Xilio Therapeutics, Inc.

Previous wording

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 initial public offering, or 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. 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. All of our programs are in early clinical or preclinical development. 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.

Current wording

To date, we have financed our operations primarily from proceeds raised through private placements of equity securities, sales of common stock in our initial public offering, or 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 F. Hoffmann-La Roche Ltd., or Roche; and upfront payments 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.

Previous wording

Since inception, we have incurred significant operating losses, including net losses of $45.4 million and $45.1 million for the nine months ended September 30, 2025 and 2024, respectively, and a net loss of $58.2 million for the year ended December 31, 2024. As of September 30, 2025, we had an accumulated deficit of $429.1 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future, particularly to the extent we:

Current wording

Since inception, we have incurred significant operating losses, including net losses of $9.5 million and $13.3 million for the three months ended March 31, 2026 and 2025, respectively, and a net loss of $35.0 million for the year ended December 31, 2025. As of March 31, 2026, we had an accumulated deficit of $428.3 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future, particularly to the extent we:

Previous wording

As a result, we will need substantial additional capital to support our continuing operations and pursue our strategy. 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. 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.

Current wording

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. 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.

Previous wording

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will remain approximately the same or will continue to increase for the foreseeable future as we advance our programs and our current or future product candidates into and through the development phase. We expect our discovery research efforts and our related personnel costs to remain consistent with historical levels. In addition, as we progress our most advanced product candidates in clinical development, we may incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into, or may enter into license, acquisition, option or other agreements to acquire the rights to future products and product candidates. In the event we are unable to raise sufficient additional capital to fund our operations, we may need to implement cost reduction strategies that seek to maintain our ability to continue the development of our most advanced product candidates in clinical development while otherwise reducing our overall research and development expenses.

Current wording

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will remain approximately the same or will continue to increase for the foreseeable future as we advance our programs and our current or future product candidates into and through the development phase. We expect our discovery research efforts and our related personnel costs to remain consistent with historical levels. In addition, as we progress our most advanced product candidates in clinical development, we may incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into, or may enter into license, acquisition, option or other agreements to acquire the rights to future products and product candidates. In the event we are unable to raise sufficient additional capital to fund our operations in the future, we may need to implement cost reduction strategies that seek to maintain our ability to continue the development of our most advanced product candidates in clinical development while otherwise reducing our overall research and development expenses.

Previous wording

We anticipate that our general and administrative expenses will remain consistent with historical levels as we maintain our infrastructure to support our research and development activities. We also expect to continue to incur significant expenses associated with operating as a public company, including increased costs for accounting, audit, legal, regulatory and tax-related services attributable to maintaining compliance with exchange listing standards and U.S. Securities and Exchange Commission, or SEC, requirements, directors’ and officers’ liability insurance costs and investor and public relations costs. We also expect to continue to incur additional expenses related to intellectual property as we file patent applications to protect intellectual property arising from our research and development activities. In the event we are unable to obtain sufficient additional capital, we may need to implement cost reduction strategies that seek to reduce our general and administrative expenses while maintaining sufficient infrastructure to support our planned research and development activities and operations as a public company.

Current wording

We anticipate that our general and administrative expenses will remain consistent with historical levels as we maintain our infrastructure to support our research and development activities. We also expect to continue to incur significant expenses associated with operating as a public company, including increased costs for accounting, audit, legal, regulatory and tax-related services attributable to maintaining compliance with exchange listing standards and U.S. Securities and Exchange Commission, or SEC, requirements, directors’ and officers’ liability insurance costs and investor and public relations costs. We also expect to continue to incur additional expenses related to intellectual property as we file patent applications to protect intellectual property arising from our research and development activities. In the event we are unable to obtain sufficient additional capital in the future, we may need to implement cost reduction strategies that seek to reduce our general and administrative expenses while maintaining sufficient infrastructure to support our planned research and development activities and operations as a public company.

Previous wording

The change in fair value of common stock warrant liabilities consists of the change in the fair value of the common stock warrant liabilities from the issuance date of June 5, 2025 to September 30, 2025.

Current wording

The change in fair value of common stock warrant liabilities consists of the change in the fair value of the common stock warrant liabilities from December 31, 2025 to March 31, 2026.

Previous wording

Other income (expense), net consists primarily of the portion of the issuance costs we incurred in connection with the issuance of the prefunded warrants and common stock warrants in June 2025 in connection with a follow-on public offering which were allocated to the common stock warrant liabilities, interest income earned from our cash and cash equivalents, interest expense principally on the note payable under our former debt arrangement with Pacific Western Bank, or PacWest, and amortization of the debt discount related to debt issuance costs.

Current wording

Other income, net consists primarily of interest income earned from our cash and cash equivalents.

Previous wording

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.

