Annual report
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 _________________________ FORM 10-K _________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________TO___________ Commission file number: 001-39321 _________________________ AVIDITY BIOSCIENCES, INC. (Exact name of registrant as specified in its charter) _________________________ Delaware 46-1336960 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 3020 Callan Road San Diego, CA 92121 (Address of Principal Executive Offices) (Zip Code) (858) 401-7900 (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 RNA The Nasdaq Global Market Securities registered pursuant to Section 12(g) of the Act: None _________________________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x As of June 30, 2025, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $3.4 billion, based on the closing price of the registrant’s common stock on the Nasdaq Global Market of $28.40 per share. As of February 13, 2026, the registrant had 155,149,646 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE None.
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Table of Contents AVIDITY BIOSCIENCES, INC. TABLE OF CONTENTS FORM 10-K For the Year Ended December 31, 2025 INDEX PART I Item 1. Business 2 Item 1A. Risk Factors 32 Item 1B. Unresolved Staff Comments 91 Item 1C. Cybersecurity 92 Item 2. Properties 93 Item 3. Legal Proceedings 93 Item 4. Mine Safety Disclosures 93 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 94 Item 6. [Reserved] 95 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 96 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 106 Item 8. Financial Statements and Supplementary Data 106 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 106 Item 9A. Controls and Procedures 106 Item 9B. Other Information 109 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 109 PART III Item 10. Directors, Executive Officers and Corporate Governance 110 Item 11. Executive Compensation 120 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 142 Item 13. Certain Relationships and Related Transactions, and Director Independence 145 Item 14. Principal Accountant Fees and Services 146 PART IV Item 15. Exhibit and Financial Statement Schedules 148 Item 16. Form 10-K Summary 148
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Table of Contents PART I Forward-Looking Statements and Market Data This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this annual report, including, without limitation, statements regarding our future results of operations and financial position; business strategies and plans; our ability to complete the proposed Merger and Distribution (each as defined below), including statements regarding the expected timetable for completing the proposed Merger and Distribution, the composition of the assets and liabilities to be held by SpinCo (as defined below) and the Company following the Distribution, the management team for SpinCo and its cash balance, and any other objectives, plans and strategies for future operations; research and development plans; the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and clinical trials for our product candidates; the anticipated timing of release of data from our ongoing clinical trials; the potential benefits of certain regulatory designations; the timing and likelihood of regulatory filings and approvals for our product candidates; the potential safety and therapeutic benefits of our product candidates, whether based on data from our ongoing clinical trials or preclinical studies, or otherwise; the characterization of data produced from our ongoing clinical programs; our ability to commercialize our product candidates, if approved; the pricing and reimbursement of our product candidates, if approved; the timing and likelihood of success; plans and objectives of management for future operations; future results of anticipated product development efforts; and the anticipated impacts on our business of any inflationary pressures, legislative, regulatory or executive actions in the Unites States regarding drug pricing and any military conflict or other hostilities, are forward- looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. This annual report on Form 10-K also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this annual report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this annual report and are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, “Risk Factors.” 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. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This annual report includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this annual report may appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames. We maintain a website at www.aviditybiosciences.com, to which we regularly post copies of our press releases as well as additional information about us. Our filings with the Securities and Exchange Commission, or SEC, are available free of charge through our website as soon as reasonably practicable after being electronically filed with or furnished to the SEC. Information contained in our website does not constitute a part of this report or our other filings with the SEC. 1
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Table of Contents ITEM 1. Business We are a biopharmaceutical company committed to delivering a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates, or AOCs. Our proprietary AOC platform is designed to combine the specificity of monoclonal antibodies, or mAbs, with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics. Our pipeline currently has three programs in clinical development. Delpacibart zotadirsen, or del-zota (formerly AOC 1044) is a registrational study designed for people living with Duchenne muscular dystrophy, or DMD, and is currently in development with the ongoing Phase 2 EXPLORE44 Open-Label Extension (EXPLORE44-OLE™) study. Del- zota is specifically designed for people with mutations amenable to exon 44 skipping, or DMD44, and is the first of multiple AOCs we are developing for DMD. Delpacibart etedesiran, or del-desiran (formerly AOC 1001), is designed to treat people with myotonic dystrophy type 1, or DM1, and is currently in development with the global Phase 3 HARBOR™ trial and ongoing HARBOR Open-Label Extension (HARBOR-OLE™) trial. Delpacibart braxlosiran, or del-brax (formerly AOC 1020), is the first investigational therapy designed to directly target DUX4 in people living with facioscapulohumeral muscular dystrophy, or FSHD, and is currently in development in the potentially registrational fully enrolled ongoing FORTITUDE™ biomarker cohort of the Phase 1/2 FORTITUDE trial, the Phase 2 FORTITUDE Open-Label Extension (FORTITUDE-OLE™) trial and the Phase 3 FORTITUDE-3™ trial. Del-desiran, del-brax and del-zota have all been granted Orphan designation by the FDA and the European Medicines Agency, or EMA, and Fast Track designation by the FDA. In addition, the FDA has granted del-desiran and del-zota Breakthrough Therapy designation and granted del-zota Rare Pediatric Disease designation. Del-desiran has also been granted Orphan Drug designation by the Japan Ministry of Health, Labour and Welfare (MHLW). In November 2025, we announced our Managed Access Program (MAP) for del-zota for eligible people living with DMD44 in the United States. Under an FDA-authorized treatment protocol, del-zota will be provided to eligible boys and men with DMD44 through participating healthcare providers. Participants in EXPLORE44-OLE will have the option to transition to the MAP as they complete two years of treatment. Recent Developments - Merger Agreement with Novartis AG and Distribution On October 25, 2025, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Novartis AG, a company limited by shares (Aktiengesellschaft) incorporated under the laws of Switzerland, which we refer to as Novartis or Parent, and Ajax Acquisition Sub, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Parent, or Merger Sub, pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into us, and we will survive the Merger as an indirect wholly owned subsidiary of Parent, which we refer to as the Merger. In connection with the Merger, we, Atrium Therapeutics, Inc. (formerly known as Bryce Therapeutics, Inc., a newly formed Delaware corporation and wholly owned subsidiary of ours), or SpinCo, and Parent (with respect to certain sections specified therein) entered into a Separation and Distribution Agreement, dated October 25, 2025, or the Separation and Distribution Agreement, pursuant to which, on the terms and subject to the conditions set forth in the Separation and Distribution Agreement, prior to the effective time of the Merger, or the Effective Time, we will effect a pre-closing reorganization, or the Pre-Closing Reorganization, which will generally result in SpinCo owning, assuming or retaining all assets and liabilities held by us and our subsidiaries exclusively related to our early stage precision cardiology programs, including AOC 1086 and AOC 1072, which target rare genetic cardiomyopathies, including phospholamban and Protein Kinase AMP-activated non-catalytic subunit Gamma 2 Syndrome, respectively, and certain collaboration agreements, including those with Bristol-Myers Squibb Company and Eli Lilly and Company, or the SpinCo Business, and us owning, assuming or retaining all other assets and liabilities. The transfer of assets to SpinCo includes certain of our assets that triggered a right of first negotiation, or ROFN, with an existing collaboration partner of ours, or the ROFN Holder. During the ROFN period, which expired on February 5, 2026, we were permitted to negotiate the sale of our assets subject to the ROFN with the ROFN Holder, and, if an agreement had been reached, consummate the sale of all or a portion of such assets. If such a sale had been consummated, SpinCo could have received less than all of the SpinCo Business. Following the Separation, but prior to the Effective Time, we will either (a) distribute to our stockholders as of February 12, 2026,the record date for the Distribution, or the Distribution Record Date, on a pro rata basis, all of the issued and outstanding shares of SpinCo common stock, par value $0.001 per share, or SpinCo Common Stock, at a ratio of one share of SpinCo Common Stock per ten shares of our common stock held, with SpinCo continuing its existence as a separate and independent company, or the Distribution or (b) subject to Parent's written consent, consummate a sale of SpinCo to a third party in accordance with the terms of the 2
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Table of Contents Merger Agreement, or a Permitted Third Party Sale, subject to the terms and conditions specified in the Merger Agreement and the Separation and Distribution Agreement, and thereafter distribute the cash proceeds received by us, any of our affiliates or SpinCo from such sale, net of expenses incurred in connection with or related to the authorization, preparation, negotiation, execution and performance of such transaction and any definitive agreements related thereto to our stockholders and holders of options to purchase shares of our common stock, or the Company Stock Options, and holders of restricted stock units denominated in shares of our common stock, or together with the Company Stock Options, the Company Equity Awards, as of the chosen record date for distributing such proceeds, or the Permitted Sale Proceeds, on a pro rata basis and subject to applicable tax withholding. In connection with the Distribution, holders of Company Equity Awards (subject to certain exceptions) as of the Distribution Record Date who are current service providers to SpinCo and its affiliates (including us) are entitled to receive certain make whole awards that will be settled in shares of SpinCo Common Stock at a ratio of one share of SpinCo Common Stock per ten shares of our common stock underlying each such Company Equity Award. If the Distribution occurs, SpinCo will operate as a separate, independent, publicly held company. Consummation of the Merger is subject to closing conditions related to the Distribution and other customary closing conditions. The parties expect the Merger, the Distribution and the other transactions contemplated by the Merger Agreement to close in the first half of 2026. In the event the Merger Agreement is terminated, under specified circumstances, we will be required to pay Parent a termination fee of $450 million. The Merger Agreement further provides that Parent will be required to pay us a reverse termination fee of $600 million in the event the Merger Agreement is terminated by either us or Parent under certain circumstances. For additional information related to the Merger Agreement, please refer to our definitive proxy statement on Schedule 14A filed with the SEC on January 30, 2026, as thereafter amended or supplemented, and the registration statement on Form 10 filed by SpinCo with the SEC on December 10, 2025, as it may thereafter be amended or supplemented. For additional information regarding risks and uncertainties associated with the Merger and the Distribution, see Part I, Item 1A – “Risk Factors” included in this annual report on Form 10-K. There is no guarantee that the Merger or the Distribution will be consummated. Our full year 2025 highlights across our three clinical development programs for del-zota, del-desiran and del-brax include: Del-zota for DMD44 • In November 2025, we announced our Managed Access Program (MAP) for del-zota for eligible people living with DMD44 in the United States. Under an FDA-authorized treatment protocol, del-zota will be provided to eligible boys and men with DMD44 through participating healthcare providers. Participants in EXPLORE44-OLE will have the option to transition to the MAP as they complete two years of treatment. • In October 2025, we completed a positive pre-BLA meeting with the FDA and aligned on a clear path forward for a planned BLA submission for potential accelerated approval of del-zota. This BLA submission is planned for 2026. • In October 2025, Kevin M. Flanigan, M.D., Nationwide Children’s Hospital, presented del-zota data at four or five months, as compared to placebo from the completed EXPLORE44® trial in participants living with DMD44, at the 30th Annual International Congress of the World Muscle Society. As part of our exploratory analysis, this early data showed trends toward functional improvement in the EXPLORE44 study, with trends across EXPLORE44 and EXPLORE44-OLE continuing after one year of treatment compared to the PRO-DMD-01 database analyzed by Analysis Group®, or DMD44 natural history. • In September 2025, we reported positive topline and functional del-zota data from a total of 17 participants (12 ambulatory and 5 non-ambulatory) in the EXPLORE44 trial®. Participants treated continuously with del-zota for approximately one year began treatment in EXPLORE44 and continued into EXPLORE44-OLE™. Data demonstrated reversal of disease progression and unprecedented improvement compared to baseline and DMD44 natural history (Nat Hx) across multiple functional measures. Treated participants demonstrated statistically significant increases of approximately 25 percent of normal in dystrophin production and restored total dystrophin up to 58 percent of normal. Creatine kinase (CK) levels rapidly reduced by greater than 80 percent compared to baseline and were sustained at near normal levels throughout the duration of evaluation with participants followed for up to 16 months. Additionally, 50 percent of participants had CK levels within the normal range at one year of 3
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Table of Contents treatment. Given the study design, some participants received 5 mg/kg once every six weeks (Q6W) and some received 10 mg/kg once every eight weeks during EXPLORE44. All participants were transitioned to the 5 mg/kg (Q6W) dosing schedule during EXPLORE44-OLE. Not all participants could complete all assessments. Safety and tolerability data were assessed from 39 participants in the ongoing EXPLORE44-OLE study, as of June 2025. Del- zota continued to demonstrate favorable long-term safety and tolerability results. Most treatment emergent adverse events (TEAEs) were mild or moderate with the most common TEAEs (occurring in greater than 3 participants) being upper respiratory tract symptoms, diarrhea, fall, back pain and headache. One participant discontinued from EXPLORE44-OLE following an event of hypersensitivity. • In July 2025, we announced the FDA granted Breakthrough Therapy designation to del-zota for the treatment of DMD44. Del-desiran for DM1 • In February 2026, Avidity announced the final results from the completed Phase 1/2 MARINA® trial were published in the February 19 issue of The New England Journal of Medicine (NEJM). • In January 2026, Avidity submitted to the FDA a protocol amendment for the Phase 3 HARBOR trial, which will move the data cutoff date from 30 weeks to 54 weeks. 54-week topline data readout from global Phase 3 HARBOR™ study is expected in the second half of 2026. • In September 2025, the Phase 2 MARINA-OLE™ trial concluded. Participants who completed the MARINA-OLE trial and provided their consent, have transitioned to the HARBOR-OLE trial. Prior to initiation of the HARBOR trial, Avidity aligned with global regulators, including the FDA, on the registrational path for del-desiran. • In July 2025, we announced the Phase 3 HARBOR trial is fully enrolled with a total of 159 participants enrolled. Del-brax for FSHD • In June 2025, we announced multiple milestones for the del-brax program including FDA alignment on accelerated and full approval pathways for del-brax, and initiation of our global confirmatory Phase 3 FORTITUDE-3™ study in FSHD. In addition, we shared positive topline Phase 1/2 FORTITUDE data from the del-brax dose escalation cohorts. • In March 2025, we announced that enrollment was completed for the del-brax biomarker cohort with a total of 51 participants enrolled. Upcoming Milestones • Del-zota for the treatment of DMD44: • Aligned on a clear path forward aligned with FDA following October 2025 pre-BLA meeting. The BLA submission is planned for 2026 for potential accelerated approval. • Del-desiran for the treatment of DM1: • 54-week topline data readout from global Phase 3 HARBOR™ study expected in the second half of 2026. • Del-brax for the treatment of FSHD: • Topline data from FORTITUDE™ biomarker cohort expected in the second quarter of 2026. • Phase 3 FORTITUDE-3™ readout and global regulatory submissions expected in 2028. Our Strategy Our mission is to profoundly improve people’s lives by revolutionizing the delivery of RNA therapeutics. We are executing on our mission by focusing on our three strategic pillars: a disruptive and broad AOC platform, an advancing and expanding pipeline, and building an agile and diverse company. With this strategy, our goal is to discover, develop and commercialize novel AOC therapeutics that overcome current barriers to the delivery of 4
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Table of Contents oligonucleotides and unlock their potential to treat a wide range of serious diseases currently lacking adequate treatment options. The key elements of our strategy to achieve this goal are to: • Harness the power of our AOC platform to develop a new class of drugs; • Continue advancing our three clinical stage product candidates in rare neuromuscular indications; • Expand our pipeline in our current focus areas of neuromuscular and precision cardiology indications as well as into additional tissue types; and • Build an agile and diverse company. As we continue to expand the company, we remain focused on employing a disciplined strategy to maximize the value of our pipeline by retaining development and commercialization rights to those product candidates, indications and geographies that we believe we can ultimately commercialize successfully on our own if they are approved. We continue to collaborate on product candidates that we believe have promising utility in disease areas or patient populations that are better served by the resources or specific expertise of other biopharmaceutical companies. Through collaborations and our internal research, we plan to continue to invest our resources in our AOC platform to explore the full potential of our AOCs in additional previously inaccessible tissue and cell types. Our AOC Product Platform Overview We are committed to delivering a new class of RNA therapeutics called AOCs designed to overcome the current limitations of oligonucleotide therapies in order to treat a wide range of serious diseases. We utilize our proprietary AOC platform to design, engineer and develop therapeutics that combine specificity of mAbs with the precision of oligonucleotide therapies to target the root cause of diseases previously untreatable with such therapeutics. All of our oligonucleotides target disease-related RNA. RNA is a polymeric molecule essential in the coding, decoding, regulation and expression of genes. We have accumulated deep experience regarding oligonucleotide therapeutics, modulation of RNA processes, antibody engineering and conjugation, and drug delivery techniques. We collectively refer to the know-how and proprietary technology borne out of this experience, and their systematic application in the design and development of our product candidates, as our AOC platform. Our Approach Based on the data-driven hypothesis that the delivery of oligonucleotides can be greatly enhanced by using antibodies as conjugates, our scientists have established a framework for screening potential cell surface protein-mAb pairs to determine which pairs we believe are well suited to deliver active oligonucleotides to specific cell types. We have identified multiple cell surface protein-mAb pairs that can deliver oligonucleotides into various tissue and cell types to induce pharmacologic changes. For example, we have employed AOCs built on a scaffold of a mAb or mAb fragment that binds with high selectivity and affinity to TfR1 to deliver oligonucleotides to cell types outside of the liver. Our deep experience with oligonucleotide therapeutics, modulation of RNA processes, antibody engineering and conjugation, and drug delivery techniques provides the foundation for our efforts to address the current limitations of oligonucleotide therapies. Our disruptive and broad AOC platform also affords us the option to deploy various types of oligonucleotides, including small interfering RNAs, or siRNAs, and phosphorodiamidate morpholino oligomers, or PMOs, whose specific mechanisms of action modify RNA function in different ways. We have programs utilizing both siRNAs and PMOs in clinical development. This flexibility allows us to use oligonucleotides that are tailored to modulate a given disease process. Mechanisms of these oligonucleotides can range from reducing the expression of a disease-related RNA with siRNAs, to correction of aberrant processing of RNAs with splice modifying oligonucleotides. AOCs are designed to do the following: • Combine the proven technologies of approved mAbs and oligonucleotides; • Deliver to tissues previously untreatable with RNA therapeutics, starting with muscle and broadening to other tissues and cell types; and • Scale with experienced manufacturers who are able to utilize well-established and scalable methods for manufacturing mAbs and oligonucleotides. We also have the ability to use a single mAb across multiple 5
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Table of Contents programs, providing significant leverage around development costs and timelines associated with each incremental program. Advantages of our AOC Platform We believe that the product candidates derived from our AOC platform will have the potential to offer the following distinct advantages: • Expand scope of diseases addressable with oligonucleotides: (i) utilize identified cell surface protein-antibody pairs to design oligonucleotides to precisely target the underlying cause of diseases previously untreatable with RNA therapeutics; (ii) flexibility to deploy an appropriate oligonucleotide type for different diseases; and (iii) optimize all structural components of our AOCs for effective delivery—the oligonucleotide, the mAb and the antibody conjugate design; • Potential to mitigate toxicity by limiting drug exposure: (i) selection of the most potent oligonucleotide type; (ii) targeted delivery to tissues and cells; and (iii) infrequent administration; • Infrequent dosing: (i) ability to deliver oligonucleotides to tissues and cells at concentrations that produce pronounced and prolonged pharmacodynamic effects as observed in our preclinical models; and (ii) ability to select appropriate oligonucleotide mechanisms to maximize durability; and • Readily reproducible and scalable: (i) AOCs synthesized using well-established and scalable methods for manufacturing mAbs and oligonucleotides; and (ii) ability to use a single mAb across multiple programs provides significant leverage around development costs and timelines associated with each incremental muscle program. For example, we use the same mAb targeting TfR1 across our current muscle franchise. Data from our three clinical stage programs has demonstrated as of their latest respective data cutoff dates that AOC- derived product candidates can consistently and reproducibly deliver oligonucleotides to muscle and engage the relevant RNA target. Our Development Programs We are advancing and expanding our innovative AOC pipeline to develop potential treatment options for patients and their families across a wide range of therapeutic areas. Our first AOC programs are from our rare neuromuscular disease franchise where we have leveraged our deep experience with oligonucleotide therapeutics, modulation of RNA processes, antibody engineering and conjugation and drug delivery techniques. We also have programs in our early-stage development pipeline through internal efforts and external collaborations that explore utilizing AOCs in additional indications including cardiology and immunology. We have expanded beyond rare neuromuscular disorders and into precision cardiology, advancing two wholly owned precision cardiology development candidates targeting rare genetic cardiomyopathies for PRKAG2 syndrome and PLN cardiomyopathy. We selected muscle as the first tissue type in which to explore the potential of our AOCs. In our early screening efforts, we observed a 95% reduction of target gene expression in mouse skeletal muscle with the AOC we tested, which in part led us to focus on developing a deep pipeline of AOCs that are designed to address multiple rare neuromuscular diseases including DM1, FSHD and DMD. We currently use the same proprietary mAb targeting TfR1 across our neuromuscular and precision cardiology programs, which we believe gives us significant leverage of development costs and timelines associated with each incremental neuromuscular program. Our Clinical Programs Del-desiran for the Treatment of DM1 Del-desiran is designed to address the root cause of DM1 by reducing levels of a disease-related mRNA called DMPK. Del-desiran consists of a proprietary mAb that binds to the transferrin receptor 1 (TfR1) conjugated with an siRNA targeting DMPK mRNA. Del-desiran is currently being studied in the global Phase 3 HARBOR trial and ongoing HARBOR- OLE trial in people with DM1. Long-term data from the completed MARINA-OLE trial showed reversal of disease progression in people living with DM1 across multiple endpoints including video hand opening time (vHOT) as a measure of hand function and myotonia, muscle strength and activities of daily living when compared to END-DM1 natural history data. Del-desiran has received Breakthrough Therapy, Orphan Drug and Fast Track designations by the FDA, Orphan designation by the 6
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Table of Contents European Commission and Orphan Drug Designation by the Japan Ministry of Health, Labour and Welfare (MHLW). DM1 Disease Overview DM1 is an underrecognized, progressive and often fatal neuromuscular disease with multiple organ involvement. DM1 is a monogenic, autosomal dominant disease caused by a triplet-repeat in the DMPK gene, resulting in a toxic gain of function mRNA. DM1 primarily affects skeletal, smooth and cardiac muscle and can be highly variable with respect to severity, presentation and age of onset. Patients can suffer from a constellation of manifestations including myotonia and muscle weakness, respiratory problems, fatigue, hypersomnia, cardiac abnormalities, gastrointestinal complications, and cognitive and behavioral impairment. DM1 is estimated to affect an estimated 80,000 in the United States and Europe. All forms, except the late-onset form, of DM1 are associated with high levels of disease burden and may cause premature mortality. Current Treatment Landscape and Limitations There are currently no approved therapies to treat DM1, and medical care is focused largely on symptom management. A previous attempt at treating DM1 with an unconjugated antisense oligonucleotide was discontinued due to challenges associated with delivery. Therefore, there remains a high unmet medical need for new disease modifying therapies. Our Solution Del-desiran consists of a proprietary mAb that binds to TfR1 conjugated with an siRNA, siDMPK.19, targeted to DMPK RNA, and is designed to be administered to the patient as an intravenous infusion. We believe that the following specific characteristics of del-desiran position it to have advantages over historical and current efforts to develop an effective therapy for people with DM1: • Addresses the underlying cause of the disease—DM1 is caused by an increase in the number of CUG triplet repeats occurring in the DMPK gene product. Del-desiran is designed to reduce the expression levels of DMPK RNA, thereby reducing the CUG burden in the nucleus and thereby releasing muscle blind-like protein to allow for normal mRNA processing; • Efficient delivery of drug substance to diseased cells—In an effort to solve for challenges identified in prior unsuccessful efforts to deliver an unconjugated oligonucleotide into muscle cells, the TfR1 antibody component of del-desiran facilitates efficient delivery of del-desiran to skeletal and cardiac muscle cells. Once inside the muscle cells, the siRNA component of del-desiran, siDMPK.19, acts to reduce levels of DMPK mRNA in both the nucleus and the cytoplasm; • Reproducible and scalable therapeutic—As with all our AOCs, del-desiran is readily synthesized using well- established and scalable methods for manufacturing mAbs and oligonucleotides. Global Phase 3 HARBOR and HARBOR-OLE Trials In July 2025, we announced the Phase 3 HARBOR trial is fully enrolled with a total of 159 participants enrolled. In January, 2026, we submitted to the FDA a protocol amendment for the HARBOR trial, which amendment will move the data cutoff date and related items from 30 weeks to 54 weeks. This change is a significant opportunity for patients and the HCP community as it will demonstrate the long-term efficacy and safety benefits of del-desiran. We believe that a larger safety database and longer efficacy data at 54 weeks will increase the likelihood of demonstrating a treatment effect in a slowly progressing disease on multiple endpoints Del-desiran is currently being studied in the global Phase 3 HARBOR™ trial and ongoing HARBOR-OLE™ trial in people living with DM1. The Phase 2 MARINA-OLE™ trial has concluded. As of October 2025, participants who completed the MARINA-OLE trial and provided their consent, have transitioned to the HARBOR-OLE trial. Prior to initiation of the HARBOR trial, Avidity aligned with global regulators, including the FDA, on the registrational path for del-desiran. The global Phase 3 HARBOR trial is a randomized, placebo-controlled, double-blind pivotal study evaluating del-desiran in 159 people (age 16 to 65 years) living with DM1. The trial is being conducted at 34 sites globally. Patients are administered either del- desiran or placebo (1:1) every eight weeks. The trial is designed to assess the multiple key functional aspects of DM1. The primary endpoint is vHOT, a measurement of myotonia, which is the hallmark symptom of DM1. Key secondary endpoints include muscle strength as measured by hand grip strength and quantitative muscle testing (QMT) total score, and activities of daily living as measured by DM1-Activ, a patient reported outcome (PRO) scale to assess the impact of del-desiran on the multi-systemic nature of the DM1 disease. All study participants, 7
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Table of Contents regardless of whether they receive active treatment or placebo, have the option to enroll into the HARBOR-OLE trial where all patients will receive active drug administered every eight weeks. The HARBOR-OLE trial is designed to assess the long-term safety, tolerability, and efficacy of del-desiran for the treatment of DM1. Del-brax for the Treatment of FSHD We are developing del-brax to treat the underlying cause of FSHD, one of the most common forms of muscular dystrophy. FSHD is a genetic muscle disorder in which the muscles of the face, shoulder blades, and upper arms are among the most affected. Symptoms usually begin before age 20, with weakness and atrophy of the muscles around the eyes and mouth, shoulders, abdominal muscles, upper arms, and lower legs, usually with asymmetric involvement. FSHD is caused by the aberrant expression, and subsequent translation, of a gene called double homeobox 4, or DUX4, which leads to cell death, immune response and oxidative stress. Our therapeutic strategy in FSHD employs an AOC based on our proprietary mAb that targets TfR1 to deliver an siRNA targeted to DUX4 mRNA. By directly targeting DUX4 RNA in the muscle, leading to destruction of the DUX4 transcripts, we can reduce the downstream effects including cell death and oxidative stress. There are no currently approved treatments for people living with FSHD and a significant unmet need remains. The FDA and European Commission have granted Orphan Designation for del-brax. The FDA also granted Fast Track designation to del-brax for the treatment of FSHD. Disease Overview FSHD is characterized by progressive and often asymmetric skeletal muscle loss that initially causes weakness in muscles in the face, shoulders, arms and trunk and progresses to weakness in muscles in lower body. FSHD is an autosomal dominant disease caused by the aberrant expression of the DUX4 gene in the skeletal muscle, which activates genes that are toxic to muscle cells and leads to a series of downstream events that result in skeletal muscle wasting and compromised muscle function. Skeletal muscle weakness results in physical limitations throughout the whole body, including an inability to lift arms for more than a few seconds, loss of ability to show facial expressions and serious speech impediments. These symptoms cause many people affected by FSHD to become dependent on the use of a wheelchair for mobility. FSHD affects both sexes equally, with onset typically in teenage and young adult years. The FSHD Society estimated FSHD affects approximately one in 20,000 people in the United States. A recent study conducted in the Netherlands reported a more frequent prevalence of one in 8,333 people. We estimate that the FSHD patient population is between 45,000–87,000 in the United States and Europe. As is typical in diseases with no approved therapies, we believe that these patient population estimates are conservative. Current Treatment Landscape and Limitations Currently there is no treatment for FSHD, and there are no therapies to treat the underlying cause of FSHD. Current approaches are focused on support for activities of daily living and mobility, improved functioning and lowering the risk of complications. They include physical therapy, exercise, pain management and orthopedic interventions. Our Solution Del-brax consists of our proprietary mAb that is designed to bind to TfR1 conjugated with an siRNA targeted to DUX4 mRNA to be administered as an intravenous infusion. We believe that data shown with del- 8
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Table of Contents brax to date supports our belief that infrequent administration of del-brax can target the root cause of FSHD in relevant muscle tissues. We believe that the following specific characteristics of del-brax position it to have advantages over historical and current efforts to develop an effective therapy for people with FSHD: ▪ Addresses the underlying cause of the disease—del-brax is designed to reduce the expression of the DUX4 mRNA, thereby reducing the expression of the DUX4 protein resulting in reduced expression of the downstream genes that are believed to cause FSHD. We believe these downstream genes can be used as biomarkers to assess the disease state and therapeutic activity. ▪ Efficient delivery of drug substance to diseased cells— The TfR1 antibody component of the AOC is designed to facilitate efficient delivery to skeletal and cardiac muscle cells, an advantage over other companies' previous unsuccessful efforts to deliver an unconjugated oligonucleotide into muscle cells. Once inside the muscle cells, the siRNA component of del-brax, siDUX4, acts to reduce levels of DUX4 mRNA. ▪ Reproducible and scalable therapeutic—As with all our AOCs, del-brax is readily synthesized using well-established and scalable methods for manufacturing mAbs and oligonucleotides. Del-brax is currently being studied in the potentially registrational, fully enrolled Biomarker Cohort of the Phase 1/2 FORTITUDE trial, the Phase 2 FORTITUDE-OLE trial and the FORTITUDE-3 global confirmatory Phase 3 trial in participants living with FSHD. In June 2025, we announced multiple milestones for the del-brax program including FDA alignment on accelerated and full approval pathways for del-brax, and initiation of our global confirmatory Phase 3 FORTITUDE-3 study in FSHD. In addition, we shared positive topline Phase 1/2 FORTITUDE data from the del-brax dose escalation cohorts. Topline del-brax data, compared to placebo, demonstrated: • Consistent improvement of functional mobility and muscle strength as measured by 10-Meter Walk-Run Test (10MWRT), Timed Up and Go (TUG) and Quantitative Muscle Testing (QMT) • Consistent improvement in multiple measures of quality of life as measured by patient reported outcomes; • Rapid and significant reductions in levels of KHDC1L or cDUX, a DUX4-regulated circulating biomarker, and creatine kinase, a biomarker of muscle damage; and • Favorable long-term safety and tolerability with most adverse events (AEs) mild or moderate, with no related serious or severe adverse events and no discontinuations. In March 2025, we announced that enrollment was completed for the del-brax biomarker cohort with a total of 51 participants enrolled. Topline data from the FORTITUDE biomarker cohort is expected in the second quarter of 2026 and the FORTITUDE 3 data readout and global regulatory submissions are expected in 2028. FORTITUDE™ and FORTITUDE-OLE™ trials The FORTITUDE™ trial is a randomized, placebo-controlled, double-blind, Phase 1/2 clinical trial designed to evaluate single and multiple doses of del-brax in 90 participants with FSHD. The two dose escalation cohorts in FORTITUDE (N=39) evaluated the safety, tolerability, pharmacokinetics, and pharmacodynamics of del-brax administered intravenously. Though the Phase 1/2 trial is not statistically powered to assess functional benefit, it explores the clinical activity of del-brax including measures of functional mobility and muscle strength as well as patient reported outcomes and quality of life measures, as well as changes in in key biomarkers including KHDC1L or cDUX, a DUX4-regulated circulating biomarker. Two dose escalation cohorts evaluated 2 mg/kg or 4 mg/kg of del-brax every 13 weeks with a booster dose at 6 weeks in the first three months of the study versus placebo and informed the dose and dose regimen of del-brax for registrational studies. We have identified 2 mg/kg of del-brax every six weeks as the dose for the potentially registrational studies, FORTITUDE Biomarker Cohort and FORTITUDE-3 Phase 3 study. Participants who complete FORTITUDE have the option to enroll in the ongoing FORTITUDE-OLE study evaluating the long-term safety and tolerability of del-brax. 9
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Table of Contents FORTITUDE Biomarker Cohort The ongoing biomarker cohort in the FORTITUDE trial (N=51) assesses the impact of del-brax 2 mg/kg administered intravenously every six weeks versus placebo for 12 months in people living with FSHD, ages 16-70. The primary endpoint of the biomarker cohort is reduction of KHDC1L, or cDUX, a novel DUX4-regulated circulating biomarker discovered by Avidity in collaboration with Stephen Tapscott, M.D., Ph.D., Professor of Human Biology and Clinical Research at the Fred Hutchinson Cancer Center. We have aligned with the FDA on the use of cDUX as a surrogate endpoint to support a potential submission for accelerated approval of del-brax. Global Phase 3 FORTITUDE-3™ Study FORTITUDE-3™ is a global, confirmatory Phase 3, randomized, placebo-controlled, double-blind, 18-month study designed to evaluate del-brax in approximately 200 people (ages 16-70) living with FSHD. The trial is being conducted at approximately 45 global sites including in the U.S., Canada, Europe and Japan. Patients will be administered either 2 mg/kg of del-brax or placebo (1:1) intravenously every six weeks. The Phase 3 FORTITUDE-3 study is designed to be a confirmatory study to support potential full approval of del-brax. FORTITUDE-3 is assessing the impact of del-brax on key FSHD-related endpoints that measure functional mobility (10-Meter Walk-Run test, or 10 MWRT, and Timed Up and Go, or TUG), strength (quantitative muscle testing, or QMT, total score), patient-reported outcomes (PROs) and decrease in KHDC1L, or cDUX, a novel, DUX4-regulated circulating biomarker. All study participants, regardless of whether they receive active treatment or placebo, will have the option to enroll into an open-label extension trial where all participants will receive del-brax. Del-zota for the Treatment of DMD44 Del-zota is currently being studied for the treatment of people living with DMD44 and is the first of multiple AOCs we are developing for DMD. Del-zota is designed to deliver phosphorodiamidate morpholino oligomers, or PMOs, to skeletal muscle and heart tissue to specifically skip exon 44 of dystrophin mRNA to enable production of near full-length functional dystrophin. Del-zota is currently in Phase 2 development as part of the ongoing Phase 2 EXPLORE44-OLE™ study in people living with DMD44. The FDA and European Commission granted Orphan designation for del-zota. The FDA has granted del- zota Breakthrough Therapy designation, Rare Pediatric Disease designation and Fast Track designation. Disease Overview The dystrophin protein maintains the integrity of muscle fibers and acts as a shock absorber through its role as the foundation of a group of proteins that connects the inner and outer elements of muscle cells. DMD causes a lack of functional dystrophin that leads to stress and tears of muscle cell membranes, resulting in 10
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Table of Contents muscle cell death and the progressive loss of muscle function. People living with DMD suffer from progressive muscle weakness that typically starts at a very young age. Over time, people with DMD will develop problems walking and breathing, and eventually, the heart and respiratory muscles will stop working. Creatine kinase, or CK, levels are often used as a serum measure of acute muscle damage and tracked in DMD patients over time to assess the potential benefit of treatments in development. Those living with the condition often require special aid and assistance throughout their lives and have significantly shortened life expectancy. While there are treatments approved to treat people with DMD, there remains a very high unmet need. DMD is a monogenic, X-linked, recessive disease that primarily affects males, with one in 3,500 to 5,000 boys born worldwide having DMD. Our Duchenne Muscular Dystrophy (DMD) Programs We are developing AOCs to treat the underlying cause of DMD and restore dystrophin levels. The oligonucleotides in our AOCs are designed to promote the skipping of specific exons to allow the production of near full-length dystrophin protein. Our most advanced DMD program, del-zota, is designed to treat people with mutations amenable to Exon 44 skipping (DMD44). Del-zota is in clinical development in the Phase 2 EXPLORE44-OLE study. Additionally, our ongoing preclinical development programs target additional mutations that are amenable to exon-skipping, including Exon 45. Current Treatment Landscape and Limitations Currently people with DMD are treated with corticosteroids to manage the inflammatory component of the disease. There is currently one approved gene therapy for certain DMD patients. Additionally, there are currently three approved unconjugated PMO-based oligonucleotide therapies, each addressing a specific mutation. These drugs require weekly intravenous infusions and have demonstrated mean increases in dystrophin of 1 to 6% in clinical trials. The FDA-approved labels for these drugs state that a clinical benefit has not yet been established and continued approval may be contingent upon the verification of such clinical benefit in confirmatory clinical trials. Additional approaches currently in clinical development include peptide-conjugated PMOs, or PPMOs, and other gene therapies. While there are therapies approved and multiple programs in clinical development for other exons, there are no exon-skipping therapies approved targeting Exon 44. Our Solution Our development efforts in DMD are focused on AOCs based on PMOs that can induce exon skipping for Exon 44 and additional exons, including Exon 45, conjugated to our proprietary mAb targeting TfR1. Del-zota is our lead program in development for DMD and targets Exon 44. Exon skipping produces a near full-length dystrophin protein which is believed to have better functional benefit than the significantly shorter version of dystrophin delivered via gene therapy. We believe that our AOCs have the potential to increase the production of dystrophin in people with DMD for two reasons. First, based on recent advances in the understanding of the splicing process and placement of skipping agents on pre-mRNA described in published literature, we have screened for and identified PMOs with optimized skipping activity. Second, the mAb targeting TfR1 allows for more efficient delivery to muscle cells, therefore allowing for better uptake of the PMO. In preclinical studies, we also observed that our TfR1-based AOCs induced exon skipping in cardiac muscle, which we believe may address some of the cardiomyopathies in people with DMD, a key complication of the disease. Based on their mechanism of action, we believe that our AOCs could have utility in several additional DMD mutations. Phase 1/2 EXPLORE44 Clinical Trial and EXPLORE44-OLE Study In September 2025, we reported positive topline and functional del-zota data from a total of 17 participants (12 ambulatory and 5 non-ambulatory) in the EXPLORE44 trial®. Participants treated continuously with del-zota for approximately one year began treatment in EXPLORE44 and continued into EXPLORE44-OLE™. Data demonstrated reversal of disease progression and unprecedented improvement compared to baseline and DMD44 natural history (Nat Hx) across multiple functional measures. Treated participants demonstrated statistically significant increases of approximately 25 percent of normal in dystrophin production and restored total dystrophin up to 58 percent of normal. Creatine kinase (CK) levels rapidly reduced by greater than 80 percent compared to baseline and were sustained at near normal levels throughout the duration of evaluation with participants followed for up to 16 months. Additionally, 50 percent of participants had CK levels within the normal range at one year of treatment. Given the study design, some participants received 5 mg/kg once every six weeks (Q6W) and some received 10 mg/kg once every eight weeks during EXPLORE44. All participants were transitioned to the 5 mg/ 11
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Table of Contents kg (Q6W) dosing schedule during EXPLORE44-OLE. Not all participants could complete all assessments. Functional data from these pooled dosing cohorts for del-zota-treated participants, compared to DMD44 natural history, demonstrated: • 4-Stair Climb (4SC): Improved from baseline by 2.1 seconds. In contrast, the natural history group declined from baseline by 2.7 seconds (DMD44 Nat Hx N=22; del-zota N=10). • 10-Meter Walk/Run Test (10mWRT): Improved from baseline by 0.7 seconds. In contrast, the natural history group declined from baseline by 1.5 seconds (DMD44 Nat Hx N=22; del-zota N=10). • Time to Rise from Floor (TTR): Improved from baseline by 3.2 seconds. In contrast, the natural history group declined from baseline by 1.6 seconds (DMD44 Nat Hx N=19; del-zota N=6). • North Star Ambulatory Assessment (NSAA): Remained stable. In contrast, the natural history group declined from baseline by 2.4 points (DMD44 Nat Hx N=20; del-zota N=10). • Performance of Upper Limb (PUL2): Improved from baseline by 1.5 points. In contrast, the natural history group declined from baseline by 0.7 points. Similar PUL improvements were seen in both ambulatory and non-ambulatory participants (DMD44 Nat Hx N=27; del-zota N=17). Safety and tolerability data were assessed from 39 participants in the ongoing EXPLORE44-OLE study, as of June 2025. Del-zota continued to demonstrate favorable long-term safety and tolerability results. Most treatment emergent adverse events (TEAEs) were mild or moderate with the most common TEAEs (occurring in greater than 3 participants) being upper respiratory tract symptoms, diarrhea, fall, back pain and headache. One participant discontinued from EXPLORE44-OLE following an event of hypersensitivity. In October 2025, we completed a positive pre-BLA meeting with the FDA and aligned on a clear path forward for a planned BLA submission for potential accelerated approval of del-zota. This BLA submission is planned for 2026. Our Discovery Programs Opportunities in Additional Neuromuscular Diseases, Cardiology and Immunology We are committed to the advancement and expansion of our pipeline with multiple research and development candidates to treat conditions in skeletal muscle, cardiology and immunology as part of our internal discovery efforts and our collaborations with Eli Lilly and Company, or Lilly, and Bristol-Myers Squibb Company, or BMS. We have expanded beyond rare neuromuscular disorders and opened up a new therapeutic field, precision cardiology, to address the root cause of genetic diseases of the heart. We are advancing our first two wholly-owned precision cardiology development candidates targeting rare genetic cardiomyopathies: AOC 1086 targeting PLN (phospholamban) cardiomyopathy and AOC 1072 targeting PRKAG2 (Protein Kinase AMP-activated non-catalytic subunit Gamma 2) syndrome. All of the preclinical programs have been engineered using our AOC platform technology. We are collaborating with Lilly for the discovery, development and commercialization of AOCs directed to up to six selected mRNA targets in immunology and other select indications outside of muscle. Through our research collaboration with BMS and our internal discovery efforts, our development activities target multiple cardiac-specific indications. We have multiple early stage research programs ongoing that look at other indications as well as new receptor and antibody pairs to target additional diseases, tissues and cell types with AOCs. Manufacturing We do not own or operate manufacturing facilities. We currently rely on third-party manufacturers and suppliers for the antibodies, oligonucleotides and linkers used to make our AOCs, and we expect to continue to do so to meet our preclinical, clinical and commercial activities. Our third-party manufacturers are required to manufacture our product candidates under current Good Manufacturing Practice, or cGMP, requirements and other applicable laws and regulations. We believe there are multiple sources for all of the materials required for the manufacture of our product candidates to supply our clinical trials and anticipated commercial requirements. In August 2025, we entered into a Manufacturing Services Agreement, or the MSA, with Lonza LTD and Lonza Sales LTD, or together Lonza, pursuant to which Lonza has agreed to manufacture for us drug substance and drug product for future commercial use, or together Product. Pursuant to the MSA, we will provide rolling 12
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Table of Contents forecasts to Lonza that reflect our future manufacturing requirements of Product. We are required to purchase Product in batches at specified prices per batch, subject to annual and other adjustments, in addition to paying for certain raw material and other costs. A portion of our rolling forecast will be considered a binding and non-cancellable commitment, and we have committed to purchase a minimum number of batches per year during the period from 2026 to 2028,or approximately $621.6 million of Product, subject to foreign currency changes, annual price increases, other adjustments, and payments for certain costs and net of the nonrefundable reservation fees. The MSA has a seven-year term ending on August 1, 2032. The MSA may be terminated by either party before its expiration (1) upon written notice if the other party has failed to remedy a material breach of any of its representations, warranties or other obligations under the Agreement within a specified period following receipt of written notice of such breach upon specified notice, (2) immediately in the event of a dissolution of the other party or the other party files for bankruptcy, reorganization, liquidation, administration or receivership proceedings, or (3) in the event a force majeure event occurs for a specified length of time. Competition The biotechnology and biopharmaceutical industries are characterized by rapid technological advancement, significant competition and an emphasis on intellectual property. We face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions. Any product candidates that we successfully develop and commercialize will compete with current therapies and new therapies that may become available in the future. There are currently no approved therapies treating the underlying cause of DM1. However, several products are in clinical development for DM1, including: DYN-101, an antibody fragment, or Fab, linked antisense oligonucleotide (ASO) that is being evaluated in a registration trial by Dyne Therapeutics; tideglusib, a GSK3-ß inhibitor in late-stage clinical development by AMO Pharma, Ltd. for the congenital phenotype of DM1; PGN-EDODM1, a peptide conjugated ASO by PepGen Inc. being evaluated in a Phase 2 trial initiating in Q1 2026; SRP-1003, another peptide conjugated ASO by Sarepta, in partnership with Arrowhead Pharmaceuticals, being evaluated in Phase 1/2 trials; VX-670, an EEV-conjugated PMO developed by Vertex Pharmaceuticals, Inc. in collaboration with Entrada Therapeutics, or Entrada, Inc. being evaluated in a Phase 1/2 clinical trial; SAR446268, an AAV-based gene therapy by Sanofi being evaluated in Phase 1/2 trials. Preclinical companies and assets are expanding as well, leveraging multiple mechanisms to treat DM1. We expect that the landscape will evolve as additional investigational therapies advance. There are currently no approved therapies to treat the underlying cause of FSHD. Products currently in development to treat FSHD include: RO7204239, a monoclonal antibody against latent myostatin, which is currently being evaluated in a Phase 2 clinical trial by F. Hoffmann-La Roche AG; ARO-DUX4, an investigational RNAi therapeutic by Arrowhead Pharmaceuticals which was out-licensed in November 2024 to Sarepta Therapeutics, Inc., is currently being evaluated outside the U.S. in a Phase 1/2a trial; EPI-321, a single dose, gene-modulating therapy designed to silence aberrant expression of DUX4, is currently being evaluated in a Phase 1/2 clinical trials by Epicrispr Biotechnologies, Inc.; Restem-L, an umbilical lining modified progenitor cell (UMPC) therapy, is currently being evaluated in a Phase 1/2a clinical trial by Restem, LLC. There is a growing number of companies in preclinical development pursuing different paths to treat FSHD, including, Dyne Therapeutics, Inc., miRecule, Inc./Sanofi S.A., Novartis, Armatus Bio, Inc./Solid Biosciences Inc., Altay Therapeutics, Inc., Vita Therapeutics, Inc., Modalis Therapeutics Corporation, OligomicsTx, Celularity Inc, and Souffle Therapeutics, Inc. We expect that the space will continue to evolve as additional investigational therapies advance. Currently, people with DMD are treated with corticosteroids to manage the inflammatory component of the disease. Deflazacort is an FDA approved corticosteroid marketed by PTC Therapeutics, Inc. Agamree is another approved corticosteroid marketed by Catalyst Pharmaceuticals, Inc. Duvyzat is an HDAC inhibitor from Italfarmaco S.p.A. Additionally, there are three FDA approved exon skipping drugs utilizing unconjugated PMOs marketed by Sarepta Therapeutics, Inc.: EXONDYS 51 (Eteplirsen) for people with DMD amenable to skipping Exon 51; VYONDYS 53 (golodirsen) for people with DMD amenable to Exon 53 skipping; and AMONDYS 45 (casimersen) for people with DMD amenable to skipping Exon 45. There is an FDA approved exon skipping drug marketed by Nippon Shinyaku Co., Inc.: VILTEPSO (viltolarsen), an unconjugated PMO approved for people with DMD amenable to Exon 53 skipping. We are developing treatments for DMD that target dystrophin mechanisms. Other companies pursuing a similar mechanism include Dyne Therapeutics with DYNE- 251, a PMO conjugated to a Fab currently being evaluated in a Phase 1/2 clinical trial for patients amendable to Exon 13
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Table of Contents 51 skipping; Wave Life Sciences, Ltd. with WVE-N531, an unconjugated PN-modified exon-skipping oligonucleotide currently being evaluated in a Phase 1/2 clinical trial for patients amenable to Exon 53 skipping; and PTC Therapeutics with ataluren, a small molecule targeting nonsense mutations in a Phase 3 clinical trial. While there are multiple programs in development for people with DMD amenable to skipping Exon 51 or 53, there are very few targeting Exon 44. NS Pharma, Inc. is running a Phase 2 trial with NS-089/NCNP-02 in people amenable to Exon 44 skipping in the US. In December 2022, Entrada’s program ENTR-601-44 is in a Phase 1 study outside of the U.S. Companies are also approaching DMD with viral-vector based gene therapy programs that are a one-time treatment versus oligonucleotide-based exon skipping chronic treatments. There is one approved gene therapy for the delivery of microdystrophin mRNA, marketed as ELEVIDYS by Sarepta Therapeutics, Inc., fully approved for ambulatory DMD patients above the age of three. Several other companies are developing microdystrophin-based gene therapies, including REGENEXBIO Inc. (RGX-202), Solid Biosciences Inc. (SGT- 003), and Genethon (GNT-004). We are also aware of several companies targeting non-dystrophin mechanisms for the treatment of DMD. There is a growing number of companies in pursuing different paths to treat DMD, including Capricor Therapeutics, Inc., and we expect that the space will continue to evolve as additional candidates advance. We will also compete more generally with other companies developing alternative scientific and technological approaches, including other companies working to develop conjugates with oligonucleotides for skeletal and cardiac muscle delivery, including Alnylam Pharmaceuticals, Inc., Aro Biotherapeutics Company, Dyne Therapeutics, Ionis Pharmaceuticals, Inc., Sarepta Therapeutics, PepGen, PeptiDream Inc., Entrada and Bicycle Therapeutics plc, as well as gene therapy and CRISPR approaches. Many of our competitors, either alone or with strategic partners, have substantially greater financial, technical and human resources than we do. Accordingly, our competitors may be more successful than us in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining approval for treatments and achieving widespread market acceptance, which could render our product candidates, if approved, obsolete or non-competitive. Merger and acquisition activity in the biotechnology and biopharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. These companies also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials and acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our commercial opportunity could be substantially limited if our competitors develop and commercialize products that are more effective, safer, less toxic, more convenient or less expensive than our comparable products. In geographies that are critical to our commercial success, competitors may also obtain regulatory approvals before us, resulting in our competitors building a strong market position in advance of the entry of our products, if any. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of other drugs. The key competitive factors affecting the success of our programs are likely to be efficacy, safety, convenience, level of promotional activity, intellectual property protection and availability of reimbursement. Intellectual Property We strive to protect our product candidates and our AOC product platform through a variety of methods, including seeking and maintaining patents intended to cover our AOC product platform, our products and compositions, their methods of use and processes for their manufacture, and any other inventions that are commercially important to the development of our business. We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position. We also rely on trade secrets and know-how that may be important to the development of our business. We seek to obtain domestic and international patent protection and endeavor to promptly file patent applications for new commercially valuable inventions to expand our intellectual property portfolio. We believe that we have a significant global intellectual property position and substantial know-how relating to our AOC product candidates and our technology platform. As of December 31, 2025, the intellectual property portfolio consisted of 49 issued U.S. patents and 51 pending U.S. patent applications that we own or co-own. Collectively, these patent rights relate to various aspects of our AOC product candidates and technology platform. In addition, we have an exclusive license to certain patent rights from the University of Alberta and Fred Hutchinson Cancer Center. In addition to filing and prosecuting patent applications in the United States, we often file counterpart patent applications in additional countries and jurisdictions where we believe such foreign filing is likely to be beneficial, including Australia, Brazil, Canada, China, Europe, Hong 14
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Table of Contents Kong, Israel, Japan, Mexico, Singapore, New Zealand, Taiwan, and South Korea. We also file patent applications pursuant to the Patent Cooperation Treaty, or PCT. Our PCT patent applications are in the first phase of the PCT process, which is the international phase, in which patent protection is pending under a single patent application filed with the United States Patent and Trademark Office, or USPTO, as a contracting state of the PCT. These PCT patent applications have not yet entered the second phase of the PCT process, which is the national and regional phase, in which rights are continued by filing necessary documents with the patent offices of separate contracting states of the PCT. The national phase of the PCT patent application process occurs 30 months after the earliest priority date of the PCT patent application. We continually assess and refine our intellectual property strategy as we develop new product candidates and platform technologies. To that end, we are prepared to file additional patent applications in any appropriate fields if our intellectual property strategy requires such filings, or where we seek to adapt to competition or seize business opportunities. Further, we are prepared to file patent applications, as we consider appropriate under the circumstances, relating to the new technologies that we develop. We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may own or license in the future, nor can we be sure that any of our existing patents or any patents we may own or license in the future will be useful in protecting our technology. Please see “Risk Factors—Risks Related to Our Intellectual Property” for additional information on the risks associated with our intellectual property strategy and portfolio. Intellectual Property Relating to Del-Desiran (AOC 1001) With regard to del-desiran, as of December 31, 2025, we owned 9 issued U.S. patents, 5 pending U.S. patent applications, 14 granted foreign patents, and 30 pending patent applications in foreign jurisdictions, including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea. These patent rights relate to del-desiran composition of matter, formulations containing del-desiran, methods of manufacturing, and methods of treating diseases, using del-desiran. Any patents issued from these applications are expected to expire in 2038- 2041; however, a patent term extension may be available. Intellectual Property Relating to Del-Brax (AOC 1020) and Other FSHD AOC Product Candidates With regard to del-brax and other FSHD AOC product candidates, as of December 31, 2025, we owned or co-owned 9 issued U.S. patents, 6 pending U.S. patent applications, 3 granted foreign patent, 26 pending patent applications in foreign jurisdictions including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea, and two pending patent applications filed pursuant to the PCT. These patent rights relate to the del-brax and other FSHD AOC composition of matter, formulations containing del-brax and other the FSHD AOC, methods of manufacturing, and methods of treating diseases, using our FSHD AOC. Any patents issued from these applications are expected to expire in 2041-2046; however, a patent term extension may be available. We have one patent family licensed from Fred Hutchinson Cancer Center, which includes one issued U.S. patent, one pending U.S. patent application, one granted foreign patent, and one pending application in Europe. Intellectual Property Relating to Del-Zota (AOC 1044) and Other DMD AOC Product Candidates With regard to del-zota and other DMD AOC product candidates, as of December 31, 2025, we owned 8 issued U.S. patents, 14 pending U.S. patent applications, 7 granted foreign patents, 46 pending patent applications in various countries and regions including Australia, Canada, China, Europe, Hong Kong, Israel, Japan, Mexico, Singapore, Taiwan, New Zealand, and South Korea, and 3 pending patent application filed pursuant to the PCT. These patent rights relate to del-zota and other DMD AOCs composition of matter, formulations containing del-zota and other DMD AOCs, methods of manufacturing, and methods of treating diseases, using del-zota and other DMD AOCs. Any patents issued from these applications are expected to expire in 2038-2046; however, a patent term extension may be available. Intellectual Property Relating to AOC 1072 and Other PRKAG2 AOC Product Candidates With regard to AOC 1072 and other PRKAG2 AOC product candidates, as of December 31, 2025, we owned 1 issued U.S. patent, 2 pending U.S. patent applications, 1 pending foreign patent application, and 2 pending patent applications filed pursuant to the PCT. These patent rights relate to the AOC 1072 and other PRKAG2 AOC composition of matter, formulations containing AOC 1072 and other the PRKAG2 AOC, methods 15
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Table of Contents of manufacturing, and methods of treating diseases, using our PRKAG2 AOC. Any patents issued from these applications are expected to expire in 2044-2045; however, a patent term extension may be available. Intellectual Property Relating to AOC 1086 and Other PLN AOC Product Candidates With regard to AOC 1086 and other PLN AOC product candidates, as of December 31, 2025, we owned 1 issued U.S. patent, 2 pending U.S. patent applications, and 1 pending patent application filed pursuant to the PCT. These patent rights relate to the AOC 1086 and other PLN AOC composition of matter, formulations containing AOC 1086 and other the PLN AOC, methods of manufacturing, and methods of treating diseases, using our PLN AOC. Any patents issued from these applications are expected to expire in 2046; however, a patent term extension may be available. Intellectual Property Relating to Our AOC Product Platform As of December 31, 2025, we owned 40 families of U.S. and foreign patents and patent applications generally covering our AOC product platform. These families include 46 issued U.S. patents, 46 granted foreign patents, 51 pending U.S. patent applications, 11 pending PCT patent applications and 164 pending foreign patent applications in Europe, Australia, Brazil, Canada, China, Israel, Hong Kong, Japan, South Korea, Mexico, Singapore, New Zealand, and Taiwan, relating to key aspects and components of our AOC product platform systems. Our patent applications contain claims covering (i) proprietary antibodies; (ii) proprietary oligonucleotide chemical structures; (iii) proprietary oligonucleotide sequences; (iv) proprietary AOC structures; and (v) methods for manufacturing and using our AOC technologies. Some of these AOC platform cases generically cover our various product candidates. The issued U.S. patents and any U.S. patents issuing from our pending U.S. patent applications are expected to expire between 2037 and 2046. We have 1 patent family licensed from the University of Alberta, which includes 2 issued U.S. patents, 1 pending U.S. patent application, 5 granted foreign patents, and 6 pending applications in Europe, Canada, China, Japan, South Korea and Hong Kong. We also have 1 patent family licensed from GenAhead Bio Inc, which includes 2 pending U.S. applications, 4 granted foreign patents, and 3 pending foreign applications in Europe, China, and Japan. The term of individual patents depends upon the laws of the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the earliest date of filing of a non-provisional patent application. However, the term of United States patents may be extended for delays incurred due to compliance with the FDA requirements or by delays encountered during prosecution that are caused by the USPTO. For example, for drugs that are regulated by the FDA under the Hatch-Waxman Act, it is permitted to extend the term of a patent that covers such drug for up to five years beyond the normal expiration date of the patent. In the future, if and when our biopharmaceutical product candidates receive FDA approval, we expect to apply for patent term extensions on patents covering those product candidates. We intend to seek patent term extensions to any of our issued patents in any jurisdiction where these are available; however, there is no guarantee that the applicable authorities, including the USPTO and FDA, will agree with our assessment of whether such extensions should be granted, and even if granted, the length of such extensions. If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2037 to 2046, unless we receive patent term extension or patent term adjustment, or both. However, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. No consistent policy regarding the scope of claims allowable in patents in the field of oligonucleotide therapy has emerged in the United States. The patent situation outside of the United States is even more uncertain. Changes in the patent laws and rules, either by legislation, judicial decisions, or regulatory interpretation in the United States and other countries may diminish our ability to protect our inventions and enforce our intellectual property rights, and more generally could affect the value of our intellectual property. In particular, our ability to stop third parties from making, using, selling, offering to sell, importing or otherwise commercializing any of our patented inventions, either directly or indirectly, will depend in part on our success in obtaining, defending and enforcing patent claims that cover our technology, inventions, and improvements. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our platform and product candidates and the methods used 16
