Instil Bio, Inc.

1. Organization and Description of Business

Instil Bio, Inc. (the “Company”) is a biotechnology company focused on identifying and advancing innovative therapeutic opportunities.

In January 2026, the Company announced that its wholly owned subsidiary, Axion Bio, Inc. (“Axion Bio”), was discontinuing development of AXN-2510, its former lead product candidate. See Note 12 for further information.

The Company is actively seeking to in-license or acquire and develop additional novel therapeutic candidates in diseases with significant unmet medical need.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2026, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026 and 2025, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2026 and 2025, and the results of its cash flows for the three months ended March 31, 2026 and 2025. The financial data and other information disclosed in these notes related to the three months ended March 31, 2026 and 2025 are also unaudited. The results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other periods, or any future year period. The Company has evaluated subsequent events through the date the condensed consolidated financial statements were issued.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”) on March 27, 2026.

Segments

Operating segments are identified as components of an entity for which separate discrete financial information is available and that is regularly reviewed by the chief operating decision maker, the Company’s Chief Executive Officer, in deciding how to allocate resources to an individual segment and in assessing performance. The Company has determined it operates in a single operating segment and hasone operating segment. See Note 3 for further information.

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents include amounts invested in money market accounts.

As of March 31, 2026, restricted cash consisted of a cash reserve allocated to future tax payments related to the 2024 Loan (as defined in Note 8) and credit card collateral. As of December 31, 2025, restricted cash consisted solely of a cash reserve allocated to future tax payments related to the 2024 Loan. There was $0.1 million and $0.2 million in restricted cash as of March 31, 2026 and December 31, 2025, respectively, on the Company’s condensed consolidated balance sheets.

The Company’s investments in marketable securities have been classified and accounted for as available-for-sale. The Company classifies its maturities as either short-term or long-term based on each instrument’s underlying contractual maturity date, which are carried at their fair values based on the quoted market prices of the securities. Unrealized gains and losses are reported as accumulated other comprehensive income (loss). Realized gains and losses on available-for-sale securities are included in net loss in the period earned or incurred. As of March 31, 2026 and December 31, 2025, marketable securities consisted of U.S. Treasury bills.

The Company periodically reviews whether its securities may be other-than-temporarily impaired, including whether or not (i) the Company has the intent to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before its anticipated recovery. If one of these factors is met, the Company will record an impairment loss associated with its impaired investment. The impairment loss will be recorded as a write-down of investments in the condensed consolidated balance sheets and a realized loss within other expense in the condensed consolidated statements of operations and comprehensive loss. As of March 31, 2026 and December 31, 2025, there were no impairment losses for the investments.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the amounts shown in the condensed consolidated statements of cash flows (in thousands):

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Management evaluated the Company’s ability to continue as a going concern for the twelve months following the issuance of the condensed consolidated financial statements. As disclosed and defined in Note 8, the 2024 Loan is due in January 2027, for total principal of $85.6 million, which is in excess of cash, cash equivalents, and marketable securities on hand as of March 31, 2026, which management has concluded is an indicator of substantial doubt about the Company’s ability to continue as a going concern.

The Company plans to cause Complex Therapeutics LLC, a wholly owned subsidiary of the Company, to execute its contractual right to extend the maturity of the 2024 Loan to January 2028. In addition, the Company may seek to cause Complex Therapeutics LLC to refinance or restructure the 2024 Loan, sell the Tarzana facility to repay the 2024 Loan, or seek additional financing in the form of equity or debt instruments. There can be no assurance that new financing or other forms of funding will be available on favorable terms or at all. The Company concluded that management's plans, including Complex Therapeutics LLC’s contractual right to exercise the extension option to January 2028, which is within Complex Therapeutics LLC’s control, alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern.

Assets Held for Sale

The Company classifies long-lived assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the asset or disposal group; the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal group; the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the asset or disposal group beyond one year; and actions required to complete the plan to sell have been initiated.

