Q32 Bio Inc.

Previous wording

Bempikibart (ADX-914), our most advanced product candidate, is a fully human anti–interleukin-7 receptor alpha (“IL-7Rα”), antagonist monoclonal antibody designed to re-regulate adaptive immune function by blocking signaling mediated by interleukin-7 (“IL-7”), and thymic stromal lymphopoietin (“TSLP”). We have completed two Phase 2a clinical trials evaluating bempikibart; SIGNAL-AA Part A, for the treatment of alopecia areata (“AA”), and SIGNAL-AD for the treatment of atopic dermatitis (“AD”). In December 2024, we announced topline results from both of these trials, as well as our intention to advance bempikibart for the treatment of AA. In April 2025, we announced dosing of the first patients in both the Part A open-label extension and Part B of the SIGNAL-AA Phase 2a clinical trial. We expect to report topline data from SIGNAL-AA Part B trial in the first half of 2026.

Current wording

Bempikibart (ADX-914), our most advanced product candidate, is a fully human anti–interleukin-7 receptor alpha (“IL-7Rα”), antagonist monoclonal antibody designed to re-regulate adaptive immune function by blocking signaling mediated by interleukin-7 (“IL-7”), and thymic stromal lymphopoietin (“TSLP”). We have completed two Phase 2a clinical trials evaluating bempikibart; SIGNAL-AA Part A, for the treatment of alopecia areata (“AA”), and SIGNAL-AD for the treatment of atopic dermatitis (“AD”). In December 2024, we announced topline results from both of these trials, as well as our intention to advance bempikibart for the treatment of AA. In April 2025, we announced dosing of the first patients in both the Part A open-label extension and Part B of the SIGNAL-AA Phase 2a clinical trial and in October 2025, we announced completion of enrollment in Part B. We expect to report topline data from the SIGNAL-AA Part B trial in mid-2026.

Previous wording

In addition, across the two trials, we observed changes in biomarkers consistent with the IL-7Rα mechanism and activity mediated by both the TSLP and IL-7 receptors. In the SIGNAL-AD trial, we observed meaningful decreases in key Th2 biomarkers of TARC, IgE, and eosinophils, each of which were statistically significant at multiple timepoints suggestive of potent TSLP inhibition. In the SIGNAL-AA trial, we observed a CD3+ T cell decrease, which was also statistically significant at multiple timepoints, suggestive of potent IL-7 inhibition. These findings were consistent with expected target engagement and IL-7Rα blockade.

Current wording

In addition, across the two trials, we observed changes in biomarkers consistent with the IL-7Rα mechanism and activity mediated by both the TSLP and IL-7 receptors. In the SIGNAL-AD trial, we observed meaningful decreases in key Th2 biomarkers of TARC, IgE, and eosinophils, each of which were statistically significant at multiple timepoints suggestive of potent TSLP inhibition. In the SIGNAL-AA trial, we observed a CD3+ T cell decrease, which was also statistically significant at multiple timepoints, suggestive of potent IL-7 inhibition. These findings were consistent with expected target engagement and IL-7Rα blockade. Across all clinical trials, bempikibart has been dosed in over 150 participants to-date and has demonstrated a favorable safety and tolerability profile, with no Grade 3 or higher related adverse events.

Previous wording

In February 2025, we announced a corporate restructuring to focus on the advancement of bempikibart for the treatment of patients with AA. As part of the restructuring, we discontinued the Phase 2 renal basket clinical trial of ADX-097 and are evaluating strategic options for our tissue-targeted complement inhibitor platform, inclusive of ADX-097 and early-stage assets, to prioritize the clinical development of bempikibart (the “Restructuring Plan”). The Restructuring Plan included a reduction in force, which was substantially completed as of June 30, 2025. As part of this Restructuring Plan, we incurred severance and severance-related charges of approximately $0.9 million.

