Q32 Bio Inc.

1. Nature of the Business

Organization

Q32 Bio Inc. (“Q32” or the “Company”) is a clinical stage biotechnology company focused on developing innovative therapies for alopecia areata (“AA”) and other autoimmune and inflammatory diseases. The Company is advancing bempikibart (ADX-914), a fully human anti-IL-7Rα antibody that re-regulates adaptive immune function, for the treatment of AA in an ongoing Phase 2 program.

Follow-On Financing

On July 16, 2026, pursuant to a shelf registration statement on Form S-3 (File No. 333-297027), the Company completed a public offering (the “Follow-On Financing”) wherein the Company sold 6,027,399 shares of its common stock, par value $0.0001 per share (the “common stock”), at a public offering price of $18.25 per share and pre-funded warrants to purchase up to 4,931,506 shares of its common stock at a public offering price of $18.2499 per pre-funded warrant. The Company received net proceeds of $187.6 million from the Follow-On Financing, after deducting underwriting discounts and commissions and offering expenses. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 1,643,835 shares of its common stock at the public offering price of $18.25 per share, less underwriting discounts and commissions.

Private Placement

On May 28, 2026, the Company completed a private placement (the “Private Placement”) of its common stock and pre-funded warrants to purchase shares of common stock. The Company sold 6,725,000 shares of its common stock at a price of $8.00 per share and pre-funded warrants to purchase up to 150,000 shares of its common stock at a price of $7.9999 per pre-funded warrant and received net proceeds of $53.4 million, after deducting placement agent fees and other offering expenses (see Note 3 for details surrounding the accounting for the pre-funded warrants).

ATM Offering Program

On March 27, 2026, the Company entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (the “Sales Agent”), with respect to an at-the-market (“ATM”) offering program pursuant to which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock through the Sales Agent. The shares offered and sold under the Sales Agreement are offered and sold pursuant to a shelf registration statement on Form S-3 (File No. 333-286491), which was filed with the SEC on April 11, 2025 and declared effective by the SEC on April 21, 2025 (the “2025 Shelf”). The Company filed a prospectus supplement with the SEC on March 27, 2026, pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to $14.2 million pursuant to the Sales Agreement. During the six months ended June 30, 2026, the Company sold 2,326,952 shares of its common stock and received gross proceeds of $14.2 million pursuant to the ATM. On April 24, 2026, the Company filed an additional prospectus supplement with the SEC, pursuant to which the Company may offer and sell additional shares having an aggregate offering price of up to $75 million pursuant to the Sales Agreement. As of June 30, 2026, there have been no shares sold under this additional prospectus supplement.

Registered Direct Offering

On February 19, 2026, pursuant to the 2025 Shelf, the Company sold 1,666,679 shares of its common stock at a price of $3.90 per share and pre-funded warrants to purchase up to 1,025,654 shares of its common stock at a price of $3.8999 per pre-funded warrant and received net proceeds of $10.4 million after deducting offering expenses (see Note 3 for details surrounding the accounting for the pre-funded warrants).

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with completing preclinical studies and clinical trials, obtaining regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Programs currently under development will require significant additional research and development efforts, including preclinical and clinical testing, and will need to obtain regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. Since its inception, the Company’s operations have been focused on organizing and staffing, business planning, raising capital, establishing the Company’s intellectual property portfolio and performing research and development of its product candidates, programs and platform. The Company has primarily funded its operations with proceeds from the sale of convertible preferred stock, convertible notes, venture debt, the Company’s reverse merger (the “Merger”) with Homology Medicines, Inc. (“Homology”) and accompanying Pre-Closing Financing and its former collaboration arrangement with Horizon.

Liquidity and Going Concern

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

As of June 30, 2026, the Company had an accumulated deficit of$221.5 million and cash and cash equivalents of$106.3 million. The Company expects that its cash and cash equivalents will be sufficient to fund its operating expenditures and capital expenditure requirements necessary to advance its research efforts and clinical trials for at least one year from the date of issuance of these unaudited condensed consolidated financial statements.

The Company has incurred recurring operating losses since its inception. During the six months ended June 30, 2026, the Company incurred a net loss of$16.6 million. The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in conformity with GAAP and pursuant to the rules and regulations of the SEC for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended December 31, 2025, included in the Company's Annual Report on Form 10-K filed with the SEC on March 10, 2026.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including those adjustments that are normal and recurring in nature, which are necessary for a fair statement of the Company’s financial position as of June 30, 2026, and consolidated results of operations for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months ended June 30, 2026 and 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026 or for any future period.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include those of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Thepreparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these unaudited condensed consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to prepaid and accrued research and development expenses. The Company utilizes certain estimates to record expenses relating to research and development contracts. These contract estimates, which are primarily related to the length of service of each contract and the amount of service provided as of each measurement date, are determined by the Company based on input from internal project management, as well as from service providers. Estimates are periodically reviewed considering changes in circumstances, facts and historical experience. Actual results may differ from the Company’s estimates.

