
424
508
Accounts payable
(
472
)
(
1,514
)
Accrued and other current liabilities
(
1,053
)
(
1,512
)
Contract liabilities
9,663
—
Operating lease liabilities
(
1,453
)
(
1,398
)
Net cash used in operating activities
(
22,786
)
(
38,725
)
Cash flows from investing activities:
Purchases of property and equipment
(
170
)
(
525
)
Proceeds from sales of marketable securities
—
10,958
Proceeds from maturities of marketable securities
—
36,857
Net cash (used) provided by investing activities
(
170
)
47,290
Cash flows from financing activities:
Proceeds from issuance of common stock, pre-funded warrants, and warrants in follow-on offering, net of issuance costs
—
48,801
Proceeds from exercise of stock options and employee stock purchase plan
43
70
Proceeds from exercise of warrants
866
—
Proceeds from at-the-market sales, net of issuance costs
—
912
Payment of accrued offering costs
(
415
)
—
Net cash provided by financing activities
494
49,783
Net change in cash, cash equivalents and restricted cash
(
22,462
)
58,348
Cash and cash equivalents and restricted cash at beginning of period
100,966
4,742
Cash and cash equivalents and restricted cash at end of period
$
78,504
$
63,090
Components of cash, cash equivalents and restricted cash:
Cash and cash equivalents
$
78,085
$
62,671
Restricted cash included in other noncurrent assets
419
419
Cash, cash equivalents and restricted cash
$
78,504
$
63,090
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment included in accounts payable and accrued and other current liabilities
$
—
$
7
Warrant exercise proceeds received by the Company's warrant agent but not yet remitted to the Company
$
4,003
$
—
The accompanying notes are an integral part of these unaudited condensed financial statements.
9
TENAYA THERAPEUTICS, INC.
Notes to Unaudited Condens
ed Financial Statements
1.
Organization and Description of the Business
Description of the Business
Tenaya Therapeutics, Inc. (the Company) was incorporated in the state of Delaware in August 2016 and is headquartered in South San Francisco, California. The Company is a clinical-stage biotechnology company focused on discovering, developing and delivering curative therapies that address the underlying drivers of heart disease. The Company’s lead product candidates include TN-201, a gene therapy for myosin binding protein C3-associated hypertrophic cardiomyopathy, TN-401, a gene therapy for plakophilin 2-associated arrhythmogenic right ventricular cardiomyopathy, and TN-301, a small molecule with potential clinical utility in cardiac, metabolic and muscular conditions, including heart failure with preserved ejection fraction and Duchenne’s muscular dystrophy.
Liquidity
The Company has incurred net losses since inception and expects such losses to continue in the future as it conducts research and development activities. As of June 30, 2026, the Company had an accumulated deficit of $
667.7
million. The Company incurred a net loss of $
62.7
million and $
50.1
million during the six months ended June 30, 2026 and 2025, respectively. The Company had $
78.1
million of cash and cash equivalents as of June 30, 2026.
Management recognizes the need to raise additional capital to fully implement its business plan. The Company may seek to raise capital through equity financings, debt financings, license agreements, collaborative agreements or other sources of financing. Management believes that its existing cash and cash equivalents as of June 30, 2026, will be sufficient to fund the Company’s operations for at least the next twelve months following the date these financial statements are filed with the Securities and Exchange Commission (SEC).
2.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and follow the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted.
The interim condensed balance sheet as of June 30, 2026, the interim condensed statements of operations and comprehensive loss, stockholders’ equity and cash flows for the six months ended June 30, 2026 and 2025 are unaudited. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and reflect all adjustments that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented. The condensed results of operations for the six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The condensed balance sheet as of December 31, 2025, included herein was derived from the audited financial statements as of that date.
These condensed financial statements should be read in conjunction with the Company’s audited financial statements and the related notes thereto for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 11, 2026.
Use of Estimates
The
preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying financial statements include, but are not limited to, accrued expenses related to research and development activities and revenue recognition
10
related
to collaboration agreements. The Company bases its estimates on historical experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.
Significant Accounting Policies
There have been no material revisions to the Company’s significant accounting policies described in Note 2,
Summary of Significant Accounting Policies
, to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, except for the accounts receivable, revenue recognition and contract liability policies related to the collaboration agreements entered into during the six months ended June 30, 2026, as described below.
Accounts Receivable
The Company's accounts receivable relates to licensing and collaboration arrangements. These accounts receivable are short-term in nature. The Company estimates expected credit losses over the life of the financial assets as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts. For the six months ended June 30, 2026 and 2025, the Company had
no
allowance for credit losses.
Revenue Recognition
Overview
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606,
Revenue from Contracts with Customers
(ASC 606)
.
Revenue is recognized when promised goods or services are transferred to a customer in an amount that reflects the consideration to which the Company expects to be entitled. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the promises and 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 the performance obligations. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and 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.
Collaborative Frameworks and Assessment Under ASC 808 and ASC 606
The Company enters into arrangements that may include elements of collaboration with counterparties, such as joint steering committees or shared development activities. The Company evaluates each arrangement to determine whether the counterparty is acting in the capacity of a customer.
To the extent that the Company transfers goods or services to a counterparty in its capacity as a customer, the Company accounts for such transactions under ASC 606 and presents the related amounts as revenue. Amounts that do not represent transactions with a customer are accounted for under ASC Topic 808,
Collaborative Arrangements
(ASC 808), and presented within the appropriate operating expense line item.
Licensing and Collaboration Arrangements
The Company enters into licensing and collaboration arrangements that may include licenses to intellectual property, as well as research, development, or technical support services necessary to enable the licensee to utilize the underlying technology.
Identification of Performance Obligations
The Company evaluates the nature of its promises in these arrangements to determine whether they are distinct or should be combined. A license of intellectual property is combined with other promised services when the license is not distinct within the context of the contract, such as when the Company’s ongoing research or
11
development activities significantly affect the utility of the licensed intellectual property. When a license and related services are not distinct, they are accounted for as a single combined performance obligation.
Recognition of Revenue
Revenue is recognized either at a point in time or over time, depending on the nature of the underlying performance obligations. Revenue is recognized at a point in time when control of a promised good or service transfers to the customer and the performance obligation is satisfied. Revenue is recognized over time when the Company satisfies a performance obligation over time, including when the Company’s performance does not create an asset with an alternative use and the Company has an enforceable right to payment for performance completed to date, or when the customer simultaneously receives and consumes the benefits of the Company’s performance.
For performance obligations satisfied over time, the Company measures progress using an appropriate method that faithfully depicts the transfer of control of the underlying services. Depending on the nature of the arrangement, the Company may use an input method, such as costs incurred relative to total estimated costs (cost-to-cost method), when such method best reflects the Company’s performance.
For arrangements that provide access to intellectual property or other rights over a defined period without additional performance obligations, revenue is recognized ratably over the contractual term.
Upfront License Fees
If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from upfront license fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company determines whether the combined performance obligation is satisfied over time or at a point in time.
Milestone Payments
Contingent milestones at contract inception are estimated at the amount which is not probable of a material reversal and included in the transaction price using the most likely amount method. Milestone payments that are not within the Company's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each reporting period, the Company re-evaluates the probability of achieving development, regulatory or sales-based milestone payments that may not be subject to a material reversal and, if necessary, adjust the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment..
Sales-Based Royalties and Milestones
For arrangements that include sales-based royalties, including milestone payments based on the volume of sales, the Company will determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate and if such is the case, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Contract Liabilities
Contract liabilities consist primarily of upfront non-refundable payments received under collaboration agreements for which the related performance obligations have not yet been fully satisfied. The Company classifies amounts expected to be recognized as revenue within the next twelve months as contract liabilities, current, with the remainder classified as contract liabilities, noncurrent based on the estimated timing of revenue recognition.
12
Recently Adopted Accounting Standards
In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2025-05 (ASU 2025-05),
Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets
(ASU 2025-05), which provides a practical expedient for entities to estimate expected credit losses on current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606. ASU 2025-05 is effective for the Company for annual periods beginning after December 15, 2025, and interim periods within those annual periods. The Company adopted this ASU on a prospective basis during the
first quarter of 2026
. The
adoption
did
no
t have a material impact on the Company's financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2025, the FASB issued ASU No. 2025-11,
Interim Reporting (Topic 270): Narrow-Scope Improvements
(ASU 2025-11), which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. ASU 2025-11 is effective for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. ASU 2025-11 may be applied either prospectively or retrospectively for all prior periods presented. The Company is evaluating the impact of this standard on its financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-10,
Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities
(ASU 2025-10), which adds guidance to Accounting Standards Codification (ASC) 832 on the recognition, measurement, and presentation of government grants. The guidance establishes a framework for accounting for government grants, including grants related to assets and grants related to income. ASU 2025-10 is effective for the Company for annual periods beginning after December 15, 2028, and interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact of this standard on its financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03,
Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses
(ASU 2024-03), which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the financial statements. The amendments in this ASU will be effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of this standard on its financial statements and related disclosures.
3.
Collaboration Revenue
Alnylam Collaboration Agreement
In March 2026, the Company entered into a collaboration agreement with Alnylam Pharmaceuticals, Inc. (Alnylam), pursuant to which both parties agreed to a research collaboration to discover and validate novel gene targets for the potential treatment of cardiovascular disease.
Under the agreement, both parties nominated and aligned on a set of collaboration targets to move forward into the collaboration. Following such alignment, the parties will conduct in vitro and in vivo validation activities under a mutually agreed research plan and budget for a period of twenty-four (
24
) months (which may be extended for completion of the work). The Company expects to take primary responsibility for the performance of all in vitro and in vivo validation activities throughout the validation term; Alnylam will reimburse the Company for full-time employees and out-of-pocket costs and expenses incurred by the Company in accordance with the agreed-upon research budget. After completion of the validation activities, Alnylam will be solely responsible, at its own expense, for all development, manufacture, regulatory and commercialization activities for any products directed to a collaboration target. The Company was also entitled to a non-refundable upfront platform access fee of up to $
10.0
million. The upfront platform access fee was initially subject to variability based on the number of collaboration targets selected and became fixed at $
10.0
million upon finalization of the collaboration target list. Reimbursement of research costs represents variable consideration and is excluded from the transaction price at contract inception as such amounts are fully constrained. These amounts are recognized as revenue as the related costs are incurred.
13
The Company concluded that the license and research activities represent a single performance obligation that is satisfied over time. Revenue is recognized using a cost-to-cost input method, which measures progress based on costs incurred relative to total estimated costs under the research plan. For the three and six months ended June 30, 2026, the Company recognized collaboration revenue of $
0.8
million and $
0.9
million, respectively, related to the upfront platform access fee and reimbursable research costs incurred during the respective periods.