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Table of Contents to manufacture them. Moreover, our issued patents and those that may issue in the future may not guarantee us the right to practice our technology in relation to the commercialization of our platform’s product candidates. The area of patent and other intellectual property rights in biotechnology is an evolving one with many risks and uncertainties, and third parties may have blocking patents that could be used to prevent us from commercializing our AOC product platform and product candidates and practicing our proprietary technology. Our issued patents and those that may issue in the future may be challenged, narrowed, circumvented or invalidated, which could limit our ability to stop competitors from marketing related platforms or product candidates or limit the length of the term of patent protection that we may have for our AOC product platform and product candidates. In addition, the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies. For these reasons, we may have competition for our AOC product platform and product candidates. Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that before any product candidate can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent. For this and other risks related to our proprietary technology, inventions, improvements, platforms and product candidates, please see the section entitled “Risk Factors—Risks Related to Our Intellectual Property.” We have filed trademark applications for registration of the Avidity, Avidity Bioscience logo, AVIDITY ON POINT, AVIDITY ON POINT logo, CDUX, DEL-BRAX, DEL-DESIRAN, DEL-ZOTA, EXPLORE44, EXPLORE44 logo, EXPLORE44- OLE, EXPLORE44-OLE logo, FORLENVY, FORTITUDE, FORTITUDE logo, HARBOR, HARBOR logo mark, KITE logo, MARINA, MARINA logo, MARINA-OLE, MARINA-OLE logo, ON POINT, ON POINT logo, QAFORZO, SAFARI44, SAFARI44 logo, SPEDELVI, TRIANGLE logo, and ZOBILITY marks with the United States Patent and Trademark Office and certain foreign trademark offices. We also rely on trade secret protection for our confidential and proprietary information. Although we take steps to protect our confidential and proprietary information as trade secrets, including through contractual means with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. Thus, we may not be able to meaningfully protect our trade secrets. It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements under the commencement of employment or consulting relationships with us. These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees, the agreements provide that all inventions conceived by the individual, and which are related to our current or planned business or research and development or made during normal working hours, on our premises or using our equipment or proprietary information, are our exclusive property. In many cases our confidentiality and other agreements with consultants, outside scientific collaborators, sponsored researchers and other advisors require them to assign or grant us licenses to inventions they invent as a result of the work or services they render under such agreements or grant us an option to negotiate a license to use such inventions. Despite these efforts, we cannot provide any assurances that all such agreements have been duly executed, and any of these parties may breach the agreements and disclose our proprietary information, and we may not be able to obtain adequate remedies for such breaches. We also seek to preserve the integrity and confidentiality of our proprietary technology and processes by maintaining physical security of our premises and physical and electronic security of our information technology systems. Although we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. To the extent that our employees, contractors, consultants, collaborators and advisors use intellectual property owned by others in their work for us, disputes may arise as to the rights in relation to the resulting know-how or inventions. For more information, please see the section entitled “Risk Factors—Risks Related to Our Intellectual Property.” Research Collaboration with Bristol Myers Squibb In November 2023, we entered into (i) a Research Collaboration and License Agreement with BMS, or the BMS Collaboration Agreement, to expand on the research with MyoKardia for up to five targets utilizing our proprietary AOC platform technology and (ii) a Securities Purchase Agreement with BMS, or the BMS Purchase Agreement, for the purchase by BMS in a private placement of 5,075,304 shares of our common stock at a purchase price of $7.8813 per share, for an aggregate purchase price of approximately $40 million. We refer to 17
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Table of Contents the BMS Collaboration Agreement and the BMS Purchase Agreement together as the "BMS Agreements." Under the terms of the BMS Agreements, we received approximately $100 million upfront, which includes a $60 million cash payment under the terms of the BMS Collaboration Agreement, and approximately $40 million for the purchase of our common stock under the terms of the BMS Purchase Agreement. We are also eligible to receive up to approximately $1.35 billion in research and development milestone payments, up to approximately $825 million in commercial milestone payments, and tiered royalties from high single digits to low double-digits on net sales. We are responsible for our own research collaboration costs incurred under the agreement, subject to a cumulative spending limit of $40 million. BMS will fund all future clinical development, regulatory and commercialization activities coming from this collaboration. Research Collaboration with Lilly In April 2019, we entered into a research collaboration and license agreement, or the Lilly Agreement, with Lilly for the discovery, development and commercialization of antibody-oligonucleotide conjugate products, or Products, in immunology and other select indications on a worldwide basis. Under the Lilly Agreement, the parties will collaborate on preclinical research and discovery activities for Products and Lilly will be responsible for funding the cost of preclinical research and discovery activities of both parties for all Products. Lilly will lead the clinical development, regulatory approval and commercialization of all Products, at Lilly’s sole cost. Under the Lilly Agreement, we granted Lilly an exclusive, worldwide, royalty-bearing license under our technology to research, develop, manufacture, and sell Products directed to up to six mRNA targets. Lilly has the right to sublicense its rights under the Lilly Agreement subject to certain conditions. Lilly granted us a non-exclusive license under certain Lilly technology solely to conduct research under the Lilly Agreement. We retain the right to use our technology to perform our obligations under the Lilly Agreement and for all purposes not granted to Lilly. We agreed that we will not, ourselves or with a third party, research, develop, manufacture or commercialize or otherwise exploit any compound or product directed against targets subject to the collaboration. Lilly paid us an upfront license fee of $20.0 million, and we are eligible to receive up to $60.0 million in development milestone payments, up to $140.0 million in regulatory milestone payments and up to $205.0 million in commercialization milestone payments per target. In addition, Lilly is obligated to pay us a tiered royalty ranging from the mid-single to low- double digits on worldwide annual net sales of licensed Products, subject to specified and capped reductions for the market entry of biosimilar products, loss of patent coverage of licensed Products and for payments owed to third parties for additional rights necessary to commercialize licensed Products in the territory. Lilly’s royalty obligations and the Lilly Agreement will expire on a licensed Product-by-licensed Product and country-by-country basis on the later of ten years from the date of the first commercial sale or when there is no longer a valid patent claim covering such licensed Product in such country. Concurrently with the Lilly Agreement, we issued a convertible promissory note to Lilly, or the Lilly Note, and received cash proceeds of $15.0 million. The Lilly Note accrued simple interest of 8.0% per annum and converted into shares of our Series C convertible preferred stock in November 2019. Research Collaboration with MyoKardia, a wholly owned subsidiary of BMS In December 2020, we entered into a research collaboration, or the MyoKardia Agreement, with MyoKardia, a wholly- owned subsidiary of BMS, to demonstrate the potential utility of AOCs in cardiac tissue by leveraging MyoKardia’s genetic cardiomyopathy platform including, among other aspects, its novel target discovery engine and proprietary cardiac disease models. Under the terms of the MyoKardia Agreement, in July 2023, BMS as the successor in interest to MyoKardia, exercised its option to negotiate and enter into a license agreement covering AOCs that modulate the function of cardiovascular targets. The research collaboration with MyoKardia was terminated in November 2023 upon execution of the BMS Collaboration Agreement. Government Regulation Government authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing and export and import of products such as those we are developing. We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates. 18
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Table of Contents U.S. Biologics Regulation In the United States, biological products are subject to regulation under the federal Food, Drug and Cosmetic Act, or FDCA, the Public Health Service Act, or PHSA, and other federal, state, and local statutes and regulations. The process required by the FDA before a biological product may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in accordance with GLP regulations and other applicable regulations; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, or ethics committee at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, requirements to establish the safety, purity and potency of the proposed biologic for its intended use; • submission to the FDA of a biologics license application, or BLA, after completion of all pivotal trials; • satisfactory completion of an FDA advisory committee review, if applicable; • a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the biological product is produced to assess compliance with cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity, and potential inspection of selected clinical investigation sites and/or the trial sponsor to assess compliance with GCP; and • FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States. Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies, in an effort to support subsequent clinical testing. The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for certain studies. Prior to beginning the first clinical trial with a product candidate in the United States, the trial sponsor must submit an IND to the FDA. An IND is a request for allowance from the FDA to introduce an investigational drug into interstate commerce and administer the product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies. The IND also includes results of animal and in vitro studies assessing the toxicology, PK, pharmacology, and PD characteristics of the product candidate, chemistry, manufacturing, and controls information, and any available human data or literature to support the use of the product candidate. An IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns about ongoing or proposed clinical trials or non- compliance with specific FDA requirements, and the trials may not begin or continue until the FDA notifies the sponsor that the hold has been lifted or modified to allow such continuation. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial. Clinical trials involve the administration of the investigational product to human subjects under the supervision of one or more qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCP regulations, which, among other things, include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical trials must be conducted under protocols detailing, among other things, the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND as well as any subsequent protocol amendments. While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to 19
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Table of Contents humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure. Furthermore, an independent IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations. Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives. Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined: • Phase 1: The product candidate is initially introduced into healthy human volunteers or patients with the target disease or condition. These studies are designed to test for safety, dosage tolerance, absorption, metabolism, distribution and excretion and, if possible, to gain an early indication of its effectiveness. • Phase 2: The product candidate is administered to a limited patient population with a specified disease or condition to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and appropriate dosage. Multiple Phase 2 trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 trials. • Phase 3: The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy, and to further test for safety in an expanded patient population, generally at geographically dispersed clinical study sites. These clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide, if appropriate, an adequate basis for product approval and labeling. Post-approval trials, sometimes referred to as Phase 4 studies, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of a BLA. Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and biological characteristics of the product and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug. In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. There are also requirements governing the reporting of ongoing clinical trials and completed trial results to public registries. Sponsors of certain clinical trials of FDA-regulated products are required to register and disclose specified clinical trial information, which is publicly available at www.clinicaltrials.gov. Information related to the product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed until the new product or new indication being studied has been approved. BLA Review and Approval Process Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, including from preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of a BLA 20
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Table of Contents requesting approval to market the product for one or more indications. The submission of a BLA is subject to the payment of substantial user fees, unless a waiver or exemption applies. Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the FDA accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. Once a BLA has been accepted for filing, the FDA’s goal is to review standard applications within ten months after the filing date, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing. In both standard and priority reviews, the review process may also be extended for a three- month period by the FDA in response to new data or other information designated as a major amendment to the application. The FDA reviews a BLA to determine, among other things, whether a product is safe, pure and potent and the facility in which it is manufactured, processed, packed or held meets standards designed to assure the product’s continued safety, purity and potency. The FDA may also convene an advisory committee to provide clinical insight on application review questions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. Before approving a BLA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA may inspect one or more clinical trial sites as well as the trial sponsor to assure compliance with GCP requirements. After the FDA evaluates a BLA, it will issue an approval letter or a Complete Response Letter, or CRL. An approval letter authorizes commercial marketing of the biologic with prescribing information for specific indications. A CRL indicates that the review cycle of the application is complete and the application will not be approved in its present form. A CRL usually describes the specific deficiencies in the BLA identified by the FDA and may require additional clinical data, including additional clinical trials, or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing. If a CRL is issued, the sponsor must resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval. If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. In addition, the FDA may require a sponsor to conduct so-called Phase 4 clinical testing to further assess a biological product’s safety and effectiveness after BLA approval, and may require additional testing and surveillance programs to monitor the safety of approved products which have been commercialized. The FDA may also place other conditions on approval including the requirement for a risk evaluation and mitigation strategy, or REMS, to assure the safe use of the product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS. The FDA will not approve the BLA without an approved REMS, if required, which could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. In addition, the Pediatric Research Equity Act, or PREA, requires a sponsor to conduct pediatric clinical trials for most drugs, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original BLAs and supplements must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must evaluate the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric clinical trials begin. The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation. 21
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Table of Contents Expedited Development and Review Programs A sponsor may seek approval of its product candidate under programs designed to expedite FDA’s review and approval of biological products that meet certain criteria. The FDA has a Fast Track designation program that is intended to expedite or facilitate the process for reviewing product candidates that meet certain criteria. For example, product candidates are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a Fast Track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once a BLA is submitted, the application may be eligible for priority review. A Fast Track product candidate may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA. A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for Breakthrough Therapy designation to expedite its development and review. A product candidate can receive Breakthrough Therapy designation if preliminary clinical evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of FDA senior managers. Any product submitted to the FDA for approval, including a product candidate with a Fast Track designation or Breakthrough Therapy designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review. A product is eligible for priority review if it is designed to treat a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. The FDA will attempt to direct additional resources to the evaluation of an application for the product candidate designated for priority review in an effort to facilitate the review. For original BLAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (as compared to ten months under standard review). Additionally, depending on the design of the applicable clinical trials, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA will generally require the sponsor of a drug receiving accelerated approval to perform adequate and well-controlled confirmatory clinical trials to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit, and may require that such studies be underway before granting any accelerated approval. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. FDA may withdraw approval of a drug or indication approved under accelerated approval on an expedited basis if, for example, the sponsor fails to conduct the required confirmatory trial in a timely manner or if such confirmatory trial fails to verify the predicted clinical benefit of the product. Fast Track designation, priority review and Breakthrough Therapy designation do not change the standards for approval but may expedite the development or approval process. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Rare Pediatric Disease Designation and Priority Review Vouchers In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications. This program is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases. Specifically, under this 22
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Table of Contents program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product. The sponsor of a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application. The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the United States within one year following the date of approval. For purposes of this program, a “rare pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years; and (b) rare diseases or conditions within the meaning of the Orphan Drug Act. Congress has only authorized the Rare Pediatric Disease Priority Review Voucher program until September 30, 2029. Consequently, unless Congress reauthorizes the program, the sponsor of the marketing application for a drug that receives Rare Pediatric Disease Designation will only be eligible to receive a voucher if the FDA grants the designation on or before September 30, 2029. Post-Approval Requirements Any products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual program fees for any marketed products. Biologic manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose certain procedural and documentation requirements. Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks, or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • fines, warning letters, or untitled letters; • clinical holds on clinical studies; • refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals; • product seizure or detention, or refusal to permit the import or export of products; • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; • mandated modification of promotional materials and labeling and the issuance of corrective information; • the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or • injunctions or the imposition of civil or criminal penalties. In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of drug products. A company can make only those claims relating to safety and efficacy, purity and potency that are 23
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Table of Contents approved by the FDA and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by the manufacturer and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant Orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States or, if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan designation must be requested before submitting a BLA. After the FDA grants Orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. If a product that has Orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to Orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biologic for the same approved use or indication within such rare disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with Orphan exclusivity or inability to manufacture the product in sufficient quantities of the Orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same approved use or indication within the relevant rare disease or condition, or the same drug or biologic for any use or indication within a different rare disease or condition. Among the other benefits of Orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee. A designated Orphan drug may not receive Orphan drug exclusivity if it is approved for a use that is broader than the disease or condition for which it received Orphan designation. In addition, Orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with Orphan exclusivity within the relevant approved use or indication or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs relating to the approved use or indication for patients with the relevant rare disease or condition. Biosimilars and reference product exclusivity The Affordable Care Act, signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the 24
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Table of Contents safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. A biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of existing exclusivity protection or patent terms, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study. U.S. Healthcare Fraud and Abuse Laws and Compliance Requirements In addition to FDA regulation of pharmaceutical products, U.S. federal and state healthcare laws and regulations restrict business practices in the pharmaceutical industry. These laws may impact, among other things, our current and future business operations, including our clinical research activities, and constrain the business or financial arrangements and relationships with healthcare providers and other parties. These laws include anti-kickback and false claims laws, civil monetary penalties laws, and physician and other healthcare provider payment transparency laws. In addition to the federal laws summarized below, we may also be subject to similar state and local laws and regulations that may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves. The federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. The federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. The federal civil monetary penalties laws impose civil fines for, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies. The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other transfers of value made during the previous year to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care providers including, among others, physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held during the previous year by physicians as defined under statute and their immediate family members. Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, such as state anti-kickback and false claims laws, which may apply to business practices, including but 25
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Table of Contents not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; and state and local laws that require the registration of pharmaceutical sales representatives. Violation of any of such laws or any other applicable governmental regulations may result in significant criminal, civil and administrative penalties including damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non- compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations. U.S. Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any product candidate for which we may seek regulatory approval. Sales in the United States will depend, in part, on the availability of sufficient coverage and adequate reimbursement from third-party payors, which include government health programs such as Medicare, Medicaid, TRICARE and the Veterans Health Administration, as well as managed care organizations and private health insurers. Prices at which we or our customers seek reimbursement for our product candidates can be subject to challenge, reduction or denial by third-party payors. For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. The process for determining whether a third-party payor will provide coverage for a product is typically separate from the process for setting the reimbursement rate that the payor will pay for the product. In the United States, there is no uniform policy among payors for coverage or reimbursement. Decisions regarding whether to cover a product, the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies, but also have their own methods and approval processes. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that can require manufacturers to provide scientific and clinical support for the use of a product to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product that receives approval. Third-party payors may not consider our product candidates to be medically necessary or cost-effective compared to other available therapies, or the rebates required to secure favorable coverage may not yield an adequate margin over cost or may not enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development. Additionally, decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product. U.S. Healthcare Reform In the United States, there has been, and continues to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect the profitable sale of product candidates. Among policy makers and payors in the United States, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. For example, in March 2010, the Patient Protection 26
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Table of Contents and Affordable Care Act, or the ACA, was passed, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affected the pharmaceutical industry. ACA provisions of importance to our product candidates established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; expanded the entities eligible for enrollment in the 340B program; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Thus, the ACA will remain in force in its current form. In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. In addition, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, as of January 1, 2024. The rebate was previously capped at 100% of a drug’s average manufacturer price. Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for pharmaceutical products. The Inflation Reduction Act, or IRA, was enacted in 2022. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); redesigns the Medicare Part D benefit (beginning in 2024); and replaces the Part D coverage gap discount program with a new manufacturer discount program (beginning in 2025). CMS has published the negotiated prices for the initial ten drugs, which went into effect in January 2026, and the subsequent 15 drugs, which will first be effective in 2027. The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented, although the Medicare drug price negotiation program is currently subject to legal challenges. While the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant. The One Big Beautiful Bill Act, which was enacted in July 2025, imposes significant reductions in the funding of the Medicaid program. Such reductions are expected to decrease the number of persons enrolled in Medicaid and reduce the services covered by Medicaid, which could adversely affect our sales of any product candidate that we commercialize. The Trump administration is pursuing a two-fold strategy to reduce drug costs in the U.S. While it is unclear whether and how the Trump proposals will be implemented, the Trump policies are likely to have a negative impact on the pharmaceutical industry and on our ability to receive adequate revenues for any product candidates that we commercialize. On the one hand, President Trump has threatened to impose significant tariffs on pharmaceutical manufacturers that do not adopt pricing policies such as most favored nation pricing, which would tie the price for drugs in the U.S. to the lowest price in a group of other countries. In response, multiple manufacturers have entered into confidential pricing agreements with the federal government. On the other hand, the Trump administration is pursuing traditional regulatory pathways to impose drug pricing policies and published two proposed regulations in December 2025, referred to as Globe and Guard. If finalized, these 27
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Table of Contents regulations would implement mandatory payment models under which manufacturers of eligible drugs would be required to pay rebates to the federal government on a portion of the units of their drugs that are reimbursed by Medicare, with the rebate amount based on most favored nation pricing. Imposing a rebate in the U.S. that is based on drug prices outside the U.S. would mark a drastic and unprecedented shift in the U.S. pharmaceutical market, and while the impact of the Globe and Guard proposed regulations, if finalized, cannot yet be determined, it is likely to be significant. Even regulatory proposals or executive actions that are ultimately deemed unlawful could negatively impact the U.S. pharmaceutical sector and our business. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure, drug price reporting and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Some states have also enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states, and at least one state board is imposing an upper payment limit. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine which drugs and suppliers will be included in their healthcare programs Furthermore, there has been increased interest by third party payors and governmental authorities in reference pricing systems and publication of discounts and list prices. Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, or MA, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions. Although many of the issues discussed above with respect to the United States apply similarly in the context of the European Union, or EU, the approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others. Non-clinical Studies and Clinical Trials Similarly to the United States, the various phases of non-clinical and clinical research in EU are subject to significant regulatory controls. Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances. Non-clinical (pharmaco-toxicological) studies must be conducted in compliance with the principles of good laboratory practice, or GLP, as set forth in EU Directive 2004/10/EC (unless otherwise justified for certain particular medicinal products, e.g., radio-pharmaceutical precursors for radio-labeling purposes). In particular, non-clinical studies, both in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set of rules and criteria for a quality system for the organizational process and the conditions for non-clinical studies. These GLP standards reflect the Organization for Economic Co-operation and Development requirements. Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, or ICH, guidelines on Good Clinical Practices, or GCP, as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. If the sponsor of the clinical trial is not established within the EU, it must appoint an EU entity to act as its legal representative. The sponsor must take out a clinical trial insurance policy, and in most EU member states, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial. The regulatory landscape related to clinical trials in the EU has been subject to recent changes. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. Unlike directives, the CTR is directly applicable in all EU member states without the need for member states to further implement it into national law. The CTR notably harmonizes 28
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Table of Contents the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU portal and database. While the EU Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The CTA must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR transition period ended on January 31, 2025, and all clinical trials (and related applications) are now fully subject to the provisions of the CTR. Medicines used in clinical trials must be manufactured in accordance with Good Manufacturing Practice, or GMP. Other national and EU-wide regulatory requirements may also apply. Marketing Authorization To market a medicinal product in the EU, we must obtain separate regulatory approvals. More concretely, in the EU, medicinal product candidates can only be commercialized after obtaining a MA. To obtain regulatory approval of a product candidate under EU regulatory systems, we must submit a MA application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product. There are two types of MAs: • "Centralized MAs" are issued by the European Commission through the centralized procedure based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the EMA and are valid throughout the entire territory of the EU. The centralized procedure is mandatory for certain types of products, such as (i) biotechnology medicinal products, (ii) designated orphan medicinal products, (iii) advanced therapy medicinal products, and (iv) medicinal products containing a new active substance indicated for the treatment certain diseases, such as AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The centralized procedure is optional for products containing a new active substance not yet authorized in the EU, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU; and • "National MAs" are issued by the competent authorities of the EU member states, only cover their respective territory, and are available for product candidates not falling within the mandatory scope of the centralized procedure. Where a product has already been authorized for marketing in an EU member state, this national MA can be recognized in another member state through the mutual recognition procedure. If the product has not received a national MA in any member state at the time of application, it can be approved simultaneously in various member states through the decentralized procedure. Under the decentralized procedure, an identical dossier is submitted to the competent authorities of each of the member states in which the MA is sought, one of which is selected by the applicant as the reference member state. Under the centralized procedure, the maximum timeframe for the evaluation of an MAA by the EMA is 210 days, excluding clock stops. Under the above described procedures, before granting the MA, the EMA or the competent authorities of the EU member states make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy. Data and Marketing Exclusivity In the EU, new products authorized for marketing, or reference products, generally receive eight years of data exclusivity and an additional two years of market exclusivity upon MA. If granted, the data exclusivity period prevents generic or biosimilar applicants from relying on the pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar MA in the EU during a period of 29
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Table of Contents eight years from the date on which the reference product was first authorized in the EU. The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years have elapsed from the initial authorization of the reference product in the EU. The 10-year market exclusivity period can be extended to a maximum of 11 years if, during the first eight years of those 10 years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. However, there is no guarantee that a product will be considered by the EU's regulatory authorities to be a new chemical or biological entity, and products may not qualify for data exclusivity. There is a special regime for biosimilars, or biological medicinal products that are similar to a reference medicinal product but that do not meet the definition of a generic medicinal product, for example, because of differences in raw materials or manufacturing processes. For such products, the results of appropriate preclinical or clinical trials must be provided, and guidelines from the EMA detail the type of quantity of supplementary data to be provided for different types of biological product. There are no such guidelines for complex biological products, such as gene or cell therapy medicinal products, and so it is unlikely that biosimilars of those products will currently be approved in the EU. However, guidance from the EMA states that they will be considered in the future in light of the scientific knowledge and regulatory experience gained at the time. Orphan Medicinal Products The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States. A medicinal product can be designated as an orphan if its sponsor can establish that: (1) the product is intended for the diagnosis, prevention or treatment of a life threatening or chronically debilitating condition (2) either (a) such condition affects not more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from the orphan status, would not generate sufficient return in the EU to justify the necessary investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized for marketing in the EU or, if such method exists, the product will be of significant benefit to those affected by that condition. Orphan designation must be requested before submitting an MAA. An EU orphan designation entitles a party to incentives such as reduction of fees or fee waivers, protocol assistance, and access to the centralized procedure. Upon grant of a MA, orphan medicinal products are entitled to ten years of market exclusivity for the approved indication, which means that the competent authorities cannot accept another MAA, or grant a MA, or accept an application to extend a MA for a similar medicinal product for the same indication for a period of ten years. The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed pediatric investigation plan, or PIP. No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications. Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The orphan exclusivity period may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for which it received orphan designation, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity or where the prevalence of the condition has increased above the threshold. Additionally, MA may be granted to a similar product for the same indication at any time if (i) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; (ii) the applicant consents to a second orphan medicinal product application; or (iii) the applicant cannot supply enough orphan medicinal product. Pediatric Development In the EU, MAAs for new medicinal products have to include sponsor plans for the results of studies conducted in the pediatric population, in compliance with a pediatric investigation plan, or PIP, agreed with the EMA’s Pediatric Committee, or PDCO. The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the drug for which MA is being sought. The PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults. Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when these data are not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients. Once the MA is obtained in all EU member states and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection 30
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Table of Contents certificate extension (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity is granted. The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland. Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing approval, MA of medicinal products and marketing of such products, both before and after grant of the MA, manufacturing of pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements may result in administrative, civil or criminal penalties. These penalties could include delays or refusal to authorize the conduct of clinical trials, or to grant MA, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the MA, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties. Data Privacy and Security Laws We are subject to laws and regulations governing data privacy and security, including the protection of health-related and other personal information. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of health- related and other personal information could apply to our operations or the operations of our partners. In addition, certain state and non-U.S. laws, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act, or the CCPA, and the General Data Protection Regulation, or the GDPR, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. Data privacy and security laws, regulations, and related obligations are constantly evolving, may conflict with each other, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing, any of which could cause a significant disruption to our business. Human Capital As of February 13, 2026, we had 511 full-time employees, 111 of whom have a Ph.D. or M.D. degree. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, and incentivizing our management team and our employees and consultants. The principal purposes of our equity and cash incentive plans are to attract, retain and motivate personnel through the granting of stock-based and cash-based compensation awards, in order to align our interests and the interests of our stockholders with those of our employees and consultants. Corporate Information We were originally founded as a Delaware limited liability company on November 13, 2012, under the name Avidity NanoMedicines LLC. On June 4, 2016, we changed our name to Avidity Biosciences LLC, and on April 1, 2019, we converted into a Delaware corporation under the name Avidity Biosciences, Inc. Our principal executive offices are located at 3020 Callan Road, San Diego, California 92121, and our telephone number is (858) 401-7900. Available Information Our internet address is www.aviditybiosciences.com. Our investor relations website is located at https://aviditybiosciences.investorroom.com/home. We make available free of charge on our investor relations website under “SEC Filings” our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, our directors’ and officers’ Section 16 reports and any amendments to those reports as soon as reasonably practicable after filing such materials with, or furnishing them to, the SEC. They are also available for free on the SEC’s website at www.sec.gov. 31
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Table of Contents We use our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Investors should monitor such website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this Annual Report on Form 10-K. ITEM 1A. Risk Factors You should carefully consider the following risk factors, together with the other information contained in this annual report on Form 10-K, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to purchase or sell shares of our common stock. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition and growth prospects. If that were to happen, the trading price of our common stock could decline substantially. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. Summary of Risk Factors The principal risks and uncertainties affecting our business include the following: • We may not complete the pending transaction with Novartis within the timeframe we anticipate, or at all, which could have an adverse effect on our business, financial results, and/or operations. • The pendency of the Merger and Distribution could adversely affect our business, financial results and/or operations. • While the Merger Agreement is in effect, we are subject to restrictions on our business activities. • In certain instances, the Merger Agreement requires us to pay a termination fee to Novartis; we have incurred, and will continue to incur, costs as a result of the pending transaction with Novartis; and litigation may arise in connection with the pending transaction, which could be costly and divert management’s attention. • We have incurred, and will continue to incur, direct and indirect costs as a result of the pending transaction with Novartis. • Litigation has arisen in connection with the Merger or the Distribution, which could be costly and divert management’s attention and otherwise materially harm our business. • The Merger Agreement contains provisions that could discourage a potential competing acquirer of our company or could result in any competing proposal being at a lower price than it might otherwise be. • The value of SpinCo Common Stock may not be as anticipated, and if the Merger is consummated, our stockholders will not be able to participate in any further upside to the portion of our business acquired by Novartis. • We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future. We may never generate any product revenue or become profitable or, if we achieve profitability, we may not be able to sustain it. • We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development programs, commercialization efforts or other operations. • We have three product candidates in clinical development. All of our other development programs are in the preclinical or discovery stage. If we are unable to successfully develop, obtain regulatory approval for and ultimately commercialize product candidates, or experience significant delays in doing so, our business will be materially harmed. 32
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Table of Contents • Any difficulties or delays in the commencement or completion, or the termination or suspension, of our ongoing and planned clinical trials could result in increased costs to us, or delay or limit our ability to generate revenue and adversely affect our commercial prospects. • Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon a product candidate, limit the commercial profile of an approved label or result in other significant negative consequences that could severely harm our business, prospects, operating results and financial condition. • We may find it difficult to enroll patients in our clinical trials. If we encounter difficulties enrolling subjects in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. • Our product candidates are subject to extensive regulation and compliance, which is costly and time consuming, and such regulation may cause unanticipated delays or prevent the receipt of the approvals required to commercialize our product candidates. • We rely on third parties for the manufacture of our product candidates for preclinical and clinical development. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. • Interim, topline and preliminary data from our preclinical studies and clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. • Our approach to the discovery and development of product candidates based on our AOC platform is unproven, and we do not know whether we will be able to develop any products of commercial value, or if competing technological approaches will limit the commercial value of our product candidates or render our AOC platform obsolete. • Preclinical and clinical development involves a lengthy and expensive process with an uncertain outcome, and the results of preclinical studies and early clinical trials are not necessarily predictive of future results. Our product candidates may not have favorable results in clinical trials or receive regulatory approval on a timely basis, if at all. • We rely on third parties to conduct our preclinical studies and clinical trials, and these parties may not perform satisfactorily. • We face significant competition, and if our competitors develop technologies or product candidates more rapidly than we do or their technologies are more effective, our business and our ability to develop and successfully commercialize products may be adversely affected. • We may encounter difficulties in managing our growth and expanding our operations successfully. • Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to commercialize our product candidates and may affect the prices we may set. • Our success depends on our ability to protect our intellectual property and our proprietary technologies. • Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price. Risks Related to Our Pending Acquisition by Novartis We may not complete the pending transaction with Novartis within the timeframe we anticipate, or at all, which could have an adverse effect on our business, financial results, and/or operations. On October 25, 2025, we entered into the Merger Agreement with Novartis, pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub will merge with and into us, and we will survive as an indirect wholly owned subsidiary of Novartis. 33
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Table of Contents In connection with the Merger, we, SpinCo, and Parent entered into the Separation and Distribution Agreement, pursuant to which, on the terms and subject to the conditions set forth therein, prior to the Effective Time: (i) we will effect the Pre-Closing Reorganization and (ii) thereafter, we will either (a) complete the Distribution or (b) subject to Parent's written consent, consummate a Permitted Third Party Sale, subject to the terms and conditions specified in the Merger Agreement and the Separation and Distribution Agreement. Following completion of the Distribution, we will have no continuing ownership interest in SpinCo. The Distribution also includes certain assets of the Company that triggered a ROFN with an existing collaboration partner of ours that was notified concurrently with our announcement of our entry into the Merger Agreement. Consummation of the Merger is subject to (i) closing conditions related to the Distribution, including (a) the effectiveness of the registration statement on Form 10 filed with respect to the registration of the SpinCo Common Stock and the absence of any stop order or similar proceeding, and (b) completion of either the Distribution or, subject to Parent’s written consent, a Permitted Third Party Sale ; and (ii) other customary closing conditions, including, (a) the absence of certain legal restraints preventing or otherwise making illegal the consummation of the Merger, (b) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) having occurred since October 25, 2025, (c) the expiration or termination of any waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, including any extensions thereof, applicable to the Merger and, potentially, the applicable antitrust laws of specified other jurisdictions and (d) the adoption of the Merger Agreement and the Separation and Distribution Agreement by holders of the Company’s common stock representing at least a majority of the Company’s common stock outstanding. In addition, the Merger Agreement may be terminated under certain specified circumstances, including, but not limited to, by Novartis in the event we accept and enter into an agreement for the consummation of a transaction that our board of directors, or the Company Board, determines is a Superior Proposal (as defined in the Merger Agreement). In addition, consummation of the Distribution is subject to, among other things: (i) satisfaction of the conditions to closing set forth in the Merger Agreement (with certain exceptions); (ii) the absence of any judgment or law prohibiting or making illegal the consummation of the Distribution, the Pre-Closing Reorganization or the Merger; (iii) the license agreement entered into between the Company and SpinCo being in full force and effect; (iv) execution of a transition services agreement; and (v) completion of the Pre-Closing Reorganization. As a result, we cannot assure you that the transaction with Novartis will be completed, or that, if completed, it will be exactly on the terms set forth in the Merger Agreement as of its date or within the expected timeframe. If the Merger is not completed within the expected timeframe or at all, we may be subject to a number of material risks. The price of our common stock may decline to the extent that current market prices of our common stock reflect a market assumption that the Merger will be completed. We could be required to pay Novartis a termination fee of $450 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. The failure to complete the Merger also may result in negative publicity and negatively affect our relationship with our stockholders, employees, regulators, and other business partners. We may also be required to devote significant time and resources to litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement. The pendency of the Merger and Distribution could adversely affect our business, financial results and/or operations. Our efforts to complete the Merger and Distribution could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our results of operations and our business. Uncertainty as to whether the Merger or Distribution will be completed may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention or focus may be particularly challenging while the Merger and Distribution are pending because employees may experience uncertainty about their roles following consummation of both the Merger and Distribution. A substantial amount of our management’s and certain employees’ attention is being directed toward the completion of the Merger and Distribution and thus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our business and our relationship with collaborators, vendors, customers, regulators, and other business partners. For example, vendors, collaborators, and other counterparties may defer decisions concerning working with us, or seek to change existing business relationships with us. Changes to or 34
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Table of Contents termination of existing business relationships could adversely affect our results of operations and financial condition, as well as the market price of our common stock. The adverse effects of the pendency of the Merger could be exacerbated by any delays in completion of the Merger or Distribution, or the termination of the Merger Agreement. While the Merger Agreement is in effect, we are subject to restrictions on our business activities. While the Merger Agreement is in effect, subject to certain exceptions, including, among others, actions required by the Separation and Distribution Agreement, we are subject to restrictions on our business activities, generally requiring us to conduct our business in the ordinary course and consistent with past practice in all material respects, and subjecting us to a variety of specified restrictions absent Novartis’s prior consent. These limitations include, among other things, restrictions on our ability to acquire other businesses and assets, dispose of our assets, make investments, enter into certain contracts, repurchase or issue securities, pay dividends, make capital expenditures, take certain actions relating to intellectual property, amend our organizational documents, and incur indebtedness. These restrictions could prevent us from pursuing business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, and may, as a result, materially and adversely affect our business, results of operations and financial condition. In certain instances, the Merger Agreement requires us to pay a termination fee to Novartis, which could require us to use available cash that would have otherwise been available for general corporate purposes. Under the terms of the Merger Agreement, we may be required to pay Novartis a termination fee of $450 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement, including, but not limited to, in the event we accept and enter into an agreement for the consummation of a transaction which the Company Board determines is a Superior Proposal. If the Merger Agreement is terminated under such circumstances, the termination fee we would be required to pay under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes and other uses. For these and other reasons, termination of the Merger Agreement could materially and adversely affect our business operations and financial condition, which in turn would materially and adversely affect the price of our common stock. We have incurred, and will continue to incur, direct and indirect costs as a result of the pending transaction with Novartis. We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the pending transaction. We must pay substantially all of these costs and expenses whether or not the transaction is completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses. Litigation has arisen in connection with the Merger or the Distribution, which could be costly and divert management’s attention and otherwise materially harm our business. Lawsuits have been filed challenging aspects of the proposed Merger or Distribution or otherwise related to the Merger or the Distribution. Regardless of the outcome of any ongoing or future litigation related to the proposed Merger or Distribution, such litigation may be time-consuming and expensive and may distract our management from running the day-to- day operations of our business. The litigation costs and diversion of management’s attention and resources to address the claims and counterclaims in any litigation related to the proposed Merger or Distribution may materially adversely affect our business, financial condition and operating results. The outcome of any lawsuit filed or that may be filed challenging the Merger or Distribution is uncertain. If any lawsuit is successful in obtaining an order enjoining the Merger or Distribution, then the transactions may not be consummated within the expected time frame, or at all, and could result in substantial costs, including but not limited to, costs associated with the indemnification of our directors and officers. If the Merger or the Distribution is not consummated for any reason, litigation could be filed in connection with the failure to consummate the Merger or the Distribution. Any litigation related to the proposed Merger or the Distribution may result in negative publicity or an unfavorable impression of us, which could adversely affect the price of our 35
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Table of Contents common stock, impair our ability to recruit or retain employees, damage our relationships with our partners, or otherwise materially harm our operations and financial performance. The Merger Agreement contains provisions that could discourage a potential competing acquirer of our company or could result in any competing proposal being at a lower price than it might otherwise be. We are subject to certain restrictions on our ability to solicit alternative acquisition proposals from third parties, to provide information to third parties and to enter into or continue discussions or negotiations with third parties regarding alternative acquisition proposals, subject to customary exceptions. In addition, we may be required to pay Novartis a termination fee of $450 million under specific circumstances described in the Merger Agreement, including, but not limited to, in the event we accept and enter into an agreement for the consummation of a transaction which the Company Board determines is a Superior Proposal. These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of our company from considering or proposing such an acquisition, including, if the Merger Agreement is terminated prior to the consummation of the Merger, after such termination of the Merger Agreement, even if it were prepared to pay a purchase price per share higher than the purchase price per share proposed to be paid in the Merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in specified circumstances under the Merger Agreement, including, in certain circumstances, after a valid termination of the Merger Agreement in accordance with the terms thereof. The value of SpinCo Common Stock may not be as anticipated. Even if the distribution of SpinCo Common Stock is completed, the value of SpinCo Common Stock, if any, may not be equal to or greater than the value anticipated. SpinCo as an independent company will be subject to similar risks and uncertainties as those previously described by the Company with respect to its business in its filings with the SEC, including those relating to capital requirements, discovery and development of product candidates, regulatory review and approval and intellectual property matters. In addition, the value of SpinCo Common Stock could be lower than anticipated for a variety of reasons, including SpinCo’s limited operating history, the failure of SpinCo to develop any product candidates or operate and compete effectively as an independent company. SpinCo Common Stock may experience periods of extreme volatility. SpinCo will be smaller than the Company currently, with a narrower and less diversified business focus, and may be more vulnerable to changing market conditions. If the Merger is consummated, our stockholders will not be able to participate in any further upside to the portion of our business acquired by Novartis. If the Merger is consummated, each share of our common stock issued and outstanding immediately prior to the Effective Time (including any shares issued as a result of the exercise of any Company Warrants (as defined below) prior to the Effective Time, but excluding each share of our common stock (i) held in our treasury, (ii) owned by Parent or Merger Sub or any direct or indirect wholly owned subsidiary of Parent or us immediately prior to the Effective Time or (iii) held by any stockholder who is entitled to demand and has properly and validly demanded their statutory right of appraisal of such shares of our common stock in accordance with, and in compliance in all respects with, Section 262 of the General Corporation Law of the State of Delaware) will automatically be cancelled and converted into the right to receive an amount in cash equal to $72.00, without interest and subject to any applicable tax withholdings. In addition, holders of our common stock as of the Distribution Record Date will receive, at the Distribution Effective Time, shares of SpinCo Common Stock on a pro rata basis of one share of SpinCo Common Stock per ten shares of our common stock. As a result, even if the portion of our business acquired by Novartis performs well following the Merger, our current stockholders will not receive any additional consideration or benefit from any such future performance of the portion of our business acquired by Novartis. 36
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Table of Contents Risks Related to Our Limited Operating History, Financial Position and Capital Requirements We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future. We may never generate any product revenue or become profitable or, if we achieve profitability, we may not be able to sustain it. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are a clinical-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. We have three product candidates, del-desiran, del-brax and del-zota, in clinical development while all of our other development programs are in preclinical development or in the drug discovery stage. We commenced operations in 2012, and to date, we have focused primarily on organizing and staffing our company, business planning, raising capital, developing our proprietary AOC technology platform, identifying product candidates, establishing our intellectual property portfolio and conducting research and clinical and preclinical studies. Our approach to the discovery and development of product candidates based on our AOC platform is unproven, and we do not know whether we will be able to develop any product candidates that succeed in clinical development or products of commercial value. As an organization, we have not yet completed any clinical trials, obtained regulatory approvals, manufactured a commercial-scale product, or conducted sales and marketing activities necessary for successful product commercialization. Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing biopharmaceutical products. We have incurred significant operating losses since our inception. We do not have any products approved for sale and have not generated any product revenue since our inception. If our product candidates are not successfully developed and approved, we may never generate any significant revenue. Our net losses were $684.6 million, $322.3 million, and $212.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $1.6 billion. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. All of our product candidates will require additional development time and resources, which would be substantial, before we would be able to apply for or receive regulatory approvals and begin generating revenue from product sales. We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase as we continue our development of, seek regulatory approval for and potentially commercialize any of our product candidates. To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates, identifying lead product candidates, discovering additional product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. In addition, we have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical industry. Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Even 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 may have an adverse effect on the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product candidates or even continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment. We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development programs, commercialization efforts or other operations. The development of biopharmaceutical product candidates is capital-intensive. We expect our expenses to increase in connection with our ongoing activities, particularly as we conduct our ongoing and planned clinical trials and preclinical studies for our development programs and seek regulatory approval for our current product candidates and any future product candidates we may develop. If we obtain regulatory approval for any of our product candidates, we also expect to incur significant commercialization expenses related to 37
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Table of Contents product manufacturing, marketing, compliance, sales and distribution. Because the outcome of any preclinical study or clinical trial is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any commercialization efforts. We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operations for at least the next 12 months. We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we currently expect. Our operating plans and other demands on our cash resources may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other capital sources, including potentially additional collaborations, licenses and other similar arrangements. In addition, 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. For example, in August 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or the Sales Agent, under which we may, from time to time, sell shares of common stock having an aggregate offering price of up to $400.0 million through the Sales Agent. During 2025, we sold 5,646,583 shares of our common stock pursuant to the 2024 Sales Agreement and received net proceeds of $185.5 million, after deducting offering-related transaction costs and commissions. However, there can be no assurance that the Sales Agent will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that we deem appropriate. In addition, the 2024 Sales Agreement may be terminated by us or the Sales Agent at any time upon specified notice to the other party, or by the Sales Agent at any time in certain circumstances, including the occurrence of a material adverse change. 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. If the Merger is not completed, our future capital requirements will depend on many factors, including, but not limited to: • the type, number, scope, progress, expansions, results, costs and timing of, discovery, preclinical studies and clinical trials of our product candidates which we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for our product candidates and commercial manufacturing if any product candidate is approved; • the costs, timing and outcome of regulatory review of our product candidates; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our preclinical, clinical and compliance activities increase; • the timing and amount of the milestone or other payments made to us under our current or future research and collaboration agreements; • the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and • costs associated with any products or technologies that we may in-license or acquire. Identifying potential product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the 38
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Table of Contents necessary data or results required to obtain regulatory approval and commercialize our product candidates. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available in the immediate near term, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential additional collaborations, licenses and other similar arrangements. We do not have any committed external source of funds. 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 of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Any future 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, selling or licensing our assets, making capital expenditures, 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 future collaborations, licenses and other similar arrangements, we may have to relinquish valuable rights to our future revenue streams, research programs, product candidates or AOC platform, or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed or on terms acceptable to us, we would 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. Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates We have three product candidates in clinical development. All of our other development programs are in the preclinical or discovery stage. If we are unable to successfully develop, obtain regulatory approval for and ultimately commercialize product candidates, or experience significant delays in doing so, our business will be materially harmed. We have three product candidates in clinical development. All of our other development programs are in the preclinical or drug discovery stage. We have invested substantially all of our efforts in developing our AOC platform, identifying potential product candidates and conducting preclinical and clinical studies. We will need to progress our preclinical-stage candidates through IND-enabling studies and receive allowance from the FDA, or the equivalent regulatory authority in other countries, to proceed under an IND, or its equivalent, prior to initiating their clinical development. Our ability to generate product revenues, which we do not expect will occur in the immediate near term, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates. The success of our product candidates will depend on several factors, including the following: • successful completion of preclinical studies with favorable results, including those compliant with GLP, toxicology studies, biodistribution studies and minimum effective dose studies in animals; • allowance to proceed with clinical trials under INDs by the FDA, or under similar regulatory submissions by comparable foreign regulatory authorities for the conduct of clinical trials of our product candidates and our proposed design of future clinical trials; • successful enrollment in clinical trials and completion of clinical trials with favorable results; • demonstrating safety, purity, potency and efficacy of our product candidates to the satisfaction of applicable regulatory authorities; • receipt of marketing approvals from applicable regulatory authorities, including BLAs from the FDA, and maintaining such approvals; • making and managing arrangements with our third-party manufacturers for, or establishing, commercial manufacturing capabilities; 39