The Company initially measures a long-lived asset or disposal group that is held for sale at the lower of its carrying value or fair value less any costs to sell. Fair value is estimated by the Company through evaluations of quoted market prices received for other comparable held for sale assets sold by the Company. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. The Company assesses the fair value of a long-lived asset or disposal group less any costs to sell each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the asset or disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale. Upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale, the Company ceases depreciation and reports long-lived assets in the line item “assets held for sale” in its condensed consolidated balance sheets.

In March 2025, the Company’s board of directors (the “Board of Directors”) approved a plan to sell the Tarzana facility. The Company engaged a broker to facilitate a potential sale of the Tarzana facility and therefore reclassified the land and building as held for sale in the condensed consolidated balance sheet during the year ended December 31, 2025. The Tarzana facility is currently leased to AstraZeneca Pharmaceuticals LP (“Tenant”) and Tenant has a right of first offer to purchase it. Refer to Note 8.

In May 2026, the Company determined that there had been a change to its plan with respect to the Tarzana facility and the Board of Directors approved discontinuing the plan to market the Tarzana facility for sale. As a result, the Company determined that this asset no longer meets the criteria to be classified as held for sale under ASC 360. Consequently, in the second quarter of 2026, this asset will be reclassified as held and used at the lower of (a) its carrying amount before the asset was classified as held for sale, adjusted for depreciation expenses that would have been recognized had the asset been continuously classified as held and used, and (b) its fair value. The Company is currently evaluating the financial statement impact of this reclassification. The resulting adjustment will be recognized in the second quarter in the condensed consolidated statement of operations and comprehensive loss as a component of gain (loss) from operations.

The fair value less the cost to sell of the Tarzana facility was $112.1 million on the Company’s condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025. During the three months ended March 31, 2026, the Company concluded that no impairment indicators were present and recordedno impairment charge. The Company recorded building impairments related to the Tarzana facility ofnil and $16.6 million during the three months ended March 31, 2026 and 2025, respectively. Refer to Note 12.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset over its remaining useful life. If such assets are impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. If the useful life is shorter than originally estimated, the Company depreciates or amortizes the remaining carrying value over the revised shorter useful life. See Note 12 for more information.

Research and Development Expenses

Research and development costs are expensed as incurred. Clinical trial and other development costs incurred by third parties are expensed as the contracted work is performed. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or project and the invoices received from its external service providers. The Company adjusts its accrual as actual costs become known. Where contingent milestone payments are due to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are achieved.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). The amendments in this update require disclosure, in the notes to the financial statements, of specific expense categories present within expense captions presented on the face of the income statement within continuing operations of public business entities. The amendments in this update are effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging and Revenue from Contracts with Customers - Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”) which applies to all entities that enter into non-exchange-traded contracts with underlyings based on operations or activities specific to one of the parties to the contract. The new guidance excludes from derivative accounting non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company does not expect adoption of ASU 2025-07 to have a material impact on its condensed consolidated financial statements and related disclosures.

A variety of proposed or otherwise potential accounting standards are currently being studied by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, the Company has not yet determined the effect, if any, that the implementation of such proposed standards would have on the Company’s consolidated financial statements.

3. Segment Reporting

The Company manages its business activities on a consolidated basis and hasone reportable segment relating to the research and development of novel therapies. The Chief Executive Officer, who serves as the Company’s chief operating decision maker (“CODM”), is responsible for the overall supervision, direction, and management of the business and its officers.

The CODM reviews net loss, as reported in the condensed consolidated statements of operations and comprehensive loss, as well as the progress of the Company’s program(s). The CODM does not review assets in evaluating the results of the segment, and therefore, such information is not presented. All long-lived assets owned by the Company are located in the United States. The accounting policies of the segment are the same as those described in Note 2.

The following table is a summary of the segment and consolidated net loss, including significant segment expenses for the three months ended March 31, 2026 and 2025 (in thousands):

(1) Other program expenses consist of costs related to the Company’s past development of its CoStAR-TIL technology.

(2) Depreciation expense is removed from “General and administrative” and is disclosed separately.

4. Balance Sheet Components

Prepaid and other current assets

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

Property, Plant and Equipment, Net

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

Depreciation expense wasnil and $0.5 million for the three months ended March 31, 2026 and 2025, respectively, in the condensed consolidated statements of operations and comprehensive loss. In March 2025, the Tarzana facility was classified as held for sale, and accordingly, depreciation ceased upon such classification.