Concentrations of Credit Risk and Significant Suppliers

Financial instruments that potentially expose the Company to credit risk primarily consist of cash, cash equivalents, restricted cash and restricted cash equivalents. The Company maintains its cash, cash equivalents, restricted cash and restricted cash equivalents balances with accredited financial institutions and, consequently, the Company does not believe it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company’s cash management limits investment to investment-grade securities with the objective to preserve capital and to maintain liquidity until the funds can be used in business operations. The Company maintains its cash in bank deposit accounts that are Federal Deposit Insurance Corporation (“FDIC”) insured up to $250,000. At times, the Company’s bank accounts may exceed the federal insurance limit.

The Company is dependent on contract development and manufacturing organizations (“CDMOs”) to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients, other raw materials and formulated drugs related to these programs. These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients, other raw materials and formulated drugs. The Company is also dependent on contract research organizations (“CROs”) which provide services related to the research and development activities in its programs.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

The Company considers all highly liquid investments that are readily convertible into cash with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents are comprised of money market accounts invested in U.S. Treasury securities.

Restricted cash and restricted cash equivalents are comprised of deposits held by financial institutions as collateral for the Company’s venture debt and used to collateralize letters of credit related to the Company’s lease arrangements.

The Company includes the restricted cash and restricted cash equivalents balance together with its cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows.

Cash, cash equivalents, restricted cash and restricted cash equivalents consisted of the following (in thousands):

Deferred Transaction Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred transaction costs until such financings are consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds from the transaction, either as a reduction of the carrying value of the preferred stock or in stockholders’ deficit as a reduction of additional paid-in capital generated as a result of the transaction. Should the in-process equity financing be abandoned, the deferred transaction costs would be expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1 –Quoted prices in active markets for identical assets or liabilities.

Level 2 –Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3 –Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Leases

The Company evaluates whether an arrangement is or contains a lease at contract inception. If a contract is or contains a lease, lease classification is determined at lease commencement, which represents the date at which the underlying asset is made available for use by the Company. The Company’s lease terms are generally measured at the respective lease’s noncancelable term and exclude any optional extension terms as the Company is not reasonably certain to exercise such options. The Company elected the short-term lease exemption and therefore does not recognize lease liabilities and right of use assets for lease arrangements with original lease terms of twelve months or less.

Lease liabilities represent the Company’s obligation to make lease payments under a lease arrangement. Lease liabilities are measured as the present value of fixed lease payments, discounted using an incremental borrowing rate, as interest rates implicit in the Company’s lease arrangements are generally not readily determinable. The Company elected the practical expedient to not separate lease and non-lease components for its real estate leases and therefore both are considered when determining the lease payments in a lease arrangement. Variable lease costs are expensed as incurred.

The incremental borrowing rate represents the interest rate at which the Company could borrow a fully collateralized amount equal to the lease payments, over a similar term, in a similar economic environment. The Company determines the incremental borrowing rate at lease commencement, generally using a synthetic credit rating based on the Company’s financial position and negative cash flows, factoring in adjustments for additional risks based on the Company’s economic condition, a survey of comparable companies with similar credit and financial profiles, as well as additional market risks, as may be applicable.

Right-of-use assets represent the Company’s right to use an underlying asset over its lease term. Right-of-use assets are initially measured as the associated lease liability, adjusted for prepaid rent and tenant incentives. The Company remeasures right-of-use assets and lease liabilities when a lease is modified, and the modification is not accounted for as a separate contract. A modification is accounted for as a separate contract if the modification grants the Company an additional right of use not included in the original lease agreement and the increase in lease payments is commensurate with the additional right of use. The Company assesses its right-of-use assets for impairment consistent with its policy for impairment of long-lived assets held and used in operations.

Subsequent Event Considerations

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. The Company has evaluated events occurring after the date of its consolidated balance sheet through the date these condensed consolidated financial statements were issued (see Note 19).

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation Disclosures (Subtopic 220-40)—Disaggregation of Income Statement Expenses (“ASU 2024-03”) which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments in ASU 2024-03 should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating ASU 2024-03 to determine the impact on the Company's disclosures.

3. Pre-Funded Warrants

On February 19, 2026, as part of the registered direct offering, the Company issued pre-funded warrants to purchase up to 1,025,654 shares of its common stock to a certain institutional investor at a price of $3.8999 per pre-funded warrant for gross proceeds of approximately $4.0 million. On May 28, 2026, as part of the Private Placement, the Company issued pre-funded warrants to purchase up to 150,000 shares of its common stock to a certain institutional investor at a price of $7.9999 per pre-funded warrant for gross proceeds of approximately $1.2 million. The pre-funded warrants have an exercise price of $0.0001 per share and may be exercised at any time after the original issuance date. A holder of a pre-funded warrant may not exercise such pre-funded warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise. As of June 30, 2026, the pre-funded warrants have not been exercised.

