[10-Q] Transcode Therapeutics, Inc. Quarterly Earnings Report
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ___________ |
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
, Massachusetts | |
(Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class | | Trading Symbol(s) | | Name of Each Exchange on Which Registered |
| | The |
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
The number of shares of Registrant’s Common Stock outstanding as of May 12, 2026, was
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TRANSCODE THERAPEUTICS, INC.
QUARTERLY REPORT ON FORM 10-Q
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PART I. FINANCIAL INFORMATION | | |
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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS | | 4 |
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2026 (UNAUDITED) AND DECEMBER 31, 2025 | | 4 |
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED) | | 5 |
CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED) | | 6 |
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED) | | 7 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | | 8 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | | 40 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | | 60 |
ITEM 4. CONTROLS AND PROCEDURES | | 61 |
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PART II. OTHER INFORMATION | | |
| | |
ITEM 1. LEGAL PROCEEDINGS | | 62 |
ITEM 1A. RISK FACTORS | | 62 |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | | 63 |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES | | 63 |
ITEM 4. MINE SAFETY DISCLOSURES | | 63 |
ITEM 5. OTHER INFORMATION | | 64 |
ITEM 6. EXHIBITS | | 64 |
SIGNATURE | | 66 |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
| Ø | our ability to obtain stockholder approvals allowing for (i) the issuance of common stock upon the conversion of our Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share, and Series B Non-Voting Convertible Preferred Stock, par value $0.0001 per share, in connection with our acquisition of ABCJ, LLC, the parent company of Polynoma, LLC ("Polynoma") pursuant to a Membership Interest Purchase Agreement, dated October 8, 2025, (ii) the issuance of common stock upon the conversion of our Series C Non-Voting Convertible Preferred Stock, par value $0.0001 per share, issued pursuant to our licensing agreement with Unleash Immuno Oncolytics, Inc. ("Unleash"), dated March 2, 2026, and the respective timing thereof, and (iii) the potential issuance of shares of common stock pursuant to a Standby Equity Purchase Agreement (the “SEPA”) by and between us and YA II PN, LTD (“Yorkville”); |
| Ø | our cash position, our estimates and expectations regarding our capital requirements, cash and expense levels, liquidity sources, our need for additional financing and our ability to obtain, on satisfactory terms or at all, the financing required to support operations, research, development, clinical trials, and commercialization of products; |
| Ø | a potential delisting of our common stock from trading on the Nasdaq Capital Market; |
| Ø | our ability to continue as a going concern; |
| Ø | the results and timing of our preclinical and clinical trial activities, including but not limited to our ability to enroll timely a sufficient number of patients to advance our clinical trials; |
| Ø | our ability to expand our therapeutic candidate portfolio through internal research and development or the acquisition or in-licensing of intellectual property assets; |
| Ø | the therapeutic benefits, effectiveness and safety of our therapeutic candidates; |
| Ø | our ability to receive regulatory approval for our therapeutic candidates in the United States, Europe and other geographies; |
| Ø | the expected regulatory approval pathway for our therapeutic candidates; |
| Ø | potential changes in regulatory requirements, and delays or negative outcomes from the regulatory approval process; |
| Ø | our ability to maintain adequate quality processes and oversight of vendors; |
| Ø | our ability to secure raw materials to support continued drug substance and drug product manufacturing; |
| Ø | our reliance on third-parties for the planning, conduct, management and monitoring of clinical trials, for the manufacture of clinical drug supplies and drug product meeting our specifications, and for other requirements; |
| Ø | our estimates of the size and characteristics of the markets that may be addressed by our therapeutic candidates; |
| Ø | market acceptance of our therapeutic candidates that are approved for marketing in the United States or other countries; |
| Ø | our ability to successfully commercialize our therapeutic candidates, if approved for marketing; |
| Ø | the safety and efficacy of therapeutics marketed by our competitors that are targeted to indications which our therapeutic candidates have been developed to treat; |
| Ø | our ability to utilize our proprietary technological approach to develop and commercialize our therapeutic candidates; |
| Ø | our heavy dependence on licensed intellectual property, including our ability to source and maintain licenses from third-party owners; |
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| Ø | our ability to protect our own or in-licensed intellectual property and operate our business without infringing the intellectual property rights of others; |
| Ø | our ability to attract, retain and motivate key personnel; |
| Ø | our ability to generate revenue and become profitable; |
| Ø | the outcome of our Phase Ia clinical trial with TTX-MC138, which commenced in the third quarter of 2024, and our Phase IIa clinical trial, which we expect to commence in the first half 2026, and our ability to complete these trials; |
| Ø | the impact of natural disasters, global pandemics, armed conflicts and wars, labor disputes, lack of raw materials or other supplies, issues with facilities and equipment, or other forms of disruption to business operations at our manufacturing or laboratory facilities or those of our vendors; |
| Ø | potential collaborations to license and commercialize any therapeutic candidates for which we receive regulatory approval in the future in or outside the United States; and |
| Ø | other risks and uncertainties, including those listed under the caption “Risk Factors” in this Quarterly Report on Form 10-Q and in our other regulatory filings. |
The risks set forth above are not exhaustive. Other sections of this Quarterly Report on Form 10-Q may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all risk factors, nor can we assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events and with respect to our business and future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You are advised, however, to consult any further disclosure we make in our reports filed with the U.S. Securities and Exchange Commission (the “SEC”).
This Quarterly Report on Form 10-Q may include data that we obtained from industry publications and third-party research, surveys and studies. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. This Quarterly Report on Form 10-Q also may include data based on our own internal estimates and research, including estimates regarding our consolidated financial statements and business operations. Our internal estimates have not been verified by any independent source and, while we believe any data obtained from industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. Such third-party data, as well as our internal estimates and research, are subject to a high degree of uncertainty and risk due to a variety of factors, including those described in Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. These and other factors could cause our results to differ materially from those expressed in or suggested by this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q may contain trademarks, service marks and trade names of third parties which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this Quarterly Report on Form 10-Q is not intended to, and does not, imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ®, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.
For purposes of this Quarterly Report on Form 10-Q, TransCode Therapeutics® is referred to as TransCode. Additionally, “we,” “our,” “us” and the “Company” refer to TransCode.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRANSCODE THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Assets | | (Unaudited) | | | | |
Current assets: | | | | | | |
Cash | | $ | | | $ | |
Grant receivable | | | — | | | |
Reimbursement right | | | | | | |
Due from related party | | | | | | |
Prepaid expenses and other current assets | | | | | | |
Total current assets | | | | | | |
Property and equipment, net of depreciation | | | | | | |
Goodwill | | | | | | |
Intangible assets | | | | | | |
Deferred offering costs | | | | | | — |
Total assets | | $ | | | $ | |
| | | | | | |
Liabilities, Series A Non-Voting Convertible Preferred Stock, and Stockholders’ Equity | | | | | | |
Current liabilities: | | | | | | |
Accounts payable and accrued expenses | | $ | | | $ | |
Deferred grant income | | | | | | — |
Total current liabilities | | | | | | |
Long-term liabilities: | | | | | | |
Warrant liability - Series C | | | | | | |
Contingent consideration | | | | | | |
Deferred tax liability | | | | | | |
Long-term liabilities | | | | | | |
Total liabilities | | | | | | |
Commitments and contingencies | | | | | | |
Series A Non-Voting Convertible Preferred Stock – $ | | | | | | |
Stockholders’ equity: | | | | | | |
Series B Non-Voting Convertible Preferred Stock – $ | | | — | | | — |
Series C Non-Voting Convertible Preferred Stock – $ | | | | | | — |
Common stock – $ | | | | | | |
Additional paid-in capital | | | | | | |
Accumulated deficit | | | ( | | | ( |
Total stockholders’ equity | | | | | | |
Total liabilities, Series A Non-Voting Convertible Preferred Stock and stockholders' equity | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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TRANSCODE THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | |
| | Three Months Ended March 31, | | ||||
| | 2026 | | 2025 | | ||
Operating expenses | | | | | | | |
Research and development | | $ | | | $ | | |
Acquired in-process research and development expense | | | | | | — | |
General and administrative | | | | | | | |
Total operating expenses | | | | | | | |
Operating loss | | | ( | | | ( | |
| | | | | | | |
Other income (expense) | | | | | | | |
Change in fair value of warrant liabilities | | | ( | | | ( | |
Change in fair value of contingent consideration | | | | | | — | |
Grant income | | | | | | | |
Currency exchange gain (loss) | | | ( | | | ( | |
Interest income | | | | | | | |
Interest expense | | | — | | | ( | |
Total other income (expense) | | | | | | ( | |
Loss before income taxes | | | ( | | | ( | |
Deferred income tax provision | | | ( | | | — | |
Net loss | | | ( | | | ( | |
Accrual of paid-in-kind dividends on Series A Non-Voting Convertible Preferred Stock | | | ( | | | — | |
Net loss attributable to common stockholders | | $ | ( | | $ | ( | |
| | | | | | | |
Basic and diluted net loss per share | | | | | | | |
Net loss attributable to common stockholders | | $ | ( | | $ | ( | |
Weighted-average common shares outstanding | | | | | | | |
Net loss per share | | $ | ( | | $ | ( | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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TRANSCODE THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Series A Non-Voting | | | Series B Non-Voting | | Series C Non-Voting | | | | | | | | | | | | | Total | ||||||||||
| | Convertible | | | Convertible | | Convertible | | | | | | | Additional | | | | | Stockholders’ | |||||||||||
| | Preferred Stock | | | Preferred Stock | | Preferred Stock | | Common Stock | | Paid-In | | Accumulated | | Equity | |||||||||||||||
| | Shares | | Amount | | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | (Deficit) | |||||||
Three months ended March 31, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2025 | | | | $ | | | | | | $ | — | | — | | $ | — | | | | $ | | | $ | | | $ | ( | | $ | |
Net loss | | — | | | — | | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( | | | ( |
Issuance of Series C Preferred Stock, net of issuance costs | | — | | | — | | | — | | | — | | | | | | | — | | | — | | | | | | — | | | |
Accrual of paid-in-kind dividends on Series A Non-Voting Convertible Preferred Stock | | — | | | | | | — | | | — | | — | | | — | | — | | | — | | | ( | | | — | | | ( |
Balance, March 31, 2026 (unaudited) | | | | $ | | | | | | $ | — | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended March 31, 2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2024 | | — | | $ | — | | | — | | $ | — | | — | | $ | — | | | | $ | | | $ | | | $ | ( | | $ | ( |
Net loss | | — | | | — | | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( | | | ( |
Issuances of common stock, net | | — | | | — | | | — | | | — | | — | | | — | | | | | | | | | | | — | | | |
Exercise of Series D warrants | | — | | | — | | | — | | | — | | — | | | — | | — | | | — | | | | | | — | | | |
Share-based compensation | | — | | | — | | | — | | | — | | — | | | — | | — | | | — | | | | | | — | | | |
Balance, March 31, 2025 (unaudited) | | — | | $ | — | | | — | | $ | — | | — | | $ | — | | | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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TRANSCODE THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | |
| | Three months ended | | ||||
| | March 31, | | ||||
| | 2026 | | 2025 | | ||
Cash flows from operating activities: | | | | | | | |
Net loss | | $ | ( | | $ | ( | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | |
Depreciation | | | | | | | |
Amortization of right-of-use asset | | | — | | | | |
Non-cash acquired in-process research and development cost | | | | | | — | |
Share-based compensation expense | | | — | | | | |
Change in fair value of contingent consideration | | | ( | | | — | |
Change in fair value of warrant liabilities | | | | | | | |
Changes in assets and liabilities: | | | | | | | |
Prepaid expenses and other current assets | | | ( | | | | |
Accounts payable and accrued expenses | | | | | | ( | |
Deferred grant income | | | | | | ( | |
Grants receivable | | | | | | ( | |
Operating lease liability | | | — | | | ( | |
Deferred tax liability | | | | | | — | |
Net cash used in operating activities | | | ( | | | ( | |
Cash flows from financing activities: | | | | | | | |
Net proceeds from sales of common stock | | | — | | | | |
Net cash provided by financing activities | | | — | | | | |
Net change in cash | | | ( | | | | |
Cash, beginning of period | | | | | | | |
Cash, end of period | | $ | | | $ | | |
| | | | | | | |
Supplemental disclosure of cash flow | | | | | | | |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | |
Deferred offering costs included in accounts payable and accrued expenses | | $ | | | $ | — | |
Exercise of Series D warrants | | $ | — | | $ | | |
Accrual of paid-in-kind dividends on Series A Non-Voting Convertible Preferred Stock | | $ | | | $ | — | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
(1) Nature of Business and Liquidity
TransCode Therapeutics, Inc. (the “Company” or “TransCode”) was incorporated on January 11, 2016, under the laws of the State of Delaware. TransCode is a clinical-stage biopharmaceutical company focused primarily on the research and development (“R&D”) of innovative drugs for treating cancer. The Company operates in
On October 8, 2025, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with DEFJ, LLC, a Delaware limited liability company, (“DEFJ”) pursuant to which the Company acquired
ABCJ owns
Concurrent with the Acquisition, the Company entered into an Investment Agreement (the “Investment Agreement”) with DEFJ. Pursuant to the Investment Agreement, DEFJ purchased in a private placement an aggregate of approximately
The Company intends to work on developing both TTX-MC138 and Seviprotimut-L, with its primary initial focus on advancing TTX-MC138 in a planned Phase 2a clinical trial. The Company believes there is potential to augment Seviprotimut-L's focus with TTX-MC138 by addressing micrometastases in stage IIB and IIC melanoma patients.
The Company has not generated revenues and has not yet achieved profitable operations, nor has it ever generated positive consolidated cash flows from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. The Company is subject to those risks associated with any early-stage biopharmaceutical company that requires substantial expenditures for research and development. There can be no assurance that the Company’s research and development projects will be successful, that products developed will obtain necessary regulatory approvals, or that any approved product will be commercially viable. In addition, the Company operates in an environment of rapid technological change and is largely dependent on the services of its employees and consultants. Further, the Company’s future operations are dependent on its success in raising additional capital.
The Company plans to expand development of its lead therapeutic candidate and other candidates, and to explore strategic partnerships.
To further support its planned operations, the Company will require additional capital; however, the Company cannot be certain that additional funding will be available on acceptable terms, or at all. Through the date of these consolidated financial statements, the Company’s primary source of capital was from the sale of equity securities in its IPO and subsequent financings, sales of convertible promissory notes prior to the IPO, and funds received under SBIR Awards. For the foreseeable future, the Company plans to fund its
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(1) Nature of Business and Liquidity (continued)
operations by continuing to raise additional capital, primarily through sales of equity or debt, and from funds that may be awarded under government and other grants.
To the extent the Company raises additional funds by issuing equity securities, its stockholders may experience significant dilution. Any debt financing, if available, may include potentially dilutive features and include restrictive covenants that impact the Company’s ability to conduct business. If the Company is unable to raise additional capital when required or on acceptable terms, the Company may have to (i) significantly scale back its planned operations or (ii) relinquish or otherwise dispose of rights to technologies on unfavorable terms.
Going Concern
These consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. Due to the Company’s recurring and expected continuing losses from operations, the Company has concluded there is substantial doubt concerning its ability to continue as a going concern within one year of the issuance of these consolidated financial statements without additional capital becoming available. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
To date, the Company has incurred substantial consolidated losses and negative consolidated cash flows from operations. It expects to continue to incur operating losses for the foreseeable future as it pursues development of its lead therapeutic candidate and other programs. Operating losses are expected to continue until such time, if ever, that the Company can generate significant revenue from product candidates currently in development. The Company is unable to predict the extent of any future losses or when the Company will become profitable, if ever.
For the three months ended March 31, 2026, consolidated net cash used in operating activities was approximately $
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The interim consolidated financial statements included herein are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, ABCJ, LLC, including ABCJ’s wholly-owned subsidiaries, Polynoma, LLC and Polynoma, Inc. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, these consolidated financial statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the consolidated financial position of the Company at March 31, 2026, its consolidated results of operations for the three months ended March 31, 2026 and 2025, and its consolidated cash flows for the three months ended March 31, 2026 and 2025. The interim consolidated results of operations are not necessarily indicative of consolidated results to be expected for a full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025, and notes thereto contained in the Company’s Annual Report on Form 10-K, filed with the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations relating to interim financial statements.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
(b) Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and liabilities, at the date of the consolidated financial statements, and the reported amounts of consolidated revenues and expenses during the reporting period. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. Significant items subject to such estimates and assumptions include but are not limited to estimated work performed but not yet billed by contract manufacturers and clinical research organizations, the valuation of equity and stock-based instruments, the valuation allowance related to deferred taxes, the estimated fair value of the net assets acquired in connection with the Acquisition, contingent value rights (“CVRs”) issued to common stockholders at October 20, 2025, in connection with the Acquisition, the estimated fair value of the contingent consideration agreed to in connection with the Acquisition, share-based compensation, valuation of warrant liability, income from grants, and accrued research and development costs. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. These judgments can be subjective and complex. Accounting estimates used in the preparation of these consolidated financial statements change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. Due to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results may materially vary from these estimates.