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Table of Contents • establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • establishing and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates, and defending these items, as required; • maintaining an acceptable safety profile of our products following approval; and • maintaining and growing an organization of people who can develop and commercialize our products and technology. If we are unable to develop, obtain regulatory approval for, or, if approved, successfully commercialize our product candidates, we may not be able to generate sufficient revenue to continue our business. Interim, topline and preliminary data from our clinical trials and preclinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. From time to time, we may publicly disclose preliminary or topline data from our clinical trials and preclinical studies, which is based on a preliminary analysis of then-available data as of certain data cutoff dates, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the preliminary or topline results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline and preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the data we previously published. As a result, topline and preliminary data should be viewed with caution until the final data are available. From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary, topline or interim data and final data could significantly harm our business prospects. Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and the value of our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our business. If the topline data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects and financial condition. Our approach to the discovery and development of product candidates based on our AOC platform is unproven, and we do not know whether we will be able to develop any products of commercial value, or if competing technological approaches will limit the commercial value of our product candidates or render our AOC platform obsolete. The success of our business depends primarily upon our ability to identify, develop and commercialize products based on our proprietary AOC platform, which leverages a novel and unproven approach. While we believe we have had favorable preclinical and early clinical study results based on our technology platform, we have not yet succeeded and may not succeed in producing final data demonstrating safety, purity or potency for any product candidates in clinical trials or in obtaining marketing approval thereafter. Our research methodology and novel approach to oligonucleotide based therapy may be unsuccessful in identifying additional product candidates, and any product candidates based on our technology platform may be shown to have harmful side 40
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Table of Contents effects or may have other characteristics that may necessitate additional clinical testing, or make the product candidates unmarketable or unlikely to receive marketing approval. We may also be unsuccessful in developing and demonstrating potential utility of our AOCs in cell types beyond the muscle, including under our Lilly Agreement for immunology and other select indications and under the BMS Collaboration Agreement for certain cardiovascular targets. Further, because all of our product candidates and development programs are based on our AOC platform, adverse developments with respect to one of our programs may have a significant adverse impact on the actual or perceived likelihood of success and value of our other programs. In addition, the biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies. Our future success will depend in part on our ability to maintain a competitive position with our AOC approach. If we fail to stay at the forefront of technological change in utilizing our AOC platform to create and develop product candidates, we may be unable to compete effectively. Our competitors may render our AOC approach obsolete, or limit the commercial value of our product candidates, by advances in existing technological approaches or the development of new or different approaches (including, for example, using different mAbs or transporter protein combinations with oligonucleotides than us), potentially eliminating the advantages in our drug discovery process that we believe we derive from our research approach and proprietary technologies. By contrast, adverse developments with respect to other companies that attempt to use a similar approach to our approach may adversely impact the actual or perceived value of our AOC platform and potential of our product candidates. If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect on our business and could potentially cause us to cease operations. Preclinical and clinical development involves a lengthy and expensive process with an uncertain outcome, and the results of preclinical studies and early clinical trials are not necessarily predictive of future results. Our product candidates may not have favorable results in clinical trials or receive regulatory approval on a timely basis, if at all. Preclinical and clinical development is expensive and can take many years to complete, and its outcome is inherently uncertain. We cannot guarantee that any preclinical studies or clinical trials will be conducted as planned or completed on schedule, if at all, and failure can occur at any time during the preclinical study or clinical trial process. For example, we may not be able to meet expected timeframes for data readouts. Despite promising preclinical or clinical results, any product candidate can unexpectedly fail at any stage of preclinical or clinical development. The historical failure rate for product candidates in our industry is high. The results from preclinical studies or clinical trials of a product candidate may not predict the results of later clinical trials of the product candidate, and interim, topline, or preliminary results of a clinical trial are not necessarily indicative of final results. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy characteristics despite having progressed through preclinical studies and early clinical trials. In particular, while we have conducted certain clinical trials and preclinical studies of del-desiran, del-brax and del-zota, and preclinical studies in other potential product candidates, we do not know whether these product candidates will perform in ongoing or future clinical trials as they have performed in these prior trials and studies. The positive results we have observed for our product candidates in preclinical animal models, and in certain cases, clinical studies, may not be predictive of our ongoing and future clinical trials in humans, including any late-stage or pivotal trials. Furthermore, for some indications that we are pursuing, there are no animal models of the human disease and therefore the animal models may not be predictive for human disease outcomes. It is not uncommon to observe results in clinical trials that are unexpected based on preclinical studies and early clinical trials, and many product candidates fail in clinical trials despite very promising early results. If unexpected observations or toxicities are observed in these studies, or in IND-enabling studies for any of our other development programs, this will delay clinical trials for such development programs. Moreover, preclinical and clinical data may be susceptible to varying interpretations and analyses. A number of companies in the biopharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies. For the foregoing reasons, we cannot be certain that our ongoing and planned preclinical studies and planned clinical trials will be successful. Any safety concerns observed in any of our preclinical studies or clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other indications, which could have a material adverse effect on our business, financial condition and results of operations. 41
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Table of Contents In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU has recently evolved. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the EU Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR transition period ended on January 31, 2025, and all clinical trials (and related applications) are now fully subject to the provisions of the CTR. Compliance with the CTR requirements by us and our third-party service providers, such as contract research organizations, or CROs, may impact our developments plans. Any difficulties or delays in the commencement or completion, or the termination or suspension, of our current or planned clinical trials could result in increased costs to us, or delay or limit our ability to generate revenue and adversely affect our commercial prospects. In order to obtain FDA approval to market a new drug we must demonstrate the safety, purity and potency (or efficacy) of our product candidates in humans to the satisfaction of the FDA. To meet these requirements, we will have to conduct adequate and well-controlled clinical trials. Clinical testing is expensive, time-consuming and subject to uncertainty. Before we can initiate clinical trials for a product candidate, we must submit the results of preclinical studies to the FDA or comparable foreign regulatory authorities along with other information, including information about product candidate chemistry, manufacturing and controls and our proposed clinical trial protocol, as part of an IND or similar regulatory filing required for authorization to proceed with clinical development. The FDA or comparable foreign regulatory authorities may require us to conduct additional preclinical studies for any product candidate before it allows us to initiate clinical trials under any IND or similar regulatory filing, which may lead to delays and increase the costs of our preclinical development programs. Moreover, even if these trials begin, issues may arise that could cause regulatory authorities to suspend or terminate such clinical trials. For example, the FDA placed a partial clinical hold on new participant enrollment in our Phase 1/2 MARINA clinical trial of del-desiran in adults with DM1 in response to a serious adverse event reported in a single participant in the 4mg/kg cohort of the MARINA study, which partial clinical hold was removed in October 2024. Any delays in the commencement or completion of our ongoing and planned clinical trials for our current and any future product candidates could significantly affect our product development timelines and product development costs. We do not know whether our planned trials will begin on time or if our ongoing or future clinical trials will be completed on schedule, if at all. The commencement, associated data readouts and completion of clinical trials can be delayed for a number of reasons, including delays related to: • obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design; • the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies; • any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining approval from one or more IRBs or ethics committees; • IRBs or ethics committees refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; • changes to clinical trial protocol; 42
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Table of Contents • clinical sites deviating from trial protocol or dropping out of a trial; • manufacturing sufficient quantities of product candidate for use in clinical trials; • subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow- up; • subjects choosing an alternative treatment for the indications for which we are developing our product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • occurrence of serious adverse events in trials of the same class of agents conducted by other companies; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • a facility manufacturing our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, GCP, or other regulatory requirements; • third-party contractors not performing data collection or analysis in a timely or accurate manner; or • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications. We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or comparable foreign regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial. Further, conducting clinical trials in foreign countries, as we currently do and plan to continue, presents additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks, including war, relevant to such foreign countries. If we experience delays in the completion of, or the termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed or eliminated. Moreover, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues. In addition, many of the factors that cause, or lead to, the termination or suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. We may make formulation or manufacturing changes to our product candidates, in which case we may need to conduct additional preclinical studies to bridge our modified product candidates to earlier 43
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Table of Contents versions. Any delays to our clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition and prospects significantly. We may find it difficult to enroll patients in our clinical trials. If we encounter difficulties enrolling subjects in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to identify and enroll a sufficient number of eligible patients to participate in these trials as may be required by the FDA or similar regulatory authorities outside the United States. Subject enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the risk that enrolled patients will not complete a clinical trial, our ability to recruit clinical trial investigators with the appropriate competencies and experience, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating as well as any product candidates under development. We will be required to identify and enroll a sufficient number of subjects for each of our clinical trials. Potential subjects for any planned clinical trials may not be adequately diagnosed or identified with the diseases which we are targeting or may not meet the entry criteria for such trials. We are initially developing product candidates targeting genetically defined, rare muscle disorders with limited patient pools from which to draw for clinical trials. Genetically defined diseases generally, including those for which our current product candidates are targeted, have low incidence and prevalence. We also may encounter difficulties in identifying and enrolling subjects with a stage of disease appropriate for our planned clinical trials and monitoring such subjects adequately during and after treatment. We may not be able to initiate or continue clinical trials if we are unable to locate a sufficient number of eligible subjects to participate in the clinical trials required by the FDA or comparable foreign regulatory authorities. In addition, the process of finding and diagnosing subjects may prove costly. The timing of our clinical trials depends, in part, on the speed at which we can recruit patients to participate in our trials, as well as completion of required follow-up periods. The eligibility criteria of our clinical trials, once established, will further limit the pool of available trial participants. If patients are unwilling to participate in our trials for any reason, including the existence of concurrent clinical trials for similar patient populations or the availability of approved therapies, or we otherwise have difficulty enrolling a sufficient number of patients, the timeline for recruiting subjects, conducting studies and obtaining regulatory approval of our product candidates may be delayed. Our inability to enroll a sufficient number of subjects for any of our ongoing or future clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our current and future clinical trials and, while we have entered and will enter into agreements governing their services, we have limited influence over their actual performance. We cannot assure you that our assumptions used in determining expected clinical trial timelines are correct or that we will not experience delays in enrollment, which would result in the delay of completion of such trials beyond our expected timelines. Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon a product candidate, limit the commercial profile of an approved label or result in other significant negative consequences that could severely harm our business, prospects, operating results and financial condition. As is the case with biopharmaceuticals generally, it is likely that there may be side effects and adverse events associated with our product candidates’ use. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Although other oligonucleotide therapeutics have received regulatory approval, our AOCs, which combine oligonucleotides with a mAb, are a novel approach to oligonucleotide therapies, which may present enhanced risk and uncertainty for our product candidates compared to more well-established classes of therapies, or oligonucleotide or mAb-based therapies on their own. Moreover, there have been only a limited number of clinical trials involving the 44
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Table of Contents use of oligonucleotide therapeutics or the proprietary technology used in our AOC platform. It is impossible to predict when or if any product candidates we may develop will prove safe in humans. Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly. Moreover, if our product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial prospects for the product candidate if approved. We may also be required to modify our study plans based on findings after we commence our clinical trials. Many compounds that initially showed promise in early-stage testing have later been found to cause side effects that prevented further development of the compound. In addition, regulatory authorities may draw different conclusions or require additional testing to confirm these determinations. It is possible that as we test our product candidates in larger, longer and more extensive clinical trials, or as the use of these product candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, may be reported by subjects. If such side effects become known later in development or upon approval, if any, such findings may harm our business, financial condition and prospects significantly. Patients treated with our products, if approved, may experience previously unreported adverse reactions, and it is possible that the FDA or other regulatory authorities may ask for additional safety data as a condition of, or in connection with, our efforts to obtain approval of our product candidates. If safety problems occur or are identified after our products, if any, reach the market, we may make the decision or be required by regulatory authorities to amend the labeling of our products, recall our products or even withdraw approval for our products. In addition, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such product, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw, suspend or limit approvals of such product, or seek an injunction against its manufacture or distribution; • we may be required to recall a product or change the way such product is administered to patients; • regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication; • we may be required to implement a REMS or create a medication guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way a product is distributed, conduct additional clinical trials or change the labeling of a product or be required to conduct additional post-marketing studies or surveillance; • we could be sued and held liable for harm caused to patients; • sales of the product may decrease significantly, or the product could become less competitive; and • our reputation may suffer. Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects. 45
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Table of Contents As an organization, we have never completed any pivotal clinical trials or submitted a BLA for regulatory approval and may be unable to do so for any of our product candidates. We are continuing to develop our product candidates and we will need to successfully complete our ongoing and planned early-stage clinical trials, and later-stage and pivotal clinical trials in order to obtain FDA or comparable foreign regulatory approval to market any of our product candidates, as well as complete IND-enabling studies for our preclinical product candidates. Carrying out clinical trials and the submission of a successful BLA is a complicated process. As an organization, we have not completed any pivotal clinical trials, have limited experience as a company in preparing, submitting and prosecuting regulatory filings and have not previously submitted a BLA or other comparable foreign regulatory submission for any product candidate. As interactions with the FDA may not be comprehensive, we cannot be certain how many clinical trials of any of our product candidates will be required or how such trials should be designed. Consequently, we may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that leads to regulatory submission and approval of any of our product candidates. We may require more time and incur greater costs than our competitors and may not succeed in obtaining regulatory approvals of product candidates that we develop. Failure to commence or complete, or delays in, our planned clinical trials, could prevent us from or delay us in submitting BLAs for and commercializing our product candidates. Our product candidates are subject to extensive regulation and compliance, which is costly and time consuming, and such regulation may cause unanticipated delays or prevent the receipt of the approvals required to commercialize our product candidates. The clinical development, manufacturing, labeling, packaging, storage, record-keeping, advertising, promotion, import, export, marketing, distribution and adverse event reporting, including the submission of safety and other information, of our product candidates are subject to extensive regulation by the FDA in the United States and by comparable foreign regulatory authorities in foreign markets. In the United States, we are not permitted to market our product candidates until we receive regulatory approval from the FDA. The process of obtaining regulatory approval is expensive, often takes many years following the commencement of clinical trials and can vary substantially based upon the type, complexity and novelty of the product candidates involved, as well as the target indications and patient population. Approval policies or regulations may change, and the FDA has substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed. Neither we nor any current or future collaborator is permitted to market any of our product candidates in the United States until we receive approval from the FDA. Prior to obtaining approval to commercialize a product candidate in the United States or abroad, we or our collaborators must demonstrate with substantial evidence from adequate and well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidates are safe, pure, potent or effective for their intended uses. Results from preclinical studies and clinical trials can be interpreted in different ways. Even if we believe the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and comparable foreign regulatory authorities. The FDA or comparable foreign regulatory authorities, as the case may be, may also require us to conduct additional preclinical studies or clinical trials for our product candidates either prior to or post-approval, or may object to elements of our clinical development program. The FDA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including: • such authorities may disagree with the design or implementation of our or our collaborators’ current or future clinical trials; • negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval; • serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States; 46
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Table of Contents • we or any of our current or future collaborators may be unable to demonstrate that a product candidate is safe and effective, and that product candidate’s clinical and other benefits outweigh its safety risks; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; • such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant restrictions on distribution and use; • such authorities may find deficiencies in the manufacturing processes, approval policies or facilities of our third- party manufacturers with which we or any of our current or future collaborators contract for clinical and commercial supplies; • regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval; or • such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission. With respect to foreign markets, approval procedures vary among countries and, in addition to the foregoing risks, may involve additional product testing, administrative review periods and agreements with pricing authorities. In addition, events raising questions about the safety of certain marketed biopharmaceuticals may result in increased cautiousness by the FDA and comparable foreign regulatory authorities in reviewing new drugs and biologics based on safety, efficacy or other regulatory considerations and may result in significant delays in obtaining regulatory approvals. Any delay in obtaining, or inability to obtain, applicable regulatory approvals could prevent us or any of our potential future collaborators from commercializing our product candidates. We may attempt to secure approval from the FDA through the use of the accelerated approval pathway for certain of our product candidates. If we are unable to obtain such approval, we may be required to conduct additional preclinical studies or clinical trials beyond those that we contemplate, which could increase the expense of obtaining, and delay the receipt of, necessary regulatory approvals. Even if we receive accelerated approval from the FDA, if our confirmatory trials do not verify clinical benefit, or if we do not comply with rigorous post-marketing requirements, the FDA may seek to withdraw any accelerated approval we have obtained. We currently plan to pursue an accelerated approval pathway in the United States with respect to del-brax and del- zota, and may in the future pursue accelerated approval for our one or more additional of our product candidates. Under the accelerated approval program, the FDA may grant accelerated approval to a product candidate designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over available therapies upon a determination that the product candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease, such as irreversible morbidity or mortality. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit. The accelerated approval pathway may be used in cases in which the advantage of a new biologic over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional confirmatory studies to verity and describe the biologic’s predicted clinical benefit. If such confirmatory studies fail to confirm the biologic’s clinical benefit or are not completed in a timely manner, the FDA may withdraw its approval of the drug on an expedited basis. In addition, 47
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Table of Contents the Food and Drug Omnibus Reform Act of 2022 provided FDA statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval. Under these provisions, the FDA may require a sponsor of a product seeking accelerated approval to have a confirmatory trial underway prior to such approval being granted. Prior to seeking accelerated approval for any of our product candidates, including del-brax and del-zota, we intend to continue seeking feedback from the FDA and will otherwise evaluate our ability to seek and receive accelerated approval. There can be no assurance that after our evaluation of the feedback and other factors we will decide to pursue or submit an BLA for accelerated approval or any other form of expedited development, review or approval. Furthermore, if we decide to submit an application for accelerated approval for our product candidates, there can be no assurance that such application will be accepted or that any expedited development, review or approval will be granted on a timely basis, or at all. The FDA or other comparable foreign regulatory authorities could also require us to conduct further studies prior to considering our application or granting approval of any type. A failure to obtain accelerated approval or any other form of expedited development, review or approval for our product candidate would result in a longer time period to commercialization of such product candidate, if any, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace. We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. Because we have limited financial and managerial resources, we focus on specific product candidates and specific indications. As a result, we may forgo or delay pursuit of opportunities with other product candidates that could have had greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaborations, licenses and other similar arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. We may not be able to obtain or maintain Orphan drug designations for any of our product candidates, and we may be unable to maintain the benefits associated with Orphan drug designation, including the potential for market exclusivity. Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs or biologics for relatively small patient populations as Orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a drug or biologic as an Orphan product if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population of greater than 200,000 individuals in the United States, but for which there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the EU, Orphan designation is granted by the European Commission based on a scientific opinion of the EMA Committee for Orphan Medicinal Products. A medicinal product may be designated as Orphan if its sponsor can establish that (i) the product is intended for the diagnosis, prevention or treatment of a life- threatening or chronically debilitating condition; (ii) either (a) such condition affects no more than 5 in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from Orphan status, would not generate sufficient return in the EU to justify investment; and (iii) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the medicinal product will be of significant benefit to those affected by the condition. We have received orphan drug designation in the United States and the European Union for each of del-desiran for the treatment of DM1, del-brax for the treatment of FSHD and del-zota for the treatment of DMD44, and we may seek Orphan drug designation for future product candidates. There can be no assurance that we will be able to maintain such designation or that the FDA or European Commission will grant Orphan designation for any additional indication for which we apply. In the United States, Orphan designation entitles a party to financial incentives such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers. In addition, if a product candidate that has Orphan designation subsequently receives the first FDA approval for the disease or condition for which 48
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Table of Contents it has such designation, the product is entitled to Orphan drug exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same product for the same approved use or indication within such disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with Orphan drug exclusivity within the relevant approved use or indication or where the manufacturer is unable to assure sufficient product quantity. The applicable exclusivity period is ten years in the EU, but such exclusivity period can be reduced to six years if, at the end of the fifth year, a product no longer meets the criteria for Orphan designation or if the product is sufficiently profitable that market exclusivity is no longer justified. Even if we obtain Orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same approved uses or indications within the same rare disease or condition. Even after an Orphan drug is approved, the FDA or comparable foreign regulatory authority can subsequently approve the same drug for the same approved use or indication within the applicable disease or condition if such regulatory authority concludes that the later drug is clinically superior because it is shown to be safer, more effective or makes a major contribution to patient care. Orphan drug exclusivity in the United States may also be lost if the FDA later determines that the initial request for designation was materially defective. In addition, Orphan drug exclusivity does not prevent the FDA from approving competing drugs containing different active ingredients for the same or similar indications or uses. In addition, if a subsequent drug is approved for marketing for the same or a similar approved use or indication within the same rare disease or condition as any of our product candidates that receive marketing approval, we may face increased competition and lose market share regardless of orphan drug exclusivity. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. Receipt of Breakthrough Therapy designation or Fast Track designation by the FDA for one or more of our product candidates may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval. We may seek Breakthrough Therapy or Fast Track designation for some of our product candidates. If a product candidate is intended for the treatment of a serious or life-threatening condition and clinical or preclinical data demonstrate the potential to address unmet medical needs for this condition, the sponsor may apply for Fast Track designation. The FDA has granted Fast Track designation to each of del-desiran for the treatment of DM1, del-brax for the treatment of FSHD and del-zota for the treatment of DMD44. The sponsor of a Fast Track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once a BLA is submitted, the application may be eligible for priority review if the relevant criteria are met. A Fast Track product candidate may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA. Breakthrough Therapy designation may be granted to a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs or biologics that have been designated as Breakthrough Therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. The designation also includes the same benefits as Fast Track designation, including eligibility for rolling review of a BLA. The FDA has granted Breakthrough Therapy designation to del-desiran for the treatment of DM1. Whether to grant Breakthrough Therapy or fast track designation is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for these designations, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of either of these designations for a product candidate, including the Fast Track designations granted to del-desiran, del-brax and del-zota, or Breakthrough Therapy designation granted to del-desiran, may not result in a faster development process, review or approval compared to product candidates considered for approval under conventional FDA review procedures and does not assure ultimate approval by the FDA. In addition, the FDA may later decide that the product candidate no longer meets the conditions for qualification and rescind granted designations. 49
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Table of Contents We have obtained Rare Pediatric Disease designation for del-zota for the treatment of DMD44. However, there is no guarantee that FDA approval of will result in issuance of a priority review voucher. In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications. This program is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases. Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” that meets certain criteria may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product. The sponsor of a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application. The FDA may also revoke any priority review voucher if the Rare Pediatric Disease drug for which the voucher was awarded is not marketed in the U.S. within one year following the date of approval. We have obtained Rare Pediatric Disease designation for del-zota for the treatment of DMD44. However, there is no guarantee that we will be able to obtain a priority review voucher, even if del-zota is approved by the FDA in the designated indication. For example, the FDA may determine that a BLA, even if ultimately approved, does not meet the eligibility criteria for a priority review voucher, including for the following reasons: • the product no longer meets the definition of a rare pediatric disease; • the product contains an active ingredient (including any ester or salt of the active ingredient) that has been previously approved in another marketing application; • the application does not rely on clinical data derived from studies examining a pediatric population and dosages of the drug intended for that population; or • the application is approved for a different adult indication than the rare pediatric disease for which the product is designated. Moreover, Congress included a sunset provision in the statute authorizing the rare pediatric disease priority review voucher program. Under the current statutory sunset provisions, FDA may only award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the product candidate, and that designation was granted by September 30, 2029, provided the relevant eligibility criteria are met. We are conducting certain of our clinical trials for our product candidates outside of the United States. However, the FDA and other foreign equivalents may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business. We are conducting clinical trials for our product candidates outside the United States. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to certain conditions imposed by the FDA. Where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will not approve the application on the basis of foreign data alone unless those data are applicable to the U.S. population and U.S. medical practice; the studies were performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. For studies that are conducted only at sites outside of the United States and not otherwise subject to an IND, the FDA requires the clinical trial to have been conducted in accordance with GCPs, and the FDA must be able to validate the data from the clinical trial through an on-site inspection if it deems such inspection necessary. For such studies not subject to an IND, the FDA generally does not provide advance comment on the clinical protocols for the studies, and therefore there is an additional potential risk that the FDA could determine that the study design or protocol for a non-U.S. clinical trial was inadequate, which could require us to conduct additional clinical trials. There can be no assurance the FDA will accept data from clinical trials conducted outside of the United States. If the FDA does not accept data from our clinical trials of our product candidates, it would likely result in the need for additional clinical trials, which would be costly and time consuming and delay or permanently halt our development of our product candidates. 50
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Table of Contents Conducting clinical trials outside the United States also exposes us to additional risks, including risks associated with: • additional foreign regulatory requirements; • foreign exchange fluctuations; • compliance with foreign manufacturing, customs, shipment and storage requirements; • cultural differences in medical practice and clinical research; and • diminished protection of intellectual property in some countries. Disruptions at the FDA and other government agencies caused by funding shortages, staffing limitations or policy changes could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business. The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, the FDA’s and foreign regulatory authorities' abilities to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s and foreign regulatory authorities' abilities to perform routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new drugs and biologics or modifications to approved drugs and biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, in recent years the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points. If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business. In addition, the current U.S. Presidential administration has issued certain policies and Executive Orders directed towards reducing the employee headcount and costs associated with U.S. administrative agencies, including the FDA, and it remains unclear the degree to which these efforts may limit or otherwise adversely affect the FDA’s ability to conduct routine activities. If a prolonged government shutdown occurs, or if funding shortages, staffing limitations or similar factors hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, such events could significantly impact the ability of the FDA or other such regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Risks Related to Our Reliance on Third Parties We rely on third parties to conduct our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, our development programs and our ability to seek or obtain regulatory approval for or commercialize our product candidates may be delayed. We are dependent on third parties to conduct our preclinical studies and clinical trials. Specifically, we have used and relied on, and intend to use and rely on, medical institutions, clinical investigators, CROs and consultants to conduct our preclinical studies and clinical trials in accordance with our clinical protocols and regulatory requirements. These CROs, investigators and other third parties play a significant role in the conduct and timing of these trials and subsequent collection and analysis of data. While we have and will have agreements governing the activities of our third-party contractors, we have limited influence over their actual performance. Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on our 51
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Table of Contents CROs and other third parties does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for all of our product candidates in clinical development. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs or trial sites fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. In addition, our clinical trials must be conducted with products produced under cGMP and similar foreign regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. There is no guarantee that any of our CROs, investigators or other third parties will devote adequate time and resources to such trials or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, or otherwise performs in a substandard manner, our clinical trials may be extended, delayed or terminated. In addition, many of the third parties with whom we contract may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other development activities that could harm our competitive position. In addition, principal investigators for our clinical trials are expected to serve as scientific advisors or consultants to us from time to time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA of any BLA we submit. Any such delay or rejection could prevent us from commercializing our product candidates. Similar risks may exist in foreign jurisdictions. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties on commercially reasonable terms or at all. Switching or adding additional CROs, investigators and other third parties involve additional cost and requires our management’s time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, investigators and other third parties, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects. We rely on third parties for the manufacture of our product candidates for preclinical and clinical development. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. We do not own or operate manufacturing facilities and have no plans to develop our own clinical or commercial-scale manufacturing capabilities. We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates and related raw materials for preclinical and clinical development, as well as for commercial manufacture if any of our product candidates receive marketing approval. The facilities used by third-party manufacturers to manufacture our product candidates must be approved by the FDA and any comparable foreign regulatory authority for the manufacture of our product candidates pursuant to inspections that will be conducted after we submit a BLA to the FDA or any comparable application to a foreign regulatory authority. We do not control the manufacturing process of, and are completely dependent on, third-party manufacturers for compliance with cGMP and similar foreign requirements for manufacture of products. If these third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or any comparable foreign regulatory authority, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. Our AOCs consist of a proprietary mAb conjugated with the oligonucleotide therapy. All of our mAbs are manufactured by starting with cells which are stored in a cell bank. We have multiple working cell banks and one master cell bank for our mAbs manufactured in accordance with cGMP and believe we would have adequate backup should any cell bank be lost in a catastrophic event. However, it is possible that we could lose multiple cell banks and have our manufacturing impacted by the need to replace the cell banks. In addition, we have no control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any comparable foreign regulatory authority does not approve these facilities for the manufacture of our 52
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Table of Contents product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products. Our or a third party’s failure to execute on our manufacturing requirements on commercially reasonable terms and in compliance with cGMP and similar foreign requirements could adversely affect our business in a number of ways, including: • an inability to initiate clinical trials of our product candidates under development; • delay in submitting regulatory applications, or receiving marketing approvals, for our product candidates; • subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities; • requirements to cease development or to recall batches of our product candidates; and • in the event of approval to market and commercialize our product candidates, an inability to meet commercial demands for our product candidates or any other future product candidates. In addition, we may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • failure of third-party manufacturers to comply with regulatory requirements and maintain quality assurance; • breach of the manufacturing agreement by the third party; • failure to manufacture our product according to our specifications; • failure to manufacture our product according to our schedule or at all; • misappropriation of our proprietary information, including our trade secrets and know-how; and • termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. Our product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us. Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval, and any related remedial measures may be costly or time consuming to implement. We do not currently have arrangements in place for redundant supply or a second source for all required raw materials used in the manufacture of our product candidates. If our existing or future third-party manufacturers cannot perform as agreed, we may be required to replace such manufacturers and we may be unable to replace them on a timely basis or at all. Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis. Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed. Because we currently rely on third parties to manufacture our product candidates and to perform quality testing, we must, at times, share our proprietary technology and confidential information, including trade secrets, with them. We seek to protect our proprietary technology, in part, by entering into confidentiality agreements, and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to 53
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Table of Contents beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are intentionally or inadvertently incorporated into the technology of others or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets and despite our efforts to protect our trade secrets, a competitor’s discovery of our proprietary technology and confidential information or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business, financial condition, results of operations and prospects. We are dependent on Lilly and BMS, as collaboration partners, for the development of certain targets. Under certain circumstances, Lilly or BMS may each unilaterally terminate its respective agreement with us for convenience, which could materially and adversely affect our business. In April 2019, we entered into the Lilly Agreement for the discovery, development and commercialization of AOCs directed against certain targets in immunology and other select indications, or the Lilly AOCs. Under the Lilly Agreement, Lilly will be solely responsible for funding the cost of preclinical research and discovery activities, clinical development, regulatory approval and commercialization for the Lilly AOCs. Lilly primarily controls the research and development activities, pursuant to the terms of the Lilly Agreement, and our lack of control over such activities could result in delays or other difficulties in the development and commercialization of the Lilly AOCs. Any dispute with Lilly may result in the delay or termination of the research, development or commercialization of the Lilly AOCs, and may result in costly litigation that diverts our management’s attention and resources away from our day-to-day activities and which may adversely affect our business, financial condition, results of operation and prospects. In November 2023, we entered into the BMS Collaboration Agreement for the development of up to five cardiovascular targets using our AOC platform, or the BMS AOCs. Under the BMS Collaboration Agreement, BMS will be solely responsible for funding all future clinical development, regulatory and commercialization activities for the BMS AOCs. Any dispute with BMS may result in the delay or termination of the research, development or commercialization of the BMS AOCs, either on an individual target basis or collectively, and may result in costly litigation that diverts our management's attention and resources away from our day-to-day activities and which may adversely affect our business, financial condition, results of operation and prospects. In addition, Lilly or BMS may unilaterally terminate the Lilly Agreement or the BMS Collaboration Agreement, respectively (including for convenience), and in either such event, we would be prevented from receiving any research and development funding, milestone payments, royalty payments and other benefits under the respective agreement. In addition, any decision by Lilly or BMS to terminate the Lilly Agreement or the BMS Collaboration Agreement, respectively, may negatively impact public perception of our AOC product candidates, which could adversely affect the market price of our common stock. We cannot provide any assurance with respect to the success of the collaborations with Lilly or BMS. Any of the foregoing events could have a materially adverse effect on our business, financial condition, results of operations and prospects. We may seek to enter into additional collaborations, licenses and other similar arrangements and may not be successful in doing so, and even if we are, we may relinquish valuable rights and may not realize the benefits of such relationships. We may seek to enter into additional collaborations, joint ventures, licenses and other similar arrangements for the development or commercialization of our product candidates, due to capital costs required to develop or commercialize the product candidate or manufacturing constraints. We may not be successful in our efforts to establish or maintain such collaborations for our product candidates because our research and development pipeline may be insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity. In addition, we face significant competition in seeking appropriate strategic partners, and the negotiation process can be time-consuming and complex. We may have to relinquish valuable rights to our future revenue streams, research programs, product candidates or AOC platform, or grant licenses on terms that may not be favorable to us, as part of any such arrangement, and such arrangements may restrict us from entering into additional agreements 54
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Table of Contents with other potential collaborators. We cannot be certain that, following a collaboration, license or strategic transaction, we will achieve an economic benefit that justifies such transaction. Even if we are successful in our efforts to establish such collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain or current or any future collaborations if, for example, the development or approval of a product candidate is delayed, the safety of a product candidate is questioned or the sales of an approved product candidate are unsatisfactory. In addition, collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our rights under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we do. Any termination of collaborations we enter into in the future, or any delay in entering into collaborations related to our product candidates, could delay the development and commercialization of our product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Commercialization of Our Product Candidates Even if we receive regulatory approval for any product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to labeling and other restrictions on marketing or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved. Following potential approval of any our product candidates, the FDA and foreign regulatory authorities may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly and time-consuming post-approval studies, post-market surveillance or clinical trials to monitor the safety and efficacy of the product. The FDA may also require a REMS as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our products will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs, GCP and similar foreign requirements for any clinical trials that we conduct post-approval. Later discovery of previously unknown problems with our products, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: • restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or voluntary or mandatory product recalls; • restrictions on product distribution or use, or requirements to conduct post-marketing studies or clinical trials; • fines, restitutions, disgorgement of profits or revenues, warning letters, untitled letters or holds on clinical trials; • refusal by the FDA or foreign regulatory authorities to approve pending applications or supplements to approved applications filed by us or suspension or revocation of approvals; • product seizure or detention, or refusal to permit the import or export of our products; and • injunctions or the imposition of civil or criminal penalties. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity. 55
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Table of Contents In addition, if any of our product candidates are approved, our product labeling, advertising and promotion will be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about drug products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling. If we receive marketing approval for a product candidate, physicians may nevertheless, in their independent medical judgment, prescribe it to their patients in a manner that is inconsistent with the approved label. The FDA does not regulate the behavior of physicians in their choice of treatments, but the FDA does restrict manufacturer’s communications on the subject of off-label use of their products. If we are found to have promoted such off- label uses, we may become subject to significant liability. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant sanctions. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. In addition, the FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We also cannot predict the likelihood, nature or extent of government If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action and we may not achieve or sustain profitability. Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated. The Affordable Care Act, or the ACA, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a “biosimilar” product may not be submitted to the FDA until four years following the date that the reference product was first approved by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing such company’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of their product. We believe that any of our product candidates approved as a biological product under a BLA should qualify for the 12- year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. The commercial success of our product candidates will depend upon the degree of market acceptance of such product candidates by physicians, patients, healthcare payors and others in the medical community. Our product candidates may not be commercially successful. Even if any of our product candidates receive regulatory approval, they may not gain market acceptance among physicians, patients, healthcare payors or the medical community. The commercial success of any of our current or future product candidates will depend significantly on the broad adoption and use of the resulting product by physicians and patients for approved indications. The degree of market acceptance of our products will depend on a number of factors, including: • demonstration of clinical efficacy and safety compared to other more-established products; • the indications for which our product candidates are approved; 56
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Table of Contents • the limitation of our targeted patient population and other limitations or warnings contained in any FDA-approved labeling; • acceptance of a new drug for the relevant indication by healthcare providers and their patients; • the pricing and cost-effectiveness of our products, as well as the cost of treatment with our products in relation to alternative treatments and therapies; • our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payors; • the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with our products in the absence of sufficient third-party coverage and adequate reimbursement; • any restrictions on the use of our products, and the prevalence and severity of any adverse effects; • potential product liability claims; • the timing of market introduction of our products as well as competitive drugs; • the effectiveness of our or any of our current or potential future collaborators’ sales and marketing strategies; and • unfavorable publicity relating to the product. If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors or patients, we may not generate sufficient revenue from that product and may not become or remain profitable. Our efforts to educate the medical community and third-party payors regarding the benefits of our products may require significant resources and may never be successful. The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off- label uses. If we are found or alleged to have improperly promoted off-label uses, we may become subject to significant liability. The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, as our product candidates would be, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. If we are found to have promoted such off-label uses, we may become subject to significant liability. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also required companies to enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the promotion of our product candidates, if approved, we could become subject to significant liability, which would materially adversely affect our business and financial condition. The successful commercialization of our product candidates, if approved, will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies. Failure to obtain or maintain coverage and adequate reimbursement for our products could limit our ability to market those products and decrease our ability to generate revenue. The availability of coverage and the adequacy of reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford prescription medications such as our product candidates, if approved. Our ability to achieve coverage and acceptable levels of reimbursement for our products by third-party payors will have an effect on our ability to successfully commercialize those products. Moreover, we are initially developing product candidates targeting rare muscle disorders with small patient populations. In order for products that are designed to treat smaller patient populations to be commercially viable, the reimbursement for such products must be higher, on a relative basis, to account for the lack of volume. Accordingly, we will need to implement a coverage and reimbursement strategy for any approved product candidate with a smaller patient population that accounts for the smaller potential market size. Even if we obtain coverage for a given product by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that 57
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Table of Contents patients find unacceptably high. For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. We cannot be sure that coverage and reimbursement in the United States, the EU or elsewhere will be available for any product that we may develop, and that any coverage will be adequate. Further, any reimbursement that may become available may be decreased or eliminated in the future. Third-party payors increasingly are challenging prices charged for biopharmaceutical products and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a third-party payor may consider our products as substitutable and only offer to reimburse patients for the less expensive product. Even if we are successful in demonstrating improved efficacy or improved convenience of administration with our products, pricing of existing drugs may limit the amount we will be able to charge for our products. These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our products and may not be able to obtain a satisfactory financial return on products that we may develop. There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs will be covered. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for our products. Obtaining and maintaining reimbursement status is time consuming, costly and uncertain. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs. However, no uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases at short notice, and we believe that changes in these rules and regulations are likely. Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost containment initiatives in Europe and other countries has and will continue to put pressure on the pricing and usage of our products. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our products. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our products. We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. 58
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Table of Contents We face significant competition, and if our competitors develop technologies or product candidates more rapidly than we do or their technologies are more effective, our business and our ability to develop and successfully commercialize products may be adversely affected. The biotechnology and biopharmaceutical industries are characterized by rapid advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates. Our competitors have developed, are developing or may develop products, product candidates and processes competitive with our product candidates. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may attempt to develop product candidates. In particular, there is intense competition amongst RNA targeted therapies. Our competitors include larger and better funded pharmaceutical, biopharmaceutical, biotechnological and therapeutics companies. Moreover, we may also compete with universities and other research institutions who may be active in the indications we are targeting and could be in direct competition with us. We also compete with these organizations to recruit management, scientists and clinical development personnel, which could negatively affect our level of expertise and our ability to execute our business plan. We will also face competition in establishing clinical trial sites, enrolling subjects for clinical trials and in identifying and in-licensing new product candidates. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our clinical trials may compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition could reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we may conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which could reduce the number of patients who are available for our clinical trials in such clinical trial site. We expect to face competition from existing products and products in development for each of our product candidates. There are currently no approved therapies to treat the underlying cause of DM1. Products currently in development to treat DM1 include: AMO-02, a GSK3-ß inhibitor in late-stage clinical development by AMO Pharma, Ltd. for the congenital phenotype of DM1; DYNE-101, an antibody fragment, or Fab, linked oligonucleotide that is being evaluated outside of the US in a Phase 1/2 clinical trial by Dyne Therapeutics Inc.; gene editing treatments in preclinical development by various companies collaborating with Vertex Pharmaceuticals, Inc., including Entrada Therapeutics, Inc.'s ENTR-701, an EEV-conjugated PMO. There is a growing number of companies in preclinical development pursuing different paths to treat DM1, including Design Therapeutics, Inc. and PepGen, Inc., and we expect that the space will continue to evolve as additional investigational therapies advance. There are currently no approved therapies to treat the underlying cause of FSHD. Products currently in development to treat FSHD include: RO7204239, a monoclonal antibody against latent myostatin, which is currently being evaluated in a Phase 2 clinical trial by F. Hoffmann-La Roche AG; ARO-DUX4, an investigational RNAi therapeutic by Arrowhead Pharmaceuticals which was out-licensed to Sarepta Therapeutics, Inc. in November 2024, is currently being evaluated outside the U.S. in a Phase 1/2a trial. There is a growing number of companies in preclinical development pursuing different paths to treat FSHD, including, Dyne Therapeutics, miRecule, Inc./Sanofi S.A., Kate Therapeutics/Novartis, Armatus Bio/Solid Bio, and Celularity. We expect that the space will continue to evolve as additional investigational therapies advance. Currently people with DMD are treated with corticosteroids to manage the inflammatory component of the disease. Deflazacort is an FDA approved corticosteroid marketed by PTC Therapeutics, Inc. Agameee is another approved corticosteroid marketed by Catalyst. Duvyzat is an HDAC inhibitor from Italfarmaco. In addition, there are three FDA approved exon skipping drugs utilizing unconjugated PMOs marketed by Sarepta Therapeutics, Inc.: EXONDYS 51 (Eteplirsen) for people with DMD amenable to Exon 51 skipping; VYONDYS 53 (golodirsen) for people with DMD amenable to Exon 53 skipping; and AMONDYS 45 (casimersen) for people with DMD amenable to Exon 45 skipping. There is an FDA approved exon skipping drug marketed by Nippon Shinyaku Co., Inc.: VILTEPSO (viltolarsen), an unconjugated PMO approved for people with DMD amenable to skipping Exon 53. We are developing treatments for DMD that target dystrophin mechanisms. Other companies pursuing a similar mechanism include Dyne Therapeutics with DYNE-251, a PMO conjugated to a Fab currently being evaluated in a Phase 1/2 clinical trial for patients amendable to Exon 51 skipping; Wave Life Sciences, Ltd. with WVE-N531, an unconjugated PN-modified exon-skipping oligonucleotide currently being evaluated in a Phase 1/2 clinical trial for patients amenable to Exon 53 skipping; PepGen with PGN-EDO51, a peptide- 59
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Table of Contents conjugated oligonucleotide for patients amenable to Exon 51 skipping being evaluated in a Phase 2 clinical trial; and PTC Therapeutics with ataluren, a small molecule targeting nonsense mutations in a Phase 3 clinical trial. While there are multiple programs in development for people with DMD amenable to skipping Exon 51 or 53, there are very few targeting Exon 44. NS Pharma, Inc. is running a Phase 2 trial with NS-089/NCNP-02 in people amenable to Exon 44 skipping in the US. In December 2022, Entrada’s program ENTR-601-44 was placed on a clinical hold prior to initiating Phase 1 development but has been evaluated in a Phase 1 study outside of the U.S. Companies are also approaching DMD with viral-vector based gene therapy programs that are a one-time treatment versus oligonucleotide-based exon skipping chronic treatments. There is one approved gene therapy for the delivery of microdystrophin mRNA, marketed as ELEVIDYS by Sarepta Therapeutics, Inc., fully approved for ambulatory DMD patients above the age of three and has received accelerated approval for non- ambulatory DMD patients above the age of three. Several other companies are developing microdystrophin-based gene therapies, including REGENEXBIO Inc. (RGX-202), Solid Biosciences Inc. (SGT-003), and Genethon (GNT-004). We are also aware of several companies targeting non-dystrophin mechanisms for the treatment of DMD. There is a growing number of companies in pursuing different paths to treat DMD, including Capricor Therapeutics, Inc., and we expect that the space will continue to evolve as additional investigational therapies advance. We will also compete more generally with other companies developing alternative scientific and technological approaches, including other companies working to develop conjugates with oligonucleotides for extra-hepatic delivery, including Alnylam Pharmaceuticals, Inc., Aro Biotherapeutics Company, Dyne Therapeutics, Ionis Pharmaceuticals, Inc., Sarepta Therapeutics, PepGen, PeptiDream Inc. and Bicycle Therapeutics plc, as well as gene therapy and CRISPR approaches. Many of our competitors, either alone or with strategic partners, have substantially greater financial, technical and human resources than we do. Accordingly, our competitors may be more successful than us in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining approval for treatments and achieving widespread market acceptance, rendering our treatments obsolete or non-competitive. Merger and acquisition activity in the biotechnology and biopharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. These companies also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials and acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our commercial opportunity could be substantially limited if our competitors develop and commercialize products that are more effective, safer, less toxic, more convenient or less expensive than our comparable products. In geographies that are critical to our commercial success, competitors may also obtain regulatory approvals before us, resulting in our competitors building a strong market position in advance of the entry of our products. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of other drugs. The key competitive factors affecting the success of our programs are likely to be their efficacy, safety profile, convenience, level of promotional activity, intellectual property protection and availability of reimbursement. If the market opportunities for our products are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer. The precise incidence and prevalence for all the conditions we aim to address with our product candidates are unknown. Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including the scientific literature, surveys of clinics, patient foundations or market research, and may prove to be incorrect. Further, new trials may change the estimated incidence or prevalence of these diseases. The total addressable market across all of our product candidates will ultimately depend upon, among other things, the diagnosis criteria included in the final label for each of our product candidates approved for sale for these indications, the availability of alternative treatments and the safety, convenience, cost and efficacy of our product candidates relative to such alternative treatments, acceptance by the medical community and patient access, drug pricing and reimbursement. The number of patients in the United States and other major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our products or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business. Further, even if we obtain significant market 60
