Xilio Therapeutics, Inc.

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands):

Collaboration and License Revenue

Collaboration and license revenue increased by $37.4 million from $6.3 million for the year ended December 31, 2024 to $43.8 million for the year ended December 31, 2025. The increase was due to collaboration and license revenue recognized under the collaboration, license and option agreement that we entered into in February 2025 with AbbVie and an increase in collaboration and license revenue recognized under the license 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.

Research and Development Expenses

The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024 (in thousands):

Research and development expenses increased by $14.8 million from $41.2 million for the year ended December 31, 2024 to $56.0 million for the year ended December 31, 2025. The changes in research and development expenses were primarily due to the following:

•

vilastobart costs decreased by $0.6 million, primarily driven by $4.5 million in aggregate development milestones that we incurred during the year ended December 31, 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 were no comparable costs during the year ended December 31, 2025, partially offset by a $3.8 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab, and a $0.1 million increase in manufacturing activities;

•

efarindodekin alfa costs increased by $2.7 million, primarily driven by an increase in clinical development activities related to initiating our Phase 2 clinical trial evaluating efarindodekin alfa as a monotherapy in patients with certain advanced solid tumors during the year ended December 31, 2025;

•

XTX501 costs for the year ended December 31, 2025 consisted of manufacturing activities related to IND-enabling studies and pre-clinical development activities; for the year ended December 31, 2024, XTX501 costs were not separately tracked as we had not begun performing IND-enabling studies;

•

XTX202 costs decreased by $5.1 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 $3.9 million, primarily driven by an increase in external expenses related to preclinical research and development activities, including costs related to our collaboration and license agreement with AbbVie that we entered into in February 2025; and

•

personnel-related costs increased by $4.4 million, primarily driven by a $3.8 million increase in salaries, bonuses and benefits due to higher research and development headcount, a $0.4 million increase in stock-based compensation and a $0.2 million increase in recruiting and other personnel-related costs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the years ended December 31, 2025 and 2024 (in thousands):

General and administrative expenses increased by $4.9 million from $24.8 million for the year ended December 31, 2024 to $29.7 million for the year ended December 31, 2025. The changes in general and administrative expenses were primarily due to the following:

•

personnel-related costs increased by $1.7 million, primarily driven by a $1.7 million increase in salaries, bonuses and benefits due to higher general and administrative headcount and a $0.1 million increase in stock-based compensation, partially offset by a $0.1 million decrease in recruiting and other personnel-related costs;

•

professional and consulting fees increased by $3.6 million, primarily driven by an increase in legal fees and other professional costs; and

•

facility-related and other general and administrative expenses decreased by $0.4 million, primarily driven by a decrease in costs related to directors’ and officers’ liability insurance.

Restructuring

We did not recognize any restructuring expenses for the year ended December 31, 2025. We recognized $0.9 million in restructuring expenses for the year ended December 31, 2024. The restructuring expenses were associated with a workforce reduction announced in March 2024 and consisted of employee severance, benefits continuation and outplacement service costs.

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities for the year ended December 31, 2025 was due to a gain of $5.8 million, which consisted of:

•

a $3.7 million gain on the decrease in the fair value of the Series A common stock warrant liabilities between the issuance date of June 5, 2025 and December 31, 2025, which was primarily driven by a decrease in the price per share of our common stock;

•

a $3.5 million gain on the decrease in the fair value of the Series B common stock warrant liabilities between the issuance date of June 5, 2025 and December 2, 2025, which was primarily driven by a decrease in the price per share of our common stock; and

•

a $1.4 million loss on the increase in the fair value of the Series C common stock warrant liabilities between the issuance date of June 5, 2025 and December 31, 2025, which was primarily driven by a decrease in the price per share of our common stock and the expiration of 1,319,145 Series C warrants on December 31, 2025 according to their terms in connection with the expiration of unexercised Series B warrants.

