PRECISION BIOSCIENCES INC

Precision BioSciences, Inc.

Notes to Condensed Financial Statements (Unaudited)

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Precision BioSciences, Inc. (the “Company”) was incorporated on January 26, 2006 under the laws of the State of Delaware and is based in Durham, North Carolina. The Company is a gene editing company dedicated to improving life by developingin vivo therapies for genetic and infectious diseases with the application of the Company’s wholly-owned proprietary ARCUS genome editing platform.

Since its inception, the Company has devoted substantially all of its efforts to research and development activities, recruiting skilled personnel, establishing its intellectual property portfolio and providing general and administrative support for these operations. The Company is subject to a number of risks similar to those of other companies conducting early-stage research and development of product candidates. Principal among these risks are the Company’s dependence on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development and clinical manufacturing of its product candidates. The Company’s success is dependent upon its ability to continue to raise additional capital in order to fund ongoing research and development, obtain regulatory approval of its products, successfully commercialize its products, generate revenue, meet its obligations, and, ultimately, attain profitable operations.

Unaudited Interim Financial Information

The accompanying unaudited condensed financial statements and notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), have been condensed or omitted pursuant to those rules and regulations. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026.

The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the Company’s condensed financial position as of June 30, 2026 and its condensed results of operations and cash flows for the three and six months ended June 30, 2026 and 2025, have been made. The Company’s condensed 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.

Summary of Significant Accounting Policies

The Company’s complete listing of significant accounting policies is set forth in Note 1, Description of Business and Summary of Significant Accounting Policies, to the Notes to Condensed Financial Statements on its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no changes to these policies as of June 30, 2026.

Accounting Standards Updates

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve disclosures around an entity’s expenses. Upon adoption, companies will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted, and can be applied either prospectively or retrospectively. The Company plans to adopt the standard in the year ending December 31, 2027 and is currently assessing its effect on the Company’s financial statement disclosures.

NOTE 2: FAIR VALUE MEASUREMENTS

The following represents assets and liabilities measured at fair value on a recurring basis by the Company (in thousands):

The following represents a reconciliation of assets measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the six months ended June 30, 2026 (in thousands). The warrant reconciliation is disclosed in Note 11, Warrants:

The carrying amounts of the Company’s accounts receivable, accounts payable, and accrued expenses and other current liabilities, approximate their respective fair values due to their short-term nature. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis and to minimize the use of unobservable inputs when determining their fair value. The three tiers are defined as follows:

Level 1—Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities

Level 2—Inputs, other than quoted prices in active markets, which are observable either directly or indirectly

Level 3—Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions.

NOTE 3: DEBT

Loan and Security Agreement

On July 31, 2024, the Company entered into an amended and restated loan and security agreement (the “2024 Loan and Security Agreement”) with Banc of California pursuant to which Banc of California provided the Company with a term loan with a principal amount of $22.5 million (the “2024 Term Loan”). The 2024 Term Loan bears interest at an annual rate equal to the greater of (i)1.50% below the Prime Rate (as defined in the 2024 Loan and Security Agreement) then in effect or (ii)4.50%. On June 10, 2026, the Company and Banc of California entered into a First Amendment to Amended and Restated Loan and Security Agreement (the “First Amendment”). The First Amendment amended the 2024 Term Loan between the Company and Banc of California (as amended, including the First Amendment, the “Loan and Security Agreement”). The First Amendment extended the maturity date of the Term Loan, as defined in the Loan and Security Agreement, from June 30, 2027 to December 31, 2029. As of June 30, 2026, the stated interest rate on the Loan and Security Agreement was 5.25% and the effective interest rate was 5.43%.

Additionally, as of June 30, 2026, $22.5 million in borrowings were outstanding under the Loan and Security Agreement and the unamortized debt discount balance was less than $0.1 million. Refer to Note 12, Debt, to the Company’s audited financial statements included in the Company’s Annual Report for the fiscal year ended December 31, 2025, for more information related to the Loan and Security Agreement.

