Xilio Therapeutics, Inc.

Comparison of the three months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands):

Collaboration and License Revenue

Collaboration and license revenue increased by $16.8 million from $2.3 million for the three months ended September 30, 2024 to $19.1 million for the three months ended September 30, 2025. The increase was due to collaboration and license revenue recognized under the collaboration, license and option agreement and stock purchase agreement that we entered into in February 2025 with AbbVie and an increase in collaboration and license revenue recognized under the license agreement and stock purchase agreement with Gilead, which included a cumulative catch-up of collaboration and license revenue of $7.0 million related to the adjustment of the overall transaction price due to the achievement of the $17.5 million development milestone during the third quarter of 2025.

The following table summarizes our research and development expenses for the three months ended September 30, 2025 and 2024 (in thousands):

Research and development expenses increased by $3.6 million from $10.8 million for the three months ended September 30, 2024 to $14.3 million for the three months ended September 30, 2025. The changes in research and development expenses were primarily due to the following:

•

vilastobart costs decreased by $3.7 million, primarily driven by $3.5 million in aggregate development milestones

that we incurred during the three months ended September 30, 2024 under our CTLA-4 monoclonal antibody

license agreement with WuXi Biologics (Hong Kong) Limited, or WuXi Biologics, and our amended and restated

exclusive license agreement with City of Hope, for which there was no comparable cost during the three months ended September 30, 2025;

•

efarindodekin alfa costs increased by $1.0 million, primarily driven by a $0.8 million increase in clinical development

activities related to initiation of our Phase 2 clinical trial evaluating efarindodekin alfa as a monotherapy in patients with certain advanced solid tumors and a $0.2 million increase in manufacturing activities;

•

XTX501 costs for the three months ended September 30, 2025 consisted of manufacturing activities related to IND-enabling studies and pre-clinical development activities; for the three months ended September 30, 2024, XTX501 costs were not separately tracked as we had not begun performing IND-enabling studies;

•

XTX202 costs for the three months ended September 30, 2025 consisted of investigator costs invoiced during the final winddown process of the discontinued XTX202 study; and XTX202 costs for the three months ended September 30, 2024 include the effect of invoiced investigator costs being lower than previously estimated amounts;

•

other early programs and indirect research and development costs increased by $1.4 million, primarily driven by an increase in external expenses related to preclinical research and development activities; and

•

personnel-related costs increased by $1.4 million, primarily driven by an increase in salaries, bonuses and benefits due to higher research and development headcount.

The following table summarizes our general and administrative expenses for the three months ended September 30, 2025 and 2024 (in thousands):

General and administrative expenses increased by $0.4 million from $6.3 million for the three months ended September 30, 2024 to $6.7 million for the three months ended September 30, 2025. The changes in general and administrative expenses were primarily due to the following:

•

personnel-related costs decreased by $0.3 million, primarily driven by a $0.4 million decrease in stock-based compensation and a $0.2 million decrease in recruiting and other personnel-related costs, partially offset by a $0.3 million increase in salaries, bonuses and benefits due to higher general and administrative headcount;

•

professional and consulting fees increased by $0.7 million, primarily driven by an increase in legal fees and other professional costs; and

•

facility-related and other general and administrative expenses decreased by $0.1 million, primarily driven by a decrease in costs related to directors’ and officers’ liability insurance.

We did not recognize any restructuring expenses for the three months ended September 30, 2025. We recognized a credit of $41,000 in restructuring expenses for the three months ended September 30, 2024 related to a change in estimate for costs of continuation of certain employee benefits related to the workforce reduction announced in March 2024.

The change in fair value of common stock warrant liabilities for the three months ended September 30, 2025 was due to a loss of $15.4 million due to the increase in the fair value of the common stock warrant liabilities between June 30, 2025 and September 30, 2025, which was primarily driven by an increase in the price per share of our common stock.

Other income (expense), net, increased by $0.3 million from $0.7 million for the three months ended September 30, 2024 to $1.0 million for the three months ended September 30, 2025. The increase in other income (expense), net was primarily due to an increase in interest income due to a higher average cash balance.