Current wording

In February 2025, we announced a corporate restructuring to focus on the advancement of bempikibart for the treatment of patients with AA. As part of the restructuring, we discontinued the Phase 2 renal basket clinical trial of ADX-097 and are evaluating strategic options for our tissue-targeted complement inhibitor platform, inclusive of ADX-097 and early-stage assets, to prioritize the clinical development of bempikibart (the “Restructuring Plan”). The Restructuring Plan included a reduction in force, which was completed as of September 30, 2025. As part of this Restructuring Plan, we incurred severance and severance-related charges of approximately $0.9 million.

Previous wording

These potential payments to Horizon are not in exchange for a distinct good or service and therefore, the Company accounts for consideration payable to Horizon as a reduction of the transaction price under the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The Company concluded that the $55.0 million of arrangement consideration previously recognized should be fully constrained as a result of the contingent consideration payable to Horizon, and accordingly, the amounts previously recognized were reversed in the fourth quarter of 2023 and a refund liability was established for the $55.0 million cash received during the term of the Horizon Collaboration Agreement. No amounts have been recognized related to the remaining potential payment to Horizon (up to $20.1 million) as it is not probable that the respective milestones will be achieved at this time.

Current wording

These potential payments to Horizon are not in exchange for a distinct good or service and therefore, the Company accounts for consideration payable to Horizon as a reduction of the transaction price under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The Company concluded that the $55.0 million of arrangement consideration previously recognized should be fully constrained as a result of the contingent consideration payable to Horizon, and accordingly, the amounts previously recognized were reversed in the fourth quarter of 2023 and a refund liability was established for the $55.0 million cash received during the term of the Horizon Collaboration Agreement. No amounts have been recognized related to the remaining potential payment to Horizon (up to $20.1 million) as it is not probable that the respective milestones will be achieved at this time. A description of the Amendment to the Horizon Termination Agreement which provides for a one-time equity grant of the Company’s common stock as full consideration of all milestone payments pursuant to the Horizon Termination Agreement is included in Note 20 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

On November 16, 2023, Legacy Q32 entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Homology and Kenobi Merger Sub, Inc., a wholly-owned subsidiary of Homology (“Merger Sub”). The Merger was completed on March 25, 2024. Pursuant to the Merger Agreement, Merger Sub merged with and into Legacy Q32, with Legacy Q32 continuing as the surviving company and as a wholly-owned subsidiary of Homology (the “Merger”). Homology changed its name to Q32 Bio Inc. (“Q32”), and Legacy Q32, which remains as a wholly-owned subsidiary of Q32, changed its name to Q32 Bio Operations Inc. On March 26, 2024, the combined company’s common stock began trading on the Nasdaq Global Market under the ticker symbol “QTTB.” The business of Legacy Q32 continues as the business of the combined company. The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue

Current wording

On November 16, 2023, Legacy Q32 entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Homology and Kenobi Merger Sub, Inc., a wholly-owned subsidiary of Homology (“Merger Sub”). The Merger was completed on March 25, 2024. Pursuant to the Merger Agreement, Merger Sub merged with and into Legacy Q32, with Legacy Q32 continuing as the surviving company and as a wholly-owned subsidiary of Homology (the “Merger”). Homology changed its name to Q32 Bio Inc. (“Q32”), and Legacy Q32, which remains as a wholly-owned subsidiary of Q32, changed its name to Q32 Bio Operations Inc. On March 26, 2024, the combined company’s common stock began trading on the Nasdaq Global Market under the ticker symbol “QTTB.” The business of Legacy Q32 continues as the business of the combined company. The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. In connection with the Merger Agreement, certain parties entered into a subscription agreement with us to purchase shares of our common stock for an aggregate purchase price of $42.0 million (the “Pre-Closing Financing”).

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $54.8 million. We expect that our cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into 2027. This estimate is based on assumptions that may prove to be wrong, and we could use our capital resources sooner than currently anticipated.

Current wording

As of September 30, 2025, we had cash and cash equivalents of $49.0 million. We expect that our cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into 2027. This estimate is based on assumptions that may prove to be wrong, and we could use our capital resources sooner than currently anticipated.