NOTE 4: COMMITMENTS AND CONTINGENCIES

Litigation

The Company is subject to various legal matters and claims in the ordinary course of business. Although the results of legal proceedings and claims cannot be predicted with certainty, in the opinion of management, there are currently no such known matters that will have a material effect on the financial condition, results of operations or cash flows of the Company.

Servier Program Purchase Agreement

On April 9, 2021, the Company entered into a program purchase agreement (the “Program Purchase Agreement”) with Les Laboratoires Servier and Institut de Recherches Internationales Servier (collectively, “Servier”), pursuant to which the Company reacquired all of its global development and commercialization rights previously granted to Servier pursuant to the Development and Commercial License Agreement by and between Servier and the Company, dated February 24, 2016, as amended (the “Servier Agreement”), and mutually terminated the Servier Agreement.

The Program Purchase Agreement requires the Company to make certain payments to Servier based on the achievement of regulatory and commercial milestones for each product. Management assessed the likelihood of each of the regulatory and commercial milestones included in the Program Purchase Agreement in accordance with ASC 450, Contingencies. If the assessment of a contingency indicates that it is probable that the milestone will be achieved and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s condensed financial statements.

Accordingly, contingent liabilities of $10.0 million related to the Program Purchase Agreement are accrued and included in contract liabilities in the condensed balance sheets as of June 30, 2026 and December 31, 2025.

Leases

The Company has an operating lease for real estate in North Carolina and does not have any finance leases.

The elements of lease expense were as follows:

Future minimum lease payments under non-cancelable operating leases with terms of greater than one year as of June 30, 2026, were as follows:

Supply Agreements

The Company enters into contracts in the normal course of business with contract manufacturing organizations (“CMOs”) for the manufacture of clinical trial materials and contract research organizations (“CROs”) for clinical trial services. These agreements provide for termination at the request of either party with less than one-year’s notice and are, therefore, cancellable contracts. If canceled, these agreements are not anticipated to have a material effect on the financial condition, results of operations, or cash flows of the Company.

Compensatory Arrangements of Certain Officers

On August 26, 2025, the Company entered into amended and restated employment agreements to help retain each of its then-serving executive officers: Michael Amoroso, the Company’s President and Chief Executive Officer; Alex Kelly, the Company’s Chief Financial Officer; Dario Scimeca, the Company’s General Counsel and Secretary; and Jeff Smith, the Company’s Chief Research Officer. The amended employment agreements include, among other things, a requirement to fund the cash severance and expenses in an escrow account. As a result, the Company entered into escrow arrangements with JPMorgan Chase Bank, N.A. and the executives with respect to the funded amounts. Interest earned from the escrow account accrues to the Company and any unused funds return to the Company. As of June 30, 2026, the escrow account cash balance was $3.8 million.

NOTE 5: STOCKHOLDERS’ EQUITY

Capital Structure

On March 1, 2024, the Company entered into an underwriting agreement relating to a public offering of (i)2,500,000 shares of the Company’s common stock, par value $0.000005 per share, and (ii) warrants to purchase up to an aggregate of 2,500,000 shares of the Company’s common stock (the “March 2024 Public Offering”). The warrants have afive-year term and an exercise price of $20.00 per share. Each warrant is exercisable immediately upon issuance, subject to certain limitations on beneficial ownership. The price to the public in the March 2024 Public Offering was $16.00 per share of common stock and accompanying warrants, which resulted in approximately $37.0 million of net proceeds to the Company after deducting the underwriting discount and offering expenses of approximately $3.0 million.

On November 10, 2025, the Company entered into an underwriting agreement relating to the issuance and sale of 10,815,000 shares of the Company's common stock, par value$0.000005 per share, and accompanying one-half warrants to purchase up to 5,407,500 shares of the Company's common stock at a combined price of$6.14 per share. Further, in lieu of common stock to certain investors, the Company issued pre-funded warrants to purchase up to 1,400,000 shares of the Company's common stock and accompanying one-half warrants to purchase up to 700,000 shares of the Company's common stock at a combined price of$6.139995 per share. Each whole warrant has afive-year term and an exercise price of$7.25 per share. The offering resulted in approximately $70.0 million of net proceeds to the Company after deducting the underwriting discount and offering expenses of approximately $5.0 million. During the six months ended June 30, 2026, pre-funded warrants were exercised to purchase 1,400,000 shares of the Company's common stock. No pre-funded warrants remained outstanding as of June 30, 2026.

