Camp4 Therapeutics Corp

1. Description of Business and Basis of Presentation

Description of Business

CAMP4 Therapeutics Corporation, formerly Marauder Therapeutics, Inc., and its subsidiary (collectively, the “Company”), is a clinical-stage biopharmaceutical company pioneering the discovery and development of a new class of RNA-based therapeutics with the goal of upregulating gene expression and restoring healthy protein levels to treat a broad range of genetic diseases. The Company is currently focusing on metabolic diseases and diseases of the central nervous system. The Company was organized in September 2015 and began operations in 2016.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative standards of U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The Company’s consolidated financial statements include the accounts of CAMP4 Therapeutics Corporation and its wholly owned subsidiary, CAMP4 Therapeutics Pty Ltd (“CAMP4 AUS”), which was established on September 15, 2023. All intercompany balances and transactions have been eliminated in consolidation.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations or balance sheets.

Reverse Stock Split

On October 3, 2024, the Company effected a one-for-11.2158 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company’s convertible preferred stock. Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split and adjustment of the preferred stock conversion ratios. The par value and the number of authorized shares of the convertible preferred stock and common stock were not adjusted in connection with the reverse stock split.

Initial Public Offering

On October 15, 2024, the Company completed its initial public offering (“IPO”), pursuant to which it issued and sold an aggregate of 6,820,000 shares of its common stock at a price to the public of $11.00 per share, resulting in net proceeds of $65.8 million, after deducting underwriting discounts and commissions of $5.3 million and other offering expenses of $4.0 million. In addition, on November 1, 2024, the Company received additional proceeds of $6.6 million, after deducting underwriting discounts and commissions of $0.5 million, pursuant to the partial exercise by the underwriters of their option to purchase additional shares in the IPO. Collectively, the Company received aggregate net proceeds of $72.4 million. Upon the closing of the IPO, the Company’s outstanding convertible preferred stock automatically converted into 11,648,582 shares of common stock (see Note 9).

In connection with the completion of its IPO, on October 15, 2024, the Company’s certificate of incorporation was amended and restated to authorize 175,000,000 shares of common stock, par value $0.0001 per share and 25,000,000 shares of preferred stock, par value of $0.0001 per share.

Liquidity and Going Concern

As of December 31, 2024, the Company had approximately $64.0 million of cash and cash equivalents and working capital of approximately $56.8 million. The Company has a relatively limited operating history, and the revenue and income potential of the Company’s business and market are unproven. The Company has experienced net losses and negative cash flows from operations since its inception and, as of December 31, 2024, the Company had an accumulated deficit of $211.8 million. During the year ended December 31, 2024, the Company incurred a net loss of $51.8 million and had negative cash flows from operations of $45.6 million. The Company will continue to incur significant costs and expenses related to its ongoing operations until it successfully develops, obtains regulatory approval for and gains market acceptance of a product candidate and achieves revenues adequate to support the Company’s operations.

From inception to December 31, 2024, the Company has funded its operations primarily with proceeds from the sale of convertible preferred stock and common stock, including in its IPO, as well as through revenues from its license and collaboration agreements. Based on its current operating plan, the Company estimates that its cash and cash equivalents as of December 31, 2024 will be sufficient to fund its operating expenses and capital expenditure requirements into the second quarter of 2026. However, the Company has based this estimate on assumptions that may prove to be wrong, and could deplete its capital resources sooner than it currently expects. The Company's capital resources may not be sufficient to fund operations through at least the next twelve months from the date that these audited consolidated financial statements as of December 31, 2024 are issued based on its expected cash needs, which raises substantial doubt about the Company's ability to continue as a going concern. As the Company continues to pursue its business plan, it expects to finance its operations through potential public or private equity offerings, debt financings or other capital sources, including current or potential future collaborations, licenses and other similar arrangements. However, there can be no assurance that any additional financing or strategic arrangements will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it may be necessary to significantly reduce its scope of operations to reduce the current rate of spending through actions such as reductions in staff and the need to delay, limit, reduce or terminate product development or future commercialization efforts or grant rights to develop and market product candidates that it would otherwise prefer to develop and market itself, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates assumptions, and judgments that affect the reported amounts of assets, liabilities, expenses and related disclosures in the accompanying notes. The Company bases its estimates, assumptions and judgments on historical experience when available and on various factors that it believes to be reasonable under the circumstances as of the date of the accompanying consolidated financial statements, including the fair value of common stock prior to the Company’s IPO, stock-based compensation expense, accrued expenses, lease accounting and the recoverability of the Company’s net deferred tax assets and related valuation allowance. In addition, other factors may affect estimates, including the expected business and operational changes, the 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. Actual results could differ materially from the estimates and assumptions used in the preparation of the accompanying consolidated financial statements under different assumptions or conditions.

Cash and Cash Equivalents

The Company considers all highly liquid investments and instruments with original maturities of 90 days or less that can be liquidated without prior notice or penalty to be cash equivalents. Cash equivalents primarily represent funds invested in readily available money market accounts. As of December 31, 2024 and 2023, the Company had cash and cash equivalents balances deposited atone major financial institution.

Restricted Cash

In connection with its operating leases, the Company is required to maintain security deposits totaling $1.5 million, which were issued in the form of letters of credit with a bank. As of December 31, 2024 and 2023, the Company held cash in this amount in separate restricted bank accounts as collateral for the letters of credit. The restricted cash balance is classified as long-term restricted cash on the accompanying consolidated balance sheets. In addition, the Company held less than $0.1 million in money market accounts as of each of December 31, 2024 and 2023 as collateral for the Company’s credit card obligation and increased letter of credit due to an amendment to the leases.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the corresponding amounts shown in the consolidated statements of cash flows as of December 31, 2024 and 2023 (in thousands):

Concentration of Credit Risks

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company deposits cash and cash equivalents with high credit quality financial institutions in the United States. These deposits are held in checking and money market accounts and may, from time to time, exceed the federally insured amounts. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant risk in its cash and cash equivalents. The primary objectives of the Company’s investment portfolio are the preservation of capital and maintenance of liquidity.