As of March 31, 2026, the Company had $112.1 million in assets related to the Tarzana facility on the condensed consolidated balance sheet meeting the criteria of held for sale assets. These assets are recognized at the lower of cost or fair value less costs to sell. The Company estimates the fair value of its Tarzana facility through a combination of an income-based approach and a market-based approach. The income-based approach is dependent on specific assumptions such as market rental rates, capitalization rates and discount rates. The market-based approach utilizes observable data such as comparable building sales. The fair value of these assets are classified as Level 3 in the fair value hierarchy due to a mix of unobservable inputs utilized such as proprietary independent research in the market as well as actual quotes from market participants. As a result, the Company recognized an impairment of long-lived assets held for sale ofnil and $16.6 million related to the building and land during the three months ended March 31, 2026 and 2025, respectively.

Accrued Expenses and Other Current Liabilities

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

5. Fair Value Measurement

The carrying amounts of cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these instruments. Cash and cash equivalents consist primarily of cash and highly liquid investments with original maturities of three months or less at the time of purchase; accordingly, their carrying amounts approximate fair value. Cash and cash equivalents are valued based upon quoted market prices in active markets for identical assets and are therefore classified as Level 1 assets. Money market funds are open-end mutual funds that invest in cash, government securities, and/or repurchase agreements that are collateralized fully. To the extent that these funds are valued based upon the reported net asset value, they are categorized in Level 1 of the fair value hierarchy.

Short-term marketable securities consisted of U.S. Treasury bills that are classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations, alternative pricing sources or U.S. Government Treasury yield of appropriate term.

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring and nonrecurring basis:

There were no transfers in or out of Level 1, 2 and 3 measurements for the three months ended March 31, 2026 and the year ended December 31, 2025. As of March 31, 2026 and December 31, 2025, there were no securities within Level 3 of the fair value hierarchy.

As of March 31, 2026 and December 31, 2025, the fair value of the 2024 Loan (as defined in Note 8) was $85.6 million and $85.5 million, respectively. The fair value was determined on the basis of its net present value and is considered Level 2 in the fair value hierarchy.

6. Financial Instruments

Marketable securities classified as available-for-sale as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):

As of March 31, 2026 and December 31, 2025, marketable securities that had contractual maturities less than one year are classified as current because management considers these marketable securities to be available for current operations. The Company does not intend to sell its marketable securities and it is not likely that the Company will be required to sell these securities before recovery of their amortized cost basis. There were $69.5 million of marketable securities classified as available-for-sale as of March 31, 2026 and December 31, 2025.

7. License and Collaboration Agreement with ImmuneOnco

On August 1, 2024, Axion Bio entered into a license and collaboration agreement (the “IO Collaboration Agreement”) with ImmuneOnco Biopharmaceuticals (Shanghai) Inc. (“ImmuneOnco”), under which it in-licensed several bispecific antibodies, including AXN-2510 and AXN-27M. As part of the IO Collaboration Agreement, Axion Bio made a $10.0 million upfront payment to ImmuneOnco during the year ended December 31, 2024. This amount was fully expensed as in-process research and development (IPR&D) in the same year.

During the year ended December 31, 2024, Axion Bio made a $5.0 million prepayment to ImmuneOnco for development costs, which was fully recognized as research and development expense by March 31, 2025. In April 2025, Axion Bio made a second $5.0 million prepayment to ImmuneOnco for development costs, which was fully recognized as research and development expense by September 30, 2025. In August 2025, Axion Bio made a third $5.0 million prepayment to ImmuneOnco for development costs, which was fully recognized as research and development expense by the three months ended March 31, 2026.

In June 2025, Axion Bio achieved Investigational New Drug (IND) clearance in the United States for a Phase 1 trial of AXN-2510 in relapsed/refractory solid tumors. This milestone triggered a $10.0 million development payment to ImmuneOnco, which was paid in July 2025. This amount was fully expensed as IPR&D during the second quarter of 2025.