The Company may also receive future milestone payments of up to an aggregate of $
1.1
billion under the agreement. Development and regulatory milestones will be recognized when the underlying milestone event is achieved and it becomes probable that a significant reversal of cumulative revenue recognized will not occur. Sales-based milestones will be recognized when the related sales occur. As of June 30, 2026, the Company is unable to predict or reasonably estimate the amount or timing of such milestone payments.
As of June 30, 2026, the aggregate amount of the transaction price allocated to the remaining performance obligation under the collaboration agreement was approximately $
9.5
million, which the Company expects to recognize over the remaining validation term of approximately 21 months. The transaction price allocated to the remaining performance obligation does not include variable consideration related to reimbursable research costs as they are contingent on actual qualifying costs incurred. Milestone payments were considered variable consideration and were also not included in the transaction price as they are fully constrained. The Company will reassess the transaction price at each reporting period as uncertainties are resolved.
The following table summarizes activity in the Company’s total contract liabilities for the three and six months ended June 30, 2026. Additions to contract liabilities include $
0.6
million of upfront payments from an additional immaterial collaboration arrangement.
Contract Liabilities
(In thousands)
Balance as of December 31, 2025
$
—
Addition
10,600
Less: revenue recognized from contract liabilities
(
198
)
Balance as of March 31, 2026
$
10,402
Less: revenue recognized from contract liabilities
(
739
)
Balance as of June 30, 2026
$
9,663
4.
Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consists of the following:
June 30,
December 31,
2026
2025
(In thousands)
Laboratory equipment
$
17,334
$
19,014
Leasehold improvements
7,787
26,244
Computer equipment and software
1,793
1,893
Furniture and fixtures
560
902
Manufacturing equipment
—
19,485
Construction in progress
—
67
Total property and equipment
$
27,474
$
67,605
Less: accumulated depreciation and amortization
(
24,980
)
(
39,933
)
Total property and equipment, net
$
2,494
$
27,672
Depreciation and amortization expense for the three months ended June 30, 2026 and 2025 was $
1.7
million and $
2.1
million, respectively. Depreciation and amortization expense for the six months ended June 30, 2026 and 2025 was $
3.5
million and $
4.7
million, respectively.
14
In connection with the early termination of the Union City lease for the Company's Genetic Medicine Manufacturing Center (the GMMC Facility) (see Note 5,
Commitments and Contingencies
), the Company recorded an impairment loss of $
21.8
million during the three and six months ended June 30, 2026. The impairment loss primarily reflects the write-down to
zero
of leasehold improvements and certain manufacturing and laboratory equipment that, pursuant to the lease termination agreement, are required to remain at the GMMC Facility and be surrendered to the landlord without consideration. Certain other equipment will be removed from the GMMC Facility and retained for continued use or repurposing and will continue to be depreciated over its remaining useful life. The impairment charge is presented as impairment loss in the accompanying condensed statements of operations and comprehensive loss.
Accrued and Other Current Liabilities
Accrued and other current liabilities consist of the following:
June 30,
December 31,
2026
2025
(In thousands)
Accrued compensation and related expenses
$
3,882
$
6,013
Accrued research and development expenses
2,537
1,651
Accrued taxes
529
277
Accrued professional services
242
718
Other current liabilities
324
176
Total accrued and other current liabilities
$
7,514
$
8,835
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
June 30,
December 31,
2026
2025
(In thousands)
Prepaid expenses
$
3,485
$
4,014
Other current assets
4,067
1,025
Total prepaid expenses and other current assets
$
7,552
$
5,039
5.
Commitments and Contingencies
Facility Leases
In December 2016, the Company entered into a lease agreement for office and laboratory space in South San Francisco, California. The lease was initially set to expire in
May 2025
with two
five-year
renewal options.
In June 2024, the Company amended the lease to extend
the term
to
November 2027
.
Pursuant to the terms of the amended lease, the Company has
one
remaining five-year renewal option.
In February 2021, the Company entered into a lease agreement for office and manufacturing space in Union City, California. The lease commenced in
May 2021
and has a
ten-year
term with
one
five-year
renewal option.
On June 29, 2026, the Company entered into a lease termination agreement with the landlord. Pursuant to the agreement, the lease will terminate on August 31, 2026, instead of its original expiration in July 2031. The Company is not required to remove tenant improvements or restore the premises and may surrender the facility in its existing condition. As consideration for the lease termination, the Company agreed to forfeit its $
1.8
million security deposit and pay a one-time lease termination fee of $
0.3
million. The Company accounted for the termination agreement as a lease modification under ASC 842 and remeasured the related operating lease liability and right-of-use asset as of June 30, 2026. As a result of the lease modification, the Company recognized a net loss on lease termination of $
1.4
million during the three and six months ended June 30, 2026, consisting of the security deposit forfeiture and a brokerage commission incurred in connection with the lease termination, partially offset by the gains recognized upon remeasurement of the operating lease liability and right-of-use asset and the derecognition of the asset retirement obligation liability.
15
Information related to operating lease activity during the three and six months ended June 30, 2026 was as follows (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
(In thousands)
Operating lease cost
$
889
$
889
$
1,778
$
1,778
Variable lease cost
296
265
685
633
Total lease cost
$
1,185
$
1,154
$
2,463
$
2,411
Cash paid for amounts included in the measurement of lease liabilities
$
1,907
$
1,967
As of June 30, 2026, the Company’s operating leases had a weighted average remaining lease term of
1.3
years and a weighted average discount rate of
8.1
%. As of December 31, 2025, the Company’s operating leases had a weighted average remaining lease term of
4.1
years and a weighted average discount rate of
9.1
%.
Future minimum lease payments under the Company’s operating leases as of June 30, 2026 were as follows:
Amount
(In thousands)
2026 (six months remaining)
$
1,784
2027
2,347
2028
—
2029
—
2030
—
Thereafter
—
Total undiscounted future minimum lease payments
$
4,131
Imputed interest
(
182
)
Total operating lease liabilities
$
3,949
Purchase Commitments
The Company enters into contractual agreements with various suppliers in the normal course of its business, including vendors that provide machinery and equipment. All contracts are terminable, with varying provisions regarding termination. In general, if a contract with a specific vendor were to be terminated, the Company would only be obligated for the products or services that the Company had received up to the time of termination.
Contingencies
From time to time, the Company may become involved in litigation and other legal actions. The Company estimates the range of liability related to any pending litigation where the amount and range of loss can be estimated. The Company records its best estimate of a loss when the loss is considered probable. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, the Company records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements and (ii) the range of loss can be reasonably estimated. The Company was not involved in any material litigation as of June 30, 2026.
Indemnification
In the normal course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amounts of future payments the Company could be required to make under these provisions is not determinable. In addition, the Company has entered into indemnification agreements with its directors and certain officers that may require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or
16
officers. As of June 30, 2026, the Company did not have any material indemnification claims that were probable or reasonably possible and, consequently, has not recorded any related liabilities.
6.
Stock-Based Compensation
2024 Inducement Equity Incentive Plan
In September 2024, the Board of Directors (the Board) adopted the Company's 2024 Inducement Equity Incentive Plan (the Inducement Plan), and subject to the adjustment provisions of the Inducement Plan, reserved
1,200,000
shares of the Company’s common stock for issuance pursuant to equity awards granted under the Inducement Plan. The Inducement Plan allows the Company to make equity awards to prospective employees of the Company as an inducement to such individual’s commencement of employment with the Company. On January 26, 2026, the Board approved an increase of
2,161,000
shares to the number of shares reserved under the Inducement Plan.
Total shares reserved and available for grant under the Inducement Plan as of June 30, 2026, was
2,686,000
.
Repricing
On January 22, 2025, the Compensation Committee of the Company's Board approved a repricing of certain outstanding vested and unvested stock option awards under the Amended and Restated 2016 Equity Incentive Plan (the 2016 Plan) and 2021 Plan for eligible employees and certain other service providers (the Repricing Participants). The per share exercise price of eligible stock option awards was reduced to $
1.21
, the closing price of the Company's common stock on January 24, 2025 (the Repricing Effective Date). To receive the benefit of the repricing, Repricing Participants were required to remain a Service Provider (as such term is defined in the 2016 Plan or 2021 Plan) through the period (the Retention Period) that began on the Repricing Effective Date and ended on July 24, 2025 (the Retention Date) and not exercise any of their repriced stock options prior to the Retention Date. Option holders who exercised their repriced stock options prior to the Retention Date were required to pay the original exercise price per share of such repriced options. No other changes were made to the terms and conditions of the eligible stock option awards. The stock option repricing impacted
4.1
million stock option awards and affected
89
employees and service providers.
On February 6, 2025, the Company's Board approved an option repricing applicable to Faraz Ali, the Company's Chief Executive Officer, with terms mirroring the aforementioned repricing approved on January 22, 2025, except that for Mr. Ali, the options eligible for repricing were limited to options with exercise prices higher than $
5.25
per share. The total number of shares underlying Mr. Ali’s repriced options was
915,875
shares.
The repricing resulted in a total incremental stock-based compensation expense of $
1.3
million, which was calculated using the Black-Scholes option pricing model, of which $
1.0
million is associated with vested repriced options as of the Retention Date and were recognized on a straight-line basis over the Retention Period. The remaining $
0.3
million of the incremental stock-based compensation expense is associated with unvested repriced options beyond the Retention Period and will be recognized on a straight-line basis over the remaining original vesting periods. For the six months ended June 30, 2026 and 2025, the Company recognized an immaterial amount and $
0.9
million, respectively, of incremental stock-based compensation expense.
2021 Equity Incentive Plan
Under the Company’s 2021 Equity Incentive Plan (the 2021 Plan),
4,000,000
shares of the Company’s common stock were initially reserved for issuance of equity awards to employees, directors, and consultants, under terms and provisions established by the Board. Prior to May 27, 2026, the number of shares of common stock available for issuance under the 2021 Plan automatically increases on the first day of January for a period of
ten years
, commencing on January 1, 2022, in an amount equal to the lesser of:
4,000,000
shares;
4
% of the outstanding shares of the Company’s common stock as of the last day of the immediately preceding year; or such other amount as the board of directors may determine.
On May 27, 2026, the Company’s stockholders approved the Amended and Restated 2021 Equity Incentive Plan (the Restated 2021 Plan). The Restated 2021 Plan increased the number of shares of the Company’s common stock reserved for issuance by
6,509,966
shares. In addition, beginning on January 1, 2027, the annual automatic increase provision was amended such that the number of shares available for issuance under the Restated 2021 Plan will increase on the first day of each fiscal year through 2031 in an amount equal to
4
%
of the outstanding shares of
17
the
Company’s common stock as of the last day of the immediately preceding year, or such lesser amount as the Board or the Compensation Committee may determine, without the previous annual cap of
4,000,000
shares. The Restated 2021 Plan also provides that no more than
15,000,000
shares may be issued pursuant to incentive stock options.