The Company is subject to risks common to companies in the biopharmaceutical industry, including, but not limited to, risks related to the successful development and commercialization of product candidates, fluctuations in operating results and financial risks, the ability to successfully raise additional funds when needed, protection of proprietary rights and patent risks, patent litigation, compliance with government regulations, dependence on key personnel and collaboration partners, dependence on third-party manufacturers and competition from competing products in the marketplace.

Fair Value Measurements

The Company applies fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is measured as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. A framework is used for measuring fair value utilizing a three-tier hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are as follows:

Level 1—Observable inputs such as unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities the Company has the ability to access;

Level 2—Inputs (other than quoted prices included within Level 1) that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and

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.

Financial instruments are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the investment. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. The Company reviews the fair value hierarchy classification at each reporting date. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the years presented.

Foreign Currency Remeasurement

The Company’s reporting currency and the functional currency of its foreign subsidiary, CAMP4 AUS, is the United States Dollar (“USD”). At the date a foreign currency denominated transaction is recognized, each asset, liability, revenue, expense, gain or loss arising from the transaction is measured initially in USD based on the exchange rate in effect at that date. Subsequently, at each balance sheet date, balances related to monetary assets and liabilities are adjusted to reflect the current exchange rate, which is the rate at which the related receivable or payable could be settled at that date.

Foreign exchange transaction gains and losses are included in other income, net in the accompanying consolidated statements of operations and comprehensive loss and were de minimis for the years ended December 31, 2024 and 2023.

Comprehensive Loss

There were no differences between net loss and comprehensive loss presented in the consolidated statements of operations for the years ended December 31, 2024 and 2023.

Property and Equipment, Net

Property and equipment, which are all located in the United States, are stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred, whereas major betterments are capitalized as additions to property and equipment. Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets:

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets, which consist of property and equipment, operating lease right-of-use (“ROU”) assets, and finance lease ROU assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If the asset is impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. The Company recognized no impairment losses for the years ended December 31, 2024 and 2023.

Commitments and Contingencies

Contractual Commitments

The Company enters into contracts in the normal course of business with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), academic institutions and other third parties for preclinical and clinical research studies, testing and manufacturing services. These contracts generally do not contain minimum purchase commitments and are cancellable by the Company upon prior written notice, although purchase orders for preclinical materials are generally non-cancellable. Payments due upon cancellation consist primarily of payments for services provided or expenses incurred, including non-cancellable obligations from the Company’s service providers, up to the date of cancellation or upon the completion of a manufacturing run.

Indemnifications

Indemnification Obligations

The Company has entered into indemnification agreements with its officers and directors that require the Company to indemnify such individuals for certain events or occurrences while each such officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential future payments the Company could be required to make is, in many cases, unlimited. The Company has directors’ and officers’ liability insurance coverage that limits its exposure and enables the Company to recover a portion of any future amounts paid.

The Company leases office and laboratory space under operating leases. The Company has standard indemnification arrangements under the leases that require it to indemnify the landlords against all costs, expenses, fines, suits, claims, demands, liabilities and actions directly resulting from any breach, violation or nonperformance of any covenant or condition of the Company’s leases.

In the ordinary course of its business, the Company enters into indemnification agreements with certain suppliers and business partners pursuant to which the Company has certain indemnification obligations limited to the costs, expenses, fines, suits, claims, demands, liabilities and actions directly resulting from the Company’s gross negligence or willful misconduct, and in certain instances, breaches, violations or nonperformance of covenants or conditions under the agreements.

As of December 31, 2024 and 2023, the Company had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

The Company is subject to the possibility of loss contingencies arising in the ordinary course of business. Management considers the likelihood of loss related to an asset, or the incurrence of a liability, as well as its ability to reasonably estimate the amount of the loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired, or a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information available to determine whether such accruals should be adjusted and whether new accruals are required.

Legal Proceedings

From time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. Management believes that there are no claims or actions pending against the Company currently, the ultimate disposition of which would have a material adverse effect on the Company’s consolidated results of operations, financial condition or cash flows.

Leases

In accordance with ASC 842, Leases, the Company determines if an arrangement is or contains a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. The Company classifies leases at the lease commencement date as operating or finance leases and records a ROU asset and a lease liability on the consolidated balance sheet for all leases with an initial lease term of greater than 12 months. Leases with an initial term of 12 months or less are not recorded in the balance sheet, but payments are recognized as expense on a straight-line basis over the lease term.

A lease qualifies as a finance lease if any of the following criteria are met at the inception of the lease: (i) there is a transfer of ownership of the leased asset to the Company by the end of the lease term, (ii) the Company holds an option to purchase the leased asset that it is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of the fair value of the leased asset, or (v) the nature of the leased asset is specialized to the point that it is expected to provide the lessor no alternative use at the end of the lease term. All other leases are recorded as operating leases.

The Company enters into contracts that contain both lease and non-lease components. Non-lease components may include maintenance, utilities and other operating costs. The Company combines the lease and non-lease components of fixed costs in its lease arrangements as a single lease component. Variable costs, such as utilities or maintenance costs, are not included in the measurement of ROU assets and lease liabilities, but rather are expensed when the event determining the amount of variable consideration to be paid occurs.

Finance and operating lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term using the discount rate implicit in the lease. If the rate implicit is not readily determinable, the Company utilizes an estimate of its incremental borrowing rate based upon the available information at the lease commencement date. Operating lease assets are further adjusted for prepaid or accrued lease payments. Operating lease assets are expensed using the straight-line method as an operating expense over the lease term. Finance lease assets are amortized to depreciation expense using the straight-line method. Finance lease payments are bifurcated into (i) a portion that is recorded as imputed interest expense and (ii) a portion that reduces the finance liability associated with the lease.