Current wording

Collaboration and license revenue increased by $9.7 million from $2.9 million for the three months ended March 31, 2025 to $12.6 million for the three months ended March 31, 2026. The increase was due to an increase in collaboration and license revenue recognized under our collaboration and license agreements with AbbVie and Gilead.

Previous wording

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:

Current wording

Research and development expenses increased by $11.6 million from $8.3 million for the three months ended March 31, 2025 to $19.8 million for the three months ended March 31, 2026. The changes in research and development expenses were primarily due to the following:

Previous wording

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

Current wording

other early programs and indirect research and development costs increased by $2.8 million, primarily driven by an increase in external expenses related to preclinical research and development activities, including costs related to our CLDN18.2 program, prostrate program and AbbVie collaboration;

Previous wording

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;

Current wording

vilastobart costs increased by $1.3 million, primarily driven by a $2.0 million cost-sharing payment earned under our Roche clinical collaboration during the three months ended March 31, 2025, which we recorded as a reduction in research and development expenses and for which there was no corresponding cost-sharing payment during the three months ended March 31, 2026, partially offset by a $0.7 million decrease in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

Previous wording

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.

Current wording

personnel-related costs increased by $1.4 million, primarily driven by a $1.0 million increase in salaries, bonuses and benefits due to higher research and development headcount, and a $0.4 million increase in stock-based compensation; and

Previous wording

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;

Current wording

efarindodekin alfa costs increased by $0.4 million, primarily driven by an increase in clinical development activities related to our ongoing our Phase 2 clinical trial evaluating efarindodekin alfa as a monotherapy in patients with certain advanced solid tumors.

Previous wording

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:

Current wording

General and administrative expenses decreased by $1.6 million from $8.5 million for the three months ended March 31, 2025 to $6.9 million for the three months ended March 31, 2026. The changes in general and administrative expenses were primarily due to the following:

Previous wording

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.

Current wording

personnel-related costs decreased by $0.3 million, primarily driven by a decrease in severance costs and discretionary bonus costs; and

Previous wording

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

Current wording

professional and consulting fees decreased by $1.2 million, primarily driven by a decrease in legal fees and other professional costs.

Previous wording

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.

Current wording

The change in fair value of common stock warrant liabilities for the three months ended March 31, 2026 was due to a gain of $3.3 million due to the decrease in the fair value of the common stock warrant liabilities between December 31, 2025 and March 31, 2026, which was primarily driven by a decrease in the price per share of our common stock.

Previous wording

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.

Current wording

Other income, net, increased by $0.7 million from $0.6 million for the three months ended March 31, 2025 to $1.3 million for the three months ended March 31, 2026. The increase in other income, net was primarily due to an increase in interest income due to a higher average cash balance.

Previous wording

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.

Current wording

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). In March 2025, we entered into a sales agreement with Leerink Partners, LLC, under which we could initially 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.

Previous wording

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.

Current wording

During the three months ended March 31, 2026, net cash used in operating activities of $22.3 million was primarily driven by net changes in operating assets and liabilities of $12.1 million, our net loss of $9.5 million and the $3.3 million gain recorded on the change in fair value of our common stock warrant liabilities, partially offset by $2.2 million of stock-based compensation expense and $0.3 million of depreciation and amortization expense.

Previous wording

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.

Current wording

During the three months ended March 31, 2025, net cash provided by operating activities of $29.0 million was primarily driven by changes in operating assets and liabilities of $40.2 million, which includes the $49.1 million recorded as deferred revenue in connection with our collaboration, license and option agreement and stock purchase agreement with AbbVie, and net non-cash expenses of $2.0 million, partially offset by our net loss of $13.3 million.

Previous wording

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

Current wording

During the three months ended March 31, 2026 and 2025, net cash used in investing activities consisted of purchases of property and equipment.

Previous wording

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.

Current wording

During the three months ended March 31, 2025, net cash provided by financing activities of $4.8 million consisted of 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.

Previous wording

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;

Current wording

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;

Previous wording

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;

Current wording

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;

Previous wording

During the nine months ended September 30, 2025, there have been no material changes to our contractual obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

During the three months ended March 31, 2026, there have been no material changes to our contractual obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported revenue and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. Except as described in Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no changes to our critical accounting policies appearing in our Annual Report on Form 10-K for the year ended December 31, 2024, other than the estimates required in determining the fair value of the common stock warrant liabilities that are described in Note 3 to the condensed consolidated financial statements appearing elsewhere in our Quarterly Report on Form 10-Q.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported revenue and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. Except as described in Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no changes to our critical accounting policies appearing in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (1) irrevocably elect to “opt out” of such extended transition period or (2) no longer qualify as an emerging growth company. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Current wording

In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (1) irrevocably elect to “opt out” of such extended transition period or (2) no longer qualify as an emerging growth company. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We expect to remain classified as an EGC until December 31, 2026.