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Table of Contents share for our product candidates, because some of our potential target populations are very small, we may never achieve profitability despite obtaining such significant market share. We currently have no marketing and sales organization and have no experience as a company in commercializing products, and we may have to invest significant resources to develop these capabilities. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our products, we may not be able to generate product revenue. We have no internal sales, marketing or distribution capabilities, nor have we commercialized a product. If any of our product candidates ultimately receives regulatory approval, we must build a marketing and sales organization with technical expertise and supporting distribution capabilities to commercialize each such product in major markets, which will be expensive and time consuming, or collaborate with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. We have no prior experience as a company in the marketing, sale and distribution of biopharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products. We may not be able to enter into collaborations or hire consultants or external service providers to assist us in sales, marketing and distribution functions on acceptable financial terms, or at all. In addition, our product revenues and our profitability, if any, may be lower if we rely on third parties for these functions than if we were to market, sell and distribute any products that we develop ourselves. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we are not successful in commercializing our products, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and we would incur significant additional losses. Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties. Our future growth may depend, in part, on our ability to develop and commercialize our product candidates in foreign markets. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from applicable regulatory authorities in foreign markets, and we may never receive such regulatory approvals for any of our product candidates. To obtain separate regulatory approval in many other countries we must comply with numerous and varying regulatory requirements regarding safety and efficacy and governing, among other things, clinical trials, commercial sales, pricing and distribution of our product candidates. If we obtain regulatory approval of our product candidates and ultimately commercialize our products in foreign markets, we would be subject to additional risks and uncertainties, including: • different regulatory requirements for approval of drugs in foreign countries; • reduced protection for intellectual property rights; • the existence of additional third-party patent rights of potential relevance to our business; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is common; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and 61
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Table of Contents • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires. Risks Related to Our Business Operations and Industry Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide. Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to our product candidates, which may change from time to time; • coverage and reimbursement policies with respect to our product candidates, if approved, and potential future drugs that compete with our products; • the cost of manufacturing our product candidates, which may vary depending on the quantity of production and the terms of our agreements with third-party manufacturers; • the timing and amount of the milestone or other payments we may receive under our current or future research and collaboration agreements; expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies; • the level of demand for any approved products, which may vary significantly; • future accounting pronouncements or changes in our accounting policies; and • the timing and success or failure of preclinical studies or clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners. The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue, earnings or other guidance. We are dependent on the services of our management and other clinical and scientific personnel, and if we are not able to retain these individuals or recruit additional management or clinical and scientific personnel, our business will suffer. Our success depends in part on our continued ability to attract, retain and motivate highly qualified management, clinical and scientific personnel. We are highly dependent upon our senior management, as well as our senior scientists and other members of our management team. The loss of services of any of these individuals could delay or prevent the successful development of our product pipeline, initiation or completion of our preclinical studies and clinical trials or the commercialization of our product candidates. Although we have executed employment agreements or offer letters with each member of our senior management team, these agreements are terminable at will with or without notice and, therefore, we may not be able to retain their services as expected. We do not currently maintain “key person” life insurance on the lives of our executives or any of our employees. This lack of insurance means that we may not have adequate compensation for the loss of the services of these individuals. We will need to expand and effectively manage our managerial, operational, financial and other resources in order to successfully pursue our clinical development and commercialization efforts. We may not be successful in maintaining our unique company culture and continuing to attract or retain qualified 62
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Table of Contents management and other key personnel in the future due to the intense competition for qualified personnel among biopharmaceutical, biotechnology and other businesses, particularly in the San Diego area. Our industry has experienced a high rate of turnover of management personnel in recent years. If we are not able to attract, integrate, retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital and our ability to implement and execute our business strategy. We may encounter difficulties in managing our growth and expanding our operations successfully. We had 511 full-time employees as of February 13, 2026. As we continue development and pursue the potential commercialization of our product candidates, as well as function as a public company, we will need to expand our financial, development, regulatory, manufacturing, marketing and sales capabilities or contract with third parties to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our ability to develop and commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. We are subject to various federal, state and foreign healthcare laws and regulations, which could increase compliance costs, and our failure to comply with these laws and regulations could harm our results of operations and financial condition. Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors and customers expose us to broadly applicable foreign, federal and state fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute any products for which we obtain marketing approval. Such laws include: • the federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation; • the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; • the federal civil monetary penalties laws, impose civil fines for, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary's selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 63
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Table of Contents • the federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other transfers of value made during the previous year to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care providers including, among others, physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held during the previous year by physicians as defined under statute and their immediate family members; • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers; • some state laws require biotechnology companies to comply with the biotechnology industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and • some state laws that require biotechnology companies to report information on the pricing of certain drug products; and some state and local laws require the registration or pharmaceutical sales representatives. Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare laws and regulations will involve ongoing substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations. Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare program. Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to commercialize our product candidates and may affect the prices we may set. In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes and proposed changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we obtain marketing approval. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For example, in March 2010, the Patient Protection and Affordable Care Act, or the ACA, was enacted in the United States, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affected the pharmaceutical industry. ACA provisions of importance to our product candidates established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; expanded the entities eligible for enrollment in the 340B program; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; established a new Patient- Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness 64
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Table of Contents research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending. Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the ACA, and on June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Thus, the ACA will remain in force in its current form. In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, as of January 1, 2024. The rebate was previously capped at 100% of a drug’s average manufacturer price. Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for pharmaceutical products. The Inflation Reduction Act, or IRA, was enacted in 2022. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); redesigns the Medicare Part D benefit (beginning in 2024); and replaces the Part D coverage gap discount program with a new manufacturer discount program (beginning in 2025). CMS has published the negotiated prices for the initial ten drugs, which went into effect in January 2026, and the subsequent 15 drugs, which will first be effective in 2027. The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented, although the Medicare drug price negotiation program is currently subject to legal challenges. While the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant. The One Big Beautiful Bill Act, which was enacted in July 2025, imposes significant reductions in the funding of the Medicaid program. Such reductions are expected to decrease the number of persons enrolled in Medicaid and reduce the services covered by Medicaid, which could adversely affect our sales of any product candidate that we commercialize. The Trump administration is pursuing a two-fold strategy to reduce drug costs in the U.S. While it is unclear whether and how the Trump proposals will be implemented, the Trump policies are likely to have a negative impact on the pharmaceutical industry and on our ability to receive adequate revenues for our product candidates, if approved. On the one hand, President Trump has threatened to impose significant tariffs on pharmaceutical manufacturers that do not adopt pricing policies such as most favored nation pricing, which would tie the price for drugs in the U.S. to the lowest price in a group of other countries. In response, multiple manufacturers have entered into confidential pricing agreements with the federal government. On the other hand, the Trump administration is pursuing traditional regulatory pathways to impose drug pricing policies and published two proposed regulations in December 2025, referred to as Globe and Guard. If finalized, these regulations would implement mandatory payment models under which manufacturers of eligible drugs would be required to pay rebates to the federal government on a portion of the units of their drugs that are reimbursed by Medicare, with the rebate amount based on most favored nation pricing. Imposing a rebate in the U.S. that is based on drug prices outside the U.S. would mark a drastic and unprecedented shift in the U.S. pharmaceutical market, and while the impact of the Globe and Guard proposed regulations, if finalized, cannot yet be determined, it is likely to be significant. Even regulatory proposals or executive actions that are ultimately deemed unlawful could negatively impact the U.S. pharmaceutical sector and our business. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure, drug price reporting and other 65
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Table of Contents transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Some states have also enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states, and at least one state board is imposing an upper payment limit. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine which drugs and suppliers will be included in their healthcare programs Furthermore, there has been increased interest by third party payors and governmental authorities in reference pricing systems and publication of discounts and list prices. We expect that these new laws and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare reimbursement and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates, if approved. We intend to participate in the Medicaid Drug Rebate Program and other governmental pricing programs. If we fail to comply with our reporting and payment obligations under any programs we participate in, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Medicaid is a joint federal and state program administered by the states for low income and disabled beneficiaries. Manufacturers that participate in the Medicaid Drug Rebate Program, or MDRP, have certain price reporting obligations as a condition of having their covered outpatient drugs payable under Medicaid and, if applicable, under Medicare Part B. The MDRP requires the manufacturer to pay a rebate to state Medicaid programs every quarter for each unit of its covered outpatient drugs dispensed to Medicaid beneficiaries and paid for by a state Medicaid program. The rebate is based on pricing data that the manufacturer must report on a monthly and quarterly basis to the Centers for Medicare & Medicaid Services, or CMS, the federal agency that administers the MDRP and other governmental healthcare programs. These data include the average manufacturer price (AMP) for each drug and, in the case of innovator products, the best price, which in general represents the lowest price available from the manufacturer to certain entities in the U.S. in any pricing structure, calculated to include all sales and associated rebates, discounts and other price concessions. The Medicaid rebate consists of two components, the basic rebate and the additional rebate, which is triggered if the AMP for a drug increases faster than inflation. If the manufacturer becomes aware that its MDRP government price reporting submission for a prior quarter was incorrect or has changed as a result of recalculation of the pricing data, it must resubmit the corrected data for up to three years after those data originally were due. If the manufacturer fails to provide information timely or is found to have knowingly submitted false information to the government, it may be subject to civil monetary penalties and other sanctions, including termination from the MDRP. In the event that CMS terminates the manufacturer’s rebate agreement pursuant to which the manufacturer participates in the MDRP, no federal payments would be available under Medicaid or Medicare Part B for its covered outpatient drugs. If we participate in the MDRP, our failure to comply with MDRP price reporting and rebate payment obligations could negatively impact our financial results. In connection with Medicare Part B, a pharmaceutical manufacturer must provide CMS with average sales price (ASP) information for its drugs or biologicals payable under Part B on a quarterly basis. ASP is calculated based on a statutorily defined formula, as well as regulations and interpretations of the statute by CMS. CMS uses this information to compute Medicare Part B payment rates, which consist of ASP plus a specified percentage. The Part B payment rate is the amount that CMS reimburses the provider for drugs and biologicals administered to Medicare beneficiaries. The IRA imposes rebates under Medicare Part B and Medicare Part D that are triggered by price increases that outpace inflation (first due in 2023), as described under the risk factor “Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to commercialize our product candidates and may affect the prices we may set,” above. The Medicare Part D rebate, if applicable, will be calculated on the basis of the AMP figures we will be required to report pursuant to the MDRP if we enroll in the MDRP. The Medicare Part B rebate, if applicable, will be calculated on the basis of the Part B payment rate, which in turn is based on the reported ASP figures. 66
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Table of Contents Federal law requires that any company that participates in the MDRP also participate in the Public Health Service’s 340B drug pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and, if applicable, Medicare Part B. We intend to participate in the 340B program, which is administered by the Health Resources and Services Administration, or HRSA, and will requires us to charge statutorily defined covered entities no more than the 340B “ceiling price” for our covered outpatient drugs that receive approval. These 340B covered entities include a variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low income patients. The ACA expanded the list of covered entities to include certain free standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, but exempts “orphan drugs” from the ceiling price requirements for these covered entities. The 340B ceiling price is calculated using a statutory formula based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP, and in general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement. If we enroll in the 340B program, we must report 340B ceiling prices to HRSA on a quarterly basis, and HRSA publishes those prices to 340B covered entities. In addition, HRSA has finalized regulations regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities for 340B eligible drugs. HRSA has also finalized a revised regulation implementing an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs. If we enroll in the 340B program, our failure to comply 340B program requirements could negatively impact our financial results. Any additional future changes to the definition of average manufacturer price and the Medicaid rebate amount under legislation or regulation could affect our 340B ceiling price calculations and also negatively impact our financial results if we enroll in the 340B program. In order for any product candidates, if approved, to be paid for with federal funds under the Medicaid and Medicare Part B programs and purchased by certain federal agencies and grantees, we also intend to participate in the U.S. Department of Veterans Affairs, or VA, Federal Supply Schedule, or FSS, pricing program. As part of this program, we will be required to make our products, if approved, available for procurement on an FSS contract under which we must comply with standard government terms and conditions and charge a price that is no higher than the statutory Federal Ceiling Price, or FCP, to four federal agencies (VA, U.S. Department of Defense, or DOD, Public Health Service, and U.S. Coast Guard). The FCP is based on the Non-Federal Average Manufacturer Price, or Non-FAMP, which we will be required to calculate and report to the VA on a quarterly and annual basis. Pursuant to applicable law, knowing provision of false information in connection with a Non-FAMP filing can subject a manufacturer to significant civil monetary penalties for each item of false information. The FSS pricing and contracting obligations also contain extensive disclosure and certification requirements. We also intend to participate in the Tricare Retail Pharmacy program, under which we will be required to pay quarterly rebates on utilization of innovator products that are dispensed through the Tricare Retail Pharmacy network to Tricare beneficiaries. The rebates are calculated as the difference between the annual Non-FAMP and FCP. We will be required to list our innovator products on a Tricare Agreement in order for them to be eligible for DOD formulary inclusion. If we participate in the program and overcharge the government in connection with our FSS contract or Tricare Agreement, whether due to a misstated FCP or otherwise, we will be required to refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges could result in allegations against us under the False Claims Act and other laws and regulations. Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects if we enroll in the program. Individual states continue to consider and have enacted legislation to limit the growth of healthcare costs, including the cost of prescription drugs and combination products. A number of states have either implemented or are considering implementation of drug price transparency legislation. Requirements of pharmaceutical manufacturers under such laws include advance notice of planned price increases, reporting price increase amounts and factors considered in taking such increases, wholesale acquisition cost information disclosure to prescribers, purchasers, and state agencies, and new product notice and reporting. Such legislation could limit the price or payment for certain drugs, and a number of states are authorized to impose civil monetary penalties or pursue other enforcement mechanisms against manufacturers who fail to comply with drug price transparency requirements, including the untimely, inaccurate, or incomplete reporting of drug pricing information. 67
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Table of Contents Pricing and rebate calculations vary among products and programs. The calculations are complex and are often subject to interpretation by us, governmental or regulatory agencies, and the courts. CMS, the Department of Health & Human Services Office of Inspector General, and other governmental agencies have pursued manufacturers that were alleged to have failed to report these data to the government in a timely or accurate manner. Governmental agencies may also make changes in program interpretations, requirements or conditions of participation, some of which may have implications for amounts previously estimated or paid. If we enroll in the government pricing programs, we cannot assure you that any submissions we are required to make under the MDRP, the 340B program, the VA/FSS program, the Tricare Retail Pharmacy Program, and other governmental drug pricing programs will not be found to be incomplete or incorrect. If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our products. We face an inherent risk of product liability as a result of the clinical trials of our product candidates and will face an even greater risk if we commercialize our product candidates. For example, we may be sued if our product candidates allegedly cause injury or are found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product candidate, negligence, strict liability and a breach of warranties. Claims may be brought against us by clinical trial participants, patients or others using, administering or selling products that may be approved in the future. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or cease the commercialization of our products. Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our products; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • costs to defend the related litigation; • a diversion of our management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • significant negative financial impact; • the inability to commercialize our product candidates; and • a decline in our stock price. We currently hold approximately $20 million in product liability insurance coverage in the aggregate. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates. Insurance coverage is increasingly expensive. Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of our product candidates. Although we will maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies will also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Our insurance policies are expensive and only protect us from some business risks, which will leave us exposed to significant uninsured liabilities. We do not carry insurance for all categories of risk that our business may encounter. Some of the policies we currently maintain include property, general liability, employment benefits liability, business 68
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Table of Contents automobile, workers’ compensation, malicious invasion of our electronic systems, directors’ and officers’, employment practices, fiduciary liability, and product liability insurance. We do not know, however, if we will be able to maintain insurance with adequate levels of coverage. Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our financial position and results of operations. We and any of our current and potential future collaborators will be required to report to regulatory authorities if any of our approved products cause or contribute to adverse medical events, and any failure to do so would result in sanctions that would materially harm our business. If we or any of our current and potential future collaborators are successful in commercializing our products, the FDA and foreign regulatory authorities would require that we and such collaborators report certain information about adverse medical events if those products may have caused or contributed to those adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We and any of our current or potential future collaborators or CROs may fail to report adverse events within the prescribed timeframe. If we or any of our current or potential future collaborators or CROs fail to comply with such reporting obligations, the FDA or a foreign regulatory authority could take action, including criminal prosecution, the imposition of civil monetary penalties, seizure of our products or delay in approval or clearance of future products. Our business, including ongoing and planned clinical trials and preclinical studies, and financial condition, is subject to risks arising from pandemic and epidemic diseases. Future pandemics or other public health epidemics, present substantial public health and economic challenges and may affect, as they have in the past, our employees, clinical trial subjects, physicians and other healthcare providers, communities and business operations, as well as the U.S. and global economies, supply chains and financial markets. Any resurgence of COVID-19 or emergence of variants thereof and any future pandemic or epidemic diseases may cause disruptions that could severely impact our business, preclinical studies, clinical trials and financial condition, including impairing our ability to raise capital when needed. The extent to which the other outbreak of a pandemic or epidemic disease, impacts our results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact. Further, to the extent any pandemic or epidemic disease, adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this section. Our business could be affected by litigation, government investigations and enforcement actions. We currently operate in a number of jurisdictions in a highly regulated industry and we could be subject to litigation, government investigation and enforcement actions on a variety of matters in the United States or foreign jurisdictions, including, without limitation, intellectual property, regulatory, product liability, environmental, whistleblower, false claims, privacy, anti-kickback, anti-bribery, securities, commercial, employment and other claims and legal proceedings which may arise from conducting our business. Any determination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, civil and criminal penalties, equitable remedies, including disgorgement, injunctive relief and/or other sanctions against us, and remediation of any such findings could have an adverse effect on our business operations. Legal proceedings, government investigations and enforcement actions can be expensive and time consuming. An adverse outcome resulting from any such proceeding, investigations or enforcement actions could result in significant damages awards, fines, penalties, exclusion from the federal healthcare programs, healthcare debarment, injunctive relief, product recalls, reputational damage and modifications of our business practices, which could have a material adverse effect on our business and results of operations. Our employees and independent contractors, including principal investigators, CROs, consultants and vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. We are exposed to the risk that our employees and independent contractors, including principal investigators, CROs, consultants and vendors may engage in misconduct or other illegal activity. Misconduct by 69
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Table of Contents these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate: (i) the laws and regulations of the FDA and other similar regulatory requirements, including those laws that require the reporting of true, complete and accurate information to such authorities, (ii) manufacturing standards, including cGMP requirements, (iii) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad or (iv) laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, the creation of fraudulent data in our preclinical studies or clinical trials or illegal misappropriation of drug product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, imprisonment, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management. From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases and out-licensing or in-licensing of intellectual property, products or technologies. For example, we have collaborations with Lilly and BMS pursuant to which we have granted them licenses to our intellectual property in connection with certain targets and issued to them certain of our securities. Additional potential transactions that we may consider in the future include a variety of business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any future transactions could increase our near and long-term expenditures, result in potentially dilutive issuances of our equity securities, including our common stock, or the incurrence of debt, contingent liabilities, amortization expenses or acquired in-process research and development expenses, any of which could affect our financial condition, liquidity and results of operations. Future acquisitions may also require us to obtain additional financing, which may not be available on favorable terms or at all. These transactions may never be successful and may require significant time and attention of our management. In addition, the integration of any business that we may acquire in the future may disrupt our existing business and may be a complex, risky and costly endeavor for which we may never realize the full benefits of the acquisition. Accordingly, although there can be no assurance that we will undertake or successfully complete any additional transactions of the nature described above, any additional transactions that we do complete could have a material adverse effect on our business, results of operations, financial condition and prospects. Our ability to use net operating loss carryforwards and other tax attributes may be limited. We have incurred substantial losses during our history, do not expect to become profitable in the near future and may never achieve profitability. To the extent that we continue to incur net operating losses, or NOLs, such NOLs will carry forward and, subject to limitations, offset future taxable income, if any, until such unused NOL carryforwards expire (if subject to expiration). ). U.S. federal NOLs generated in periods after December 31, 2017 may be carried forward indefinitely but may only be used to offset 80% of our taxable income in years beginning after December 31, 2020. At December 31, 2025, we had federal, state, and foreign net operating loss (NOL) carryforwards of $421.6 million. Our NOL carryforwards and other tax attributes are subject to review and possible adjustment by the Internal Revenue Services, and state tax authorities. Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, our federal NOL carryforwards may become subject to an annual limitation in the 70
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Table of Contents event of certain cumulative changes in the ownership of our company. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three- year period. Our ability to utilize our NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with our initial public offering, or IPO, that was completed in June 2020, our subsequent public offerings or any future offerings. Similar rules may apply under state tax laws. Inflation could adversely affect our business and results of operations. In recent years, the U.S. economy experienced a material level of inflation. The impact of geopolitical developments may continue to increase uncertainty in the outlook of near-term and long-term economic activity, including any impacts on inflation. Increases in inflation raise our costs for commodities, labor, materials and services and other costs required to grow and operate our business, and failure to secure these on reasonable terms may adversely impact our financial condition. Additionally, increases in inflation, along with the uncertainties surrounding geopolitical developments and global supply chain disruptions, have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult, costly or dilutive for us to secure additional financing. Historically, the price of our common stock has been highly sensitive to actual or anticipated changes in the interest rate environment. A failure to adequately respond to these risks could have a material adverse impact on our financial condition, results of operations or cash flows. Risks Related to Our Intellectual Property If we are unable to obtain and maintain patent protection for our therapeutic programs and other proprietary technologies we develop, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our therapeutic programs and other proprietary technologies we may develop may be adversely affected. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our therapeutic programs and other proprietary technologies we may develop. We seek to protect our proprietary position, in part, by filing patent applications in the United States and abroad relating to our therapeutic programs and other proprietary technologies we may develop. If we are unable to obtain or maintain patent protection with respect to our therapeutic programs and other proprietary technologies we may develop, our business, financial condition, results of operations and prospects could be materially harmed. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our protection. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection against competitors or other third parties. The patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. In addition, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our inventions and the prior art allow our inventions to be patentable over the prior art. Furthermore, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we or our licensors were 71
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Table of Contents the first to make the inventions claimed in any of our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions. The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our patent applications may not result in patents being issued which protect our therapeutic programs and other proprietary technologies we may develop, or which effectively prevent others from commercializing competitive technologies and products. Moreover, the claim coverage in a patent application can be significantly reduced before the patent is granted. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage. Any patents issuing from our patent applications may be challenged, narrowed, circumvented or invalidated by third parties. Consequently, we do not know whether our therapeutic programs and other proprietary technology will be protectable or remain protected by valid and enforceable patents. Even if a patent is granted, our competitors or other third parties may be able to circumvent the patent by developing similar or alternative technologies or products in a non-infringing manner which could materially adversely affect our business, financial condition, results of operations and prospects. In addition, given the amount of time required for the development, testing and regulatory review of our therapeutic programs and eventual product candidates, patents protecting the product candidates might expire before or shortly after such product candidates are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability and our patents may be challenged in the courts or patent offices in the United States and abroad. We may be subject to a third-party pre-issuance submission of prior art to the United States Patent and Trademark Office, or the USPTO, or become involved in opposition, derivation, revocation, reexamination, post-grant and inter partes review, or other similar proceedings challenging our patent rights. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, our patent rights, allow third parties to commercialize our therapeutic programs and other proprietary technologies we may develop and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. Such proceedings also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us. We may not be able to protect our intellectual property and proprietary rights throughout the world. Filing, prosecuting and defending patents on our therapeutic programs and other proprietary technologies we may develop in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally. In addition, some jurisdictions, such as Europe, Japan and China, may have a higher standard for patentability than in the United States, including, for example, the requirement of claims having literal support in the original patent filing and the limitation on using supporting data that is not in the original patent filing. Under those heightened patentability requirements, we may not be able to obtain sufficient patent protection in certain jurisdictions even though the same or similar patent protection can be secured in U.S. and other jurisdictions. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our 72
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Table of Contents patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop. Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected. In Europe, beginning June 1, 2023, European applications and patents may be subject to the jurisdiction of the Unified Patent Court, or UPC, unless they explicitly opt out. Also, European applications will have the option, upon grant of a patent, of becoming a Unitary Patent, which will be subject to the jurisdiction of the UPC. This will present a significant change in European patent practice. As the UPC is a new entity, there is no applicable precedent on which we may rely, increasing the uncertainty of any outcome from the UPC. As a single entity can now invalidate a European patent, we may opt out of the UPC in certain cases, in which case each of our European patents would need to be challenged on a country-by-country basis. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned or licensed patents and applications. In certain circumstances, we rely on our licensing partners to pay these fees due to U.S. and non-U.S. patent agencies. The USPTO and various non-U.S. government agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. We are also dependent on our licensors to take the necessary action to comply with these requirements with respect to our licensed intellectual property. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in a partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act, or the America Invents Act, enacted in September 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. A third party that files a patent application in the USPTO after March 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we were the first to either (i) file any patent application related to our therapeutic programs and other proprietary technologies we may develop or (ii) invent any of the inventions claimed in our patent applications. 73
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Table of Contents The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of patents issuing from those patent applications, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, the patent positions of companies in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. It is unpredictable how decisions by the U.S. federal courts, the U.S. Congress or the USPTO may impact the value of our patent rights. For example, the U.S. Supreme Court held in Amgen v. Sanofi (2023) that a functionally claimed genus was invalid for failing to comply with the enablement requirement of the Patent Act. In addition, the U.S. Court of Appeals for the Federal Circuit recently issued a decision involving the interaction of a patent term adjustment, terminal disclaimers, and obvious-type double patenting. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future actions by the U.S. Congress, the U.S. federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on our existing patent portfolio and our ability to protect and enforce our intellectual property in the future. Issued patents covering our therapeutic programs and other proprietary technologies we may develop could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad. If we initiated legal proceedings against a third party to enforce a patent covering our therapeutic programs and other proprietary technologies we may develop, the defendant could counterclaim that such patent is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may raise claims challenging the validity or enforceability of a patent before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post- grant review, inter partes review, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation of, cancellation of or amendment to our patents in such a way that they no longer cover our therapeutic programs and other proprietary technologies we may develop. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we or our licensing partners and the patent examiner were unaware during prosecution. If a third party were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our therapeutic programs and other proprietary technologies we may develop. Such a loss of patent protection would have a material adverse impact on our business, financial condition, results of operations and prospects. If we do not obtain patent term extension for our product candidate, our business may be materially harmed. Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidate we may develop, one or more of patents issuing from our U.S. patent applications may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Action of 1984, or 74
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Table of Contents the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent term extension, or PTE, of up to five years as compensation for patent term lost during the FDA regulatory review process. A PTE cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. Similar patent term restoration provisions to compensate for commercialization delay caused by regulatory review are also available in certain foreign jurisdictions, such as in Europe under Supplemental Protection Certificate, or SPC. We may be subject to claims challenging the inventorship of our patents and other intellectual property. We may be subject to claims that former employees, collaborators or other third parties have an interest in our patent rights, trade secrets, or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our therapeutic programs and other proprietary technologies we may develop. Litigation may be necessary to defend against these and other claims challenging inventorship or our patent rights, trade secrets or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our therapeutic programs and other proprietary technologies we may develop. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. In addition to seeking patent protection for our therapeutic programs and other proprietary technologies we may develop, we also rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology, and other proprietary information and to maintain our competitive position. With respect to our AOC platform and development programs, we consider trade secrets and know-how to be one of our important sources of intellectual property, including our extensive knowledge of the modulation of RNA processes using oligonucleotides and siRNA, oligonucleotide drug delivery techniques and antibody conjugation. Trade secrets and know-how can be difficult to protect. In particular, the trade secrets and know-how in connection with our AOC platform, development programs and other proprietary technology we may develop may over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology and the movement of personnel with scientific positions in academic and industry. We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. We cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time- consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be materially and adversely harmed. We may be subject to claims that third parties have an ownership interest in our trade secrets. For example, we may have disputes arise from conflicting obligations of our employees, consultants or others who are involved in developing our product candidate. Litigation may be necessary to defend against these and other claims challenging ownership of our trade secrets. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable trade secret rights, such as exclusive ownership of, or right to use, trade secrets that are important to our therapeutic programs and other proprietary technologies we may develop. Such an outcome could have a material adverse effect on our business. Even if we are successful in 75
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Table of Contents defending against such claims, litigation could result in substantial costs and be a distraction to our management and other employees. We may not be successful in obtaining necessary rights to any product candidate we may develop through acquisitions and in-licenses. We currently solely own intellectual property rights covering our therapeutic programs. Other pharmaceutical companies and academic institutions may also have filed or are planning to file patent applications potentially relevant to our business. In order to avoid infringing these third-party patents, we may find it necessary or prudent to obtain licenses to such patents from such third-party intellectual property holders. However, we may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes or other intellectual property rights from third parties that we identify as necessary for our therapeutic programs and other proprietary technologies we may develop. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all. If we are unable to successfully obtain rights to required third party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant program or product candidate, which could have a material adverse effect on our business, financial condition, results of operations and prospects. We may be subject to claims that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property. Some of our employees, consultants and advisors are currently or were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our management. In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial condition, results of operations and prospects. Third-party claims of intellectual property infringement, misappropriation or other violations against us or our collaborators may prevent or delay the development and commercialization of our therapeutic programs and other proprietary technologies we may develop. Our commercial success depends in part on our ability to avoid infringing, misappropriating and otherwise violating the patents and other intellectual property rights of third parties. There is a substantial amount of complex litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including interference, derivation and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. As discussed above, recently, due to changes in U.S. law referred to as patent reform, 76
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Table of Contents new procedures including inter parties review and post-grant review have also been implemented. As stated above, this reform adds uncertainty to the possibility of challenge to our patents in the future. Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist in the fields in which we are commercializing or plan to commercialize our therapeutic programs and in which we are developing other proprietary technologies. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our therapeutic programs and commercializing activities may give rise to claims of infringement of the patent rights of others. We cannot assure you that our therapeutic programs and other proprietary technologies we may develop will not infringe existing or future patents owned by third parties. We may not be aware of patents that have already been issued and that a third party, for example, a competitor in the fields in which we are developing our therapeutic programs, might assert as infringed by us. It is also possible that patents owned by third parties of which we are aware, but which we do not believe we infringe or that we believe we have valid defenses to any claims of patent infringement, could be found to be infringed by us. It is not unusual that corresponding patents issued in different countries have different scopes of coverage, such that in one country a third-party patent does not pose a material risk, but in another country, the corresponding third- party patent may pose a material risk to our planned products. As such, we monitor third-party patents in the relevant pharmaceutical markets. In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that we may infringe. Generative artificial intelligence (AI) resources that are publicly available also present a risk that a company may inadvertently obtain, incorporate or use a third party's intellectual property. In the event that any third party claims that we infringe their patents or that we are otherwise employing their proprietary technology without authorization and initiates litigation against us, even if we believe such claims are without merit, a court of competent jurisdiction could hold that such patents are valid, enforceable and infringed by us. In this case, the holders of such patents may be able to block our ability to commercialize the infringing products or technologies unless we obtain a license under the applicable patents, or until such patents expire or are finally determined to be held invalid or unenforceable. Such a license may not be available on commercially reasonable terms or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize the infringing products or technologies or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business. Defense of infringement claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, and may impact our reputation. In the event of a successful claim of infringement against us, we may be enjoined from further developing or commercializing the infringing products or technologies. In addition, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties and/or redesign our infringing products or technologies, which may be impossible or require substantial time and monetary expenditure. In that event, we would be unable to further develop and commercialize our product candidate or technologies, which could harm our business significantly. Further, we cannot predict whether any required license would be available at all or whether it would be available on commercially reasonable terms. In the event that we could not obtain a license, we may be unable to further develop our product candidate and commercialize our product, if approved, which could harm our business significantly. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms. Engaging in litigation defending against third parties alleging infringement of patent and other intellectual property rights is very expensive, particularly for a company of our size, and time-consuming. Some of our competitors may be able to sustain the costs of litigation or administrative proceedings more effectively than we can because of greater financial resources. Patent litigation and other proceedings may also absorb significant management time. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition or results of operations. We may in the future pursue invalidity proceedings with respect to third-party patents. The outcome following legal assertions of invalidity is unpredictable. Even if resolved in our favor, these legal proceedings 77
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Table of Contents may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such proceedings adequately. Some of these third parties may be able to sustain the costs of such proceedings more effectively than we can because of their greater financial resources. If we do not prevail in the patent proceedings the third parties may assert a claim of patent infringement directed at our product candidates. We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time consuming and unsuccessful. Third parties, such as a competitor, may infringe our patent rights. In an infringement proceeding, a court may decide that a patent owned by us is invalid or unenforceable or may refuse to stop the other party from using the invention at issue on the grounds that the patent does not cover the technology in question. In addition, our patent rights may become involved in inventorship, priority or validity disputes. To counter or defend against such claims can be expensive and time consuming. An adverse result in any litigation proceeding could put our patent rights at risk of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. During trademark registration proceedings, we may receive rejections of our applications by the USPTO or in other foreign jurisdictions. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, which may not survive such proceedings. Moreover, any name we have proposed to use with our product candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. Similar requirements exist in Europe. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA or an equivalent administrative body in a foreign jurisdiction objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. Furthermore, in many countries, owning and maintaining a trademark registration may not provide an adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build 78
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Table of Contents brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, domain name or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects. Intellectual property rights do not necessarily address all potential threats. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example: • others may be able to make products that are similar to our product candidate or utilize similar technology that are not covered by the claims of the patents that we license or may own; • we might not have been the first to make the inventions covered by our current or future patent applications; • we might not have been the first to file patent applications covering our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our current or future patent applications will not lead to issued patents; • any patent issuing from our current or future patent applications may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file for patent protection in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent application covering such intellectual property. Intellectual property discovered through government funded programs may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for United States-based companies. Compliance with such regulations may limit our exclusive rights and limit our ability to contract with non-United States manufacturers. Although we do not currently own issued patents or pending patent applications that have been generated through the use of United States government funding, our licensed patents and patent applications from Fred Hutchinson Cancer Center have been generated through the use of United States government funding or grants. Pursuant to the Bayh-Dole Act of 1980, the United States government has certain rights in inventions developed with government funding. On December 8, 2023, the National Institute of Standards and Technology (NIST) released the Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights (Guidance) to the public for comment. The Guidance represents the first federal framework specifying that price can be a factor in considering whether the government may exercise its march-in authority pursuant to 35 U.S.C. 200 et seq. (Bayh-Dole). These United States government march-in rights include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the United States government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non- exclusive licenses to any of these inventions to a third party if it determines that: (1) adequate steps have not been taken to commercialize the invention; (2) government action is necessary to meet public health or safety needs; or (3) government action is necessary to meet requirements for public use under federal regulations, also referred to as march-in rights. If the United States government exercised its march-in rights in our future intellectual property rights that are generated through the use of United States 79
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Table of Contents government funding or grants, we could be forced to license or sublicense intellectual property developed by us or that we license on terms unfavorable to us, and there can be no assurance that we would receive compensation from the United States government for the exercise of such rights. The United States government also has the right to take title to these inventions if the grant recipient fails to disclose the invention to the government or fails to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. In addition, the United States government requires that any products embodying any of these inventions or produced through the use of any of these inventions be manufactured substantially in the United States. This preference for United States industry may be waived by the federal agency that provided the funding if the owner or assignee of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for United States industry may limit our ability to contract with non-United States product manufacturers for products covered by such intellectual property. We partially depend on intellectual property licensed from third parties, and our licensors may not always act in our best interest. If we fail to comply with our obligations under our intellectual property licenses, if the licenses are terminated or if disputes regarding these licenses arise, we could lose significant rights that are important to our business. We are dependent, in part, on patents, know-how and proprietary technology licensed from others. Our licenses to such patents, know-how and proprietary technology may not provide exclusive rights in all relevant fields of use and in all territories in which we may wish to develop or commercialize our products in the future. The agreements under which we license patents, know-how and proprietary technology from others are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. For example, we are a party to an exclusive worldwide license with the University of Alberta, pursuant to which we in- licensed key patent applications for our Exon 51 skipping AOC for DMD and future product candidates. If we fail to comply with obligations under any license agreements, our licensors may have the right to terminate our license, in which event we would not be able to develop or market technology or product candidates covered by the intellectual property licensed under these agreements. In addition, we may need to obtain additional licenses from our existing licensors and others to advance our research or allow commercialization of product candidates we may develop. It is possible that we may be unable to obtain any additional licenses at a reasonable cost or on reasonable terms, if at all. In either event, we may be required to expend significant time and resources to redesign our technology, product candidates, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected technology or product candidates. If we or our licensors fail to adequately protect our licensed intellectual property, our ability to commercialize product candidates could suffer. We do not have complete control over the maintenance, prosecution and litigation of our in-licensed patents and patent applications and may have limited control over future intellectual property that may be in-licensed. For example, we cannot be certain that activities such as the maintenance and prosecution by our licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights. It is possible that our licensors’ infringement proceedings or defense activities may be less vigorous than had we conducted them ourselves or may not be conducted in accordance with our best interests. In addition, the resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant patents, know-how and proprietary technology, or increase what we believe to be our financial or other obligations under the relevant agreement. Disputes that may arise between us and our licensors regarding intellectual property subject to a license agreement could include disputes regarding: • the scope of rights granted under the license agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; 80
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Table of Contents • our right to sublicense patent and other rights to third parties under collaborative development relationships; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates and what activities satisfy those diligence obligations; and • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us. If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected technology or product candidates. As a result, any termination of or disputes over our intellectual property licenses could result in the loss of our ability to develop and commercialize our AOC platform, or AOC products, or we could lose other significant rights, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. For example, our agreements with certain of our third-party research partners provide that improvements developed in the course of our relationship may be owned solely by either us or our third-party research partner, or jointly between us and the third party. If we determine that rights to such improvements owned solely by a research partner or other third party with whom we collaborate are necessary to commercialize our product candidates or maintain our competitive advantage, we may need to obtain a license from such third party in order to use the improvements and continue developing, manufacturing or marketing our product candidates. We may not be able to obtain such a license on an exclusive basis, on commercially reasonable terms, or at all, which could prevent us from commercializing our product candidates or allow our competitors or others the chance to access technology that is important to our business. We also may need the cooperation of any co- owners of our intellectual property in order to enforce such intellectual property against third parties, and such cooperation may not be provided to us. We may not be successful in obtaining or maintaining necessary rights to product components and processes for our development pipeline through acquisitions and in-licenses. The growth of our business may depend in part on our ability to acquire, in-license or use third-party proprietary rights. For example, our product candidates may require specific formulations to work effectively and efficiently, we may develop product candidates containing our compounds and pre-existing pharmaceutical compounds, or we may be required by the FDA or comparable foreign regulatory authorities to provide a companion diagnostic test or tests with our product candidates, any of which could require us to obtain rights to use intellectual property held by third parties. In addition, with respect to any patents we may co-own with third parties, we may require licenses to such co-owners’ interest to such patents. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify as necessary or important to our business operations. In addition, we may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. Were that to happen, we may need to cease use of the compositions or methods covered by those third-party intellectual property rights, and may need to seek to develop alternative approaches that do not infringe on those intellectual property rights, which may entail additional costs and development delays, even if we were able to develop such alternatives, which may not be feasible. Even if we are able to obtain a license, it may be non-exclusive, which means that our competitors may also receive access to the same technologies licensed to us. In that event, we may be required to expend significant time and resources to develop or license replacement technology. Additionally, we sometimes collaborate with academic institutions to accelerate our preclinical research or development under written agreements with these institutions. In certain cases, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Even if we hold such an option, we may be unable to negotiate a license from the institution within the specified timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to others, potentially blocking our ability to pursue our program. The licensing and acquisition of third-party intellectual property rights is a competitive area, and companies that may be more established or have greater resources than we do may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize our product candidates. More established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In 81
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Table of Contents addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. There can be no assurance that we will be able to successfully complete these types of negotiations and ultimately acquire the rights to the intellectual property surrounding the additional product candidates that we may seek to develop or market. If we are unable to successfully obtain rights to required third-party intellectual property or to maintain the existing intellectual property rights we have, we may have to abandon development of certain programs and our business financial condition, results of operations and prospects could suffer. We, our collaborators and our service providers may be subject to a variety of data privacy and security laws and contractual obligations, which could increase compliance costs and our actual or alleged failure to comply with them could subject us to potentially significant fines or penalties, regulatory investigations, negative publicity, liability or otherwise harm our business, results of operations and financial condition. We maintain a large quantity of sensitive information, including confidential business and health-related information in connection with our clinical studies, and are subject to laws and regulations governing the privacy and security of such information. The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention and security of personal information, including as our operations continue to expand or if we operate in foreign jurisdictions. Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards or perception of their requirements may have on our business. This evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us. The cost of compliance with these laws, regulations and standards is high and is likely to increase in the future. Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our business, results of operation, and financial condition. In the United States, there are numerous federal and state data privacy and security laws and regulations governing the collection, use, disclosure and protection of personal information, including federal and state health information privacy laws, security breach notification laws and consumer protection laws. Each of these laws is subject to varying interpretations and constantly evolving. By way of example, the regulations promulgated under HIPAA and the Health Information Technology for Economic and Clinical Health Act impose, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. While we do not believe that we are currently acting as a covered entity or business associate under HIPAA and thus are not directly regulated under HIPAA, any person may be prosecuted under HIPAA’s criminal provisions either directly or under aiding-and-abetting or conspiracy principles. Consequently, depending on the facts and circumstances, we could be subject to criminal penalties if we knowingly obtain or disclose individually identifiable health information maintained by a HIPAA covered entity in a manner that is not authorized or permitted by HIPAA. The U.S. Federal Trade Commission, or the FTC, also has authority to initiate enforcement actions against entities that mislead consumers about HIPAA compliance, make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of health information, fail to implement policies to protect health information or engage in other unfair practices that harm customers or that may violate Section 5 of the FTC Act. Even when HIPAA does not apply, according to the FTC failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business and the cost of available tools to improve security and reduce vulnerabilities. Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states’ attorneys general to regulate the collection, use, storage, and disclosure of health-related and other personal information, through websites or otherwise, and to regulate the presentation of website content. In addition, certain state laws govern the privacy and security of health-related and other personal information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. For example, the CCPA requires covered businesses that process the personal information of California residents 82
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Table of Contents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf. Additional compliance investment and potential business process changes may be required. Similar laws have been passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that we are subject to or affected by HIPAA, the CCPA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition. Our operations abroad may also be subject to increased scrutiny or attention from data protection authorities. For example, in Europe, the General Data Protection Regulation, or EU GDPR, and the United Kingdom General Data Protection Regulation and Data Protection Act 2018, or the UK GDPR and together with the EU GDPR, referred to as the GDPR, imposes strict requirement for processing of personal data of individuals within the European Economic Area, or EEA, and United Kingdom, or UK, or in the context of our activities within the EEA. In addition, some of the personal data we process in respect of clinical trial participants is special category or sensitive personal data under the GDPR, and subject to additional compliance obligations and to local law derogations. Among other things, the GDPR imposes requirements regarding the security of personal data and notification of data processing obligations to the competent national data processing authorities, changes the lawful bases on which personal data can be processed, expands the definition of personal data and requires changes to informed consent practices, as well as detailed notices for clinical trial subjects and investigators. In addition, the GDPR regulates the transfer of personal data subject to the GDPR to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws. The GDPR imposes substantial fines for breaches and violations under both the EU GDPR and UK GDPR (up to the greater of €20 million/GBP 17.5 million or 4% of our consolidated annual worldwide gross revenue). In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational damage, orders to cease or change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/or civil claims, including class actions. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the GDPR. As we continue to expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business. In relation to such cross border transfers of personal data, we expect the existing legal complexity and uncertainty regarding international personal data transfers to continue, and international transfers to the United States, China, and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators. As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, we could suffer additional costs, complaints and/or regulatory investigations or fines; we may have to stop using certain tools and vendors and make other operational changes; we may have to implement alternative data transfer mechanisms under the GDPR and/ or take additional compliance and operational measures; and/or it could otherwise affect the manner in which we operate our business, and could adversely affect our business, operations and financial condition. Compliance with these and any other applicable data privacy and security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules within required time frames. If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations. Our business may be affected by the evolving regulatory framework for AI Technologies. The regulatory framework for artificial intelligence, or AI, machine learning, and automated decision-making technologies, or collectively AI Technologies, is rapidly evolving as many federal, state, and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations. Additionally, existing laws and regulations may be interpreted in ways that would affect the operation of our AI Technologies. 83