Other Income, Net

Other income, net of $1.1 million for the year ended December 31, 2025 included $3.4 million of interest income, which was partially offset by $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 connection with our June 2025 follow-on offering, which were allocated to the common stock warrant liabilities. Other income, net of $2.3 million for the year ended December 31, 2024 consisted primarily 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 equity securities; sales of common stock in our IPO, and through “at-the-market” offerings; the sale of prefunded warrants in our June 2025 and February 2026 follow-on offerings; the exercise of certain common stock warrants issued in connection with our June 2025 follow-on offering; development event payments under our co-funded clinical trial collaboration with Roche; and upfront and milestone payments under our collaboration and license agreements with AbbVie and Gilead. All of our programs are in early clinical or preclinical development. As a result, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for at least the next several years, if at all. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve profitability. Even if we are able to generate revenue from product sales, we may not become profitable.

As of December 31, 2025, we had cash and cash equivalents of $137.5 million. In the first quarter of 2026, we received net proceeds of approximately $37.3 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, upon the closing of a follow-on offering of prefunded warrants and a $5.0 million development milestone related to the collaboration agreement with AbbVie. Based on our current operating plans, we anticipate that our existing cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the end of 2027. This estimate excludes any potential future milestone payments, option-related fees or other contingent payments under our existing collaboration and partnership agreements with AbbVie and Gilead and excludes the potential receipt of up to $36.2 million in additional gross proceeds in the second half of 2026 if all outstanding Series C warrants are exercised at their current exercise price. In addition, 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.

At-the-Market Offering Program

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. In February 2026, we filed a prospectus supplement to our prospectus dated May 8, 2025 (333-285793) to reduce the amount of common stock we may offer and sell under the sales agreement to an aggregate offering price of up to $9.5 million.

Please see Note 9 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K 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 year ended December 31, 2025, net cash used in operating activities of $5.0 million was primarily driven by net changes in operating assets and liabilities of $25.1 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 the $17.5 million development milestone received in the third quarter of 2025 from Gilead under the license agreement, and net non-cash expenses of $4.9 million, which includes the $5.8 million gain recorded on the change in fair value of our common stock warrant liabilities, partially offset by our net loss of $35.0 million.

During the year ended December 31, 2024, net cash used in operating activities of $18.4 million was primarily due to our net loss of $58.2 million, partially offset by changes in operating assets and liabilities of $31.8 million and net non-cash expenses of $8.1 million.

Investing Activities

During the years ended December 31, 2025 and 2024, net cash used in investing activities consisted of purchases of property and equipment.

Financing Activities

During the year ended December 31, 2025, net cash provided by financing activities of $87.8 million primarily consisted of proceeds from the sale of prefunded warrants and common stock warrants through a follow-on offering and the subsequent exercise of certain of those common stock warrants, 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 year ended December 31, 2024, net cash provided by financing activities of $29.2 million consisted of aggregate net proceeds of $25.7 million from the sale and issuance of common stock and prefunded warrants to certain existing accredited investors and Gilead in private placements and aggregate net proceeds of $6.8 million from the sale and issuance of common stock under our ATM offering program, partially offset by repayments of debt principal of $3.3 million under our loan agreement with PacWest and payments on our finance lease for certain lab equipment.

Capital Requirements

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 consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 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 December 31, 2025, we had cash and cash equivalents of $137.5 million. In the first quarter of 2026, we received net proceeds of approximately $37.3 million, after deducting underwriting discounts and commissions and offering expenses payable by us, upon the closing of a follow-on offering of prefunded warrants and a $5.0 million development milestone related to the collaboration agreement with AbbVie. Based on our current operating plans, we anticipate that our existing cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the end of 2027. This estimate excludes any potential future milestone payments, option-related fees or other contingent payments under our existing collaboration and partnership agreements with AbbVie and Gilead and excludes the potential receipt of up to $36.2 million in additional gross proceeds in the second half of 2026 if all outstanding Series C warrants are exercised at their current exercise price.

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, masked 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.

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 masked 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;

•

the potential receipt of up to $36.2 million in additional gross proceeds in the second half of 2026 if all of the outstanding Series C common stock warrants issued in connection with our June 2025 follow-on offering are exercised at their current exercise price of $10.50 per warrant;

•

•

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.