(c) Basic and Diluted Loss per Share
Basic net loss per share is determined by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share includes the effect, if any, from the potential conversion, vesting or exercise of securities (“Contingent Securities”) such as convertible stock, convertible promissory notes, stock options and warrants which would result in the issuance of additional shares of common stock. The computation of diluted net loss per shares does not include the conversion or exercise of Contingent Securities when the effect of doing so would be antidilutive.
(d) Cash
The Company classifies deposits in banks, money market funds and cash invested temporarily in various instruments with original maturities of three months or less as cash. To date, the Company has not held any funds in money market funds or instruments with original maturities of three months or less. The Company holds significant cash balances in U.S. banks which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or lack of access to such funds could have a material adverse effect on the Company’s consolidated financial condition, consolidated results of operations, and consolidated cash flows.
(e) Fair Value Measurements
ASC 820, “Fair Value Measurements”, provides guidance on the development and disclosure of fair value measurements. The Company follows this guidance for fair value measurements, which defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements. The guidance requires that fair value measurements be classified and disclosed in one of the following three categories:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.
Level 3: Unobservable inputs which are supported by little or no market activity with values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
The Company’s consolidated financial instruments as of the balance sheet dates included cash, grant receivable, reimbursement right asset, due from related party, prepaid expenses and other current assets, goodwill, intangible assets, accounts payable and accrued expenses, deferred grant income, current and long-term portion of lease liability, warrant liability, and contingent consideration. Cash is reported at fair value. The recorded carrying amounts of grant receivable, reimbursement right asset, due from related party, prepaid expenses and other current assets, goodwill, intangible assets, accounts payable and accrued expenses, deferred grant income, current and long-term portion of lease liability, warrant liability, and contingent consideration approximate their fair value due to their short-term or fixed arrangements nature.
(f) Research and Development
Research and development costs generally are expensed as incurred and primarily comprise expenses to discover, research and develop therapeutic candidates. These expenses may include personnel costs, share-based compensation expense, materials and supplies, allocated facility-related and depreciation expenses, third-party license fees, and costs under arrangements with third-party vendors, such as contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and consultants. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as expenses as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.
The Company has entered into various research and development-related contracts with companies both inside and outside the United States. The related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes manufacturing and clinical trials progress, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates.
Patent Costs
All legal fees and expenses and costs related to patent-related filings with governmental authorities incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. Other patent costs are classified as R&D expenses.
(g) Grant Income
Funds from grants are recognized as grant income in the consolidated statements of operations as and when earned for the specific research and development projects for which the grants are designated. In April 2021 and September 2024, the Company received awards (the “Awards”) from the National Cancer Institute in support of the Company’s lead therapeutic candidate. Since there is no transfer of ownership of the work performed under the Awards, and the Company does not lose control over the work performed under the Awards, the Company deems the Awards funds as contributions. Grant payments received in excess of grant income earned are recorded as deferred grant income on the Company’s consolidated balance sheets until the related income has been earned. Grant income earned in excess of grant payments received is recorded as grant receivable on the Company’s consolidated balance sheets.
(h) Share-Based Compensation
Share-based compensation, if any, for employees and non-employees is measured at the grant date based on the fair value of the award. The Company recognizes compensation expense, if any, for awards to employees and directors over the requisite service period, which is generally the vesting period of the respective award, and for awards to non-employees over the period during which services are rendered by such non-employees until completed. Under applicable accounting standards, the fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model. Generally, the Company issues awards with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company classifies share-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. Forfeitures are accounted for as they occur.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
The estimated fair value of the common stock used by the Company to determine the expense of option awards is the closing Nasdaq price of the Company’s common shares on the date of each award. Other factors used in calculating the fair value of share-based awards represented management’s best estimates, some of which involve inherent uncertainties and the application of management’s judgment. As a result, if factors were to change and management were to use different assumptions, share-based compensation expense could be materially different.
Certain stock appraisal methodologies utilize, among other variables, the volatility of the stock price. When private, the Company lacked Company-specific historical and implied volatility information for its stock. Therefore, it estimated its expected stock price volatility based on the historical volatility of publicly-traded peer companies and expects to continue to do so until such time, if ever, as it has adequate historical data regarding the volatility of its own publicly-traded stock price. The expected life of options awarded was estimated using the simplified method because the Company has limited historical information on which to base reasonable expectations about future exercise patterns and post-vesting employment. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on its common stock and does not expect to pay cash dividends in the foreseeable future.
(i) Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the estimated useful life of each asset as follows:
| ||
| | Estimated useful life |
Laboratory equipment | | |
Furniture and fixtures | | |
Computer and office equipment | | |
Leasehold improvements | | Shorter of the useful life or remaining lease term |
When assets are retired or otherwise disposed of, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations in the period of disposal. Expenditures for repairs and maintenance are charged to expense as incurred.
(j) Income Taxes
The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the consolidated financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company is subject to the provisions of ASC 740-10-25, “Income Taxes” (“ASC 740”). ASC 740 prescribes a more likely-than-not threshold for the consolidated financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
There are currently no open federal or state tax audits. The Company has not recorded any liability for uncertain tax positions at the dates of the Company’s consolidated balance sheets herein.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
(k) Emerging Growth Company Status
The Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act (“JOBS Act”) and may take advantage of certain exemptions from various reporting requirements applicable to public companies that are not EGCs. 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. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of a public offering or such earlier time that it is no longer an EGC.
(l) Reverse Stock Splits
On May 23, 2023, the Company effected a reverse split of the Company’s common stock, either issued and outstanding or held by the Company as treasury stock, (the “2023 Reverse Split”) previously approved by the Company’s Board of Directors (“Board”) and stockholders of the Company. The 2023 Reverse Split was at a ratio of one share for every 20 shares previously held with no change in the par value per share. The 2023 Reverse Split did not change the number of authorized shares of common stock.
On January 16, 2024, the Company effected a reverse split of the Company’s common stock, either issued and outstanding or held by the Company as treasury stock, (the “January 2024 Reverse Split”) previously approved by the Board and stockholders of the Company. The January 2024 Reverse Split was at a ratio of one share for every 40 shares previously held with no change in the par value per share. The January 2024 Reverse Split did not change the number of authorized shares of common stock.
On December 4, 2024, the Company effected a reverse split of the Company’s common stock, either issued and outstanding or held by the Company as treasury stock, (the “December 2024 Reverse Split”) previously approved by the Board and stockholders of the Company. The December 2024 Reverse Split was at a ratio of one share for every 33 shares previously held with no change in the par value per share. The December 2024 Reverse Split did not change the number of authorized shares of common stock.
On May 15, 2025, the Company effected a reverse split of the Company’s common stock, either issued and outstanding or held by the Company as treasury stock, (the “May 2025 Reverse Split”) previously approved by the Board and stockholders of the Company. The May 2025 Reverse Split was at a ratio of one share for every 28 shares previously held with no change in the par value per share. The May 2025 Reverse Split did not change the number of authorized shares of common stock.
All common stock share and per share data, and exercise price data for applicable common stock equivalents, included in these consolidated financial statements have been retroactively adjusted to reflect the foregoing reverse stock splits.
(m) Collaboration Agreements
When the Company enters into a collaboration agreement, it evaluates the arrangement against the requirements of ASC 808, “Collaborative Arrangements,” as well as ASU 2018-18 which clarifies the interaction between Topic 808 and Topic 606. ASU 2018-18 indicates that collaborative arrangements could be partially in the scope of other guidance, including ASC 606.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
(n) Leases
The Company at times leases certain office and laboratory space. At inception, the Company determines if a contract or arrangement contains a lease. Leases are evaluated and classified as either operating or finance leases. A lease is classified as a finance lease if any of the following criteria are met: (i) ownership of the underlying asset transfers to the Company by the end of the lease term; (ii) the lease contains an option to purchase the underlying asset that the Company is reasonably expected to exercise; (iii) the lease term is for a major part of the remaining economic life of the underlying asset; (iv) the present value of the sum of lease payments and any residual value guaranteed by the Company equals or exceeds substantially all of the fair value of the underlying asset; or (v) the underlying asset is of a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease that does not meet any of the criteria to be classified as a finance lease is classified as an operating lease. Operating leases are included on the Company’s consolidated balance sheets as right-of-use (“ROU”) assets, net; current portion of operating lease liabilities; and operating lease liabilities. ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. Where leases do not provide an implicit rate for use in determining the present value of future payments, the Company uses an incremental borrowing rate that represents the cost of borrowing on a collateralized basis for a period equal to the expected lease term. ROU assets also include any lease payments made and exclude any lease incentives and initial direct costs incurred. Lease terms may include periods under options to extend the lease or terminate the lease prior to expiration when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term, including rent abatement periods and rent holidays. While lease liabilities are not remeasured as a result of changes to these costs, changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Finance leases are included on the Company’s consolidated balance sheets as property and equipment, net; current maturities of long-term debt; and long-term debt. Finance lease costs are split between depreciation expense related to the asset and interest expense on the lease liability, using the effective rate charged by the lessor. The Company has elected to account for lease and non-lease components separately. Additionally, the Company has elected not to record short-term leases, those with expected terms of twelve months or less, on its consolidated balance sheets. Certain lease agreements include fixed escalations, while others include rental payments adjusted periodically for inflation.
(o) Warrant Accounting
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”),
and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period-end date while the warrants are outstanding.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of warrants classified as liabilities are recognized as a non-cash gain or loss on the consolidated statements of operations.
Warrants issued in financings in January and July 2024, and in March 2025, met the criteria for equity classification under ASC 815 and were classified as equity. Warrants issued in a financing that closed in December 2024, did not meet the criteria for equity classification under ASC 815 and were classified as liabilities.
(p) | Business Combinations |
The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, meeting the requirements of a business. If determined to be a business combination, the Company accounts for the transaction under the acquisition method of accounting as indicated in ASU 2017-01, “Business Combinations” (“ASC 805”), which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree, and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations based on fair value estimates as of their acquisition date. In accordance with ASC 805, the Company recognizes and measures goodwill as of the acquisition date, determined as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.
(q) | Indefinite-Lived Intangible Assets |
Indefinite-lived intangible assets consist of In-Process Research and Development (“IPR&D”). The fair values of IPR&D project assets acquired in business combinations are capitalized. The Company generally utilizes the Multi-Period Excess Earning Method to determine the estimated fair value of the IPR&D assets acquired in a business combination. The projections used in this valuation approach are based on many factors, such as relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, the population expected to be treated, and estimated Company payment obligations (e.g., royalties). The estimated future net cash flows are then discounted to their present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate.
Intangible assets with indefinite lives, including IPR&D, are tested for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Quantitative impairment testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company considers many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, outlook and market performance of the Company’s industry and recent and forecasted financial performance.
For the three months ended March 31, 2026, the Company determined that there was
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
(r) | Goodwill |
Goodwill represents the amount of consideration paid in an acquisition in excess of the fair value of net assets acquired as a result of the Company’s business acquisitions accounted for using the acquisition method of accounting. The intangible assets acquired represented the fair value of IPR&D which has been recorded on the Company’s consolidated balance sheet as indefinite-lived intangible assets. A deferred tax liability was recorded for the difference between the fair value of the acquired IPR&D and its tax basis which was recognized as goodwill in applying the purchase method of accounting. Goodwill is not amortized and is subject to impairment testing at least annually on October 1 and whenever facts and circumstances indicate that its carrying amount may not be recoverable. An entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Quantitative impairment testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that the fair value of the goodwill is less than its carrying amount.
For the three months ended March 31, 2026, the Company determined that there was
(s) | Impairment of Long-Lived Assets |
In accordance with ASC 360-10-35, “Impairment or Disposal of Long-Lived Assets,” the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of those assets may not be recoverable (i.e., their carrying amount has been impaired). Once an impairment is determined, the actual impairment recognized is the difference between the carrying amount and the fair value (less costs to sell for assets to be disposed of) as estimated using one of the following approaches: income, cost, and/or market. Fair value using the income approach is determined primarily using a discounted cash flow model that uses the estimated cash flows associated with the asset or asset group under review, discounted at a rate commensurate with the risk involved. Fair value utilizing the cost approach is determined based on the replacement cost of the asset reduced for, among other things, depreciation and obsolescence. Fair value utilizing the market approach benchmarks the fair value of the asset against its carrying amount.
(t) | Redeemable and Convertible Preferred Stock |
The Company applies ASC 480 when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity (deficit). See Note 12 to these consolidated financial statements.
(u) Contingent Consideration
The Company applies ASC 805, “Business Combinations,” which requires recognition of assets acquired, liabilities assumed, and non-controlling interest in the acquired entity at the acquisition date, measured at their fair values as of that date. This ASC also requires that the fair value of contingent consideration be recorded on the acquisition date with subsequent changes in fair value charged in the consolidated statements of operations. In connection with the Acquisition, the Company agreed to make milestone payments contingent upon the achievement of certain events within ten (10) years of the date of the Acquisition. The Company estimated the fair value of contingent consideration incurred on the date of the Acquisition using the following inputs: the amount of each of the potential contingent payments, the estimated probability of success of achieving each milestone, and selection of the discount rate applied to the contingent payments.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(2) Summary of Significant Accounting Policies (continued)
(v) Recently Adopted Accounting Standards
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective date.
In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The Company adopted ASU 2023-09 for the year ended December 31, 2025.
(w) Recent Accounting Pronouncements
Unless otherwise discussed, the Company believes that recently issued accounting pronouncements will not have a material effect on its consolidated financial position, consolidated results of operations, and consolidated cash flows, or do not apply to its operations.
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 will require more detailed information about the types of expenses in commonly presented income statement captions such as “Cost of sales” and “Selling, general and administrative expenses”. The new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect that this change will have on its disclosures.
In May 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805)” and “Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” to improve the requirements for identifying the accounting acquirer in Topic 805, “Business Combinations.” The amendments in ASU 2025-03 revise current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity (“VIE”) that meets the definition of a business. The amendments require that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. Entities will be required to apply the new guidance prospectively to any acquisition transaction that occurs after the initial application date. Adoption of this guidance is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods; early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the effect of this ASU on its consolidated financial statements.
(3) Business Combination
On October 8, 2025, the Company entered into the Purchase Agreement with DEFJ pursuant to which the Company acquired
Under the terms of the Purchase Agreement, on October 8, 2025, (the “Closing”) in exchange for all the issued and outstanding membership interests of ABCJ immediately prior to the effective time of the Closing (the “Effective Time”), the Company issued to DEFJ, as sole member of ABCJ, an aggregate of (A)
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(3) Business Combination (continued)
The Board approved the Purchase Agreement and the related transactions, and consummation of the Acquisition was not subject to approval of Company stockholders. However, under the rules of the Nasdaq Stock Market LLC (“Nasdaq”), stockholder approval is required in connection with the conversion of the Preferred Stock into Common Stock. In the Purchase Agreement, the Company agreed to hold a stockholders’ meeting to submit to its stockholders certain matters for their consideration, including (i) approval of the conversion of shares of Series A Preferred Stock into shares of Common Stock (the “Conversion Proposal”); (ii) approval of the conversion of shares of Series B Preferred Stock into shares of Common Stock in accordance with Nasdaq rules (the “Investment Proposal”) and (iii) approval of a “change of control” under Nasdaq Listing Rules 5110 and 5635(b) (the “Change of Control Proposal,” and together with the Conversion Proposal and the Investment Proposal, the “Meeting Proposals”). In connection with these matters, the Company agreed to file a proxy statement on Schedule 14A with the SEC.
The fair value of the consideration totaled approximately $
| | | |
Fair value of contingent consideration | | $ | |
Reimbursement right asset | | | ( |
Fair value of common stock issued | | | |
Fair value of preferred stock issued | | | |
Total Consideration Paid | | $ | |
The transaction was accounted for as a Business Combination. Under this method, the total purchase price of the Acquisition is allocated to the net tangible and the identifiable intangible assets acquired and liabilities assumed based on fair values as of the date of the Acquisition. Consideration paid comprises the estimated fair value of various securities issued including the Series A Preferred Stock and the Common Stock issued to DEFJ. In the fourth quarter of 2025, the preliminary purchase price allocation was updated, including the related determination of fair value of the securities issued as consideration, the allocation of consideration to the specific IPR&D programs acquired and the tax implications related to the updates to the purchase price allocation.
The Company recorded the assets acquired and liabilities assumed as of the date of the Acquisition based on the information available at that date. The following table presents the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of the Acquisition date:
| | | |
Assets acquired: | | | |
Cash | | $ | |
Prepaid expenses and other current assets | | | |
Property and equipment, net of depreciation | | | |
In-process research and development assets: Seviprotimut-L | | | |
Goodwill | | | |
Total assets acquired | | $ | |
| | | |
Liabilities Assumed: | | | |
Accounts payable and accrued expenses | | $ | |
Deferred tax liability | | | — |
Total liabilities assumed | | | |
Net assets acquired | | $ | |
The fair value of IPR&D assets was capitalized as of the Acquisition date and accounted for as indefinite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts. Upon successful completion of the development efforts, the useful lives of the IPR&D assets will be determined based on the anticipated period of regulatory exclusivity. Those IPR&D assets will be amortized within operating expenses over their useful lives. Until that time,
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(3) Business Combination (continued)
the IPR&D assets will be subject to impairment testing and will not be amortized. The goodwill recorded related to the Acquisition is the excess of the fair value of the consideration transferred by the acquirer over the fair value of the net identifiable assets acquired and liabilities assumed at the date of the Acquisition. The goodwill recorded is not deductible for tax purposes.