The total number of shares reserved and available for grant under the Restated 2021 Plan as of June 30, 2026 was
7,548,238
.
Stock Option Activity
The following table summarizes stock option activity:
Shares
Weighted
Average
Exercise
Price
(in dollars)
Outstanding as of December 31, 2025
12,050,796
$
1.90
Granted
4,322,073
$
0.89
Exercised
—
$
—
Cancelled
(
472,717
)
$
1.90
Outstanding as of June 30, 2026
15,900,152
$
1.66
Stock option awards granted to employees generally vest over a
four-year
period. The contractual term of stock option awards is generally
10 years
from the grant date.
Stock Option Valuation
The fair value of the Company’s stock option awards is estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions:
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Expected term (in years)
5.5
5.5
–
6.1
5.5
–
6.0
5.5
–
6.1
Expected volatility
83
%
87
% –
90
%
83
% –
85
%
87
% –
91
%
Risk-free interest rate
4.2
%
4.1
% –
4.2
%
3.9
% –
4.2
%
4.1
% –
4.5
%
Expected dividend yield
—
%
—
%
—
%
—
%
Restricted Stock Units
Restricted stock units (RSUs) are awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon the completion of a specific period of continued service. RSUs generally vest over a
two
to
four year
period and are subject to forfeiture if employment terminates prior to the release of vesting restrictions. RSUs are valued at the market price of the underlying common stock on the date of grant. The Company recognizes noncash compensation expense for the fair value of RSUs on a straight-line basis over the requisite service period of the awards.
The following table summarizes activity of RSUs granted to employees with service-based vesting under the 2021 Plan.
Shares
Weighted
Average
Grant Date
Fair Value
per Share
(in dollars)
Unvested as of December 31, 2025
1,536,234
$
2.39
Granted
1,237,092
$
0.91
Vested
(
439,949
)
$
2.53
Forfeited
(
123,653
)
$
2.03
Unvested as of June 30, 2026
2,209,724
$
1.56
18
2021 Employee Stock Purchase Plan
Under the Company's 2021 Employee Stock Purchase Plan (the ESPP), the Company initially reserved
800,000
shares for future issuance. The number of shares of common stock available for issuance under the ESPP automatically increases on the first day of each fiscal year for a period of
ten years
beginning with 2022 in an amount equal to the lesser of:
800,000
shares;
1
% of the outstanding shares of the Company’s common stock as of the last day of the immediately preceding year; or such other amount as the Board may determine. As of June 30, 2026,
2,999,814
shares were reserved for future issuance under the ESPP. Under the Company’s ESPP, employees are generally eligible to participate and can purchase shares on each purchase date established semi-annually through payroll deductions at the lower of
85
% of the fair market value of the Company’s stock at the commencement of the offering period or each purchase date of the offering period. Each offering period spans
six months
. The ESPP permits eligible employees to purchase common stock through payroll deductions for up to
15
% of qualified compensation, up to an annual limit of $
25,000
per the Internal Revenue Service. For the six months ended June 30, 2026 and 2025, the stock-based compensation expense for ESPP was not material.
Stock-Based Compensation
The following table summarizes stock-based compensation recognized in the Company’s condensed statements of operations and comprehensive loss:
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Research and development
$
884
$
1,873
$
2,085
$
3,920
General and administrative
817
1,762
1,812
3,447
Total stock-based compensation
$
1,701
$
3,635
$
3,897
$
7,367
7.
Term Loan
Loan Agreement
On August 6, 2024, the Company entered into the Loan Agreement with Silicon Valley Bank (SVB), which was subsequently amended on July 14, 2026.
As of December 31, 2025, all of the term loan commitments expired under the Loan Agreement and no term loans were outstanding. The Loan Agreement provides that an additional loan of $
20.0
million may be available at SVB’s discretion, subject to specified conditions.
8.
Stockholders' Equity
Lender Warrant
In connection with the Loan Agreement, the Company issued to SVB a warrant to purchase up to
171,848
shares of common stock (the Lender Warrant).
The Lender Warrant became exercisable for
73,649
shares upon closing (the Initial Lender Warrant)
at an exercise price of $
2.55
per share. The Initial Lender Warrant was classified as equity and its fair value was recorded in the stockholders’ equity section of the balance sheet. The Lender Warrant expires on
August 6, 2034
.
The Lender Warrant was eligible to become exercisable for up to an additional
98,199
shares pro-rated based on amounts actually advanced for the various tranches under the Loan Agreement (the Remaining Lender Warrant).
Following the expiration of the tranches under the Loan Agreement described in Note 7,
Term Loan
, the Remaining Lender Warrant expired as of December 31, 2025.
“At-the-Market” Equity Offering
On August 10, 2022, the Company entered into a sales agreement (the Sales Agreement) with Leerink Partners LLC to establish an “at-the-market” (ATM) offering defined in Rule 415 under the Securities Act. Pursuant to the Sales Agreement, the Company is permitted to offer and sell, from time to time, shares of its common stock having a maximum aggregate offering price of up to $
75.0
million. In January 2025, the Company sold
822,566
shares of common stock under the ATM offering for net proceeds of $
0.9
million,
after deducting commissions and
19
offering
costs of $
0.3
million. As of June 30, 2026, the Company may issue and sell up to approximately $
69.8
million of common stock under the ATM offering.
Follow-On Offering
On December 15, 2025, the Company completed an underwritten public offering of
50,000,000
units, priced at a public offering price of $
1.20
per unit, with each unit consisting of
one
share of its common stock and a warrant to purchase
one
share of its common stock at an exercise price of $
1.50
per share, which were immediately exercisable and expire
five years
from the date of issuance (December 2025 Warrants), under its registration statement on Form S-3 (File No. 333-286005). The Company received net proceeds of $
55.8
million, after deducting underwriting discounts and commissions of $
3.6
million and other offering expenses of $
0.6
million.
On March 5, 2025, the Company completed an underwritten public offering of
75,000,000
units, priced at a public offering price of $
0.70
per unit, with each unit consisting of
one
share of its common stock, a warrant to purchase
one
share of its common stock at an exercise price of $
0.80
per share, which were immediately exercisable and expire
five years
from the date of issuance (a Series A Warrant) and a warrant to purchase
one-half
of a share of its common stock at an exercise price of $
0.70
per share, which were immediately exercisable and expired on
June 30, 2026
(a Series B Warrant), under its registration statement on Form S-3 (File No. 333-266741). The Company received net proceeds of approximately $
48.8
million, after deducting underwriting discounts and commissions of approximately $
3.2
million and other offering expenses of approximately $
0.5
million. During the three and six months ended June 30, 2026, certain holders exercised Series B Warrants to purchase
6,955,000
shares of common stock for an aggregate exercise price of $
4.9
million prior to the warrants’ expiration.
As of June 30, 2026, Series B Warrants to purchase
10,211,250
shares of our common stock have been exercised, and the remaining Series B Warrants to purchase
27,288,750
shares of our common stock expired on June 30, 2026.
The Company analyzed the December 2025, Series A, and Series B Warrants under ASC 480,
Distinguishing Liabilities from Equity
, and ASC 815-40,
Derivatives and Hedging - Contracts in Entity's Own Equity
, and concluded that they were not liabilities, were indexed to its own stock and met all other conditions for equity classification. Accordingly, the Company has classified them as permanent equity.
As of June 30, 2026, total shares of common stock reserved for issuance, on an as-if converted basis, are as follows:
June 30,
2026
Outstanding stock options and restricted stock units
18,109,876
Outstanding Lender Warrant
73,649
Outstanding Series A Warrants
74,987,500
Outstanding December 2025 Warrants
50,000,000
Shares available for further issuance under the 2024 Inducement Equity Incentive Plan
2,686,000
Shares available for further issuance under the 2021 Equity Incentive Plan
7,548,238
Shares available for further issuance under the 2021 Employee Stock Purchase Plan
2,999,814
Total
156,405,077
9.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:
Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 - Inputs other than quoted market prices included in Level 1 are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
20
Level 3 - Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy:
June 30, 2026
Valuation
Hierarchy
Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Fair Value
(In thousands)
Assets:
Cash equivalents:
Money market funds
Level 1
$
73,345
$
—
$
—
$
73,345
Total financial assets
$
73,345
$
—
$
—
$
73,345
December 31, 2025
Valuation
Hierarchy
Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Fair Value
(In thousands)
Assets:
Cash equivalents:
Money market funds
Level 1
$
98,424
$
—
$
—
$
98,424
Total financial assets
$
98,424
$
—
$
—
$
98,424
Money market funds are classified as Level 1 because they are valued using quoted market prices in active markets for identical assets.
The carrying amount of the Company’s remaining financial assets and liabilities, which include cash, receivables and payables, approximate their fair values due to their short-term nature.
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains a significant majority of its cash balances with a single financial institution, with the remainder held at other financial institutions. The Company’s cash balances exceed federally insured limits. The Company has not experienced any losses on its cash balances and management monitors the creditworthiness of these institutions and believes the Company is not exposed to significant credit risk related to these balances.
10.
Income Taxes
For the three and six months ended June 30, 2026 and 2025, the Company did
no
t record any income tax expense or benefit. The Company has recorded a full valuation allowance against its U.S. federal and state deferred tax assets as the Company believes it is more likely than not that the benefit will not be realized.
11.
Net Loss Per Share
Basic and diluted loss per share are computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period.
The following potentially dilutive securities were not included in the calculation of diluted net loss per share as of the periods presented because the effect would have been anti-dilutive:
June 30,
2026
2025
Outstanding stock options and restricted stock units
18,109,876
14,251,842
Outstanding Lender Warrant
73,649
122,749
Outstanding Series A and Series B Warrants
74,987,500
112,500,000
Outstanding December 2025 Warrants
50,000,000
—
Total
143,171,025
126,874,591
21
12.
Workforce Reduction
During the three and six months ended June 30, 2026, the Company recognized $
0.3
million and $
0.5
million, respectively, of charges related to the workforce reduction implemented in March 2025, primarily consisting of employee cash severance and continuing health insurance benefits. As of June 30, 2026, the Company had incurred substantially all charges associated with the workforce reduction and does not expect to incur material additional charges.
13.
Segment Reporting
The Company is a clinical-stage biotechnology company focused on discovering, developing and delivering curative therapies that address the underlying drivers of heart disease and has
one
operating and reportable segment. The Company’s chief operating decision maker (CODM) is the
chief executive officer
.
The statement of operations includes research and development expenses, general and administrative costs, interest income, and income taxes; the Company has not generated any product revenue. In addition to reviewing the expenses in the Company’s statement of operations, the CODM is regularly provided with operating expenses by function. The CODM does not review assets at a different asset level or category than the amounts disclosed in the Company’s balance sheet. The Company’s long-lived assets are located in the United States.
The following table provides information about the Company’s operating expenses by function and includes a reconciliation to net loss.