Comparison of the nine months ended September 30, 2025 and 2024

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

Collaboration and License Revenue

Collaboration and license revenue increased by $25.5 million from $4.6 million for the nine months ended September 30, 2024 to $30.1 million for the nine months ended September 30, 2025. The increase was due to collaboration and license revenue recognized under the collaboration, license and option agreement and stock purchase agreement that we entered into in February 2025 with AbbVie and an increase in collaboration and license revenue recognized under the license agreement and stock purchase agreement with Gilead, which included a cumulative catch-up of collaboration and license revenue of $7.0 million related to the adjustment of the overall transaction price due to the achievement of the $17.5 million development milestone during the third quarter of 2025.

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

Research and development expenses increased by $5.5 million from $32.4 million for the nine months ended September 30, 2024 to $37.9 million for the nine months ended September 30, 2025. The changes in research and development expenses were primarily due to the following:

•

vilastobart costs decreased by $1.6 million, primarily driven by $4.5 million in aggregate development milestones that we incurred during the nine months ended September 30, 2024 under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics and our amended and restated exclusive license agreement with City of Hope, for which there was no comparable costs during the nine months ended September 30, 2025, partially offset by a $2.8 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

•

efarindodekin alfa costs increased by $0.7 million, primarily driven by an increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating efarindodekin alfa as a monotherapy in patients with certain advanced solid tumors;

•

XTX501 costs for the nine months ended September 30, 2025 consisted of manufacturing activities related to IND-enabling studies and pre-clinical development activities; for the nine months ended September 30, 2024, XTX501 costs were not separately tracked as we had not begun performing IND-enabling studies;

•

XTX202 costs decreased by $3.3 million, primarily driven by a decrease in clinical development activities as a result of discontinuing further investment in XTX202;

•

other early programs and indirect research and development costs increased by $3.1 million, primarily driven by an increase in external expenses related to preclinical research and development activities; and

•

personnel-related costs increased by $2.3 million, primarily driven by a $2.4 million increase in salaries, bonuses and benefits due to higher research and development headcount and a $0.1 million increase in recruiting and other personnel-related costs, partially offset by a $0.2 million decrease in stock-based compensation.

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

General and administrative expenses increased by $4.0 million from $18.3 million for the nine months ended September 30, 2024 to $22.3 million for the nine months ended September 30, 2025. The changes in general and administrative expenses were primarily due to the following:

•

personnel-related costs increased by $1.1 million, primarily driven by a $1.4 million increase in salaries, bonuses and benefits due to higher general and administrative headcount and a $0.4 million increase in recruiting and other personnel-related costs, partially offset by a $0.7 million decrease in stock-based compensation;

•

professional and consulting fees increased by $3.3 million, primarily driven by an increase in legal fees and other professional costs; and

•

facility-related and other general and administrative expenses decreased by $0.3 million, primarily driven by a decrease in costs related to directors’ and officers’ liability insurance.

We did not recognize any restructuring expenses for the nine months ended September 30, 2025. We recognized $0.9 million in restructuring expenses for the nine months ended September 30, 2024. The restructuring expenses were associated with the workforce reduction announced in March 2024 and consisted of employee severance, benefits continuation and outplacement service costs.

The change in fair value of common stock warrant liabilities for the nine months ended September 30, 2025 was due to a loss of $15.4 million due to an increase in the fair value of the common stock warrant liabilities between the issuance date of June 5, 2025 and September 30, 2025, which was primarily driven by an increase in the price per share of our common stock.

Other income (expense), net of $0.2 million for the nine months ended September 30, 2025 included $2.3 million of the issuance costs we incurred in connection with the sale and issuance of the prefunded warrants and common stock warrants in June 2025 in connection with our follow-on public offering, which were allocated to the common stock warrant liabilities and were partially offset by $2.5 million of interest income. Other income (expense), net of $1.8 million for the nine months ended September 30, 2024 consisted of interest income.