Previous wording

Prior to the termination agreement, Legacy Q32 concluded that the arrangement was within the scope of ASC 606. Specifically, Legacy Q32 concluded that the research services required to be performed as part of the Horizon Collaboration Agreement represented an output of Legacy Q32’s ordinary activities, and this represented a contract with a customer. At the commencement of the collaboration arrangement with Horizon, Legacy Q32 identified two performance obligations related to the development activities of bempikibart, one of each of the specified clinical trials in AD and AA, with each composing the services related to the clinical trial and other related development activity. Legacy Q32 also identified a material right related to the option for Horizon to purchase bempikibart. The material right was considered a separate performance obligation pursuant to the provisions of ASC 606. Legacy Q32 determined the transaction price to be $55.0 million which it allocated to the three performance obligations based on the estimated stand-alone selling price of each performance obligation. Legacy Q32 concluded that the consideration allocated to the research service performance obligations should be recognized over time as Horizon received the benefit of the research activities as the activities were performed. Legacy Q32 determined that this method was most appropriate as progress towards completion of research is largely driven by time and effort spent and costs incurred to perform this research. As of December 31, 2023, Legacy Q32 had received the full $55.0 million, which the combined company retains. The Termination Agreement is accounted for as a modification because it does not result in the addition of distinct goods or services. Since the two performance obligations and the material right are terminated with no further performance obligations aside from the contingent payments to Horizon of up to $75.1 million, Legacy Q32 recognized the remaining deferred revenue in the fourth quarter of 2023.

Current wording

Prior to the Horizon Termination Agreement, Legacy Q32 concluded that the arrangement was within the scope of ASC 606. Specifically, Legacy Q32 concluded that the research services required to be performed as part of the Horizon Collaboration Agreement represented an output of Legacy Q32’s ordinary activities, and this represented a contract with a customer. At the commencement of the collaboration arrangement with Horizon, Legacy Q32 identified two performance obligations related to the development activities of bempikibart, one of each of the specified clinical trials in AD and AA, with each composing the services related to the clinical trial and other related development activity. Legacy Q32 also identified a material right related to the option for Horizon to purchase bempikibart. The material right was considered a separate performance obligation pursuant to the provisions of ASC 606. Legacy Q32 determined the transaction price to be $55.0 million which it allocated to the three performance obligations based on the estimated stand-alone selling price of each performance obligation. Legacy Q32 concluded that the consideration allocated to the research service performance obligations should be recognized over time as Horizon received the benefit of the research activities as the activities were performed. Legacy Q32 determined that this method was most appropriate as progress towards completion of research is largely driven by time and effort spent and costs incurred to perform this research. As of December 31, 2023, Legacy Q32 had received the full $55.0 million, which the combined company retains. The Horizon Termination Agreement is accounted for as a modification because it does not result in the addition of distinct goods or services. Since the two performance obligations and the material right are terminated with no further performance obligations aside from the contingent payments to Horizon of up to $75.1 million, Legacy Q32 recognized the remaining deferred revenue in the fourth quarter of 2023.

Previous wording

Upon the execution of the Horizon Termination Agreement, Legacy Q32 became obligated to pay Horizon up to $75.1 million contingent on regulatory and sales-based milestones or up to $20.1 million in excess of the cash received. These potential payments to the customer are not in exchange for a distinct good or service; therefore, we are accounting for consideration payable to a customer as a reduction of the transaction price under ASC 606. Legacy Q32 concluded that the $55.0 million of arrangement consideration previously recognized should be fully constrained as a result of the contingent consideration payable to the customer, and accordingly, all amounts previously recognized as revenue were reversed in the fourth quarter of 2023 and a refund liability was established for the $55.0 million cash received during the term of the collaboration agreement. No amounts have been recognized related to the remaining potential payment to Horizon (up to $20.1 million) as it cannot be deemed probable that the respective milestones will be achieved at this time.