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Table of Contents It is possible that new laws and regulations will be adopted in the United States and in other non-U.S. jurisdictions, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects the performance of our products, services, and business and the way in which we use AI Technologies. We may need to expend resources to adjust our products or services in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions. Further, the cost to comply with such laws, regulations, or decisions and/or guidance interpreting existing laws, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI Technologies). Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could adversely affect our business, financial condition and results of operations. Our use of open source software could impose limitations on our ability to commercialize our product candidates. Our use of open source software could impose limitations on our ability to commercialize our product candidates. As a result, as we seek to use our platform in connection with commercially available products, we may be required to license that software under different license terms, which may not be possible on commercially reasonable terms, if at all. If we are unable to license software components on terms that permit its use for commercial purposes, we may be required to replace those software components, which could result in delays, additional cost and additional regulatory approvals. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the software code. Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary software to the public. This could allow our competitors to create similar products with lower development effort and time, and ultimately could result in a loss of product sales for us. Although we monitor our use of open source software, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that those licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our product candidates. We could be required to seek licenses from third parties in order to continue offering our product candidates, to re-engineer our product candidates or to discontinue the sale of our product candidates in the event re-engineering cannot be accomplished on a timely basis, any of which could materially and adversely affect our business, financial condition, results of operations and prospects. Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations, and prospects. Risks Related to Our Common Stock The trading price of the shares of our common stock has been, and is likely to continue to be, highly volatile, and purchasers of our common stock could incur substantial losses. Our stock price has been, and is likely to continue to be, highly volatile. The stock market in general and the market for stock of biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the price at which they paid. The market price for our common stock may be influenced by those factors discussed in this “Risk Factors” section and many others, including: • results of our clinical trials and preclinical studies, and the results of trials of our competitors or those of other companies in our market sector; • our ability to enroll subjects in our ongoing and future clinical trials; • regulatory approval of our product candidates, or limitations to specific label indications or patient populations for its use, or changes or delays in the regulatory review process; 84
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Table of Contents • regulatory developments in the United States and foreign countries; • changes in the structure of healthcare payment systems; • the success or failure of our efforts to develop, acquire or license additional product candidates; • innovations, clinical trial results, product approvals and other developments regarding our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • manufacturing, supply or distribution delays or shortages; • any changes to our relationship with any manufacturers, suppliers, collaborators or other strategic partners; • achievement of expected product sales and profitability; • variations in our financial results or those of companies that are perceived to be similar to us; • market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations; • trading volume of our common stock; • an inability to obtain additional funding; • sales of our stock by insiders and stockholders; • general economic, industry and market conditions, other events or factors, many of which are beyond our control; • additions or departures of key personnel; and • intellectual property, product liability or other litigation against us. In addition, in the past, stockholders have initiated class action lawsuits against biopharmaceutical companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert our management’s attention and resources, which could have a material adverse effect on our business, financial condition and results of operations. An active, liquid and orderly market for our common stock may not be maintained. We can provide no assurance that we will be able to maintain an active trading market for our common stock. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially adversely affect our business. We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock. We have never declared or paid any cash dividend on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, the terms of any future debt agreements may preclude us from paying dividends. Any return to stockholders will therefore be limited to the appreciation of their stock. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares. 85
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Table of Contents Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management. Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could significantly reduce the value of our shares to a potential acquiror or delay or prevent changes in control or changes in our management without the consent of our board of directors. The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the board of directors, the chair of our board of directors, our chief executive officer or our president (in the absence of a chief executive officer), which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice and other procedural requirements that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us. We are also subject to the anti-takeover provisions contained in Section 203 of the Delaware General Corporation Law. Under Section 203, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, the board of directors has approved the transaction. Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated 86
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Table of Contents bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine; provided, that, this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, our amended and restated certificate of incorporation also provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. By agreeing to this provision, however, stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. If a court were to find the choice of forum provisions in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. General Risk Factors We previously remediated a material weakness in our internal control over financial reporting. If we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline. Pursuant to Section 404 of Sarbanes-Oxley, our management is required to report upon the effectiveness of our internal control over financial reporting and our independent registered public accounting firm is also required to attest to the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. If we or our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our common stock may decline. In connection with our year-end assessment of internal control over financial reporting, we determined that, as of December 31, 2023, we did not maintain effective internal control over financial reporting because of a material weakness related to the design of internal controls with respect to segregation of duties over certain information technology general controls, or ITGCs. These ITGCs were not operating effectively to (i) restrict access to certain data and the ability to make changes thereto, and (ii) monitor changes to such data. While the control deficiency identified did not result in any misstatements, a reasonable possibility exists that a material misstatement to the annual or interim financial statements and disclosures would not have been prevented or detected on a timely basis. In response to the identified material weakness above, we have changed the relevant access to address the known segregation of duties issues and updated our access review controls to include additional procedures. During the fourth quarter of 2024, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective. As a result, we have concluded the material weakness has been remediated as of December 31, 2024. However, we cannot be certain that a material weakness identical to, or distinct from, this material weakness will not occur in the future. For further discussion of the material weakness identified and our completed remedial efforts, see Item 9A, Controls and Procedures. We cannot assure you that there will not be additional material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. 87
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Table of Contents We and any of our third-party manufacturers or suppliers may use potent chemical agents and hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly. We and any of our third-party manufacturers or suppliers and current or potential future collaborators will use biological materials, potent chemical agents and may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety of the environment. Our operations and the operations of our third-party manufacturers and suppliers also produce hazardous waste products. Federal, state and local laws and regulations govern the use, generation, manufacture, storage, handling and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair our product development efforts. In addition, we cannot eliminate the risk of accidental injury or contamination from these materials or wastes. We do not carry specific biological or hazardous waste insurance coverage, and our property, casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. In the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended. Although we maintain workers’ compensation insurance for certain costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for toxic tort claims that may be asserted against us in connection with our storage or disposal of biologic, hazardous or radioactive materials. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, which have tended to become more stringent over time. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could materially adversely affect our business, financial condition, results of operations and prospects. Our information technology systems, or those of any of our CROs, manufacturers, other contractors or consultants or current or potential future collaborators, may fail or suffer security breaches, which could result in a material disruption of our product development programs. The United States federal and various state and foreign governments have adopted or proposed laws, regulations and requirements regarding the collection, distribution, use, security, and storage of personally identifiable information and other data relating to individuals, and federal and state consumer protection laws are being applied to enforce regulations related to the collection, use, and dissemination of such data. In the ordinary course of business, we collect, store, transmit and otherwise process confidential information, including, without limitation, proprietary business information, preclinical and clinical trial data and personal information, or collectively, Confidential Information. It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such Confidential Information. Despite the implementation of security measures, our information technology systems (including infrastructure) and those of our current and any future CROs and other contractors, consultants and collaborators are vulnerable to attack, damage and interruption from computer viruses and malware (e.g. ransomware), misconfigurations, "bugs" or other vulnerabilities, malicious code, cybersecurity threats (such as denial or degredation-of-service attacks, cyber-attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering attacks), unauthorized access or use, natural disasters, terrorism, war and telecommunication and electrical failures, employee theft or misuse, human error, fraud, and sophisticated nation-state and nation-state-supported actors. Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. As a result of the post-pandemic continued hybrid working environment, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who continue to work remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques - including artificial intelligence - that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic 88
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Table of Contents evidence. There can also be no assurance that our and our third-party service providers’, strategic partners’, contractors’, consultants’, CROs’ and collaborators’ cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and confidential information. We and certain of our service providers are from time to time subject to cyberattacks and security incidents. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations or result in the unauthorized disclosure of or access to proprietary or sensitive personally identifiable information, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets or other similar disruptions. Some of the federal, state and foreign laws, regulations and requirements include obligations of companies to notify individuals of security breaches involving particular personally identifiable information, which could result from breaches experienced by us or by our vendors, contractors, or organizations with which we have formed strategic relationships. Any security breach or other incident, whether real or perceived, could impact our reputation, cause us to incur significant costs, including legal expenses, harm customer confidence, hurt our expansion into new markets, cause us to incur remediation costs, or cause us to lose existing customers. For example, the loss of clinical trial data from clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. We also rely on third parties to manufacture our product candidates, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any real or perceived disruption or security breach affects our systems (or those of our third-party collaborators, service providers, contractors or consultants) or were to result in a loss of or accidental, unlawful or unauthorized access to, use of, release of, or other processing of personally identifiable information, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development and commercialization of our product candidates could be delayed, and we could be subject to significant fines, penalties or liabilities for any noncompliance to certain privacy and security laws. Any adverse impact to the availability, integrity or confidentiality of our or third-party systems or confidential information can result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs. Further, our insurance coverage may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. For further discussion on the potential liability related to the violation of these laws, see “Risk Factors—We, our collaborators and our service providers may be subject to a variety of data privacy and security laws and contractual obligations, which could increase compliance costs and our actual or alleged failure to comply with them could subject us to potentially significant fines or penalties, regulatory investigation, negative publicity, liability or and otherwise harm our business, results of operations and financial condition.” Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses. Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions, for which we are predominantly self-insured. We rely on third-party manufacturers to produce our product candidates. Our ability to obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers were affected by a man-made or natural disaster or other business interruption. In addition, our corporate headquarters is located in San Diego, California near major earthquake faults and fire zones, and the ultimate impact on us of being located near major earthquake faults and fire zones and being consolidated in a certain geographical area is unknown. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. Compliance with these legal 89
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Table of Contents standards could impair our ability to compete in domestic and international markets. We could face criminal liability and other serious consequences for violations, which could harm our business. We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls and anti-corruption and anti-money laundering laws and regulations, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act and other state and national anti-bribery and anti-money laundering laws in the countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, CROs, contractors and other collaborators and partners from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We may engage third parties for clinical trials outside of the United States, to sell our products abroad once we enter a commercialization phase, and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals. We have direct or indirect interactions with officials and employees of government agencies or government- affiliated hospitals, universities and other organizations. We can be held liable for the corrupt or other illegal activities of our employees, agents, CROs, contractors and other collaborators and partners, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences. Furthermore, U.S. export control laws and economic sanctions prohibit the provision of certain products and services to countries, governments, and persons targeted by U.S. sanctions. U.S. sanctions that have been or may be imposed as a result of military conflicts in other countries may impact our ability to continue activities at future clinical trial sites within regions covered by such sanctions. If we fail to comply with export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. These export and import controls, and economic sanctions could also adversely affect our supply chain. Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price. The global credit and financial markets have from time to time experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, rising interest and inflation rates, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of inflation, military conflict, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. In addition, in 2023, the closures of financial institutions and their placement into receivership with the Federal Deposit Insurance Corporation, or FDIC, created bank-specific and broader financial institution liquidity risk and concerns. Future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term working capital needs, and create additional market and economic uncertainty. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget. 90
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Table of Contents Changes in tax laws may impact our future financial position and results of operations. New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, or interpreted, changed, modified or applied adversely to us, any of which could adversely affect our business operations and financial performance. The likelihood of these changes being enacted or implemented is unclear. We are currently unable to predict whether such changes will occur and, if so, the ultimate impact on our business. To the extent that such changes have a negative impact on us, our customers or our suppliers, including as a result of related uncertainty, these changes may materially and adversely impact our business, financial condition, results of operations and cash flows. We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. We are subject to the reporting requirements of the Exchange Act, which require, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition. In addition, Sarbanes- Oxley, as well as rules subsequently adopted by the SEC and Nasdaq to implement provisions of Sarbanes-Oxley, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted additional rules and regulations in these areas, such as mandatory “say on pay” voting and “pay versus performance” disclosure requirements to which we are subject. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate. The rules and regulations applicable to public companies have increased and may continue to increase our legal and financial compliance costs and have made some activities more time consuming and costly. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will decrease our net income or increase our net loss and may require us to reduce costs in other areas of our business. For example, in recent periods obtaining director and officer liability insurance has become more expensive, and we may be required to continue to incur substantial costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline. The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. If these analysts cease coverage of our company, the trading price for our stock would be negatively impacted. If one or more of the analysts who covers us downgrades our stock, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our stock could decrease, which could cause our stock price or trading volume to decline. We could be subject to securities class action litigation. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us, because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of our management’s attention and resources, which could harm our business. ITEM 1B. Unresolved Staff Comments None. 91
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Table of Contents ITEM 1C. Cybersecurity We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework, or NIST CSF. NIST CSF is used as a guide to help us identify, assess and manage cybersecurity risks relevant to our business. This framework enables Avidity to mature its cybersecurity operations through a structured, risk-based approach aligned with evolving technical standards, specifications and requirements. Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares reporting channels and governance processes with other legal, compliance, operational, and financial risk areas. The program is designed to manage cybersecurity risks and is supported by a multi-year roadmap to mature cybersecurity capabilities and services; however, as with any risk management program, there can be no assurance that these measures will be fully implemented, complied with, or effective in all circumstances. Key elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments to help identify material risks from cybersecurity threats to our critical systems and information; • a security team that includes internal IT and data privacy personnel and external managed services partners, principally responsible for managing (i) our cybersecurity risk assessment processes, (ii) our security controls and (iii) our response to cybersecurity incidents; • use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes, including: • annual external and internal penetration tests; • 24-hour monitoring of our networks and cloud resources to help detect, respond to and recover from cyber-attacks; • IT managed services that includes help desk support and managed infrastructure (networks and servers support); and • a ransomware defense plan. • cybersecurity awareness training for our employees, including incident response personnel and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • third-party risk management and reporting process for key service providers based on our assessment of their criticality to our operations and respective risk profile, suppliers and vendors with access to our information systems or data. We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition. In the event we experience a cybersecurity incident we consider to be material, we will disclose such incident consistent with the requirements of Item 1.05 of Form 8-K. See “Risk Factors – We, our collaborators and our service providers may be subject to a variety of data privacy and security laws and contractual obligations, which could increase compliance costs and our actual or alleged failure to comply with them could subject us to potentially significant fines or penalties, regulatory investigations, negative publicity, liability or otherwise harm our business, results of operations and financial condition.” Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee of the board of directors, or the audit committee, oversight of cybersecurity 92
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Table of Contents and other information technology risks. The audit committee oversees management’s implementation of our cybersecurity risk management program. The audit committee receives periodic reports from management on our cybersecurity risks. In addition, management alerts the audit committee of any cybersecurity incidents it considers to be significant or potentially significant. The audit committee reports to the full board of directors regarding its activities, including those related to cybersecurity. Board members receive presentations on cybersecurity topics from management and have available to them external resources related to cybersecurity as part of the board of directors' continuing education on topics that impact companies similar to ours. Our cybersecurity function is overseen by our Senior Vice President of Information Technology, who leads a team that is responsible for assessing and managing our risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. ITEM 2. Properties We currently lease approximately 54,597 square feet of office and laboratory space in San Diego, California, under a lease that expires in 2026, with the option to extend the term of the lease for an additional five years. In April 2024, we entered into a sublease agreement, or the Sublease, to rent 105,000 square feet for office and laboratory space for the Company’s corporate headquarters. The Sublease commenced in August 2025, with a term of 9 years, 9 months. In March 2025, we also exercised the option to rent an additional 80,000 square feet in an adjacent available building under an amended sublease agreement, or the Amended Sublease, with Turning Point Therapeutics, Inc. The term of the Amended Sublease is approximately 9 years, 1 month with payments expected to begin in April 2026. We believe that our current and expected future facilities are adequate to meet our needs and that suitable additional alternative spaces will be available in the future on commercially reasonable terms, if required. ITEM 3. Legal Proceedings We are not currently subject to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. Regardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. ITEM 4. Mine Safety Disclosures Not applicable. 93
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Table of Contents PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “RNA.” Holders of Common Stock As of February 13, 2026, there were approximately 13 holders of record of our common stock. This number was derived from our shareholder records and does not include beneficial owners of our common stock whose shares are held in the name of various dealers, clearing agencies, banks, brokers and other fiduciaries. Dividend Policy We have never declared or paid any cash dividends on our capital stock. We intend to retain future earnings, if any, to finance the operation of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments. Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K for information about our equity compensation plans which is included herein. 94
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Table of Contents Performance Graph The following stock performance graph illustrates a comparison from June 12, 2020 (the date our common stock commenced trading on the Nasdaq Global Market) through December 31, 2025, of the total cumulative stockholder return on our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index. The graph assumes an initial investment of $100 on June 12, 2020 at the opening trading price of $18.00 per share, and that all dividends were reinvested, although dividends have not been declared on our common stock. The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. Unregistered Sales of Equity Securities None. Issuer Repurchases of Equity Securities None. ITEM 6. [Reserved] 95
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Table of Contents ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this annual report. This discussion and analysis contains forward-looking statements based upon our current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this annual report. For the comparison of the financial results for the fiscal years ended December 31, 2024 and 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 27, 2025. References to “Avidity,” "the Company," “we,” “us” and “our” refer to Avidity Biosciences, Inc. Overview We are a biopharmaceutical company committed to delivering a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates, or AOCs. Our proprietary AOC platform is designed to combine the specificity of monoclonal antibodies, or mAbs, with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics. Our pipeline currently has three programs in clinical development. Delpacibart zotadirsen, or del-zota (formerly AOC 1044) is a registrational study designed for people living with Duchenne muscular dystrophy, or DMD, and is currently in development with the ongoing Phase 2 EXPLORE44 Open-Label Extension (EXPLORE44-OLE™) study. Del- zota is specifically designed for people with mutations amenable to exon 44 skipping, or DMD44, and is the first of multiple AOCs we are developing for DMD. Delpacibart etedesiran, or del-desiran (formerly AOC 1001), is designed to treat people with myotonic dystrophy type 1, or DM1, and is currently in development with the global Phase 3 HARBOR™ trial and ongoing HARBOR Open-Label Extension (HARBOR-OLE™) trial. Delpacibart braxlosiran, or del-brax (formerly AOC 1020), is the first investigational therapy designed to directly target DUX4 in people living with facioscapulohumeral muscular dystrophy, or FSHD, and is currently in development in the potentially registrational fully enrolled ongoing FORTITUDE™ biomarker cohort of the Phase 1/2 FORTITUDE trial, the Phase 2 FORTITUDE Open-Label Extension (FORTITUDE-OLE™) trial and the Phase 3 FORTITUDE-3™ trial. Del-desiran, del-brax and del-zota have all been granted Orphan designation by the FDA and the European Medicines Agency, or EMA, and Fast Track designation by the FDA. In addition, the FDA has granted del-desiran and del-zota Breakthrough Therapy designation and granted del-zota Rare Pediatric Disease designation. Del-desiran has also been granted Orphan Drug designation by the Japan Ministry of Health, Labour and Welfare (MHLW). Since our inception in 2012, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, developing our proprietary AOC platform, identifying potential product candidates, establishing our intellectual property portfolio, conducting research, preclinical and clinical studies, preparing for potential commercial activities, and providing other general and administrative support for these operations. We have not generated any revenue from product sales. We are currently building our capabilities to support potential launches of product candidates currently in clinical development and to potentially operate as a commercial organization. In June 2020, we completed our initial public offering, or IPO, and have since raised capital through additional public offerings, private placements, and under collaboration and research license agreements. Refer to “Liquidity and Capital Resources” for further information on the capital raised since inception and our future capital requirements. We have incurred operating losses in each year since inception. Our net losses were $684.6 million, $322.3 million, and $212.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $1.6 billion. We expect our expenses and operating losses will increase substantially as we conduct our ongoing and planned preclinical studies and clinical trials, continue our research and development activities, utilize third parties to manufacture our product candidates and related raw materials, hire additional personnel, and protect our intellectual property. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies and clinical trials and our expenditures on other research and development activities, as well as the generation of any collaboration and services revenue. Based upon our current operating plans, we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least 12 months from the date of the filing of this Annual Report on Form 10-K. While we may generate revenue under our current and/or future collaboration 96
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Table of Contents agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us 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. Recent Events On October 25, 2025, we entered into the Merger Agreement, with Novartis and Merger Sub, pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into us, and we will survive the Merger as an indirect wholly owned subsidiary of Parent, which we refer to as the Merger. In connection with the Merger, we, SpinCo, and Parent (with respect to certain sections specified therein) entered into the Separation and Distribution Agreement, pursuant to which, on the terms and subject to the conditions set forth in the Separation and Distribution Agreement, prior to the Effective Time, we will effect the Pre-Closing Reorganization, which will generally result in SpinCo owning, assuming or retaining all assets and liabilities held by us and our subsidiaries exclusively related to our early stage precision cardiology programs, including AOC 1086 and AOC 1072, which target rare genetic cardiomyopathies, including phospholamban and Protein Kinase AMP-activated non-catalytic subunit Gamma 2 Syndrome, respectively, and certain collaboration agreements, including those with Bristol-Myers Squibb Company and Eli Lilly and Company, and us owning, assuming or retaining all other assets and liabilities. The transfer of assets to SpinCo includes certain of our assets that triggered a ROFN with the ROFN Holder. During the ROFN period, which expired on February 5, 2026, we were permitted to negotiate the sale of our assets subject to the ROFN with the ROFN Holder, and, if an agreement had been reached, consummate the sale of all or a portion of such assets. If such a sale had been consummated, SpinCo could have received less than all of the SpinCo Business. Following the Separation, but prior to the Effective Time, we will either (a) distribute to our stockholders, as of the Distribution Record Date, on a pro rata basis, all of the issued and outstanding shares of SpinCo Common Stock at a ratio of one share of SpinCo Common Stock per ten shares of our common stock held, with SpinCo continuing its existence as a separate and independent company or (b) subject to Parent's written consent, consummate a sale of SpinCo to a third party in accordance with the terms of the Merger Agreement, subject to the terms and conditions specified in the Merger Agreement and the Separation and Distribution Agreement, and thereafter distribute the Permitted Sale Proceeds to our stockholders or the Company Equity Awards, as of the chosen record date for distributing such proceeds, on a pro rata basis and subject to applicable tax withholding. In connection with the Distribution, holders of Company Equity Awards (subject to certain exceptions) as of the Distribution Record Date who are current service providers to SpinCo and its affiliates (including us) are entitled to receive certain make whole awards that will be settled in shares of SpinCo Common Stock at a ratio of one share of SpinCo Common Stock per ten shares of our common stock underlying each such Company Equity Award. If the Distribution occurs, SpinCo will operate as a separate, independent, publicly held company. Consummation of the Merger is subject to closing conditions related to the Distribution and other customary closing conditions. The parties expect the Merger, the Distribution and the other transactions contemplated by the Merger Agreement to close in the first half of 2026. In the event the Merger Agreement is terminated, under specified circumstances, we will be required to pay Parent a termination fee of $450 million. The Merger Agreement further provides that Parent will be required to pay us a reverse termination fee of $600 million in the event the Merger Agreement is terminated by either us or Parent under certain circumstances. For additional information related to the Merger Agreement, please refer to our definitive proxy statement on Schedule 14A filed with the SEC on January 30, 2026, as thereafter amended or supplemented, and the registration statement on Form 10 filed by SpinCo with the SEC on December 10, 2025, as thereafter amended or supplemented. For additional information regarding risks and uncertainties associated with the 97
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Table of Contents Merger and the Distribution, see Part I, Item 1A – “Risk Factors” included in this annual report on Form 10-K. There is no guarantee that the Merger or the Distribution will be consummated. Research Collaboration with Bristol Myers Squibb Company In November 2023, we entered into (i) a Research Collaboration and License Agreement, or the BMS Collaboration Agreement, to expand on the research with MyoKardia for up to five targets utilizing our proprietary AOC platform technology and (ii) a Securities Purchase Agreement with BMS, or the BMS Purchase Agreement, for the purchase by BMS in a private placement of 5,075,304 shares of our common stock at a purchase price of $7.8813 per share, for an aggregate purchase price of approximately $40 million. We refer to the BMS Collaboration Agreement and the BMS Purchase Agreement together as the "BMS Agreements." Under the terms of the BMS Agreements, we received approximately $100 million upfront, which includes a $60 million cash payment under the terms of the BMS Collaboration Agreement, and approximately $40 million for the purchase of our common stock under the terms of the BMS Purchase Agreement. We are also eligible to receive up to approximately $1.35 billion in research and development milestone payments, up to approximately $825 million in commercial milestone payments, and tiered royalties from high single digits to low double-digits on net sales. We are responsible for our own research collaboration costs incurred under the agreement, subject to a cumulative spending limit of $40 million. BMS will fund all future clinical development, regulatory, and commercialization activities coming from this collaboration. Research Collaboration with Eli Lilly and Company In April 2019, we entered into a Research Collaboration and License Agreement, or the Lilly Agreement, with Eli Lilly and Company, or Lilly, for the discovery, development, and commercialization of AOC products in immunology and other select indications on a worldwide basis. Under the Lilly Agreement, we and Lilly will collaborate on preclinical research and discovery activities for such products, with Lilly being responsible for funding the cost of such activities by both parties. Lilly will also lead the clinical development, regulatory approval and commercialization of all such products, at its sole cost. We granted Lilly an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under our technology to research, develop, manufacture, and sell products containing AOCs that are directed to up to six mRNA targets. We retain the right to use our technology to perform our obligations under the agreement and for all purposes not granted to Lilly. Lilly paid us an upfront license fee of $20.0 million in 2019, and we are eligible to receive up to $60.0 million in development milestone payments per target, up to $140.0 million in regulatory milestone payments per target and up to $205.0 million in commercialization milestone payments per target. We are eligible to receive a tiered royalty ranging from the mid-single to low-double digits from Lilly on worldwide annual net sales of licensed products, subject to specified and capped reductions for the market entry of biosimilar products, loss of patent coverage of licensed products, and for payments owed to third parties for additional rights necessary to commercialize licensed products in the territory. In August 2025, Lilly paid us $10.0 million as the result of the achievement of a clinical development milestone under the Lilly Agreement for a collaboration target. Components of Results of Operations Revenue Our revenue to date has been derived from payments received under our license and research collaboration agreements, including revenue from reimbursements of services, as well as a combination of upfront payments and milestone payments under our current and/or future collaboration agreements. We do not expect to generate any revenue from the sale of products unless and until such time that our product candidates have advanced through clinical development and regulatory approval, if ever. We expect that any revenue we generate, if at all, will fluctuate from quarter-to-quarter as a result of the timing and amount of payments relating to such services and milestones and the extent to which any of our products are approved and successfully commercialized. If we fail to complete preclinical and clinical development of product candidates or obtain regulatory approval for our product candidates, our ability to generate future revenues and our results of operations and financial position would be adversely affected. 98
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Table of Contents Operating Expenses Research and Development Research and development expenses consist of costs associated with our research and development activities, including our discovery and research efforts, and the preclinical and clinical development of our product candidates. Our research and development expenses include: • external costs, including expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturers, consultants, and our scientific advisors; and • internal costs, including; • employee-related expenses, including salaries, benefits, and stock-based compensation; • the costs of laboratory supplies and acquiring, developing, and manufacturing preclinical study materials; and • facilities, information technology, and depreciation, which include direct and allocated expenses for rent and maintenance of facilities, and depreciation of leasehold improvements and equipment. Research and development costs, including costs reimbursed under collaboration agreements, are expensed as incurred, with reimbursements of such amounts being recognized as revenue. We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received. At any one time, we are working on multiple programs. Our internal resources, employees, and infrastructure are not directly tied to any one research or drug discovery program and are typically deployed across multiple programs. We expect our research and development expenses to increase for the foreseeable future as we continue to conduct ongoing research and development activities, advance preclinical research programs toward clinical development, including IND-enabling studies, and conduct clinical trials. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming and can vary significantly for each product candidate and development program. We may never succeed in achieving marketing approval for any of our product candidates. We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to preclinical and clinical results, regulatory developments, ongoing assessments as to each program’s commercial potential, and our ability to maintain or enter into new collaborations, to the extent we determine the resources or expertise of a collaborator would be beneficial for a given program. If the Merger is not completed, we will need to raise substantial additional capital in the future. In addition, we cannot forecast which development programs may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements. Our development costs may vary significantly based on factors such as: • the number and scope of clinical, preclinical, and IND-enabling studies; • per patient trial costs; • the number of trials required for approval; • the number of sites included in the trials; • the countries in which the trials are conducted; • the length of time required to enroll eligible patients; • the number of patients that participate in the trials; • the number of doses that patients receive; • the drop-out or discontinuation rates of patients; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; 99
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Table of Contents • the cost and timing of manufacturing our product candidates; • the various phases of development of our product candidates; and • the efficacy and safety profiles of our product candidates. General and Administrative General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits, and stock-based compensation, for employees in our executive, finance, accounting, legal, business development, and other support functions. Other general and administrative expenses include allocated facility, information technology, and depreciation related costs not otherwise included in research and development expenses, and professional fees for auditing, tax, intellectual property, and legal services. Costs related to filing and pursuing patent applications are recognized as general and administrative expenses as incurred since recoverability of such expenditures is uncertain. We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development activities, commercial readiness initiatives, and other corporate activities. Other Income (Expense) Other income (expense) consists primarily of interest earned on our cash, cash equivalents, and marketable securities. Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the years presented (in thousands): Year Ended December 31, Change2025 2024 Revenue $ 18,755 $ 10,897 $ 7,858 Research and development expenses 559,159 303,593 255,566 General and administrative expenses 205,539 86,240 119,299 Other income 61,312 56,634 4,678 Revenue Revenue increased by $7.9 million for the year ended December 31, 2025 as compared to the same period in 2024, primarily due to the recognition of a $10.0 million milestone under the Lilly Agreement, partially offset by a slight decrease in revenues earned under the BMS agreement. 100
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Table of Contents Research and Development Expenses The following tables illustrate the components of our research and development expenses for the years presented (in thousands): Year Ended December 31, Change2025 2024 External costs: Del-desiran $ 92,716 $ 47,026 $ 45,690 Del-brax 76,238 33,230 43,008 Del-zota 47,401 27,073 20,328 Other programs 27,989 7,617 20,372 Unallocated 133,365 74,729 58,636 Total external costs 377,709 189,675 188,034 Internal costs: Employee-related expenses 152,305 90,935 61,370 Facilities, lab supplies and other 29,145 22,983 6,162 Total internal costs 181,450 113,918 67,532 Total research and development expenses $ 559,159 $ 303,593 $ 255,566 ____________________ (1) Unallocated costs primarily relate to manufacturing costs for monoclonal antibodies and professional services used across all programs. Research and development expenses increased by $255.6 million for the year ended December 31, 2025 as compared to the same period in 2024. Research and development expense increased primarily due to increased external costs associated with the progression of clinical trials and preclinical studies, including $53.9 million in higher unallocated manufacturing costs related to monoclonal antibodies, as well as higher internal costs including $61.4 million in higher personnel costs. General and Administrative Expenses General and administrative expenses increased by $119.3 million for the year ended December 31, 2025 as compared to the same period in 2024, primarily due to $52.5 million in higher personnel costs and $46.1 million in higher professional fees. Professional fees included $35.9 million of transaction-related costs incurred in connection with the Merger, as well as costs to support our expanded operations and commercial readiness. Other Income Other income increased by $4.7 million for the year ended December 31, 2025 as compared to the same period in 2024, due to higher interest income earned on marketable securities investments and cash and cash equivalent balances. Liquidity and Capital Resources Sources of Liquidity On August 9, 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or the 2024 Sales Agent. Under the 2024 Sales Agreement, we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $400.0 million through the 2024 Sales Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the 2024 Sales Agent. We are not obligated to sell, and the 2024 Sales Agent is not obligated to buy or sell, any shares of common stock under the 2024 Sales Agreement. As of December 31, 2025, we sold 5,646,583 shares of our common stock pursuant to the 2024 Sales Agreement and received net proceeds of $185.5 million, after deducting offering-related transaction costs and commissions of $4.8 million, at an average price of $33.69 per share. (1) 101
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Table of Contents On July 23, 2025, pre-funded warrants, originally issued by the Company on March 4, 2024, or the 2024 Pre-Funded Warrants, to purchase 2,208,114 shares of our common stock were exercised in a cashless transaction, which resulted in an aggregate of 2,208,048 shares of our common stock being issued. On September 15, 2025, we completed an underwritten public offering of 17,250,000 shares of our common stock at a public offering price of $40.00 per share. Net proceeds from the offering were approximately $651.4 million, after deducting underwriting discounts and offering expenses of $38.6 million. The shares sold in the offering were registered pursuant to our shelf registration statement on Form S-3, which became automatically effective upon filing on May 9, 2024. On October 27, 2025, 2024 Pre-Funded Warrants to purchase an aggregate of 3,761,945 shares of our common stock were exercised in cashless transactions, which resulted in an aggregate of 3,761,868 shares of our common stock being issued. As of December 31, 2025, 2024 Pre-Funded Warrants to purchase a total of 3,060,792 shares of our common stock remained available for exercise. As of December 31, 2025, other significant sources of capital raised to fund our operations were comprised of aggregate gross proceeds of $130.0 million from funding under collaboration and research services agreements of which approximately $40.0 million relates to the sale of 5,075,304 unregistered shares in November 2023 to BMS in a private placement under the terms of the BMS Purchase Agreement. Future Capital Requirements As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $1.7 billion. Based upon our current operating plans, we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least 12 months from the date of the filing of this Form 10-K. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. In addition, the Merger Agreement contains restrictions on our issuance of shares of our common stock, subject to certain exceptions described therein. If the Merger is not completed, our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to: • the type, number, scope, progress, expansions, results, costs and timing of discovery, preclinical studies and clinical trials of our product candidates that we are pursuing or may choose to pursue in the future; • the costs and timing of manufacturing for our product candidates and commercial manufacturing if any product candidate is approved; • the costs, timing, and outcome of regulatory review of our product candidates; • the terms and timing of establishing and maintaining collaborations, licenses, and other similar arrangements; • the costs of obtaining, maintaining, and enforcing our patents and other intellectual property rights; • the costs associated with hiring additional personnel and consultants as we continue to grow our company; • the timing and amount of the milestone or other payments made to us under current or future research and collaboration agreements; • the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved; • our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors, and adequate market share and revenue for any approved products; and • costs associated with any products or technologies that we may in-license or acquire. While we may generate revenue under our current and/or future collaboration agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain 102
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Table of Contents regulatory approval for one or more of our product candidates, which we do not expect will occur in the immediate near term, and may never occur. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. Accordingly, if the Merger is not completed, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including current and potential future collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all. In addition, 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. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us 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. Cash Flows The following table summarizes our cash flows for the years presented (in thousands): Year Ended December 31, Change2025 2024 Net cash provided by (used in): Operating activities $ (650,441) $ (300,870) $ (349,571) Investing activities (38,035) (854,201) 816,166 Financing activities 850,990 1,192,357 (341,367) Effect of exchange rate on cash, cash equivalents and restricted cash 137 — 137 Net increase in cash, cash equivalents and restricted cash $ 162,651 $ 37,286 $ 125,365 Operating Activities Net cash used in operating activities of $650.4 million and $300.9 million for the years ended December 31, 2025 and 2024, respectively, consisted primarily of cash used to fund our operations related to the development of del-desiran, del- brax, del-zota, and other potential programs. The increase in cash used in our operations is primarily due to increases in research and development costs as well as general and administrative expenses as described under “Results of Operations” above. Investing Activities Net cash used in investing activities of $38.0 million for the year ended December 31, 2025 consisted of $1.1 billion for purchases of marketable securities due to investing the proceeds from the issuance of common stock as well as the reinvestment of proceeds from matured marketable securities, as well as $13.3 million in purchases of property and equipment, offset by $1.1 billion of proceeds from maturities of marketable securities. Net cash used in investing activities of $854.2 million for the year ended December 31, 2024 consisted of $1.4 billion for purchases of marketable securities due to investing the proceeds from the issuance of common stock and pre-funded warrants as well as the reinvestment of proceeds from matured marketable securities, as well as $7.1 million in purchases of property and equipment, offset by $586.4 million of proceeds from maturities of marketable securities. Financing Activities Net cash provided by financing activities of $851.0 million for the year ended December 31, 2025 consisted primarily of $836.9 million in net proceeds from sales of our common stock and $26.5 million in proceeds from the issuance of common stock under employee incentive equity plans, offset by $12.4 million of payments for taxes related to the net share settlement of equity awards. Net cash provided by financing activities of $1.2 billion for the year ended December 31, 2024 consisted primarily of $762.2 million in net proceeds from sales of our common stock, $238.4 million in net proceeds from the issuance of common stock from a private placement transaction, $141.4 million in net proceeds from the sale of pre-funded warrants in a 103
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Table of Contents private placement transaction, as well as $50.4 million in proceeds from the issuance of common stock under employee incentive equity plans. Contractual Obligations and Commitments We have operating lease obligations related to our lease for office and laboratory space in San Diego, California. In June 2020, and as amended in December 2020, we entered into a non-cancellable operating lease for approximately 54,597 square feet of office and laboratory space, or the Lease, which commenced in November 2021. The Lease has a five-year initial term with a renewal option for an additional five years. Under the terms of the Lease, the initial monthly base rent of approximately $251,000 will increase to approximately $282,000 during the last year of the Lease's initial term, and the first year includes five months of rent abatement. In June 2023, we further amended the lease to expand our office and laboratory space. The expansion increased monthly base rent by approximately $45,000 increasing to $49,000 per month in the last year of the Lease's term. The total remaining base rent commitment for the initial term under the Lease is $3.1 million. In April 2024, we entered into a new Sublease agreement to rent office and laboratory space for our corporate headquarters. The Sublease commenced on August 14, 2025, with a term of 9 years, 9 months. Total aggregate future lease commitments under the Sublease are approximately $78.0 million. In March 2025, we also exercised the option to rent an adjacent available building under the Amended Sublease agreement with Turning Point Therapeutics, Inc. The term of the Amended Sublease is approximately 9 years, 1 month with payments expected to commence in April 2026. Total aggregate future lease commitments under the Amended Sublease are approximately $53.7 million. Refer to Note 7, "Commitments and Contingencies" to our consolidated financial statements included elsewhere in this report. In August 2025, we entered into a manufacturing agreement with a Contract Manufacturing Organization (CMO) for the manufacturing of the Company’s drug substances, conjugated drug substances, and drug products. The manufacturing agreement requires the Company to meet minimum purchase obligations on an annual basis, beginning in 2026 and ending in 2028. The total aggregate amount of future unconditional minimum purchase obligations under the manufacturing agreement is approximately $621.6 million, subject to foreign currency changes, annual price increases, other adjustments, and payments for certain costs and net of the nonrefundable reservation fees. Refer to Note 7, "Commitments and Contingencies" to our consolidated financial statements included elsewhere in this report for further details of our commitments. We enter into contracts in the normal course of business for contract research services, contract manufacturing services, clinical trials, professional services, and other services and products for operating purposes. These contracts may include certain provisions that could require payments for early termination. The amount of the termination payments vary depending on the timing of the termination and the specific terms of the contract. Therefore, these contracts are considered cancelable contracts. Critical Accounting Polices and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue and expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements included elsewhere in this annual report, we believe that the following accounting policies with financial estimates are the most critical to understanding and evaluating our historical and future performance. Revenue Recognition To date, all of our revenue has been derived from our collaboration and research agreements entered into with various parties. The terms of these arrangements include payments to us for the following: non- 104
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Table of Contents refundable, upfront license fees; development, regulatory, and commercial milestone payments; payments for research and development services provided by us or for manufacturing supply services we may provide through our contract manufacturers; and royalties on net sales of licensed products. If an agreement includes a license to our intellectual property and that license is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. With respect to BMS, we identified two distinct units of accounting under the BMS Agreements. The first distinct unit of accounting includes (i) a license to technology and patents; (ii) collaboration services, including research services and technical and regulatory support; and (iii) participation on research oversight committees. The Company has determined that these delivered elements individually are either not capable of being distinct or are not distinct within the context of the contract and, therefore, will account for them as a single distinct performance obligation for purposes of revenue recognition. The second distinct unit of accounting is related to the sale of common stock, which will be accounted for as an issuance of equity at fair value in accordance with the applicable accounting standards. Consideration received related to the premium on sale of the Company's common stock was allocated to the transaction price for purposes of revenue recognition. The Company will recognize revenue using the input method in an amount proportional to the collaboration expenses incurred and the total estimated collaboration expenses over the seven-year period in which it expects to deliver its performance obligation as this method provides the most faithful depiction of the Company's transfer of services under the BMS Agreements. The Company periodically reviews and updates the estimated collaboration expenses, when appropriate, which adjusts the percentage of revenue that is recognized for the period. For all periods presented, amounts received prior to satisfying the above revenue recognition criteria were recorded as deferred revenue until all applicable revenue recognition criteria were met. Deferred revenue represented the portion of payments received that have not been earned. Accrued Research and Development Costs As part of the process of preparing our consolidated financial statements, we are required to make estimates of our accrued research and development expenses resulting from our obligations under contracts with CROs, manufacturers, vendors and consultants. The financial terms of these contracts vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. We reflect research and development expenses in our consolidated financial statements by matching those expenses with the period in which services and efforts are expended. In accruing for these activities, we obtain information from various sources and estimate the level of effort or expense allocated to each period. These accruals of research and development expenses require estimates of expenses incurred, including estimates of the time period over which services will be performed and the completion of contract components. If the actual timing of the performance of services varies from estimates, the accrual or prepaid expenses are adjusted accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in our reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this annual report. 105
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Table of Contents ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk Our cash, cash equivalents, and marketable securities consist of cash held in readily available checking and money market accounts, as well as debt securities. We are exposed to market risk related to fluctuations in interest rates and market prices. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of United States interest rates. However, due to the short- and intermediate-term nature of the instruments in our portfolio, we believe an immediate hypothetical 5% change in interest rates would not have had a material effect on our results of operations during the periods presented. Effects of Inflation Inflation generally affects us by increasing our cost of labor and contract costs included within operating expenses. We do not believe inflation has had a material effect on our results of operations during the periods presented. Foreign Currency Exchange Risk We are exposed to market risk related to changes in foreign currency exchange rates. We contract with vendors that are located outside the United States, and certain invoices are denominated in foreign currencies. We are subject to fluctuations in foreign currency exchange rates in connection with these arrangements. To date, we have not experienced any material effects from foreign currency fluctuations. We believe an immediate hypothetical 5% change in foreign currency exchange rates would not have had a material effect on our results of operations during the periods presented. ITEM 8. Financial Statements and Supplementary Data The consolidated financial statements required pursuant to this item are incorporated by reference herein from the applicable information included in Item 15 of this annual report and are presented beginning on page F-1. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ITEM 9A. Controls and Procedures Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, 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 cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the 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. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this annual report. Based on such 106
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Table of Contents evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in its 2013 Internal Control — Integrated Framework. Based on this assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2025. Attestation Report of the Registered Public Accounting Firm Deloitte & Touche LLP has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, as stated in its report dated February 23, 2026, which is included below. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 107
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Table of Contents Report of Independent Registered Public Accounting Firm To the stockholders and the Board of Directors of Avidity Biosciences, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Avidity Biosciences, Inc. and subsidiaries (the "Company") as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 23, 2026, expressed an Unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's report. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP San Diego, California February 23, 2026 108
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Table of Contents ITEM 9B. Other Information Rule 10b5-1 Trading Arrangements From time to time, our officers (as defined in Rule 16a–1(f)) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of Regulation S-K). During the three months ended December 31, 2025, none of our officers or directors adopted or terminated any such trading arrangements. In connection with our entry into the Merger Agreement, all active Rule 10b5-1 trading arrangements to which our officers and directors were a party automatically terminated or suspended in accordance with the terms of such trading arrangements. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 109
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Table of Contents PART III ITEM 10. Directors, Executive Officers and Corporate Governance Board of Directors Our Amended and Restated Certificate of Incorporation, or the “Charter”, and Bylaws provide that the authorized number of directors shall be fixed from time to time exclusively by resolution adopted by a majority of the Board. We currently have nine (9) authorized director slots on our Board. As set forth in our Charter, the Board is currently divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. The following table summarizes the class, independence and committee membership of our directors: Name Age * Position Independent Committee Membership CLASS I DIRECTORS - Terms to Expire at the 2027 Annual Meeting Carsten Boess 59 Director X Audit (Chair) Sarah Boyce 54 President, Chief Executive Officer, and Director Troy Wilson, Ph.D., J.D. 57 Chair of the Board X Human Capital Management CLASS II DIRECTORS - Terms to Expire at the 2028 Annual Meeting Arthur Levin, Ph.D. 72 Director Simona Skerjanec 61 Director X Tamar Thompson 52 Director X Nominating and Corporate Governance; Human Capital Management CLASS III DIRECTORS - Terms to Expire at the 2026 Annual Meeting Noreen Henig, M.D. 60 Director X Nominating and Corporate Governance (Chair); Audit Edward M. Kaye,M.D. 76 Director X Human Capital Management (Chair); Nominating and Corporate Governance Jean Kim 52 Director X Audit ____________________ * As of February 23, 2026. The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of our Company. Our directors may be removed only for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of the then-outstanding shares of capital stock entitled to vote in the election of directors. All of the persons whose names and biographies appear below are currently serving as our directors. Each of our directors brings to the Board significant leadership experience derived from their professional experience and service as executives or board members of other corporations and/or private equity and venture capital firms. The process undertaken by the Nominating and Corporate Governance Committee of the Board in recommending qualified director candidates is described below under “Board Qualifications and Director Nomination Process.” Certain individual qualifications and skills of our directors that contribute to the Board’s effectiveness as a whole are described in the following paragraphs. 110