Certain of the Company’s leases provide a lease incentive in the form of reimbursable leasehold improvements. Due to the unpredictability of the payout of leasehold improvement reimbursements, the Company recognizes a reduction to the ROU asset and the lease liability once it has incurred costs that qualify as reimbursable by the lessor. The reduction to the ROU asset is recognized prospectively over the remainder of the lease term.

Certain of the Company’s leases include options to extend or terminate the lease. The amounts determined for the Company’s ROU assets and lease liabilities generally do not assume that renewal options or early-termination provisions, if any, are exercised, unless it is reasonably certain that the Company will exercise such options.

In addition, the Company examines other contracts with suppliers, vendors and outside parties to identify whether such contracts contain an embedded lease and, as applicable, records such embedded leases in accordance with ASC 842, Leases.

Financing Obligation (Failed Sale-Leaseback)

In accordance with ASC 842, Leases, for potential sale-leaseback transactions, the Company assesses the contract to identify if a sale occurred in accordance with ASC Topic 606, Revenue from Contracts with Customers(“ASC 606”). Sale-and-leaseback transactions occur when the Company sells assets to a third-party and simultaneously leases them back. The resulting leases that qualify for sale-and-leaseback accounting are evaluated and accounted for as operating leases. A transaction that does not qualify for sale-and-leaseback accounting as a result of finance lease classification or the failure to meet certain revenue recognition criteria is accounted for as a financing transaction. For a financing transaction, the Company will retain the assets sold within Property, plant and equipment, net and record a financing obligation equal to the amount of cash proceeds received. Rental payments under such transactions are recognized as a reduction of the financing obligation and as interest expense using an effective interest method. To date, the Company has entered into one failed sale-leaseback transaction. See additional discussion in Note 7. Commitments and Contingencies.

Revenue Recognition and Accounting for Collaboration Agreements

Revenue from Contracts with Customers

The Company recognizes revenue in accordance with ASC 606. The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company uses judgment to determine: (a) the performance obligations based on the determination under step (ii) above; (b) the transaction price under step (iii) above; and (c) the recognition of revenue as services are performed under step (v) above. The Company also uses judgment to determine whether development milestones or other variable consideration except for royalties and sales-based milestones, should be included in the transaction price as described further below.

The Company applies the five-step model to contracts when the arrangement is not a collaboration pursuant to ASC Topic 808, Collaborative Arrangements (“ASC 808”), and it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Collaborative Agreements

The Company analyzes its collaboration agreements to assess whether they are within the scope of ASC 808 by determining whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the extent the arrangement is within the scope of ASC 808, the Company assesses whether aspects of the arrangement between the Company and the collaboration partner are within the scope of other accounting literature. If the Company concludes that some or all aspects of the arrangement represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC 606. If the Company concludes that some or all aspects of the arrangement are within the scope of ASC 808 and do not represent a transaction with a customer, the Company recognizes the Company’s share of the allocation of the shared costs incurred with respect to the jointly conducted activities as a component of the related expense in the period incurred.

Research and development (“R&D”) expenses are recorded to operating expenses when incurred. The Company’s R&D expenses consist primarily of costs incurred in performing R&D activities, including personnel-related expenses such as salaries, stock-based compensation and benefits, facilities costs, depreciation and external costs of outside vendors engaged to conduct clinical and preclinical development activities and to manufacture a product candidate. The Company accrues expenses related to development activities performed by third parties based on an evaluation of services received and efforts expended pursuant to the terms of the contractual arrangements. Payments under some of these contracts depend on preclinical trial milestones. Non-refundable advance payments for goods and services that will be used over time for R&D are deferred and capitalized as R&D prepaid expenses on the Company’s consolidated balance sheets. The capitalized amounts are recognized as an expense as the goods are delivered or as the related services are performed. In accruing service fees, the Company estimates the period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual or prepaid expense accordingly. Costs to acquire technologies to be used in R&D that have not reached technological feasibility and have no alternative future use are also expensed as incurred.

General and administrative (“G&A”) expenses consist primarily of personnel-related expenses, including salaries, bonuses, benefits, travel and stock-based compensation expenses for employees in executive, accounting and finance, business development, human resources, legal, and other administrative functions. Other significant G&A expenses include allocated facility-related costs, legal fees relating to corporate and intellectual property matters, professional fees for accounting, audit and tax services, consulting fees and insurance costs. G&A costs are expensed as incurred.

Patent Costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts are classified as G&A expenses.

Offering Costs

The Company complies with the requirements of ASC 340, Other Assets and Deferred Costs, with regards to offering costs. Prior to the completion of an offering of common stock, direct offering costs are capitalized as deferred offering costs. The deferred offering costs are charged to additional paid-in capital for offerings of common stock or as a reduction in the carrying value of preferred stock for offerings of preferred stock. As of December 31, 2024 and 2023, the Company had no deferred offering costs recorded. During the year ended December 31, 2024, the Company recorded $4.0 million of offering costs related to the issuance of common stock in the IPO and recognized this amount as a reduction in the carrying value of the common stock issued in the IPO.

Stock-Based Compensation

The Company periodically grants equity-based awards in the form of stock options and restricted stock to employees, directors and non-employees and records stock-based compensation expenses based on their estimated fair value at the grant date. The Company estimates the fair value of stock options using the Black-Scholes option-pricing model as of the grant date. Stock-based compensation expenses are recognized in the accompanying consolidated statements of operations and comprehensive loss on a straight-line basis over the requisite service period, which is typically the vesting period. Determining the appropriate fair value model and related input assumptions requires judgment.