Current wording

These potential payments to the customer are not in exchange for a distinct good or service; therefore, we are accounting for consideration payable to a customer as a reduction of the transaction price under ASC 606. Legacy Q32 concluded that the $55.0 million of arrangement consideration previously recognized should be fully constrained as a result of the contingent consideration payable to the customer, and accordingly, all amounts previously recognized as revenue were reversed in the fourth quarter of 2023 and a refund liability was established for the $55.0 million cash received during the term of the collaboration agreement. No amounts have been recognized related to the remaining potential payment to Horizon (up to $20.1 million) as it cannot be deemed probable that the respective milestones will be achieved at this time.

Previous wording

Upon closing of the Merger, Legacy Q32 converted the outstanding Convertible Notes plus accrued interest into shares of common stock at 90% of the purchase price of the mandatory conversion event. As the Convertible Notes are recorded at fair value, a noncash gain of $15.9 million on the change in fair value prior to the conversion of convertible notes is reflected in the unaudited condensed consolidated statement of operation for the six months ended June 30, 2024.

Current wording

Upon closing of the Merger, Legacy Q32 converted the outstanding Convertible Notes plus accrued interest into shares of common stock at 90% of the purchase price of the mandatory conversion event. As the Convertible Notes are recorded at fair value, a noncash gain of $15.9 million on the change in fair value prior to the conversion of convertible notes is reflected in the unaudited condensed consolidated statement of operation for the nine months ended September 30, 2024.

Previous wording

Research and development expenses were $12.3 million for the six months ended June 30, 2025, compared to $23.2 million for the six months ended June 30, 2024. Bempikibart program expenses decreased by $8.7 million due to lower clinical costs and lower costs related to manufacturing clinical trial materials, as well as higher costs in the prior year as we were advancing clinical trials for AA and AD. ADX-097 program expenses decreased by $1.1 million as we discontinued the Phase 2 renal basket clinical trial of ADX-097 in the first quarter of 2025.

Current wording

Research and development expenses were $3.6 million for the three months ended September 30, 2025, compared to $14.3 million for the three months ended September 30, 2024. Bempikibart program expenses decreased by $8.0 million due to lower clinical costs and lower costs related to manufacturing clinical trial materials, as well as higher costs in the prior year since we were advancing clinical trials for both AA and AD. ADX-097 program expenses decreased by $1.2 million due to the discontinuation of the Phase 2 renal basket clinical trial of ADX-097 in the first quarter of 2025.

Previous wording

The decrease in personnel-related and consultant costs was primarily related to lower headcount in the three months ended June 30, 2025 as compared to the prior year associated with the Restructuring Plan in February 2025. Personnel-related and consultant costs for the three months ended June 30, 2025 and 2024 included stock-based compensation expense of $0.3 million and $0.4 million, respectively.

Current wording

The decrease in personnel-related and consultant costs was primarily related to lower headcount in the three months ended September 30, 2025 as compared to the prior year associated with the Restructuring Plan in February 2025. Personnel-related and consultant costs for the three months ended September 30, 2025 and 2024 included stock-based compensation expense of $0.2 million and $0.3 million, respectively.

Previous wording

General and administrative expenses were $4.0 million for the three months ended June 30, 2025, compared to $4.5 million for the three months ended June 30, 2024. The decrease of $0.5 million was primarily due to decreased personnel-related costs as a result of reduced headcount in the three months ended June 30, 2025 associated with the Restructuring Plan in February 2025, as well as decreased legal costs as compared to the prior year.

Current wording

General and administrative expenses were $4.0 million for the three months ended September 30, 2025, compared to $4.5 million for the three months ended September 30, 2024. The decrease of $0.4 million was primarily due to decreased personnel-related costs as a result of reduced headcount in the three months ended September 30, 2025 associated with the Restructuring Plan in February 2025, as well as decreased legal and other professional services costs as compared to the prior year. General and administrative expenses include stock-based compensation expense of $1.0 million and $1.1 million for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Other income (expense), net was ($0.3) million for the three months ended June 30, 2025, compared to $2.4 million for the three months ended June 30, 2024. Other income (expense), net for the three months ended June 30, 2025 includes a loss recorded for the change in fair value of the CVR liability of $0.6 million as well as interest expense of $0.3 million on our venture debt. These decreases are partially offset by interest income of $0.6 million. The decrease in other income (expense), net is due to a gain on the change in fair value of the CVR liability of $1.4 million booked in the prior year as well as a lower average cash balance resulting in lower interest income for the three months ended June 30, 2025.