The expenses recognized in connection with the IO Collaboration Agreement were $0.3 million and $4.3 million for the three months ended March 31, 2026 and 2025, respectively, and were recorded as a component of research and development expense on the condensed consolidated statements of operations and comprehensive loss. As of March 31, 2026, no additional milestones were accrued.

On January 5, 2026, Axion Bio and ImmuneOnco entered into an agreement terminating the IO Collaboration Agreement. Under the termination agreement, Axion Bio agreed to transfer the rights, title, and interest related to AXN-2510 and AXN-27M to ImmuneOnco, and ImmuneOnco agreed to pay Axion Bio $1.8 million, of which $1.6 million was received during the quarter ended March 31, 2026 and recorded as other income as a gain on contract termination in the condensed consolidated statements of operations and comprehensive loss. Receipt of the remaining $0.2 million is contingent upon the completion of specified wind-down activities.

8. Commitments and Contingencies

Leases

Company as a Lessee: Operating Lease Obligations

The Company currently leases office spaces and laboratory spaces located in Dallas, Texas, and Alderley Park in the United Kingdom. During April 2025, the Company terminated its prior lease in Thousand Oaks, California. The Company’s leased facilities have original lease terms ranging from 2 to 5 years that in general require the Company to provide a security deposit. Certain leases provide the right for the Company to renew the lease upon the expiration of the initial lease term, and various leases have scheduled rent increases on an annual basis. The exercise of lease renewal options for the Company’s existing leases is at the Company’s sole discretion, and not included in the measurement of right-of-use asset or lease liability as they are not reasonably certain to be exercised.

The Company’s lease costs consisted of the following (in thousands):

The following table summarizes cash flow information related to the Company’s lease obligations (in thousands):

The following table summarizes the Company’s lease assets and liabilities (in thousands):

The following table summarizes other supplemental information related to the Company’s lease obligations:

Subsequent to March 31, 2026, the Company extended its lease in Dallas to April 2031, which was originally set to expire in April 2026. The Alderley Park leases in the United Kingdom are set to expire in November 2026.

As of March 31, 2026, future minimum lease payments under operating lease liabilities were $0.2 million, excluding any future payments associated with the Dallas lease extension.

Operating lease liabilities are recorded in the line item “accrued expenses and other current liabilities” in the condensed consolidated balance sheet.

Company as a Lessor: Tarzana Facility Lease with AstraZeneca

On July 10, 2024, Complex Therapeutics LLC, a wholly owned subsidiary of the Company, entered into a lease with AstraZeneca Pharmaceuticals LP pursuant to which Tenant is leasing the facility located in Tarzana, California (the “Lease”). The Lease has an initial term of approximately 15 years, beginning on July 10, 2024 and ending on July 31, 2039, with Tenant having two consecutive options to extend the term for a five-year period each and a one-time option to terminatethe Lease on the tenth anniversary of the commencement of the Lease, which, if exercised, obligates Tenant to pay Complex Therapeutics LLC a termination fee. The initial base rent was approximately $0.6 million per month (approximately $7.5 million annually) and the base rent escalates by 3% per annum. Tenant is also required to pay certain operating expenses and tax expenses as additional rent. There was rent abatement during the first year of the Lease such that Tenant paid no rent or reduced rent during this period. Tenant also has a right of first offer to purchase the premises that are subject to the Lease.

The Lease is classified as an operating lease and revenue is recognized on a straight-line basis and is recorded within the condensed consolidated statements of operations and comprehensive loss in the line item “Other rental income” as this is not a part of the Company’s core operations. Rental income related to the Lease was as follows (in thousands):

Approximate future straight-lined contractual lease income to be recognized under the Lease in effect as of March 31, 2026, is as follows (in thousands):

Differences between rental income earned and amounts due per the Lease are capitalized or charged, as applicable, to accrued rent receivable. As of March 31, 2026 and December 31, 2025, the Company had accrued rent receivable of $8.0 million and $7.7 million, respectively.

Legal Proceedings

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. The Company does not expect that the resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flows.