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Table of Contents Class I Directors (Terms to Expire at the 2027 Annual Meeting) Carsten Boess has served on our board of directors since April 2020. Mr. Boess also serves on the boards of directors of Rocket Pharmaceuticals, Inc. and Achilles Therapeutics plc. Previously, Mr. Boess was the Executive Vice President of Corporate Affairs at Kiniksa Pharmaceuticals, Ltd. from August 2015 until February 2020. Before Kiniksa, Mr. Boess was the Chief Financial Officer at Alexion Pharmaceuticals from 2004 to 2005 and the Senior Vice President and Chief Financial Officer at Synageva BioPharma Corp. from 2011 until the company’s acquisition by Alexion Pharmaceuticals in 2015. Previously, Mr. Boess served in multiple roles with increasing responsibility at Insulet Corporation, including Chief Financial Officer from 2006 to 2009 and Vice President of International Operations from 2009 to 2011. Prior to that, Mr. Boess served as Executive Vice President of Finance at Serono Inc. from 2005 to 2006. In addition, he was a member of the Geneva-based World Wide Executive Finance Management Team while at Serono. Mr. Boess also held several financial executive roles at Novozymes of North America and Novo Nordisk in France, Switzerland and China. During his tenure at Novo Nordisk, he served on Novo Nordisk’s Global Finance Board. From August 2020 until January 2023, Mr. Boess served on the board of directors of Health Sciences Acquisitions Corporation 2. Mr. Boess received a Bachelor’s degree and a Master’s degree in Economics and Finance, specializing in Accounting and Finance from the University of Odense, Denmark. Mr. Boess’s business, financial and corporate governance experience in the biotechnology industry contributed to our board of directors’ conclusion that he should serve as a director of our company. Sarah Boyce has served as our President and Chief Executive Officer and as a member of our board of directors since October 2019. Prior to joining Avidity, she served as President and a member of the board of directors of Akcea Therapeutics, Inc. from April 2018 through September 2019, where she led the commercialization of the company’s rare disease products. Ms. Boyce served as Chief Business Officer of Ionis Pharmaceuticals, Inc. from January 2015 to April 2018, and Vice President, Head of International Business Strategy and Operations at Forest Laboratories, Inc. from 2012 to 2014. She previously held various positions with Alexion Pharmaceuticals Inc., Novartis AG, Bayer AG and F. Hoffmann-La Roche AG. Ms. Boyce has served on the boards of directors of Abcuro, Inc., a privately held biotechnology company, since July 2024, and of Contineum Therapeutics, Inc. since June 2024. Ms. Boyce also served on the boards of directors of OmniAb, Inc. from November 2022 to April 2025, of Berkeley Lights Inc. from July 2019 to May 2022 and of Ligand Pharmaceuticals Incorporated from October 2019 to November 2022. Ms. Boyce holds a B.S. in Microbiology from the University of Manchester, England. Ms. Boyce’s knowledge of our business, as well as her extensive development, commercial and executive management experience, contributed to our board of directors’ conclusion that she should serve as a director of our company. Troy Wilson, Ph.D., J.D., is our co-founder and has served as a member of our board of directors since November 2012. He served as Executive Chairman from February 2019 to January 2021 and has served as our Chair since January 2021. Dr. Wilson served as our President and Chief Executive Officer from November 2012 to February 2019. He has been President and Chief Executive Officer and Chairman of the board of directors of Kura Oncology, Inc. since August 2014 and has served as a member of the board of directors of Puma Biotechnology, Inc. since October 2013. He has served as Executive Chairman of the board of directors of Abintus Bio, Inc. since October 2020. He has also served as Executive Chairman of the board of directors of Wellspring Biosciences, Inc., a privately held biopharmaceutical company, since July 2012, and has served as the sole managing member of Wellspring Biosciences’ parent company, Araxes Pharma LLC, since May 2012. Previously, Dr. Wilson served as a director of Zosano Pharma Corporation from June 2014 to October 2019. He also served as President and Chief Executive Officer of Wellspring Biosciences and Araxes Pharma from July 2012 to March 2019, and as President and Chief Executive Officer and a member of the board of directors of Intellikine, Inc. Dr. Wilson holds a J.D. from New York University and a Ph.D. in Bioorganic Chemistry and a B.A. in Biophysics from the University of California, Berkeley. Dr. Wilson’s knowledge of our business and his senior executive and board-level experience at biopharmaceutical companies contributed to our board of directors’ conclusion that he should serve as Chair of our company. Class II Directors (Terms to Expire at the 2028 Annual Meeting) Arthur A. Levin, Ph.D., has served on our board of directors since February 2023. Dr. Levin served as our Distinguished Scientist and Strategic Leader from February 2023 until the end of 2024 after serving as our Chief Scientific Officer from October 2019 to February 2023. Previously, Dr. Levin served as our Executive Vice President of Research and Development from October 2013 to October 2019. Dr. Levin has a combined three decades of experience in all aspects of drug development from discovery through drug registration and has played key roles in the development of numerous oligonucleotides. Prior to joining Avidity, from April 2012 to 111
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Table of Contents January 2014, he served as Executive Vice President at miRagen Therapeutics, Inc. Prior to that, Dr. Levin held various senior management positions at Santaris Pharma A/S Corp. and Ionis Pharmaceuticals, Inc. Since September 2015, Dr. Levin has served as a member of the board of directors of Stoke Therapeutics, Inc. Dr. Levin holds a Ph.D. in Toxicology from the University of Rochester and a B.S. in Biology from Muhlenberg College. Dr. Levin's knowledge of our business and technology and his extensive drug development experience contributed to our board of directors' conclusion that he should serve as a director of our company. Simona Skerjanec has served on our board of directors since May 2024. Ms. Skerjanec holds nearly three decades of broad international experience in the pharmaceutical industry and has led multiple research and development efforts that have resulted in regulatory approvals and launches of commercial therapies in therapeutic areas including neurology and cardiology in the U.S. and other countries. Ms. Skerjanec was the Senior Vice President and Global Neuroscience Head at Roche in Switzerland and led the business and global strategy for Roche’s portfolio of neurological and rare diseases, including Ocrevus® for the treatment of multiple sclerosis and a novel monoclonal antibody for the treatment of Alzheimer’s disease. During her nine-year tenure at Roche, she also served as a General Manager of Roche in Portugal. Prior to joining Roche, Ms. Skerjanec was Senior Vice President and Cardiovascular franchise head at The Medicines Company where she held various roles of increasing responsibilities in development and commercialization. She also held positions at Eli Lilly, Pfizer and Johnson & Johnson. Ms. Skerjanec has served on the board of directors of Immunic Therapeutics since April 2024 and the board of directors of Perceiv AI, a private, AI-driven precision medicine company, since October 2024. Ms. Skerjanec holds a Master’s degree in Pharmacy from University of Ljubljana and an MBA from Farleigh Dickinson University in New Jersey. Ms. Skerjanec’s deep commercial and business experience in the biotechnology industry in the United States and internationally contributed to our board of directors’ conclusion that she should serve as a director of our company. Tamar Thompson has served on our board of directors since January 2021. Since November 2019, Ms. Thompson has served as the Vice President, Global Corporate Affairs for Alexion Pharmaceuticals, Inc. and as the chair of the board of the Alexion Charitable Foundation. Prior to joining Alexion, Ms. Thompson served as head, federal executive branch strategy and state government affairs for Bristol-Myers Squibb Company from February 2015 to November 2019. She also served as a strategic policy advisor and consultant for premiere Washington, DC based firms, including ADVI, Kimbell and Associates and Avalere Health. Since May 2023, Ms. Thompson has served on the board of directors of Catalyst Pharmaceuticals, Inc., where she is also a member of the audit committee and the nominating and corporate governance committee. Ms. Thompson holds a M.S. in Health Sciences with a concentration in Public Health from Trident University. Ms. Thompson’s extensive health policy and government affairs experience contributed to our board of directors’ conclusion that she should serve as a director of our company. Class III Directors (Terms to Expire at the 2026 Annual Meeting) Noreen Henig, M.D., has served on our board of directors since August 2019. Dr. Henig is the CEO of a digital health company, Mobile Applications for Connected Health, and works as a consultant to several private biotechnology companies. Dr. Henig served as the Chief Medical Officer of Kezar Life Sciences, Inc. from May 2020 until October 2023. Dr. Henig has also served as a member of the board of directors of Lazard Growth Acquisition Corp. I from February 2021 until February 2023. Previously, from July 2018 to March 2020, Dr. Henig served as the Chief Medical Officer of Breath Therapeutics GmbH, which is now Zambon SpA following an acquisition in July 2019. Previously, Dr. Henig served as the Chief Development Officer of ProQR Therapeutics N.V. where she oversaw preclinical and clinical drug development from March 2014 to November 2017. Before joining ProQR, Dr. Henig was Senior Director, Global Respiratory, from 2011 to 2014, and Director, Respiratory Therapeutics, from 2008 to 2011, at Gilead Sciences, Inc. Dr. Henig’s specialties as a physician include pulmonary, critical care, allergy and immunology. Dr. Henig holds an M.D. with a distinction in immunology from the Albert Einstein College of Medicine of Yeshiva University and a B.A. from Yale University. She also completed training in internal medicine at the University of California, San Francisco and in pulmonary and critical care medicine at the University of Washington. Dr. Henig’s drug development and clinical trial experience contributed to our board of directors’ conclusion that she should serve as a director of our company. Edward M. Kaye, M.D., has served on our board of directors since August 2019. Dr. Kaye served as the Chief Executive Officer of Stoke Therapeutics Inc. from October 2017 to March 2025 and has served on Stoke's board of directors since October 2017. Dr. Kaye joined Stoke from Sarepta Therapeutics, Inc. where he served as a member of the board of directors from September 2016 to August 2017, President and Chief Executive Officer from September 2016 to July 2017, Interim Chief Executive Officer from April 2015 to September 2016 and Chief Medical Officer from June 2011 to March 2017. From 2001 to 2011, Dr. Kaye served in various 112
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Table of Contents positions at Genzyme Corporation, including most recently as Group Vice President of Clinical Development. Previously, Dr. Kaye served as Chief of Biochemical Genetics at Children’s Hospital of Philadelphia, Chief of Neurology at St. Christopher’s Hospital for Children and as a member of the research staff at Massachusetts General Hospital and Tufts University Medical Center. Dr. Kaye is also a member of the board of directors of Cytokinetics, Inc. and the Massachusetts Biotechnology Council, where he serves on the Equality, Diversity and Inclusion Committee. Dr. Kaye holds an M.D. from the Loyola University Stritch School of Medicine and a B.S. in Biology/Chemistry from Loyola University. Dr. Kaye’s extensive leadership and clinical experience in the medical and biotechnology fields contributed to our board of directors’ conclusion that he should serve as a director of our company. Jean Kim has served on our board of directors since January 2021. Ms. Kim served as a Partner at Deerfield Management Company LP from August 2006 to July 2020 where she provided extensive research and analysis on individual companies operating in the healthcare industry, with a particular focus on rare and orphan diseases. In addition, Ms. Kim incubated and founded a new gene therapy portfolio company at Deerfield Management with a novel incubator company structure focused on rare orphan monogenic diseases. Prior to joining Deerfield, she was a healthcare investment professional for six years with Merrill Lynch Ventures and a Financial Analyst in Merrill Lynch’s investment banking department. Ms. Kim received her Bachelor of Arts in English Literature and a Bachelor of Science in Biology from Stanford University. She also holds an MBA from Harvard Business School and a Master of Science degree from the Massachusetts Institute of Technology through the Biomedical Enterprise Program and was a Fulbright Scholar. Ms. Kim served on the Board of Directors of Amplo Biotechnology, a gene therapy company, from July 2021 to December 2023. Ms. Kim’s years of experience investing in the biopharmaceutical industry contributed to our board of directors’ conclusion that she should serve as a director of our company. Executive Officers The following table identifies our executive officers as of February 23, 2026: Name Age Position Sarah Boyce 54 President, Chief Executive Officer and Director Charles Calderaro III 62 Chief Technical Officer W. Michael Flanagan, Ph.D. 64 Chief Scientific Officer Kathleen Gallagher 45 Chief Program Officer Steven Hughes, M.D. 59 Chief Medical Officer Michael F. MacLean 60 Chief Financial Officer Teresa McCarthy 62 Chief Human Resources Officer John B. Moriarty, Jr, J.D. 58 Chief Legal Officer and Corporate Secretary Eric Mosbrooker 59 Chief Commercial Officer The following is biographical information for our executive officers other than Ms. Boyce, whose biographical information is included under “Continuing Members of the Board of Directors”. Charles Calderaro III has served as our Chief Technical Officer since January 2025. Prior to joining the Company, Mr. Calderaro served as Chief Technical Officer of Shoreline Biosciences from October 2022 to December 2025. Previously, from December 2019 to September 2022, Mr. Calderaro served as Global Head of Technical Operations at Kite Pharma, a Gilead company, and from September 2016 to December 2019, he served as Senior Vice President, Global Manufacturing at BioMarin Pharmaceutical. From June 2002 until August 2016, Mr. Calderaro held roles of increasing responsibility at Genentech and through its acquisition by Roche in 2009. Prior to joining Genentech, Mr. Calderaro held leadership roles at Aventis Behring, L.L.C., Alcon Laboratories, and Ethicon, a Johnson & Johnson company. From 1986 to 1990, Mr. Calderaro served in the U.S. Navy as a commissioned officer. Mr. Calderaro received a B.A. from the University of Notre Dame, a Graduate Certificate in Nuclear Engineering from the U.S. Naval Nuclear Power School and an MBA from Texas Christian University. W. Michael Flanagan, Ph.D. has served as our Chief Scientific Officer since February 2023 and previously served as our Chief Technical Officer from January 2021 to January 2025. Dr. Flanagan has extensive experience developing multiple therapeutic modalities, including RNA therapeutics, antibody drug conjugates, and bispecific antibodies. Prior to joining the Company in January 2021, Dr. Flanagan served as 113
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Table of Contents Senior Director and Project Team Leader, Oncology and Immunology for Genentech, Inc. from January 2012 to January 2021, where he advanced programs through late-stage research to end of Phase 2 development. Prior to Genentech, Dr. Flanagan served in roles of increasing responsibility in the biology groups at Sunesis Pharmaceuticals, Inc., Gilead Sciences, Inc. and Merck & Co. Inc., where he was Senior Director of RNA Sciences. Dr. Flanagan received a B.S. in Genetics from the University of California at Davis, a Ph.D. in Biological Sciences from the University of California at Irvine and was an American Cancer Society postdoctoral fellow at the Howard Hughes Medical Institute, Stanford University. Kathleen Gallagher has served as our Chief Program Officer since January 2025. She joined the Company in April 2021 and has held roles of increasing responsibility, including Senior Vice President and Global Program Head, Myotonic Dystrophy Type 1 (DM1) and Senior Vice President, Corporate Communications and Investor Relations. Prior to joining the Company, she was Vice President, Investor Relations and Corporate Communications at Akcea Therapeutics from September 2017 through the completion of its acquisition by Ionis Pharmaceuticals in October 2020, where she was instrumental in the development and commercial launches of rare disease therapies Tegsedi and Waylivra . Previously, she held roles of increasing responsibility during her 13-year tenure at Merrimack Pharmaceuticals, where she provided leadership and direction through multiple financing rounds including an IPO and through the launch of the pancreatic cancer therapy ONIVYDE . Ms. Gallagher earned her B.S. degree in English from Boston University. Steven Hughes, M.D., has served as our Chief Medical Officer since February 2022. Dr. Hughes has over 20 years of experience building and leading clinical development and medical affairs teams. He has contributed to over 50 clinical trials for more than 25 drugs across all stages of drug development and in multiple therapeutic areas including cardiovascular, neurology and several rare diseases with successful license approvals for several rare disease drugs. Dr. Hughes’s previous positions include the Chief Medical Officer at Arcturus and Organovo, Chief Clinical Development Officer at Ionis Pharmaceuticals and clinical leadership positions at Biogen, CSL Behring and Sanofi. Dr. Hughes is board certified in pharmaceutical medicine and received his medical degree from Imperial College, London. He also has an MBA from Imperial College Business School. Michael F. MacLean has served as our Chief Financial Officer since May 2020 and also served as our Chief Business Officer from April 2022 until December 2024. Prior to joining the Company, Mr. MacLean most recently served as Chief Financial Officer of Akcea Therapeutics, Inc. from September 2017 to March 2020. Prior to joining Akcea Therapeutics, from September 2015 to August 2017, Mr. MacLean was Chief Financial Officer and Executive Vice President of PureTech Health plc. Previously, Mr. MacLean was Chief Financial Officer of Iron Mountain Inc.’s North American business from July 2014 to June 2015 and was Senior Vice President, Worldwide Controller at Iron Mountain from October 2012 to June 2014. Prior to Iron Mountain, Mr. MacLean previously served as Senior Vice President of Finance and Chief Accounting Officer of Biogen Inc., where he led the company’s worldwide finance organization. Since June 2021, Mr. MacLean has also served on the board of directors of Verve Therapeutics. Mr. MacLean holds a B.S. in Accounting from Boston College. Teresa McCarthy has served as our Chief Human Resources Officer since August 2020. Since 2002, Ms. McCarthy has advised life sciences companies as an organizational development and human resources consultant through her consulting firm, McCarthy Consultants Inc. Ms. McCarthy has also served as a lead consultant at The Leadership Edge from 2002 to 2020. Prior to consulting, Ms. McCarthy held the position of Director, Talent Development at Edwards Lifesciences from 1999 to 2001. Previously, Ms. McCarthy was Director, Employee Relations at Baxter Cardiovascular Group from 1996 to 1999 and served as Manager, Talent Development at IVAC Corporation from 1990 to 1995. Ms. McCarthy received a Bachelor of Arts in Communication from San Diego State and an M.A. in Organizational Communication from San Diego State University. John B. Moriarty, Jr., J.D. has served as our Chief Legal Officer and Corporate Secretary since August 2024. Prior to joining the Company, Mr. Moriarty served as Executive Vice President, Chief Legal Officer and Corporate Secretary at Mirati Therapeutics from May 2023 through the completion of its acquisition by Bristol-Myers Squibb Co. in January 2024. From September 2020 to April 2023, Mr. Moriarty served as Executive Vice President, Chief Legal Officer and Corporate Secretary of Olema Pharmaceuticals, Inc., and from March 2018 to July 2020, he served as Executive Vice President, General Counsel and Secretary of Portola Pharmaceuticals, Inc., which was acquired by Alexion Pharmaceuticals, Inc. in July 2020. From September 2014 to February 2018, Mr. Moriarty served as Executive Vice President and General Counsel of Alexion, and from December 2012 to September 2014, he served as Senior Vice President and General Counsel of Alexion. Prior to joining Alexion, from December 2008 to December 2012, he served at Elan Corporation plc, an Irish ® ® ® 114
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Table of Contents public limited company traded on the New York and Irish Stock Exchanges, including as General Counsel and Senior Vice President from March 2010 to December 2012. From 2002 to 2008, Mr. Moriarty held various positions with Amgen Inc., including Executive Director and Associate General Counsel, Global Commercial Operations and Senior Counsel, Complex Litigation, Products Liability and Government Investigations. From 1999 through 2002 Mr. Moriarty was in private practice with a national law firm. From 1994 to 1999, Mr. Moriarty served in various capacities in private practice focused on healthcare and as a healthcare fraud prosecutor in the U.S. Attorney’s Office and the Virginia Attorney General’s Office. Mr. Moriarty received a B.A. from the University of Virginia and a J.D. cum laude from the University of Georgia School of Law. Eric Mosbrooker has served as our Chief Commercial Officer since January 2025, after serving as our Chief Strategy Officer since January 2024 and as a member of the Company's Board of Directors from August 2021 to December 2024. Mr. Mosbrooker has more than 20 years of experience in global operations, with demonstrated leadership and experience in commercial operations, market access, product launches, and program leadership. He has expertise in multiple rare diseases, encompassing neuromuscular, metabolic, oncology, and additional orphan conditions. He has worked in all treatment modalities including one-time gene therapy. Prior to joining Avidity, Mr. Mosbrooker served as Chief Operations Officer for Cognoa from January 2021 to February 2023, leading the commercial, program management, product, and business operations functions. Before Cognoa, he was Chief Commercial Officer at Audentes Therapeutics from January 2019 to January 2021, overseeing the gene therapy business unit, and Senior Vice President of the Global Orphan Business Unit at Horizon Pharmaceuticals from November 2016 to April 2018. He holds a B.S. in Industrial Engineering from the University of Wisconsin – Madison. Corporate Governance General The Board has adopted Corporate Governance Guidelines, a Code of Business Conduct and Ethics and charters for our Nominating and Corporate Governance Committee, Audit Committee and Human Capital Management Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of the Company. You can access our current committee charters, our Corporate Governance Guidelines and our Code of Business Conduct and Ethics in the “Corporate Governance” section of the “Investors” page of our website located at www.aviditybiosciences.com, or by writing to our Secretary at our offices at 3020 Callan Road, San Diego, CA 92121. Please note, however, that the information contained on the website is not incorporated by reference in, or considered part of, this annual report. Board Qualifications and Director Nomination Processes Our Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the appropriate characteristics, skills and experience required for the Board as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members) for election or appointment, the Nominating and Corporate Governance Committee, in recommending candidates for election, and the Board will consider personal and professional integrity, ethics and values along with other factors the committee may deem to be relevant, such as: • experience in corporate management, such as serving as an officer or former officer of a publicly held company; • experience as a board member or executive officer of another publicly held company; • strong finance experience; • expertise and experience in substantive matters pertaining to our business relative to other Board members; • diversity of background and perspective, including, but not limited to, with respect to age, gender, race, place of residence and specialized experience; • experience relevant to our business industry; and • relevant academic expertise or other proficiency in an area of our business operations. 115
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Table of Contents Currently, the Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its range of experience in these various areas. Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating and Corporate Governance Committee may also consider such other factors as it may deem to be in the best interests of our company and our stockholders. The Nominating and Corporate Governance Committee does, however, believe it appropriate for at least one member of our Board to meet the criteria for an “audit committee financial expert” as defined by SEC rules, and that a majority of the members of our Board meet the definition of “independent director” under Nasdaq qualification standards. The Nominating and Corporate Governance Committee also believes it is appropriate for our President and Chief Executive Officer to serve as a member of our Board. The Board currently includes five female members and four male members. Identification and Evaluation of Nominees for Directors The Nominating and Corporate Governance Committee identifies nominees for director by first evaluating the current members of our Board willing to continue in service. Current members with qualifications and skills that are consistent with the Nominating and Corporate Governance Committee’s criteria for board of director service and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of our Board with that of obtaining a new perspective or expertise. If any member of our Board does not wish to continue in service or if our Board decides not to re-nominate a member for re-election or if the Board decides to expand the size of the Board, the Nominating and Corporate Governance Committee identifies the desired skills and experience of a new nominee in light of the criteria above. The Nominating and Corporate Governance Committee generally polls our Board and members of management for their recommendations. The Nominating and Corporate Governance Committee may also review the composition and qualification of the boards of directors of our competitors and may seek input from industry experts or analysts. The Nominating and Corporate Governance Committee reviews the qualifications, experience and background of the candidates. Final candidates are interviewed by the members of the Nominating and Corporate Governance Committee and by certain of our other independent directors and executive management. In making its determinations, the Nominating and Corporate Governance Committee evaluates each individual in the context of our Board as a whole, with the objective of assembling a group that can best contribute to the success of our company and represent stockholder interests through the exercise of sound business judgment. After review and deliberation of all feedback and data, the Nominating and Corporate Governance Committee makes its recommendation to our Board. The Nominating and Corporate Governance Committee evaluates nominees recommended by stockholders in the same manner as it evaluates other nominees. We have not received director candidate recommendations from our stockholders, and we do not have a formal policy regarding consideration of such recommendations. However, any recommendations received from stockholders will be evaluated in the same manner that potential nominees suggested by members of our Board, management or other parties are evaluated. Under our Bylaws, a stockholder wishing to suggest a candidate for director should write to our Secretary and provide such information about the stockholder and the proposed candidate as is set forth in our Bylaws and as would be required by SEC rules to be included in a proxy statement. In addition, the stockholder must include the consent of the candidate and describe any arrangements or undertakings between the stockholder and the candidate regarding the nomination. Communication from Stockholders The Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Our Secretary is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the directors as he considers appropriate. Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that our Secretary and Chair of the Board consider to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we tend to receive repetitive or duplicative communications. Stockholders who wish to send communications on any topic to the Board should address such communications to the Board in writing: c/o Secretary, Avidity Biosciences, Inc., 3020 Callan Road, San Diego, California 92121. 116
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Table of Contents Board Evaluation Our Corporate Governance Guidelines require the Nominating and Corporate Governance Committee to oversee a periodic assessment by the Board of the Board’s performance. As provided in our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee is responsible for establishing the evaluation criteria and implementing the process for such evaluation. Code of Business Conduct and Ethics We have a written Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of this code in the “Corporate Governance” section of the “Investors” page of our website located at www.aviditybiosciences.com. In addition, we intend to post on our website all disclosures that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of this code. Insider Trading Compliance Policy and Procedures We have adopted an Insider Trading Compliance Policy and Procedures, or Insider Trading Policy, governing the purchase, sale and other disposition of our securities by our directors, officers, employees and other covered persons, which is designed to promote compliance with insider trading laws, rules and regulations, and the Nasdaq listing rules, as applicable. A copy of our Insider Trading Policy is filed as an exhibit to this annual report. It is our policy to comply with U.S. insider trading laws and regulations, including with respect to transactions in our own securities. Our Insider Trading Policy prohibits officers, directors and employees, and entities controlled by such individuals and members of their households, from making short sales in our equity securities; transacting in puts, calls or other derivative securities involving our equity securities, on an exchange or in any other organized market; engaging in hedging transactions; purchasing our securities on margin or pledging our securities as collateral for a loan. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors, officers and beneficial owners of 10% or more of our shares of common stock to file certain reports with the SEC. We assist our directors and officers by monitoring transactions and completing and filing these reports on their behalf. During 2025, all such required reports were timely filed, except that, due to an administrative error, one Form 4 was filed for Michael MacLean on August 15, 2025 with respect to a reportable event that occurred on August 6, 2025. Committees of the Board of Directors The Board has established three standing committees—Audit, Human Capital Management and Nominating and Corporate Governance—each of which operates under a charter that has been approved by the Board. All of the members of each of the Board’s three standing committees are independent as defined under the Nasdaq rules. In addition, all members of the Audit Committee meet the independence requirements for Audit Committee members under Rule 10A-3 under the Securities Exchange Act of 1934 (the “Exchange Act”). 117
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Table of Contents The current members of each of the Board committees and committee Chairs are set forth in the following chart. Name of Director Audit Human Capital Management Nominating and Corporate Governance Carsten Boess C Noreen Henig, M.D. X C Edward M. Kaye, M.D. C X Jean Kim X Tamar Thompson X X Troy Wilson, Ph.D., J.D. X ____________________ C Committee Chair † Audit Committee Financial Expert Audit Committee The Audit Committee’s main function is to oversee our accounting and financial reporting processes and the audits of our financial statements. This committee’s responsibilities include, among other things: • appointing our independent registered public accounting firm; • evaluating the qualifications, independence and performance of our independent registered public accounting firm; • approving the audit and non-audit services to be performed by our independent registered public accounting firm; • reviewing the design, implementation, adequacy and effectiveness of our internal accounting controls and our critical accounting policies; • discussing with management and the independent registered public accounting firm the results of our annual audit and the review of our quarterly unaudited financial statements; • reviewing, overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; • reviewing on a periodic basis, or as appropriate, any investment policy and recommending to the Board any changes to such investment policy; • reviewing with management and our auditors any earnings announcements and other public announcements regarding our results of operations; • preparing the report that the SEC requires in our annual proxy statement; • reviewing and approving any related party transactions and reviewing and monitoring compliance with our code of conduct and ethics; • providing oversight of cybersecurity and other information technology risks, overseeing management's implementation of our cybersecurity risk management program, and reviewing with management periodic reports regarding our cybersecurity risk; and • reviewing and evaluating, at least annually, the performance of the audit committee and its members including compliance of the audit committee with its charter. The members of our Audit Committee are Mr. Boess, Dr. Henig and Ms. Kim. Mr. Boess serves as the Chair of the Audit Committee. All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq. The Board has determined that Mr. Boess is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable Nasdaq rules and regulations. The Board has determined that each of Mr. Boess, Dr. Henig and Ms. Kim are independent under the applicable rules of the SEC and Nasdaq. † 118
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Table of Contents All members of our Audit Committee are independent under Nasdaq rules and Rule 10A-3. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq, which the Audit Committee will evaluate and review at least annually. The Audit Committee met four times during 2025. Both our external auditor and internal financial personnel meet privately with the Audit Committee and have unrestricted access to this committee. Human Capital Management Committee The Human Capital Management Committee reviews, approves and recommends to the Board policies relating to compensation and benefits of our officers, employees and directors. The Human Capital Management Committee reviews corporate goals and objectives relevant to the compensation of our chief executive officer and other executive officers, evaluates the performance of these officers in light of those goals and objectives and approves the compensation of these officers based on such evaluations. The Human Capital Management Committee also reviews and approves or makes recommendations to the Board regarding the issuance of stock options and other awards under our equity plan. In addition, the Human Capital Management Committee periodically reviews and recommends to the Board compensation for service on the Board and any committees of the Board. The Human Capital Management Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time as further described in its charter. The Human Capital Management Committee will review and evaluate, at least annually, its charter, as well as review and evaluate, at least annually, the performance of the Human Capital Management Committee and its members, including compliance by the committee with its charter. The members of our Human Capital Management Committee are Dr. Kaye, Ms. Thompson and Dr. Wilson. Dr. Kaye serves as the Chair of the committee. Our Board has determined that each member of this committee is independent under the applicable rules and regulations of Nasdaq and is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. The Human Capital Management Committee met four times during 2025. Compensation Committee Interlocks and Insider Participation None of the members of our Human Capital Management Committee is currently, or has at any time been, one of our officers or employees, with the exception of Dr. Wilson, who served as our President and Chief Executive Officer until his resignation in February 2019. None of our executive officers currently serves, or has served during the past fiscal year, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving as a member of our Board or Human Capital Management Committee. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee is responsible for assisting the Board in discharging the Board’s responsibilities regarding the identification of qualified candidates to become Board members, the selection of nominees for election as directors at our annual meetings of stockholders (or special meetings of stockholders at which directors are to be elected), and the selection of candidates to fill any vacancies on the Board and any committees thereof. In addition, the Nominating and Corporate Governance Committee is responsible for overseeing our corporate governance policies, reporting and making recommendations to the Board concerning governance matters and oversight of the evaluation of the Board. The members of our Nominating and Corporate Governance Committee are Dr. Henig, Dr. Kaye and Ms. Thompson. Dr. Henig serves as the Chair of the committee. The Board has determined that each member of this committee is independent under the applicable rules and regulations of Nasdaq relating to Nominating and Corporate Governance Committee independence. The Nominating and Corporate Governance Committee operates under a written charter, which the Nominating and Corporate Governance Committee will review and evaluate at least annually. The Nominating and Corporate Governance Committee met three times during 2025. 119
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Table of Contents ITEM 11. Executive Compensation Executive Compensation and Other Information Compensation Discussion Analysis This compensation discussion and analysis discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below, whom we refer to as our “named executive officers” or "NEOs." For 2025, our named executive officers and their positions were as follows: • Sarah Boyce, President and Chief Executive Officer • Michael F. MacLean, Chief Financial Officer • Charles Calderaro III, Chief Technical Officer • Kathleen Gallagher, Chief Program Officer • Eric Mosbrooker, Chief Commercial Officer This compensation discussion and analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, and each compensation component that we provide. In addition, we explain how and why the Human Capital Management Committee and our Board arrived at specific compensation policies and decisions involving our executive officers during the fiscal year ended December 31, 2025. Overview of 2025 Executive Compensation Decisions In general, our named executive officers’ total compensation is tied directly to corporate and individual performance. Specific elements of our executive compensation program that demonstrate our pay-for-performance philosophy include: • The performance measures in our short-term cash incentive program are linked to key corporate objectives; • Our named executive officers' annual bonus opportunities are dependent entirely on corporate achievement of performance goals and individual achievement; and • Our long-term equity incentives are provided in the form of stock options and restricted stock units, or RSUs, each of which vest over multi-year periods, and, when appropriate, performance stock units, or PSUs. In determining the named executive officers' total compensation for 2025, the Human Capital Management Committee considered conditions affecting the biotechnology industry in light of corporate progress. The primary elements of our total direct compensation program for the named executive officers and a summary of the actions taken by the Human Capital Management Committee during 2025 are set forth below. 120
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Table of Contents Market-Based Base Salary Increases for NEOs • Our named executive officers received base salary increases for 2025 consistent with our pay positioning philosophy of targeting total cash compensation above the market median, placing their salary levels between the approximate 50 and 75 percentiles of similarly-situated executives at comparable companies based on our peer group. Annual Cash Incentives Paid Based on Performance • Based on our achievement relative to our corporate performance goals during 2025, our named executive officers’ annual incentives tied to corporate performance were paid out at 150% of target. • Our named executive officers' annual incentives tied to corporate performance are subject to further adjustment based on individual performance, as determined by our Human Capital Management Committee on a case-by-case basis, with the resulting individual performance multiplier, if any, applied to determine the final annual incentive payout. Long-Term Incentive Compensation Vesting Over Multi-Year Periods or Based on Key Performance Objectives • Our named executive officers receive annual awards of stock options and RSUs, each of which vest over four year periods. • Stock options are an important vehicle for tying executive pay to performance, because they deliver future value only if the value of our common stock increases above the exercise price. As a result, they provide strong incentives for our executive officers to increase the value of our common stock over the long term, and they tightly align the interests of our executives with those of our stockholders. • RSU awards are granted because they are less dilutive to our stockholders, as fewer shares of our common stock are granted to achieve an equivalent value relative to stock options, and because RSU awards are an effective retention tool that maintain value even in cases where the share price is trading lower than the initial grant price. • In connection with his commencement of employment, Mr. Calderaro received a special equity award consisting of a number of PSUs intended to approximate his annual target equity award value (if such awards were granted solely in the form of full value awards). The PSUs vest in three equal tranches based on achievement of three key goals related to our del-desiran, del-brax and del-zota candidates, each of which must be achieved prior to December 31, 2029. th th 121
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Table of Contents Our Executive Compensation Practices We endeavor to maintain sound executive compensation policies and practices consistent with our executive compensation philosophy. The following table highlights some of our executive compensation policies and practices, which are structured to drive performance and align our executives’ interests with our stockholders’ long-term interests: WHAT WE DO ✓ Pay for Performance. We design our executive compensation program to align pay with company performance. ✓ Significant Portion of Compensation is at Risk. Under our executive compensation program, a significant portion of compensation is “at risk” based on our performance, including short-term cash incentives and long-term cash and equity incentives, to align the interests of our executive officers and stockholders. ✓ Independent Compensation Committee. The Human Capital Management Committee is comprised solely of independent directors. ✓ Independent Compensation Advisor Reports Directly to the Human Capital Management Committee. The Human Capital Management Committee engages its own compensation consultant to assist with making compensation decisions. ✓ Annual Market Review of Executive Compensation. The Human Capital Management Committee and its compensation consultant annually assess competitiveness and market alignment of our compensation plans and practices. ✓ Multi-Year or Performance Vesting Requirements. The equity awards granted to our executive officers vest over multi-year periods or based on performance goals tied to key corporate objectives, consistent with current market practice and our retention objectives. ✓ Minimize Inappropriate Risk Taking. Our compensation program is weighted toward long-term incentive compensation to discourage short-term risk taking, and it includes goals that are quantifiable with objective criteria, multiple performance measures and caps on short-term incentive compensation. ✓ “Double Trigger” Change in Control Cash Severance Benefits. The employment agreements with our named executive officers do not include any “single trigger” change in control cash severance benefits. ✓ Competitive Peer Group. Our Human Capital Management Committee selects our peers from biotechnology and pharmaceutical companies that are similar to us with respect to market capitalization, revenue, headcount, commercialization stage, and geographic region, while also taking into account a number of qualitative criteria. ✓ Clawback Policy. We maintain a clawback policy as required by SEC and Nasdaq rules to recover erroneously awarded incentive compensation from our current and former executive officers in the event of an accounting restatement. 122
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Table of Contents WHAT WE DON’T DO X No Special Health or Welfare Benefits for Executives. Our executive officers participate in broad-based, company- sponsored health and welfare benefits programs on the same basis as our other employees. Executives do not have access to special benefits programs. X No Post-Employment Tax Gross-Ups. We do not provide any post-employment tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits. X No Hedging Transactions by Employees or Directors. Our Insider Trading Compliance Policy and Procedures prohibits our employees (including executive officers) and directors from engaging in hedging or short-term speculative transactions involving our securities. Compensation Philosophy and Objectives We recognize that the ability to excel depends on the integrity, knowledge, imagination, skill, diversity and teamwork of our employees. To this end, the key objectives of our executive compensation program are: • To attract, engage and retain an executive team who will provide leadership for our future success by providing competitive total pay opportunities. • To establish a direct link between our business results, individual executive performance and total executive compensation. • To align the interests of our executive officers with those of our stockholders. Compensation Determination Process Role of the Human Capital Management Committee The Human Capital Management Committee of our Board develops, reviews and approves each of the elements of our executive compensation program. The Human Capital Management Committee also regularly assesses the effectiveness and competitiveness of our compensation programs. In the first quarter of each year, the Human Capital Management Committee reviews the performance of each of our named executive officers during the previous year. At this time the Human Capital Management Committee also reviews our performance relative to the corporate performance goals set by the Board for the year under review and makes the final bonus payment determinations based on our overall corporate performance and the Human Capital Management Committee’s evaluation of each named executive officer’s performance for the year under review. In connection with this review, the Human Capital Management Committee also reviews and adjusts, as appropriate, annual base salaries for our named executive officers and grants, as appropriate, additional equity awards to our named executive officers and certain other eligible employees. The Chief Executive Officer also prepares a draft of the corporate performance goals for the current year for the Board to review and approve. Role of Our Executive Officers Our Chief Executive Officer, with the assistance and support of our Chief Human Resources Officer, our Chief Legal Officer and our human resources department, aids the Human Capital Management Committee by providing annual recommendations regarding the compensation of our named executive officers. The Human Capital Management Committee also, on occasion, meets with our Chief Executive Officer to obtain recommendations with respect to our compensation programs and practices generally. The Human Capital Management Committee considers, but is not bound to accept, the Chief Executive Officer’s recommendations with respect to named executive officer compensation. Our Chief Executive Officer generally attends all of the Human Capital Management Committee meetings, but the Human Capital Management Committee also holds executive sessions that are not attended by any members of management or non-independent directors, as needed from time to time. Any deliberations or decisions regarding the compensation of our Chief Executive Officer are made without her present. 123
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Table of Contents Role of Compensation Consultant and Comparable Company Information The Human Capital Management Committee is authorized to retain the services of third-party compensation consultants and other outside advisors, from time to time, to assist in its evaluation of executive compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. In 2025, the Human Capital Management Committee retained Alpine Rewards, LLC, or "Alpine", an independent third-party compensation consulting firm, for guidance in making compensation decisions and determining 2025 executive and director compensation. Specifically, the Human Capital Management Committee requested Alpine to advise it on a variety of compensation-related issues, including: • conducting an analysis of current practices of comparable public companies to assist the Human Capital Management Committee in developing director and executive compensation levels; • reviewing our peer group to determine whether additional or different peer companies or groups are necessary to provide appropriate information on market practices and compensation levels; and • providing general information concerning director and executive compensation trends and developments. Alpine did not provide any other services to us in 2025 beyond its engagement as an advisor to the Human Capital Management Committee on director, executive and non-executive compensation matters. The Human Capital Management Committee assessed the independence of Alpine pursuant to SEC and Nasdaq rules and concluded that no conflict of interest existed that would have prevented Alpine from serving as an independent consultant to the Human Capital Management Committee currently or during 2025. Competitive Positioning The Human Capital Management Committee reviews our peer group annually to reflect changes in market capitalization and other factors, including acquisitions, and revises the companies included in the peer group accordingly. For 2025, Alpine assisted the Human Capital Management Committee in identifying an appropriate peer group of companies for use as a reference when determining 2025 director and executive compensation. The peer group identified below was selected in September 2025 for purposes of setting 2026 compensation and the selection criteria identified below were measured at such date. The identified peer group consisted of 20 life sciences companies in similar phases of development as our company. This peer group was selected based on the following parameters and not on the basis of the compensation levels of executives at the companies within this group: MARKET CAPITALIZATION • Generally, between $1.5 billion to $10.0 billion as of August 2025, representing a range of 0.3x to 3.0x of our market capitalization at the time the peer group was established (approximately $4.2 billion). SECTOR AND STAGE • US-based, late-stage clinical bio/pharma companies and early commercial companies where applicable. • Emphasis on companies with a similar therapeutic focus to ours, where possible. • Emphasis on Phase 3 companies to reflect our Phase 3 stage of development for our lead product candidate at the time the peer group was selected. HEADCOUNT • Companies with over 150 employees (~0.3x Avidity’s FYE’25 headcount) GEOGRAPHIC LOCATION• Focused on West Coast or other biotech “hub” locations that reflect our talent market. 124
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Table of Contents For 2025, this peer group consisted of the following companies: ACADIA Pharmaceuticals Ionis Pharmaceuticals Arrowhead Pharmaceuticals Kymera Therapeutics BridgeBio Pharma Madrigal Pharmaceuticals Crinetics Pharmaceuticals Nuvalent CRISPR Therapeutics Revolution Medicines Cytokinetics Rhythm Pharmaceuticals Denali Therapeutics Soleno Therapeutics Halozyme Therapeutics Ultragenyx Pharmaceutical ImmunityBio Vaxcyte Immunovant Xenon Pharmaceuticals Our Human Capital Management Committee reviewed the foregoing comparable company data in connection with its determinations of the 2025 base salaries, total target cash and company-issued equity ownership for our named executive officers. The Human Capital Management Committee attempts to set total direct compensation opportunities for the named executive officers generally between the 50 and 75 percentiles, with a greater emphasis on performance-based and equity- based compensation. The Human Capital Management Committee does not, however, rely entirely on that data to determine named executive officer compensation. Instead, as described above and consistent with past practice, the Human Capital Management Committee members rely on their judgment and experience in setting those compensation levels and making those awards. As a result, variations on this pay positioning occur from year to year. We expect that the Human Capital Management Committee will continue to review comparable company data in connection with setting the compensation we offer our named executive officers to help ensure that our compensation programs are competitive and fair. The compensation levels of the named executive officers reflect to a significant degree the varying roles and responsibilities of such executives. As a result of the Human Capital Management Committee’s and the Board's assessment of our Chief Executive Officer’s roles and responsibilities within our company, there are significant compensation differentials between our Chief Executive Officer and our other named executive officers. Results of 2025 Say on Pay Vote At the 2025 annual meeting of stockholders, our stockholders voted, on an advisory basis, to approve our executive compensation, with approximately 76% of votes cast on the proposal voting in favor. The Human Capital Management Committee took the results of the advisory vote into consideration in making its executive compensation decisions for 2026, but its awareness of the advisory vote did not affect the committee’s decisions. The say on pay vote is advisory and, therefore, not binding on the Board or on the Company; however, because our stockholders will vote again, on an advisory basis, at the Annual Meeting on whether to approve our executive compensation, the Human Capital Management Committee intends to consider the results of the 2025 say on pay vote in future compensation decisions. Executive Compensation Components The following describes each component of our executive compensation program, the rationale for each, and how compensation amounts are determined. Base Salaries In general, base salaries for our named executive officers are initially established through a market assessment of total compensation, taking into account such executive’s qualifications, experience and compensation expectations. Base salaries of our named executive officers are approved and reviewed annually by our Human Capital Management Committee and adjustments to base salaries are based on the scope of an executive’s responsibilities, individual contribution, prior experience and sustained performance. This strategy is consistent with our intent of offering compensation that is cost- effective, competitive and contingent on the achievement of performance goals. th th 125
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Table of Contents In January 2025, the Human Capital Management Committee reviewed the base salaries of our named executive officers. The Human Capital Management Committee, in consultation with our Chief Executive Officer (with respect to the salaries of our other named executive officers) and its independent compensation consultant, determined that the base salaries of our named executive officers would be as follows, which increases were effective January 1, 2025: Named Executive Officer 2025 Base Salary Percentage Increase from 2024 Sarah Boyce $ 758,900 15.0 % Michael F. MacLean $ 530,100 8.0 % Kathleen Gallagher $ 467,400 5.0 % Eric Mosbrooker $ 483,000 5.0 % Charles Calderaro III $ 515,000 N/A ____________________ (1) Mr. Calderaro joined the Company in January 2025 and earned the portion of his base salary representing the amount of time during 2025 he was employed by the Company, which amount is reported in the "2025 Summary Compensation Table" below. The foregoing increases placed our named executive officers’ salaries generally between the 50 and 75 percentile of similarly situated executives. The actual base salaries paid to all of our named executive officers for 2025 are set forth in the “2025 Summary Compensation Table” below. Performance Bonuses Overview of Performance Bonuses Each named executive officer is also eligible for a performance bonus based upon the achievement of pre- determined corporate performance goals approved by our Human Capital Management Committee. Bonus targets are established based on percentages of the executives’ respective base salaries for the relevant bonus year. The target levels for executive bonuses in 2025 were as follows: 60% of base salary for Ms. Boyce and 45% of base salary for each of Mr. MacLean, Ms. Gallagher, Mr. Mosbrooker and Mr. Calderaro. The actual bonuses awarded in any year, if at all, may be more or less than the target, depending on the achievement of corporate objectives. The Human Capital Management Committee and the Board each year approves the corporate goals and milestones for the upcoming year, after considering recommendations from management and the company’s strategic objectives. For 2025, each named executive officer was eligible for a performance bonus based upon the achievement of certain corporate performance goals and objectives approved by our Board in December 2024. These performance goals and objectives were used as a guide by our Human Capital Management Committee in determining overall corporate performance for these executives as they represented those areas in which they were expected to focus their efforts during the year. All final bonus payments to our named executive officers are determined by our Human Capital Management Committee. 2025 Corporate Performance Goals The corporate goals for 2025 fell into the following categories: (i) BLA submission and achieve US launch readiness for del-zota, (ii) scale our operations for pipeline and commercial advancements, (iii) advance and execute global launch strategy for del-desiran, (iv) advance and execute global launch strategy for del-brax, (v) advance research pipeline and platform technology, and (vi) continue to evolve our patient focused culture. The 2025 performance goals were set at levels such that the attainment of executive target annual cash incentive award opportunities was not assured at the time they were established and would require a high level of effort and execution on the part of the executive officers and others in order to achieve the goals. The Human Capital Management Committee also specified a “stretch” weighting for certain clinical goals, corresponding to additional credit that could be achieved for those goals in the event of over performance in that area, generally representing up to an additional 50% in the aggregate of the target level for the corporate goals. (1) th th 126
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Table of Contents To determine the actual attainment of the corporate goals established for 2025, the Human Capital Management Committee employed a holistic analysis that took into account both the extent to which the performance goals had been achieved or exceeded as well as the relative difficulty of achieving the goals that were met and that were only partially met. In late 2025, in light of our strong performance against the objectives set by the Human Capital Management Committee, the Human Capital Management Committee determined our corporate performance percentage to be 150% of the target performance level for 2025. In coming to this determination, the Human Capital Management Committee noted the strong performance of the Company against the corporate goals, corporate stretch goals, and Company achievements not contemplated by any pre-established goals. This 150% achievement level was applied to each named executive officer’s target bonus level. The annual bonuses paid to our named executive officers for 2025 are set forth in the Summary Compensation Table below. Equity-Based Incentive Awards The goals of our long-term, equity-based incentive awards are to align the interests of our named executive officers and all employees, non-employee directors and consultants with the interests of our stockholders. Because vesting is based on continued employment over multiple years, our equity-based incentives also encourage the retention of our named executive officers through the vesting period of the awards. In determining the size of the long-term equity incentives to be awarded to our named executive officers, we take into account a number of internal factors, such as the relative job scope, the value of existing long-term incentive awards, individual performance history, prior contributions to us, the size of prior grants as well as comparable company information, as described below. We have had no program, plan or practice pertaining to the timing of stock option grants to named executive officers coinciding with the release of material non-public information. We use equity awards to compensate our named executive officers both in the form of initial grants in connection with the commencement of employment and annual refresher grants. Our Human Capital Management Committee typically approves annual equity awards during the first quarter of each year. While we intend that the majority of stock awards to our employees be made pursuant to initial grants or our annual grant program, the Human Capital Management Committee retains discretion to make equity awards to employees at other times, including in connection with the promotion of an employee, to reward an employee, for retention purposes or for other circumstances recommended by management or the Human Capital Management Committee. Equity Vehicles Annual equity awards are granted under our 2020 Incentive Award Plan, or the "2020 Plan", using a mix of different equity instruments to further its goal of attracting and retaining top performers and to balance the relative advantages of different instruments. During 2025, we granted our named executive officers stock options and RSUs. Stock options are an important vehicle for tying executive pay to performance, because they deliver future value only if the value of our common stock increases above the exercise price. As a result, they provide strong incentives for our executive officers to increase the value of our common stock over the long term, and they tightly align the interests of our executives with those of our stockholders. The exercise price of each stock option grant is the fair market value of our common stock on the grant date, as determined by our Board from time to time. Option awards granted at the time of commencement of employment generally vest as to 25% of the award on the first anniversary of the vesting commencement date, with the remainder vesting in equal monthly installments over a three-year period thereafter. Option awards granted as part of our ongoing, annual award program generally vest in equal monthly installments over a four-year period. From time to time, our Human Capital Management Committee may, however, determine that a different vesting schedule is appropriate. We also grant RSUs to our named executive officers. Like option awards, RSUs are an important vehicle for tying executive pay to performance, since the award value upon vesting is tied directly to the value of our common stock. RSUs also complement stock option awards in the total mix of long term incentive awards because they are less dilutive to our stockholders, as fewer shares of our common stock are granted to achieve an equivalent value relative to stock options. RSUs serve as an important retention tool since they vest in four equal annual installments. From time to time, our Human Capital Management Committee may, however, determine that a different vesting schedule is appropriate. 127
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Table of Contents In 2025, we granted PSUs to Mr. Calderaro in connection with his commencement of employment to further align his compensation opportunities with our other executive officers and with company objectives intended to drive long-term stockholder value. Like RSUs, the award value upon vesting is tied directly to the value of our common stock. PSUs provide a performance-based component to our named executive officers’ long-term incentive opportunities to complement the service- based vesting requirements applicable to the options and RSUs we also grant.. The PSUs vest in three equal tranches based on key goals related to our del-desiran, del-brax and del-zota candidates, each of which must be achieved prior to December 31, 2029. In the event of his termination of employment, any unearned PSUs will be forfeited. The PSUs are eligible to vest in full upon a change in control. 2025 Annual Equity Awards Generally, the Human Capital Management Committee determines the value of each executive officer’s annual equity grant using competitive market analysis prepared by Alpine with market data for each role, the recommendations of our Chief Executive Officer based on her evaluation of individual performance (except with respect to her own performance), the extent to which the executive officer is currently vested in his or her stock awards, the scope and criticality of the executive’s role and parity in targets among executives in roles of a given level. In January 2025, the Human Capital Management Committee approved the ordinary course annual equity awards for our named executive officers with approximately 67% of the total value of the awards allocated in the form of options and 33% in the form of RSUs. The equity awards granted to our named executive officers in the first quarter of each year are generally intended to align with the 75th percentile of our peers. The equity awards granted to our named executive officers for 2025 are set forth in the “Grants of Plan-Based Awards" table below, each of which vests over four years in accordance with the standard vesting schedules described above. 2025 New Hire Equity Awards to Mr. Calderaro In connection with his commencement of employment, Mr. Calderaro was granted stock options, RSUs and PSUs, as reflected in the “Grants of Plan-Based Awards Table” below. Acceleration of Certain Awards in Connection with Merger In connection with the Merger, certain employees of the Company (including certain of its named executive officers) may become entitled to payments and benefits that may be treated as “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (“Section 280G” and the “Code,” respectively). To mitigate the potential impact of Section 280G and Section 4999 of the Code on the Company and its applicable executive officers, on December 14, 2025, the Board approved the acceleration into December 2025 of the vesting and payments of certain equity awards that otherwise would have been payable to Ms. Boyce, Ms. Gallagher, Mr. Calderaro, and Mr. Mosbrooker on or prior to the closing of the Merger or otherwise in 2026. These actions were intended to benefit us by preserving potential compensation-related corporate income tax deductions for us that otherwise might be disallowed through the operation of Section 280G and to mitigate the amount of excise tax that may be payable by the NEO pursuant to Section 4999 of the Code. The approved accelerated vesting consisted of the following forms, to the extent applicable to each NEO: (a) vesting and settlement in shares of our common stock of certain restricted stock units held by the NEO (“Accelerated RSUs”); and/or (b) vesting and settlement in shares of certain performance-vesting restricted stock units (“Accelerated PSUs”) held by the NEOs. The Accelerated RSUs and Accelerated PSUs (collectively, the “Accelerated Amounts”) represent payments or amounts the NEO otherwise would have been entitled to receive upon the consummation of the Merger or otherwise in 2026. Therefore, there will be no duplication of payments. All Accelerated Amounts will be reduced by applicable tax withholdings and are subject to the terms of the Accelerated Payments and Clawback Agreements (described below). Specifically, the Board approved for each NEO the following accelerated vesting: • For Ms. Boyce, 31,000 Accelerated PSUs. • For Ms. Gallagher, 72,000 Accelerated PSUs and 16,982 Accelerated RSUs. • For Mr. Calderaro, 23,250 Accelerated PSUs. • For Mr. Mosbrooker, 72,000 Accelerated PSUs and 22,500 Accelerated RSUs. 128
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Table of Contents In connection with the accelerated vesting and payments described above, each NEO signed an Accelerated Payments and Clawback Agreement providing that the NEO’s accelerated payments are subject to certain repayment conditions. Generally, if an NEO’s employment is terminated for “cause” or voluntarily by the Affected Executive other than for “good reason” prior to the date on which the applicable payment would have been made (or, if later, prior to December 31, 2029, in the case of the Accelerated PSUs) but for the payment of the relevant Accelerated Amount, then the NEO would be required to repay to us the applicable Accelerated Amount. Health, Welfare, and Retirement Benefits Health and Welfare Benefits Our named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, group life, disability and accidental death and dismemberment insurance plans, in each case on generally the same basis as all of our other employees. We do, however, pay the premiums for term life insurance for all of our employees, including our named executive officers. Retirement Savings We maintain a defined contribution employee retirement plan, or 401(k) plan, for our employees. Our named executive officers are eligible to participate in the 401(k) plan on the same basis as our other employees. The 401(k) plan is intended to qualify as a tax-qualified plan under Section 401(k) of the Internal Revenue Code. The 401(k) plan provides that each participant may make pre-tax deferrals from his or her compensation up to the statutory limit, which is $24,500 for calendar year 2026. Participants that are 50 years or older can also make “catch-up” contributions which, in calendar year 2026, was up to an additional $8,000 above the statutory limit. Participant contributions are held and invested, pursuant to the participant’s instructions, by the plan’s trustee. We also match employee contributions under the 401(k) plan in the amount of 100% of employee contributions up to 4% of their eligible compensation. Other Benefits Our Board may elect to adopt qualified or non-qualified benefit plans in the future if it determines that doing so is in our best interests. We generally do not provide significant perquisites or personal benefits to our named executive officers. Post-Termination and Change in Control Benefits Our named executive officers may become entitled to certain benefits or enhanced benefits in connection with a change in control of our company. The employment agreements with each of our named executive officers provide for accelerated vesting of all outstanding equity awards, as well as certain other benefits upon a qualifying termination in connection with a change in control of our company. For additional discussion, please see “Employment Agreements with Our Named Executive Officers” below. Prohibition on Certain Transactions in Avidity Securities Our Insider Trading Compliance Policy and Procedures prohibits our named executive officers, and entities controlled by such individuals and members of their households, from making short sales in our equity securities, transacting in puts, calls or other derivative securities involving our equity securities, on an exchange or in any other organized market, engaging in hedging transactions, purchasing our securities on margin or pledging our securities as collateral for a loan. Tax and Accounting Considerations Deductibility of Executive Compensation The Human Capital Management Committee and our Board have considered the potential future effects of Section 162(m) of the Internal Revenue Code on the compensation paid to our executive officers. Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1.0 million in any taxable year for “covered employees.” While we consider the tax deductibility of each element of executive compensation as a factor in our overall compensation program, the Human Capital Management Committee, however, retains the discretion to approve compensation that may not qualify for the 129