Prior to the IPO, the fair value of the Company’s common stock was determined by the Company’s Board of Directors (the “Board”) at the time of each option grant by considering several objective and subjective factors. These factors included the valuation of a select group of representative public companies within the industry that focus on biotechnology that the Board believed was comparable to the Company’s operations; operating and financial performance; the lack of liquidity of the common stock and trends in the broader economy and biotechnology industry also impact the determination of the fair value of the common stock. For awards granted after the Company’s IPO, the grant date fair value of common stock was determined by using the closing price per share of the Company’s common stock.

The other inputs to the Black-Scholes option-pricing model include the following:

•The risk-free interest rate used is based on the published U.S. Department of Treasury interest rates in effect at the time of stock option grant for zero coupon U.S. Treasury notes with maturities approximating each grant’s expected term;

•The dividend yield iszero as the Company has not paid dividends and does not anticipate paying a cash dividend in the foreseeable future;

•The expected term for options granted is calculated using the simplified method and represents the average time that options are expected to be outstanding based on the mid-point between the vesting date and the end of the contractual term of the award; and

•Expected volatility is derived from the historical volatility of a select group of representative companies, for a look-back period commensurate with the expected term of the stock options, as the Company has limited trading history of common stock.

The Company recognizes forfeitures related to stock-based compensation awards as they occur.

The Company classifies stock-based compensation expense in the consolidated statement of operations and comprehensive loss in the same way the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 requires the use of the asset and liability method of accounting for income taxes. The current or deferred tax consequences of a transaction are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable currently or in future years. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax basis of assets and liabilities and expected future tax consequences of events that have been included in the consolidated financial statements or tax returns using enacted tax rates in effect for the year in which the differences are expected to reverse. Under this method, a valuation allowance is used to offset deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets may not be realized. Management evaluates the recoverability of deferred taxes and the adequacy of the valuation allowance at each reporting period (see Note 12, Income Taxes).

The Company follows the provisions of ASC 740 relative to accounting for uncertain tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company had no reserves related to uncertain tax positions as of December 31, 2024 and 2023. As applicable, the Company recognizes accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes. As of December 31, 2024 and 2023, the Company did not accrue any potential interest or penalties.

The Company is required to file federal and state income tax returns in the U.S. and foreign income tax returns in Australia. The preparation of tax returns requires the Company to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company.

The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities for the tax years ended December 31, 2020 through December 31, 2024. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations.

Classification of Convertible Preferred Stock

The Company’s convertible preferred stock was classified as temporary equity in the accompanying consolidated balance sheet as of December 31, 2023 and was excluded from stockholders’ equity (deficit) as the potential redemption of such stock was outside the Company’s control. The convertible preferred stock was not redeemable except for in the event of a liquidation, dissolution or winding up of the Company. The Company did not accrete the carrying values of the preferred stock to the redemption values since the occurrence of these events was not considered probable.

Net Loss Per Share Attributable to Common Stockholders

The Company determined all of its convertible preferred stock qualified as participating securities, as defined in ASC 260, Earnings Per Share (“ASC 260”). Under ASC 260, securities are considered participating securities if the securities may participate in undistributed earnings with common stock, whether that participation is conditioned upon the occurrence of a specified event or not. In accordance with ASC 260, a company is required to use the two-class method when computing net income (loss) per share when a company has securities that qualify as participating securities. The two-class method is an earnings allocation formula that determines net income (loss) per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Diluted net loss per share for the Company’s common stock is computed using the more dilutive of the two-class method or the if-converted method.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting net loss per share attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding options to purchase common stock, unvested restricted stock awards, and shares of convertible preferred stock are considered potential dilutive common shares. The Company has generated a net loss in all periods presented, and therefore the basic and diluted net loss per share attributable to common stockholders are the same as the inclusion of the potentially dilutive securities would be anti-dilutive.

Emerging Growth Company Status

The Company is an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not an EGC. The Company may take advantage of these exemptions until it is no longer an EGC under Section 107 of the JOBS Act and has elected to use the extended transition period for complying with new or revised accounting standards. As a result of this election, the Company’s consolidated financial statements may not be comparable to companies that comply with public company FASB standards’ effective dates.

Recently Adopted Accounting Pronouncements

In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The standard expands reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit (referred to as the “significant expense principle”). The Company has adopted this standard for the fiscal year 2024 annual financial statements and has applied this standard retrospectively for all prior periods presented in the financial statements (see Note 13).

Recently Issued Accounting Standards

Accounting standards not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures. The guidance includes the requirement that public business entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). It also requires that all entities disclose, on an annual basis, the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received) and requires that all entities disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. Lastly, the guidance eliminates the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or make a statement that an estimate of the range cannot be made. For public business entities, the guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual consolidated financial statements that have not yet been issued or made available for issuance. The guidance should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact that this guidance may have on its consolidated financial statements.

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.” The standard requires that public business entities disclose additional information about specific expense categories in the notes to financial statements for interim and annual reporting periods. For public business entities, the guidance is effective for interim and annual periods beginning after December 15, 2026. Early adoption is permitted for annual consolidated financial statements that have not yet been issued or made available for issuance. The guidance may be applied on a prospective basis or retrospectively for all prior periods presented in the financial statements. The Company is currently evaluating the impact that this guidance may have on its consolidated financial statements.

3. Fair Value Measurements

The following tables present the financial instruments carried at fair value on a recurring basis as of December 31, 2024 and 2023 (in thousands):

The carrying amounts reflected in the consolidated balance sheet for prepaid expenses and other current assets, accounts payable and accrued expenses and other liabilities are shown at their historical values which approximate their fair values.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of December 31, 2024 and 2023 (in thousands):

5. Property and Equipment, Net

Property and equipment, net consisted of the following as of December 31, 2024 and 2023 (in thousands):

During the year ended December 31, 2024, title of a finance lease ROU asset for laboratory equipment with cost totaling $0.3 million transferred to the Company. The laboratory equipment had accumulated depreciation of $0.2 million. The Company incurred depreciation and amortization expense of $1.5 million and $1.6 million for the years ended December 31, 2024 and 2023, respectively. Depreciation and amortization expense for the years ended December 31, 2024 and 2023 includes $0.2 million and $0.1 million of finance lease ROU asset amortization, respectively (see Note 7).