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Revenue
Collaboration revenue
$
1,110
$
—
$
1,335
$
—
Operating expenses:
Research and development
Clinical
5,202
5,397
10,578
11,345
Manufacturing (pre-commercial)
3,852
4,077
7,317
9,524
Research
3,820
4,182
6,778
10,102
Other
3,729
3,714
6,774
7,475
Total research and development
$
16,603
$
17,370
$
31,447
$
38,446
General and administrative
5,406
6,712
10,853
13,174
Impairment loss
21,821
—
21,821
—
Loss on lease termination, net
1,368
—
1,368
—
Total operating expenses
45,198
24,082
65,489
51,620
Loss from operations
(
44,088
)
(
24,082
)
(
64,154
)
(
51,620
)
Other income, net:
Interest income
697
815
1,491
1,449
Other (loss) income, net
(
2
)
(
16
)
(
2
)
24
Total other income, net
695
799
1,489
1,473
Net loss before income tax expense
(
43,393
)
(
23,283
)
(
62,665
)
(
50,147
)
Income tax expense
—
—
—
—
Net loss
$
(
43,393
)
$
(
23,283
)
$
(
62,665
)
$
(
50,147
)
22
Item 2. Management’s Discussion and Analysis o
f Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto for the year ended December 31, 2025, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 11, 2026.
In addition to historical financial information, this discussion and analysis and other parts of this report contain forward-looking statements within the meaning 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, based upon current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A. below. You should carefully read the “Risk Factors” to gain an understanding of the factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”
Overview
We are a clinical-stage biotechnology company focused on discovering, developing and delivering potentially curative therapies that address the underlying drivers of heart disease. Heart disease remains the leading cause of death in the world. We believe the emerging insights into the genetic causes of cardiovascular conditions and increased recognition for precision medicine approaches has created an opportunity to change the treatment paradigm for heart disease, and in doing so improve and extend the lives of patients.
We were founded with a long-term goal of building a fully integrated biopharmaceutical company focused on discovering, developing and ultimately commercializing first-/best-in-class precision medicines for heart disease. Early on in our company history, we invested in differentiated capabilities to enable modality-agnostic target identification and validation, anchored in human genetics and the use of human disease models. These highly productive platform drug discovery capabilities directly contributed to the development of our three clinical-stage programs, as well as to several earlier-stage pipeline programs.
Today, we are focused on advancing our clinical-stage gene therapy candidates, TN-201 for
MYBPC3
-associated hypertrophic cardiomyopathy (HCM), and TN-401 for
PKP2
-associated arrhythmogenic right ventricular cardiomyopathy (ARVC). Each candidate is currently in Phase 1b/2 trials to establish the safety profile of two different doses in adults with disease due to pathogenic/likely pathogenic mutations. We have presented promising interim results for both product candidates and are engaging with regulators to discuss pivotal trial plans. We plan to share additional follow-up data in the fourth quarter of 2026 and to provide an update on our interactions with regulators. We are also advancing a third internally discovered clinical-stage candidate, TN-301, a highly specific small molecule inhibitor of histone deacetylase 6 (HDAC6) with potentially broad utility in heart failure with preserved ejection fraction (HFpEF) and other cardiac, metabolic, muscular and pulmonary diseases, including but not limited to Duchenne muscular dystrophy (DMD), genetic dilated cardiomyopathy (DCM) and pulmonary arterial hypertension (PAH).
For programs arising out of our modality agnostic drug discovery platform that address relatively rare conditions our strategy is to develop, manufacture and commercialize at least some of these programs on our own, although we may selectively consider partnerships to access technology, accelerate our progress, or improve our global reach to patients. For example, in March 2026, we entered into a multi-target research collaboration with Alnylam Pharmaceuticals, Inc. (Alnylam), to identify and validate novel gene targets for the potential treatment of cardiovascular disease. Importantly, this agreement takes advantage of our modality agnostic discovery know-how and provides reimbursement for research efforts. Where our discovery efforts lead to product candidates intended for relatively prevalent indications, our strategy is to out-license or partner such programs.
TN-201 is our investigational gene therapy for individuals with HCM due to
MYBPC3
gene mutations. These mutations result in a deficiency of myosin-binding protein C (MyBP-C), which in turn can cause the heart walls of affected individuals to become significantly thickened, leading to fibrosis, abnormal heart rhythms, cardiac dysfunction, heart failure and death. HCM is a chronic, progressive condition, and those diagnosed with the disease often experience significant impairment in overall quality of life and may be at higher risk for serious complications and co-morbidities. TN-201 utilizes a recombinant AAV9 capsid and is designed to deliver a
23
working
MYBPC3
gene to specific cells of the heart in order to produce MyBP-C and thereby potentially slow or even reverse the course of
MYBPC3
-associated HCM following a single infusion.
MyPEAK
TM
-1 is our Phase 1b/2 multi-center, open-label clinical trial, designed to assess the safety, tolerability and efficacy of a one-time intravenous infusion of TN-201. We have completed enrollment in MyPEAK-1 necessary to characterize dose response and inform dose selection for late-stage clinical trials, including three patients at the 3E13 vg/kg dose (Cohort 1), three at the 6E13 vg/kg dose (Cohort 2) and additional patients in the 6E13 vg/kg dose expansion cohort. Other than Patient 5, all patients have completed every scheduled visit and remain in the trial.
In June 2026, we presented new interim safety and efficacy data from MyPEAK-1 as of a May 2026 data cut off. Data shared included 78-104 weeks of follow-up for the three Cohort 1 patients and 26-52 weeks of follow-up for four patients dosed with TN-201 at 6E13 vg/kg. Among the latest findings reported, six patients evaluable for efficacy endpoints demonstrated improvements in multiple clinical parameters of disease including echocardiographic (ECG) measures of hypertrophy, and one or more measures of symptom burden. Cardiac troponin, a known risk factor for cardiac-related morbidities or mortality, improved or remained stable in five of six patients and NT-pro BNP, a measure of heart muscle strain, improved in three patients. ECG measures of left ventricular structure showed decreases in multiple measures of left ventricular hypertrophy, a defining characteristic of HCM. All six evaluable patients achieved reductions in left ventricular mass index (LVMI) and five of six demonstrated reductions in one or more measures of wall thickness. Decreases in LVMI were durable through two years for the first two Cohort 1 patients and decreases among Cohort 2 patients were observed at an earlier timepoint post-dose compared to Cohort 1 patients.
Among all six patients, treatment with TN-201 resulted in a lessening of symptom burden as assessed by either New York Heart Association (NYHA) classification, a physician assessment of the impact of heart failure symptoms on activities of daily living, and/or the Kansas City Cardiomyopathy Questionnaire (KCCQ), a validated tool for measuring health status, symptom burden and quality of life among HCM patients. All patients were symptomatic at baseline (NYHA class II-III) and five of six improved by at least one class following treatment with TN-201. All five were assessed as Class I and no longer have heart failure symptoms that interfere with activities of daily living, while the sixth patient remained stable. Four of six patients demonstrated meaningful benefit in symptoms and quality of life, with KCCQ Clinical Summary Scores (KCCQ-CSS) improving by between 12 to 56 points from baseline, while the three evaluable Cohort 2 patients who received TN-201 at a dose of 6E13 vg/kg had improved KCCQ-CSS with a mean increase of 36 points. An improvement of 5 points or greater is considered clinically meaningful.
Functional capacity was also assessed by six-minute walk test (6MWT) and cardiopulmonary exercise testing (CPET) and improved by at least one of the two measures in three patients, with Cohort 2 patients showing greater benefit. Two patients from Cohort 2 and one Cohort 1 patient achieved meaningful improvements in 6MWT with changes from baseline ranging from 50- to 255-meters. An increase of 30 meters is considered clinically meaningful. Patient 4 from Cohort 2 also demonstrated clinically meaningful improvement in peak oxygen consumption (pVO2). CPET were not available as of the data cut off for the remaining Cohort 2 patients. Two patients from Cohort 1 experienced a decline in 6MWT, and no Cohort 1 patients saw improvements in CPET. Cohort 1 performance may be confounded by preexisting functional limitations and/or relatively longer duration and higher dose of immunosuppression.
TN-201 continued to be generally well tolerated across both MyPEAK-1 dose cohorts for the seven patients for whom safety data was reported. No dose-limiting toxicities were observed and all patients have tapered off immunosuppressive medicines. Adjustments to monitoring and immunosuppression during Cohort 1 resulted in faster tapers and lower cumulative corticosteroid doses in Cohort 2, despite the higher TN-201 dose. Results from serial cardiac biopsies taken at baseline or Week 8 and again post-dose or Week 52 showed that TN-201 DNA transduction and mRNA expression were robust, and MyBP-C levels increased by an average of 4% over time.
Protein level changes were measured using liquid chromatography mass spectrometry (LCMS) normalized to myosin heavy chain (MYHC). As of the most recent assessment, MyBP-C levels were shown to increase in four of six patients, while variation in expression between individual biopsies is believed to have contributed to smaller differences in the remaining two patients. While additional follow-up is needed, the totality of results suggest that the higher dose of 6E13 vg/kg may result in equivalent or greater clinical benefit at an earlier timepoint post-dose.
24
We expect to present one-year Cohort 2 data and two-year Cohort 1 data from MyPEAK-1 in the fourth quarter of 2026. We are also engaging with regulatory authorities to obtain feedback on pivotal trial plans for TN-201 and plan to provide an update on progress in the fourth quarter of 2026.
Despite advances in the treatment of the obstructive HCM in recent years with the approval of cardiac myosin inhibitors, there are no approved treatments for those with the non-obstructive form of disease or those diagnosed before the age of 18. Recognizing the urgent medical need among pediatric patients, we initiated MyClimb, a retrospective and prospective natural history study of pediatric patients to characterize the outcomes, burden of illness, risk factors, quality of life, and biomarkers associated with disease progression in pediatric patients. MyClimb complements existing disease registries focused primarily on adult patient HCM populations and may support and expedite the development of TN-201 in the pediatric patient population. MyClimb completed enrollment of more than 200 individuals and is believed to be the largest study of pediatric individuals with
MYBPC3
-associated HCM ever conducted. Initial data indicated that 93% of participants had the nonobstructive HCM phenotype, for which there are currently no approved treatment options and that genotype was a significant predictor of risk. The data also revealed that LVMI may serve as a surrogate marker for poor long-term outcomes and as an appropriate marker to evaluate the early effectiveness of TN-201’s potential in a future pivotal trial.
The FDA has granted TN-201 Fast Track, Orphan Drug and Rare Pediatric Drug Designations. TN-201 has also been accepted into the agency’s Rare Disease Evidence Principles (RDEP) process for biallelic children with
MYBPC3
-associated HCM. TN-201 received orphan medicinal product designation from the European Commission (EC) and was granted PRIority MEdicine (PRIME) designation by the European Medicines Agency (EMA).