Debt

In June 2022, the Company’s wholly owned subsidiaries Complex Therapeutics Mezzanine LLC and Complex Therapeutics LLC entered into a mortgage construction loan and mezzanine construction loan (together, the “Construction Loans”) secured by Complex Therapeutic LLC’s Tarzana, California land and building. The initial principal amount of the Construction Loans was $52.1 million, with additional future principal of up to $32.9 million to fund ongoing construction costs.

On December 20, 2024 (the “Closing Date”), Complex Therapeutics LLC entered into a Term Loan Agreement (the “2024 Loan”) and related loan documents with Midland National Life Insurance Company (“Lender”), pursuant to which Lender loaned Complex Therapeutics LLC a term loan in the principal amount of $85.6 million to refinance the Construction Loans. Substantially all of the 2024 Loan proceeds were used to repay in full the Construction Loans. As of both March 31, 2026 and December 31, 2025, the outstanding principal amount under the 2024 Loan was $85.6 million. Unamortized debt issuance costs were $0.6 million and $0.8 million as of March 31, 2026 and December 31, 2025, respectively.

The 2024 Loan has a term oftwo years with aone-year extension option. The extension option is subject to certain conditions being met, including: (a) no potential default or event of default, (b) payment of a 0.35% extension fee and the costs and expenses of Lender incurred in connection with the extension, (c) replenishing of all reserve funds as reasonably determined by Lender, and (d) compliance with minimum debt yield and debt service coverage ratio requirements. The 2024 Loan bears interest at a fixed rate of 6.35% per annum, with interest-only payments during the term and the principal balance due in full at maturity.

The 2024 Loan may be prepaid in whole but not in part. If the 2024 Loan is prepaid on or prior to the 12-month anniversary of the Closing Date, a prepayment fee is required (other than in connection with a casualty or condemnation event) to make Lender whole for the interest it would have otherwise earned on the 2024 Loan during the first 12 months. There is no prepayment fee due if the 2024 Loan is prepaid after the 12-month anniversary of the Closing Date.

The net carrying amount of the liability component of the 2024 Loan was as follows (in thousands):

The following table sets forth the interest expense recognized related to the 2024 Loan (in thousands):

Indemnifications

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance coverage that reduces its exposure and enables the Company to recover a portion of any future amounts paid. No liability associated with such indemnifications was recorded as of March 31, 2026 and December 31, 2025.

Other Commitments

In the normal course of business, the Company enters into contracts and various purchase agreements and commitments with third-party vendors for clinical research services, products and other services for operating purposes. These agreements generally provide for termination or cancellation at the Company’s option, other than for costs already incurred.

As of March 31, 2026 and December 31, 2025, the Company had $0.2 million in commitments for contract terminations as part of the Plan (see Note 12).

9. Equity

Common Stock

Each share of common stock has the right toone vote. The holders of common stock are also entitled to receive dividends out of legally available funds when and if declared by the Company’s Board of Directors, subject to the rights of holders of any classes of stock outstanding having priority rights as to dividends. No cash dividends have been declared by the Board of Directors from inception.

As of March 31, 2026 and December 31, 2025, the Company had 6,781,976 shares of common stock outstanding.

At-the-Market Offering

In March 2025, the Company entered into an Open Market Sale Agreement SM with Jefferies LLC (“Jefferies”) pursuant to which the Company may, subject to the terms and conditions set forth in the agreement, offer and sell, from time to time, through or to Jefferies, acting as agent or principal, shares of common stock having an aggregate offering price of up to $100.0 million in one or more “at the market offerings” (the “ATM Program”).

As of December 31, 2025, the Company had sold 185,837 shares of common stock under the ATM Program at a weighted-average price of $37.13 per share, for net proceeds of $6.6 million, after deducting commissions and expenses of approximately $0.3 million. The remaining availability under the ATM Program as of both December 31, 2025 and March 31, 2026 was approximately $93.1 million. There wereno sales under the ATM Program during the three months ended March 31, 2026.