NOTE 6: COLLABORATION AND LICENSE AGREEMENTS

TG Therapeutics

On January 7, 2024, the Company entered into a license agreement (the “TG License Agreement”) with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc. (“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”), pursuant to which the Company granted TG Subsidiary certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize azer-cel for autoimmune diseases and other indications outside of cancer pursuant to the terms of the TG License Agreement.

Under the TG License Agreement, the Company received an upfront cash payment of $10.0 million (the “Upfront Payment”) comprised of (i) a $5.25 million cash payment that was paid to the Company on February 5, 2024, (ii) a $2.25 million cash payment that was paid to the Company on February 5, 2024 in exchange for 97,360 shares of the Company’s common stock, based on a price per share equal to a 100% premium to the VWAP of the Company’s common stock for the 30 trading days prior to the date of the TG License Agreement, and (iii) a deferred cash payment of $2.5 million that was paid to the Company on January 6, 2025 in exchange for 220,712 shares of the Company’s common stock at a price per share of $11.33, which represented a 100% premium to the VWAP of the Company’s common stock for the 30 trading days prior to the date of payment. The Company also received a cash payment of $7.5 million from TG Therapeutics on March 12, 2026 following the achievement of a clinical milestone (the “Initial Milestone Payment”). The Initial Milestone payment of $7.5 million consisted of (i) $5.25 million cash milestone payment and (ii) a $2.25 million cash payment in exchange for 201,504 shares of the Company’s common stock based on the minimum price of $11.1660 determined in accordance with Nasdaq Listing Rule 5635(d). The Company is also entitled to receive additional payments upon the achievement of additional specified milestones of up to $288.6 million.

The 201,504 shares purchased at a purchase price of $11.1660 per share in connection with the Initial Milestone represented a premium paid over the Company's stock value at the milestone achievement date. Management concluded that the stock premium was to be combined with the cash consideration received in connection with the achievement of the milestone in accordance with ASC 606. Of the total $7.5 million received for the Initial Milestone achievement, the Company applied equity accounting guidance to measure the $0.7 million recorded in equity upon issuance of the shares, and $6.8 million was identified as the transaction price of the milestone that would be allocated to revenue. As such, during the six months ended June 30, 2026, the Company recognized $6.8 million revenue under the TG License Agreement. During the six months ended June 30, 2025, the Company recognizedno revenue under the TG License Agreement.

Collaboration and License Agreement with Novartis

During the six months ended June 30, 2026, the Company recognizedno revenue under the collaboration and license agreement between the Company and Novartis Pharma AG (the “Novartis Agreement”) as the Novartis Agreement was terminated in the prior year. During the six months ended June 30, 2025, the Company recognized revenue under the Novartis Agreement of less than $0.1 million. There isno deferred revenue related to the Novartis Agreement as of June 30, 2026 or December 31, 2025.

Development and License Agreement with iECURE

The Company adjusts the carrying value of the iECURE, Inc. (“iECURE”) equity to fair value each reporting period with any changes in fair value recorded to other (expense) income. There wasno change in the fair value of the iECURE equity during the six months ended June 30, 2026 and a 2.5 million decrease in the fair value of the iECURE equity during the six months ended June 30, 2025.

Research and License Agreement with an Agriculture Industry Collaboration Partner

During the six months ended June 30, 2026, the Company recognized $4.0 million in revenue under a legacy ARCUS gene editing research and license agreement milestone from an agriculture industry collaboration partner. The collaboration was concluded in April 2026.

NOTE 7: SHARE-BASED COMPENSATION

The Company previously granted stock options under its 2015 Stock Incentive Plan (the “2015 Plan”). As of June 30, 2026 there were 15,784 stock options outstanding under the 2015 Plan andno remaining stock options available to be granted under the 2015 Plan.

The 2019 Incentive Award Plan (as amended and restated, the “2019 Plan”) provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other share-based awards. The 2019 Plan had 35,626 stock options and 2,899,866 restricted stock units (“RSUs”) outstanding as of June 30, 2026.