TN-401 is our AAV9-based gene therapy for the treatment of ARVC due to disease-causing variants in the
PKP2
gene. ARVC, also known as arrhythmogenic cardiomyopathy or ACM, is a chronic, progressive disease characterized by frequent, severe, and potentially life-threatening ventricular arrhythmias. The disease is associated with adverse heart remodeling, fibrosis, cardiac dysfunction, significant impairment to patients’ overall quality of life, as well as an elevated risk of sudden cardiac death.
PKP2
mutations are the most common genetic cause of ARVC and result in insufficient expression of a protein needed for proper functioning of the desmosomal complex that maintains physical connections and electrical signaling between heart muscle cells. TN-401 utilizes a recombinant AAV9 capsid and is designed to deliver a working
PKP2
gene to heart muscle cells in order to produce plakophilin protein and potentially slow or even reverse the course of
PKP2
-associated ARVC following a single infusion.
RIDGE
TM
-1 is our Phase 1b/2 multi-center, open-label clinical trial, designed to assess the safety, tolerability and efficacy of a one-time intravenous infusion of TN-401. We have completed enrollment in RIDGE-1 necessary to characterize dose response and inform dose selection for late-stage clinical trials, including three patients at the 3E13 vg/kg dose (Cohort 1), three at the 6E13 vg/kg dose (Cohort 2) and additional patients in the 6E13 vg/kg dose expansion cohort.
In May 2026, we presented interim data from the first six patients dosed in RIDGE-1 at the American Society of Gene and Cell Therapies 2026 Annual Meeting. Data reported included electrophysiology, biopsy and safety results 20-52 weeks post-dose following a single infusion of TN-401. As of the April 2026 data cut off, all patients have completed all assessments and remain on study.
Treatment with TN-401 resulted in dramatic improvements in electrical stability, as measured by premature ventricular contractions (PVCs) and non-sustained ventricular tachycardias (NSVTs). PVCs and NSVTs are each important prognosticators of more serious, potentially life-ending ventricular arrythmias and their frequency is utilized as an important component in calculating patient risk and the need for an implantable cardiac defibrillator (ICD). All six patients had PVC counts of greater than 500 per day at baseline and demonstrated meaningful reductions in arrhythmia burden with a mean reduction in average daily PVC count of 60% for Cohort 1 and 67% for Cohort 2. Two patients with a high rate of NSVTs at baseline experienced substantial decreases, apparent as early as Week 20. Patient 2 had an NSVT burden of 78 counts per 24-hours, which dropped to zero and remained stable at Week 52. At baseline, Patient 5 had an NSVT count of 43 per 24 hours, which dropped to 4 per 24 hours at Week 20. Four patients had low NSVT burden at baseline and remained low. Other measures of clinical response including ECG changes (QRS duration and T wave inversions), heart structure and function and NYHA class were in the normal range at baseline and/or remained stable during the post-dose follow-up period.
Post-dose biopsies provided evidence of robust transduction and TN-401-specific expression for the first five patients for whom data was available at the time of data cut off. Biopsy samples were collected from the right
25
ventricular septum at Week 8 for the first four patients and at Week 22 for Patient 5, with results from a second post-dose biopsy at Week 52 available for Cohort 1 patients. Robust evidence of dose-dependent TN-401 DNA transduction and mRNA expression were apparent, while changes in PKP2 protein levels in heart muscle cells from baseline to the most recent timepoints ranged from -4% to +15% as measured by LCMS normalized to MYHC. Measurements of PKP2 protein levels were impacted by the varied composition of cardiac tissue in an ARVC heart.
TN-401 was well tolerated across both RIDGE-1 dose cohorts and no dose-limiting toxicities had occurred as of the April 2026 data cut off. The prophylactic immune suppression regimen of sirolimus and prednisone successfully managed immune responses and all patients discontinued immunosuppressive medicines. Adverse events associated with TN-401 treatment were asymptomatic and self-resolved or responded to treatment. There was no clinical thrombotic microangiopathy, no ventricular arrhythmias related to TN-401 and no other cardiotoxicities associated with TN-401.
We expect to present interim Cohort 2 results in the fourth quarter of the year. We are also engaging with regulators on late-stage pivotal trial planning for TN-401 and plan to provide an update on the status of our discussions in the fourth quarter of 2026.
In February 2025, we were awarded a Clinical Grant (Clin2) of $8.0 million from California Institute for Regenerative Medicine (CIRM), a state of California Agency that funds regenerative medicine, stem cell, and gene therapy research. Proceeds from the grant help fund clinical trial costs for our ongoing Phase 1b/2 RIDGE-1 clinical trial of TN-401 gene therapy. RIDGE-1 is being conducted at multiple clinical trial sites with ARVC expertise at leading cardiology centers in the U.S. and United Kingdom.
To support our development efforts for TN-401, we have initiated RIDGE, a global noninterventional natural history and seroprevalence study of nearly 200 patients with ARVC due to
PKP2
gene mutations. RIDGE is believed to be the largest natural history study of adults with
PKP2
-associated ARVC. Interim data from RIDGE was presented at Heart Rhythm Society’s annual meeting in April 2025 and showed that patients with
PKP2
-associated ARVC experience a high burden of arrhythmias despite treatments with approved anti-arrhythmic medications including flecainide, beta blockers and surgical interventions such as ablation and ICD placement. Further, current treatments appeared to do little to halt or prevent progressive structural changes to the heart that occur as a result of
PKP2
mutations. A large majority of adults with
PKP2
-associated ARVC would be eligible to participate in RIDGE-1 based on low levels of pre-existing antibodies to AAV9.
TN-401 has received Orphan Drug and Fast Track designation from the FDA. TN-401 has also received orphan medicinal product designation from the EC and was granted PRIME designation by the EMA.
Sufficient clinical drug supply for both TN-201 and TN-401 to support our ongoing clinical trials was produced in our Genetic Medicines Manufacturing Center (GMMC). In June 2026, we terminated the lease for the GMMC Facility, which we decommissioned in 2025 to reduce costs. Notwithstanding the closure of the GMMC Facility, we have retained our internal process and assay development know-how and plan to transfer our AAV manufacturing process to a contract development manufacturing organization with global capabilities in anticipation of future late-stage development and/or commercial launch of TN-201 and/or TN-401.
We are also advancing TN-301, a highly specific HDAC6 inhibitor that has potential utility in HFpEF and other cardiac, metabolic, muscular and pulmonary diseases. TN-301 was initially discovered and validated as having cardioprotective qualities in preclinical studies of a rapidly worsening mouse model of
BAG3
mutant DCM. HDAC6 is a cytoplasmic enzyme known to regulate diverse cellular processes. Based on TN-301’s multi-modal mechanism of action, that includes reductions in inflammation, oxidative stress, fibrosis, and metabolic dysregulation, as well as improvements in autophagy, protein quality control, mitochondrial metabolism, and lipid metabolism, TN-301 may be well suited to the treatment of HFpEF, as well as other cardiac, metabolic, muscular and pulmonary disorders where there is strong alignment between TN-301’s mechanism and the pathophysiology of disease.
We shared positive data from our Phase 1 clinical trial of TN-301 in healthy participants at the 2023 Heart Failure Society of America Annual Scientific Meeting. TN-301 was generally well tolerated across the broad range of doses studied. Pharmacokinetic results showed overall dose proportionality with a half-life supportive of once-daily dosing. Increasing doses and exposures with TN-301 correlated with increased pharmacodynamic effects. There were no changes in histone acetylation with TN-301 underscoring the selectivity of TN-301 for HDAC6 and potentially reducing the risk of off target effects.
26
Extensive
in vitro
and
in vivo
studies in HFpEF disease models have also shown that TN-301 addresses diverse pathological processes with direct and systemic benefits in models of HFpEF. In comparative studies, selective HDAC6 inhibition as a single agent has been shown to have similar efficacy to empagliflozin, an SGLT2 inhibitor which is approved for the treatment of HFpEF and co-administration of our HDAC6 inhibition with a SGLT2 inhibitor demonstrated additive benefit.
Taken together, these data support continued development of TN-301 as a potential treatment for patients with HFpEF and other severe diseases including those outside of cardiology in which inflammation, fibrosis and metabolic dysregulation may be implicated.
Based on our observations of TN-301’s mechanism and evidence of efficacy for an approved pan-HDAC agent, we are also exploring the development of TN-301 for DMD, a condition caused by genetic mutations in the
dystrophin
gene, leading to absence of functional dystrophin protein in the heart and skeletal muscle. The muscle pathologies that underlie muscle wasting in the absence of dystrophin include inflammation, fibrosis, altered regeneration, mitochondrial dysfunction and disrupted autophagic flux – all processes that can be improved by HDAC6 inhibition.
At the Muscular Dystrophy Association Clinical & Scientific Congress 2026, we presented results from preclinical studies comparing TN-301 with the FDA-approved pan HDAC inhibitor, givinostat, in a well-established mouse model of DMD, and in human induced Pluripotent Stem Cell (iPSC)-derived cardiomyocytes from DMD patients. After five weeks of once-daily oral dosing, TN-301 showed a statistically significant increase in forelimb grip strength in
mdx
mice at both 3 mg/kg and 30 mg/kg compared to vehicle with both doses of TN-301 achieving wildtype levels of grip strength after five weeks. Further, TN-301 demonstrated greater efficacy at both doses compared to the 10 mg/kg dose of givinostat, which corresponds to the clinically relevant dose used in DMD patients. Notably, the effects of TN-301 at both doses approached those observed with the 30 mg/kg dose of givinostat, a level that is not tolerated in humans.
In engineered heart tissues derived from human DMD-induced iPSCs, TN-301 corrected calcium handling abnormalities, a key driver of DMD cardiomyopathy, including beat-to-beat fluctuations in calcium amplitude. In contrast, givinostat exacerbated calcium handling irregularities. In an experiment of DMD patient-derived iPSC cardiomyocytes designed to measure oxygen consumption and mitochondrial stress, both known contributors to DMD cardiomyopathy, TN-301 corrected basal and maximal respiration whereas givinostat worsened both measures. Taken together, these data support the potential advancement of TN-301 in DMD therapy, suggesting that HDAC6 inhibition may have benefits for both skeletal and cardiac muscle and reduced liabilities compared to pan-HDAC inhibitors.
We plan to advance TN-301 toward clinical trials in patients in order to generate proof-of-activity data, with HFpEF and DMD being among the most promising potential indications identified to date. We also intend to share additional details regarding TN-301 development plans in the fourth quarter of 2026, and to initiate at least one company-sponsored proof-of-activity Phase 2 clinical trial in the second half of 2027. Consistent with our strategy, we believe that TN-301’s late-stage development and commercialization in large indications would best be led by a strategic pharmaceutical partner with global resources to explore the full potential of the molecule.