The following table summarizes the Company’s intangible assets and goodwill acquired in connection with the Acquisition and their carrying values as of March 31, 2026:
| | | | | | | | | |
| | | | | | | | Carrying Value | |
| | Acquisition Date | | | | | as of | ||
| | Level 3 | | | | | March 31, | ||
| | Fair Value | | Impairment | | 2026 | |||
| | | | | | | | | |
Seviprotimut-L | | $ | | | $ | — | | $ | |
Total in-process research and development (IPR&D) | | $ | | | $ | — | | $ | |
| | | | | | | | | |
Goodwill | | $ | | | $ | — | | $ | |
Intangible asset fair values for the IPR&D program were determined using the Multi-Period Excess Earnings Method (“MPEEM”) which is a form of the income approach. Under the MPEEM, the fair value of an intangible asset is equal to the present value of the asset's incremental after-tax cash flows (excess earnings) remaining after deducting the market rates of return on the estimated value of contributory assets (contributory charge) over its remaining useful life. To calculate fair value of acquired IPR&D programs under the MPEEM, the Company uses probability-weighted cash flows discounted at a rate considered appropriate given the significant inherent risks associated with drug development by development-stage companies. Cash flows were calculated based on estimated projections of revenues and expenses related to each program and then reduced by a contributory charge on requisite assets employed. Contributory assets included debt-free working capital, net fixed assets and assembled workforce. Rates of return on the contributory assets were based on rates used for comparable market participants. Cash flows were assumed to extend through the market exclusivity period expected to be provided by trade-secrets and patents or for products related to the indication to be treated. The resultant cash flows were then discounted to present value using a weighted-average cost of equity capital for companies with profiles substantially similar to that of the acquired IPR&D program, which the Company believes represents the rate that market participants would use to value the assets. The Company compensated for the phase of development of the program by probability-adjusting its estimation of the expected future cash flows. The projected cash flows were based on significant assumptions, such as the time and resources needed to complete development and approval of the IPR&D program, estimates of revenues and operating profits related to the program considering its stage of development, the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in drug development, such as obtaining marketing approval from the FDA and other regulatory agencies, and risks related to the viability of and potential alternative treatments in any future target markets.
The Company’s transaction costs of approximately $
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(4) Fair Value Measurements
Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of the dates of the Company’s balance sheets herein. The carrying amount of cash, grant receivable, prepaid expenses and other current assets, right-of-use asset, accounts payable and accrued expenses, deferred grant income, and current and long-term
portion of lease liability approximated their fair value due to their short-term or fixed arrangements nature. Warrant liabilities and contingent considerations are recorded based on their fair value.
The Company records its warrant liability at fair value which is considered a Level 3 measurement on the fair value hierarchy due to the significant unobservable inputs used in valuation of the warrant liability such as the probability weighted outcomes regarding the shareholder approval date and the potential de-listing date. The fair value of the warrant liability at issuance and at December 31, 2024, was determined using a Monte Carlo simulation model within a risk-neutral framework. This widely accepted financial modeling approach is employed to value complex instruments, including warrants with strike price reset and anti-dilution provisions. The model simulates multiple potential future paths for the Company’s stock price, accounting for the reset provision by adjusting the strike price if the stock price falls below a specified level, but not lower than the specified Floor Price. Upon each reset of the strike price, the warrants are also adjusted for quantity, based on the anti-dilution provisions. For each simulated path, the warrants’ payoff is calculated using the final stock price and the potentially adjusted strike price and quantity, then discounted to present value. The fair value is estimated as the average of these discounted payoffs across all simulated paths. This method ensures the valuation reflects the impact of the strike price reset provision and anti-dilution provision on the warrants’ potential values. Fair value of the warrant liability as of March 31, 2026, was determined using the Black-Scholes valuation model which the Company deemed appropriate as both the exercise price of the warrants and the number of shares issuable were known, no longer requiring use of a simulation model.
The table below lists key assumptions used in the valuations of the warrant liability as of March 31, 2026, and December 31, 2025. The $
| | | | |
Assumptions | | March 31, 2026 | | December 31, 2025 |
Risk-free rate | | | ||
Volatility | | | ||
Expiration date of Series C | | February 24, 2030 | | February 24, 2030 |
Expiration date of Series D | | N/A | | N/A |
Shareholder approval date | | N/A | | N/A |
Potential de-listing date | | N/A | | N/A |
The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis.
The fair value of the specified liabilities at March 31, 2026, is as follows:
| | | | | | | | | | | | |
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Liabilities | | | | | | | | | | | | |
PIPE warrants - Series C | | $ | — | | $ | — | | $ | | | $ | |
Contingent consideration | | | — | | | — | | | | | | |
Total liabilities, at fair value | | $ | — | | $ | — | | $ | | | $ | |
The fair value of the specified liabilities at December 31, 2025, is as follows:
| | | | | | | | | | | | |
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Liabilities | | | | | | | | | | | | |
PIPE warrants - Series C | | $ | — | | $ | — | | $ | | | $ | |
Contingent consideration | | | — | | | — | | | | | | |
Total liabilities, at fair value | | $ | — | | $ | — | | $ | | | $ | |
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(4) Fair Value Measurements (continued)
| | | | | | | | | | | | |
| | Warrants | | Warrants | | Contingent | | Total | ||||
Level 3 Rollforward: | | Series C | | Series D | | Consideration | | Liabilities | ||||
Balance, December 31, 2024 | | $ | | | $ | | | $ | — | | $ | |
Additions | | | — | | | — | | | | | | |
Change in fair value | | | ( | | | | | | ( | | | |
Exercise of Series D warrants | | | — | | | ( | | | — | | | ( |
Balance, December 31, 2025 | | | | | | — | | | | | | |
Change in fair value | | | | | | — | | | ( | | | |
Balance, March 31, 2026 | | $ | | | $ | — | | $ | | | $ | |
The Company incurred contingent consideration in connection with the Acquisition. It records its contingent consideration liability at fair value which is considered a Level 3 measurement on the fair value hierarchy due to the significant unobservable inputs used in valuation of the contingent consideration liability such as the probability of milestone events being achieved and the time to payment of potential milestone events. The fair value of the contingent consideration liability at issuance and at March 31, 2026, was determined using a discounted cash flow analysis. The table below lists key assumptions used in the valuations as of March 31, 2026, and October 8, 2025 (the date of the Acquisition). The $
| | | | |
Assumptions | | March 31, 2026 | | December 31, 2025 |
Expected achievement date of milestone event #1 | | June 30, 2029 | | June 30, 2029 |
Probability of achieving milestone event #1 | | | ||
Discount rate applied to milestone event #1 | | | ||
Expected achievement date of milestone event #2 | | June 30, 2036 | | June 30, 2036 |
Probability of achieving milestone event #2 | | | ||
Discount rate applied to milestone event #2 | | | ||
Expected achievement date of milestone event #3 | | June 30, 2042 | | June 30, 2042 |
Probability of achieving milestone event #3 | | | ||
Discount rate applied to milestone event #3 | | | ||
Expected achievement date of milestone event #4 | | June 30, 2043 | | June 30, 2043 |
Probability of achieving milestone event #4 | | | ||
Discount rate applied to milestone event #4 | | |
(5) Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Prepaid operating expenses | | $ | | | $ | |
Contract manufacturers and research organizations | |
| | |
| |
Insurance premiums | |
| | |
| |
Prepaid FICA | | | | | | |
| | $ | | | $ | |
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(6) Property and Equipment
Property and equipment, net consisted of the following:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Laboratory and computer equipment | | $ | | | $ | |
Less accumulated depreciation | |
| ( | |
| ( |
Total property and equipment, net | | $ | | | $ | |
Depreciation expense for the three months ended March 31, 2026 and 2025, was $
(7) Receivable from Related Party
On October 8, 2025, under the Purchase Agreement, DEFJ agreed to reimburse the Company for up to $
There was no comparable reimbursement arrangement prior to the Acquisition.
(8) Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Professional and general consulting fees | | $ | | | $ | |
R&D-related – CMOs, CROs, supplies, equipment and consulting | |
| | |
| |
General expenses | |
| | |
| |
Insurance premiums | |
| — | |
| |
Payroll and benefits | | | | | | |
Accrued license payments | | | | | | — |
| | $ | | | $ | |
At March 31, 2026, and December 31, 2025, the Company’s outstanding payables to CROs or CMOs included above were $
See Note 10 for further information regarding the accrued license payments.
(9) Grant Income
In September 2024, the Company received its second award (the “2024 Award”) from the National Cancer Institute of the National Institutes of Health (the “NIH”). The 2024 Award is a
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(10) Unleash License Agreement
On March 2, 2026, the Company entered into an Exclusive Licensing Agreement (the “Licensing Agreement”) with Unleash Immuno Oncolytics, Inc., a Delaware corporation, (“Unleash”) pursuant to which Unleash granted the Company a royalty-free, sublicensable global license to develop Unleash’s pre-clinical candidate program involving genetically-engineered adenoviruses to harness the immune system to fight cancer, as well as an exclusive, perpetual, irrevocable, worldwide, fully-paid up, royalty-free, sublicensable right and license to related technology. In consideration of the Licensing Agreement, the Company issued
Tungsten Advisors (together with its affiliates, “Tungsten”) acted as the financial advisor to the Company in connection with the Licensing Agreement. As compensation for services rendered by Tungsten, the Company issued to Tungsten and its affiliates and designees an aggregate of
The fair value of the consideration totaled approximately $
| | | |
Fair value of preferred stock issued to Unleash | | $ | |
Fair value of preferred stock issued to Tungsten | |
| |
Total Consideration Paid | | $ | |
(11) Commitments and Contingencies
(a) Leases
Operating Lease
In December 2022, the Company signed an agreement to sublease
Prior to February 1, 2023, and subsequent to January 31, 2025, the Company had no operating leases with maturities greater than one year. The Company does not recognize any variable lease costs or short-term lease costs in connection with the operating lease.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(11) Commitments and Contingencies (continued)
Rent expense for the three months ended March 31, 2026 and 2025, was $
(b) License Agreements
License One
In November 2018, the Company licensed the exclusive rights to certain intellectual property to support development of its therapeutic candidates (“License”). The intellectual property licensed by the Company is owned by The General Hospital Corporation, d/b/a Massachusetts General Hospital, (“Licensor”). Payments by the Company under the license agreement included a one-time non-refundable fee of $
The Company has the right to terminate the License at any time by giving
Milestone payments payable by the Company are summarized below.
| | | |
Milestone Event | | Amount | |
1. Enrollment of first patient in a phase II clinical trial of a therapeutic product or process | | $ | [**] |
2. Enrollment of first patient in a phase III clinical trial of a therapeutic product or process | | $ | [**] |
3. First commercial sale of a therapeutic product or process | | $ | [**] |
4. Filing of an application for regulatory approval of a clinical diagnostic product or process | | $ | |
5. First regulatory approval of a clinical diagnostic product or process | | $ | |
6. Change of Control Liquidity Event: | | | |
a. between $ | | $ | [**] |
b. greater than $ | | $ | [**] |
The royalties to be paid to Licensor shall be assessed on net sales of licensed products on a country-by-country basis in an amount equal to
In November 2020, the Company and Licensor amended the License. Under the amendment, the intellectual property licensed in 2018 was categorized as “Patent Family 1” and a provisional patent filing related to the Company’s nanoparticle technology was added to Patent Family 1. A second patent family (“Patent Family 2”) was created which includes Licensor intellectual property targeting PD-L1. The minimum annual license fee prior to the first commercial sale of a product or process covered by the License was increased from $
Effective August 15, 2025, the Company and Licensor further amended the License (the “Second Amendment”) to revise the diligence requirements and milestone payments. In connection with the Second Amendment, the Company paid the Licensor a license
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(11) Commitments and Contingencies (continued)
amendment fee of $
(i) a certain dollar amount within sixty (60) days following dosing of the first patient in the first phase II clinical trial for a Therapeutic Product or Therapeutic Process for each Patent Family;
(ii) a certain dollar amount within sixty (60) days following dosing of the first patient in the first phase III clinical trial for a Therapeutic Product or Therapeutic Process for each Patent Family; and
(iii) a certain dollar amount within sixty (60) days following the First Commercial Sale of a Therapeutic Product or Therapeutic Process for each Patent Family.
In addition, upon the occurrence of a Change of Control Liquidity Event (as defined in the Second Amendment), the Company shall pay Licensor up to a certain dollar amount.
The License One milestone payments the Company shall pay to Licensor shall not exceed $
As of March 31, 2026 and December 31, 2025, no License One milestone events had been achieved.
License Two
The Company’s second license is between Polynoma, LLC and Sloan Kettering Institute (“SKI”) For Cancer Research (the “SKI License”). The SKI License was entered into on April 12, 2006, by SKI and MAANEX LLC, a predecessor of Polynoma. Under the
SKI License, there are the following Milestone Events (excluding milestones that occurred prior to the Company’s acquisition of Polynoma which prior milestones were previously paid):
| | | |
Milestone Event | | Amount | |
1. Upon filing of a New Drug Application with the FDA for a product(s) subject to the SKI License | | $ | |
2. Enrollment of first patient in a phase III clinical trial of a therapeutic product or process | | $ | |
As of March 31, 2026, and December 31, 2025, no License Two milestone events had been achieved.
Accrued License Obligations
At March 31, 2026, and December 31, 2025, the Company had accrued $
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(11) Commitments and Contingencies (continued)
(c) Collaboration Agreement
On July 29, 2022, the Company signed a
(d) Employment Agreements and Severance
Prior to the IPO, the Company entered into employment agreements with its executive officers which became effective on completion of the IPO. Each employment agreement provides the employee with, among other things, severance payments upon termination of the agreement by the Company for any reason other than for cause, death or disability, or by the employee for good reason. The maximum aggregate severance payments under the agreements, which arise in the event of termination involving a Change of Control (as defined in the agreements), are approximately $
(e) Litigation
The Company may from time to time be subject to claims by others under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, consolidated financial condition, and consolidated cash flows. At the balance sheet dates herein, the Company did not know of any claims or actions pending against it or threatened, the ultimate disposition of which could have a material adverse effect on its consolidated results of operations or consolidated financial condition except claims by an investment bank that it is entitled to fees, claims which the Company rigorously disputes.
On April 24, 2026, Wheeler Bio, Inc. (“Wheeler”) filed a complaint in the Supreme Court of the State of New York, County of New York, captioned Wheeler Bio, Inc. v. Polynoma LLC, et al., No. 652458/2026 against Polynoma and TransCode (the “Wheeler Action”). The Wheeler Action asserts two causes of action: breach of contract against Polynoma and intentional interference with contractual relations against TransCode. The claims arise out of an agreement between Wheeler and Polynoma for certain contract development and manufacturing services offered by Wheeler. Wheeler alleges that, on October 1, 2025, Polynoma terminated a Statement of Work and a Change Order effective immediately without advance notice required by the agreement, and has failed to pay certain delay fees, cancellation fees, and invoices generated in connection with the agreement. Wheeler further alleges that TransCode caused Polynoma to terminate the agreement and to refuse to pay the fees at issue. The Wheeler Action seeks compensatory and punitive damages, restitution, pre- and post-judgment interest, and attorneys’ fees and costs. The Company disputes the claims and intends to defend vigorously against this litigation.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(11) Commitments and Contingencies (continued)
(f) Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board and executive officers that require the Company, among other things, to indemnify the parties against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any costs as a result of payments required by such indemnifications. The Company is not aware of any indemnification arrangements that could have a material adverse effect on its consolidated financial position, consolidated results of operations or consolidated cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements, as of the balance sheet dates herein.
(g) Risks and Uncertainties
As geopolitical events such as wars in the Ukraine and the Middle East and major health issues such as SARS-CoV-2, or the coronavirus, continue to evolve, the extent to which they affect the Company’s operations directly or through parties on whom the Company depends is highly uncertain and cannot be predicted with confidence. The outcomes resulting from these events could delay the Company’s plans, increase its operating expenses and have a material adverse effect on its consolidated financial condition, consolidated results of operations or consolidated cash flows.
(h) Contingent Value Rights Agreement
Concurrent with the Closing of the Acquisition, the Company entered into a contingent value rights agreement (the “CVR Agreement”) with a rights agent (the “Rights Agent”), pursuant to which each holder of Common Stock as of October 20, 2025, including those holders receiving shares of Common Stock in connection with the Acquisition, was entitled to
Each CVR entitles the holders thereof (each a “CVR Holder”), in the aggregate, to
Under the CVR Agreement, the Rights Agent has, and CVR Holders of at least
As no transaction was deemed probable as of March 31, 2026, the Company has not recorded any potential liability related to the CVRs.