Liquidity and Capital Resources

Sources of Liquidity

Since our 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 preclinical or early 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 financed our operations primarily from proceeds raised through private placements of preferred units, convertible preferred stock, common stock and prefunded warrants; sales of common stock in our IPO and through at-the-market offerings; the sale of prefunded warrants and common stock warrants in a follow-on public offering; and upfront payments under our collaboration and license agreements with AbbVie and Gilead. Through September 30, 2025, we have received an aggregate of $531.8 million in gross proceeds from such transactions, including $224.5 million in gross proceeds from the sale and issuance of preferred units and convertible preferred stock, $129.9 million in gross proceeds from our IPO, $72.0 million in upfront cash payments under our collaboration and license agreements with AbbVie and Gilead, $46.3 million in gross proceeds from the sale and issuance of common stock and prefunded warrants in private placements with certain existing accredited investors, Gilead and AbbVie, $9.1 million in gross proceeds from the sale and issuance of common stock through at-the-market offerings and $50.0 million in gross proceeds from the sale of prefunded warrants and common stock warrants through a follow-on public offering. As of September 30, 2025, we had cash and cash equivalents of $103.8 million. In the fourth quarter of 2025, we received a $17.5 million development milestone under our license agreement with Gilead. Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of September 30, 2025, together with the $17.5 million development milestone received under our license agreement with Gilead, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027.

In March 2025, we filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $250.0 million of our common stock, preferred stock, debt securities, units and warrants, which we may issue and sell from time to time in one or more offerings, which became effective on May 8, 2025 (333-285703), or the S-3 Shelf. In March 2025, we entered into a sales agreement with Leerink Partners, LLC, under which we may issue and sell shares of our common stock from time to time at an aggregate offering price of up to $50.0 million. Please see Note 8 to our condensed consolidated financial statements appearing elsewhere in our Quarterly Report on Form 10-Q for additional information about our at-the-market offering program.

Cash Flows

The following table provides information regarding our cash flows for each period presented (in thousands):

Operating Activities

Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support our business. We have historically experienced negative cash flows from operating activities as we invested in research and development of our product candidates, including preclinical studies, clinical trials, manufacturing and manufacturing process development. The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges, which are generally due to stock-based compensation, depreciation and amortization, as well as changes in components of operating assets and liabilities, which are generally due to increased expenses and timing of vendor payments.

During the nine months ended September 30, 2025, net cash used in operating activities of $3.0 million was primarily driven by net changes in operating assets and liabilities of $19.5 million, which includes the $49.1 million received from AbbVie under the collaboration, license and option agreement and stock purchase agreement that was recorded as deferred revenue at the outset of the arrangement, and net non-cash expenses of $22.9 million, which includes the $15.4 million loss recorded on the change in fair value of our common stock warrant liabilities, partially offset by our net loss of $45.4 million.

During the nine months ended September 30, 2024, net cash used in operating activities of $4.2 million was primarily driven by our net loss of $45.1 million, partially offset by changes in operating assets and liabilities of $34.8 million, which includes the $39.1 million received from Gilead under the license agreement and stock purchase agreement that was recorded as deferred revenue at the outset of the arrangement, and net non-cash expenses of $6.2 million.

Investing Activities

During the nine months ended September 30, 2025 and 2024, net cash used in investing activities consisted of purchases of property and equipment.

Financing Activities

During the nine months ended September 30, 2025, net cash provided by financing activities of $51.9 million consisted of proceeds from the sale of prefunded warrants and common stock warrants through a follow-on public offering, proceeds from the sale and issuance of common stock to AbbVie in a private placement and proceeds from the sale and issuance of common stock through ATM offerings.

During the nine months ended September 30, 2024, net cash provided by financing activities of $21.0 million consisted of proceeds from the sale and issuance of common stock and prefunded warrants in private placements with certain existing accredited investors and Gilead and proceeds from the sale and issuance of common stock under our at-the-market offering program, partially offset by repayments of debt principal under our loan agreement with PacWest and payments on our finance lease for certain lab equipment.

Capital Requirements and Going Concern

We expect our future capital requirements to increase substantially over time in connection with our ongoing research and development activities, particularly as we advance our current and planned clinical development of our product candidates and maintain the research efforts and preclinical activities associated with our other existing programs and discovery platform. In addition, we expect to continue to incur additional costs associated with operating as a public company. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.

Inflation generally affects us by increasing our cost of labor and certain services. We do not believe that inflation had a material effect on our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, the United States has recently experienced historically high levels of inflation. If the inflation rate continues to increase it may affect our expenses, such as employee compensation and research and development charges due to, for example, increases in the costs of labor and supplies. Additionally, the biotechnology industry is subject to a competitive wage environment that may also increase our operating costs in the future.