The Company classified the pre-funded warrants as a component of permanent equity in its condensed consolidated balance sheet as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its own shares, cannot require cash settlement and permit the holder to receive a fixed number of shares of common stock upon exercise. All of the shares underlying the pre-funded warrants have been included in the weighted-average number of shares of common stock used to calculate net loss per share attributable to common stockholders because the shares may be issued for little or no consideration, are fully vested and are exercisable any time after the original issuance date of the pre-funded warrants.

4. Sale of Asset

On November 28, 2025, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Q32 Bio Operations Inc., a wholly-owned subsidiary of the Company (“Q32 Bio Operations” and, together with the Company, the “Seller”), and Akebia Therapeutics, Inc. (“Akebia”) pursuant to which the Seller sold to Akebia substantially all of the Seller’s assets related to the research, development, manufacture and commercialization of ADX-097 (the “ADX-097 Asset Sale”). As consideration for the ADX-097 Asset Sale, the Company received an upfront payment of $7.0 million on November 28, 2025, and a payment of $3.0 million on the six-month anniversary of the closing, or May 28, 2026. The Company will also receive a near-term milestone payment of $2.0 million upon the earlier of achievement of the first milestone under the Asset Purchase Agreement or December 31, 2026. In addition to these payments, the Company is eligible to receive up to $580.0 million upon the achievement of additional specified milestones, including up to $92.5 million related to development and regulatory milestones and up to $487.5 million related to commercial milestones. The Company is also eligible to receive tiered royalties on potential future sales of ADX-097 ranging from low single-digit to mid-teen percentages of annual net sales. The royalties will expire on a country-by-country basis on the later to occur of (a) the date of expiration of the last-to-expire valid claim of any transferred patent right that covers such product in such country, and (b) the tenth anniversary of the first commercial sale of such product.

The Company accounted for the transaction as an asset sale and recognized $11.7 million, comprised of $12.0 million in guaranteed upfront and near-term milestones less certain contractual offsets, as a gain on sale of asset included in other income (expense) in the consolidated statements of operations for the year ended December 31, 2025. The guaranteed near-term milestone payments less certain contractual offsets of $4.8 million were recorded as a short-term receivable included in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheets, and as of June 30, 2026, the balance was $1.8 million. Any future milestones and royalties will be recognized when achieved.

On November 28, 2025, in connection with the ADX-097 Asset Sale, the Colorado License Agreement (defined in Note 10) was amendedand restated and all of the Company’s rights and obligations thereunder were transferred to Akebia.

5. Fair Value Measurements

The carrying values of the Company’s prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities approximate their fair value due to their short-term nature. The carrying value of the Company’s term loan as of June 30, 2026 (see Note 11) approximated fair value based on interest rates currently available to the Company.

The tables below present information about the Company’s assets that are regularly measured and carried at fair value on a recurring basis at June 30, 2026 and December 31, 2025 and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, which is described further within Note 2, Summary of Significant Accounting Policies.

Financial assets measured at fair value on a recurring basis as of June 30, 2026 are summarized as follows (in thousands):

Financial assets measured at fair value on a recurring basis as of December 31, 2025 are summarized as follows (in thousands):

Money market funds

Money market funds were valued by the Company using quoted prices in active markets for identical securities, which represent a Level 1 measurement within the fair value hierarchy.

CVR liability

On March 25, 2024, the effective date of the Merger, each person who as of immediately prior to the effective time of the Merger was a stockholder of record of Homology or had the right to receive Homology’s common stock received a contractual contingent value right (“CVR”), issued by Homology subject to and in accordance with the terms and conditions of a Contingent Value Rights Agreement between Homology and the rights agent (the “CVR Agreement”), representing the contractual right to receive cash payments from the combined company upon the receipt of certain proceeds from a disposition of Homology’s pre-merger assets, calculated in accordance with the CVR Agreement.

The Company concluded that the CVR liability was a derivative liability and was accounted for at fair value. The fair value of the CVR liability was based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. For the portion of the CVR liability that was related to Homology's equity interest in OXB (US) LLC, the Company utilized a Monte Carlo simulation model, also known as a probability simulation, to estimate the fair value of the CVR liability at December 31, 2024. This model requires the use of estimates and assumptions including estimated future revenues and discount rates. Upon Oxford Biomedica (US), Inc.'s exercise of its option to cause the Company to sell and transfer to Oxford Biomedica (US), Inc. all of the Company’s equity ownership interest in OXB (US) LLC in June 2025, the Company received proceeds from Oxford Biomedica (US),

Inc. and then remitted those proceeds to the CVR holders, and subsequently removed the associated CVR liability and recorded $0.4 million for the change in estimated fair value during the twelve months ended December 31, 2025 in other income (expense), net.

For the portion of the CVR liability related to Homology's HMI-103, HMI-204, capsids and AAVHSC platform, the Company's fair value assessment includes judgments around the probability of progressing the in-process research and development assets. As of June 30, 2026, the Company's assessment resulted in a CVR liability of zero.