The number of shares available for issuance under the 2019 Plan initially equaled 158,333 shares of common stock. The 2019 Plan provides for an annual increase to the number of shares of common stock available for issuance on the first day of each calendar year beginning January 1, 2020 and ending on and including January 1, 2029 by an amount equal to the lesser of (i)4% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the board of directors. As of June 30, 2026, the aggregate number of shares available for issuance under the 2019 Plan has been increased by 1,825,822 pursuant to this provision. Additionally, the number of shares available for issuance under the plan was increased by an additional 630,000 shares in connection with the amendment and restatement of the 2019 Plan approved at the Company’s annual meeting of stockholders on June 4, 2024 and by an additional 3,800,000 shares in connection with the amendment and restatement of the 2019 Plan approved at the Company’s annual meeting of stockholders on May 21, 2026. Any shares that are subject to awards outstanding under the Company’s 2006 Plan and 2015 Plan as of the effective date of the 2019 Plan that expire, lapse, or are terminated, exchanged for cash, surrendered, repurchased, or canceled without having been fully exercised or forfeited, to the extent so unused, will become available for award grants under the 2019 Plan. As of June 30, 2026,2,284,462 shares were available to be issued under the 2019 Plan.

The purchase price of the shares under the 2019 ESPP, in the absence of a contrary designation, will be 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the purchase date. As of June 30, 2026, we had issued 130,143 shares under the 2019 ESPP. As of June 30, 2026,20,900 shares were available to be issued under the 2019 ESPP. The Company recognized share-based compensation expense related to the 2019 ESPP of less than $0.1 million during each of the six months ended June 30, 2026 and the six months ended June 30, 2025.

The 2021 Employment Inducement Incentive Award Plan (as amended, the “Inducement Award Plan”) provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock, RSUs and other share-based awards to newly hired employees who have not previously been an employee or member of the board, or an employee who is being rehired following a bona fide period of non-employment by the Company. No more than 1,100,000 shares of the Company’s common stock may be issued under the Inducement Award Plan. As of June 30, 2026,976,785 shares were available to be issued under the Inducement Award Plan. The Inducement Award Plan had 96,201 stock options and 13,804 RSUs outstanding as of June 30, 2026.

The Company recorded employee and nonemployee share-based compensation expense as follows (in thousands):

Share-based compensation expense is included in the following line items in the condensed statements of operations (in thousands):

The following table summarizes activity in the Company’s stock option plans for the six months ended June 30, 2026:

The fair value of each RSU was determined based on the closing market price of the Company’s common stock on the date of grant. The fair value of the RSUs will be recognized as expense over the requisite vesting period.

The following table summarizes the Company’s RSU activity for the six months ended June 30, 2026:

There was approximately $17.8 million of total unrecognized compensation cost related to unvested stock options and RSUs as of June 30, 2026, which is expected to be recognized over a weighted-average period of 2.2 years.

NOTE 8: INCOME TAXES

The Company estimates an annual effective tax rate of 0% for the year ending December 31, 2026 as the Company incurred losses for financial statement and tax purposes for the six months ended June 30, 2026. The Company is forecasting additional net losses for financial statement and tax purposes for the remainder of the year ending December 31, 2026. Therefore, no federal or state income taxes are expected, and none have been recorded at this time. Income taxes have been accounted for using the liability method in accordance with ASC 740, Income Taxes.

Due to the Company's history of losses since inception, there is not enough evidence at this time to support that the Company will generate future income of a sufficient amount and nature to utilize the benefits of its net deferred tax assets. Accordingly, the deferred tax assets have been reduced by a full valuation allowance, since the Company does not currently believe that realization of its deferred tax assets is more likely than not.

As of June 30, 2026, the Company hadno unrecognized tax benefits that would reduce the Company’s effective tax rate if recognized.

NOTE 9: EARNINGS PER SHARE

The Company calculates basic net loss per share by dividing net loss for each respective period by the weighted-average number of common shares outstanding for each respective period. The Company computes diluted net loss per share after giving consideration to the dilutive effect of unvested RSUs, stock options, unsettled ESPP contributions, and warrants that are outstanding during the period, except where such securities would be anti-dilutive.