As of September 30, 2025, we had cash and cash equivalents of $103.8 million. Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of September 30, 2025, together with the $17.5 million development milestone received under our license agreement with Gilead, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027. However, we have based our estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we anticipate. In addition, we expect our operating losses and negative operating cash flows to continue for the foreseeable future as we continue to advance our pipeline of novel, tumor-activated I-O molecules through preclinical and clinical development, maintain the infrastructure necessary to support these activities and continue to incur costs associated with operating as a public company. These conditions raise substantial doubt about our ability to continue as a going concern. In order to fund our operations, we will need to raise additional capital, which could be obtained through the cash exercise of the Series B warrants and Series C warrants issued in connection with our June 2025 follow-on public offering, the receipt of milestone payments, option-related fees or other contingent payments under our existing agreements with Gilead and AbbVie, additional public or private equity offerings, debt financings, additional collaborations, partnerships or licensing arrangements or other sources. However, there can be no assurance that we will receive additional proceeds from the exercise of the common stock warrants or from contingent payments under our existing agreements with Gilead or AbbVie or that we will be able to complete any such transaction on acceptable terms or otherwise. If we are not able to secure sufficient additional capital when needed, we may need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to our operations and research and development programs. For more information regarding our liquidity and going concern, refer to Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. For more information regarding the terms of the warrants we issued in our June 2025 follow-on public offering, refer to Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

The accompanying condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business for the foreseeable future. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Because of the numerous risks and uncertainties associated with product development, and because the extent to which we may enter into additional collaborations with third parties for the development of our product candidates is unknown, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with advancing the research and development of our product candidates.

Our future capital requirements, both short-term and long-term, will depend on many factors, including, but not limited to:

•

the scope, progress, results and costs of research and development for our current and future product candidates, including our current and planned clinical trials for our clinical-stage product candidates, vilastobart and efarindodekin alfa, and ongoing preclinical development for our current and future product candidates;

•

our ability to maintain our collaboration and license agreements with AbbVie and Gilead;

•

the timing and amount of milestones, option-related fees and other contingent payments under our collaboration, license and option agreement with AbbVie for tumor-activated immunotherapies and our license agreement with Gilead for efarindodekin alfa, as well as the scope, costs and timing of our development obligations under these agreements;

•

our ability to maintain our co-funded clinical trial collaboration with Roche to further develop vilastobart in combination with atezolizumab, including the timing and amount of cost-sharing payments under the collaboration;

•

the potential receipt of up to $100.0 million in additional gross proceeds, if all of the Series B and Series C common stock warrants issued in connection with our June 2025 follow-on public offering are exercised;

•

•

the scope, prioritization and number of our research and development programs;

•

the costs of securing manufacturing materials for use in preclinical studies, clinical trials and, for any product candidates for which we receive regulatory approval, if any, commercial supply;

•

the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims;

•

the extent to which we may acquire or in-license other products, product candidates, technologies or intellectual property, as well as the terms of any such arrangements;

•

the scope, costs, timing and outcome of regulatory review of our product candidates;

•

the costs and timing of future commercialization activities for any of our product candidates for which we receive regulatory approval;

•

the amount and timing of revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approval;

•

general economic conditions, including inflation and the imposition of new or revised global trade tariffs; and

•

the costs of maintaining our operations and continuing to operate as a public company.

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 necessary data or results required to obtain regulatory approval and achieve product sales. 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 for several years, if ever. Accordingly, we will need to obtain substantial additional capital to achieve our business objectives.

Our expectation with respect to our ability to fund our currently planned operations is based on estimates that are subject to various risks and uncertainties. Our operating plan may change as a result of many factors currently unknown to management and there can be no assurance that our current operating plan will be achieved in the time frame anticipated by us, and we may exhaust our available capital resources sooner than we expect.

Adequate additional capital may not be available to us on acceptable terms, or at all. Market volatility resulting from adverse changes in domestic and international fiscal, monetary and other policies and political relations, regional or global conflicts, uncertainty around global economic conditions, instability in the financial markets, current or future pandemics or other factors could also adversely impact our ability to access capital as and when needed. To the extent that we raise additional capital through the sale of equity or securities convertible into or exchangeable for equity, the ownership interest of our existing stockholders may be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. Additional debt and preferred equity, if available, may also involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require that we issue additional warrants, which could potentially dilute the ownership interest of our existing stockholders.