(12) Contingent Consideration
In connection with the Acquisition, the Company agreed to make up to $
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(12) Contingent Consideration (continued)
commercialize the Seller Lead Candidate (as defined in the Purchase Agreement)) of the corresponding Milestone Event as follows: (i) a milestone payment of five million U.S. dollars ($
The estimated fair value of the Acquisition Obligation as of March 31, 2026, and December 31, 2025, was approximately $
(13) Stockholders’ Equity
(a) Overview
The Company’s Certificate of Incorporation (the “Charter”), originally filed on January 11, 2016, was amended on April 15, 2020, to increase the number of shares of common stock authorized and to authorize the issuance of preferred stock. The Company’s Certificate of Incorporation was further amended and restated on April 27, 2021, on May 22, 2023, to effect the May 2023 Reverse Split, on January 16, 2024, to effect the January 2024 Reverse Split, on December 4, 2024, to effect the December 2024 Reverse Split, and on May 5, 2025, to effect the May 2025 Reverse Split. The total number of shares of capital stock which the Company is authorized to issue is
At March 31, 2026, and December 31, 2025, the Company had
(b) Preferred Stock
In October 2025, the Board designated
As of April 6, 2026, Holders of Series A Preferred Stock were entitled to receive, and the Company paid, payment-in-kind dividends on each share of Series A Preferred Stock, at a rate equal to five percent (
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(13) Stockholders’ Equity (continued)
Except as otherwise required by law, the Series A Preferred Stock and Series B Preferred Stock do not have voting rights. However, as long as any shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, the Company may not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series A Preferred Stock and Series B Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or Series B Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Charter or Amended and Restated Bylaws of the Company, or file any articles of amendment, certificate of designation, preferences, limitations and relative rights of any series of Preferred Stock, if such action would adversely alter or change the preferences, rights, privileges or powers, or restrictions provided for the benefit, of the Series A Preferred Stock or Series B Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Charter or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series A Preferred Stock or Series B Preferred Stock, or increase or decrease (other than by conversion) the number of authorized shares of Series A Preferred Stock or Series B Preferred Stock, (iii) prior to the Stockholder Approval (as defined in the Certificate of Designation) or at any time while at least
The Series A Preferred Stock and Series B Preferred Stock shall rank on parity with the Common Stock as to distributions of assets upon liquidation, dissolution or winding-up of the Company, whether voluntarily or involuntarily.
At any time following 5:00 p.m. Eastern Time on the third business day after the date the Company’s stockholders approve the conversion of the Series A Preferred Stock and Series B Preferred Stock (the “Stockholder Approval”), each share of Series A Preferred Stock will be convertible at the option of the holder thereof into
At any time and from time to time after April 8, 2026, each share of Series B Preferred Stock will be convertible at the option of the Holder thereof into
At any time following the earlier to occur of (i) the receipt of the Stockholder Approval or (ii) the consummation of a Fundamental Transaction, the holders of Series A Preferred Stock and Series B Preferred Stock may waive or change the Beneficial Ownership Limitation effective upon written notice to the Company; provided, that to the extent such waiver or change is solely permitted pursuant to the Stockholder Approval or the consummation of a Fundamental Transaction, such notice must be delivered not less than
Upon the occurrence of the conditions set forth in section 5.3 of the Repurchase Agreement dated as of October 8, 2025, by and between the Company and DEFJ (the “Repurchase Agreement”), or if the Company fails to deliver to the holder of Series A Preferred Stock a certificate or certificates representing shares of Common Stock, or electronically deliver such shares, (i) on or prior to the third trading day after the applicable Share Delivery Date (as defined in the Certificate of Designation), or (ii) April 8, 2027, then, unless the holder of Series A Preferred Stock has rescinded the applicable Notice of Conversion, the Company will, at the request of the holder of Series A Preferred Stock, pay an amount equal to the Fair Value (as defined in the Certificate of Designation) of such undelivered shares, with such payment to be made within two business days from the date of request by such holder, whereupon the Company’s obligations to deliver such shares underlying the Notice of Conversion (as defined in the Certificate of Designation) shall
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(13) Stockholders’ Equity (continued)
be extinguished upon payment in full of the Fair Value of such undelivered shares; provided, however that such request shall be presumed to have been duly and properly made by such holder if Stockholder Approval with respect to the Series A Preferred Stock shall not have been obtained prior to the date on which the Notice of Conversion is delivered to the Company.
Upon the occurrence of the conditions set forth in section 5.3 of the Repurchase Agreement, or if the Company fails to deliver to the holder of Series B Preferred Stock a certificate or certificates representing shares of Common Stock, or electronically deliver such shares, on or prior to the third trading day after the applicable Share Delivery Date, then, unless the holder of Series B Preferred Stock has rescinded the applicable Notice of Conversion, the Company will, at the request of the holder of Series B Preferred Stock, pay an amount equal to the Fair Value of such undelivered shares, with such payment to be made within two business days from the date of request by such holder, whereupon the Company’s obligations to deliver such shares underlying the Notice of Conversion shall be extinguished upon payment in full of the Fair Value of such undelivered shares; provided, however that such request shall be presumed to have been duly and properly made by such holder if Stockholder Approval with respect to the Series B Preferred Stock shall not have been obtained prior to the date on which the Notice of Conversion is delivered to the Company.
The cash settlement provisions set forth in the Certificate of Designation shall be available irrespective of the reason for the Company’s failure to timely deliver the applicable shares of Common Stock including due to not having obtained Stockholder Approval with respect to the Preferred Stock.
(c) Repurchase Agreement
The terms of the Repurchase Agreement signed in connection with the Acquisition (the “Repurchase Agreement”) provide that DEFJ has the right, but not an obligation, after the Closing and upon the occurrence of certain conditional events including continued listing
requirements, to acquire all of the Company’s and its subsidiaries’ rights in and to the membership interests of ABCJ (the “Interests”) from the Company in accordance with the terms and conditions of the Repurchase Agreement. The aggregate purchase price for the Interests (the “Repurchase Price”) shall equal one hundred percent (
(d) Redeemable Preferred Stock
The Company applies ASC 480 when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.
(e) Series A Preferred Stock
In connection with the Acquisition, the Company initially issued
| Ø | Conversion: Upon obtaining stockholder approval at the Special Meeting, each share of Series A may convert into |
| Ø | Dividends: Series A Preferred Stock is eligible to participate in any dividends with common stockholders on an as-converted basis. On April 6, 2026, the Company issued to holders of Series A Preferred Stock a payment-in-kind dividend for each share of |
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(13) Stockholders’ Equity (continued)
Series A Preferred Stock, which payment-in-kind dividend accrued at a rate equal to five percent (
| Ø | Liquidation: In the event of the liquidation, dissolution, or winding up of the affairs of the Company (a “Liquidity Event”), prior to Stockholder Approval, holders of Series A Preferred Stock would be entitled to receive a liquidation preference prior to any payment to holders of Common Stock. |
| Ø | Redemption: In the event the Company is unable to obtain an affirmative stockholder vote at the Special Meeting to permit conversion, each holder of Series A Preferred Stock will be entitled to elect, at the holder’s option, to have their shares of Series A Preferred Stock redeemed by the Company for an amount equal to the estimated fair value of the Series A Preferred Stock shares held by such holder at the time of redemption. Due to this redemption feature, as of March 31, 2026, the Series A Preferred Stock was classified within temporary equity on the Company’s consolidated balance sheet. |
(f) Series B Preferred Stock
In connection with the Investment, the Company issued
| Ø | Conversion: Each share of Series B Preferred Stock is convertible into |
| Ø | Dividends: Series B Preferred Stock is eligible to participate in any dividends with common stockholders on an as-converted basis. |
| Ø | Liquidation: In the event of a Liquidity Event prior to Stockholder Approval, holders of Series B Preferred Stock would be entitled to receive a liquidation preference prior to any payment to holders of Common Stock. |
(g) Series C Preferred Stock
In connection with the Company’s licensing agreement with Unleash, the Company issued
| Ø | Conversion: Each share of Series C Preferred Stock is convertible into |
| Ø | Dividends: Series C Preferred Stock is eligible to participate in any dividends with common stockholders on an as-converted basis. |
| Ø | Liquidation: In the event of a Liquidity Event prior to Stockholder Approval, holders of Series C Preferred Stock would be entitled to receive a liquidation preference prior to any payment to holders of Common Stock. |
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(13) Stockholders’ Equity (continued)
(h) Common Stock
| Ø | Dividends: Subject to the rights of holders of any preferred stock, holders of common stock are entitled to receive dividends as may be declared from time to time by the Board. The Company has never declared or paid cash dividends through the date of these consolidated financial statements. |
| Ø | Liquidation: Subject to the rights of holders of any preferred stock as to liquidation, upon the liquidation, dissolution or winding up of the Company, the remaining assets of the Company will be distributed to holders of common stock. |
| Ø | Voting: Holders of common stock are entitled to one vote for each share of common stock held but shall not be entitled to vote on any amendment to the Certificate of Incorporation that relates solely to the terms of any series of preferred stock. There is no cumulative voting. |
(i) Issuances of Common Stock and Warrants
On January 22, 2024, the Company closed an offering under a Securities Purchase Agreement with purchasers named therein pursuant to which the Company sold approximately
Company also issued the placement agent warrants to purchase up to approximately
On July 22, 2024, the Company entered into a Placement Agency Agreement with ThinkEquity LLC pursuant to which the Company issued and sold approximately
On December 2, 2024, the Company closed an offering under a Securities Purchase Agreement with purchasers named therein pursuant to which the Company sold
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(13) Stockholders’ Equity (continued)
On March 23, 2025, the Company entered into a Placement Agency Agreement with ThinkEquity LLC pursuant to which the Company issued and sold
shares of common stock at an exercise price of $
(j) Registration Rights Agreement
In connection with the Acquisition, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the holders (the “Holders”) of the Common Stock, the Series A Preferred Stock and the Series B Preferred Stock issued in connection with the Acquisition (collectively the “Acquisition Transaction Shares”). Pursuant to the Registration Rights Agreement, the Company was required to prepare and file a resale registration statement with the SEC on or prior to the 75th calendar day following the Closing (the “Filing Deadline”), with respect to the shares of Common Stock issued in the Acquisition and the shares of Common Stock issuable upon conversion of the Series A Preferred Stock and the Series B Preferred Stock issued in the Acquisition, subject to the Beneficial Ownership Limitation. The Company and the Holders agreed to extend the Filing Deadline to a date to be determined.
Pursuant to a Registration Rights Agreement with Unleash, the Company agreed to file a resale registration statement on Form S-3 registering the shares of Common Stock issuable on conversion of the Series C Preferred Stock under the Unleash Registration Rights Agreement and to use commercially reasonable efforts to cause such registration statement to be declared effective by the Securities and Exchange Commission as soon as practicable after such registration statement is filed. The Company also granted Unleash customary demand registration rights.
(14) Warrants
Except as noted otherwise, all the warrants described below were outstanding as of March 31, 2026, and are accounted for as a component of stockholders’ equity. All PFWs issued in the Company’s financings described herein were exercised on or before January 10, 2025.
In connection with the IPO, the Company granted the underwriter warrants (the “IPO Underwriter Warrants”) to purchase up to approximately
In connection with the February RDO, the Company issued the February Placement Agent Warrants to purchase up to approximately
In connection with an agreement the Company entered into with a consultant in February 2023, the Company agreed to issue warrants (the “Consultant Warrants”) to purchase approximately
In connection with the June RDO, the Company issued approximately
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(14) Warrants (continued)
In connection with the September Offering, the Company issued warrants to the underwriter to purchase up to approximately
In connection with the December RDO, the Company issued the December Placement Agent Warrants to purchase up to approximately
In connection with the January 2024 RDO, the Company issued the January 2024 Warrants to purchase up to approximately
In connection with the July 2024 Offering, the Company issued to the placement agent the July Placement Agent Warrants to purchase up to approximately
In connection with the 2024 PIPE, the Company issued approximately
In connection with the March 2025 Offering, the Company issued the March 2025 Offering Warrants to purchase up to
2025 Placement Agent Warrants became exercisable on issuance, expire
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(14) Warrants (continued)
The following table summarizes the Company’s outstanding warrants at March 31, 2026:
| | | | | |
| | Number | | Exercise Price | |
Description | | of Shares | | Per Share | |
IPO Underwriter Warrants |
| | | $ | |
February 2023 Placement Agent Warrants |
| | | | |
February 2023 Consultant Warrants |
| | | | |
June 2023 Series A-1 warrants |
| | | | |
June 2023 Series A-2 warrants |
| | | | |
June 2023 Placement Agent Warrants |
| | | | |
September 2023 Underwriter Warrants |
| | | | |
October 2023 Underwriter Overallotment Warrants |
| | | | |
December 2023 Placement Agent Warrants |
| | | | |
January 2024 Warrants |
| | | | |
January 2024 Warrants |
| | | | |
January 2024 Placement Agent Warrants |
| | | | |
July 2024 Placement Agent Warrants |
| | | | |
December 2024 Series C Warrants |
| | | | |
March 2025 Offering Warrants |
| | | | |
March 2025 Placement Agent Warrants |
| | | | |
Approximately
share. In connection with the modification, the Company recorded a deemed dividend in the aggregate of $
(15) Share-Based Compensation
In April 2020, the Board approved the TransCode Therapeutics, Inc. 2020 Stock Option and Incentive Plan (the “2020 Plan”) providing for the issuance of options or other awards to purchase up to approximately
Both Plans provide for grants of equity in the form of stock awards, stock options and other instruments to employees, members of the Board, officers and consultants of and advisors to the Company. The Plans are administered by the Board or, at the discretion of the Board, by a committee of the Board. The amount and terms of grants are determined by the Board. The terms of options granted under
the Plans generally are for ten (
granted under the 2021 Plan terminate, expire, or are surrendered or cancelled, the shares subject to such grants will again be available under the 2021 Plan.
The exercise price for incentive stock options is determined at the discretion of the Board but for grants to any person possessing less than
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(15) Share-Based Compensation (continued)
power of all classes of stock). The option term for incentive stock option awards may not be greater than ten years from the date of the grant (five years for grants to any person possessing more than
Of options outstanding at March 31, 2026, approximately
| | | | | | | |
| | | | Weighted | | | |
| | | | average | | Weighted | |
| | | | exercise | | average | |
| | Number of | | price | | contractual | |
| | shares | | per share | | term (years) | |
Outstanding at December 31, 2024 |
| |
| $ | |
| |
Granted |
| — | | | — |
| — |
Exercised |
| — | | | — |
| — |
Forfeited |
| ( | | | |
| — |
Outstanding at December 31, 2025 |
| | | | |
| |
Granted |
| — | | | — |
| — |
Exercised |
| — | | | — |
| — |
Forfeited |
| — | |
| — |
| — |
Outstanding at March 31, 2026 |
| | | $ | |
| |
The intrinsic value of the outstanding options as of March 31, 2026, was $
Option Valuation
(16) Employee Stock Purchase Plan
In 2021, the Company adopted an Employee Stock Purchase Plan (the “ESPP”) to provide eligible employees of the Company with opportunities to purchase shares of the Company’s common stock. The ESPP initially provided for the purchase of an aggregate of up to approximately
(17) Net Loss per Share
The Company reported net losses for the three months ended March 31, 2026 and 2025. Reported basic and diluted net loss per share attributable to common stockholders are the same for each period because shares issuable in connection with Contingent Securities have been excluded from the computation of diluted weighted-average shares outstanding. The effect of their inclusion would have been antidilutive.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(17) Net Loss per Share (continued)
The following table sets forth the computation of basic and diluted loss per share:
| | | | | | | |
| | Three months ended March 31, | | ||||
| | 2026 | | 2025 | | ||
Basic and diluted net loss per share | | | | | | | |
Net loss attributable to common stockholders | | $ | ( | | $ | ( | |
Weighted-average common shares outstanding | |
| | |
| | |
Net loss per share | | $ | ( | | $ | ( | |
(18) Income Taxes
The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of the dates of the Company’s consolidated balance sheets herein, the Company had a full valuation allowance against deferred tax assets with the exception of the “naked” credit from amortization for tax purposes of indefinite-lived intangible assets of Goodwill and IPR&D. The Company booked expense of approximately $
The Company is subject to the provisions of ASC 740-10-25, “Income Taxes” (“ASC 740”). ASC 740 prescribes a more likely-than-not threshold for the financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
There are currently no open federal or state tax audits. The Company has not recorded any liability for uncertain tax positions at the dates of the Company’s consolidated balance sheets herein.
(19) Segment Reporting
ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services categories, business segments and major customers in consolidated financial statements. The Company has a single reportable business unit segment, development of drug candidates designed to treat cancer, and
The provisions of ASC 280 establish standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in consolidated financial statements issued to shareholders. In accordance with ASC 280, the Company’s chief operating decision maker has been identified as its Chief Executive Officer and Chief Financial Officer (together, the “CODM”). The Company’s CODM reviews the consolidated financial information presented for purposes of allocating resources and evaluating consolidated financial performance for the entire Company. Accordingly, the Company has determined that it operates in a single reportable segment. All of the Company’s long-lived assets are located in the United States. Since the Company operates in
The Company does not distinguish between markets or segments for the purpose of internal reporting. The majority of the Company’s long-lived tangible assets are located in Michigan, US, and its deferred tax assets are US-related.
Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar activities and similarities in economic characteristics, procurement, manufacturing and distribution processes.
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(20) Subsequent Events
For its consolidated financial statements as of March 31, 2026, the Company evaluated subsequent events through May 15, 2026, the date on which these consolidated financial statements were issued.