During the three and six months ended June 30, 2026 and 2025, there were no transfers between Level 1, Level 2 and Level 3 measurements. There have been no impairments of the Company’s assets measured and carried at fair value during the three and six months ended June 30, 2026 and 2025.

6. Investment in Equity Securities

As part of the Merger, the Company obtained Homology's 20% equity interest in OXB (US) LLC, an AAV vector process development and manufacturing services company. At that time, the Company had significant influence over, but did not control, OXB (US) LLC through its noncontrolling representation on OXB (US) LLC’s board of directors and the Company’s equity interest in OXB (US) LLC. Accordingly, the Company did not consolidate the financial statements of OXB (US) LLC and accounted for its investment using the equity method of accounting.

In May 2024, as a result of transactions by OXB (US) LLC, the Company’s investment was diluted to a 10% equity interest in OXB (US) LLC and the Company no longer had the ability to exert significant influence over the operating and financial policies of OXB (US) LLC, therefore the Company discontinued the equity method of accounting for the investment in OXB (US) LLC and determined the remaining investment to be an equity security accounted for in accordance with FASB ASC Topic 321, Investments—Equity Securities (“ASC 321”). The Company recorded the equity instrument at fair value and applied the measurement alternative under ASC 321 such that the Company would not change the amount recorded for the equity instrument unless the Company identified observable price changes in orderly transactions for the identical or similar investment of the same issuer or the equity instrument was otherwise deemed to be impaired.

On March 1, 2025, Oxford Biomedica (US), Inc. exercised its option to cause the Company to sell and transfer to Oxford Biomedica (US), Inc. all of the Company’s equity ownership interest in OXB (US) LLC. In June 2025, the Company finalized the sale of its 10% equity interest in OXB (US) LLC to Oxford Biomedica (US), Inc. and received $2.5 million from Oxford Biomedica (US), Inc., calculated using the Company's pro rata share of OXB (US) LLC (10%), times a predetermined multiple of revenue for the immediately preceding 12-month period increased by OXB (US) LLC's cash balance and decreased by OXB (US) LLC's debt balance as of the exercise date, and reduced the associated equity investment on its condensed consolidated balance sheet tozero.

7. Property and Equipment, Net

Property and equipment, net consisted of the following as of (in thousands):

Depreciation expense was approximately $0.1 million and $0.2 million, respectively, for thethree and six months ended June 30, 2026, and $0.1 million and $0.2 million, respectively, for thethree and six months ended June 30, 2025. No impairment losses occurred in thethree and six months ended June 30, 2026 and 2025. The Company hadno losses on disposal of fixed assets for thethree and six months ended June 30, 2026 and 2025.

8. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of (in thousands):

9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of (in thousands):

10. Commitments and Contingencies

As of June 30, 2026, the Company had ongoing clinical studies in various clinical trial stages. Its most significant contracts relate to agreements with CROs for clinical trials and preclinical studies and CDMOs for manufacturing which the Company enters into in the normal course of business. The contracts with CROs and CDMOs are generally cancellable, with notice, at the Company’s option.

Operating lease

In 2021, the Company entered into a long-term operating lease agreement for its current corporate headquarters in Waltham, Massachusetts (“headquarters lease”). The headquarters lease provides approximately 15,000 square feet for general office use and research lab facilities. The headquarters lease commencement date was January 1, 2022 and the lease term ends in December 2031. The Company has an option to extend the headquarters lease term for an additional five years. The initial rent for the office space is approximately $1.0 million per year, increasing every year by 3% for total aggregate payment of $11.1 million. Upon the commencement date, the Company established a right-of-use asset and lease liability on the condensed consolidated balance sheet. As part of the agreement, the Company arranged for a letter of credit for $0.6 million as security for the headquarters lease, which is considered restricted cash and included as restricted cash and restricted cash equivalents in the condensed consolidated balance sheet. The Company received $0.4 million in a tenant improvement allowance that was applied against the right-of-use asset.

As of June 30, 2026, the Company’s headquarters lease had a weighted-average remaining lease term of 5.50 years and weighted average incremental borrowing rate of 7.5%.

Amounts reported in the unaudited condensed consolidated balance sheet for leases where the Company is the lessee as of June 30, 2026 and December 31, 2025 were as follows (in thousands):

The following table summarizes operating lease costs for thesix months ended June 30, 2026 and 2025 (in thousands):

Variable lease costs were primarily related to operating expenses, taxes and insurance associated with the operating lease, which were assessed based on the Company’s proportionate share of such costs for the leased premises. As these costs are generally variable in nature, they were not included in the measurement of the operating lease right-of-use asset and related lease liability. Total lease costs are included as operating expenses in the Company’s unaudited condensed consolidated statements of operations. Future minimum lease payments under non-cancelable lease agreement as of June 30, 2026 and a reconciliation to the carrying amount of the lease liabilities presented in the consolidated balance sheet are as follows (in thousands):