The FDA granted both Orphan Drug and Rare Pediatric Drug Designations to TN-301 as a treatment for DMD.
In addition to our clinical-stage candidates, we have multiple early-stage programs using various therapeutic approaches, including gene addition, gene editing, gene silencing, and cellular regeneration to address other forms of rare and/or prevalent forms of heart disease. We do not have any products approved for sale and have not generated any product revenue to date.
27
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025:
The following table summarizes our results of operations for the periods presented:
Three Months Ended
June 30,
$
%
(in thousands, except percentages)
2026
2025
Change
Change
Revenue
Collaboration revenue
$
1,110
$
—
$
1,110
NM
Operating expenses:
Research and development
16,603
17,370
(767
)
(4%)
General and administrative
5,406
6,712
(1,306
)
(19%)
Impairment loss
21,821
—
21,821
NM
Loss on lease termination, net
1,368
—
1,368
NM
Total operating expenses
45,198
24,082
21,116
88%
Loss from operations
(44,088
)
(24,082
)
(20,006
)
83%
Other income, net:
Interest income
697
815
(118
)
(14%)
Other loss, net
(2
)
(16
)
14
(88%)
Total other income, net
695
799
(104
)
(13%)
Net loss
$
(43,393
)
$
(23,283
)
$
(20,110
)
86%
NM - Not Meaningful
Collaboration Revenue
Collaboration revenue for the three months ended June 30, 2026 was $1.1 million, compared to none in the prior year period. The increase consisted of $0.7 million from the recognition of revenue associated with upfront fees and $0.4 million from reimbursements for research and development activities under collaboration arrangements entered into during the first quarter of 2026.
Research and Development Expenses
Research and development activities account for a significant portion of our operating expenses. Research and development expenses relate primarily to discovery and development of our research programs, product candidates and proprietary platform technology, and are recognized as incurred. Internal research and development costs include, among others, employee-related costs (including salaries, benefits and stock-based compensation for employees engaged in research and development functions), laboratory supplies, other non-capital equipment utilized for in-house research, and allocated overhead costs. External research and development expenses include, among others, fees paid to contract research organizations to execute preclinical studies and clinical trials on our behalf, and consulting fees. In connection with the closure of the GMMC Facility, our external research and development expenses may include fees paid to third-party contract development manufacturing organizations for future process development and manufacturing activities. We do not allocate our costs by research program, product candidate or proprietary platform technology, as a significant amount of research and development expenses represent internal costs, which are deployed across our programs, product candidates, proprietary platform technology, and other activities.
We expense all research and development costs in the periods in which they are incurred. Costs of certain research and development activities are recognized based on estimates derived from a number of factors, including an evaluation of the progress of the activities, as well as input from external service providers.
The process of conducting the necessary research to advance through the clinical stages and ultimately obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we cannot reasonably estimate or know the nature, timing or estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates. The level of our research and development expenses over the next twelve months will be subject to operational decisions
28
made following data generated from our MyPEAK-1 and RIDGE-1 clinical trials and our ability to achieve regulatory alignment on our pivotal trial plans for our TN-201 and TN-401 programs.
The following table summarizes our research and development expenses for the periods presented:
Three Months Ended
June 30,
$
%
(in thousands, except percentages)
2026
2025
Change
Change
Clinical
$
5,202
$
5,397
$
(195
)
(4%)
Research
3,820
4,182
(362
)
(9%)
Manufacturing (pre-commercial)
3,852
4,077
(225
)
(6%)
Other
3,729
3,714
15
0%
Total research and development expenses
$
16,603
$
17,370
$
(767
)
(4%)
Research and development expenses were $16.6 million and $17.4 million for the three months ended June 30, 2026 and 2025, respectively. The decrease of $0.8 million, or 4%, was primarily due to:
•
a $0.4 million decrease in research expenses, reflecting lower employee-related and lab service costs; and
•
a $0.2 million decrease in manufacturing costs reflecting lower facility maintenance fees and depreciation expense.
General and Administrative
General and administrative expenses consist of personnel-related costs (including salaries, benefits and stock-based compensation for our employees in finance, human resources and other administrative functions), legal fees, professional fees incurred for accounting, audit and tax services, information technology and facility costs not otherwise included in research and development expenses. Legal fees primarily include those related to corporate and intellectual property-related matters.
We will continue to incur legal, accounting, insurance and other expenses in operating our business as a public company, including costs associated with regulatory and compliance activities. As with our research and development, the level of our general and administrative expenses over the next twelve months will be subject to operational decisions made following data generated from our MyPEAK-1 and RIDGE-1 clinical trials and our ability to achieve regulatory alignment on our pivotal trial plans for our TN-201 and TN-401 programs.
General and administrative expenses were $5.4 million and $6.7 million for the three months ended June 30, 2026 and 2025, respectively. The decrease of $1.3 million, or 19%, was primarily due to a $0.9 million decrease in stock-based compensation expense and lower professional fees.
Impairment Loss
During the three months ended June 30, 2026, we recognized an impairment loss of $21.8 million, primarily related to leasehold improvements and manufacturing equipment at our Union City manufacturing facility, following the decision to exit the facility. No impairment loss was recognized in the prior-year period.
Loss On Lease Termination, Net
During the three months ended June 30, 2026, we recognized a net loss on lease termination of $1.4 million in connection with the termination of the lease for our Union City manufacturing facility. The loss primarily reflected the forfeiture of the facility’s security deposit and a brokerage commission incurred in connection with the lease termination, partially offset by gains associated with the remeasurement of the operating lease right-of-use asset and lease liability and the derecognition of the related asset retirement obligation liability. No comparable loss was recognized in the prior-year periods.
Interest Income
Interest income primarily consists of interest earned on our cash and cash equivalents balances. In the prior-year period, interest income also included amounts earned on marketable securities. Interest income was $0.7 million and $0.8 million for the three months ended June 30, 2026 and 2025, respectively. The decrease of $0.1 million was primarily due to the absence of discount accretion on marketable securities in the current-year period.
29
Net Loss
Net loss for the three months ended June 30, 2026, was $43.4 million, compared to a net loss of $23.3 million for the three months ended June 30, 2025.
Comparison of the Six Months Ended June 30, 2026 and 2025:
The following table summarizes our results of operations for the periods presented:
Six Months Ended
June 30,
$
%
(in thousands, except percentages)
2026
2025
Change
Change
Revenue
Collaboration revenue
$
1,335
$
—
$
1,335
NM
Operating expenses:
Research and development
31,447
38,446
(6,999
)
(18%)
General and administrative
10,853
13,174
(2,321
)
(18%)
Impairment loss
21,821
—
21,821
NM
Loss on lease termination, net
1,368
—
1,368
NM
Total operating expenses
65,489
51,620
13,869
27%
Loss from operations
(64,154
)
(51,620
)
(12,534
)
24%
Other income, net:
Interest income
1,491
1,449
42
3%
Other (loss) income, net
(2
)
24
(26
)
NM
Total other income, net
1,489
1,473
16
1%
Net loss
$
(62,665
)
$
(50,147
)
$
(12,518
)
25%
NM - Not Meaningful
Research and Development Expenses
The following table summarizes our research and development expenses for the periods presented:
Six Months Ended
June 30,
$
%
(in thousands, except percentages)
2026
2025
Change
Change
Clinical
$
10,578
$
11,345
$
(767
)
(7%)
Manufacturing (pre-commercial)
7,317
9,524
(2,207
)
(23%)
Research
6,778
10,102
(3,324
)
(33%)
Other
6,774
7,475
(701
)
(9%)
Total research and development expenses
$
31,447
$
38,446
$
(6,999
)
(18%)
Research and development expenses were $31.4 million and $38.4 million for the six months ended June 30, 2026 and 2025, respectively. The decrease of $7.0 million, or 18%, was primarily due to:
•
a $3.3 million decrease in research expenses, reflecting lower employee-related costs driven by the workforce reduction implemented in March 2025 (the 2025 Workforce Reduction) and reduced lab supply and service costs; and
•
a decrease of $2.2 million in manufacturing costs reflecting lower employee-related costs driven by the 2025 Workforce Reduction and lower facility maintenance fees and depreciation expense.
General and Administrative
General and administrative expenses were $10.9 million and $13.2 million for the six months ended June 30, 2026 and 2025, respectively. The decrease of $2.3 million, or 18%, was primarily due to a $1.6 million decrease in stock-based compensation expense, as well as lower professional fees and depreciation expense.
30
Impairment Loss
During the six months ended June 30, 2026, we recognized an impairment loss of $21.8 million, primarily related to leasehold improvements and manufacturing equipment at our Union City manufacturing facility, following the decision to exit the facility. No impairment loss was recognized in the prior-year period.
Loss On Lease Termination, Net
During the six months ended June 30, 2026, we recognized a net loss on lease termination of $1.4 million in connection with the termination of the lease for our Union City manufacturing facility. The loss primarily reflected the forfeiture of the facility’s security deposit and a brokerage commission incurred in connection with the lease termination, partially offset by gains associated with the remeasurement of the operating lease right-of-use asset and lease liability and the derecognition of the related asset retirement obligation liability. No comparable loss was recognized in the prior-year periods.
Interest Income
Interest income primarily consists of interest earned on our cash and cash equivalents balances. In the prior-year period, interest income also included amounts earned on marketable securities. Interest income was $1.5 million and $1.4 million for the six months ended June 30, 2026 and 2025, respectively, and remained relatively consistent between periods.
Net Loss
Net loss for the six months ended June 30, 2026, was $62.7 million, compared to a net loss of $50.1 million for the six months ended June 30, 2025.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have generated limited collaboration revenue and no product revenue, and we have incurred significant net losses and negative cash flows from operations. From our inception through June 30, 2026, we have funded our operations primarily from the sale and issuance of our equity securities. As of June 30, 2026, we had cash and cash equivalents of $78.1 million and an accumulated deficit of $667.7 million.
CIRM Grant
In February 2025, we announced we were awarded an $8.0 million grant from the CIRM to support RIDGE-1. The award is payable to us upon achievement of certain clinical milestones. We expect this grant to provide funding for a portion of our research and development activities, subject to the achievement of applicable milestones and compliance with the grant terms.
Loan Agreement
On August 6, 2024, we entered into a
Loan Agreement with Silicon Valley Bank (SVB), which was subsequently amended on July 14, 2026
.
As of December 31, 2025, all of the term loan commitments expired under the Loan Agreement and no term loans were outstanding.
The Loan Agreement provides that an additional loan of $20.0 million may be available at SVB’s discretion, subject to specified conditions.