Yorkville Financing
On April 6, 2026, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership, (“Yorkville”) pursuant to which the Company has the right to sell to Yorkville up to $
In connection with the SEPA, and subject to the conditions set forth therein, Yorkville has also agreed to advance to the Company up to $
The first Pre-Paid Advance was disbursed to the Company on April 16, 2026. In exchange for the first Pre-Paid Advance, the Company issued to Yorkville a Convertible Note in the principal amount of $
The second tranche of the Pre-Paid Advance is expected to be disbursed to the Company in exchange for the issuance to Yorkville of a Convertible Note in the principal amount of $
Price (the “Second Convertible Note Conversion Price,” and together with the First Convertible Note Conversion Price, the “Conversion Price”). The Second Convertible Note will be issued on the second trading day after the later of (i) the registration statement filed pursuant to the SEPA, including any prospectus, amendments and supplements thereto, (the “Yorkville Registration Statement”) first becoming effective under the Securities Act, (ii) the Company’s receipt of stockholder approval to issue shares of Common Stock to Yorkville under the SEPA in excess of the Exchange Cap (defined below), and (iii) the approval by Nasdaq of the initial listing application required under Nasdaq Listing Rules 5110 and 5635(b). After accounting for the purchase price discount, the Company expects to receive gross proceeds of $
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TRANSCODE THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2026
(Unaudited)
(20) Subsequent Events (continued)
Interest on the outstanding balances of the Convertible Notes will accrue at an annual rate of
The sale and issuance of shares under the SEPA, including upon conversion of the Convertible Notes at Yorkville’s option and the sale of shares of Common Stock to Yorkville at the Company’s option, is subject to an exchange cap limiting the total number of shares issuable to Yorkville to
Sponsored Research Agreement
On April 11, 2026, the Company entered into a Sponsored Research Agreement (the “SRA”) with Michigan State University (“MSU”) pursuant to which MSU will conduct certain research projects in collaboration with the Company. There are no upfront financial obligations on the Company under the SRA. The Company will pay MSU agreed upon costs for conduct of the research. Each project under the SRA will have its own budget and payment schedule, with payments generally due monthly upon receipt of invoices from MSU.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our consolidated financial condition and consolidated results of operations together with the “Consolidated Financial Statements” section of this Quarterly Report on Form 10-Q including the related notes appearing elsewhere in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those set forth in the “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” sections of this Quarterly Report, our actual results could differ materially from the consolidated results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Company Overview
TransCode is an immuno-oncology and targeted cancer therapy company with a focus on treating advanced malignancy. Our lead therapeutic candidate, TTX-MC138, is focused on treating metastatic tumors that overexpress microRNA-10b, a unique, well-documented biomarker of metastasis. In 2023, we conducted a Phase 0 clinical trial in one patient with advanced solid tumors. The intent of the Phase 0 trial was to demonstrate quantitative delivery of radiolabeled TTX-MC138 to metastatic lesions. In September 2024, we commenced a Phase I/II clinical trial with TTX-MC138 which substantially met its primary safety endpoint by the end of 2025. Analysis of the Phase I/II clinical trial results is ongoing. We expect to commence a Phase 2a clinical trial in the first half of 2026.
Polynoma Acquisition. On October 8, 2025, we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with DEFJ, LLC, a Delaware limited liability company, (“DEFJ”) pursuant to which we acquired 100% of the issued and outstanding membership interests of ABCJ, LLC, a Delaware limited liability company, (“ABCJ”) (such transaction, the “Acquisition”). Prior to the Acquisition, ABCJ was a wholly-owned subsidiary of DEFJ and an indirect wholly-owned subsidiary of CK Life Sciences Int’l., (Holdings) Inc., a listed entity on the Main Board of the Hong Kong Stock Exchange (“CKLS”). In the Acquisition, we issued 1,242.0717 shares of Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share, (the “Series A Preferred Stock”) to DEFJ. Each share of Series A Preferred Stock is convertible into 10,000 shares of Common Stock.
ABCJ owns 100% of the issued and outstanding membership interests of Polynoma, LLC, a Delaware limited liability company, (“Polynoma”) previously headquartered in San Diego, California. Polynoma is an immuno-oncology focused biopharmaceutical company developing Seviprotimut-L, an investigational polyvalent antigen vaccine intended to reduce the risk of recurrence of cancer in patients with stage IIB and IIC melanoma who have limited options. Seviprotimut-L has been safely administered in clinical trials to more than 1,000 patients.
We intend to work on developing both TTX-MC138 and Seviprotimut-L, with the initial focus on advancing TTX-MC138 in a planned Phase 2a clinical trial. We believe there is potential to augment Seviprotimut-L's focus with TTX-MC138 by addressing micrometastases in stage IIB and IIC melanoma patients.
Concurrent with the Acquisition, we entered into an Investment Agreement (the “Investment Agreement”) with DEFJ. Pursuant to the Investment Agreement, DEFJ agreed to purchase, and we agreed to issue and sell, in a private placement an aggregate of 223.7337 shares of Series B Non-Voting Convertible Preferred Stock, par value $0.0001 per share, (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred Stock”) at a price per share of $111,740, for an aggregate purchase price of approximately $25 million. The aggregate purchase price consisted of a cash subscription of $20 million paid on October 8, 2025, and a promissory note (the “Promissory Note”) in the aggregate principal amount of approximately $5 million (together, the “Investment”). The Promissory Note accrued interest at a rate of 4% per annum, calculated as simple interest on a 365-day year. The principal and accrued interest were paid on December 30, 2025. Each share of Series B Preferred Stock is convertible into 10,000 shares of Common Stock.
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Contingent Value Rights Agreement. Concurrent with the closing of the Acquisition, we entered into a contingent value rights agreement (the “CVR Agreement”) with a rights agent (the “Rights Agent”), pursuant to which each holder of our Common Stock as of October 20, 2025, (the “Record Date”) including those holders who received shares of Common Stock in connection with the Acquisition, is entitled to one contractual contingent value right (each, a “CVR”) issued by us, subject to and in accordance with the terms and conditions of the CVR Agreement, for each share of Common Stock held by such holder as of 5:00 p.m. Eastern Daylight Time on the Record Date. The CVR Agreement has a term of seven years (the “Term”).
The CVRs entitle the holders thereof (each a “Holder”), in the aggregate, to 50% of the Net Proceeds (as defined in the CVR Agreement) from any Upfront Payment (as defined in the CVR Agreement) or Milestone Payment (as defined in the CVR Agreement) we receive in a given calendar quarter during the Term. Distributions in respect of CVRs that become payable will be made on a quarterly basis subject to a number of deductions with certain exceptions or limitations, including but not limited to for certain taxes and certain out-of-pocket expenses we incur.
Under the CVR Agreement, the Rights Agent has, and Holders of at least 30% of the CVRs then-outstanding have, certain rights to audit and enforcement on behalf of all Holders. The CVRs may not be sold, assigned, pledged, encumbered or in any other manner transferred or disposed of, in whole or in part, other than as permitted pursuant to the CVR Agreement. Holders, by virtue of their CVR holdings, do not have the rights of stockholders such as the ability to vote, rights to dividends, or other interests. The CVRs also establish certain restrictions on mergers and change in control activities, as defined in the CVR Agreement.
Unleash Licensing Agreement. In March 2026, we entered into the Unleash Licensing Agreement with Unleash pursuant to which the we acquired a pre-clinical candidate program involving genetically-engineered adenoviruses to harness the immune system to fight cancer, as well as an exclusive, perpetual, irrevocable, worldwide, fully-paid up, royalty-free, sublicensable right and license to related technology.
As consideration for the Unleash Licensing Agreement, pursuant to an Equity Issuance and Registration Rights Agreement with Unleash (the “Unleash Registration Rights Agreement”), we issued to Unleash 1,136,364 shares of our Series C Non-Voting Convertible Preferred Stock and 77,840 shares of our Series C Non-Voting Convertible Preferred Stock to Tungsten Advisors (together with its affiliates, “Tungsten”) as compensation for services rendered by Tungsten. The Series C Preferred Stock is not convertible until our stockholders approve its conversion into Common Stock in accordance with the listing rules of Nasdaq (the “Unleash Stockholder Approval”). Following the Unleash Stockholder Approval, each share of Series C Preferred Stock is convertible into one share of our Common Stock.
Other Drug Candidates
In addition to TTX-MC138, we have a portfolio of other first-in-class therapeutic candidates designed to mobilize the immune system to recognize and destroy cancer cells. TTX-siPDL1 is an siRNA-based modulator of programmed death-ligand 1, or PD-L1. TTX-RIGA is an RNA-based agonist of the retinoic acid-inducible gene I, or RIG-I, targeting activation of innate immunity in the tumor microenvironment. TTX-siMYC is a siRNA-based inhibitor of c-MYC, a widely expressed but currently undruggable oncogene. Seviprotimut-L is a novel allogeneic, polyvalent partially-purified shed antigens vaccine (alum adjuvanted) for the adjuvant treatment of Stage IIB and IIC melanoma patients age 60 years and younger. Seviprotimut-L is derived from three proprietary human melanoma cell lines. Seviprotimut-L works by stimulating both humoral and cellular immune responses. It has completed an initial Phase 3 clinical trial and has been administered to approximately 1,000 patients in clinical trials.
Targeted Therapeutic Delivery Background
For decades, ribonucleic acid, or RNA, has been a topic of investigation by the scientific community as a potentially attractive therapeutic modality because it can target any gene, and it lends itself to rational and straightforward drug design. RNA-based therapeutics are highly selective to their targets and potentially applicable to a broad array of previously undruggable targets in the human genome. We believe that one of the major challenges to widespread use of RNA therapeutics in oncology and other indications has been the inability to deliver these molecules inside cells.
To customize development of RNA therapeutics, we developed a design engine that is modular at both the levels of the core nanoparticle and the therapeutic loading. The size, charge, and surface chemistry of the core iron oxide nanoparticle are designed so
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that it can be tuned to optimize the particles for the intended target and therapeutic load. The therapeutic load is designed to consist of synthetic oligonucleotides and other molecular moieties such as proteins, peptides, radionuclides, and small molecules that can be adapted to the specific approach being developed. The approach can range from RNA interference, or RNAi, including small interfering RNAs, antisense oligonucleotides, and non-coding RNA mimics to Pattern Recognition Receptors such as RIG-I. We believe the TTX platform can further be used for developing targeted radiolabeled therapeutics and diagnostics and other custom products targeting known and novel biomarkers and other genetic elements as they are discovered and validated.
Our TTX platform is designed to overcome extracellular and intracellular delivery issues of stability, efficiency, and immunogenicity faced by existing lipid and liposomal nanoparticle platforms while optimizing targeting of and accumulation in tumors and metastases. We believe the ability to deliver targeted therapeutics inside tumors and metastases will potentially allow us to target genes and other important biomarkers for cancer treatment that have until now remained undruggable using other delivery systems.
TTX Delivery System
The therapeutic potential of RNA in oncology has remained an unrealized promise due in large part, we believe, to the difficulty in safely and effectively delivering oligonucleotides, i.e., synthetic RNA molecules, to tumors. We believe we are now closer to solving this challenge by means of our TTX platform.
Our TTX technology has gone through more than 20 years of research and development, or R&D, and optimization, including 12 years at Harvard Medical School and the Massachusetts General Hospital, by our scientific co-founders prior to company formation.
Our TTX nanocarrier is designed to be tunable to certain specifications to deliver therapeutic oligonucleotides to RNA targets in tumors and metastases without compromising the integrity of the oligonucleotide. We believe our TTX nanocarriers differentiate us from competitive delivery approaches, many of which rely on lipid particles or chemical structures, such as GalNAc. These competitive delivery approaches effectively target hepatocytes in the liver but not tumors and metastases.
Our TTX delivery platform is also designed to minimize early kidney and liver clearance, which we expect to translate into a long circulation half-life that allows for efficient accumulation in tumors and metastases.
Nanoparticles similar in formulation to ours have an excellent clinical safety record of low toxicity and immunogenicity. Because their iron core is magnetic and visible with magnetic resonance imaging, or MRI, they have the additional benefit of enabling quantification of the delivery of the particles to target organs. Our nanoparticles carry functional groups to provide stable links to the therapeutic oligonucleotides of interest through covalent bonds.
The small hydrodynamic size and the charge of the resulting nanoparticles are designed to maximize distribution throughout the tumor microvasculature, extravasation into the interstitium of tumors and metastases, and uptake by tumors. The physicochemical properties of the nanoparticles are expected to further facilitate their rapid uptake by tumors by exploiting the high metabolic activity of cancer cells, a process analogous to the mechanism behind the systemic loading of metastatic cancer cells with fluorodeoxyglucose for diagnostic Positron Emission Tomography, or PET. We believe the combined result of a hydrodynamically-favored distribution and a metabolically-triggered uptake will result in the enhanced ability of our nanoparticles to access genetic targets inside tumors.
Advancing new RNA therapies through a modular approach
In September 2021, research conducted by MGH was published in Cancer Nanotechnology, entitled “Radiolabeling and PET-MRI microdosing of the experimental cancer therapeutic, MN-anti-miR10b, demonstrates delivery to metastatic lesions in a murine model of metastatic breast cancer.” This paper reported on an MGH study using a radiolabeled derivative of TTX-MC138 (referred to in the paper as MN-anti-miR10b). In this study, TTX-MC138 was tagged with copper-64, or Cu-64. As a result, highly sensitive and specific quantitative determination of pharmacokinetics and biodistribution, as well as observation of delivery of the radiolabeled TTX-MC138 to metastases, was made in laboratory tests using noninvasive PET-MRI. The key results of the study suggest that when injected intravenously, TTX-MC138 accumulates in metastatic lesions. These results suggest that our TTX platform delivers its therapeutic candidate as intended and support clinical evaluation of TTX-MC138. In addition, the MGH investigation describes a microdosing PET-MRI approach to measure TTX-MC138 biodistribution in cancer patients and its delivery to clinical metastases. (Microdoses are minute, subpharmacologic doses of a test compound, not greater than 100 micrograms.) The capacity to carry out
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microdosing PET-MRI studies in patients under an exploratory IND, or eIND, application could be important because they have the potential to support additional clinical trials we may propose for FDA consideration. The research described in this paper, published by Dr. Zdravka Medarova, our Chief Scientific Officer and scientific co-founder, and others, describes what we believe is an effective approach to assessing delivery of TTX-MC138 in metastatic cancer patients. Since the PET-MRI technique is sensitive enough to determine the concentration of radiolabeled drug candidate in the sub-picomolar range, microgram quantities of the radiolabeled drug candidate are believed to be sufficient to perform such a study in humans. We believe this capability has significant advantages in the initial phases of drug development.
Dr. Medarova’s paper suggests that the radiolabeling does not impact tumor cell uptake or the ability of TTX-MC138 to engage its target. The paper also shows that the biodistribution of radiolabeled TTX-MC138, when injected at a microdose, reflects its biodistribution at the level of a therapeutic dose.
These key findings informed the design of our Phase 0 microdose clinical trial with radiolabeled TTX-MC138 which we believe offered numerous potential advantages:
| (i) | allowed more precise quantitation of the amount of TTX-MC138 delivered to the metastatic lesions because of the higher sensitivity and quantitative accuracy of positron emission tomography; |
| (ii) | permitted measurement of the pharmacokinetics and biodistribution of TTX-MC138 not only in the metastatic lesions but in other tissues throughout the body, potentially informing Phase I/II clinical trial designs by allowing us to determine drug candidate uptake and clearance from vital organs; |
| (iii) | supported assessment of pharmacokinetic endpoints, potentially informing dosing for clinical trials. Specifically, because of the high sensitivity and quantitative nature of PET-MRI, we obtained information suggesting what drug concentration in the metastatic lesions over time could be which we then could assess relative to the effective dose used in our preclinical studies; and |
| (iv) | further informed clinical trial designs to potentially incorporate patient inclusion criteria in those designs. |
Because of the potential benefits from a microdose Phase 0 clinical trial, and reflecting the studies described in Cancer Nanotechnology, our First-in-Human Phase 0 trial was designed to deliver a microdose of our therapeutic candidate. Results from the trial suggest the validity of our TTX pipeline for drug delivery generally, potentially opening-up additional relevant RNA targets that have been previously undruggable.
SBIR Awards
In April 2021, we received a Fast-Track Small Business Innovation Research award, or SBIR Award, from the National Cancer Institute that provided approximately $2.4 million to fund a two-phased research partnership between us and Massachusetts General Hospital. The program commenced in April 2021 and ended in March 2024. In the SBIR Award application, we proposed performing key translational experiments including IND-enabling and supporting imaging studies using MRI to assess delivery and target engagement of TTX-MC138 in metastatic lesions of breast cancer patients. The experiments were designed to achieve the following aims:
SBIR Phase I:
Aim 1. Optimize a method for measuring miR-10b expression in breast cancer clinical samples.
SBIR Phase II:
Aim 2. File an IND application for TTX-MC138.
Aim 3. Use imaging to determine the uptake of TTX-MC138 by radiologically-confirmed metastases in breast cancer patients.
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We believe that we achieved all three aims under this SBIR.
In September 2024, we received our second NIH Award (the “2024 Award”) from the National Cancer Institute of the NIH. The 2024 Award is a Direct to Phase II SBIR Award to support IND-enabling and clinical trial activities in our clinical trial with TTX-MC138 over two years. The total 2024 Award is for $1,999,972 of which $1,011,207 applies to the first year and $988,765 applies to the second year.