License Agreements

License Agreement with the University of Colorado

In August 2017, the Company entered into an exclusive license agreement, as amended in February 2018, September 2018, and April 2019 (the “Colorado License Agreement”), with The Regents of the University of Colorado (“Colorado”), pursuant to which the Company obtained worldwide, royalty-bearing, sublicensable licenses under certain patents and know-how owned by Colorado and Medical University of South Carolina (“MUSC”) relating to the research, development and commercialization of ADX-097. The licenses granted to the Company were exclusive with respect to certain patent families and know-how and non-exclusive with certain other patent families and know-how. The licenses granted to the Company were also subject to certain customary retained rights of Colorado and MUSC and rights of the United States government owing to federal funding giving rise to inventions covered by the licensed patents. The Company agreed to use commercially reasonable efforts to develop, manufacture and commercialize ADX-097, including by using commercially reasonable efforts to achieve specified development and regulatory milestones by specified dates.

In addition, the Company agreed to pay Colorado (i) development and sales milestone payments in an aggregate amount of up to $2.2 million per licensed product for the first three products, (ii) tiered royalty rates on cumulative net sales of licensed products in the low single digit percentages, (iii)15% of sublicense income and (iv) ongoing fees associated with the prosecution, maintenance, or filing of the licensed patents. The Company’s obligation to pay royalties to Colorado would commence, on a licensed product-by-licensed product and country-by-country basis, from the first commercial sale of a licensed product in any country and expires on the later of (a) the last to expire valid claim within the licensed patents covering such licensed product in such country, and (b)20 years following the effective date of the Colorado License Agreement, or April 2037 (the “Royalty Term”).

On November 28, 2025, in connection with the ADX-097 Asset Sale, the Colorado License Agreement was amended and restated and all of the Company’s rights and obligations thereunder were transferred to Akebia.

License Agreement with Bristol-Myers Squibb Company

In September 2019, the Company entered into a license agreement, as amended in August 2021 and July 2022 (the “BMS License Agreement”) with Bristol-Myers Squibb Company (“BMS”), pursuant to which the Company obtained sublicensable licenses from BMS to research, develop and commercialize licensed products, including bempikibart, for any and all uses worldwide. The licenses granted to the Company are exclusive with respect to BMS’s patent rights and know-how relating to certain antibody fragments (including certain fragments of bempikibart) and non-exclusive with respect to BMS’s patent rights and know-how relating to the composition of matter and use of a specific region of bempikibart. BMS retained the right for it and its affiliates to use the exclusively licensed patents and know-how for internal, preclinical research purposes. Under the BMS License Agreement, the Company is prohibited from engaging in certain clinical development or commercialization of any antibody other than a licensed compound with the same mechanism of action until the earlier of the expiration of Q32’s obligation to pay BMS royalties or September 2029.

In consideration for the license, the Company made an upfront payment to BMS of $8 million, issued 318,278 Series A preferred shares to BMS and agreed to use commercially reasonable efforts to develop and commercialize at least one licensed product in key geographic markets. In addition, the Company agreed to pay BMS (i) development and regulatory milestone payments in aggregate amounts ranging from $32 million to $49 million per indication for the first three indications and commercial milestone payments in an aggregate amount of up to $215 million on net sales of licensed products, (ii) tiered royalties ranging from rates in the mid-single digit percentages to up to 10% of net sales, with increasing rates depending on the cumulative net sales, (iii) up to 60% of sublicense income, which percentage decreases based on the development stage of bempikibart at the time of the sublicensing event, and (iv) ongoing fees associated with the prosecution, maintenance, or filing of the licensed patents.

The Company’s obligation to pay BMS royalties under subsection (ii) above commences, on a licensed product-by-licensed product and country-by-country basis on the first commercial sale of a licensed product in a country and expires on the later of (x)12 years from the first commercial sale of such Licensed Product in such country, (y) the last to expire licensed patent right covering bempikibart or such licensed product in such country, and (z) the expiration or regulatory or marketing exclusivity for such licensed product in such country (Royalty Term). If the Company undergoes a change of control prior to certain specified phase of development, the development and milestone payments are subject to increase by a low double digit percentage and the royalty rates are subject to increase by a low sub single digit percentage.

Unless terminated earlier by either party pursuant to its terms, the BMS License Agreement will expire on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last to expire Royalty Term with respect to such licensed product in such country. Either party may terminate the BMS License Agreement for the other party’s material breach, subject to a specified notice and cure period. BMS may terminate the BMS License Agreement if the Company fails to meet its diligence obligations under the BMS License Agreement, for the Company’s insolvency, or if the Company or its affiliates challenges the validity, scope, enforceability, or patentability of any of the licensed patents. The Company may terminate the BMS License Agreement for any reason upon prior written notice to BMS, with a longer notice period if a licensed product has received regulatory approval. If the BMS Agreement is terminated for the Company’s material breach, BMS will regain rights to bempikibart and the Company must grant BMS an exclusive license under the Company’s patent rights covering bempikibart, subject to a low single digit percentage royalty on net sales of bempikibart payable to the Company by BMS.