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Table of Contents compensation deduction if, considering all applicable circumstances, it would be in our best interest for such compensation to be paid without regard to whether it may be tax deductible. Accounting for Stock-Based Compensation Under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or “ASC 718”, we are required to estimate the grant date “fair value” for each grant of equity award using various assumptions. This calculation is performed for accounting purposes and reported in the compensation tables below, even though recipients may never realize any value from their awards. ASC 718 also requires us to recognize the compensation cost of stock-based awards in our income statements over the period that an employee is required to render service in exchange for the award. Risk Assessment of Compensation Program In 2025, management assessed our compensation program for the purpose of reviewing and considering any risks presented by our compensation policies and practices that are reasonably likely to have a material adverse effect on us. As part of that assessment, management reviewed the primary elements of our compensation program, including base salary, short-term incentive compensation and long-term incentive compensation. Management’s risk assessment included a review of the overall design of each primary element of our compensation program, and an analysis of the various design features, controls and approval rights in place with respect to compensation paid to management and other employees that mitigate potential risks to us that could arise from our compensation program. Following the assessment, management determined that our compensation policies and practices did not create risks that were reasonably likely to have a material adverse effect on us and reported the results of the assessment to our Human Capital Management Committee. Policy for Recovery of Erroneously Awarded Compensation In September 2023, the Human Capital Management Committee adopted a new Policy for Recovery of Erroneously Awarded Compensation, or the Clawback Policy, that is intended to satisfy new applicable SEC and Nasdaq rules, and can be accessed in this annual report. The Clawback Policy applies to all incentive-based compensation received by our current and former executive officers on or after October 2, 2023. As set forth in the Clawback Policy, if such compensation is later determined to have been erroneously awarded in the event of an accounting restatement of our financial statements, the Human Capital Management Committee is required to administer the recovery of the applicable compensation. Persons covered under the Clawback Policy are not entitled to indemnification in connection with enforcement of the Clawback Policy. Each of our named executive officers has executed an acknowledgment agreement conditioning receipt of compensation on adherence to the Clawback Policy. Equity Award Timing Policies and Practices Equity awards to employees are typically granted in connection with the Company’s annual award process in the first quarter of each year, as well as to new hires in connection with their commencement of employment. We do not grant equity awards in anticipation of the release of material nonpublic information and we do not time the release of material nonpublic information for the purpose of affecting the value of executive compensation. In the event material nonpublic information becomes known to the Human Capital Management Committee before granting an equity award, it will consider such information and use its business judgment to determine whether to delay the grant of equity to avoid any appearance of impropriety. For all stock option awards, the exercise price is the closing price of our common stock on the Nasdaq Stock Market on the date of the grant (or if the grant date is not a trading day, then on the immediately preceding trading day). The following table sets forth information regarding option grants made to our NEOs during 2025 within the period commencing four business prior to and ending one business day following the filing by us of a Form 130
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Table of Contents 10-K, Form 10-Q or Form 8-K containing material non-public information as required under Item 4.02(x) of Regulation S-K: Name Grant Date Number of Securities Underlying the Award Exercise Price of the Award ($/Sh) Grant Date Fair Value of the Award ($) Percentage Increase (Decrease) in the Closing Market Price of the Securities Underlying the Award between the Trading Day Ending Immediately Prior to the Disclosure of Material Non-public Information and the Trading Day Beginning Immediately Following the Disclosure of Material Non-public Information Sarah Boyce 1/6/2025 165,000 31.42$ 3,600,036 (4.32)% Michael F. MacLean 1/6/2025 50,000 31.42$ 1,090,920 (4.32)% Kathleen Gallagher 1/6/2025 50,000 31.42$ 1,090,920 (4.32)% Eric Mosbrooker 1/6/2025 50,000 31.42$ 1,090,920 (4.32)% Charles Calderaro III 1/6/2025 80,000 31.42$ 1,751,760 (4.32)% ____________________ (1) Represents stock options that vest and become exercisable in equal monthly installments over the four-year period following the grant date until fully vested at the fourth anniversary of the vesting commencement date, subject to the individual’s continued service through each vesting date. (2) Represents the grant date fair value of the option awards granted in 2025. In accordance with SEC rules, this column reflects the aggregate fair value of the awards granted to the NEOs computed as of the applicable grant date in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Notes 2 and 8 to the consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025. This amount does not reflect the actual economic value that will be realized by the NEOs upon the vesting or exercise of the awards or the sale of the common stock underlying such awards. Compensation Committee Report The Human Capital Management Committee of our board of directors, which performs functions equivalent to a compensation committee, has submitted the following report for inclusion in this annual report: The Human Capital Management Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above. Based on such review and discussions, the Human Capital Management Committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in this annual report. This report of the Human Capital Management Committee is not “soliciting material,” shall not be deemed “filed” with the SEC and shall not be incorporated by reference by any general statement incorporating by reference this annual report into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts. The foregoing report has been furnished by the Human Capital Management Committee. Respectfully submitted, The Human Capital Management Committee of the Board of Directors Edward M. Kaye, M.D. (Chair) Tamar Thompson Troy Wilson, Ph.D., J.D. (1) (2) 131
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Table of Contents Compensation Tables 2025 Summary Compensation Table The following table presents summary information regarding the total compensation that was awarded to, earned by or paid to our named executive officers for services rendered for the years ended December 31, 2025, 2024 and 2023. Name and PrincipalPosition Year Salary ($)Bonus ($) StockAwards($) OptionAwards($) Non-equity incentive plan compensation ($) All othercompensation($) Total ($) Sarah Boyce 2025 758,900 — 3,480,300 3,600,036 683,010 24,025 8,546,271 President and Chief Executive Officer 2024 659,900 — 10,748,480 2,157,090 594,000 17,010 14,176,480 2023 634,500 — 2,766,000 7,374,840 349,000 15,379 11,139,719 Michael F. MacLean 2025 530,100 — 785,500 1,090,920 357,818 14,945 2,779,283 Chief Financial Officer 2024 490,800 — 3,340,440 762,172 331,300 17,010 4,941,722 2023 471,900 — 1,072,695 2,728,691 188,760 14,082 4,476,128 Kathleen Gallagher2025 467,400 — 2,848,300 1,090,920 315,495 16,704 4,738,819 Chief Program Officer Eric Mosbrooker 2025 483,000 — 2,848,300 1,090,920 326,025 4,745 4,752,990 Chief Commercial Officer Charles Calderaro III2025 515,000 201,200 4,459,503 1,751,760 347,625 19,205 7,294,293 Chief Technical Officer ____________________ (1) Represents the grant date fair value of RSU, PSU and option awards granted in the applicable fiscal year. In accordance with SEC rules, these columns reflect the aggregate fair value of the awards granted to our NEOs computed as of the applicable grant date in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Notes 2 and 8 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025. The amounts shown also include incremental expense associated with the modification of certain PSU awards on December 17, 2025, as follows: $888,150 for Ms. Boyce, $2,062,800 for Ms. Gallagher, $2,062,800 for Mr. Mosbrooker, and $940,463 for Mr. Calderaro. This amount does not reflect the actual economic value that will be realized by the named executive officers upon the vesting or exercise of the awards or the sale of the common stock underlying such awards. The PSU awards granted in 2024 are valued at target, which also represents the maximum performance level under such 2024 PSUs. If the PSU awards granted to Mr. Calderaro during 2025 were valued at maximum, the amounts shown in this column for 2025 for such PSU awards would be $2,262,240. (2) Represents annual bonuses for the applicable year under our annual bonus plan, as described above. (3) For 2025, this includes (i) life insurance premiums of $1,367 for each NEO, (ii) 401(k) matching contributions for each NEO and (iii) a work from home stipend in the amount of $1,800 for each NEO. (4) Represents a one-time signing bonus paid to Mr. Calderaro in connection with his commencement of employment with us. (1) (1) (2) (3) (4) 132
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Table of Contents 2025 Grants of Plan-Based Awards The following table sets forth summary information regarding grants of plan-based awards made to our named executive officers during the year ended December 31, 2025. Name Grant Date Estimated Future Payouts Under Non-Equity Incentive Plan Awards Estimated Future Payouts Under Non- Equity Incentive Plan Awards All Other Stock Awards: Number of Shares of Stocks (#) All Other Option Awards: Number of Securities Underlying Options (#) Exercise or Base Price of Option Awards ($/sh) Grant Date Fair Value For Stock and Option Awards ($) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) Sarah Boyce — — 455,340 683,010 — — — — — — — 1/6/2025 — — — — — — — 165,000 31.42 3,600,036 1/6/2025 — — — — — — 82,500 — — 2,592,150 12/17/2025 — — — — 31,000 — — — — 888,150 Michael F. MacLean — — 238,545 357,818 — — — — — — — 1/6/2025 — — — — — — — 50,000 31.42 1,090,920 1/6/2025 — — — — — — 25,000 — — 785,500 Kathleen Gallagher — — 210,330 315,495 — — — — — — — 1/6/2025 — — — — — — — 50,000 31.42 1,090,920 1/6/2025 — — — — — — 25,000 — — 785,500 12/17/2025 — — — — 72,000 — — — — 2,062,800 Eric Mosbrooker — — 217,350 326,025 — — — — — — — 1/6/2025 — — — — — — — 50,000 31.42 1,090,920 1/6/2025 — — — — — — 25,000 — — 785,500 12/17/2025 — — — — 72,000 — — — — 2,062,800 Charles Calderaro III — — 231,750 347,625 — — — — — — — 1/6/2025 — — — — — — — 80,000 31.42 1,751,760 1/6/2025 — — — — — — 40,000 — — 1,256,800 1/6/2025 — — — — 72,000 — — — — 2,262,240 12/17/2025 — — — — 23,250 — — — — 940,463 ____________________ (1) Represents the target annual bonus payouts pursuant to our annual bonus program, as described above. (2) Represents PSUs granted to Mr. Calderaro that vest in three equal tranches based on achievement of three key goals related to our del-desiran, del- brax, and del-zota product candidates, each of which must be achieved prior to December 31, 2029. The PSUs are eligible to vest in full upon a change in control. Mr. Calderaro's PSUs were granted under our Inducement Plan (as defined below). (3) Represents RSUs that vest in equal annual installments on each of the first four anniversaries of the grant date, subject to the individual’s continued service through each vesting date. In addition, the employment agreements with our NEOs provide for accelerated vesting under certain circumstances. For additional discussion, please see “Employment Agreements with Our Named Executive Officers” below. The RSUs that were granted on January 6, 2025 were approved by our Human Capital Management Committee on January 3, 2025. Except for Mr. Calderaro's RSUs, which were granted under our Inducement Plan, all RSUs awarded in 2025 were granted under our 2020 Plan. (4) Represents stock options that vest and become exercisable in equal monthly installments over the four-year period following the grant date until fully vested at the fourth anniversary of the vesting commencement date, subject to the individual’s continued service through each vesting date. In addition, the employment agreements with our NEOs provide for accelerated vesting under certain circumstances. For additional discussion, please see “— Employment Agreements with Our Named Executive Officers” below. The stock options that were granted on January 6, 2025 were approved by our Human Capital Management Committee on January 3, 2025. These stock options were granted under our 2020 Plan. (5) Represents stock options that vest and become exercisable as follows: 25% of the shares underlying the option vest on the one-year anniversary of the grant date, and the remaining shares vest in equal monthly installments thereafter until fully vested at the fourth anniversary of the vesting commencement date, subject to Mr. Calderaro’s continued service through each vesting date. In addition, the employment agreement with Mr. Calderaro provides for accelerated vesting under certain circumstances. For additional discussion, please see “—Employment Agreements with Our Named Executive Officers” below. The stock options that were granted to Mr. (6)(1) (4) (3) (7) (4) (3) (4) (3) (7) (4) (3) (7) (5) (3) (2) (7) 133
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Table of Contents Calderaro on January 6, 2025 were approved by our Human Capital Management Committee on January 3, 2025. Mr. Calderaro’s stock options were granted under our Inducement Plan (as defined below). (6) Represents the grant date fair value of the stock and option awards granted in 2025. In accordance with SEC rules, this column reflects the aggregate fair value of the awards granted to the NEOs computed as of the applicable grant date in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Notes 2 and 8 to these consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025. This amount does not reflect the actual economic value that will be realized by the NEOs upon the vesting or exercise of the awards or the sale of the common stock underlying such awards. (7) Represents the number of PSUs that were accelerated and became vested at target performance levels in December 2025 pursuant to the Board- approved acceleration of certain equity awards in connection with the Merger. For additional discussion, please see “—Acceleration of Certain Awards in Connection with the Merger” above. Employment Agreements with Our Named Executive Officers In August 2024, our Human Capital Management Committee approved and adopted amended and restated employment agreements for each of our then-current executive officers. Below are written descriptions of those employment agreements, in addition to the employment agreement of Mr. Calderaro, who joined the Company in January 2025. Each of our named executive officers' employment is “at will” and may be terminated at any time. Amended and Restated Employment Agreement with Ms. Boyce We have entered into an employment agreement with Ms. Boyce, which governs the terms of Ms. Boyce’s employment. Ms. Boyce serves as our President and Chief Executive Officer. Ms. Boyce’s agreement sets forth her annual base salary and eligibility to receive an annual performance bonus. Regardless of the manner in which Ms. Boyce’s employment terminates, she is entitled to receive amounts previously earned during her employment, including unpaid salary and cash out of unused vacation. In addition, Ms. Boyce is entitled to certain severance benefits under her employment agreement, subject to her execution of a release of claims and compliance with post-termination obligations. Ms. Boyce’s employment agreement provides for severance benefits for certain terminations that arise during and outside a change of control period. Upon a termination without cause or resignation for good reason outside of a change of control period (as such terms are defined below), Ms. Boyce is entitled to: (i) continuation of her base salary for 18 months (such applicable period, the severance period), and (ii) payment of the COBRA premiums for her and her eligible dependents until the earliest of (a) the end the severance period, (b) expiration of her eligibility for continuation coverage under COBRA, or (c) the date she becomes eligible for health insurance coverage in connection with her new employment. Upon a termination without cause or resignation for good reason within 59 days prior to or 24 months after a change of control (such period, the change of control period), Ms. Boyce is entitled to: (i) an amount equal to 24 months of her base salary, with 6 months of base salary paid in a lump sum and 18 months of base salary paid in 18 equal monthly installments, (ii) an amount equal to 200% of her target annual bonus for the year in which the termination occurs, paid in a lump sum, (iii) an amount equal to her prorated target annual bonus for the calendar year in which her termination occurs, paid in a lump sum, (iv) payment of the COBRA premiums for her and her eligible dependents until the earliest of (a) the end such 18- month period, (b) expiration of her eligibility for continuation coverage under COBRA, or (c) the date she becomes eligible for health insurance coverage in connection with her new employment, (v) an amount equal to the COBRA premiums for her and her eligible dependents for 6 months, paid in a lump sum, and (vi) accelerated vesting of any unvested time-based vesting equity awards. In addition, in the event that Ms. Boyce’s termination occurs after the occurrence of a change of control and after the conclusion of a calendar year in respect of her annual bonus has yet been paid, Ms. Boyce is entitled to her annual bonus for such completed calendar year based on actual performance, paid when annual bonuses are paid to the Company’s employees generally, but in all events prior to March 15 of the calendar year in which her termination occurs. For purposes of Ms. Boyce’s employment agreement: • “cause” means (i) executive’s willful failure substantially to perform executive’s duties and responsibilities to us or deliberate violation of our policy; (ii) executive’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to us; (iii) executive’s unauthorized use or disclosure of any proprietary information or trade secrets of ours or any other party to whom executive owes an 134
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Table of Contents obligation of nondisclosure as a result of executive’s relationship with us; or (iv) executive’s willful breach of any of executive’s obligations under any written agreement or covenant with us; • “change of control” has the same meaning given to such term in our 2020 Plan; and • “good reason” means executive’s resignation from employment with us if we take any of the following actions without executive’s prior written consent: (i) a material reduction in executive’s base salary or target bonus if such a reduction is not made in proportion to an across-the-board reduction for all senior executives; (ii) a material reduction or material adverse change in executive’s duties, responsibilities and/or authorities (including, following a change of control, Ms. Boyce ceasing to report to the board of directors of the ultimate parent entity of the Company and/or ceasing to serve as the chief executive officer of such ultimate parent company); (iii) relocation of executive’s principal place of employment to a place that increases executive’s one-way commute by more than 50 miles as compared to executive’s then-current principal place of employment immediately prior to such relocation; or (iv) any other action or inaction that constitutes a material breach by us of any agreement under which executive provides services. Employment Agreements with Our Other NEOs We have entered into employment agreements with each of Mr. MacLean, Ms. Gallagher, Mr. Mosbrooker, and Mr. Calderaro, which sets forth the terms of their employment. Each of their agreements sets forth their annual base salary and eligibility to receive an annual performance bonus. Regardless of the manner in which their services terminate, Mr. MacLean, Ms. Gallagher, Mr. Mosbrooker, and Mr. Calderaro are entitled to receive amounts previously earned during their term of service, including unpaid salary and cash out of unused vacation. In addition, they are entitled to certain severance benefits under their employment agreement, subject to his execution of a release of claims and compliance with post-termination obligations. Each employment agreement provides for severance benefits for certain terminations that arise during and outside a change of control period. Upon a termination without cause or resignation for good reason outside of a change of control period (as such terms are defined below), they are entitled to: (i) an amount equal to 12 months of their base salary, paid in a lump sum, and (ii) payment of the COBRA premiums for them and their eligible dependents until the earliest of (a) the end of the 12-month period following their termination, (b) expiration of their eligibility for continuation coverage under COBRA, or (c) the date they become eligible for health insurance coverage in connection with new employment. Upon a termination without cause or resignation for good reason within 59 days prior to or 24 months after a change of control (such period, the change of control period), each executive is entitled to: (i) an amount equal to 18 months of their base salary, paid in a lump sum, (ii) an amount equal to 150% of their target annual bonus for the year in which the termination occurs, paid in a lump sum, (iii) an amount equal to their prorated target annual bonus for the calendar year in which their termination occurs, paid in a lump sum, (iv) payment of the COBRA premiums for them and their eligible dependents until the earliest of (a) the end of such 18-month period, (b) expiration of their eligibility for continuation coverage under COBRA, or (c) the date they become eligible for health insurance coverage in connection with new employment, and (v) accelerated vesting of any unvested time-based vesting equity awards. In addition, in the event that their termination occurs after the occurrence of a change of control and after the conclusion of a calendar year in respect of which no annual bonus has yet been paid, Mr. MacLean, Ms. Gallagher, Mr. Mosbrooker, and Mr. Calderaro are entitled to their annual bonus for such completed calendar year based on actual performance, paid when annual bonuses are paid to the Company’s employees generally, but in all events prior to March 15 of the calendar year in which their termination occurs. In addition, in the event that Mr. MacLean is terminated for cause, he will have 3 months to exercise his vested stock options. Further, in the event that he is terminated without cause or he resigns for good reason, he will have 6 months to exercise his vested stock options. Notwithstanding the foregoing, in no event will any options remain exercisable beyond the original outside expiration date of such options. For purposes of Mr. MacLean, Ms. Gallagher, Mr. Mosbrooker, and Mr. Calderaro’s employment agreements: • “cause” has the same meaning as given to the term in Ms. Boyce’s employment agreement, as described above, except that, for Mr. MacLean, prong (i) in the definition of “cause” means executive’s willful failure substantially to perform executive’s duties and responsibilities to us 135
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Table of Contents causing material harm to the Company after written notice to executive specifying such failure and executive’s failure to cure within 60 days or deliberate violation of our written policy causing material harm to the Company; • “change of control” has the same meaning as given to the term in Ms. Boyce’s employment agreement, as described above; and • “good reason” means executive’s resignation from employment with us if we take any of the following actions without executive’s prior written consent: (i) a material reduction in executive’s base salary or target bonus if such a reduction is not made in proportion to an across-the-board reduction for all senior executives; (ii) a material reduction or material adverse change in executive’s duties, responsibilities and/or authorities, (and, for Mr. MacLean, a requirement that he report to someone other than the Company’s chief executive officer), including, following a change of control, the executive ceasing to report to the chief executive officer of the ultimate parent entity of the Company and/or ceasing to serve in the same C-suite position of such ultimate parent entity, provided, however, that prior to a change of control, it shall not constitute “good reason” if such reduction is a mere change of title alone or, for Dr. Flanagan, Ms. McCarthy, and Mr. Moriarty, a change in reporting relationship; (iii) relocation of executive’s principal place of employment to a place that increases executive’s one- way commute by more than 50 miles as compared to executive’s then-current principal place of employment immediately prior to such relocation; or (iv) any other action or inaction that constitutes a material breach by us of any agreement under which executive provides services. 136
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Table of Contents Outstanding Equity Awards at Fiscal Year-End The following table sets forth specified information regarding the outstanding equity awards held by our named executive officers at December 31, 2025. Option Awards Stock Awards Name Grant Date Vesting Commencement Date Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Option exercise price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock that Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested ($) Sarah Boyce 12/18/2019 10/7/2019 386,015 — 1.24 12/18/2029 — — — — 2/2/2021 1/1/2021 300,000 — 22.34 2/2/2031 — — — — 1/21/2022 1/3/2022 416,145 8,855 14.22 1/21/2032 — — — — 1/20/2023 1/20/2023 291,666 108,334 22.47 1/20/203325,000 1,803,250 — — 9/11/2023 9/11/2023 112,500 87,500 6.57 9/11/2033 — — — — 1/20/2024 1/20/2024 143,750 156,250 10.16 1/20/203446,875 3,381,094 — — 10/30/202410/30/2024 — — — — — — 203,00014,642,390 1/6/2025 1/6/2025 37,812 127,188 31.42 1/6/2035 82,500 5,950,725 — — Michael F. MacLean 2/2/2021 1/1/2021 92,000 — 22.34 2/2/2031 — — — — 1/21/2022 1/3/2022 128,515 2,735 14.22 1/21/2032 — — — — 1/20/2023 1/20/2023 107,916 40,084 22.47 1/20/2033 9,250 667,203 — — 9/11/2023 9/11/2023 27,750 32,375 6.57 9/11/2033 — — — — 1/20/2024 1/20/2024 50,791 55,209 10.16 1/20/203416,875 1,217,194 — — 10/30/202410/30/2024 — — — — — — 72,000 5,193,360 1/6/2025 1/6/2025 11,458 38,542 31.42 1/6/2035 25,000 1,803,250 — — Kathleen Gallagher4/26/2021 4/26/2021 22,321 — 25.12 4/26/2031 — — — — 1/20/2022 1/3/2022 12,446 1,383 14.70 1/20/2032 — — — — 7/18/2022 7/18/2022 18,724 3,872 16.65 7/18/2032 — — — — 1/20/2023 1/20/2023 17,517 10,067 22.47 1/20/2033 — — — — 8/20/2023 8/20/2023 24,780 17,700 8.24 8/20/2033 — — — — 1/20/2024 1/20/2024 6,478 7,042 10.16 1/20/203412,250 883,593 — — 8/30/2024 8/30/2024 5,333 10,667 44.00 8/30/2034 1,250 90,163 — — 1/6/2025 1/6/2025 11,458 38,542 31.42 1/6/2035 18,750 1,352,438 — — Eric Mosbrooker1/1/2024 1/1/2024 13,125 164,063 9.05 1/1/2034 20,000 1,442,600 — — 1/6/2025 1/6/2025 11,458 38,542 31.42 1/6/2035 12,500 901,625 — — Charles Calderaro III 1/6/2025 1/6/2025 — 80,000 31.42 1/6/2035 40,000 2,885,200 48,750 3,516,338 ____________________ (1) The stock options vest and become exercisable in equal monthly installments over the four-year period following the vesting commencement date until fully vested at the fourth anniversary of the vesting commencement date, subject to the individual’s continued service through each vesting date. In addition, the employment agreements with our NEOs provide for accelerated vesting under certain circumstances. For additional discussion, please see “—Employment Agreements with Our Named Executive Officers” above. (2) The stock options vest and become exercisable with respect to 25% of the underlying shares on the one-year anniversary of the vesting commencement date and monthly thereafter in equal installments until fully vested at the fourth anniversary of the vesting commencement date, subject to the individual’s continued service through each vesting date. In addition, the employment agreements with our NEOs provide for accelerated vesting under certain circumstances. For additional discussion, please see “—Employment Agreements with Our Named Executive Officers” above. (4) (4) (1) (1) (1) (3) (1) (1) (3) (5) (1) (3) (1) (1) (1) (3) (1) (1) (3) (5) (1) (3) (2) (1) (1) (1) (1) (1) (3) (1) (3) (1) (3) (1) (3) (1) (3) (2) (3) (5)
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(3) The RSUs vest in equal annual installments over the four-year period following the vesting commencement date until fully vested at the fourth anniversary of the vesting commencement date, subject to the individual’s continued service through each vesting date. In addition, the employment agreements with our NEOs provide for accelerated vesting under certain circumstances. For additional discussion, please see “—Employment Agreements with Our Named Executive Officers” above. (4) Market value is calculated by multiplying the number of RSU or PSU stock awards that have not vested by the closing price of our common stock on December 31, 2025, the last trading day of 2025, which was $72.13. (5) The PSUs vest in three equal tranches based on achievement of three key achievements related to our del-desiran, del-brax, and del-zota product candidates, each of which must be achieved prior to December 31, 2029. In addition, the PSUs will vest upon a change in control. 137
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Table of Contents Option Exercises and Stock Vested The following table sets forth information regarding the options that were exercised and the RSUs and PSUs that vested during 2025 with respect to our named executive officers. Option Awards Stock Awards Name Number of Shares Acquired on Exercise (#) Value Realizedon Exercise($) Number of Shares Acquired on Vesting (#) Value Realizedon Vesting($) Sarah Boyce 75,000 3,639,135 121,625 5,023,845 Michael F. MacLean — — 35,250 1,089,430 Kathleen Gallagher 35,250 533,840 97,723 6,658,964 Eric Mosbrooker 137,812 4,853,541 94,500 6,363,815 Charles Calderaro III — — 23,250 1,670,978 ____________________ (1) The amount shown for value realized on exercise of stock options equals (a) the number of shares of our common stock to which the exercise of the stock option related, multiplied by (b) the difference between the per-share market price of the shares on the date of exercise and the per-share exercise price of the option. If the stock acquired upon exercise was sold on the day of exercise, the market price was determined as the actual sales price of the stock. If the stock acquired upon exercise was not sold on the day of exercise, the market price was determined as the closing price of the stock on the Nasdaq Stock Market on the exercise date. (2) The amount shown for the value realized on vesting equals (a) the number of shares of stock subject to awards of RSUs and PSUs, as applicable, that vested during 2025, multiplied by (b) the closing price of our common stock on the applicable vesting date. The amount also includes fair value of certain PSUs the vesting of which was accelerated in December 2025 in connection with the 280G mitigation actions taken in connection with the Merger. Potential Payments Upon Termination or Change in Control The following table summarizes the potential payments to our named executive officers in the scenarios listed in the table below. The table assumes that the termination of employment or change in control, as applicable, occurred on December 31, 2025. Except as described in the footnote below, the value of the accelerated vesting of option awards was computed using $72.13, which was the price of our common stock at (1) (2) 138
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Table of Contents December 31, 2025, the last trading day of 2025 (less, in the case of option awards, the exercise price per share of such option awards). Triggering Event Cash Severance ($) Accelerated Equity Awards ($) Health Benefits ($) Total ($) Sarah Boyce Involuntary Termination Without Cause/Resignation for Good Reason Apart from a CIC 1,138,350 — 51,149 1,189,499 Involuntary Termination Without Cause/Resignation for Good Reason in Connection with a CIC 2,428,480 52,267,254 68,198 54,763,932 CIC (No Termination) — 14,642,390 — 14,642,390 Michael F. MacLean Involuntary Termination Without Cause/Resignation for Good Reason Apart from a CIC 530,100 — 11,562 541,662 Involuntary Termination Without Cause/Resignation for Good Reason in Connection with a CIC 1,152,968 18,142,813 17,343 19,313,124 CIC (No Termination) — 5,193,360 — 5,193,360 Kathleen Gallagher Involuntary Termination Without Cause/Resignation for Good Reason Apart from a CIC 467,400 — 34,099 501,499 Involuntary Termination Without Cause/Resignation for Good Reason in Connection with a CIC 1,016,595 6,556,717 51,149 7,624,461 CIC (No Termination) — — — — Eric Mosbrooker Involuntary Termination Without Cause/Resignation for Good Reason Apart from a CIC 483,000 — 34,099 517,099 Involuntary Termination Without Cause/Resignation for Good Reason in Connection with a CIC 1,050,525 14,262,364 51,149 15,364,038 CIC (No Termination) — — — — Charles Calderaro III Involuntary Termination Without Cause/Resignation for Good Reason Apart from a CIC 515,000 — 20,007 535,007 Involuntary Termination Without Cause/Resignation for Good Reason in Connection with a CIC 1,120,125 9,658,338 30,011 10,808,474 CIC (No Termination) — 3,516,338 — 3,516,338 ____________________ (1) Represents cash severance payable upon an involuntary termination without cause or a resignation for good reason pursuant to the NEOs’ employment agreements. For Ms. Boyce, represents 18 months’ base salary (increased to 24 months’ base salary plus 200% of full target bonus in the event of such a termination within 59 days prior to or 24 months following a change of control (the "change of control period")) plus her 2025 target bonus (given she is entitled to a prorated bonus, but for purposes of this disclosure the termination is assumed to have occurred on December 31, 2025). For the other NEOs, represents 12 months’ base salary (increased to 18 months' base salary plus 150% of full target bonus in the event of such a termination within the change of control period plus their 2025 target bonus (given they are entitled to a prorated bonus, but for purposes of this disclosure the termination is assumed to have occurred on December 31, 2025)). (2) These values are based on the fair market value of our common stock of $72.13 on December 31, 2025, the last trading day of 2025. In the case of unvested options, the value represents the excess of such fair market value over the exercise price of the unvested options, multiplied by the number of shares of common stock underlying such unvested options. In the case of unvested RSU and PSU awards, the value represents the number of shares of common stock underlying the unvested RSU and PSU awards that would vest on an accelerated basis, multiplied by the fair market value described above. In the event of an involuntary termination without cause or a resignation for good reason within the change of control period, all outstanding unvested time-based vesting option awards and RSUs held by the NEOs will vest upon such termination. The PSU awards will vest at "target" levels in the event of a change in control. (1) (2) (3) 139
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Table of Contents (3) For Ms. Boyce, represents the value of the continuation of health benefits for 18 months (increased to 24 months in the event her termination occurs within the change of control period). For all other NEOs, represents the value of the continuation of health benefits for 12 months (increased to 18 months in the event that their termination occurs within the change of control period). CEO Pay Ratio For 2025, the annual total compensation of our median employee, excluding Ms. Boyce, was $327,372, and the annual total compensation of Ms. Boyce, was $8,546,271. The ratio of these amounts is 26.11 to 1. To identify our median employee, we used a consistently applied compensation measure, or “CACM,” to all employees as of December 31, 2025, including full time, part-time, regular and temporary employees, and excluding Ms. Boyce. Our CACM consisted of the sum of (i) annual base salary, (ii) cash bonus or incentive earned in 2024 and paid in 2025 and (iii) grant date fair value of equity awards granted in 2025, as obtained from our payroll and equity systems. Other than annualizing base salaries for permanent employees who were on a leave of absence or not employed for the full year as permitted under Item 402(u) of Regulation S-K, we did not make any compensation adjustments, whether for cost of living or otherwise, in the identification process. The median employee’s annual total compensation for fiscal 2025 was determined using the same methodology used to determine Ms. Boyce’s annual total compensation set forth in the “Summary Compensation Table” on page 132 in this Annual Report on Form 10-K. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act. SEC regulations permit companies to adopt a variety of methodologies, apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices and other factors unique to their workforce and business operations when calculating their pay ratio. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above. Director Compensation Our non-employee director compensation program, or the “NED Compensation Program,” is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders. Directors who are also employees of our Company do not receive compensation for their service on the Board. We have reimbursed, and will continue to reimburse, our non- employee directors for their actual out-of-pocket costs and expenses incurred in connection with attending Board meetings. Under the NED Compensation Program, non-employee directors receive a cash retainer for service on the Board and for service on each committee of which the director is a member. The Chair of the Board and each committee chair receive a higher retainer for such service. Cash retainers are payable quarterly in arrears. Annual cash retainers are pro-rated for any partial calendar quarter of service. The fees paid to non-employee directors for service on the Board under the NED Compensation Program during 2025 were as follows: 2025 Cash Compensation Board of Directors annual retainer (other than Chair) $ 50,000 Annual retainer for the Chair $ 85,000 Committee chair annual retainers Audit $ 20,000 Human Capital Management $ 15,000 Nominating and Corporate Governance $ 10,000 Committee member annual retainers Audit $ 10,000 Human Capital Management $ 7,500 Nominating and Corporate Governance $ 5,000 In addition, under the NED Compensation Program in effect from April 2024 until April 2025, upon his or her initial appointment or election, each of our non-employee directors was eligible to receive a grant of options to purchase 55,000 shares of our common stock (subject to a cap on the grant date value of such award of 140
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Table of Contents $750,000) vesting in equal monthly installments over three years, upon initial election or appointment to the Board (the "Initial Director Grant"), and thereafter annual grants of options to purchase 27,500 shares of our common stock on the date of each annual meeting of stockholders (subject to a cap on the grant date value of each such award of $375,000), vesting on the first to occur of (i) the first anniversary of the grant date or (ii) the next occurring annual meeting of our stockholders (each such grant for each director an "Annual Director Grant"), in each case subject to the non-employee director’s continued service on the applicable vesting date. In the event the value of an Initial Director Grant or an Annual Director Grant would have exceeded these caps, as calculated on the grant date in accordance with the Black-Scholes option pricing model (utilizing the same assumptions we utilize in preparation of our financial statements and the average closing price per share of our common stock for the 30-day period preceding the grant date), then the number of shares of our common stock underlying such Initial Director Grant or the Annual Director Grant was reduced by a number necessary to ensure the value of such grant equaled or fell below the applicable limit. In June 2024, the number of options granted pursuant to the Annual Director Grants was reduced as a result of the foregoing cap. In addition, under the NED Compensation Program in effect since April 2025, upon his or her initial appointment or election, each of our non-employee directors will be eligible to receive the following initial awards: (1) an option to purchase such number of shares of common stock having a value of $375,000 on the grant date, calculated in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that we utilize in preparation of our financial statements), which vests in substantially equal monthly installments over the three years following the non-employee director’s election or appointment to the Board, subject to the non-employee director’s continued service on the applicable vesting date, and (2) such number of RSUs as is determined by dividing (a) $375,000, by (b) the closing price per share of the Company’s common stock on the grant date, which vests in substantially equal annual installments over the three years following the non- employee director’s election or appointment to the Board, subject to the non-employee director’s continued service on the applicable vesting date. Thereafter, each non-employee director is entitled to receive the following annual awards on the date of each annual meeting of stockholders, commencing in 2025: (i) an option to purchase such number of shares of common stock having a value of $225,000 on the grant date, calculated in accordance with the Black-Scholes option pricing model (utilizing the same assumptions we utilize in preparation of our financial statements), and (ii) such number of RSUs as is determined by dividing (x) $225,000, by (y) the closing price per share of the Company’s common stock on the grant date. These annual awards vest on the first to occur of (A) the first anniversary of the grant date or (B) the next occurring annual meeting of our stockholders, subject to the non-employee director’s continued service on the applicable vesting date. All equity awards granted to our non-employee directors will vest upon a change of control (as defined in the 2020 Plan) of the Company. The following table sets forth information regarding the compensation of our non-employee directors earned for services rendered during the year ended December 31, 2025. Ms. Boyce, who served as our President and Chief Executive Officer during the year ended December 31, 2025, and continues to serve in that capacity, does not receive additional compensation for her service as a director. All compensation paid to Ms. Boyce is reported above in the "2025 Summary Compensation Table". Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Total ($) Carsten Boess 62,500 224,985 224,989 512,474 Noreen Henig, M.D. 62,750 224,985 224,989 512,724 Edward Kaye, M.D. 62,000 224,985 224,989 511,974 Jean Kim 53,750 224,985 224,989 503,724 Arthur A. Levin, Ph. D. 35,000 224,985 224,989 484,974 Tamar Thompson 55,750 224,985 224,989 505,724 Troy Wilson, Ph.D., J.D. 83,750 224,985 224,989 533,724 Simona Skerjanec 45,000 224,985 224,989 494,974 ____________________ (1) Represents the grant date fair value of option awards granted in 2025. In accordance with SEC rules, this column reflects the aggregate fair value of the awards granted to the directors computed as of the applicable grant date in accordance with ASC 718. (1) 141
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Table of Contents Assumptions used in the calculation of these amounts are included in Notes 2 and 8 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025. This amount does not reflect the actual economic value that will be realized by the directors upon the vesting or exercise of the awards or the sale of the common stock underlying such awards. The aggregate number of shares subject to stock awards and stock options outstanding at December 31, 2025 for the individuals who served as non-employee directors during 2025 was as follows: Name Number of Securities Underlying RSUs Outstanding at December 31, 2025 Number of Securities Underlying Options Outstanding at December 31, 2025 Carsten Boess 6,692 103,381 Noreen Henig, M.D. 6,692 103,380 Edward Kaye, M.D. 6,692 103,380 Jean Kim 6,692 97,523 Arthur A. Levin, Ph.D. 15,692 295,523 Tamar Thompson 6,692 67,523 Troy Wilson, Ph.D., J.D. 6,692 38,523 Simona Skerjanec 6,692 52,342 Compensation Committee Interlocks and Insider Participation None of the members of our Human Capital Management Committee is currently, or has at any time been, one of our officers or employees, with the exception of Dr. Wilson, who served as our President and Chief Executive Officer until his resignation in February 2019. None of our executive officers currently serves, or has served during the past fiscal year, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving as a member of our Board or Human Capital Management Committee. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information with respect to the beneficial ownership of shares of the Company's common stock as of February 13, 2026 by: • each of our directors; • each of our Named Executive Officers; • all of our current directors and executive officers as a group; and • each person, or group of affiliated persons, who beneficially owned more than 5% of our outstanding common stock. The percentages in the column entitled “Beneficial Ownership Percentage” are based on a total of 155,149,646 shares of Company common stock outstanding as of February 13, 2026. Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to shares of the Company's common stock. Shares of common stock subject to stock options that were exercisable as of February 13, 2026, or exercisable within 60 days of February 13, 2026, are considered outstanding and beneficially owned by the Person holding the stock options for the purpose of calculating the percentage ownership of that Person but not for the purpose of calculating the percentage ownership of any other Person. RSUs that are scheduled to vest during the 60-day period following February 13, 2026, are considered outstanding and beneficially owned by the holder of such RSUs for the purpose of calculating the percentage ownership of that Person but not for the purpose of calculating the percentage ownership of any other Person. Except as otherwise noted, the Persons in this table have sole voting and investing power with respect to all of the shares of common stock beneficially owned by 142
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Table of Contents them, subject to community property laws, where applicable. Except as otherwise set forth below, the address of the beneficial owner is c/o Avidity Biosciences, Inc., 3020 Callan Road, San Diego, CA 92121. Beneficial Ownership Name of Beneficial Owner Number Percentage 5% or Greater Stockholders The Vanguard Group 13,219,759 8.52 % Avoro Capital Advisors LLC 9,935,792 6.40 % T. Rowe Price Associates, Inc. 9,787,912 6.31 % RA Capital Management, L.P. 8,641,031 5.57 % BlackRock, Inc. 8,631,771 5.56 % Janus Henderson Group plc 8,224,930 5.30 % Named Executive Officers and Directors Sarah Boyce 1,937,145 1.25 % Michael F. MacLean 474,725 * Kathleen Gallagher 181,142 * Eric Mosbrooker 101,913 * Charles Calderaro 44,797 * Troy Wilson, Ph.D., J.D. 100,599 * Carsten Boess 93,347 * Noreen Henig, M.D. 93,346 * Edward M. Kaye, M.D. 93,346 * Jean Kim 87,489 * Arthur A. Levin, Ph.D. 392,231 * Simona Skerjanec 27,030 * Tamar Thompson 57,489 * All executive officers and directors as a group (17 persons) 4,831,259 3.11 % ____________________ * Less than 1%. (1) According to Amendment No. 3 to Schedule 13G filed with the SEC on October 30, 2025, The Vanguard Group (“Vanguard”), an investment adviser, was deemed the beneficial owner of 13,219,759 shares of Company Common Stock. Vanguard has shared voting power over 878,441 shares of Company Common Stock, sole dispositive power over 12,196,279 shares of Company Common Stock, and shared dispositive power over 1,023,480 shares of Company Common Stock. The address of Vanguard is 100 Vanguard Blvd, Malvern, PA 19355. (2) According to the Schedule 13G filed with the SEC on November 14, 2024, Avoro Capital Advisors LLC (“Avoro Capital”), an investment advisor, and Dr. Behzad Aghazadeh, Avoro Capital’s portfolio manager, were deemed the beneficial owners of 6,875,000 shares of Company Common Stock and 3,060,792 pre-funded warrants, and have the shared power to vote or direct the vote of an aggregate of 9,935,792 shares of Company Common Stock (including 3,060,792 shares of Company Common Stock issuable upon exercise of pre-funded warrants) and the shared voting and dispositive power over an aggregate of 9,935,792 shares of Company Common Stock (including 3,060,792 shares of Company Common Stock issuable upon exercise of pre-funded warrants). The address of Avoro Capital is 110 Greene Street, Suite 800, New York, NY 10012. (3) According to Amendment No. 7 to Schedule 13G filed with the SEC on November 14, 2025, T. Rowe Price Associates, Inc. (“T. Rowe”), an investment advisor, was deemed to be the beneficial owner of 9,787,912 shares of Company Common Stock. T. Rowe has sole voting power over 9,583,549 shares of Company Common Stock and sole dispositive power over 9,787,417 shares of Company Common Stock. The address of T. Rowe is 1307 Point Street, Baltimore, Maryland 21231. (4) According to Amendment No. 2 to Schedule 13G filed with the SEC on November 14, 2025, entities and individuals affiliated with RA Capital Management, L.P., including Peter Kolchinsky, Rajeev Shah and RA Capital Healthcare Fund, L.P., have shared voting and dispositive power over an aggregate of 8,641,031 shares of Company Common Stock. The address of RA Capital Management, L.P. is 200 Berkeley Street, 18th Floor, Boston, MA 02116. (5) According to Amendment No. 5 to Schedule 13G filed with the SEC on October 17, 2025, BlackRock, Inc. has the sole power to vote or direct the vote of an aggregate of 8,455,367 shares of Company Common Stock, and has the sole power to dispose or direct the (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) 143
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Table of Contents disposition of an aggregate of 8,631,771 shares of Company Common Stock. The address of BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. (6) According to Amendment No. 4 to Schedule 13G filed with the SEC on December 5, 2025, entities affiliated with Janus Henderson Group plc have the shared power to vote or direct the vote of an aggregate of 8,224,930 shares of Company Common Stock and have the shared voting and dispositive power over an aggregate of 8,224,930 shares of Company Common Stock. The address of Janus Henderson Group plc is 201 Bishopsgate, EC2M 3AE, United Kingdom. (7) Includes 1,770,909 shares of Company Common Stock underlying Company Stock Options held by Ms. Boyce that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (8) Includes 447,373 shares of Company Common Stock underlying Company Stock Options held by Mr. MacLean that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (9) Includes 133,089 shares of Company Common Stock underlying Company Stock Options held by Ms. Gallagher that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (10) Includes 55,000 shares of Company Common Stock underlying Company Stock Options held by Mr. Mosbrooker that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (11) Includes 25,000 shares of Company Common Stock underlying Company Stock Options held by Mr. Calderaro that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (12) Includes (i) 58,399 shares of Company Common Stock; (ii) 28,489 shares of Company Common Stock underlying Company Stock Options held by Dr. Wilson that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date; and (iii) 13,711 shares of Company Common Stock held by a trust in which Dr. Wilson is co-trustee and in such capacity may be deemed a beneficial owner of the shares. (13) Includes 93,347 shares of Company Common Stock underlying Company Stock Options held by Mr. Boess that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (14) Includes 93,346 shares of Company Common Stock underlying Company Stock Options held by Dr. Henig that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (15) Includes 93,346 shares of Company Common Stock underlying Company Stock Options held by Dr. Kaye that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (16) Includes 87,489 shares of Company Common Stock underlying Company Stock Options held by Ms. Kim that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (17) Includes (i) 255,489 shares of Company Common Stock underlying Company Stock Options held by Dr. Levin that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date and (ii) 131,372 shares held by a family trust of which Dr. Levin and his spouse are co-trustees. (18) Includes 27,030 shares of Company Common Stock underlying Company Stock Options held by Ms. Skerjanec that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (19) Includes 57,489 shares of Company Common Stock underlying Company Stock Options held by Ms. Thompson that are exercisable as of February 13, 2026, or that will become exercisable within 60 days after such date. (20) Includes (i) the shares described in footnotes 7 through 19; (ii) 67,115 shares of Company Common Stock held by Dr. Flanagan and 267,291 shares of Company Common Stock subject to Company Stock Options held by Dr. Flanagan that are exercisable within 60 days of February 13, 2026; (iii) 100,296 shares of Company Common Stock held by Ms. McCarthy and 406,750 shares of Company Common Stock subject to Company Stock Options held by Ms. McCarthy that are exercisable within 60 days of February 13, 2026; (iv) 9,232 shares of Company Common Stock held by Steven Hughes, M.D. and 175,131 shares of Company Common Stock subject to Company Stock Options held by Dr. Hughes that are exercisable within 60 days of February 13, 2026; and (v) 38,554 shares of Company Common Stock held by Mr. Moriarty and 82,291 shares of Company Common Stock subject to Company Stock Options held by Mr. Moriarty that are exercisable within 60 days of February 13, 2026. Equity Compensation Plan Information The following table sets forth information as of December 31, 2025 regarding common stock that may be issued under our equity compensation plans, consisting of the 2020 Plan, the Avidity Biosciences, Inc. 2013 Equity Incentive Plan (the “2013 Plan”), the Avidity Biosciences, Inc. 2022 Employment Inducement Incentive 144
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Table of Contents Award Plan (the "Inducement Plan"), and the Avidity Biosciences, Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”). Plan Category (A) Number of securities to be issued upon exercise of outstanding options, warrants and rights (B) Weighted average per share exercise price of outstanding options, warrants and rights (C) Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) Equity compensation plans approved by security holders 13,047,719 $ — 6,448,802 Equity compensation plans not approved by security holders 3,830,473 — 173,081 Total 16,878,192 $ 17.81 6,621,883 ____________________ (1) Includes 12,277,319 outstanding options to purchase shares of common stock, RSUs, and PSUs (at "target") under the 2020 Plan and 770,400 outstanding options to purchase shares of common stock under the 2013 Plan. (2) Represents the weighted-average exercise price of outstanding options. (3) Includes 5,221,269 shares of common stock available for issuance under the 2020 Plan and 1,227,533 shares of common stock available for issuance under the 2020 ESPP (all of which were eligible for purchase pursuant to the offering period in effect on December 31, 2025). This amount does not include any additional shares that may become available for future issuance under the 2020 Plan pursuant to the automatic increased to the share reserve on January 1 of each of our calendar years through 2030 by the number of shares equal to 5% of the total outstanding shares of our common stock as of the immediately preceding December 31. Additionally, this amount does not include any additional shares that may become available for future issuance under the 2020 ESPP pursuant to the automatic increased to the share reserve on January 1 of each of our calendar years through 2030 by the number of shares equal to 1% of the total outstanding shares of our common stock as of the immediately preceding December 31. (4) Includes 3,830,473 outstanding options to purchase shares of common stock and RSUs under the Inducement Plan. (5) Represents shares of common stock available for issuance under the Inducement Plan. The material features of our equity incentive plans, including the Inducement Plan, are more fully described in Note 8 to our consolidated financial statements included in our Annual Report on this Form 10-K for the year ended December 31, 2025. ITEM 13. Certain Relationships and Related Transactions, and Director Independence Certain Relationships and Related Party Transactions The following is a summary of transactions entered into or existing since January 1, 2025 to which we have been a party in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, nominees, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described under Item 11 -“Executive Compensation.” We also describe below certain other transactions with our directors, executive officers, and stockholders. Employment Agreements We have entered into employment agreements with each of our named executive officers. For more information regarding these agreements, see the section in this annual report entitled “Compensation Tables—Employment Agreements with our Named Executive Officers.” Indemnification Agreements We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us or will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or (1) (3) (4) (5) (2) 145
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Table of Contents proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer. Our Charter and Bylaws provide that we will indemnify each of our directors and officers to the fullest extent permitted by the Delaware General Corporation Law. Further, we have purchased a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances. Stock Option, Restricted Stock Unit and Performance Stock Unit Grants to Executive Officers and Directors We have granted stock options, restricted stock units and performance stock units to our executive officers, and stock options to our directors, as more fully described in the sections entitled "Compensation Discussion and Analysis" and “Director Compensation,” respectively. Policies and Procedures for Related Person Transactions The Board adopted a written related person transaction policy, setting forth the policies and procedures for the review and approval or ratification of related-person transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our Audit Committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. Board Independence The Board currently consists of nine members. The Board has determined that all of our directors, other than Ms. Boyce and Dr. Levin, are independent directors in accordance with the listing requirements of the Nasdaq Stock Market, LLC, or Nasdaq. The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, the Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers. ITEM 14. Principal Accountant Fees and Services Independent Registered Public Accountants' Fees Deloitte & Touche LLP became our independent registered public accounting firm on April 25, 2025. The following table summarizes fees billed and expected to be billed to the Company for the fiscal years ended 146
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Table of Contents December 31, 2025 and 2024 by Deloitte & Touche LLP and BDO USA, P.C., respectively. All fees were approved by the Audit Committee. Fiscal Years Ended December 31, Fee Category 2025 2024 Audit Fees $ 840,786 $ 901,011 Audit-Related Fee 776,481 — Tax Fees 247,838 — All Other Fees — — Total Fees $ 1,865,105 $ 901,011 ____________________ (1) Audit fees consist of fees for the audit of our annual financial statements and internal controls over financial reporting, the review of the unaudited interim financial statements included in our quarterly reports on Form 10-Q and the issuance of consents and comfort letters in connection with registration statements. (2) Audit-Related fees consist of fees for carve-out audits in connection with the Distribution and Merger. Audit Committee Pre-Approval of Audit and Non-Audit Services The Audit Committee has established a policy that all audit and permissible non-audit services provided by our independent registered public accounting firm will be pre-approved by the Audit Committee, and all such services were pre- approved in accordance with this policy during the fiscal year ended December 31, 2025. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of our auditors. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. (1) (2) 147
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Table of Contents PART IV ITEM 15. Exhibits and Financial Statement Schedules 1. Financial Statements. The consolidated financial statements of Avidity Biosciences, Inc., together with the reports thereon of Deloitte & Touche LLP and BDO USA, P.C., independent registered public accounting firms, are included in this annual report on Form 10-K beginning on page F-1. 2. Financial Statement Schedules. All schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto. 3. Exhibits. A list of exhibits is set forth on the Exhibit Index immediately preceding the signature page of this annual report on Form 10-K and is incorporated herein by reference. ITEM 16. Form 10-K Summary None. 148
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Table of Contents Avidity Biosciences, Inc. Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP; San Diego, California; PCAOB ID#34) F-2 Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; San Diego, California; PCAOB ID#243) F-4 Consolidated Balance Sheets F-5 Consolidated Statements of Operations and Comprehensive Loss F-6 Consolidated Statements of Stockholders’ Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9
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Table of Contents Report of Independent Registered Public Accounting Firm To the stockholders and the Board of Directors of Avidity Biosciences, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Avidity Biosciences, Inc. and subsidiaries (the "Company") as of December 31, 2025, the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows, for the year ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accrued Clinical Development — Refer to Notes 2 and 6 to the financial statements Critical Audit Matter Description The Company records accruals for estimated costs incurred for ongoing research and development activities, including clinical trial related activities. When evaluating the adequacy of the accrued liabilities for clinical development, the Company analyzes progress of the services, including the phase or completion of events, invoices received, and contracted costs. As of December 31, 2025, the Company recorded $12.8 million as accrued clinical development, which was included in accrued expenses and other liabilities within current liabilities on the consolidated balance sheet. Given the judgment necessary to estimate progress of services including the phase or completion of events and the associated costs incurred to determine the accrued liabilities for clinical trials, as well as the high volume of data used in the estimation, auditing such estimates requires extensive audit effort and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures. F-2
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Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s judgments in the estimation of accrued clinical development included the following, among others: • We tested the operating effectiveness of controls over management’s determination and approval of key assumptions and inputs used to estimate accrued clinical development. • On a sample basis, we tested the methodology used by the Company to estimate accrued clinical development, including how management estimates costs incurred but not yet invoiced. • On a sample basis, we tested the assumptions used by management to calculate accrued clinical development by: • Testing the mathematical accuracy of management’s estimate for accrued clinical development, including allocation of costs by study and by period. • Testing the completeness and accuracy of key data used in the estimate by making selections and agreeing the selected information to source documents. • Testing management’s ability to estimate accrued clinical development accurately by comparing prior period accruals to subsequent vendor invoices and credits processed through January 2026. • We sent confirmations to selected clinical research organizations to validate clinical trial accruals as of period end. /s/ Deloitte & Touche LLP San Diego, California February 23, 2026 We have served as the Company's auditor since 2025. F-3
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Table of Contents Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Avidity Biosciences, Inc. San Diego, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Avidity Biosciences, Inc. (the “Company”) as of December 31, 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, P.C. We served as the Company’s auditor from 2016 to 2025. San Diego, California February 27, 2025 F-4
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Table of Contents Avidity Biosciences, Inc. Consolidated Balance Sheets (in thousands, except par value) December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 382,517 $ 219,868 Marketable securities 1,314,352 1,281,629 Prepaid and other current assets 101,598 40,793 Total current assets 1,798,467 1,542,290 Property and equipment, net 23,333 12,670 Restricted cash 2,797 2,795 Right-of-use assets 51,278 5,619 Other assets 82,175 521 Total assets $ 1,958,050 $ 1,563,895 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 12,403 $ 8,461 Accrued expenses and other liabilities 157,466 64,726 Lease liabilities, current portion 3,938 3,844 Deferred revenue, current portion 21,639 20,987 Total current liabilities 195,446 98,018 Lease liabilities, net of current portion 45,313 2,957 Deferred revenue, net of current portion 28,691 37,961 Total liabilities 269,450 138,936 Commitments and contingencies (Note 7) Stockholders’ equity: Common stock, $0.0001 par value; authorized shares – 400,000; issued and outstanding shares – 151,205 and 119,893 at December 31, 2025 and 2024, respectively 15 12 Additional paid-in capital 3,263,720 2,315,111 Accumulated other comprehensive income 2,562 2,902 Accumulated deficit (1,577,697) (893,066) Total stockholders’ equity 1,688,600 1,424,959 Total liabilities and stockholders’ equity $ 1,958,050 $ 1,563,895 See accompanying notes. F-5
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Table of Contents Avidity Biosciences, Inc. Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data) Year Ended December 31, 2025 2024 2023 Collaboration revenue $ 18,755 $ 10,897 $ 9,560 Operating expenses: Research and development 559,159 303,593 190,968 General and administrative 205,539 86,240 54,190 Total operating expenses 764,698 389,833 245,158 Loss from operations (745,943) (378,936) (235,598) Other income (expense): Interest income 63,255 56,882 23,972 Other expense (1,943) (248) (594) Total other income 61,312 56,634 23,378 Net loss $ (684,631) $ (322,302) $ (212,220) Net loss per share, basic and diluted $ (4.97) $ (2.89) $ (2.91) Weighted-average shares outstanding, basic and diluted 137,710 111,582 73,012 Other comprehensive income (loss): Net unrealized (losses) gains on marketable securities (451) 2,777 2,823 Foreign currency translation adjustment 111 — — Comprehensive loss $ (684,971) $ (319,525) $ (209,397) See accompanying notes. F-6
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Table of Contents Avidity Biosciences, Inc. Consolidated Statements of Stockholders’ Equity (in thousands) Common StockAdditional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ EquityShares Amount Balance at December 31, 2022 69,768$ 7 $ 939,310 $ (2,698) $ (358,544) $ 578,075 Issuance of common stock in a private placement, net of issuance costs of $74 and allocation to deferred revenues (Note 5) 5,075 1 31,189 — — 31,190 Issuance of common stock in public offerings, net of issuance costs of $1,385 4,107 — 60,547 — — 60,547 Issuance of common stock upon exercise of stock options 149 — 573 — — 573 Issuance of common stock under employee stock purchase plan 176 — 1,554 — — 1,554 Stock-based compensation — — 38,222 — — 38,222 Net loss — — — — (212,220) (212,220) Other comprehensive income — — — 2,823 — 2,823 Balance at December 31, 2023 79,275$ 8 $1,071,395 $ 125 $ (570,764) $ 500,764 Issuance of common stock in a private placement, net of issuance costs of $12,821 15,225 2 238,386 — — 238,388 Issuance of pre-funded warrants in a private placement, net of issuance costs of $7,605 — — 141,395 — — 141,395 Issuance of common stock in public offerings, net of issuance costs of $49,749 20,969 2 762,159 — — 762,161 Issuance of common stock upon exercise of stock options 3,498 — 48,204 — — 48,204 Issuance of common stock under employee stock purchase plan 179 — 2,209 — — 2,209 Issuance of common stock in connection with vesting of restricted stock units 747 — — — — — Stock-based compensation — — 51,363 — — 51,363 Net loss — — — — (322,302) (322,302) Other comprehensive income — — — 2,777 — 2,777 Balance at December 31, 2024 119,893$ 12 $2,315,111 $ 2,902 $ (893,066) $ 1,424,959 Issuance of common stock in public offerings, net of issuance costs of $43,350 22,897 3 836,879 — — 836,882 Issuance of common stock upon exercise of stock options 1,363 — 22,133 — — 22,133 Issuance of common stock upon exercise of pre- funded warrants 5,970 — — — — — Issuance of common stock under employee stock purchase plan 164 — 4,384 — — 4,384 Issuance of common stock in connection with vesting of restricted stock units 918 — — — — — Stock-based compensation — — 85,213 — — 85,213 Net loss — — — — (684,631) (684,631) Other comprehensive loss — — — (340) — (340) Balance at December 31, 2025 151,205$ 15 $3,263,720 $ 2,562 $ (1,577,697) $ 1,688,600 See accompanying notes. F-7
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Table of Contents Avidity Biosciences, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities Net loss $ (684,631) $ (322,302) $ (212,220) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 4,151 2,776 2,101 Stock-based compensation expense 97,838 51,363 38,222 Amortization of premiums and discounts on marketable securities, net(12,524) (21,447) (11,274) Loss on disposal of property and equipment 140 — — Noncash operating lease costs 4,242 3,297 2,978 Changes in operating assets and liabilities: Prepaid and other assets (142,834) (25,057) (3,444) Accounts payable 3,799 (349) 4,172 Accrued expenses and other liabilities 90,742 24,860 742 Operating right-of-use assets and lease liabilities, net (2,746) (3,696) (3,328) Deferred revenue (8,618) (10,315) 62,987 Net cash used in operating activities (650,441) (300,870) (119,064) Cash flows from investing activities Purchases of marketable securities (1,106,872) (1,433,535) (461,002) Proceeds from maturities of marketable securities 1,086,222 586,400 335,160 Purchases of property and equipment (13,319) (7,066) (4,228) Tenant improvements capitalized to right-of-use assets (4,066) — — Net cash used in investing activities (38,035) (854,201) (130,070) Cash flows from financing activities Proceeds from issuance of common stock in public offerings, net of issuance costs 836,882 762,161 60,547 Proceeds from issuance of common stock in private placements, net of issuance costs and allocation to deferred revenues (Note 5) — 238,388 31,190 Proceeds from issuance of pre-funded warrants in a private placement, net of issuance costs — 141,395 — Proceeds from the issuance of common stock under employee incentive equity plans 26,517 50,413 2,127 Payments for taxes related to net share settlement of equity awards(12,409) — — Net cash provided by financing activities 850,990 1,192,357 93,864 Effect of exchange rate on cash, cash equivalents and restricted cash 137 — — Net increase (decrease) in cash, cash equivalents and restricted cash162,651 37,286 (155,270) Cash, cash equivalents and restricted cash at beginning of period 222,663 185,377 340,647 Cash, cash equivalents and restricted cash at end of period $ 385,314 $ 222,663 $ 185,377 Supplemental schedule of noncash investing and financing activities: Right-of-use assets obtained in exchange for operating lease liabilities$ 45,195 $ — $ 1,741 Costs incurred, but not paid, in connection with purchases of property and equipment included in accounts payable and accrued expenses and other liabilities $ 1,634 $ 3,424 $ — Tenant improvements capitalized to right-of-use assets within accounts payable and accrued expenses and other liabilities $ 253 $ — $ — Receivables from stock option exercises included in prepaid and other current assets $ 1,106 $ — $ — See accompanying notes.