Recent Developments
Phase I/II Clinical Trial
We commenced a Phase I/II clinical trial with TTX-MC138 in September 2024 at MD Anderson and three other clinical trial sites. This trial has been designed as a multicenter, open-label, dose-escalation and dose-expansion study in patients with advanced solid tumors.
The Phase Ia stage of this trial involved administration of escalating therapeutic dose levels of our drug candidate in four cohorts of an aggregate of 16 patients. Preliminary data indicate no significant safety or dose limiting toxicities have been reported in the trial. To date, approximately 86 doses of TTX-MC138 have been administered to the 16 patients, all of whom had advanced solid tumors. Three patients remain on trial. The median duration of treatment is 79 days. Importantly, the duration on study for all patients in this trial ranged from two to 20 cycles, indicative of tolerability and disease control. Preliminary data analysis demonstrated evidence of dose response over a wide dose range, consistent with preclinical results and our Phase 0 clinical trial. Key assessments in the clinical trial characterize the safety, pharmacokinetic, pharmacodynamic and anti-tumor activity of TTX-MC138 from which we have estimated a maximum tolerated dose, or MTD, and which suggest that the mechanism of action of TTX-MC138 is on target. The trial also is exploring the effect of TTX-MC138 on biomarker expression, which may include miR-10b expression, and miR-10b downstream targets (RNA sequencing). Clinical assessments to further evaluate TTX-MC138 include clinical laboratory exams, CT scan assessments, and response assessments per RECIST criteria.
We recently announced a new collaboration to evaluate TTX-MC138 as part of the PRE-I-SPY clinical trial platform operated by Quantum Leap Health Care Collaborative (“Quantum Leap”). The PRE-I-SPY program will incorporate TTX-MC138 into a Phase IIa clinical trial designed as a multicenter, open-label, one-year treatment duration with one year follow up, dose-expansion trial. The trial will evaluate event-free survival, ctDNA dynamics and pharmacokinetics of TTX-MC138 in up to 45 patients (i) with stage I-III adenocarcinoma of the colon or rectum who are ctDNA positive with minimal residual disease detected by tumor-informed ctDNA assays, (ii) who have completed standard curative-intent therapy, and (iii) who show no radiographic evidence of recurrence or metastasis. This trial is planned to begin in the second quarter 2026 and will be led by Principal Investigator Dr. Paula Pohlmann of the MD Anderson Cancer Center. The study is being conducted under a Quantum Leap IND and cross-referenced to our IND.
Yorkville Financing
On April 6, 2026, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership, (“Yorkville”) pursuant to which we have the right to sell to Yorkville up to $14 million of shares of Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA (the “Commitment Amount”). Sales of Common Stock to Yorkville under the SEPA, and the timing of any such sales, are at our option, and we are under no obligation to sell any shares of Common Stock to Yorkville under the SEPA.
Upon satisfaction of the conditions to Yorkville’s purchase obligations set forth in the SEPA, we may, at our sole discretion, direct Yorkville to purchase specified amounts of Common Stock. The purchase price per share for each Advance is set at 97% of the lowest daily VWAP during the three consecutive trading days beginning on the date upon which the Advance Notice is delivered. Actual sales of Common Stock to Yorkville under the SEPA will depend on a variety of factors including some to be determined by us, in our sole discretion, from time to time, which may include, among other things, market conditions, the trading price of the Common Stock and our determinations as to appropriate sources of funding for our business and operations.
In connection with the SEPA, and subject to the conditions set forth therein, Yorkville has also agreed to advance to us up to $6.0 million, less certain amounts as described below, to be paid in two tranches (each, a “Pre-Paid Advance” and, together, the “Pre-Paid Advances”), in exchange for our issuance to Yorkville of convertible promissory notes (each, a “Convertible Note” and, together, the
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“Convertible Notes”). Pursuant to the Convertible Notes and the SEPA, Yorkville may convert all or any portion of the outstanding principal amount, accrued but unpaid interest, and other amounts outstanding under the Convertible Notes into shares of Common Stock, at any time and from time to time during the term of the Convertible Notes.
The first Pre-Paid Advance was disbursed to us on April 16, 2026. In exchange for the first Pre-Paid Advance, we issued to Yorkville a Convertible Note in the principal amount of $1.0 million (the “First Convertible Note”), sold with a purchase price discount of 5.0% (or $50,000). The First Convertible Note is convertible into Common Stock at the lower of (i) a fixed conversion price equal to 115% of the VWAP on the day prior to the issuance of the Note and (ii) 95% of the lowest daily VWAP during the seven consecutive trading days immediately preceding the conversion date, but in no event lower than 20% of last reported trading price of our Common Stock on Nasdaq as quoted by Bloomberg (the “First Convertible Note Conversion Price”) as of the trading day immediately prior to the date of the SEPA (the “Floor Price”). After accounting for the purchase price discount, we received gross proceeds of $950,000 from the sale of the First Convertible Note.
The second tranche of the Pre-Paid Advance shall be disbursed to the Company in exchange for the issuance to Yorkville of a Convertible Note in the principal amount of $5.0 million (the “Second Convertible Note”). The Second Convertible Note will be issued with a purchase price discount of 5.0% (or $250,000) and will be convertible into Common Stock at the lower of (i) a price equal to 115% of the VWAP on the day prior to the issuance of the Second Convertible Note and (ii) 95% of the lowest daily VWAP during the seven consecutive trading days immediately preceding the conversion date, but in no event lower than the Floor Price (the “Second Convertible Note Conversion Price,” and together with the First Convertible Note Conversion Price, the “Conversion Price”). The Second Convertible Note will be issued on the second trading day after the later of (i) the registration statement filed pursuant to the SEPA, including any prospectus, amendments and supplements thereto, (the “Yorkville Registration Statement”) first becoming effective under the Securities Act, (ii) our receipt of stockholder approval to issue shares of Common Stock to Yorkville under the SEPA in excess of the Exchange Cap (defined below) and (iii) the approval by Nasdaq of the initial listing application required under Nasdaq Listing Rules 5110 and 5635(b). After accounting for the purchase price discount, we expect to receive gross proceeds of $4,750,000 pursuant to the Second Convertible Note.
Interest on the outstanding balances of the Convertible Notes will accrue at an annual rate of 5.0%, subject to an increase to 18% upon an event of default as described in the Convertible Notes. The maturity date of each Convertible Note will be 18 months from the date upon which the Convertible Note is issued. The applicable maturity date of each Convertible Note may be extended by us, at our option, for a period of six months on two occasions by providing written notice to Yorkville. On the applicable maturity date, any portion of the outstanding principal amount and accrued but unpaid interest that remains outstanding on such Convertible Note will automatically be converted at the then applicable Conversion Price, provided that if any Equity Condition (as defined in the Form of Promissory Note ) is not satisfied, the applicable maturity date will be automatically extended until all Equity Conditions have been satisfied.
The sale and issuance of shares under the SEPA, including conversion of the Convertible Notes at Yorkville’s option and the sale of shares of Common Stock at our option, is subject to an exchange cap limiting the total number of shares issuable to Yorkville to 183,301 (19.99% of outstanding shares of Common Stock before the effective date of the SEPA) (the “Exchange Cap”), unless we obtain stockholder approval to exceed the Exchange Cap (the “Yorkville Issuance Approval”). Additionally, Yorkville may not own more than 9.99% of our outstanding Common Stock at any time, unless it provides written notice of its intention to increase this limit, effective after 65 days.
MGH License Amendment
Effective August 15, 2025, we and The General Hospital Corporation, d/b/a Massachusetts General Hospital, (“Licensor”) further amended our 2018 License (the “Second Amendment”) to revise certain diligence requirements and milestone payments. Pursuant to the 2018 License (the License”), we licensed the exclusive rights to certain intellectual property to support development of our therapeutic candidates. In connection with the Second Amendment, we paid the Licensor a license amendment fee of $75,000. The Second Amendment revised certain one-time milestone payments to be made by us to the Licensor for Products and Processes covered by the License as follows:
| (i) | a certain dollar amount within sixty (60) days following dosing of the first patient in the first Phase II clinical trial for a Therapeutic Product or Therapeutic Process covered by the License; |
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| (ii) | a certain dollar amount within sixty (60) days following dosing of the first patient in the first Phase III clinical trial for a Therapeutic Product or Therapeutic Process covered by the License; and |
(iii) | a certain dollar amount within sixty (60) days following the First Commercial Sale (as defined in the License) for a Therapeutic Product or Therapeutic Process covered by the License. |
In addition, upon the occurrence of a Change of Control Liquidity Event (as defined in the Second Amendment), we shall pay Licensor up to a certain dollar amount.
Nasdaq Listing
On June 2, 2025, we received a letter from the Nasdaq Stock Market (“Nasdaq”) notifying us that we were deemed in compliance with Nasdaq Listing Rule 5550(a)(2), requiring that a company maintain a minimum closing bid price of $1.00 per share. As a result, and subject to our remaining in compliance with Nasdaq listing requirements, our stock will continue to be listed on the Nasdaq.
Reverse Stock Split
On May 15, 2025, we effected a Reverse Stock Split pursuant to which every 28 shares of our issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock. The Reverse Stock Split affected all stockholders uniformly and did not by itself alter any stockholder’s percentage interest in our equity except to the extent that the Reverse Stock Split would result in a stockholder owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split; any stockholder who would have received fractional shares instead had their shares rounded up to the nearest whole number of shares.
March 2025 Equity Financing
On March 23, 2025, we entered into a Placement Agency Agreement, or the March Agreement, with ThinkEquity LLC, or the Placement Agent, pursuant to which we agreed to issue and sell, directly to various investors, in a registered direct offering (the “March Offering”) an aggregate of approximately 366,072 shares, or the March Shares, of our Common Stock and approximately 366,072 Common Stock Purchase Warrants, or the March Warrants, to purchase approximately 366,072 shares of Common Stock at an aggregate offering price of $27.44 per share of Common Stock and accompanying March Warrant. As part of its compensation for acting as placement agent for the March Offering, we also agreed to issue to the Placement Agent warrants to purchase approximately 18,304 shares of Common Stock, or the Placement Agent Warrants, and together with the March Shares and the March Warrants, the March Securities. We received gross proceeds of approximately $10 million in connection with the March Offering before deducting placement agent fees and other offering expenses payable by us. The March Offering closed on March 25, 2025. The March Warrants are exercisable commencing March 25, 2025, expire on March 25, 2030, and have an exercise price equal to $24.08 per share. The Placement Agent Warrants are exercisable commencing March 25, 2025, expire on March 25, 2030, and have an exercise price equal to $29.96 per share.
Further Restructuring
In an effort to continue to manage our costs, in connection with the January 31, 2025, termination of our sublease of laboratory and office space in Newton, Massachusetts, we (i) determined to conduct our R&D activities primarily in conjunction with Michigan State University under a sponsored research agreement, (ii) terminated an additional research scientist we employed and one consulting scientist that we had engaged, and (iii) relocated our business activities to short-term office rental space in Woburn, Massachusetts. In connection with integrating Polynoma’s operations into our own, we terminated three former Polynoma employees and did not extend Polynoma’s lease of office space in San Diego.
Financial Operations Overview
Following our IPO in July 2021, we expanded our R&D activities and company operations. We do not have any products approved for sale and have not generated any revenue from product sales. We may never be able to develop or commercialize a marketable product. We have limited experience with clinical trials, have not obtained any regulatory approvals to sell any products, have not manufactured any drug candidate at commercial-scale, or conducted sales and marketing activities. Through March 31, 2026,
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we received approximately $95.8 million of net proceeds, primarily from our IPO, other equity financings including the Investment Agreement, our SBIR Awards and from borrowings under convertible promissory notes between 2018 and 2020.
We have incurred significant operating losses since inception. Our net losses were approximately $17.8 million and $12.1 million for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, we had an accumulated deficit of approximately $115.6 million. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates for which there is no assurance of occurrence. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:
| Ø | advance clinical trials with TTX-MC138; |
| Ø | pursue preclinical studies and initiate other clinical trials with TTX-MC138; |
| Ø | advance the development of our product candidate pipeline; |
| Ø | continue to develop and expand our proprietary TTX platform to identify additional product candidates; |
| Ø | support partnerships with industry and academic partners; |
| Ø | obtain new intellectual property and maintain, expand and protect our intellectual property; |
| Ø | seek marketing approvals for our product candidates that successfully complete clinical trials, if any; |
| Ø | hire or engage additional quality assurance, clinical, scientific, commercial and administrative personnel to increase our overall knowledge base, scientific expertise, experience and capabilities; |
| Ø | acquire or license additional product candidates or technologies; |
| Ø | expand our infrastructure and facilities to accommodate increased activities and personnel; |
| Ø | add operational, financial and management information systems and personnel, including personnel to support our research and development programs, any future commercialization efforts and our continued operation as a public company; and incur additional costs associated with operating as a public company, including significant legal, accounting, insurance, investor relations and other expenses that we did not incur as a private company. |
As a result, we will need substantial additional funding to support our continuing operations and pursue our business strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through sales of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we will likely need to consider additional cost reduction strategies, which may include, among others, amending, delaying, limiting, reducing, or terminating our development programs, and we may need to seek an in-court or out-of-court restructuring of our liabilities. In the event of such future restructuring activities, holders of our Common Stock and other securities would likely suffer a total loss of their investment.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of March 31, 2026, we had cash of approximately $12.8 million. We believe that this cash, along with receipt of payment from DEFJ for reimbursement of approximately $2.3 million of certain expenses that we expect to receive in the first half of 2026, will be sufficient to support our operating expenses and capital expenditure requirements through approximately year end 2026. We have
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based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
To finance our operations beyond that point, we will need to raise additional capital which cannot be assured. If we are unable to raise additional capital in sufficient amounts or on terms we find acceptable, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidates or other research and development initiatives. See “Liquidity and capital resources.”
Impact of global economic and political developments and global pandemics
The development of our product candidates or our operations could be disrupted and materially adversely affected by global economic or political developments. In addition, economic uncertainty in global markets caused by political instability and conflict, such as the ongoing conflicts in Ukraine and the Middle East, and economic challenges caused by global pandemics or other public health events, may lead to market disruptions, including significant volatility in commodity prices, credit and capital market instability and supply chain interruptions. Our business, consolidated financial condition and consolidated results of operations could be materially and adversely affected by adverse events in the global economy and capital markets resulting from these global economic conditions and circumstances, particularly if such conditions and circumstances are prolonged or worsen.
Although our business has not been materially impacted by these global economic and political developments to date, it is impossible to predict the extent to which we may be impacted in the short and long term, or the ways in which our business, consolidated financial condition and consolidated results of operations could be affected by any of the foregoing or by other events which may occur in the future. Any such disruptions may also magnify the impact of other risks described herein or in our other filings with the SEC.
Components of our results of operations
Revenue
To date, we have not generated any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If development efforts for our product candidates are successful and result in regulatory approval of any product candidate, or license agreements with third parties, we may generate revenue in the future from product sales or licensing agreements. However, there can be no assurance as to when, if ever, we will generate any such revenue.
Operating expenses
Research and development expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts and the development of product candidates. We expense research and development costs as incurred, which include:
| Ø | expenses incurred in preclinical and clinical development, including manufacturing activities; |
| Ø | expenses incurred to conduct the preclinical studies and clinical trials related to seeking regulatory approval of market product candidates that have successfully completed clinical trials; |
| Ø | expenses incurred under agreements with contract research organizations, or CROs, conducting drug discovery work, preclinical studies, and clinical trials for us, and with contract manufacturing organizations, or CMOs, engaged to produce preclinical and clinical drug substance and drug product for our research and development activities; |
| Ø | other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and our preclinical studies, materials for our clinical trials, including manufacturing validation batches, as well as costs related to investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services; |
| Ø | payments made under third-party licensing, acquisition and option agreements; |
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| Ø | personnel-related expenses for research and development personnel, including salaries, benefits, travel and other related expenses, and share-based compensation expense; |
| Ø | costs related to compliance with regulatory requirements; and |
| Ø | allocated facilities costs, including rent and utilities, and depreciation and other facilities or equipment expenses. |
We recognize external development costs based on an evaluation of the progress toward completion of specific tasks using information provided to us by our employees, consultants and service providers, including CROs and CMOs. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, the estimated level of service performed, and the associated costs incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. Nonrefundable advance payments that we make for goods or services to be received or performed in the future in research and development activities are recorded as prepaid expenses. Such amounts are subsequently expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.
We seek to track our research and development expenses on a program-by-program basis. Our direct external research and development expenses comprise primarily payments to outside consultants, CROs, CMOs, research laboratories, and suppliers. Our direct external research and development expenses also include fees incurred under license and option agreements. We do not intend generally to allocate costs of management personnel, certain costs associated with our discovery efforts, certain supplies used in the laboratory, and certain facilities costs, including depreciation or other indirect costs, to specific programs when these costs are incurred across multiple programs and where it may not be practical to track them by program. We use internal resources along with outside parties primarily to conduct our research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally are expected to have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research and development expenses will increase substantially over the next several years if we commence additional manufacturing, continue planned clinical trials for TTX-MC138, or conduct other preclinical and clinical development, including submitting regulatory filings. In addition, we expect our discovery research efforts and related personnel costs will increase and, as a result, we expect our research and development expenses, including costs associated with share-based compensation, will increase significantly over prior levels. Also, we may incur additional expenses related to milestone and royalty payments to third-parties with whom we have entered or may enter into license, acquisition and option agreements to assess, use or acquire intellectual property rights or rights to future product candidates.