In July 2024, the Company made a $4.0 million development milestone payment to BMS and recorded it as research and development expenses. As of June 30, 2026, no further events have occurred that would require payment of milestones, royalties or sublicense fees.

Legal Proceedings

The Company is not currently party to any material legal proceedings. The Company accounts for estimated losses with respect to legal proceedings and claims when such losses are probable and reasonably estimable. Legal costs associated with these matters are expensed when incurred.

Indemnification Arrangements

As permitted under Delaware law, the Company has agreements whereby it indemnifies certain of its investors, stockholders, employees, officers, and directors (collectively, the “Indemnified Parties”) for certain events or occurrences while the Indemnified Parties are, or were serving, at its request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has an Executive Liability insurance policy that limits its exposure and enables it to recover a portion of any future amounts paid up to $5.0 million. The Company believes the estimated fair value of these indemnification agreements is minimal. The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the Indemnified Parties for losses suffered or incurred by the Indemnified Parties, generally the Company’s business partners or customers, in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

11. Debt

Venture Debt

In December 2020, the Company entered into a Loan and Security Agreement, as amended in June 2022, August 2022, December 2022, April 2023, July 2023, November 2023, March 2024 and July 2024 (the “Loan Agreement”), with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“SVB”) for a lending facility of up to $25.0 million. The Company received $5.0 million upon execution of the Loan Agreement which it repaid in July 2023, a $5.5 million term loan advance in July 2023 and a $7.0 million term loan advance in March 2024. On June 24, 2026, the Company paid off the remaining balance in the amount of approximately $6.8 million under the Loan Agreement, pursuant to a letter between the Company and SVB dated June 24, 2026 and recognized a loss on extinguishment of debt of $0.1 million in thesix months ended June 30, 2026. Accordingly, the Loan Agreement has been terminated.

The term loan bore interest at an annual rate equal to the greater of the prime rate minus 0.25% or 8.00%. The Loan Agreement provided for interest-only payments until July 1, 2025, followed by 24 equal monthly payments of principal plus interest. The loan was scheduled to mature on July 1, 2027. In addition, the Company paid a fee of $0.1 million upon entering into the Loan Agreement and was required to pay a fee of 3.5% of the aggregate amount of advances under the Loan Agreement at maturity.

In conjunction with the Loan Agreement, in December 2020, the Company issued warrants to purchase 7,988 shares of common stock to the lender at a per share price of $6.87 with a maximum contractual term of 10 years and in July 2023, warrants to purchase 10,156 shares of common stock to the lender at a per share price of $7.50 with a maximum contractual term of 10 years. The warrants had a de minimis total relative fair value at the time of issuance. Pursuant to FASB ASC Topic 480, Distinguishing Liabilities from Equityand FASB ASC Topic 815, Derivatives and Hedging, the warrants were classified as equity and were initially measured at fair value. Subsequent changes to fair value will not be recognized so long as the instrument continues to be equity classified.

Interest expense was $0.2 million and $0.4 million for thethree and six months ended June 30, 2026 and $0.3 million and $0.6 million for thethree and six months ended June 30, 2025. The effective rate on the Loan Agreement, including the amortization of the debt discount and issuance costs was 8.77% and 9.45%, respectively, at each of June 30, 2026 and December 31, 2025. The components of the long-term debt balance are as follows (in thousands):

12. Common Stock

As of June 30, 2026, the Company’s Restated Certificate of Incorporation, as amended, authorized the Company to issue 400,000,000 shares of common stock, $0.0001 par value per share.

The Company has reserved the following shares of common stock for future issuance:

13. Stock-Based Compensation

2017 Stock Option and Grant Plan

Q32 Bio Operations Inc. (previously named Q32 Bio Inc. and referred to herein as Legacy Q32) adopted the 2017 Stock Option and Grant Plan and subsequent amendments (the “2017 Plan”) with 1,246,290 shares of common stock reserved for issuance to employees, directors, and consultants. The 2017 Plan allowed for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards and other stock awards. As of June 30, 2026, there wereno additional shares available for future grant under the 2017 Plan.

2024 Stock Option and Incentive Plan

The Company’s 2024 Stock Option and Incentive Plan (the “2024 Plan”) became effective on March 25, 2024, and serves as successor to the 2017 Plan, as well as the Homology 2015 Stock Incentive Plan and the Homology 2018 Plan. The 2024 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock or cash-based awards to officers, employees, directors and consultants of the Company. The 2024 Plan provides that the number of shares reserved and available for issuance under the 2024 Plan will automatically increase each January 1 by 5% of the outstanding number of shares on the immediately preceding December 31, or such lesser amount as determined by the plan administrator. As of June 30, 2026, there were 2,087,241 shares available for future grant under the 2024 Plan.