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of December 31, 2024 and 2023 (in thousands):

7. Commitments and Contingencies

Operating Leases

The Company currently leases approximately 30,000 square feet of office space and laboratory space in Cambridge, Massachusetts (the “Cambridge Lease”) and approximately 5,300 square feet of office and lab space in Boulder, Colorado (the “Boulder Lease”). The Cambridge Lease expires on June 30, 2027. The Cambridge Lease provided a lease incentive in the form of reimbursable leasehold improvements of up to $3.6 million. As of December 31, 2024 and 2023, the Company had capitalized $4.5 million of leasehold improvement costs under this lease. $3.6 million was reimbursed through the lease incentive of which the final $2.7 million was received during the year ended December 31, 2023. Amounts received for lease incentives were included in the changes in operating lease assets and liabilities line in the consolidated statement of cash flows. As of December 31, 2024, the Cambridge Lease accounted for $4.9 million of operating lease ROU assets, $2.7 million of current operating lease liabilities and $4.6 million of non-current operating lease liabilities.

The Boulder Lease is afive-year lease that commenced on September 1, 2023 and expires on September 30, 2028. As the rate implicit for the Boulder Lease was not readily determinable, the Company used its incremental borrowing rate of 7.12% as of the commencement date. At commencement of the Boulder Lease, the Company recorded $1.4 million of operating ROU assets, $0.2 million of current operating lease liabilities and $1.2 million of non-current operating lease liabilities. As of December 31, 2024, the Boulder Lease accounted for $1.1 million of operating lease ROU assets, $0.3 million of current operating lease liabilities and $0.9 million of non-current operating lease liabilities.

The table below summarizes the Company’s operating lease costs for the years ended December 31, 2024 and 2023 (in thousands except for lease terms and borrowing rates):

Maturities of operating lease liabilities as of December 31, 2024 were as follows (in thousands):

Finance Leases

The Company leases certain specialized lab equipment under several finance lease agreements with maturities ranging from April 2025 to November 2028. As of December 31, 2024, these finance leases account for $0.4 million of finance lease ROU assets, $0.1 million of current finance lease liabilities and $0.1 million of non-current finance lease liabilities.

The table below summarizes the Company’s finance lease costs for the years ended December 31, 2024 and 2023 (in thousands except for lease terms and borrowing rates):

Maturities of finance lease liabilities as of December 31, 2024 were as follows (in thousands):

Financing Obligation

In April 2023, the Company (seller-lessee) sold certain laboratory equipment to an unrelated third-party (buyer-lessor) and simultaneously entered into a 26-month lease agreement for the laboratory equipment with the buyer-lessor through June 2025. The lease requires monthly payments of less than $0.1 million and provides a fixed price repurchase option at the end of the lease term of $0.1 million.

The repurchase option precludes accounting for the transfer of the asset to the buyer-lessor as a sale under ASC 842 since the exercise price of the repurchase option is fixed and, therefore, is not the fair value of the asset on the exercise date of the option. Thus, the agreement is considered a financing transaction (i.e., failed sale-leaseback) as the Company is reasonably certain to exercise the repurchase option at the end of the lease. The net proceeds received amounted to $0.7 million, which is recorded as a financing liability in the Company’s consolidated balance sheet. The Company imputes interest at a rate of 0.86% monthly. For each of the years ended December 31, 2024 and 2023, the Company recorded less than $0.1 million of interest expense related to this financing transaction in other expense in the consolidated statement of operations and comprehensive loss.

Legal Proceedings

A liability for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources is recorded in the consolidated financial statements if it is determined that it is probable that a loss has been incurred and the amount (or range) of the loss can be reasonably estimated. There are no matters currently outstanding for which any liabilities have been accrued or require disclosure.

8. Collaboration and License Agreements

In-License Agreements

Children’s Medical Center Corporation

In April 2018, the Company entered into a development and license agreement (the “CMCC Agreement”) with Children’s Medical Center Corporation (“CMCC”). The CMCC Agreement allows the Company to use CMCC’s proprietary intellectual property to conduct research, development and commercialization of products utilizing CMCC’s proprietary intellectual property in return for specified payments. The proprietary intellectual property licensed pursuant to this agreement is related to certain legacy programs the Company is not pursuing which were subsequently sublicensed to Fulcrum Therapeutics, Inc. (“Fulcrum”), as described below. As part of the CMCC Agreement, the Company issued a total of 15,123 shares of common stock to CMCC and its affiliates based on the fair value of the common stock on the date of issuance.

The Company is obligated to pay potential development milestone payments under the terms of the CMCC Agreement of up to $7.7 million for the first licensed target, $3.9 million for the second licensed target and $1.9 million for the third licensed target upon the achievement of certain specified contingent events. If commercial sales of a licensed product commence, the Company will pay CMCC royalties at percentage rates ranging in the low- to mid-single digits on net sales of licensed products in countries where such product is protected by patent rights. The Company incurred de minimis royalties owed to CMCC for each of the years ended December 31, 2024 and 2023 under the CMCC Agreement and recorded the amounts in R&D expense in the consolidated statement of operations and comprehensive loss. Further, under the terms of the CMCC Agreement, the Company is required to pay ten percent of any upfront payment received under a sublicensing agreement entered into prior to the initiation of the first investigational new drug study. As such, the Company recorded de minimis amounts for each of the years ended December 31, 2024 and 2023, which is presented in R&D expenses on the consolidated statements of operations and comprehensive loss. The Company re-evaluates the likelihood of achieving future milestones at the end of each reporting period. As of December 31, 2024, the Company determined that the likelihood of achieving future milestones was not probable.