In September 2021, we signed a statement of work with a European CMO to manufacture TTX-MC138 in accordance with current good manufacturing practices, or cGMP. Separately, we engaged a consulting toxicologist to assist us in designing and conducting IND-enabling studies including toxicology and pharmacokinetic, or PK, studies. These studies are designed to examine multiple parameters with a range of analytical assessments in support of regulatory submissions using radiolabeled or non-radiolabeled test substances. Toxicokinetic assessments can be conducted in parallel or concurrent with ongoing toxicology programs and in compliance with good laboratory practice, or GLP, requirements. We also engaged an analytical testing laboratory to provide testing and other services, as well as documentation and reporting that meet regulatory requirements.
In late 2024, we and The University of Texas M. D. Anderson Cancer Center (“MD Anderson”) agreed to amend our five-year strategic collaboration agreement in favor of MD Anderson focusing solely on participation in our Phase I/II clinical trial. This amendment relieved us from the obligation to make up to $10 million of collaboration payments. We are obligated to pay charges incurred by MD Anderson in connection with clinical trial services. In January 2023, we made an initial payment of $250,000 to MD Anderson recorded as a Prepaid Expense pending such time as payments under the collaboration became due. Initial expenses of the clinical trial have been charged against the initial payment and for the three months ended March 31, 2026 and 2025, were $7,933 and $81,561, respectively.
At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the manufacturing, preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows might commence from or related to any of our product candidates. The successful development and commercialization of our product
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candidates is highly uncertain due to the numerous risks and uncertainties associated with product development and commercialization, including:
| Ø | the scope, progress, outcome and costs of our preclinical development activities, clinical trials, manufacturing activities, and other research and development; |
| Ø | the requirement to establish an appropriate safety and efficacy profile in IND-enabling studies; |
| Ø | the timing and terms of regulatory submissions and, if received, approvals to conduct clinical trials; |
| Ø | the number of sites and patients needed to complete clinical trials, the length of time required to enroll suitable patients and complete clinical trials, and the duration of patient follow-ups; |
| Ø | assessment by us and regulatory agencies of data generated in clinical trials; |
| Ø | the timing, receipt and terms of marketing approvals, if any, from applicable regulatory authorities including the FDA and regulators outside the U.S.; |
| Ø | the extent of any post-marketing approval commitments that may be required of us by regulatory authorities; |
| Ø | establishing capabilities, or making arrangements with third-parties, to manufacture the quantities and quality of product we need to conduct pre-clinical studies, clinical trials and manufacturing validation activities in advance of any New Drug Applications that we may submit; |
| Ø | development and timely delivery of clinical-grade and commercial-grade drug formulations as required for use in our clinical trials and for manufacturing validation and regulatory agency review in connection with pursuit, if any, we may undertake for commercial launch of therapeutic candidates that receive marketing approval; |
| Ø | obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; |
| Ø | significant and changing government regulation; |
| Ø | launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; |
| Ø | competitive developments; and |
| Ø | maintaining an acceptable safety profile of our product candidates following approval, if any. |
Any changes in or adverse outcome of any of these variables or others with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of our product candidates.
General and administrative expenses
General and administrative expenses consist primarily of staffing costs comprising mainly salaries, benefits, and share-based compensation expense for personnel serving in executive, finance, and other business functions; professional fees for legal, patent, consulting, investor and public relations, accounting, tax and audit services; insurance costs, especially directors and officers liability insurance; corporate and office expenses, including facilities costs; and information technology costs.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our R&D activities, prepare for potential commercial activities including possible partnerships for the development or marketing of approved product candidates, if any, and the increased requirements of a larger and publicly-traded company. We also anticipate that we will incur significantly increased accounting, audit, tax, legal, regulatory, compliance and director and officer liability insurance costs as well as investor and public relations expenses associated with operating as a public company. Additionally, if and when we
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believe regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and other personnel-related expenses involved in preparing for commercial operations, especially as it relates to the sales and marketing of that product candidate. There is a risk that we could incur the foregoing expenses but not receive the anticipated regulatory approval.
In September 2021, we engaged an independent compensation advisory firm to support the continued development of our compensation programs and governance model for officers, directors and employees. Our goal is to ensure that our culture, values, and strategic priorities are effectively represented in our compensation philosophy and strategy.
Other income (expense)
Interest expense
Interest expense previously consisted primarily of accrued interest on convertible promissory notes and other charges related to the notes. Since the notes converted into shares of common stock concurrent with our IPO, we no longer incur interest expense on these notes. Under our payment program for directors and officers liability insurance, we incur certain financing charges, and we previously incurred imputed interest expense in connection with our right-of-use asset.
Interest income
Interest income consists primarily of income earned on our cash balances. Generally our interest income has not been significant except following financings that result in higher than usual cash balances.
Grant income
From time to time, we apply for grant funding from government programs and may, in the future, apply for grants from non-government sources as well. There is no assurance that any grants will be awarded to us or, if awarded, that we will receive all the funds expected from such award. Grant payments received in advance of us performing the work for which the grant was awarded are recorded as deferred grant income on our balance sheets. Grant income is recognized in our statements of operations as and when earned for performance of the specific R&D activities for which the grants are awarded. Grant income earned in excess of grant payments received is recorded as grant receivable on our balance sheets.
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Results of operations
The following table summarizes the approximate amounts of our consolidated results of operations for the periods indicated:
| | | | | | | | | | |
| | Three Months Ended March 31, | | |||||||
| | 2026 | | 2025 | | Change | | |||
| | | | | | | | | | |
Operating Expenses | | | | | | | | | | |
Research and development | | $ | 5,107 | | $ | 2,220 | | $ | 2,887 | |
Acquired in-process research and development expense | | | 10,426 | | | — | | | 10,426 | |
General and administrative expenses | | | 2,222 | | | 952 | | | 1,270 | |
Total operating expenses | | | 17,755 | | | 3,172 | | | 14,583 | |
Operating loss | | | (17,755) | | | (3,172) | | | (14,583) | |
| | | | | | | | | | |
Other income (expense) | | | | | | | | | | |
Change in fair value of warrant liability | | | (125) | | | (9,235) | | | 9,110 | |
Change in fair value of contingent consideration | | | 116 | | | — | | | 116 | |
Grant income | | | 140 | | | 348 | | | (208) | |
Currency exchange gain (loss) | | | (21) | | | (27) | | | 6 | |
Interest income | | | 92 | | | — | | | 92 | |
Total other income (expense) | | | 202 | | | (8,914) | | | 9,116 | |
Loss before income taxes | | | (17,554) | | | (12,086) | | | (5,467) | |
Deferred income tax provision | | | (231) | | | — | | | (231) | |
Net loss | | | (17,785) | | | (12,086) | | | (5,699) | |
Accrual of paid-in-kind dividends on Series A Non-Voting Convertible Preferred Stock | | | (1,725) | | | — | | | (1,725) | |
Net loss attributable to common stockholders | | $ | (19,510) | | $ | (12,086) | | $ | (7,424) | |
Comparison of the three months ended March 31, 2026 and 2025
Research and development expenses
Research and development, or R&D, expenses increased $13,313 thousand in the three months ended March 31, 2026, compared to the same period in 2025. The increase reflects primarily spending on the Unleash license shown as “Acquired in-process research and development expense” in the table above, increases in clinical trial spending, costs of production of drug used in the clinical trial, and intellectual property expenses, offset in part by reductions in certain preclinical testing and reduced lab facilities costs.
General and administrative expenses
General and administrative expenses increased $1,270 thousand in the three months ended March 31, 2026, compared to the same period in 2025. The increase reflects primarily increased fees for professional services, primarily financial advisory, legal and accounting services related to the Acquisition and the Unleash license, and increased compensation costs, offset in part by decreased share-based compensation expense, spending for directors and officers liability insurance, investor relations services, and facilities expenses.
Change in fair value of warrant liability
The change in fair value of warrant liability expense was $9,110 thousand less in the three months ended March 31, 2026, compared to the same period in 2025, resulting primarily from exercises of Series D warrants in the first quarter of 2025 that did not occur in the 2026 period.
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Change in fair value of contingent consideration
The change in fair value of contingent consideration was a $116 thousand increase in the three months ended March 31, 2026, compared to the same period in 2025. Contingent consideration arose in connection with the Acquisition; there was no contingent consideration in the 2025 period.
Grant income
Grant income decreased $208 thousand in the three months ended March 31, 2026, compared to the same period in 2025 primarily reflecting the fact that much of the work under the 2024 Award was completed prior to 2026.
Currency exchange gain (loss)
Loss on currency exchange was $6 thousand less in the three months ended March 31, 2026, compared to the same period in 2025, reflecting changes in exchange rates on billings in Euros from certain vendors.
Interest income
Interest income was $92 thousand in the three months ended March 31, 2026, compared to the same period in 2025 reflecting earnings on higher cash balances from equity financings.
Deferred income tax provision
Deferred income tax provision was $231 thousand in the three months ended March 31, 2026, compared to $0 in the same period in 2025.
Payment-in-kind dividends
The accrual of $1,725 thousand for payment-in-kind dividends in the three months ended March 31, 2026, compared to $0 in the same period in 2025 reflects a portion of dividends, paid in shares of Series A Non-Voting Convertible Preferred Stock, under a one-time obligation related to the Acquisition.
Cash flows
The following table summarizes the approximate amounts of consolidated our cash flows for the periods indicated:
| | | | | | | |
| | Three months ended March 31, | | ||||
| | 2026 | | 2025 | | ||
| | (in thousands) | | ||||
Net cash used in operating activities | | $ | (4,978) | | $ | (3,097) | |
Net cash provided by financing activities | | | — | | | 8,855 | |
Net change in cash | | $ | (4,978) | | $ | 5,758 | |
Comparison of the three months ended March 31, 2026 and 2025
Operating activities
During the three months ended March 31, 2026, we used cash of $4,978 thousand in operating activities compared to $3,097 thousand in the same period in 2025. Cash used in operating activities in the 2026 period primarily reflected our net loss of $17,785 thousand offset primarily by a $10,426 non-cash charge for the acquisition of the Unleash program, an increase of $1,775 thousand in increased accounts payable and accrued expenses, and a reduction of $952 thousand in grant receivable, offset in part by an increase of $696 thousand in prepaid expenses and other current assets.
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Changes in accounts payable and accrued expenses were generally due to the amounts and timing of vendor invoicing and payments.
Financing activities
During the three months ended March 31, 2026, we did not obtain cash from financing activities. During the 2025 period, we obtained cash of $8,855 thousand (net) from sales of equity securities.
Liquidity and capital resources
Sources of liquidity
Since inception, we have not generated any revenue from product sales or any other sources, and we have incurred significant consolidated operating losses and negative consolidated cash flows from operations. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if ever. We have funded our operations to date primarily with proceeds from our IPO and other equity financings, SBIR Awards, and funds from borrowings under convertible promissory notes. Through March 31, 2026, we had received net cash proceeds of approximately $95.8 million from these sources.
As of March 31, 2026, we had cash of approximately $12.8 million.
On April 6, 2026, we entered into the SEPA with Yorkville. Pursuant to the SEPA, in exchange for Convertible Notes in the aggregate amount of $6.0 million, Yorkville agreed to advance to us 95% of the face amount of the Convertible Notes for gross proceeds of $5.7 million. The Convertible Notes may be repaid in cash or converted into shares of Common Stock. The Convertible Notes will accrue interest at an annual rate of 5% subject to an increase upon the occurrence and continuance of events of default as described in the Convertible Notes. The outstanding balance of the Convertible Notes, plus any accrued but unpaid interest, is due and payable 18 months after issuance of each Convertible Note, unless otherwise agreed by the parties. On April 16, 2026, we issued the first Convertible Note to Yorkville in exchange for Yorkville’s cash disbursement to us of $950,000.
In connection with the SEPA, we have the right to sell to Yorkville up to $14.0 million of shares of our Common Stock, subject to certain limitations and conditions set forth in the SEPA. Sales of shares of Common Stock to Yorkville and the timing of any such sales, if we elect to sell shares of Common Stock to Yorkville at a future date, are at our option, and we are under no obligation to sell any shares of Common Stock to Yorkville. As consideration for Yorkville’s commitment under the SEPA, we agreed to pay to Yorkville a commitment fee equal to 2.0% of the Commitment Amount, or $280,000, which may be paid in cash or shares of Common Stock based on the price per share equal to the VWAP of the Common Stock on the trading day immediately prior to the effective date of the SEPA. As of the date of this Quarterly Report on Form 10-Q, no shares had been sold under the SEPA.
Future requirements
We expect our expenses to increase substantially in connection with our ongoing and planned activities, particularly as we advance preclinical activities and pursue additional clinical trials of TTX-MC138. We expect to incur additional costs associated with operating as a public company, including significant legal, accounting, tax, investor relations and other expenses.
The timing and amount of our operating expenditures will depend largely on our ability to, among other things:
| Ø | advance clinical development of TTX-MC138 and clinical or preclinical development of other drug candidates; |
| Ø | develop validated processes to effectively manufacture, or have manufactured on our behalf, our preclinical and clinical drug materials and for commercial manufacturing of any product candidates that may receive regulatory approval; |
| Ø | seek regulatory approvals for any product candidates that successfully complete clinical trials; |
| Ø | establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval and intend to commercialize on our own; |
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| Ø | establish collaborations to commercialize any product candidates for which we obtain marketing approval but do not intend to commercialize on our own; |
| Ø | expand our operational, financial and management systems and hire additional personnel, including personnel to support our clinical development, quality control, scientific research, manufacturing and commercialization efforts, our general and administrative activities and our operations as a public company; and |
| Ø | obtain or develop new intellectual property and maintain, expand and protect our intellectual property portfolio. |
We believe that our cash as of March 31, 2026, along with receipt of payment from DEFJ for reimbursement of approximately $2.3 million of certain expenses that we expect to receive in the first half of 2026, will be sufficient to support our operating expenses and capital expenditure requirements through approximately year end 2026. We have based this estimate on assumptions that may prove wrong, and we could utilize our available capital resources sooner than we expect. Changed circumstances may also result in the depletion of our capital resources more rapidly than we currently anticipate. We anticipate that we will require additional capital for additional research, development, and clinical trial costs as we seek regulatory approval of our product candidates, for operations, and for licenses or acquisitions of other product candidates we may choose to pursue. If we receive regulatory approval for TTX-MC138 or other product candidates we may develop, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, all of which will vary depending on where and how we choose to commercialize approved product candidates.
Because of the numerous risks and uncertainties associated with research, development and commercialization of biologic product candidates, we are unable to estimate the exact amount and timing of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:
| Ø | the scope, progress, outcome and costs of conducting preclinical development activities, clinical trials, and other research and development; |
| Ø | the costs, timing and outcome of regulatory review of our product candidates; |
| Ø | the costs, timing and requirements to manufacture our product candidates for our preclinical development efforts and our clinical trials; |
| Ø | the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; |
| Ø | the costs of manufacturing commercial-grade product meeting quality and regulatory requirements and building inventory of such product to support commercial activities; |
| Ø | the ability to receive non-dilutive funding, including grants from governments, organizations and foundations; |
| Ø | the revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval; |
| Ø | the costs of preparing, filing and prosecuting patent applications, maintaining, expanding and enforcing our intellectual property rights, and defending intellectual property-related claims; |
| Ø | the terms of any industry collaborations we may be able to establish; |
| Ø | the extent to which we acquire or license other product candidates and technologies; and |
| Ø | the efficiency with which we operate our business. |
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of public or private equity offerings, debt financings, governmental funding, collaborations, strategic partnerships and
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alliances, and marketing, distribution or licensing arrangements with third parties. There is no assurance that funding from any of the foregoing sources or otherwise will be available on acceptable terms, if at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests in our common stock may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, we could incur fixed payment obligations as a result of any debt or preferred equity financing.
If we raise additional funds through governmental funding, collaborations, strategic partnerships and alliances, or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue or earnings streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us.
If we are unable to raise additional funds when needed, we will likely need to consider additional cost reduction strategies, which may include, among others, amending, delaying, limiting, reducing, or terminating our development programs, and we may need to seek an in-court or out-of-court restructuring of our liabilities. In the event of such future restructuring activities, holders of our common stock and other securities will likely suffer a total loss of their investment.
Contractual obligations and commitments
At March 31, 2026, we had no future minimum lease payments under non-cancelable operating lease commitments. From time to time, we enter into contracts in the normal course of business with CROs, collaborators, CMOs and other third-parties for the manufacture of our product candidates, to support clinical trials and preclinical research studies and testing, and for other purposes. Any payments due upon completion or cancellation of these contracts generally consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation although some agreements provide for termination fees or payments for the balance of the term of the agreement.