Current wording

Other income was $0.2 million for the three months ended September 30, 2025, compared to $1.2 million for the three months ended September 30, 2024. Other income for the three months ended September 30, 2025 includes interest income of $0.5 million partially offset by interest expense of $0.3 million on our venture debt. Other income for the three months ended September 30, 2024 includes interest income of $1.2 million as well as a gain recorded for the change in fair value of the CVR liability of $0.3 million, partially offset by interest expense of $0.3 million on our venture debt. The decrease in other income is primarily due to lower average cash balance resulting in lower interest income for the three months ended September 30, 2025, as well as the gain recorded in the prior year for the change in fair value of the CVR liability that was not present in the three months ended September 30, 2025.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024:

Previous wording

The following table summarizes our research and development expenses for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our research and development expenses for the nine months ended September 30, 2025 and 2024:

Previous wording

The decrease in personnel-related and consultant costs was primarily related to lower headcount associated with the Restructuring Plan in February 2025. Personnel-related and consultant costs for the six months ended June 30, 2025 and 2024 included stock-based compensation expense of $0.5 million in each period.

Current wording

The decrease in personnel-related and consultant costs was primarily related to lower headcount in the nine months ended September 30, 2025 as compared to the prior year associated with the Restructuring Plan in February 2025. Personnel-related and consultant costs for the nine months ended September 30, 2025 and 2024 included stock-based compensation expense of $0.7 million and $0.9 million, respectively.

Previous wording

General and administrative expenses were $9.1 million for the six months ended June 30, 2025, compared to $9.5 million for the six months ended June 30, 2024. The decrease of $0.4 million was primarily due to higher costs in the prior year associated with the Merger, including severance and retention payments to former employees of Homology, as well as lower consulting expense, partially offset by higher insurance and professional services costs. General and administrative expenses include stock-based compensation expense of $2.1 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

General and administrative expenses were $13.1 million for the nine months ended September 30, 2025, compared to $14.0 million for the nine months ended September 30, 2024. The decrease of $0.8 million was primarily due to higher costs in the prior year associated with the Merger, including severance and retention payments to former employees of Homology, as well as lower consulting expense, partially offset by higher insurance and facilities costs. General and administrative expenses include stock-based compensation expense of $3.1 million and $2.3 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Upon closing of the Merger in March 2024, Legacy Q32 converted its outstanding Convertible Notes plus accrued interest into shares of common stock at 90% of the purchase price of the mandatory conversion event. As the Convertible Notes are recorded at fair value, a gain of $15.9 million on the change in fair value prior to the conversion of convertible notes is reflected in the unaudited condensed consolidated statement of operation for the six months ended June 30, 2024.

Current wording

Upon closing of the Merger in March 2024, Legacy Q32 converted its outstanding Convertible Notes plus accrued interest into shares of common stock at 90% of the purchase price of the mandatory conversion event. As the Convertible Notes are recorded at fair value, a gain of $15.9 million on the change in fair value prior to the conversion of convertible notes is reflected in the unaudited condensed consolidated statement of operation for the nine months ended September 30, 2024.

Previous wording

Other income (expense), net was $0.9 million for the six months ended June 30, 2025, compared to $2.5 million for the six months ended June 30, 2024. Other income (expense), net for the six months ended June 30, 2025 includes interest income of $1.3 million as well as a gain recorded for the change in fair value of the CVR liability of $0.4 million. These increases are partially offset by interest expense of $0.6 million on our venture debt. The decrease in other income (expense), net is due to a gain on the change in fair value of the CVR liability of $1.4 million booked in the prior year as well as a lower average cash balance resulting in lower interest income for the six months ended June 30, 2024.