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Table of Contents Avidity Biosciences, Inc. Notes to Consolidated Financial Statements 1. Description of Business and Basis of Presentation Description of Business Avidity Biosciences, Inc. (the Company or Avidity) is a biopharmaceutical company committed to delivering a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates (AOCs). The Company’s proprietary AOC platform is designed to combine the specificity of monoclonal antibodies with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics. Agreement and Plan of Merger & Separation and Distribution Agreement On October 25, 2025, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Novartis AG, a company limited by shares (Aktiengesellschaft) incorporated under the laws of Switzerland (Novartis or Parent), and Ajax Acquisition Sub, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Parent (Merger Sub), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the Merger), with the Company surviving the Merger as an indirect wholly owned subsidiary of Parent. In connection with the Merger, the Company, Atrium Therapeutics, Inc., a newly formed Delaware corporation and wholly owned subsidiary of the Company (SpinCo), and Parent (with respect to certain sections specified therein) also entered into a Separation and Distribution Agreement, dated October 25, 2025 (the Separation and Distribution Agreement), to effect a pre-closing reorganization of certain assets related the Company’s early stage precision cardiology programs and certain collaboration agreements. The transfer of assets to SpinCo includes certain of our assets that triggered a right of first negotiation, or ROFN, with an existing collaboration partner of ours, or the ROFN Holder. During the ROFN period, which expired on February 5, 2026, we were permitted to negotiate the sale of our assets subject to the ROFN with the ROFN Holder, and, if an agreement had been reached, consummate the sale of all or a portion of such assets. If such a sale had been consummated, SpinCo could have received less than all of the SpinCo Business. Liquidity Since inception, the Company has relied on various means of raising capital, including public offerings, various sales agreements, the sale and issuance of convertible preferred stock, funding under collaboration agreements, and a private placement of common stock. The Company has devoted substantially all of its resources to organizing and staffing the Company, business planning, raising capital, developing its proprietary AOC platform, identifying potential product candidates, establishing its intellectual property portfolio, conducting research, preclinical studies, advancing its clinical programs and providing other general and administrative support for these operations. In addition, the Company has a limited operating history, has incurred operating losses since inception and expects that it will continue to incur net losses into the foreseeable future as it continues the development of its product candidates and development programs. As of December 31, 2025, the Company had an accumulated deficit of $1.6 billion, cash and cash equivalents of $382.5 million, and marketable securities of $1.3 billion. The Company believes that existing cash, cash equivalents and marketable securities will be sufficient to fund the Company’s operations for at least 12 months from the date of the filing of this Form 10-K. The Company plans to finance its future cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. If the Company is not able to secure adequate additional funding, it may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or delay or reduce the scope of its planned development programs. Any of these actions could materially harm the Company’s business, results of operations, and future prospects. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC). The consolidated financial statements reflect all adjustments which, in the opinion of F-9
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Table of Contents management, are necessary for a fair presentation of the results for the periods presented. All such adjustments are of a normal and recurring nature. The operating results presented in these consolidated financial statements are not necessarily indicative of the results that may be expected for any future periods. The accompanying consolidated financial statements reflect the operations of Avidity Biosciences, Inc. and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Certain amounts reported in the Company's prior fiscal periods consolidated financial statements have been reclassified to conform to the current period presentation, including the reclassification of accounts payable from “Accounts payable and accrued liabilities” into “Accounts payable” and the reclassification of accrued compensation from “Accrued compensation” into “Accrued expenses and other liabilities" on the consolidated balance sheets. There are no changes to the Company’s financial position or results of operations as a result of this reclassification. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. Although estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with original maturities of 90 days or less from the date of purchase to be cash equivalents. Cash and cash equivalents include cash in readily available checking and money market accounts. Restricted cash represents cash held as collateral for the letters of credit required under the Company’s facility leases and is reported as a long-term asset in the accompanying consolidated balance sheets. Marketable Securities The Company’s marketable securities primarily consist of U.S. Government debt securities. The Company classifies its marketable securities as available-for-sale and records such assets at estimated fair value in the consolidated balance sheets, with unrealized gains and losses, if any, reported as a component of other comprehensive income (loss) within the consolidated statements of operations and comprehensive loss and as a separate component of stockholders’ equity. The Company classifies marketable securities with remaining maturities greater than one year as current assets because such marketable securities are available to fund the Company’s current operations. Realized gains and losses are calculated on the specific identification method and recorded as interest income. There were no realized gains and losses recognized during the periods presented. At each balance sheet date, the Company assesses available-for-sale debt securities in an unrealized loss position to determine whether the unrealized loss or any potential credit losses should be recognized in net income (loss). For available- for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through net loss. For available-for-sale securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, underlying credit ratings and forecasted recovery, among other factors. The credit- related portion of unrealized losses, and any subsequent improvements, are recorded as an allowance in interest income. There have been no impairment or credit losses recognized during the periods presented. The Company excludes the applicable accrued interest from both the fair value and amortized costs basis of the Company’s available-for-sale securities for purposes of identifying and measuring an impairment. Accrued interest receivable on available-for-sale securities is recorded within prepaid and other assets on the F-10
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Table of Contents consolidated balance sheets. The Company made an accounting policy election to (1) not measure an allowance for credit loss for accrued interest receivable, and (2) to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which the Company considers to be in the period in which it determines the accrued interest will not be collected. See Note 4 (Marketable Securities) for further information. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has established guidelines regarding approved investments, credit quality, diversification, liquidity and maturities of investments, which are designed to maintain safety and liquidity. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institutions in which those deposits are held. Fair Value of Financial Instruments Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs, such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. None of the Company’s non-financial assets are recorded at fair value on a non-recurring basis. The carrying amounts reflected in the Company’s consolidated balance sheets for prepaid and other assets and accounts payable and accrued liabilities approximate their fair values due to their short-term nature. The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There have been no transfers into or out of Level 3 assets during any of the periods presented. See Note 3 (Fair Value Measurements) for information on assets measured at fair value. Property and Equipment, net Property and equipment, including leasehold improvements, are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded using the straight-line method over the estimated useful lives of the related assets, which ranges from three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the remaining lease term. Repairs and maintenance charges that do not increase the useful life of the assets are charged to operating expenses as incurred. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or an asset group may not be recoverable. If such triggering event is F-11
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Table of Contents determined to have occurred, the asset’s or asset group’s carrying value is compared to the future undiscounted cash flows expected to be generated. The Company has not recognized any impairment losses in any of the periods presented in these consolidated financial statements. Segment Information The Company's operations constitute a single operating and reportable segment, headquartered in the United States. Operating segments are defined as components of an enterprise for which discrete financial information is available and is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and assess performance. The Company's CODM is its Chief Executive Officer, who reviews consolidated financial information for the purposes of allocating resources and assessing performance. All of the Company's property and equipment is located within the United States and all of its revenues were derived within the United States. See Note 10 (Segment Information) for further information. Revenue Recognition To date, all the Company’s revenue has been derived from collaboration and research agreements. The terms of these arrangements include the following types of payments to the Company: non-refundable, upfront license fees; development, regulatory and commercial milestone payments; payments for research and development services provided by the Company or for manufacturing supply services the Company provides through its contract manufacturers; and royalties on net sales of licensed products. At the inception of a collaboration arrangement, the Company first assesses whether the contractual arrangement is within the scope of Accounting Standards Codification (ASC) Topic 808, Collaborative Arrangements (ASC 808) to determine whether the arrangement involves a joint operating activity and involves two (or more) parties that are both active participants in the activity and exposed to significant risks and rewards dependent on the commercial success of such activity. Then the Company determines whether the collaboration arrangement in its entirety represents a contract with a customer as defined by ASC Topic 606 (ASC 606). If only a portion of the collaboration arrangement is potentially with a customer, the Company applies the distinct good or service unit-of-account guidance in ASC 606 to determine whether there is a unit of account that should be accounted for under ASC 606. The Company performs the following steps in determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of these agreements: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as, the Company satisfies each performance obligation. The Company applies significant judgment when making estimates and assumptions under these agreements, including (i) evaluating whether contractual obligations represent distinct performance obligations, ii) the assessment of whether options represent material rights, (iii) determining whether there are observable standalone prices and allocating transaction price to performance obligations within a contract, (iv) assessing whether any licenses are functional or symbolic, (v) determining when performance obligations have been met, and (vi) assessing the recognition of variable consideration. The Company evaluates each performance obligation to determine if it can be satisfied and recognized as revenue at a point in time or over time. The Company receives payments from its collaborators based on billing schedules established in each contract. Upfront and other payments may require deferral of revenue recognition to a future period until the Company performs its obligations under its research and collaboration arrangements. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. License fees, non-refundable upfront fees, and funding of research activities are considered fixed, while milestone payments are identified as variable consideration and excluded from the transaction price. The Company will recognize revenue for sales-based royalty if and when a subsequent sale occurs. See Note 5 (Collaboration, License and Research Agreements) for further information. F-12
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Table of Contents Research and Development Costs and Accruals Research and development costs are expensed as incurred and include salaries, benefits and stock-based compensation associated with research and development personnel, third-party research and development expenses, license fees, laboratory supplies, facilities, overhead costs, and consultants. Nonrefundable advance payments for goods and services that will be used in future research and development activities are capitalized and recorded as expense in the period that the Company receives the goods or when services are performed. The Company has entered into various research and development contracts with research institutions, clinical research organizations, clinical manufacturing organizations and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying consolidated balance sheets as prepaid and other assets or accrued liabilities. The Company records accruals for estimated costs incurred for ongoing research and development activities, including clinical trial related activities. When evaluating the adequacy of these accrued liabilities, the Company analyzes progress of the services, including the phase or completion of events, invoices received, and contracted costs. Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. Upfront and milestone payments to acquire contractual rights to licensed technology are expensed when incurred if there is uncertainty in the Company receiving future economic benefit from the acquired contractual rights. Certain of these contractual rights may require the Company to make additional milestone payments upon initiation of a pivotal trial and the U.S. Food and Drug Administration approval. Patent Costs Costs related to filing and pursuing patent applications are recorded as general and administrative expense and expensed as incurred since recoverability of such expenditures is uncertain. Income Taxes Income taxes are accounted for using the asset and liability method. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company is subject to taxation in the United States and various state jurisdictions. As of December 31, 2025, the Company’s tax years since conversion to a corporation in 2019 are subject to examination by taxing authorities. Leases The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent Company's right to use an underlying asset for the lease term and lease liabilities represent Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The interest rate used to determine the present value of the future lease payments is the Company's incremental borrowing rate, because the interest rate implicit in most of the Company's leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. The operating lease right-of- use asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to F-13
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Table of Contents extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments that do not depend on a rate or index, payments associated with non-lease components, and costs related to leases with terms of less than 12 months are expensed as incurred. Warrants The Company accounts for warrants as equity-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For warrants that meet all criteria for equity classification, the warrants are required to be recorded as additional paid- in capital in the consolidated balance sheets at the time of issuance. Equity-classified warrants are measured at their estimated fair value on the issuance date. Stock-Based Compensation Stock-based compensation expense is incurred related to stock option and restricted stock grants, and to shares sold under the Employee Stock Purchase Plan (ESPP). Stock-based compensation expense for stock option grants is determined using the Black-Scholes-Merton (BSM) option pricing model and is recorded at the estimated fair value of the award as of the grant date and recognized as expense on a straight-line basis over the requisite service period (usually the vesting period) of the stock-based award. Stock-based compensation expense for Restricted Stock Units (RSUs) is recorded at the market price of a share of the Company's stock on the date of grant and is recognized as expense on a straight-line basis over the service period. Stock-based compensation expense for Performance Stock Units (PSUs) is recorded at the market price of a share of the Company's stock on the date of grant and recognized on a straight-line basis over the requisite service periods beginning when the achievement of the performance condition is determined to be probable. Stock-based compensation expense for employee stock purchases under the Company’s ESPP is determined using the BSM option pricing model and is recorded at the estimated fair value of the purchase as of the plan enrollment date and is recognized as expense on a straight-line basis over the applicable six- month ESPP offering period. The estimation of fair value for stock-based compensation requires management to make estimates and judgments about, among other things, the estimated life of options and volatility of the Company’s common stock. These judgments directly affect the amount of compensation expense that will be recognized. Forfeitures are accounted for as incurred. Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including cumulative translation adjustments and unrealized gains and losses on marketable securities. Comprehensive gains (losses) have been reflected in the consolidated statements of operation and comprehensive loss for all periods presented. F-14
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Table of Contents Foreign Currency Translation The foreign subsidiary uses its local currency as the functional currency. The financial statements of the foreign subsidiary are translated into U.S. dollars using the exchange rate in effect at the balance sheet date for assets and liabilities, stockholders’ equity is translated at the historical rates, and expenses are translated at the average exchange rates for the period. Translation adjustments are recorded as a component of accumulated other comprehensive income within stockholders’ equity. Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, adjusted for the weighted-average number of common shares outstanding that are subject to repurchase or forfeiture. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if- converted methods. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the common stock equivalent securities would be anti-dilutive. The pre-funded common stock warrants are included in the calculation of basic and diluted net loss per share as the exercise price of $0.001 per share is not substantive and the shares are issuable for little or no consideration. Common stock equivalent securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares; in thousands): December 31, 2025 2024 2023 Common stock options issued and outstanding 13,366 12,635 12,495 Restricted stock units 3,023 2,111 758 Performance stock units 489 925 750 ESPP shares pending issuance — 12 12 Total 16,878 15,683 14,015 Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which requires that public business entities disclose additional information about specific expense captions in the notes to financial statements at interim and annual reporting periods. The amendment in the update does not change or remove current expense disclosures, rather, it requires enhanced disaggregated disclosures of specific expense captions and affects where that information is presented within the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. ASU 2024-03 can be applied either prospectively or retrospectively and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which eliminates the project stage model and introduces a probable-to-complete recognition threshold for the capitalization of software development costs. The amendment in the update requires an assessment of uncertainty associated with software development activities, additional disclosures for capitalized internal-use software costs and consideration of website development costs. ASU 2025-06 is effective for annual periods beginning after December 15, 2027. ASU 2025-06 can be applied prospectively, through a modified transition approach, or retrospectively and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes. Recently Adopted Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances F-15
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Table of Contents income tax disclosures, primarily through standardization and disaggregation of the income tax rate reconciliation and disaggregation of income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company adopted the additional disclosure requirements during the year ended December 31, 2025, on a prospective basis. See Note 9 (Income Taxes) for further information. 3. Fair Value Measurements The following tables summarize the Company’s cash equivalents and marketable securities measured at fair value (in thousands): Fair Value Measurements Using As of December 31, 2025 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Marketable securities: U.S. Treasury securities $ 1,314,352 $ 1,314,352 $ — $ — Total $ 1,314,352 $ 1,314,352 $ — $ — Fair Value Measurements Using As of December 31, 2024 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents: U.S. Treasury securities $ 7,439 $ 7,439 $ — $ — Marketable securities: U.S. Treasury securities 1,281,139 1,281,139 — — Negotiable certificates of deposit 490 — 490 — Total $ 1,289,068 $ 1,288,578 $ 490 $ — 4. Marketable Securities The Company’s marketable securities, which consist of highly liquid marketable debt securities, are classified as available-for-sale and are stated at fair value. The following tables summarize the Company’s marketable securities (in thousands): As of December 31, 2025 Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value U.S. Treasury securities 1 or less $ 969,717 $ 1,980 $ — $ 971,697 U.S. Treasury securities 1 - 2 342,184 471 — 342,655 Total $ 1,311,901 $ 2,451 $ — $ 1,314,352 As of December 31, 2024 Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value U.S. Treasury securities 1 or less $ 947,916 $ 2,154 $ (80) $ 949,990 Negotiable certificates of deposit 1 or less 490 — — 490 U.S. Treasury securities 1 - 2 330,321 1,218 (390) 331,149 Total $ 1,278,727 $ 3,372 $ (470) $ 1,281,629 The unrealized losses on the Company’s marketable securities as of December 31, 2024, were caused by interest rate increases and resulted in the decrease in market value of these securities. There were no allowances for credit losses at December 31, 2025 and 2024 because (i) the decline in fair value is attributable F-16
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Table of Contents to changes in interest rates and not credit quality, (ii) the Company does not intend to sell the investments before maturity, and (iii) it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. As of December 31, 2025, there were no marketable securities in a continuous unrealized loss position. The following table summarizes marketable securities in a continuous unrealized loss position for which an allowance for credit losses was not recorded as of December 31, 2024 (in thousands): Less Than 12 Months 12 Months or Greater Total As of December 31, 2024 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities $ 247,404 $ (470) $ — $ — $ 247,404 $ (470) Total $ 247,404 $ (470) $ — $ — $ 247,404 $ (470) Accrued interest receivable on available-for-sale securities was $11.9 million and $8.7 million at December 31, 2025 and 2024, respectively. The Company has not written off any accrued interest receivable in any of the periods presented in these consolidated financial statements. 5. Collaboration, License and Research Agreements Research Collaboration and License Agreement and Securities Purchase Agreement with Bristol Myers Squibb Company In November 2023, the Company entered into (i) a Research Collaboration and License Agreement (the BMS Collaboration Agreement) with Bristol Myers Squibb Company (BMS) to expand on the research with MyoKardia Inc. (MyoKardia) and (ii) a Securities Purchase Agreement (the BMS Purchase Agreement) with BMS for the sale of 5,075,304 shares of the Company's common stock in a private placement transaction. The BMS Collaboration Agreement and the BMS Purchase Agreement are referred to herein as the "BMS Agreements." Under the terms of the BMS Collaboration Agreement, BMS will have the right to select up to five cardiovascular targets (each a “Target”) for collaborative research programs under which the Company will utilize its proprietary AOC platform to conduct research and development activities in order to identify, generate, and optimize AOC compounds directed to such Targets with the goal of generating an applicable development candidate. On a Target-by-Target basis, after the Company completes specified research activities in accordance with a research plan, BMS will have the right to develop, manufacture and commercialize such compounds generated during the research term, and products containing such compounds, worldwide. The research and activities conducted under the BMS Collaboration Agreement is governed by a joint steering committee comprised of representatives from the Company and BMS. Avidity received approximately $100.0 million upfront, including a $60.0 million nonrefundable cash payment and approximately $40.0 million from the sale of Avidity common stock at $7.8813 per share, which included an $8.7 million premium for the per share amount in excess of the fair value at the time of the transaction. Avidity is also eligible to receive up to approximately $1.35 billion in research and development milestone payments, up to approximately $825.0 million in commercial milestone payments, and tiered royalties from high single digits up to low double-digits on net sales. Avidity is responsible for its own research costs incurred under the agreement, subject to a cumulative spending cap of $40.0 million. BMS will fund all future clinical development, regulatory and commercialization activities coming from this collaboration. The Company has determined that the BMS Agreements should be accounted for separately from the research collaboration with MyoKardia (the MyoKardia Agreement). The Company identified two distinct units of accounting under the BMS Agreements. The first distinct unit of accounting includes (i) a license to technology and patents; (ii) collaboration services, including research services and technical and regulatory support; and (iii) participation on research oversight committees. The Company has determined that these elements individually are either not capable of being distinct or are not distinct within the context of the contract and, therefore, will account for them as a single distinct performance obligation for purposes of revenue recognition. The second distinct unit of accounting is related to the sale of common stock, which will be accounted for as an issuance of equity at fair value in accordance with the applicable accounting standards. Consideration received related to the premium on sale of the Company's common stock was allocated to the transaction price for purposes of revenue recognition. F-17
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Table of Contents At the time the BMS Agreements were entered into, the fixed and determinable amount related to the first unit of accounting was $68.7 million, which includes the upfront cash payment and premium on sale of the Company's common stock. The Company will recognize revenue using the input method in an amount proportional to the collaboration expenses incurred and the total estimated collaboration expenses over the seven-year period in which it expects to deliver its performance obligation as this method provides the most faithful depiction of the Company's transfer of services under the BMS Agreements. The Company periodically reviews and updates the estimated collaboration expenses, when appropriate, which adjusts the percentage of revenue that is recognized for the period. The remaining $31.3 million was allocated to the second unit of accounting related to the sale of common stock (Note 8). The initial consideration related to the $60.0 million cash payment and approximate $40.0 million sale of common stock was received in 2023. $8.6 million and $9.8 million in revenues were recognized related to the BMS Agreements in 2025 and 2024, respectively. No revenues were recognized related to the BMS Agreements in 2023. Research Collaboration and License Agreement with Eli Lilly and Company In April 2019, the Company entered into a Research Collaboration and License Agreement (the Lilly Agreement) with Eli Lilly and Company (Lilly) for the discovery, development and commercialization of AOC products directed against certain targets in immunology and other select indications on a worldwide basis. Under the Lilly Agreement, the Company granted Lilly an exclusive, worldwide, royalty-bearing license, with the right to sublicense (subject to certain conditions), under the Company’s technology to research, develop, manufacture and sell products containing AOCs that are directed to up to six mRNA targets. The Company retains the right to use its technology to perform its obligations under the Lilly Agreement and for all purposes not granted to Lilly. The Company agreed that it will not, itself or with a third party, research, develop, manufacture or commercialize or otherwise exploit any compound or product directed against targets subject to the Lilly Agreement. In consideration of the rights granted to Lilly under the Lilly Agreement, the Company received a one-time upfront fee of $20.0 million and is eligible to receive up to $60.0 million in development milestone payments, up to $140.0 million in regulatory milestone payments and up to $205.0 million in commercialization milestone payments per target. In addition, Lilly is obligated to reimburse the Company for research expenses, as defined in and incurred under the Lilly Agreement. Lilly is obligated to pay the Company a tiered royalty ranging from the mid-single to low-double digits on worldwide annual net sales of licensed products, subject to specified and capped reductions for the market entry of biosimilar products, loss of patent coverage of licensed products, and for payments owed to third parties for additional rights necessary to commercialize licensed products in the territory. Lilly’s royalty obligations and the Lilly Agreement will expire on a licensed product-by- licensed product and country-by-country basis on the later of ten years from the date of the first commercial sale or when there is no longer a valid patent claim covering such licensed product in such country. The Company has identified multiple promises to deliver goods and services, which include at inception of the agreement: (i) a license to technology and patents, information and know-how; and (ii) collaboration, including research services and technical and regulatory support provided by the Company. At inception, the Company has identified one performance obligation for the promises under the Lilly Agreement since the elements are either not capable of being distinct or are not distinct within the context of the contract. Accordingly, the Company recognizes revenue for the fixed or determinable collaboration in an amount proportional to the collaboration expenses incurred and the total estimated collaboration expenses over the 5-year period in which it expects to deliver its performance obligation. The Company periodically reviews and updates the estimated collaboration expenses, when appropriate, which adjusts the percentage of revenue that is recognized for the period. In connection with the Lilly Agreement, the Company recognized revenue of $10.0 million, $1.1 million, and $9.5 million for the years ended December 31, 2025, 2024, and 2023, respectively. In August 2025, Lilly paid the Company $10.0 million as the result of the achievement of a clinical development milestone under the Lilly Agreement for a collaboration target. There were no collaboration receivables related to the Lilly Agreement as of December 31, 2025 and 2024. Research Agreement with MyoKardia, Inc. In December 2020, the Company entered into a Research Collaboration (the MyoKardia Agreement) with MyoKardia, a wholly-owned subsidiary of BMS, to demonstrate the potential utility of AOCs in cardiac tissue by leveraging MyoKardia’s genetic cardiomyopathy platform including, among other aspects, its novel target discovery engine and proprietary cardiac disease models. In connection with the MyoKardia Agreement, F-18
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Table of Contents the Company recognized an immaterial amount of revenue in each of the periods presented. Under the terms of the MyoKardia Agreement, in July 2023, BMS as the successor in interest to MyoKardia, exercised its option to negotiate and enter into a License Agreement covering AOCs that modulate the function of cardiovascular targets. The Research Collaboration with MyoKardia was terminated in November 2023 upon execution of the Research Collaboration and License Agreement with BMS. The amounts received that have not yet been recognized as revenue are deferred on the Company’s consolidated balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied. A reconciliation of the closing balance of deferred revenue related to all collaboration agreements for the years ended December 31, 2025 and 2024 is as follows (in thousands): Balance at December 31, 2023 69,263 Revenue recognized that was included in the balance at the beginning of the period (10,315) Balance at December 31, 2024 58,948 Revenue recognized that was included in the balance at the beginning of the period (8,618) Balance at December 31, 2025 $ 50,330 6. Composition of Certain Consolidated Financial Statement Items Prepaid and other current assets (in thousands) December 31, 2025 2024 Prepaid assets $ 36,456 $ 12,571 Interest receivable 12,439 9,447 Other current assets 52,703 18,775 Total prepaid and other current assets $ 101,598 $ 40,793 Other current assets include reimbursable tenant improvements of $25.6 million and $7.1 million as of December 31, 2025 and 2024. Property and equipment, net (in thousands) December 31, 2025 2024 Laboratory equipment $ 20,954 $ 14,180 Computers and software 4,574 261 Office furniture and equipment 6,778 1,979 Leasehold improvements 2,713 288 Construction in process 95 3,959 Property and equipment, gross 35,114 20,667 Less accumulated depreciation (11,781) (7,997) Total property and equipment, net $ 23,333 $ 12,670 Depreciation expense related to property and equipment was $4.2 million, $2.8 million, and $2.1 million for the years ended December 31, 2025, 2024, and 2023, respectively. Other assets During the second quarter of 2025, the Company entered into reservation agreements with a Contract Manufacturing Organization (CMO) to purchase an agreed upon number of production batches during the years 2026-2028. Nonrefundable reservation fees of approximately $73.5 million were recorded in non-current assets F-19
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Table of Contents on the consolidated balance sheet as of December 31, 2025. The nonrefundable reservation fees will be credited against purchases up to the total amount of the reservation fees. Accrued expenses and other liabilities (in thousands) December 31, 2025 2024 Accrued manufacturing and technical development $ 88,417 $ 35,680 Accrued clinical development 12,848 8,157 Accrued other research and development 1,688 3,852 Accrued compensation 41,750 3,663 Accrued other 12,763 13,374 Total accrued expenses and other liabilities $ 157,466 $ 64,726 7. Commitments and Contingencies Lease Agreements The Company determines if an arrangement is a finance lease, operating lease or short-term lease at inception. During the periods presented, the Company was party to various non-cancellable office and laboratory space operating leases and short-term leases. Short-term leases are not subject to recognition of a right-of-use (ROU) asset or liability or straight-line lease expense requirements. As of December 31, 2025, the Company’s ROU assets and liabilities related to the operating lease for the Company headquarters are as follows (in thousands): ROU assets $ 51,278 Lease liabilities, current portion $ 3,938 Lease liabilities, net of current portion 45,313 Total lease liabilities $ 49,251 As of December 31, 2025, undiscounted future lease payments for the Company's operating leases are as follows (in thousands): Year ending December 31, 2026 $ 8,323 2027 7,259 2028 9,230 2029 9,506 2030 5,327 Thereafter 42,035 Total lease payments 81,680 Less imputed interest (32,429) Total operating lease liabilities 49,251 Less lease liabilities, current portion (3,938) Lease liabilities, net of current portion $ 45,313 F-20
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Table of Contents Other information related to leases was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cash paid included in operating cash flows $ 2,746 $ 3,696 $ 3,328 Weighted-average remaining lease term (in years) 9.0 1.9 2.9 Weighted-average discount rate 11.4 % 5.9 % 5.9 % Lease cost was $7.3 million, $3.3 million, and $3.0 million for the years ended December 31, 2025, 2024, and 2023, respectively. Short-term and variable lease costs were immaterial for all periods presented. In April 2024, the Company entered into a sublease agreement with Turning Point Therapeutics, Inc., or the Sublease, to rent 105,000 square feet for office and laboratory space for the Company’s corporate headquarters. In addition, in March 2025, the Company exercised the option to rent an additional 80,000 square feet in an adjacent available building under an amended sublease agreement with Turning Point Therapeutics, Inc., or the Amended Sublease. Pursuant to the terms of the Sublease, the sublandlord provided the Company with a tenant improvement allowance of $33.6 million. An additional tenant improvement allowance of $5.0 million was utilized and will be repaid in equal installments through monthly rent payments, subject to increases of 3% per annum. The Sublease commenced on August 14, 2025, with a term of 9 years, 9 months. There are no options to extend or terminate the Sublease. Upon commencement, the Company recognized a right-of-use asset of $49.9 million and a lease liability of $45.2 million. The term of the Amended Sublease is approximately 9 years, 1 month with payments expected to begin in April 2026. Pursuant to the terms of the Amended Sublease, the sublandlord will provide the Company with a tenant improvement allowance of up to $19.9 million. An additional tenant improvement allowance of up to $5.1 million is also available under the master lease, subject to certain spending conditions by the Company. Total aggregate future lease commitments under the Amended Sublease are approximately $53.7 million and inclusive of 3% annual rent increases and various agreed upon rent abatement amounts. The Amended Sublease will be measured and recognized upon commencement of the Amended Sublease. As of December 31, 2025, the Amended Sublease had not commenced because construction of improvements to the facility for its intended use was not substantially complete. In connection with the sublease agreement, the Company is required to maintain a letter of credit for the benefit of the sublandlord in the amount of $2.5 million, which was delivered in April 2024 and is included in restricted cash in the Company’s consolidated balance sheets. Contractual Obligations The Company enters into contracts in the normal course of business for contract research services, contract manufacturing services, professional services, and other services and products for operating purposes. These contracts may include certain provisions that could require payments for early termination. The amount of any such termination payments will vary depending on the timing of the termination and the specific terms of the contract. Further, the Company has entered into various contracts to acquire contractual rights to licensed technology, some of which may require the Company to make additional milestone payments upon initiation of a pivotal trial and U.S. Food and Drug Administration approval. In the event the Merger Agreement is terminated, under specified circumstances, we will be required to pay the Parent a termination fee of $450 million. Unconditional Purchase Obligations On August 1, 2025, the Company entered into a commercial manufacturing agreement (the Manufacturing Agreement) with a CMO for the manufacturing of the Company’s drug substances, conjugated drug substances, and drug products. The non-cancellable Manufacturing Agreement requires the Company to meet minimum purchase obligations on an annual basis, beginning in 2026 and ending in 2028. The Manufacturing Agreement includes a variable component whereby service prices may be adjusted once per calendar year based on movements in an applicable price index, in addition to other adjustment and payments for certain raw material and other costs. F-21
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Table of Contents As of December 31, 2025, the aggregate amount of future unconditional minimum purchase obligations under the Manufacturing Agreement was $621.6 million, subject to foreign currency changes, annual price increases, other adjustments and payments for certain costs and net of the nonrefundable reservation fees outlined in Note 6, "Composition of Certain Consolidated Financial Statement Items". The future minimum annual purchase obligations under the Manufacturing Agreement as of December 31, 2025, are as follows (in thousands): Year Ending December 31, 2026 $ 58,484 2027 225,161 2028 337,960 Total purchases, net $ 621,605 Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. There are no such matters currently outstanding for which any liabilities have been accrued. 8. Stockholders’ Equity Amended and Restated Certificate of Incorporation On June 16, 2020, the Company’s certificate of incorporation was amended and restated to authorize 400,000,000 shares of common stock and 40,000,000 shares of undesignated preferred stock, each with a par value of $0.0001 per share. There was no preferred stock outstanding as of December 31, 2025, 2024, or 2023. Common Stock On November 8, 2022, the Company entered into a sales agreement (the 2022 Sales Agreement) with the Cowen and Company, LLC (the Sales Agent), under which the Company could, from time to time, sell shares of its common stock having an aggregate offering price of up to $200.0 million through the Sales Agent. Sales of the shares of common stock were made at prevailing market prices at the time of sale, or as otherwise agreed with the Sales Agent. During the year ended December 31, 2025, the Company did not sell shares of its common stock under the 2022 Sales Agreement. During the year ended December 31, 2024, the Company sold 418,408 shares of its common stock pursuant to the Sales Agreement and received net proceeds of $5.6 million, after deducting offering-related transaction costs and commissions of $0.1 million. On March 4, 2024, the Company sold 15,224,773 unregistered shares of its common stock and pre-funded warrants in lieu of common stock to purchase up to an aggregate of 9,030,851 shares of its common stock to investors in a private placement at an offering price of $16.50 per share and $16.499 per pre-funded warrant, which represents the offering price per share of common stock less an exercise price of $0.001 per share. The Company valued the common stock at the offering price, concluding that the offering price approximated fair value. The net proceeds from the private placement were $379.8 million after deducting placement fees and offering costs of $20.4 million. The resale of the shares, including the shares issuable upon exercise of the pre-funded warrants, were subsequently registered on a Registration Statement on Form S-3 filed with the SEC on April 2, 2024, which became automatically effective upon its filing. The pre-funded warrants are a freestanding instrument that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815. The Company valued the pre-funded warrants at the offering price, concluding that the offering price approximated fair value. The pre-funded warrants meet the equity classification criteria and were accounted for as a component of additional paid-in capital. The pre-funded warrants are immediately exercisable and do not expire. One of the investors who participated in the private placement met the criteria of a related party as such investor was a principal owner of more than 10% of the voting interest in the Company (the Principal Owner). The Principal Owner purchased 2,121,213 shares of the Company's common stock for $35.0 million. The purchase of common stock under the private placement by the Principal Owner was carried out at arm's length F-22
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Table of Contents as substantiated by the fact that the per share purchase price equaled the price paid by other participants. No amounts were due from the Principal Owner as of December 31, 2025. On June 17, 2024, the Company completed a public offering of 12,132,500 shares of our common stock at a public offering price of $38.00 per share. Net proceeds from the offering were approximately $432.8 million, after deducting underwriting discounts and offering expenses of $28.3 million. The shares sold in the offering were registered pursuant to the Company's shelf registration statement on Form S-3, which became automatically effective upon its filing on May 9, 2024. On August 9, 2024, the Company entered into a sales agreement (the 2024 Sales Agreement) with TD Securities (USA) LLC (the 2024 Sales Agent) which contained substantially similar terms as the 2022 Sales Agreement. The 2022 Sales Agreement was terminated upon effectiveness of the 2024 Sales Agreement. Under the 2024 Sales Agreement, the Company may, from time to time, sell shares of its common stock having an aggregate offering price of up to $400.0 million through the 2024 Sales Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the 2024 Sales Agent. The Company is not obligated to sell, and the 2024 Sales Agent is not obligated to buy or sell, any shares of common stock under the 2024 Sales Agreement. As of December 31, 2025, the Company sold 5,646,583 shares of its common stock pursuant to the 2024 Sales Agreement and received net proceeds of $185.5 million, after deducting offering-related transaction costs and commissions of $4.8 million, at an average price of $33.69 per share. On August 16, 2024, the Company completed a public offering of 8,418,000 shares of our common stock at a public offering price of $41.00 per share. Net proceeds from the offering were approximately $323.7 million, after deducting underwriting discounts and offering expenses of $21.4 million. The shares sold in the offering were registered pursuant to the Company's shelf registration statement on Form S-3, which became automatically effective upon its filing on May 9, 2024. On July 23, 2025, pre-funded warrants, originally issued by the Company on March 4, 2024 (the 2024 Pre-Funded Warrants), to purchase 2,208,114 shares of the Company’s common stock were exercised in a cashless transaction, which resulted in an aggregate of 2,208,048 shares of the Company’s common stock being issued. On October 27, 2025, 2024 Pre- Funded Warrants to purchase an aggregate of 3,761,945 shares of the Company’s common stock were exercised in cashless transactions, which resulted in an aggregate of 3,761,868 shares of the Company’s common stock being issued. As of December 31, 2025, 2024 Pre-Funded Warrants to purchase a total of 3,060,792 shares of the Company’s common stock remained available for exercise. On September 15, 2025, the Company completed an underwritten public offering of 17,250,000 shares of its common stock at a public offering price of $40.00 per share. Net proceeds from the offering were approximately $651.4 million, after deducting underwriting discounts and offering expenses of $38.6 million. The shares sold in the offering were registered pursuant to the Company's shelf registration statement on Form S-3, which became automatically effective upon filing on May 9, 2024. Equity Incentive Plans The Company's board of directors adopted, and the company's shareholders approved, the 2013 Equity Incentive Plan (the 2013 Plan) and the 2020 Incentive Award Plan (the 2020 Plan). Under the plans, the Company may grant stock options, restricted stock, dividend equivalents, restricted stock units, stock appreciation rights, and other stock or cash-based awards to individuals who are then employees, officers, non-employee directors or consultants of the Company. The Company ceased granting awards under the 2013 Plan in June 2020 upon adopting the 2020 Plan. A total of 3,900,000 shares of common stock were initially reserved for issuance under the 2020 Plan. The number of shares of common stock available for issuance under the 2020 Plan will be increased annually on the first day of each fiscal year during the term of the 2020 Plan, beginning with the 2021 fiscal year, by an amount equal to the lesser of (a) 5% of the shares of common stock outstanding on the final day of the immediately preceding calendar year or (b) such smaller number of shares as determined by the Company’s board of directors. During the year ended 2025, 6,594,000 additional shares were reserved for issuance. At December 31, 2025, 5,221,269 shares were available for grant under the 2020 Plan. In December 2022, the Company’s board of directors adopted the 2022 Employment Inducement Incentive Award Plan, which it amended in June 2024 (the Inducement Plan). Under the Inducement Plan, the Company may grant non- qualified stock options, restricted stock, restricted stock units, stock appreciation F-23
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Table of Contents rights, and other stock or cash-based awards to an employee in connection with his or her commencement of employment with the Company or an affiliate. A total of 4,500,000 shares of common stock have been reserved for issuance under the Inducement Plan, of which 173,081 remain available to be granted at December 31, 2025. Stock Options Options granted from the 2013 Plan, 2020 Plan, and the Inducement Plan are exercisable at various dates and will expire no more than ten years from their date of grant. Options generally vest over a four-year period. Prior to the IPO, the exercise price of options was determined by the Company’s board of directors. Following the IPO, the Company grants options with an exercise price equal to the fair market value of the Company’s stock on the date of the option grant. Stock option activity in 2025 for employee and non-employee awards and related information is as follows (in thousands, except per share and contractual term data): Number of Outstanding Options Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Balance at December 31, 2024 12,635 $ 19.19 Granted 2,629 32.29 Exercised (1,363) 16.24 Forfeited/expired (535) 28.01 Balance at December 31, 2025 13,366 $ 21.72 7.24 $ 673,825 Vested and expected to vest at December 31, 2025 13,366 $ 21.72 7.24 $ 673,825 Exercisable at December 31, 2025 7,677 $ 17.81 6.29 $ 417,037 The aggregate intrinsic values presented in the table above were calculated as the difference between the closing price of the Company’s common stock at December 31, 2025 and the exercise price of stock options that had strike prices below the closing price. The following summarizes additional information regarding stock options (in thousands, except per share data): Year Ended December 31, 2025 2024 2023 Cash received from options exercised $ 22,133 $ 48,207 $ 573 Intrinsic value of options exercised $ 41,812 $ 83,422 $ 2,421 Weighted-average grant date fair value per share $ 22.33 $ 19.26 $ 10.33 The total intrinsic values of options exercised was calculated as the difference between the fair value of the Company’s common stock at the time of the option exercise and the exercise price of that stock option. Restricted Stock Units and Performance Stock Units During the year ended December 31, 2025, under the 2020 Incentive Award Plan and the 2022 Employment Inducement Incentive Award Plan, the Company granted Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) to employees of the Company. PSUs were granted to the Company's officers. RSUs and PSUs are valued at the market price of a share of the Company’s stock on the date of grant. RSUs vest ratably on an annual basis over a service period and are payable in shares of common stock on the vesting date. Compensation expense for RSUs is recognized on a straight-line basis over the service period. Compensation expense for PSUs is recognized on a straight-line basis over the requisite service periods when the achievement of the performance condition is determined to be probable, using management's best estimate. If a performance condition is not determined to be probable or is not met, no stock-based compensation F-24
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Table of Contents expense is recognized, and any previously recognized expense is reversed. Forfeitures are recorded in the period in which they occur. The following table summarizes the RSU activity for the year ended December 31, 2025 (in thousands, except per share data): Number of Shares Weighted-Average Grant Date Fair Value Balance at December 31, 2024 2,111 $ 24.54 Granted 1,695 33.56 Vested (582) 23.20 Forfeited (201) 32.75 Balance at December 31, 2025 3,023 $ 29.32 During the years ended December 31, 2025 and 2024, 582,436 and 184,293 RSUs vested with a total fair value of $23.5 million and $3.5 million, respectively. During the year ended December 31, 2023, no RSUs vested. The following table summarizes the PSU activity for the year ended December 31, 2025 (in thousands, except per share data): Number of Shares Weighted-Average Grant Date Fair Value Balance at December 31, 2024 925 $ 35.80 Granted 72 31.42 Vested (508) 29.16 Forfeited — — Balance at December 31, 2025 489 $ 42.04 During the years ended December 31, 2025 and 2024, 508,250 and 562,500 PSUs vested with a total fair value of $29.0 million and $22.1 million, respectively. During the year ended December 31, 2023, no PSUs vested. In December 2025, the Company’s Board of Directors approved a modification to outstanding share-based payment awards for nine executives under the Company’s equity incentive plans. The modification accelerated the vesting of certain previously granted time-vesting restricted stock units and performance-based stock units. The Company recognized stock- based compensation expense of $9.0 million within research and development expense and $14.5 million within general and administrative expense for the year ended December 31, 2025 in connection with the accelerated awards. Employee Stock Purchase Plan In June 2020, the Company adopted the ESPP, which permits participants to contribute up to 15% of their eligible compensation during defined rolling six-month offering periods to purchase the Company’s common stock. The purchase price of the shares will be 85% of the lower of the fair market value of the Company’s common stock on the first day of trading of the offering period or on the applicable purchase date. The Company issued 164,734, 179,150, and 175,511 shares of common stock under the ESPP during the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, 1,227,533 shares of common stock were available for issuance under the ESPP. The Company did not have an outstanding liability at December 31, 2025, for employee contributions to the ESPP for shares pending issuance at the end of the current offering period. F-25
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Table of Contents Stock-Based Compensation Expense The assumptions used in the Black-Scholes model to determine the fair value of stock option grants and shares purchasable under the ESPP were as follows: Options ESPP Year Ended December 31, Year Ended December 31, 2025 2024 2023 2025 2024 2023 Risk-free interest rate 3.7% - 4.5% 3.5% - 4.7% 3.5% - 4.9% 4.3% 4.3% - 5.4% 5.4% Expected volatility 75% - 76% 79% - 82% 78% - 82% 70% 64% - 82% 68% - 76% Expected term (in years) 5.5 - 6.1 5.3 - 6.1 5.5 - 6.1 0.4 0.5 0.5 Expected dividend yield —% —% —% —% —% —% Risk-Free Interest Rate. The Company bases the risk-free interest rate assumption for equity awards on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. Expected Volatility. The expected volatility of stock options is estimated based on the average historical volatility of the Company's common stock. Prior to 2025, the Company estimated volatility based on the average historical volatilities of common stock of comparable publicly traded companies and the Company's own volatility in which comparable companies were chosen based on their size and stage in the life cycle. The expected volatility for employee stock purchases under the ESPP is based on the Company's own historical volatility for the prior six months to conform with the six-month ESPP offering period. Expected Term. The Company's limited option exercise history does not provide a reasonable basis for estimating expected term; therefore the Company has estimated the expected life of its stock options using the simplified method, whereby the expected life equals the average of the vesting term and the original contractual term of the option. The expected life assumption for employee stock purchases under the ESPP is six months to conform with the six-month ESPP offering period. Expected Dividend Yield. The Company’s expected dividend yield assumption is zero as it has never paid dividends and has no present intention to do so in the future. The allocation of stock-based compensation expense was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Research and development expense $ 47,635 $ 26,120 $ 22,007 General and administrative expense 50,203 25,243 16,215 Total stock-based compensation expense $ 97,838 $ 51,363 $ 38,222 As of December 31, 2025, the unrecognized compensation cost related to outstanding time-based options and RSUs was $101.5 million and $71.5 million, respectively, which is expected to be recognized over a weighted-average period of 2.5 years and 2.5 years, respectively. Unrecognized compensation cost related to PSUs was $20.6 million as of December 31, 2025, for which none of the remaining and outstanding PSUs were deemed probable. As of December 31, 2025, there was no unrecognized compensation cost related to stock purchase rights under the ESPP. F-26
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Table of Contents 9. Income Taxes The following table presents loss from continuing operations before provision for income taxes for domestic and international operations (in thousands). 2025 2024 2023 United States $ (678,877) $ (322,302) $ (212,220) Foreign (5,754) — — Loss before provision for income taxes $ (684,631) $ (322,302) $ (212,220) The Company operated as a nontaxable partnership until its conversion on March 31, 2019. The Company had deferred tax assets in existence on March 31, 2019 when the Company became a taxable entity. Deferred tax assets were not recognized due to the uncertainty that such assets will be realized. The Company retained the valuation allowance on the deferred tax assets at December 31, 2019. No provision for income taxes was recorded for the years ended December 31, 2025, 2024, and 2023. The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on January 1, 2025 on a prospective basis. As a result, the Company's rate reconciliation for 2025 is presented in accordance with the new disclosure requirements, while the reconciliations for 2024 and 2023 continue to be presented under disclosure requirements in effect for those periods. A reconciliation of the income tax expense computed at the U.S. federal statutory income tax rate to the Company's income tax expense is as follows (in thousands) (after the adoption of ASU 2023-09): Year Ended December 31, 2025 Amount % Federal income taxes at 21% $ (143,772) 21.0 % State taxes, net of federal benefit (1,455) 0.2 % Foreign Tax Effects Other foreign jurisdictions 1,208 (0.2)% Tax Credits Research and development credits (52,110) 7.6 % Changes in valuation allowances 178,355 (26.0)% Nontaxable or nondeductible items Stock-based compensation (8,372) 1.2 % Sec. 162(m) disallowance 11,554 (1.7)% Other 109 — % Changes in Unrecognized Tax Benefits 14,483 (2.1)% Effective Tax Rate $ — — % ____________________ (1) 50% or more of our state tax provision relates to the California state jurisdiction. (1) F-27
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Table of Contents A reconciliation of the income tax expense computed at the U.S. federal statutory income tax rate to the Company's income tax expense is as follows (in thousands) (prior to the adoption of ASU 2023-09): Year Ended December 31, 2024 2023 Income tax benefit at statutory rates $ (67,683) $ (44,566) State income tax, net of federal benefit (8,170) (5,882) Permanent items 66 51 Reserve for uncertain tax positions 10,572 5,993 Research and development credits (42,279) (24,054) Valuation allowance 98,813 61,332 Stock-based compensation (15,264) 3,331 Section 162(m) disallowance 20,604 291 Rate adjustment 2,766 2,526 Other 575 978 Income tax expense (benefit) $ — $ — The Company made no material income tax payments during 2025 for Federal, state, and foreign jurisdictions. The Company's net deferred tax assets (liabilities) are as follows (in thousands): 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 156,263 $ 83,371 Section 174 R&E capitalization 187,563 103,288 Research and development tax credits 106,467 62,793 Deferred revenue 10,593 12,529 Accrued expenses 7,384 287 Transaction costs 6,271 — Intangibles and fixed assets 607 698 Lease liabilities 10,366 1,446 Stock-based compensation 15,650 8,418 Gross deferred tax assets 501,164 272,830 Valuation allowance (490,371) (271,636) Total deferred tax assets 10,793 1,194 Deferred tax liabilities Right-of-use assets (10,793) (1,194) Total deferred tax liabilities (10,793) (1,194) Net Deferred Tax Assets $ — $ — The Company has established a valuation allowance against its net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that the deferred tax assets will be realizable, the valuation allowance will be released. The change in the valuation allowance was an increase of $218.7 million and $98.8 million for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025, the Company had federal, state, and foreign net operating loss (NOL) carryforwards of $421.6 million, $955.5 million, and $5.9 million respectively. The federal NOL carryforwards do not expire and can offset 80% of future taxable income each year, and the state NOLs begin to expire in 2034 unless previously utilized. The foreign net operating loss carryforwards do not expire. F-28
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Table of Contents At December 31, 2025, the Company had federal and state research and development tax credits of approximately $16.0 million and $23.5 million, respectively. The federal research and development credits begin to expire in 2039 unless previously utilized. The California state credits carryforward indefinitely and the Massachusetts R&D credits begin to expire in 2038 unless previously utilized. At December 31, 2025, the Company had federal orphan drug tax credits of $107.4 million, which begin to expire in 2041. Pursuant to Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company’s ability to use NOL and R&D tax credit carryforwards (“tax attribute carryforwards”) to offset future taxable income may be limited if the Company experienced a cumulative change in ownership by certain stockholders or groups of stockholders of more than 50 percentage points within a three-year testing period. The Company determined there were two ownership changes through December 31, 2024. Limitations as a result of these ownership changes did not impact the Company’s deferred tax assets. Due to the existence of a valuation allowance, impacts to the Company’s deferred tax assets would not impact the Company’s effective tax rate. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits for the years ended December 31, 2025, 2024, and 2023 (in thousands): 2025 2024 2023 Gross unrecognized tax benefits at the beginning of the year $ 22,159 $ 11,049 $ 4,771 Increases related to current year positions 15,029 11,110 6,156 Increases related to prior year positions — — 122 Gross unrecognized tax benefits at the end of the year $ 37,188 $ 22,159 $ 11,049 The unrecognized tax benefit amounts are reflected in the determination of the Company’s deferred tax assets. If recognized, these amounts would affect the Company’s effective tax rate. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties as of December 31, 2025 or 2024. As of December 31, 2025, the Company’s tax years since conversion to a corporation in 2019 are subject to examination by U.S. federal and various state taxing authorities. On July 4, 2025, the One Big Beautiful Bill Act (the OBBBA) was signed into law. The OBBBA includes significant changes to U.S. tax and related laws. Some of the provisions of the OBBBA affecting corporations include the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (TCJA), modifications to the Global Intangible Low- Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) international tax provisions, an increase in the limit of the deduction of interest expense to 30% of earnings before interest, taxes, depreciation, and amortization (EBITDA), and reinstatement of 100% bonus depreciation deduction from the TCJA for eligible property acquired after January 19, 2025. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA’s financial reporting implications have been recognized in our income tax provision for 2025. The incorporation of these effects resulted in no material impact on our effective tax rate. 10. Segment Information The Company's operations constitute a single operating and reportable segment and reflects how the Company’s CEO, who is the CODM, manages the Company Business, including allocating resources and measuring performance. The Company derives its revenues from its research collaboration and license agreements with BMS and Lilly, which are further described in “Note 5 – Collaboration, License and Research Agreements”. Segment performance is measured based on net loss, which the CODM uses to evaluate the results of the segment and to make operational decisions when managing the Company Business, such as how to allocate the resources of the business to advance our preclinical and research programs and to monitor budgeted to actual expenditures. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The following table presents financial information, including significant segment expenses, which are regularly provided to the CODM and included within consolidated net loss. Research and development expenses and general and administrative expenses are adjusted to exclude F-29
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Table of Contents depreciation and stock-based compensation for segment presentation. Other segment items include depreciation, stock- based compensation, and other income (in thousands): Year Ended December 31, 2025 2024 2023 Collaboration revenue $ 18,755 $ 10,897 $ 9,560 Adjusted research and development (508,605) (275,176) (167,299) Adjusted general and administrative (154,104) (60,518) (37,536) Total other segment items (40,677) 2,495 (16,945) Net loss $ (684,631) $ (322,302) $ (212,220) ____________________ (1) Depreciation and stock based compensation expense is removed from both "Adjusted research and development" and "Adjusted general and administrative" expense for the years ended December 31, 2025, 2024, and 2023. 11. Subsequent Events On January 12, 2026, 2024 Pre-Funded Warrants to purchase an aggregate of 3,060,792 shares of the Company’s common stock were exercised in cashless transactions, which resulted in an aggregate of 3,060,749 shares of the Company’s common stock being issued. On February 5, 2026 the negotiation period under the ROFN expired and, as a result, no ROFN Sale will occur. (1) (1) F-30
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Table of Contents EXHIBIT INDEX Exhibit Number Exhibit Description Incorporated by Reference Field HerewithForm Date Number 2.1^ Agreement and Plan of Merger, dated October 25, 2025, among Avidity Biosciences, Inc., Novartis AG and Ajax Acquisition Sub, Inc. 8-K 10/27/2025 2.1 2.2^ Separation and Distribution Agreement, dated October 25, 2025, among Avidity Biosciences, Inc., Bryce Therapeutics, Inc. and Novartis AG, with respect to certain sections specified therein. 8-K 10/27/2025 2.2 3.1 Amended and Restated Certificate of Incorporation. 8-K 6/16/2020 3.1 3.2 Amended and Restated Bylaws. 8-K 12/13/2023 3.1 4.1 Form of Common Stock Certificate. S-1 5/22/2020 4.1 4.2 Description of Registrant's Securities 10-K 3/15/2021 4.3 4.3 Form of Pre-Funded Warrant 8-K 2/29/2024 4.1 10.1# Avidity Biosciences, Inc. 2013 Amended and Restated Equity Incentive Plan, including form of stock option grant notice and stock option agreement thereunder. S-1 5/22/2020 10.1 10.2# Avidity Biosciences, Inc. 2020 Incentive Award Plan, including forms of grant notices and agreements thereunder. 10-K 2/28/2024 10.2 10.3# Avidity Biosciences, Inc. 2020 Employee Stock Purchase Plan. S-1/A 6/8/2020 10.3 10.4# Amended and Restated Non-Employee Director Compensation Program. 10-Q 5/8/2025 10.1 10.5# Avidity Biosciences, Inc. 2022 Employment Inducement Incentive Award Plan, including form of stock option grant notice and stock option agreement and form of restricted stock unit grant notice and restricted stock unit agreement thereunder. 10-K 2/28/2023 10.5 10.6# Amendment to Avidity Biosciences, Inc. 2022 Employment Inducement Incentive Award Plan. 8-K 6/12/2024 10.1 10.7# Amendment to Avidity Biosciences, Inc. 2022 Employment Inducement Incentive Award Plan. 8-K 9/10/2025 10.1 102
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Table of Contents 10.8# Amended and Restated Employment Agreement, dated August 26, 2024, by and between the Registrant and Sarah Boyce. 10-Q 11/7/2024 10.2 10.9# Amended and Restated Employment Agreement, dated August 26, 2024, by and between the Registrant and Michael MacLean. 10-Q 11/7/2024 10.3 10.10# Amended and Restated Employment Agreement, dated August 26, 2024, by and between the Registrant and W. Michael Flanagan. 10-Q 11/7/2024 10.4 10.11# Amended and Restated Employment Agreement, dated August 26, 2024, by and between the Registrant and Teresa McCarthy. 10-Q 11/7/2024 10.5 10.12# Amended and Restated Employment Agreement, dated August 26, 2024, by and between the Registrant and John B. Moriarty, Jr. 10-Q 11/7/2024 10.6 10.13# Amended and Restated Employment Agreement, dated August 26, 2024, by and between the Registrant and Steven Hughes. 10-K 2/27/2025 10.12 10.14# Amended and Restated Employment Agreement, dated August 29, 2024, by and between the Registrant and Kathleen Gallagher. 10-K 2/27/2025 10.13 10.15# Amended and Restated Employment Agreement, dated August 26, 2024, by and between the Registrant and Eric Mosbrooker. 10-K 2/27/2025 10.14 10.16# Offer of Employment and Employment Agreement, dated December 12, 2024, by and between the Registrant. and Charles Calderaro III. 10-K 2/27/2025 10.15 10.17# Form of Indemnification Agreement for Directors and Officers. S-1 5/22/2020 10.11 10.18# Form of Accelerated Payments and Clawback Agreement. 8-K 12/18/2025 10.1 10.19† Research Collaboration and License Agreement, dated April 17, 2019, by and between Eli Lilly and Company and the Registrant. S-1 5/22/2020 10.12 103
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Table of Contents 10.20† Research Collaboration and License Agreement, dated November 27, 2023, by and between Bristol-Myers Squibb Company and the Registrant. 10-K 2/28/2024 10.13 10.21† Manufacturing Services Agreement, effective as of August 1, 2025, by and among Lonza LTD, Lonza Sales LTD and Avidity Biosciences, Inc. 10-Q 11/10/2025 10.2 10.22# Amended and Restated Lease Agreement, dated December 18, 2020, by and between ARE-SD Region No. 44, LLC and the Registrant. 10-K 3/15/2021 10.14 10.23† Sublease Agreement, dated April 29, 2024, by and between Turning Point Therapeutics, Inc. and the Registrant. 10-K 2/27/2025 10.20 10.24† First Amendment to Sublease Agreement, dated March 19, 2025, by and between Turning Point Therapeutics, Inc. and the Registrant. 10-Q 5/8/2025 10.2 10.25# Sales Agreement, dated August 9, 2024, by and between Avidity Biosciences, Inc. and TD Securities (USA) LLC 10-Q 8/9/2024 10.2 16.1 Letter to Securities and Exchange Commission from BDO USA, P.C., dated April 28, 2025. 8-K 4/29/2025 16.1 19.1 Amended and Restated Insider Trading Compliance Policy and Procedures 10-K 2/27/2025 19.1 21.1 Subsidiaries of the Registrant. X 23.1 Consent Deloitte & Touche LLP, independent registered public accounting firm. X 23.2 Consent of BDO USA, P.C., independent registered public accounting firm. X 31.1 Certification of Chief Executive Officer of Avidity Biosciences, Inc., as required by Rule 13a- 14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. X 31.2 Certification of Chief Financial Officer of Avidity Biosciences, Inc., as required by Rule 13a- 14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. X 104
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Table of Contents 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97.1 Avidity Biosciences, Inc. Policy for Recovery of Erroneously Awarded Compensation. 10-K 2/28/2024 97.1 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X ^ Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted exhibits or schedules upon request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any exhibits or schedules so furnished # Indicates management contract or compensatory plan. † Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit have been omitted by means of marking such portions with asterisks as the identified confidential portions (i) are not material and (ii) treated by the Registrant as private or confidential. * These certifications are being furnished solely to accompany this annual report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 105
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Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. AVIDITY BIOSCIENCES, INC. /s/ Sarah Boyce Sarah Boyce President and Chief Executive Officer Date: February 23, 2026 106
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Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Sarah Boyce President, Chief Executive Officer and February 23, 2026 Sarah Boyce Director (Principal Executive Officer) /s/ Michael F. MacLean Chief Financial Officer February 23, 2026 Michael F. MacLean (Principal Financial and Accounting Officer) /s/ Troy Wilson Chair of the Board of Directors February 23, 2026 Troy Wilson, Ph.D., J.D. /s/ Carsten Boess Director February 23, 2026 Carsten Boess /s/ Noreen Henig Director February 23, 2026 Noreen Henig, M.D. /s/ Edward Kaye Director February 23, 2026 Edward Kaye, M.D. /s/ Jean Kim Director February 23, 2026 Jean Kim /s/ Arthur A. Levin Director February 23, 2026 Arthur A. Levin, Ph.D. /s/ Simona Skerjanec Director February 23, 2026 Simona Skerjanec /s/ Tamar Thompson Director February 23, 2026 Tamar Thompson 107
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Exhibit 21.1 Subsidiaries Entity Name State or Other Jurisdiction of Organization Avidity Biosciences Ireland Limited Republic of Ireland Atrium Therapeutics, Inc. Delaware
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Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in Registration Statement Nos. 333-257691, 333-277481, 333-278469, and 333-279264 on Form S-3 and Nos. 333-239148, 333-264841, 333-268933, 333-277516, 333-281453, and 333-285359 on Form S-8 of our reports dated February 23, 2026, relating to the financial statements of Avidity Biosciences, Inc. and the effectiveness of Avidity Biosciences, Inc.’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2025. /s/ Deloitte & Touche LLPSan Diego, California February 23, 2026
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Exhibit 23.2 Consent of Independent Registered Public Accounting Firm We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-257691, 333277481, 333-278469, and 333-279264) and Form S-8 (Nos. 333-239148, 333-264841, 333-268933, 333-277516, 333- 281453, and 333-285359) of Avidity Biosciences, Inc. of our report dated February 27, 2025, relating to the consolidated financial statements, which appears in this Annual Report on Form 10-K. /s/ BDO USA, P.C.San Diego, California February 23, 2026
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Exhibit 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Sarah Boyce, certify that: 1. I have reviewed this annual report on Form 10-K of Avidity Biosciences, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 23, 2026 /s/ Sarah Boyce Sarah Boyce President, Chief Executive Officer and Director (Principal Executive Officer)
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Exhibit 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael F. MacLean, certify that: 1. I have reviewed this annual report on Form 10-K of Avidity Biosciences, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 23, 2026 /s/ Michael F. MacLean Michael F. MacLean Chief Financial Officer (Principal Financial Officer)
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Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Avidity Biosciences, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sarah Boyce, President, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 23, 2026 /s/ Sarah Boyce Sarah Boyce President, Chief Executive Officer and Director(Principal Executive Officer) The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
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Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Avidity Biosciences, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael F. MacLean, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 23, 2026 /s/ Michael F. MacLean Michael F. MacLean Chief Financial Officer (Principal Financial Officer) The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.