Whitehead Institute for Biomedical Research

In October 2019, the Company entered into a patent license agreement (as subsequently amended, the “Whitehead Agreement”), with the Whitehead Institute for Biomedical Research, (“Whitehead”). Under the Whitehead Agreement, the Company was granted a worldwide, royalty-bearing, sublicensable license under certain patent rights owned or controlled by Whitehead. Upon entering into the Whitehead Agreement, the Company paid an initial $0.1 million license issuance fee, and paid de minimis additional fees in connection with subsequent amendments to the Whitehead Agreement. The Company is obligated to pay annual license maintenance fees for the term of the Whitehead Agreement. In addition, the Company is obligated to pay certain filing, prosecution and maintenance fees with respect to certain patent rights licensed.

The Company is also obligated to pay potential development milestone payments to Whitehead of up to $1.9 million upon the achievement of certain specified contingent events. In addition, if the Company successfully commercializes a product under the Whitehead Agreement, it is obligated to pay tiered royalties at percentage rates ranging from less than one percent to the mid-single digits of net sales or of running royalties of net sales, subject to specified reductions, until either the last-to-expire valid claim of a Whitehead patent covering the product orseven years after the first commercial sale, in each case on a product-by-product and country-by-country basis.

The Company incurred fees of $0.3 million under the Whitehead Agreement during the year ended December 31, 2024. During the year ended December 31, 2023, the fees were de minimis. These fees are recorded in R&D expense in the Company’s consolidated statement of operations and comprehensive loss.

Out-license Agreement

Fulcrum Therapeutics, Inc.

In July 2023, the Company entered into a license agreement (the “Fulcrum Agreement”) with Fulcrum. Under the Fulcrum Agreement, the Company granted an exclusive license related to the Company’s intellectual property (“IP”) and granted a non-exclusive sublicense for IP obtained through the CMCC Agreement. In exchange for the license rights, Fulcrum paid the Company a $0.4 million upfront payment. In the event that Fulcrum achieves certain development and commercial milestones, Fulcrum will be obligated to pay the Company one-time milestone payments ranging from $0.6 million to $20.0 million depending on the product and milestone achieved. In addition, under the Fulcrum Agreement there are potential de minimis minimum annual royalty payments as well as sales-based royalties of up to the low-double digits upon commercialization.

The Company assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty, Fulcrum, is a customer. In accordance with ASC 606, the Company determined that there isone performance obligation in the Fulcrum Agreement, consisting of the exclusive and non-exclusive license rights granted to Fulcrum. The transaction price was comprised of the fixed consideration of $0.4 million and was recognized upon transfer of control of the licenses at a point in time upon contract execution. The arrangement includes significant variable consideration primarily in the form of milestone payments, which is fully constrained at the inception of the contract. All variable consideration is remeasured and reassessed each reporting period. As of and for the years ended December 31, 2024 and 2023, the Company determined the variable consideration was fully constrained.

The sales-based royalty fee is considered variable consideration and will be recognized as revenue as such sales occur. The sales-based royalty fee qualifies for the royalty constraint exception and does not require an estimate of the future transaction price.

During the year ended December 31, 2023, the Company recorded $0.4 million in license revenue pursuant to the Fulcrum Agreement andnone in the year ended December 31, 2024.

Collaborative Arrangement

Eli Lilly and Company

In July 2023, the Company executed a Material Transfer Agreement (as amended, the “MTA”) with Eli Lilly and Company (“Eli Lilly”). As part of the MTA, the Company and Eli Lilly agreed to perform R&D activities to generate up to three antisense oligonucleotides (“ASOs”) in accordance with a prescribed workplan. The Company evaluated the MTA under ASC 808 and concluded that it is a collaboration arrangement. The Company and Eli Lilly are jointly overseeing the R&D activities under the MTA. In addition, both parties are exposed to significant risks and potential rewards under the MTA. During each of the years ended December 31, 2024 and 2023, the Company recorded $0.5 million as a reduction in R&D expense in the consolidated statement of operations and comprehensive loss as a result of the earned R&D reimbursement from Eli Lilly. Additionally, the Company had an unbilled receivable of $0.1 million recorded within prepaid expenses and other current assets on the consolidated balance sheet as of December 31, 2023 and a de minimis deferred liability as of December 31, 2024.

Research and Collaboration Arrangement

BioMarin Pharmaceutical Inc.

In September 2024, the Company entered into a Collaboration and License Agreement (the “BioMarin Agreement”) with BioMarin Pharmaceutical Inc. (“BioMarin”). Under the terms of the BioMarin Agreement, BioMarin paid the Company an upfront, nonrefundable payment of $1.0 million, and will reimburse the Company for certain research activities. On a per-program basis, the Company will be eligible to receive up to $5.0 million in future contingent preclinical milestones, up to $75.0 million in future contingent development and regulatory milestones and up to $105.0 million in commercial sales milestones. The Company will be further eligible to receive tiered royalties at percentage rates ranging from low to high single digits of net sales, subject to specified reductions, until either the last-to-expire valid claim of a patent covering the product, ten years after the first commercial sale, or the expiration of any applicable regulatory exclusivity obtained for the product, in each case on a product-by-product and country-by-country basis. The agreement may be terminated in its entirety or on a program-by-program basis for convenience by BioMarin. The agreement may also be terminated by either the Company or BioMarin under certain other circumstances, including material breach, as set forth in the agreement. The notice periods for termination provisions range from 30 days to 270 days depending on the reason for termination.

The Company assessed this arrangement in accordance with ASC 606 and concluded that BioMarin is a customer and there is one performance obligation, which includes performance of R&D activities in accordance with a contractual work plan, participation in a joint steering committee, the grant of an exclusive license to BioMarin, the grant of a non-exclusive license to the data resulting from performance of the R&D activities, and providing quarterly progress reports. The transaction price was determined to be fixed consideration of $3.8 million, comprised of $1.0 million upfront consideration and expected $2.8 million reimbursable R&D expenses, and will be recognized over time based upon a cost-to-cost method. Any deferred revenue recorded will be classified as short-term. The Company believes this work will be completed within 12 months of contract execution and thus, the related revenue will be recognized over that period.