Current wording

Other income was $1.1 million for the nine months ended September 30, 2025, compared to $3.8 million for the nine months ended September 30, 2024. Other income for the nine months ended September 30, 2025 includes interest income of $1.8 million as well as a gain recorded for the change in fair value of the CVR liability of $0.4 million. These increases are partially offset by interest expense of $0.9 million on our venture debt. Other income for the nine months ended September 30, 2024 includes interest income of $3.0 million as well as a gain recorded for the change in fair value of the CVR liability of $1.7 million. These increases are partially offset by interest expense of $0.8 million on our venture debt. The decrease in other income is due to a smaller gain recorded in the current year for the change in fair value of the CVR liability as compared to the prior year, as well as lower interest income as a result of lower average cash balance for the nine months ended September 30, 2025.

Previous wording

Prior to May 22, 2024, we accounted for our investment in OXB (US) LLC using the equity method of accounting and recorded our share of gains or losses from OXB (US) LLC on a quarterly basis. For the six months ended June 30, 2024, we recorded a loss from equity method investment of $1.6 million, representing our share of OXB (US) LLC’s net loss. See Notes 2 and 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding the equity method of accounting.

Current wording

Prior to May 22, 2024, we accounted for our investment in OXB (US) LLC using the equity method of accounting and recorded our share of gains or losses from OXB (US) LLC on a quarterly basis. For the nine months ended September 30, 2024, we recorded a loss from equity method investment of $1.6 million, representing our share of OXB (US) LLC’s net loss. See Notes 2 and 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding the equity method of accounting.

Previous wording

Since inception, we have incurred significant operating losses and negative cash flows from operations. We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all. To date, we have funded our operations primarily from proceeds from the sales of our convertible preferred stock, convertible notes, venture debt, and proceeds from the Horizon Collaboration Agreement and from the Merger with Homology and accompanying Pre-Closing Financing. From inception through June 30, 2025, we raised $111.4 million in aggregate cash proceeds, net of issuance costs, from the sales of our Series A convertible preferred stock, Series A-1 convertible preferred stock and Series B convertible preferred stock and received payments of $55.0 million in connection with the Horizon Collaboration Agreement. We also received $30.0 million from the sales of convertible notes, $12.5 million from our venture debt, $61.3 million, net of issuance costs, in connection with the Merger with Homology and $42.0 million pursuant to the Pre-Closing Financing. As of June 30, 2025, we had cash and cash equivalents of $54.8 million.

Current wording

Since inception, we have incurred significant operating losses and negative cash flows from operations. We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all. To date, we have funded our operations primarily through proceeds from the sales of our convertible preferred stock and convertible notes, as well as proceeds from our venture debt, the Horizon Collaboration Agreement, and the Merger with Homology and accompanying Pre-Closing Financing. From inception through September 30, 2025, we have raised $136.0 million in aggregate cash proceeds, net of issuance costs, from the sale of our convertible preferred stock and convertible notes. In addition, we received $55.0 million in payments under the Horizon Collaboration Agreement, $12.5 million in proceeds from our venture debt, $61.3 million, net of issuance costs, in connection with the Merger with Homology, and $42.0 million pursuant to the Pre-Closing Financing. As of September 30, 2025, we had cash and cash equivalents of $49.0 million.

Previous wording

We have incurred significant operating losses since inception and, as of June 30, 2025, had an accumulated deficit of $255.3 million. We expect negative cash flows from operations and net losses for the foreseeable future as we continue to invest significantly in research and development of our product candidates and platform. We have not yet commercialized any product and do not expect to generate revenue from sales of any products for several years, if at all.

Current wording

We have incurred significant operating losses since inception and, as of September 30, 2025, had an accumulated deficit of $262.7 million. We expect negative cash flows from operations and net losses for the foreseeable future as we continue to invest significantly in research and development of our product candidates and platform. We have not yet commercialized any product and do not expect to generate revenue from sales of any products for several years, if at all.

