Aptevo Therapeutics Inc

APTEVO THERAPEUTICS INC.

To the Stockholders and the Board of Directors of

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Aptevo Therapeutics Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, cash flows, and changes in stockholders’ equity for the years then ended, 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 consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

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 to 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated 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 consolidated 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 consolidated 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.

Accounting for the Sale of Future Payments for IXINITY Sales

As described in Note 3, the Company sold to XOMA the right to receive all deferred payments and a portion of milestone payments related to global sales of IXINITY in exchange for total cash consideration of $9.65 million. The sale of deferred payments and certain milestone payments was recorded as a gain related to the sale of a non-financial asset in the Company’s consolidated statements of operations for the year ended December 31, 2023.

We identified the accounting for the sale of future payments for IXINITY sales as a critical audit matter because the transaction was highly complex and required management to interpret and apply complex accounting standards. This, in turn, led to a high degree of auditor judgment and increased audit effort, including the use of subject matter experts on technical accounting matters, in performing procedures to evaluate whether the transaction was properly accounted for in accordance with relevant accounting principles.

The primary procedures we performed to address this critical audit matter included:

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Reviewing the analysis prepared by management and the related agreements to obtain an understanding of the sale of future payments for IXINITY sales.

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With the assistance of a subject matter expert on technical accounting matters, evaluating the reasonableness of management’s accounting conclusion to record the sale of future payments for IXINITY sales as a gain related to the sale of a non-financial asset.

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Evaluating management's analysis by:

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testing the completeness and accuracy of inputs by comparing key terms to the relevant agreements,

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agreeing the dollar value of the gain recorded as other income to the agreement,

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recalculating the total purchase price, and

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agreeing cash payments received to bank statements.

/s/ Moss Adams LLP

Seattle, Washington

March 5, 2024

We have served as the Company’s auditor since 2020.