The arrangement includes significant variable consideration primarily in the form of milestone payments, which is fully constrained at the inception of the contract. All variable consideration is remeasured and reassessed each reporting period. As of and for the year ended December 31, 2024, the Company determined the variable consideration was fully constrained.

During the year ended December 31, 2024, the Company recognized $0.7 million in collaboration revenue under the BioMarin Agreement. Additionally, the Company had deferred revenue of $0.3 million recorded on the consolidated balance sheet as of December 31, 2024.

9. Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Convertible Preferred Stock

Upon the closing of the IPO, all of the currently outstanding convertible preferred stock automatically converted into 11,648,582 shares of common stock. As of December 31, 2023, the Company’s convertible preferred stock consisted of the following (in thousands, except share amounts):

Common and Preferred Stock

The Company’s amended and restated certificate of incorporation authorizes the issuance of up to 175,000,000 shares of $0.0001 par value common stock and up to 25,000,000 shares of $0.0001 par value undesignated preferred stock. The Board may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, and number of shares constituting any series or the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on the Company’s common stock, diluting the voting power of the Company’s common stock, impairing the liquidation rights of the Company’s common stock, or delaying or preventing a change in control. As of December 31, 2024, no shares of preferred stock were outstanding.

Each share of common stock entitles the holder toone vote, together with the holders of any preferred stock, on all matters submitted to the stockholders for a vote. Common stockholders are also entitled to receive dividends. As of December 31, 2024, no cash dividends have been declared or paid.

As of December 31, 2024, the Company has reserved the following shares of common stock for future issuance:

10. Stock-Based Compensation

2024 Equity Incentive Plan

In October 2024, the Company adopted the 2024 Equity Incentive Plan (the “2024 Plan”), which became effective in connection with the Company’s IPO. The 2024 Plan provides for the grant of stock options, stock appreciation rights, restricted and unrestricted stock awards, restricted stock unit awards, and other stock-based awards to employees, directors, and non-employee service providers of the Company.

Awards granted under the 2024 Plan expire no later thanten years from the date of grant. The price of stock options shall not be less than 100% of the estimated fair value on the date of grant and typically vest over afour-year period, although awards may be granted with different vesting terms. The 2024 Plan initially reserved 2,143,039 shares of common stock for the issuance of future awards and provides for an automatic annual increase in the number of shares of common stock reserved for future issuance by the lesser of (i)5% of the number of shares of the Company’s common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the Company’s Board of Directors on or prior to such date for such year. As of December 31, 2024, there were 2,079,045 shares of common stock reserved and available for issuance pursuant to the 2024 Plan.

2024 Employee Stock Purchase Plan

In October 2024, the Company adopted the 2024 Employee Stock Purchase Plan (the “2024 ESPP”), which became effective in connection with the Company’s IPO. The 2024 ESPP initially reserved 214,303 shares of common stock for the issuance of future awards and provides for an automatic annual increase in the number of shares of common stock reserved for future issuance by the lesser of (1)1% of the number of shares of the Company’s common stock outstanding as of the close of business on the immediately preceding December 31 and (2) the number of shares determined by the Company’s Board of Directors on or prior to such date for such year. As of December 31, 2024, there were 214,303 shares of common stock reserved and available for issuance pursuant to the 2024 ESPP.

The 2024 ESPP permits eligible employees to enroll in six-month offering periods. Participants may purchase shares of the Company’s common stock, through payroll deductions, at a price equal to 85% of the fair market value of the common stock on the first or last day of the applicable offering period, whichever is lower. Purchase dates under the 2024 ESPP occur on or about January 1 and July 1 each year. As of December 31, 2024, there have been no offering periods.

2016 Equity Incentive Plan

In 2016, the Company adopted the Marauder Therapeutics, Inc. 2016 Stock Option and Grant Plan (the “2016 Plan”) that provided for the grant of stock options, restricted stock units, and other stock-based awards to employees, directors, and non-employee service providers of the Company. The 2016 Plan was suspended in connection with the Company’s IPO and no further grants will be made. The 2016 Plan continues to govern the terms and conditions of outstanding awards granted under the 2016 Plan.

Stock Option Activity

The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The weighted-average assumptions used to estimate the fair value of the stock options granted during the years ended December 31, 2024 and 2023 were as follows:

The weighted average fair value of stock options granted during the years ended December 31, 2024 and 2023 was $8.09 and $6.73 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $6.6 million and $0.2 million, respectively.

The Company issued $1.0 million of promissory notes to certain executives during the year ended December 31, 2021 in order for them to early exercise stock options. Management concluded the promissory notes are recourse in form but non-recourse in substance as the Company does not intend to seek repayment beyond the shares issued. The promissory notes are therefore treated as an option for accounting purposes and are not recorded on the consolidated balance sheet.

Stock-based compensation expense is recorded, accordingly. The exercise price used in determining the fair value of the stock options includes the interest earned on the notes and the expected term isfive years, reflecting the term of the notes. The early exercised shares were not outstanding for accounting purposes before repayment of the notes. During the year ended December 31, 2024, the promissory notes were forgiven, resulting in 491,110 shares of common stock that had been exercised early being treated as outstanding for accounting purposes. These shares are included in the exercised options in the table below.

The following table summarizes stock option activity for the year ended December 31, 2024 (in thousands, except share and per share amounts):

The Company recorded stock-based compensation expense related to stock options of $3.8 million and $2.8 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, there was $6.8 million of unrecognized stock option stock-based compensation expense which is expected to be recognized over a weighted average period of 2.7 years.