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $54.8 million. We expect that our cash and cash equivalents as of June 30, 2025, will be sufficient to fund our operations into 2027. Management based its projections of operating capital requirements on our current operating plan, which includes several assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than management expects. We expect to seek to raise additional capital through private or public equity or debt financings, loans or other capital sources, which could include collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants, and may be required to seek additional capital sooner than planned. However, there can be no assurances that we will be able to raise additional capital from these sources on favorable terms, or at all.

Current wording

As of September 30, 2025, we had cash and cash equivalents of $49.0 million. We expect that our cash and cash equivalents as of September 30, 2025, will be sufficient to fund our operations into 2027. Management based its projections of operating capital requirements on our current operating plan, which includes several assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than management expects. We expect to seek to raise additional capital through private or public equity or debt financings, loans or other capital sources, which could include collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants, and may be required to seek additional capital sooner than planned. However, there can be no assurances that we will be able to raise additional capital from these sources on favorable terms, or at all.

Previous wording

For the six months ended June 30, 2025, net cash used in operating activities was $23.1 million, which was primarily utilized for the funding of our operating expenses of $21.4 million as we incurred expenses associated with research and development activities including clinical trial activities associated with our bempikibart program. Non-cash expenses include stock-based compensation expense of $2.6 million, non-cash lease expenses of $0.3 million and depreciation expense of $0.2 million, partially offset by a gain of $0.4 million recognized on the change in fair value of the CVR liability. The change in net operating assets and liabilities was primarily attributable to a decrease in accrued expenses and other current liabilities of $3.1 million, a decrease in accounts payable of $2.1 million, an increase in other noncurrent assets of $0.5 million and a decrease in our operating lease liability of $0.3 million, partially offset by a decrease in prepaid expenses and other current assets of $0.4 million.

Current wording

For the nine months ended September 30, 2025, net cash used in operating activities was $27.4 million, which was primarily utilized for the funding of our operating expenses of $29.0 million as we incurred expenses associated with research and development activities including clinical trial activities associated with our bempikibart program. Non-cash expenses include stock-based compensation expense of $3.8 million, non-cash lease expenses of $0.5 million and depreciation expense of $0.3 million, partially offset by a gain of $0.4 million recognized on the change in fair value of the CVR liability. The change in net operating assets and liabilities was primarily attributable to a decrease in accrued expenses and other current liabilities of $3.6 million, a decrease in accounts payable of $2.0 million and a decrease in our operating lease liability of $0.5 million, partially offset by a decrease in prepaid expenses and other current assets of $2.1 million.

Previous wording

For the six months ended June 30, 2024, net cash used in operating activities was $36.8 million, which was primarily utilized for the funding of our operating expenses of $32.8 million as we incurred expenses associated with research and development activities including clinical trial activities associated with our bempikibart and ADX-097 programs, adjusted for non-cash expenses of $13.5 million. Non-cash expenses include a gain of $15.9 million recognized on the change in fair value prior to the conversion of convertible notes pursuant to the Merger with Homology on March 25, 2024, a gain of $1.4 million recognized on the change in fair value of the CVR liability, stock-based compensation expense of $1.7 million, loss from our equity method investment of $1.6 million, non-cash lease expenses of $0.3 million, depreciation expense of $0.2 million and amortization of premium on short-term investments of $0.2 million. The change in net operating assets and liabilities was primary attributable to a decrease in accrued expenses and other current liabilities of $4.9 million, a decrease in accounts payable of $1.5 million, an increase in other noncurrent assets of $0.6 million and a decrease in our operating lease liability of $0.5 million, partially offset by a decrease in prepaid expenses and other current assets of $0.2 million.