Preferred Stock

The Company’s current amended and restated certificate of incorporation authorizes the Company to issue up to 10,000,000 shares of preferred stock at $0.000001 par value per share. The Board of Directors is authorized to provide for the issuance of the preferred stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in subsequent resolution or resolutions adopted by the board providing for the issuance of such shares. As of March 31, 2026 and December 31, 2025, there wereno shares of preferred stock issued or outstanding.

10. Stock-Based Compensation

2021 Equity Incentive Plan

In March 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective in connection with the Company’s initial public offering (“IPO”). The 2021 Plan was approved by the Board of Directors and stockholders in March 2021. The 2021 Plan is an equity incentive plan pursuant to which the Company may grant the following awards: (i) incentive stock options; (ii) nonstatutory stock options; (iii) stock appreciation rights; (iv) restricted stock awards; (v) restricted stock unit awards; (vi) performance awards; and (vii)

other forms of stock awards to employees, directors, and consultants, including employees and consultants of the Company’s affiliates. The 2021 Plan is a successor to the Company’s 2018 Stock Incentive Plan (the “2018 Plan”). Following the effectiveness of the 2021 Plan, no further grants may be made under the 2018 Plan; however, any outstanding equity awards granted under the 2018 Plan will continue to be governed by the terms of the 2018 Plan.

As of March 31, 2026,951,236 shares of common stock remained available for issuance under the 2021 Plan.

The following table sets forth stock-based compensation included in the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):

As of March 31, 2026, there was $9.2 million of total unrecognized compensation cost related to unvested stock options granted under the 2021 Plan, which is expected to be recognized over a weighted average period of 2.1 years.

Employee Stock Purchase Plan

In March 2021, the Company adopted the Employee Stock Purchase Plan (the “ESPP”), which became effective in connection with the IPO. The ESPP was adopted by the Board of Directors and stockholders in March 2021, but the Company has not yet commenced offerings to employees under the ESPP. As of March 31, 2026, the Company had 192,148 shares of its common stock available for future issuance under the ESPP.

11. Net Loss Per Share

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect:

12. Restructuring and Impairment of Long-Lived Assets

In January 2023, the Board of Directors approved a restructuring plan and the Company announced the consolidation of the ITIL-306 Phase 1 clinical trial, which included contract terminations.

In January 2024, the Board of Directors approved a comprehensive restructuring plan, which included the closure of the Company’s UK manufacturing facility and clinical trial operations. In September 2024, the Board of Directors approved additional UK restructuring actions, which resulted in the elimination of the majority of the remaining UK workforce in the fall of 2024, with the remaining reduction and restructuring activities substantially completed by the end of 2024.

Collectively, the restructuring events from 2023 and 2024 are referred to as the “Plan.” Certain contractual obligations associated with the Plan were settled in 2025, resulting in related cost adjustments.

In March 2025, the Board of Directors approved a plan to sell the Tarzana facility, and the Company listed the Tarzana facility for sale and reclassified it as a long-lived asset held for sale and incurred impairment charges on the facility and as well as charges related to the anticipated cost to sell the facility, collectively, these charges are referred to as (the “2025 Tarzana Charges”).

In January 2026, Axion Bio discontinued development of AXN-2510, and the Company terminated certain employees associated with this program (the “2026 Employee Terminations”).

As a result of the 2026 Employee Terminations, the Company recorded charges of $1.0 million within the condensed consolidated statements of operations and comprehensive loss in the line item “restructuring and impairment charges” for the three months ended March 31, 2026. As a result of the 2025 Tarzana Charges and the Plan, the Company recorded charges of $16.1 million within the condensed consolidated statements of operations and comprehensive loss in the line item “restructuring and impairment charges” for the three months ended March 31, 2025.

The following table summarizes the restructuring and impairment loss (gain) by category (in thousands):

Restructuring Liability

As a result of the Plan and the 2026 Employee Terminations, a restructuring liability was recorded in the condensed consolidated balance sheets under “Accrued expenses and other current liabilities” and was measured at the amount expected to be paid, or that was paid. During the quarter ended March 31, 2026, the Company paid $1.0 million of employee benefits and expects to pay the remainder of the restructuring costs by the end of 2026.

The following table shows the restructuring liability related to the Plan and the 2026 Employee Terminations (in thousands):