2024 Employee Stock Purchase Plan

The Company’s 2024 Employee Stock Purchase Plan (the “2024 ESPP”) became effective on March 25, 2024. The 2024 ESPP provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1 by the lesser of 241,677 shares, a number of shares equal 1% of the outstanding number of shares on the immediately preceding December 31, or such lesser amount as determined by the plan administrator. As of June 30, 2026, there were 371,393 shares available for future grant under the 2024 ESPP.

There wereno shares issued under the 2024 ESPP during thesix months ended June 30, 2026 and 2025.

Stock Options

Stock options granted by the Company typically vest over afour-year period and have aten-year contractual term. The following table summarizes the Company’s stock option activity during thesix months ended June 30, 2026:

The per share weighted-average grant date fair value of options granted in the six months ended June 30, 2026 was $6.64. The total fair value of options vested during thesix months ended June 30, 2026 was $1.3 million. As of June 30, 2026, total unrecognized compensation costs to the unvested stock options were approximately$6.3 million, which is expected to be recognized over a weighted-average period of 1.4 years. The per share weighted-average exercise price of options cancelled in thesix months ended June 30, 2026 of $7.17 was impacted by the Option Repricing (defined below).

Stock Option Modifications

On February 23, 2025, the Company's board of directors approved a stock option repricing (the “Option Repricing”), which was effective on February 24, 2025 (the “Repricing Date”). The Option Repricing applied to outstanding options to purchase shares of common stock of the Company granted under the Company’s 2017 Plan and 2024 Plan (collectively, “the Plans”), which, as of the Repricing Date, were held by current employees and non-employee directors of the Company and had an exercise price in excess of the current trading price of the common stock (so-called “underwater options”) with grant dates prior to February 23, 2025 (the “Eligible Options”). As of the Repricing Date, the Eligible Options were repriced such that the exercise price per share for such Eligible Options was reduced to the closing price of the common stock on the Nasdaq Global Market on the Repricing Date (the “Repriced Exercise Price”). The total number of shares of common stock underlying all Eligible Options was 1,871,416.

The repricing of the Eligible Options was accounted for as a modification under FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). Accordingly, the Company calculated incremental compensation cost on the modification date in an amount equal to the difference between the fair value of the awards before and after modification, determined using a lattice model based on the Hull-White framework, and recognized $0.3 million in its statement of operations for the year ended December 31, 2025. An additional $0.2 million is being recognized over the remaining vesting terms of the modified awards.

Restricted Stock Units

The fair values of restricted stock units (“RSUs”) are based on the fair market value of the Company’s common stock on the date of grant. Each RSU represents a contingent right to receive one share of the Company’s common stock upon vesting. In general, RSUs vest annually in two or three equal installments. The following table summarizes the Company’s RSU activity during thesix months ended June 30, 2026:

As of June 30, 2026, total unrecognized compensation costs to the unvested RSUs were approximately $1.9 million, which is expected to be recognized over a weighted-average period of 2.3 years. The total fair value of RSUs vested during thesix months ended June 30, 2026 was $0.3 million.

Stock-Based Compensation Expense

The underlying assumptions used to value stock options granted using the Black-Scholes option-pricing model prior to the Option Repricing during thethree months ended June 30, 2026 and the six months ended June 30, 2026 and 2025 were as follows (there were no stock options granted during the three months ended June 30, 2025):

Risk-Free Interest Rate –The risk-free rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.

Expected Dividend –The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.

Expected Term –The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. The Company uses the simplified method for estimating the expected term, which calculates the expected term as the average time-to-vesting and the contractual life of the options for stock options issued to employees. The expected term for options granted to non-employees is based on the contractual life of the options.

Expected Volatility –Due to the Company’s limited operating history and lack of sufficient company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price.

Fair Value of Common Stock – Prior to the Merger, as there had been no public market for the Company’s common stock, the estimated fair value of its common stock was determined by the Company using estimates and assumptions on the respective grant dates of the awards. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred securities and the superior likelihood of achieving a liquidity event, such as an IPO or sale. Significant changes to the key assumptions used in the valuations could result in different fair values of common stock at each valuation date.

As discussed above, incremental stock-based compensation expense for the Option Repricing on February 24, 2025 was calculated using a lattice model based on the Hull-White framework. This approach incorporated key assumptions, including suboptimal exercise multiples for both staff and executives, derived from empirical data. The model also accounted for additional factors such as vesting periods, employee turnover based on the accounting of forfeitures, volatility, contractual expiry, and risk-free rates.

The Company recorded stock-based compensation expense in the following expense categories of its statements of operations (in thousands):

14. Agreements with Horizon

From August 2022 until November 2023, Legacy Q32 was a party to the Collaboration and Option Agreement (the “Horizon Collaboration Agreement”) and the Asset Purchase Agreement (the “Purchase Agreement,” and together with the Horizon Collaboration Agreement, the “Horizon Agreements”), each between Legacy Q32 and Horizon Therapeutics Ireland DAC (“Horizon”), pursuant to which Legacy Q32 received $55.0 million in initial consideration and staged development funding for the completion of the two ongoing Phase 2 trials for bempikibart, and Horizon had an option to acquire the bempikibart program at a prespecified price, subject to certain adjustments.