Current wording

For the nine months ended September 30, 2024, net cash used in operating activities was $56.3 million, which was primarily utilized for the funding of our operating expenses of $51.6 million as we incurred expenses associated with research and development activities including clinical trial activities associated with our bempikibart and ADX-097 programs, adjusted for non-cash expenses of $12.1 million. Non-cash expenses include a gain of $15.9 million recognized on the change in fair value prior to the conversion of the Convertible Notes pursuant to the Merger with Homology on March 25, 2024, a gain of $2.4 million recognized on the change in fair value of the CVR liability and amortization of premium on short-term investments of $0.2 million, partially offset by stock-based compensation expense of $3.1 million, losses related to our investment in OXB (US) LLC of $2.3 million, non-cash lease expenses of $0.4 million, depreciation expense of $0.4 million and amortization of debt discount and issuance costs of $0.1 million. The change in net operating assets and liabilities was primarily attributable to a decrease in accrued expenses and other current liabilities of $6.7 million, a decrease in accounts payable of $2.8 million, a decrease in our operating lease liability of $1.0 million and an increase in prepaid expenses and other current assets of $0.6 million, partially offset by a decrease in other noncurrent assets of $0.5 million.

Previous wording

For the six months ended June 30, 2025, there was no net cash used in or provided by investing activities.

Current wording

For the nine months ended September 30, 2025, there was no net cash used in or provided by investing activities.

Previous wording

For the six months ended June 30, 2024, net cash provided by investing activities consisted of maturities of short-term investments during the period since the Merger.

Current wording

For the nine months ended September 30, 2024, net cash provided by investing activities consisted of maturities of short-term investments during the period since the Merger.

Previous wording

For the six months ended June 30, 2024, net cash provided by financing activities consisted of $53.2 million of cash acquired as part of the Merger, $42.0 million of proceeds from the issuance of common stock in the pre-closing financing and $7.0 million of proceeds from the borrowings under a new loan and security agreement, slightly offset by payments of $8.7 million of transaction costs related to the Merger.

Current wording

For the nine months ended September 30, 2024, net cash provided by financing activities consisted of $53.2 million of cash acquired as part of the Merger, $42.0 million of proceeds from the issuance of common stock in the pre-closing financing and $7.0 million of proceeds from the borrowings under a new loan and security agreement, slightly offset by payments of $8.7 million of transaction costs related to the Merger.

Previous wording

In October 2023, Amgen completed the acquisition of Horizon plc. Following its acquisition of Horizon plc, Legacy Q32 agreed with Amgen to mutually terminate the Horizon Agreements and in November 2023, Legacy Q32 and Horizon entered into the Horizon Termination Agreement, pursuant to which Horizon’s option to acquire the bempikibart program was terminated. As a result, Legacy Q32 retained all initial consideration and development funding received under the Horizon Collaboration Agreement and regained full development and commercial rights to bempikibart. In consideration for the Horizon Termination Agreement, Legacy Q32 agreed to pay Horizon regulatory and sales milestones payments of up to an aggregate amount of $75.1 million upon the first achievement of certain regulatory and sales milestones with respect to bempikibart.

Current wording

In October 2023, Amgen completed the acquisition of Horizon plc. Following its acquisition of Horizon plc, Legacy Q32 agreed with Amgen to mutually terminate the Horizon Agreements and in November 2023, Legacy Q32 and Horizon entered into the Horizon Termination Agreement, pursuant to which Horizon’s option to acquire the bempikibart program was terminated. As a result, Legacy Q32 retained all initial consideration and development funding received under the Horizon Collaboration Agreement and regained full development and commercial rights to bempikibart. In consideration for the Horizon Termination Agreement, Legacy Q32 agreed to pay Horizon regulatory and sales milestones payments of up to an aggregate amount of $75.1 million upon the first achievement of certain regulatory and sales milestones with respect to bempikibart. A description of the Amendment to the Horizon Termination Agreement which provides for a one-time equity grant of the Company’s common stock as full consideration of all milestone payments pursuant to the Horizon Termination Agreement is included in Note 20 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Our critical accounting policies are described under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024. There were no material changes to our critical accounting policies during the three months ended June 30, 2025 from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Our critical accounting policies are described under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies during the three months ended September 30, 2025 from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.