The computations of basic and diluted net loss per share attributable to common stockholders are as follows:

(1)For the three and six months ended June 30, 2026 and June 30, 2025, all outstanding total common stock equivalents were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the three and six months ended June 30, 2026, the Company excluded the following potential common shares, based on amounts outstanding at period end, from the computation of diluted net loss per share because including them would have had an anti-dilutive effect under the treasury stock method:199,558 unvested RSUs and 9,170 unsettled ESPP contributions for the three months ended June 30, 2026 and 115,244 unvested RSUs and 7,716 unsettled ESPP contributions for the six months ended June 30, 2026.

NOTE 10: SEGMENT REPORTING

Operating segments are identified as components of an entity about which separate discrete financial information is available for evaluation by the chief operating decision maker or decision-making group (“CODM”) in making decisions on how to allocate resources and assess performance. The Company’s CODM, the Chief Executive Officer, views the Company’s operations asone operating segment, which includes the discovery and development of therapies utilizing our novel proprietary ARCUS platform. Our clinical and preclinical candidates were developed using the ARCUS platform to treat various forms of infectious and genetic disease.

The Company has not generated any revenue from product sales to date and expects to incur significant expenses and operating losses for the foreseeable future as it advances product candidates through development and clinical trials. As such, the CODM uses cash forecast models in managing and allocating resources on a total company basis, such as pursuing clinical development or entering into potential strategic collaborations. The CODM assesses the overall level of resources available and how to best deploy these resources across functions and research and development projects that are in line with the Company’s long-term strategic goals.

Consistent with its management reporting, results of operations are reported on a Company-wide basis for purposes of segment reporting. The CODM uses Company-wide financial information, including net income (loss) and comprehensive income (loss), net cash used in operating activities for the period, and cash on hand for purposes of evaluating operating results and performance. As the Company operates inone operating segment, all measures of the segment assets are reported on the balance sheets as total assets. Please refer to the financial statements for further information related to these measures of segment performance.

The tables below summarize the significant research and development and general and administrative expense categories regularly provided to the CODM for the three months ended June 30, 2026 and June 30, 2025 and the six months ended June 30, 2026 and June 30, 2025. Due to the pause in development of the PBGENE-3243 program to prioritize the Company’s two lead programs, PBGENE-HBV and PBGENE-DMD, expenses for PBGENE-3243 have been recast for the periods presented below. The amounts previously reported under “PBGENE-3243 external development costs” are now reported within the “Platform development and early-stage research expense” line items:

NOTE 11: WARRANTS

The warrants issued in the March 2024 Public Offering and 2025 November 2025 Public Offering are classified as liabilities in accordance with ASC 815, since these warrants met the definition of a derivative instrument and did not qualify for equity classification. These warrant agreements include a fundamental transaction clause whereby, in the event that another person or entity becomes the beneficial owner of 50% of the outstanding shares of the Company’s common stock, and if other conditions are met, the Company may be required to purchase the warrants from the holders by paying cash in an amount equal to the Black-Scholes value of the remaining unexercised portion of the warrants on the date of such fundamental transaction. This liability is subject to remeasurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the Company’s condensed statements of operations.

The fair value adjustment of the March 2024 Public Offering for the six months ended June 30, 2026 was $3.4 million using the Black-Scholes option-pricing model. As of June 30, 2026, all of the 2,500,000 warrants are outstanding. The Company estimated the fair value of the warrant liability using the following assumptions as of June 30, 2026:

The fair value adjustment of the November 2025 Public Offering for the six months ended June 30, 2026 was $17.6 million using the Black-Scholes option-pricing model. As of June 30, 2026, all of the 6,107,500 warrants are outstanding. The Company estimated the fair value of the warrant liability using the following assumptions as of June 30, 2026:

The following table summarizes the Company’s warrant liability (in thousands):

NOTE 12: SUBSEQUENT EVENTS

The Company has evaluated all subsequent events through the issuance date of these financial statements and no subsequent events occurred that required disclosure.