In October 2023, Amgen Inc. (“Amgen”) completed its acquisition of Horizon Therapeutics public limited company (“Horizon plc”). Following the acquisition, the Company agreed with Amgen to mutually terminate the Horizon Agreements. In November 2023, the Company and Horizon entered into a termination agreement (the “Horizon Termination Agreement”), pursuant to which Horizon’s option to acquire the bempikibart program was terminated. As a result, the Company 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, the Company agreed to pay Horizon regulatory and sales milestones payments upon the first achievement of certain regulatory and sales milestones with respect to bempikibart. 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 Horizon Collaboration Agreement.

On November 7, 2025, the Company and Amgen entered into an amendment to the Horizon Termination Agreement (the “Amgen Amendment”) pursuant to which the Company issued Horizon a one-time equity grant of 553,695 shares of the Company’s common stock as full consideration of the milestone payments under the Horizon Termination Agreement. Following the transactions contemplated by the Amgen Amendment, the Company has no remaining obligations to Amgen, including with respect to the regulatory and sales-based milestone payments set forth in the Horizon Collaboration Agreement. Therefore, the Company derecognized the $55.0 million refund liability previously recorded for the $55.0 million of cash received under the Horizon Collaboration Agreement and recognized collaboration arrangement revenue for the difference between the equity issuance, and the refund liability as the consideration was no longer constrained.

15. Related Party Transactions

The Company has consulting and advisory agreements with certain investors and board members which are considered to be related party transactions. The Company didnot incur expense for thethree and six months ended June 30, 2026 and 2025 related to services provided by these investors and board members.

No amounts were due to related parties at June 30, 2026 or December 31, 2025.

16. Income Taxes

The Company didnot record a tax provision or benefit for thethree and six months ended June 30, 2026 and 2025.

The Company has evaluated the positive and negative evidence involving its ability to realize its deferred tax assets and has considered its history of cumulative net losses incurred since inception and its lack of any commercially ready products. The Company has concluded that it is more likely than not that it will not realize the benefits of its deferred tax assets. The Company reevaluates the positive and negative evidence at each reporting period.

17. Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding, including the shares of common stock underlying the pre-funded warrants, for the three and six months ended June 30, 2026. Shares of common stock issuable upon exercise of the pre-funded warrants are considered outstanding for the purposes of computing basic net loss per share because the shares may be issued for little or no consideration, are fully vested and are exercisable after the original issuance date.

In computing diluted net loss per share, only potential shares of common stock that are dilutive are included. For thethree and six months ended June 30, 2026 and 2025, the Company’s potentially dilutive securities, which include stock options, RSUs, warrants and pre-funded warrants have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

The Company excluded the following from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:

18. Segment Reporting

The Company operates asone operating segment, focused on research, development, and discovering, developing and delivering therapies for its novel biologics. The Company’s CEO, as the chief operating decision maker (“CODM”), manages and allocates resources to the operations of the Company on a consolidated basis. Managing and allocating resources on a total-company basis enables the CODM to assess the overall level of resources available and how to best deploy those resources across research and development projects that are in line with our long-term company-wide strategic goals. Consistent with this decision-making process, the CODM uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets. When evaluating the Company’s overall performance, the CODM is focused on the timing and progress of its preclinical and clinical development activities. The CODM regularly reviews total expenses, as well as direct research and development expenses by program and makes decisions using this information on a company-wide basis.

The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance and decides how to allocate resources based on consolidated net loss. This measure is used to monitor budget versus actual results to assess performance of the segment. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.

The following table presents reportable segment net loss, including significant expenses regularly provided to the CODM, attributable to the Company’s reportable segment for thethree and six months ended June 30, 2026 and 2025:

(1)Other segment items are included in order to reconcile to total segment net loss. Other segment items include non-cash items such as depreciation and amortization expense, stock-based compensation expense and the change in fair value of contingent value rights.

19. Subsequent Events

The Company considers events or transactions that occur after the balance sheet date but prior to the date the financial statements are available to be issued for potential recognition or disclosure in the financial statements. The Company has completed an evaluation of all subsequent events after the balance sheet date of June 30, 2026 through the date the financial statements were issued to ensure that these financial statements include appropriate disclosure of events both recognized in the financial statements as of June 30, 2026 and events which occurred subsequently but were not recognized in the financial statements, and there were no material subsequent events requiring disclosure, except that subsequent to June 30, 2026, the Company sold 6,027,399 shares of its common stock at a public offering price of $18.25 per share and pre-funded warrants to purchase up to 4,931,506 shares of its common stock at a public offering price of $18.2499 per pre-funded warrant and received net proceeds of $187.6 million, after deducting underwriting discounts and commissions and offering expenses. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 1,643,835 shares of its common stock at the public offering price of $18.25 per share, less underwriting discounts and commissions.