A summary of restricted stock award activity for the year ended December 31, 2024 is a follows:

All restricted common stock awards were initially issued at a price determined to be fair value on the date of grant. The Company recognizes forfeitures of restricted common stock as they occur. As of December 31, 2024, there was a de minimis amount of unrecognized restricted stock-based compensation expense which is expected to be recognized over a weighted average period of 0.3 years. The fair value of shares that vested during the years ended December 31, 2024 and 2023 was $0.1 million and $0.5 million, respectively.

Stock-based compensation expense related to stock options and restricted stock recorded in the accompanying consolidated statements of operations for the years ended December 31, 2024 and 2023 is as follows (in thousands):

The Company has not recognized and does not expect to recognize in the near future, any tax benefit related to employee stock-based compensation expense as a result of the full valuation allowance related to its net deferred tax assets.

11. Employee Benefit Plan

On January 1, 2017, the Company’s board of directors approved the Company’s 401(k) retirement plan (the “401(k) Plan”). Employees of the Company are eligible to participate in the 401(k) Plan. Participants may contribute up to 100% of their annual compensation to the 401(k) Plan, subject to statutory limitations. Effective January 1, 2022, under the 401(k) Plan “Safe Harbor Match,” the Company matches 100% of the first 3% of employee contributions and these contributions vest in full at the time of match.

For the years ended December 31, 2024 and 2023, the Company made matching contributions of $0.3 million and $0.4 million, respectively.

12. Income Taxes

For the years ended December 31, 2024 and 2023, no income tax expense was recorded due to the Company’s net operating loss (“NOL”) and full valuation allowance. The Company’s effective tax rate ofzero differs from the U.S. statutory tax rate of 21% primarily because of the valuation allowance maintained against the Company’s net deferred tax assets. A reconciliation of the expected income tax benefit computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows for the years ended December 31, 2024 and 2023:

The Company’s net deferred tax assets as of December 31, 2024 and 2023, consisted of the following (in thousands):

As of December 31, 2024 and 2023, the Company had U.S. federal NOL carryforwards of $102.3 million and $69.8 million, respectively, which may be available to offset future income tax liabilities. Of the $102.3 million carryforwards, approximately $4.8 million will begin to expire in 2036 and approximately $97.5 million are carried forward indefinitely. As of December 31, 2024 and 2023, the Company had state NOL carryforwards of $97.6 million and $66.7 million, respectively, which will begin to expire in 2036.

As of December 31, 2024 and 2023, the Company had U.S. federal R&D tax credit carryforwards of $6.7 million and $5.2 million, respectively, which begin to expire in 2036. As of December 31, 2024 and 2023, the Company had state R&D tax credit carryforwards of $3.3 million and $2.6 million, respectively, which begin to expire in 2036. As of

December 31, 2024 and 2023, the Company had capitalized R&D costs of $22.1 million and $17.4 million, respectively, as required by the Tax Cuts and Jobs Act of 2017.

Future realization of the tax benefits of existing temporary differences and NOL carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2024, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2024. During the years ended December 31, 2024 and 2023, the valuation allowance increased by $15.3 million and $15.8 million, respectively, due to the increase in the deferred tax assets by the same amount, primarily due to increases in the NOL carryforwards, capitalized R&D costs and R&D tax credit carryforwards.

The utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation because of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code of 1986 (“IRC”), a corporation that undergoes an ownership change may be subject to limitation on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of more than 50% in the ownership positions of certain stockholders during a rolling three-year period.

The Company has not completed a formal study to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred as of December 31, 2024. An ownership change would restrict its ability to use its NOLs or tax credit carryforwards and could require the Company to pay U.S. federal or state income taxes earlier than would be required if such limitation were not in effect.

For the year ended December 31, 2024, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s R&D credit carryforwards; however, until a study is completed, and any adjustment is known, no amounts have been recognized as an uncertain tax position. A full valuation allowance has been provided against the Company’s R&D credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred income tax asset established for the R&D credit carryforwards and the valuation allowance.

13. Segment Reporting

The Company manages its business activities on a consolidated basis and operates as a single operating segment: R&D, which engages in the business of developing a new class of RNA-based therapeutics to treat a broad range of genetic diseases. The Company's operations are primarily in the United States.

The Company’s CODM is its Chief Executive Officer. The CODM uses net loss, as reported on the Company’s consolidated statement of operations and comprehensive loss, in evaluating performance and determining how to allocate resources. The CODM does not review assets in evaluating the results and therefore, such information is not presented. The following table provides the revenue and significant and other segment expenses for the years ended December 31, 2024 and 2023 (in thousands):

Other segment income includes total other income, net on the consolidated statements of operations.

14. Net Loss Per Share Attributable to Common Stockholders

Basic and diluted net loss per share was calculated as follows for the years ended December 31, 2024 and 2023 (in thousands, except share and per share amounts):

The Company’s potentially dilutive securities, which include or have included convertible preferred stock, outstanding stock options, unvested restricted common stock, and warrants to purchase stock, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following from the computation of diluted net loss per share attributable to common stockholders as of December 31, 2024 and 2023 because including them would have had an anti-dilutive effect:

15. Related Parties

In September 2015, the Company entered into consulting agreements with itstwo founders, related parties who hold shares of the Company’s common stock, to provide R&D and strategic planning services. For the years ended December 31, 2024 and 2023, the Company recognized R&D expense totaling $0.3 million and $0.3 million, respectively, related to work performed under the founder agreements. The Company hadno amount due to the founders at both December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, the Company recognized stock-based compensation expense totaling $0.2 million and less than $0.2 million, related to consulting agreements, respectively.

In March 2019, the Company entered into a consulting agreement with an executive consultant, a related party who holds shares of the Company’s common stock. For the years ended December 31, 2024 and 2023, the Company recognized G&A expense totaling $0.1 million and $0.1 million, respectively, related to work performed under the consulting agreement. The Company hadno amount due to the consultant at both December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, the Company recognized stock-based compensation expense totaling $0.2 million and less than $0.2 million, respectively, related to the consulting agreement.