Spyre Therapeutics, Inc.

A discussion and analysis of our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 and a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2024 compared with the year ended December 31, 2023 is presented below.

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024, together with the changes in those items in dollars and as a percentage:

*Percentage not meaningful

Research and development expenses increased by $8.9 million, or 5%, to $171.7 million for the year ended December 31, 2025, from $162.8 million for the year ended December 31, 2024. The increase was primarily driven by increased clinical development activities and higher headcount partially offset by lower early-stage research and development.

External research and development expenses include costs associated with third parties contracted to conduct research and development activities on behalf of the Company, including through Paragon, CROs, CMOs, and third-party laboratories. For the year ended December 31, 2025 and 2024, external research and development costs accounted for $131.1 million and $140.7 million, respectively. Preclinical expenses decreased primarily due to a reduction in early-stage research and development activities given our pipeline's advancement coupled with lower intellectual property license and sub-licensing fees. IBD expenses increased primarily due to increases in clinical development costs related to ongoing or planned clinical trials. Rheumatic diseases costs increased due to increases in manufacturing, clinical development costs, and intellectual property licensing and sub-licensing fees. External stock-based compensation decreased due to our obligations ending under the Parapyre Option Obligation.

Internal research and development expenses include compensation and related costs associated with our research and development employees. For the year ended December 31, 2025 and 2024, internal research and development costs accounted for $40.6 million and $22.1 million, respectively. The increase was primarily driven by an increase in research and development headcount.

General and Administrative Expenses. General and administrative expenses increased by $2.1 million, or 5%, to $47.9 million for the year ended December 31, 2025, from $45.8 million for the year ended December 31, 2024. The increase was primarily attributable to an increase in compensation costs due to an increase in general and administrative headcount.

Gain on Sale of In-Process Research and Development Asset. During the year ended December 31, 2025, the Company recognized a gain of $10.0 million for an achieved milestone related to the 2023 sale of the global rights of the legacy Aeglea asset pegzilarginase to Immedica, driven by a favorable reimbursement decision for pegzilarginase in Europe. There was no similar gain or loss during the year ended December 31, 2024.

Interest Income. Interest income was $24.9 million and $21.3 million for the year ended December 31, 2025 and 2024, respectively. The increase was primarily due to higher investment balances.

Other income, net. Other income, net for the year ended December 31, 2025 increased by $50.2 million versus the year ended December 31, 2024 primarily driven by changes in the fair value of the CVR liability, which was primarily driven by changes in the likelihood of achievement of certain milestones and receipt of certain cash consideration within the CVR term, changes in estimated reimbursement rates compared to reimbursement target rates, changes in estimated cash flow dates, and an increase in risk-adjusted discount rates, partially offset by time value of money adjustments.

Comparison of the Years Ended December 31, 2024 and 2023

The following table summarizes our results of operations for the years ended December 31, 2024 and 2023, together with the changes in those items in dollars and as a percentage:

*Percentage not meaningful

Development Fee and Royalty Revenue. For the year ended December 31, 2024, we did not recognize any revenue in connection with the Immedica Agreement. For the year ended December 31, 2023, we recognized $0.9 million of development fee revenue in connection with the Immedica Agreement. The revenue generated during the year ended December 31, 2023, was attributable to the PEACE Phase 3 trial and drug supply and royalties from an early access program in France.

Research and development expenses increased by $73.3 million, or 82%, to $162.8 million for the year ended December 31, 2024, from $89.5 million for the year ended December 31, 2023. The increase was primarily driven by higher early-stage research and development and increased compensation costs partially offset by decrease in costs related to the Company's legacy rare disease pipeline.

External research and development expenses include costs associated with third parties contracted to conduct research and development activities on behalf of the Company, including through Paragon, CROs, CMOs, and third-party laboratories. For the year ended December 31, 2024 and 2023, external research and development costs accounted for $140.7 million and $72.7 million, respectively. The increase was primarily due to increased costs associated with our IBD pipeline candidates, including preclinical and manufacturing activities coupled with intellectual property license fees, and stock compensation expense related to the Parapyre Option Obligation, partially offset by decreased costs related to the Company's legacy rare disease pipeline.

Internal research and development expenses include compensation and related costs associated with our research and development employees, as well as costs associated with the Company's on-premises research laboratory. For the year ended December 31, 2024 and 2023, internal research and development costs accounted for $22.1 million and $16.8 million, respectively. The increase was primarily driven by an increase in research and development headcount, partially offset by a decrease in costs associated with our on-premises research laboratory that was decommissioned, including the elimination of related internal roles, in the first half of 2023.

General and Administrative Expenses. General and administrative expenses increased by $5.8 million, or 15%, to $45.8 million for the year ended December 31, 2024, from $39.9 million for the year ended December 31, 2023. The increase was primarily due to an increase in stock-based compensation expense, inclusive of acceleration expense related to legacy Aeglea officers and directors, partially offset by reduction in compensation costs primarily associated with lower legacy severance costs, and reduction in lease termination costs that were incurred in the prior year.

Acquired In-process Research and Development Expenses. Acquired IPR&D expenses were $130.2 million for the year ended December 31, 2023, as the acquisition of Pre-Merger Spyre was determined by management to be an asset acquisition, in accordance with U.S. GAAP as the product candidates were determined to have no alternative future use. There was no similar expense during the year ended December 31, 2024.

Gain on Sale of In-Process Research and Development Asset. Gain on sale of in-process research and development asset during the year ended December 31, 2023 was driven by the sale of pegzilarginase to Immedica. There was no similar gain or loss during the year ended December 31, 2024.

Interest Income. Interest income was $21.3 million and $6.1 million for the twelve months ended December 31, 2024 and 2023, respectively. The increase was primarily due to higher investment balances.

Change in Fair Value of Forward Contract Liability. Non-cash expenses associated with the change in fair value of the forward contract liability were $83.5 million for the year ended December 31, 2023. This expense was due to the change in fair value of the underlying Series A Preferred Stock between June 22, 2023 and the forward contract's settlement on July 7, 2023. There was no similar expense during the year ended December 31, 2024.

Other expense, net. Other expense, net for the year ended December 31, 2024 increased by $1.6 million versus the year ended December 31, 2023, primarily driven by changes in the fair value of the CVR liability.