Funding Requirements
We expect that we will continue to incur operating losses over the foreseeable future. Our operating expenses may increase in the future, if and as we:
•
continue to advance our lead product candidates, TN-201, TN-401 and TN-301;
•
expand the scope of our existing clinical trials and transition into late-stage clinical development;
•
seek regulatory and marketing approvals of any of our product candidates that successfully complete clinical trials;
31
•
establish relationships with contract development manufacturing organizations (CDMOs) to support commercial-scale manufacturing;
•
expand our operational, financial, and information systems and personnel to support our future product development and commercialization efforts;
•
seek to identify additional research programs and additional product candidates;
•
initiate preclinical studies and clinical trials for any additional product candidates we identify;
•
advance our future product candidates into clinical development;
•
maintain, develop, expand, enforce, defend and protect our intellectual property portfolio; and
•
continue to operate as a public company.
Based on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs through at least the next twelve months following the date of this Quarterly Report on Form 10-Q.
In order to complete the development of our product candidates and commercialize our product candidates, if approved, we will require substantial additional funding. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our operations through public or private equity offerings, debt financings or other capital sources, which may include strategic collaborations or other arrangements with third parties, or other sources of financing. We may not be able to raise additional capital on terms acceptable to us or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our common stock, make certain investments or engage in merger, consolidation, licensing or asset sale transactions. If we raise funds through strategic collaborations, partnerships and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. If we are unable to raise additional capital on acceptable terms when needed, our business, results of operations, and financial condition would be adversely affected.
Our ability to raise additional funds may be adversely impacted by global economic conditions or disruptions to, and volatility in, the credit and financial markets in the United States and worldwide. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, future commercialization efforts or other operations. Because of the numerous risks and uncertainties associated with research, product development and commercialization of product candidates, we are unable to predict the timing or amount of our working capital requirements or when or if we will be able to achieve or maintain profitability.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
Six Months Ended
June 30,
2026
2025
(In thousands)
Net cash provided by (used in):
Operating activities
$
(22,786
)
$
(38,725
)
Investing activities
(170
)
47,290
Financing activities
494
49,783
Net change in cash, cash equivalents and restricted cash
$
(22,462
)
$
58,348
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2026 was $22.8 million, which consisted primarily of a net loss of $62.7 million, partially offset by $31.7 million in non-cash charges and a net
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change in operating assets and liabilities of $8.2 million. The change in net operating assets and liabilities was primarily due to an increase of contract liabilities of $9.7 million, partially offset by a decrease of in accounts payable and accrued expenses and other current liabilities of $1.5 million. Cash flows from operations are generally impacted by the timing of payments to vendors and vendor payment terms. The non-cash charges primarily consisted of loss on impairment of $21.8 million, stock-based compensation of $3.9 million and depreciation and amortization of $3.5 million.
Net cash used in operating activities for the six months ended June 30, 2025 was $38.7 million, which consisted primarily of a net loss of $50.1 million and a net change in operating assets and liabilities of $2.4 million, partially offset by $13.3 million in non-cash charges. The change in net operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses and other current liabilities of $3.0 million. Cash flows from operations are generally impacted by the timing of payments to vendors and vendor payment terms. The non-cash charges primarily consisted of stock-based compensation of $7.4 million and depreciation and amortization of $4.7 million.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2026 was $0.2 million, which consisted of purchases of property and equipment.
Net cash provided by investing activities for the six months ended June 30, 2025 was $47.3 million, which consisted primarily of proceeds from maturities of marketable securities of $36.9 million and sales of marketable securities of $11.0 million.
Financing Activities
Net cash provided in financing activities for the six months ended June 30, 2026 was approximately $0.5 million, which consisted primarily of proceeds from exercise of warrants, partially offset by payments of accrued offering costs.
Net cash provided by financing activities for the six months ended June 30, 2025 was $49.8 million, which primarily consisted of net proceeds of $48.8 million from our March 2025 follow-on offering.
Contractual Obligations and Other Commitments
There have been no material changes from the contractual obligations and commitments previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Off-Balance Sheet Arrangements
Since inception, we have not engaged in any off-balance sheet arrangements as defined in the rules and regulations of the SEC.
Critical Accounting Policies and Estimates
A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. There were no material changes to our critical accounting policies and estimates during the three months ended June 30, 2026.
Recent Accounting Pronouncements
See Note 2,
Summary of Significant Accounting Policies
, to our unaudited interim condensed financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition or results of operations.
Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company, as defined in the JOBS Act. We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.235 billion in
33
annual revenue; (ii) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (iv) December 31, 2026.
The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have elected to use the extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date on which we (i) are no longer an emerging growth company and (ii) affirmatively and irrevocably opt out of the extended transition period provided by the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
We are also a smaller reporting company, meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.
If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Item 3. Quantitative and Qualitat
ive Disclosures About Market Risk
We are a smaller reporting company, as defined by Rule 12b-2 under the Securities Exchange Act of 1934 and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.
Item 4. Controls
and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, has evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
A control system, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. In addition, the design of any system of controls is based in part upon certain assumptions about the
34
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in various legal proceedings that arise in the ordinary course of our business. We are not currently a party to any litigation or legal proceedings that are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Item 1A. R
isk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this quarterly report and in our other public filings in evaluating our business. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and the market price of our common stock.
Risk Factors Summary
Our ability to execute on our business strategy is subject to a number of risks and uncertainties, including those outside of our control, that could cause our actual results to be harmed, including risks regarding the following:
•
We are early in our development efforts, with a limited operating history, and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and likelihood of success and future viability.
•
We have not generated any product revenue to date, have incurred significant net losses since our inception, and expect to continue to incur significant net losses for the foreseeable future.
•
Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve several objectives relating to the discovery, development and commercialization of our product candidates, if approved.
•
We require substantial additional capital to finance our operations, which if available, may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts.
•
Our product candidates are in the early stages of development, and we have no products approved for commercial sale. If we are unable to successfully develop, receive regulatory approval for, manufacture and commercialize our product candidates, or successfully develop any other product candidates, or experience significant delays in doing so, our business will be harmed.
•
We intend to identify and develop gene therapy product candidates based on novel technology, and because the regulatory landscape that governs any product candidates we may develop is rigorous, complex, uncertain and subject to change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all, for any product candidates we may develop.
•
The mechanisms of action of our product candidates are unproven, and we do not know whether we will be able to develop any drug of commercial value.
•
Drug development involves a lengthy and expensive process with an uncertain outcome. The preclinical studies, clinical trials and post-marketing studies of our product candidates may not demonstrate safety and efficacy to the satisfaction of the FDA, European Medicines Agency (EMA) or other comparable foreign regulatory authorities or otherwise produce positive results and the results of preclinical studies and early clinical trials may not be predictive of future results. We may incur additional costs or
36
experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
•
Our product candidates may cause serious adverse events, toxicities or other undesirable side effects when used alone or in combination with other approved products or investigational new drugs that may result in a safety profile that could delay or prevent regulatory approval, or market acceptance, or even if approval is received, require them to be taken off the market, include new safety warnings, contraindications or precautions, or otherwise limit their commercial potential or result in significant negative consequences.
•
Due to the significant resources required for the development of product candidates, and depending on our ability to access capital, we must prioritize development of certain programs and product candidates. Moreover, we may expend our limited resources on programs or product candidates that do not yield a successful product and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
•
Gene therapies are novel, complex and difficult to manufacture. We could experience production problems that result in delays in development or commercialization of our product candidates, limit the supply of our products, if approved, or otherwise seriously harm our business.
•
The regulatory approval processes of the FDA, EMA and other comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval of our product candidates, we will be unable to generate product revenue, and our business will be substantially harmed.
•
If we are unable to obtain, maintain, protect, defend and enforce patent and other intellectual property coverage for our technology and product candidates, our competitors could develop and commercialize technology and product candidates similar or identical to ours, and our ability to commercialize our technology and product candidates may be adversely affected.
•
Our commercial success depends significantly on our ability to operate without infringing, misappropriating or otherwise violating the patents and other intellectual property and proprietary rights of third parties.
•
We rely on third parties to conduct our preclinical studies and our clinical trials, and plan to rely on third parties to conduct such future drug development activities. These third parties may not perform satisfactorily, including failing to meet completion deadlines, or to comply with applicable regulatory requirements, which may harm our business.
•
If we do not regain compliance with or continue to satisfy the Nasdaq continued listing requirements, our common stock could be delisted from Nasdaq. Our ability to publicly or privately sell equity securities and the liquidity of our common stock could be adversely affected if our common stock is delisted.
Risks Related to Our Financial Position, Need for Additional Capital and Limited Operating History
We are early in our development efforts, with a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and likelihood of success and future viability.
We have limited experience conducting clinical trials, have no products approved for commercial sale and have not generated any revenue. We are developing therapies that address the underlying drivers of heart disease, which is an unproven and highly uncertain undertaking and involves a substantial degree of risk. Since our inception, we have devoted substantially all of our focus and financial resources to identifying and developing product candidates, conducting preclinical studies and clinical trials, developing our internal capabilities, acquiring technology, organizing and recruiting management and technical staff, business planning, establishing our intellectual property portfolio, raising capital, and providing general and administrative support for these operations. We have not yet demonstrated our ability to successfully complete any late-stage clinical trials, obtain marketing approvals, manufacture a late stage clinical- or commercial-scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. As a result, it
37
may be more difficult for investors to accurately predict our likelihood of success and viability than it would be if we had a longer operating history.
In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by early-stage biotechnology companies in rapidly evolving fields. We also may need to transition from a company with a research and development focus to a company capable of supporting commercial activities. If we do not adequately address these risks and difficulties or successfully make such a transition, our business will suffer.
We have not generated any product revenue to date, have incurred significant net losses since our inception, and expect to continue to incur significant net losses for the foreseeable future.
We have incurred significant net losses since our inception, have not generated any product revenue to date and have financed our operations principally through issuances of our stock. As of June 30, 2026, we had an accumulated deficit of $667.7 million. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs, manufacturing activities and from general and administrative costs associated with our operations. Our product candidates will require substantial additional development time and resources before we will be able to apply for regulatory approvals and, if approved, begin generating revenue from product sales. As a result, we expect that it will be several years, if ever, before we receive approval to commercialize a product and generate revenue from product sales. Even if we succeed in receiving marketing approval for and commercializing one or more of our product candidates, we expect that we will continue to incur substantial research and development and other expenses in order to discover, develop and market additional potential products.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter such that a period-to-period comparison of our results of operations may not be a good indication of our future performance, particularly since we expect our expenses to increase if and when our product candidates progress through late-stage clinical development, where costs may increase significantly. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our working capital, our ability to fund the development of our product candidates and our ability to achieve and maintain profitability and the performance of our stock.
Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve several objectives relating to the discovery, development and commercialization of our product candidates, if approved.
Our business depends on the successful research, development, manufacturing, regulatory approval and commercialization of product candidates that we discover. Our ability to generate revenue and achieve profitability depends significantly on our ability, or any future collaborator’s ability, to achieve several objectives, including:
•
successful and timely completion of preclinical and clinical development of product candidates and programs, including, but not limited to, generating sufficient data to support the initiation or continuation of clinical trials;
•
submission of INDs or other regulatory applications for our planned clinical trials, obtaining regulatory approval to commence clinical trials of our product candidates, and achieving favorable results from clinical trials;
•
establishing and maintaining relationships with contract research organizations (CROs) and clinical sites for the clinical development of our product candidates;
•
the initiation and successful patient enrollment and completion of clinical trials on a timely basis;
•
acceptable frequency and severity of adverse events in the clinical trials;
•
efficacy and safety profiles that are satisfactory to the FDA or any comparable foreign regulatory authority for marketing approval;
•
timely receipt of marketing approvals from applicable regulatory authorities for any product candidates for which we successfully complete clinical development;
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•
complying with any required post-marketing approval commitments to applicable regulatory authorities;
•
developing an efficient and scalable manufacturing process for our product candidates, and the timely manufacture of sufficient quantities of a product candidate for use in clinical trials and, if approved, commercialization;
•
establishing and maintaining commercially viable supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and meet the market demand for our product candidates, if approved;
•
successful commercial launch following any marketing approval, including the development of a commercial infrastructure, whether in-house or with one or more collaborators;
•
the achievement of development, regulatory and sales-based milestones under our collaboration agreement with Alnylam;
•
successful outputs from our capsid engineering and promoter and regulatory elements efforts;
•
a continued acceptable safety profile following any marketing approval of our product candidates;
•
actual market-size, ability to identify patients and the demographics of patients eligible for our product candidates, which may be different than expected;
•
commercial acceptance of our product candidates by patients, the medical community and third-party payors;
•
our ability to distribute our products to certain segments of the patient population only accessible through restricted or closed distribution channels;
•
satisfying any required post-marketing approval commitments to applicable regulatory authorities;
•
maintaining consistent quality, purity, and potency across clinical supplies and commercial supplies for any approved products;
•
identifying, assessing and developing new product candidates, and our ability to expand into multiple indications;
•
obtaining, maintaining, and expanding patent and other intellectual property protection, trade secret protection and regulatory exclusivity, both in the U.S. and internationally;
•
protecting and enforcing our rights in our intellectual property portfolio;
•
defending against third-party infringement, misappropriation, or other claims, if any;
•
entering into, on favorable terms, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates and to meet our obligations set forth under such arrangements;
•
obtaining coverage and adequate reimbursement by third-party payors for our products and patients’ willingness to pay in the absence of such coverage and adequate reimbursement;
•
obtaining additional funding to develop, manufacture and commercialize our product candidates;
•
addressing any competing therapies and technological and market developments;
•
managing costs, including any unforeseen costs, that we may incur as a result of nonclinical study or clinical trial delays; and
•
attracting, hiring and retaining qualified and key personnel including clinical, scientific, management and administrative personnel.
We may never be successful in achieving our objectives and, even if we are, may never generate revenue that is significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease our
39
value and could impair our ability to maintain or further our research and development efforts, raise additional necessary capital, grow our business and continue our operations.
We require substantial additional capital to finance our operations, which, if available, may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts.
Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase over the long-term in connection with our ongoing activities, particularly as we initiate and conduct clinical trials of, and seek marketing approval for, our product candidates. Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated with sales, marketing, manufacturing and distribution activities. Our expenses could increase beyond expectations if we are required by the FDA, EMA or other regulatory agencies to perform clinical trials or preclinical studies in addition to those that we currently anticipate. Other unanticipated costs may also arise. Because the design and outcome of our planned preclinical studies and clinical trials are highly uncertain, we cannot reasonably estimate the actual amount of resources and funding that will be necessary to successfully complete the development and commercialization of any product candidate we develop. We also expect to incur costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in order to continue our operations.
As of June 30, 2026, we had $78.1 million in cash and cash equivalents. We may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop our product candidates. Our failure to raise capital as and when needed or on acceptable terms would have a negative impact on our financial condition and our ability to pursue our business strategy, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our preclinical development programs, platforms, manufacturing activities, ongoing or planned clinical trials or future commercialization efforts.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, maintaining certain leverage ratios, making acquisitions, engaging in acquisition, merger or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our stock, making certain investments, declaring dividends or encumbering our assets to secure future indebtedness. Such restrictions could adversely impact our ability to conduct our operations and execute our business plan.
If we raise additional funds through upfront payments or milestone payments pursuant to strategic collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or intellectual property, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. For example, under our collaboration agreement with Alnylam, we are not permitted to
conduct any research or development activities with respect to certain collaboration targets or any therapeutic products designed to be directed to such targets, for as long as the target remains a collaboration target.
If we are unable to raise additional funds through equity or debt financings, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves
.
Our Loan Agreement requires us to comply with specified operating covenants and places restrictions on our operating and financial flexibility.
As of the filing date of this periodic report, our Loan Agreement provides that a loan of $20.0 million may be available at SVB’s discretion, subject to specified conditions. We cannot assure you that any loans will be made available to us under our Loan Agreement. As security for our obligations under the Loan Agreement, we granted
40
SVB a first priority security interest on substantially all of our assets (other than intellectual property), subject to certain exceptions. We intend to satisfy our future debt service obligations with our existing cash and cash equivalents. However, we may not have sufficient funds or may be unable to arrange for additional financing to pay the amounts due under our outstanding debt. Funds from external sources may not be available on acceptable terms, if at all.
The Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, dispose of assets, make changes to our business, merge or consolidate, incur additional indebtedness, incur additional liens, pay dividends or other distributions or repurchase equity, make investments, and enter into certain transactions with affiliates, in each case subject to certain exceptions. These restrictive covenants could limit our flexibility in operating our business and our ability to pursue business opportunities that we or our stockholders may consider beneficial. In addition, a failure to comply with the conditions of our Loan Agreement, including a breach of any covenant, could limit our ability to draw upon available tranches or
result in an event of default and an acceleration of any outstanding loans thereunder.
In the event of an acceleration of amounts due under our Loan Agreement as a result of an event of default, including upon the occurrence of an event or circumstance that could be expected to have a material adverse effect on our business, operations, properties, assets or financial condition or a failure to pay any principal or interest due, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments, and SVB could seek to enforce security interests in the collateral securing such indebtedness. Even if we are able to repay such accelerated debt amount under the Loan Agreement, the repayment of these sums may significantly reduce our working capital and impair our ability to operate as planned. As such, any declaration by SVB of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline. Further, if we are liquidated, SVB’s rights to repayment under the Loan Agreement would be senior to the rights of the holders of our common stock to receive any proceeds from the liquidation.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset future taxable income may be limited.
Our net operating loss (NOL) carryforwards may be unavailable to offset future taxable income because of restrictions on their use under U.S. tax law. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally defined as a cumulative change in the corporation’s ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period), the corporation’s ability to use its pre-change NOLs and certain other pre-change tax attributes to offset its post-change taxable income may be limited. Similar rules may apply under state tax laws. We have experienced such ownership changes in the past, and we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which are outside our control. In addition, the use of our NOLs and other tax attributes may be subject to other limitations under applicable law. For example, California has enacted a temporary suspension on the use of state NOLs in taxable years beginning in 2024, 2025 and 2026, which would adversely affect our company if we earn taxable income in 2026. Consequently, our ability to use our NOLs and certain other tax attributes may be limited.
Risks Related to the Discovery, Development, Manufacturing and Commercialization of Our Product Candidates
Our product candidates are in the early stages of development, and we have no products approved for commercial sale. If we are unable to successfully develop, receive regulatory approval for, manufacture and commercialize our product candidates, or successfully develop any other product candidates, or experience significant delays in doing so, our business will be harmed.
Before we are able to generate any revenue from product sales, each of our programs and product candidates will require additional preclinical and/or clinical development, expansion of manufacturing capabilities and expertise or successfully outsourcing manufacturing, regulatory approval, building a commercial organization or successfully outsourcing commercialization, substantial investment and significant marketing efforts. Consequently, because of the substantial operational and financial investment required to further develop and commercialize our product candidates, there is a high risk of failure and we may never succeed in developing marketable products.
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If we do not successfully initiate and complete our clinical trials in a timely manner, including the successful manufacturing of the relevant product candidate, or fail to achieve favorable results from our trials, we may experience significant delays or be unable to advance our programs. We cannot be certain that our clinical trials will be initiated and completed on time, if at all, or whether our planned clinical strategy will be acceptable to the FDA or comparable foreign regulatory authorities. Furthermore, any changes to our development programs may cause our product candidates to perform differently and affect the results of planned clinical trials, which could delay completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates and jeopardize our ability to commercialize our product candidates, if approved, and generate revenue.
There is a high failure rate for biopharmaceutical products proceeding through clinical trials. It is not uncommon for product candidates to exhibit unforeseen safety issues or inadequate efficacy when tested in humans despite promising results in preclinical animal models or earlier clinical studies. In addition, a number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later stage clinical trials even after achieving promising results in earlier stage clinical trials and we may experience the same. We may also encounter regulatory delays or rejections as a result of many factors, including varying interpretations of data or changes in regulatory policy during the period of product development.
Because of the early stage of development of our programs, our ability to eventually generate significant revenues from our product candidates, which we do not expect will occur for several years, if ever, will depend on a number of factors, including those described in the Risk Factor entitled “
Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve several objectives relating to the discovery, development and commercialization of our product candidates, if approved
.”
We do not have control over many of these factors, including certain aspects of the manufacturing process, preclinical and clinical development, the regulatory review process and potential threats to our intellectual property rights. If we are not successful with respect to one or more of these factors, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business.
To become and remain profitable, we must develop, obtain approval for and eventually commercialize product candidates that generate significant revenue. We do not expect to receive approval of any product candidates for many years and may never succeed in these activities. Even if we obtain approval and begin commercializing one or more of our product candidates, we may never generate revenue that is significant enough to achieve profitability, as we will continue to incur substantial research and development, manufacturing and other expenditures to develop and market additional product candidates. Even as we successfully discover and advance product candidates into clinical development, their success will be subject to all of the clinical, regulatory and commercial risks described elsewhere in this “Risk Factors” section. Accordingly, we cannot assure you that we will ever be able to discover, develop, obtain regulatory approval of, manufacture, commercialize or generate significant revenue from any product candidates.
We intend to identify and develop gene therapy product candidates based on novel technology, and because the regulatory landscape that governs any product candidates we may develop is rigorous, complex, uncertain and subject to change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all, for any product candidates we may develop.
We intend to discover, develop, manufacture, and commercialize gene therapy product candidates for the heart. Our product candidates may use both known capsids, such as AAV9, as well as proprietary capsids developed in-house through our own capsid engineering efforts or licensed from third parties. Furthermore, our product candidates may also use novel heart-specific promoters and we may explore different routes-of-administration involving infusion- or injection-based catheters to support