Collaboration obligations
On July 29, 2022, we signed a five-year strategic collaboration agreement with The University of Texas M. D. Anderson Cancer Center (“MD Anderson”). Under the collaboration, we anticipated making certain expenditures with respect to Phase I and Phase II clinical trials in part through MD Anderson as a clinical site. MD Anderson was also expected to provide preclinical work under the collaboration. The details of clinical and preclinical work were to be mutually agreed by the parties prior to commencing work. We had agreed to fund up to $10 million over the term of the collaboration. In January 2023, we made an initial payment of $250,000 to MD Anderson recorded as a Prepaid Expense pending such time as payments under the collaboration became due. As a result of changes at both organizations, we and MD Anderson agreed to amend the collaboration in favor of MD Anderson focusing solely on participation in our Phase I/II clinical trial. This amendment relieved us from the obligation to make up to $10 million of collaboration payments. Initial expenses of the clinical trial were charged against the initial payment made to MD Anderson. For the three months ended March 31, 2026 and 2025, MD Anderson expenses were $7,933 and $81,561, respectively.
Critical accounting policies and significant judgments and estimates
We have based our management’s discussion and analysis of consolidated financial condition and consolidated results of operations on our consolidated financial statements. Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources including contingent consideration. We evaluate estimates and assumptions on an ongoing basis. Our actual consolidated results may differ from amounts derived from these estimates or from amounts obtained under different assumptions or conditions.
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While our significant accounting policies are described in more detail in Note 2 to our financial statements for the three months ended March 31, 2026 and 2025, elsewhere in this Quarterly Report on Form 10-Q, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Indefinite-lived intangible assets
Indefinite-lived intangible assets consist of In-Process Research and Development (“IPR&D”). The fair values of IPR&D project assets acquired in business combinations are capitalized. We generally utilize the Multi-Period Excess Earning Method to determine the estimated fair value of the IPR&D assets acquired in a business combination. The projections used in this valuation approach are based on many factors, such as relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, and estimated payments (e.g., royalties). The estimated future net cash flows are then discounted to the present value using a discount rate that we believe is appropriate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate.
Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We consider many factors in evaluating whether the value of our intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, outlook and market performance of our industry and recent and forecasted financial performance.
Redeemable and convertible preferred stock
The Company applies ASC 480 when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ (deficit) equity.
Research and development expenses
In preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.
We rely to a significant extent on third-parties to conduct preclinical studies, manufacture drug substance and drug products, provide materials, conduct analytical testing and to provide clinical trial services, including trial conduct, data management, statistical analysis, medical and safety monitoring, and electronic compilation. At the end of each reporting period, we compare payments made to each service provider and clinical trial site to the estimated progress towards completion of the related project. Factors that we consider in preparing these estimates include materials delivered or services provided, milestones achieved, the number of patients enrolled in studies, and other criteria related to the efforts of these vendors. These estimates are subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, we record net prepaid or accrued expenses related to these costs.
The estimating process involves reviewing open contracts and purchase orders, communicating with our relevant personnel to identify services that have been performed on our behalf or deliveries of materials made to us, and estimating the level of service performed and the associated cost incurred for those services when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule, or when contractual milestones are met; however, some require advance payments. As of each balance sheet date, we make estimates of our accrued expenses based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the
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service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to:
| Ø | vendors, including research laboratories, in connection with preclinical development activities; |
| Ø | CROs and investigative sites in connection with preclinical testing and clinical trials; |
| Ø | CMOs in connection with the production of drug substance and drug product formulations for use in preclinical testing and clinical trials; and |
| Ø | clinical trial sites. |
The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors exceed the level of services provided at a particular time, resulting in a prepayment of the expense. In accruing service fees, we estimate the time 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, we adjust the accrual or the prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.
Share-based compensation
We measure the expense of share-based awards granted to employees, directors and others based on the fair value of the underlying award on the date of the grant. We recognize the corresponding compensation expense of those awards over the requisite service period, generally the vesting period of the respective award.
Through the date of these consolidated financial statements, we had issued restricted stock and stock options, each with service-based vesting conditions, and recorded share-based compensation expense resulting from those awards as vesting occurred. All shares of restricted stock have vested and there is no further compensation expense to be recorded in connection with restricted stock. We would apply the graded-vesting method to all share-based awards with performance-based vesting conditions or to awards with both service-based and performance-based vesting conditions.
For share-based awards to consultants and non-employees, we recognize compensation expense over the period during which services are rendered by such consultants and non-employees until completed.
Warrant accounting
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants’ specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815 “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary shares and whether warrant holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end-date while the warrants are outstanding.
For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and at their fair value on each balance sheet date thereafter. Changes in the estimated fair value of warrants classified as liabilities are recognized as a non-cash gain or loss on our statements of operations.
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Warrants we issued upon our financings in January and July 2024 and in March 2025 met the criteria for equity classification under ASC 815 and were classified as equity. Warrants we issued upon a financing that closed December 2, 2024, did not meet the criteria for equity classification under ASC 815 and were classified as liabilities. Warrants issued upon our financings in 2023 met the criteria for equity classification under ASC 815 and were classified as equity.
Contingent Consideration
In connection with the Acquisition, we agreed to make up to $95,000,000 in contingent milestone payments (each, a “Milestone Payment” and collectively, the “Milestone Payments”) (the “Acquisition Obligation”) to DEFJ upon the achievement within ten (10) years of the date of the MIPA of the following milestone events (each, a “Milestone Event”) upon the first achievement by us or on our behalf (including by any licensee or assignee of rights to commercialize the Seller Lead Candidate as defined in the MIPA) of the corresponding Milestone Event as follows: (i) a milestone payment of five million U.S. dollars ($5,000,000) upon the first dosing of the Seller Lead Candidate in a patient in a United States Phase 3 Clinical Study; (ii) a milestone payment of ten million U.S. dollars ($10,000,000) upon the achievement of the applicable primary endpoint in a United States Phase 3 Clinical Study of the Seller Lead Candidate; (iii) a milestone payment of twenty million U.S. dollars ($20,000,000) upon the first submission of a Biologics License Application (“BLA”) to the U.S. Food and Drug Administration (“FDA”) for the Seller Lead Candidate; and (iv) a milestone payment of sixty million U.S. dollars ($60,000,000) upon the first approval by the FDA of a BLA for the Seller Lead Candidate.
The estimated fair value of the Acquisition Obligation at March 31, 2026, and at December 31, 2025, was approximately $6.2 million and $6.4 million, respectively.
Factors that may affect future results
You should refer to “Risk Factors” elsewhere in this Quarterly Report on Form 10-Q for a discussion of important factors that may affect our future results.
Off-balance sheet arrangements
During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Recently issued accounting pronouncements
A description of recently issued accounting pronouncements that may affect our consolidated financial position and consolidated results of operations is disclosed in Note 2 to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Internal control over financial reporting
We previously determined that material weaknesses in our internal control over financial reporting existed prior to our IPO. See “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, under the caption,, “We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our consolidated financial condition or consolidated results of operations, which may adversely affect our business.” We subsequently retained an independent consulting firm to assist us in improving our control systems and procedures, and have implemented new software systems designed to enhance our ability to process financial transaction information. There is no assurance that any controls we implement will prevent fraud or enable accurate or timely financial reporting. In assessing our financial controls and procedures as described in “Item 4. Controls and Procedures,” our management determined that our internal control resulted in a material weakness as of December 31, 2025, related to certain transactions arising from the Acquisition. Notwithstanding this material weakness, management believes that all significant and unusual transactions have been appropriately recorded and that our consolidated financial statements at and for the three months ended March 31, 2026, are fairly presented in all material respects in accordance with U.S. GAAP.
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Emerging Growth Company and Smaller Reporting Company Status
We are an “emerging growth company” as defined in the JOBS Act. We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (ii) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (iv) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards by delaying adoption of these standards until they would apply to private companies. We have elected to use the extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date on which we (i) are no longer an emerging growth company and (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of effective dates applicable to public companies.
We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of our initial public offering is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We will continue to be a smaller reporting company until either (i) the market value of our stock held by non-affiliates is more than $250 million or (ii) our annual revenue is greater than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is greater than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.
Information Technology Risks
Our data and computer systems are subject to threats from malicious software codes and viruses, phishing, ransomware, business email compromise attacks, or other cyber-attacks. In July 2021, we were subject to what we believe was a phishing attack. We do not believe this incident had a material impact on our business or consolidated financial condition. However, the number and complexity of these threats continue to increase. See “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, under the caption, “We may be unable to adequately protect our information systems from cyberattacks, which could result in the disclosure of confidential or proprietary information, including personal data, damage our reputation, and subject us to significant financial and legal exposure.” We have taken and continue to take steps to mitigate the risk of cyberattacks including enhancing email screening, engaging with a computer support firm to provide forensics and training services, among other services, and enhancing security protocols for vendor payments. We intend to take additional steps to continue to enhance cybersecurity defenses. Despite steps we have taken or may take in the future, there is no assurance that we will not suffer material and adverse consequences as a result of cyberattacks or other computer-based activities. In addition, there is no assurance that any steps we may take will be effective or prevent material adverse effects on our consolidated financial condition or consolidated results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
We are exposed to market risk related to changes in interest rates. As of March 31, 2026, and December 31, 2025, our cash was held in checking and savings accounts at major U.S. banks. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of our holdings, an immediate 10% change in the interest rate would not materially affect the fair market value of our investments or our consolidated financial position or consolidated results of operations.
As of March 31, 2026, and December 31, 2025, we had no debt outstanding and therefore were not subject to interest rate risk related to debt.
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Foreign currency exchange risk
Our primary exposure to market risk is foreign exchange rate sensitivity to the Euro, the currency for certain of our major purchases. Foreign currency transaction gains or losses, if any, are recorded as a component of other income (expense) in our consolidated statements of operations. For the three months ended March 31, 2026 and 2025, we recognized losses on foreign currency transactions of approximately $21 thousand and $27 thousand, respectively. An immediate 5% change in the Euro exchange rate would not have a material effect on our consolidated results of operations.
As we continue to develop our business, our consolidated results of operations and consolidated cash flows will likely be more affected by fluctuations in foreign currency exchange rates, including the Euro and other currencies, which could adversely affect our consolidated results of operations. To date, we have not entered into any foreign currency hedging contracts to mitigate our exposure to foreign currency exchange risk.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a–15(f) or 15d-15(f). Our internal control system was designed to provide reasonable assurance to our management and our Board regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our management, with the participation of our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2026. In making this assessment, our management used the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (COSO criteria). Based on this assessment, and due to the material weakness referred to in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included elsewhere in this Quarterly Report on Form 10-Q, our management concluded that our internal control over financial reporting was not effective and resulted in a material weakness as of the assessment date related to certain transactions arising from the Acquisition. Notwithstanding this material weakness, management believes that all significant and unusual transactions have been appropriately recorded and that our consolidated financial statements for the three months ended March 31, 2026, are fairly presented in all material respects in accordance with U.S. GAAP. The small size of our finance and accounting staff requires us to rely on outside parties for certain accounting analyses such as for non-routine transactions. This Quarterly Report on Form 10-Q does not include an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
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Continuing Remediation Efforts
To remediate the material weakness in our internal control over financial reporting and address the material weakness in our accounting processes, we previously implemented steps to address internal control deficiencies such as implementing more robust accounting policies and procedures, implementing new accounting software, and, most particularly, hiring of or engaging additional finance and accounting personnel including consultants and other third-party resources with requisite experience and technical accounting expertise. We also engaged an independent consulting firm to assist us in determining what personnel are needed, evaluating and improving our accounting processes, and in evaluating new accounting policies.
While we believe that these efforts will improve our internal control over financial reporting, implementation of these and other measures will be ongoing and will require validation and testing of the design and operating effectiveness of our internal controls over a sustained period of financial reporting cycles. We cannot reasonably estimate when these remediation measures will be completed nor can we assure you that the measures we have taken to date, and are continuing to take, will be sufficient to remediate the material weakness we identified or avoid potential future material weaknesses. Our management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary.
Changes in Internal Control over Financial Reporting
Other than the remediation measures taken to date as described above, there were no material changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2026, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, the process of integrating ABCJ, LLC into our system of internal control over financial reporting continues which may result in future changes to our internal control environment.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On April 24, 2026, Wheeler Bio, Inc. (“Wheeler”) filed a complaint in the Supreme Court of the State of New York, County of New York, captioned Wheeler Bio, Inc. v. Polynoma LLC, et al., No. 652458/2026 against Polynoma and us (the “Wheeler Action”). The Wheeler Action asserts two causes of action: breach of contract against Polynoma and intentional interference with contractual relations against us. The claims arise out of an agreement between Wheeler and Polynoma for certain contract development and manufacturing services offered by Wheeler. Wheeler alleges that, on October 1, 2025, Polynoma terminated a Statement of Work and a Change Order effective immediately without advance notice required by the agreement, and has failed to pay certain delay fees, cancellation fees, and invoices generated in connection with the agreement. Wheeler further alleges that we caused Polynoma to terminate the agreement and to refuse to pay the fees at issue. The Wheeler Action seeks compensatory and punitive damages, restitution, pre- and post-judgment interest, and attorneys’ fees and costs. We dispute the claims and intend to defend vigorously against this litigation.
ITEM 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q are any of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2025, or our Annual Report, filed with the SEC, as amended and supplemented by the information in our subsequent Quarterly Reports on Form 10-Q or other subsequent filings, together with all of the other information contained in this Quarterly Report, including our unaudited consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report, and the risk factors set forth below. The risk factors disclosure in our Annual Report and subsequent Quarterly Reports on Form 10-Q is qualified by the information that is described in this Quarterly Report. Any of these factors could result in a significant or material adverse effect on our business, consolidated results of operations or consolidated financial condition. Additional risk factors not currently known to us or that we currently deem immaterial may also have a material adverse effect on our business, consolidated financial condition or consolidated results of operations. You should
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review the risk factors in our Annual Report and the risk factors discussed below for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this Quarterly Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
We could lose our listing on the Nasdaq Capital Market if our stockholders’ equity or the closing bid price of our common stock do not meet Nasdaq requirements or if we do not comply with other Nasdaq requirements. The loss of our Nasdaq listing would in all likelihood make our common stock significantly less liquid and adversely affect its value, including a total loss of value.
Our stockholders’ equity in this Quarterly Report on Form 10-Q does not meet Nasdaq rules for continued listing of our stock on the Nasdaq Capital Market, LLC, or Nasdaq. We expect to receive a deficiency notice to this effect from Nasdaq with the opportunity to present our plan to Nasdaq for regaining compliance. We believe that if we obtain shareholder approval for the conversion of our preferred stock, we will exceed the minimum stockholders’ equity requirement but there is no guarantee that such approval will be obtained.
In the event of a delisting from the Nasdaq Capital Market, our stock would likely be traded in the over-the-counter inter-dealer quotation system, more commonly known as the OTC. OTC transactions involve risks in addition to those associated with transactions in securities traded on the securities exchanges, such as the Nasdaq Capital Market, or Exchange-listed stocks. Many OTC stocks trade less frequently and in smaller volumes than Exchange-listed stocks. Accordingly, our stock would be less liquid than it would be otherwise. Also, the prices of OTC stocks are often more volatile than Exchange-listed stocks. Additionally, many institutional investors are prohibited from investing in OTC stocks, and it might be more challenging to raise capital when needed.
As further described elsewhere in this Quarterly Report on Form 10-Q, in light of our financial position and our need to raise additional capital, delisting of our common stock from the Nasdaq Capital Market would materially limit our ability to obtain additional equity capital.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Unregistered Sales of Equity Securities
None.
(b)Use of Proceeds from Initial Public Offering of Common Stock
Not applicable.
(c)Issuer Purchases of Equity Securities
None.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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ITEM 5. OTHER INFORMATION.
(c) Rule 10b5-1 Trading Arrangements.
From time to time, our officers (as defined in Rule 16a–1(f)) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of Regulation S-K). During the three months ended March 31, 2026, none of the Company’s directors or officers
ITEM 6. Exhibits
3.1 | Amended and Restated Certificate of Incorporation of TransCode Therapeutics, Inc. (Incorporated by reference to Exhibit 3.3 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1, filed on April 8, 2021 (File No. 333-253599)). | |
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3.2 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of TransCode Therapeutics, Inc. (Incorporated by reference to Exhibit 3.2 to the Registrant’s Form 10-K for the year ended December 31, 2023, filed on April 1, 2024). | |
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3.3 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of TransCode Therapeutics, Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on January 16, 2024). | |
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3.4 | | Certificate of Amendment to Amended and Restated Certificate of Incorporation of TransCode Therapeutics, Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on November 29, 2024). |
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3.5 | | Certificate of Amendment to Amended and Restated Certificate of Incorporation of TransCode Therapeutics Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on May 5, 2025). |
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3.6 | | Amended and Restated Bylaws of TransCode Therapeutics, Inc. (Incorporated by reference to Exhibit 3.5 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1, filed on April 8, 2021 (File No. 333-253599)). |
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3.7 | | Amendment No. 1 to the Amended and Restated Bylaws of TransCode Therapeutics, Inc., effective as of December 8, 2023 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on December 8, 2023). |
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3.8 | | Amended and Restated Certificate of Designation of Series A Non-Voting Convertible Preferred Stock and Series B Non-Voting Convertible Preferred Stock of TransCode Therapeutics, Inc., dated October 27, 2025 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 27, 2025). |
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3.9 | | Certificate of Designation of Series C Non-Voting Convertible Preferred Stock of TransCode Therapeutics, Inc., dated March 2, 2026 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on March 3, 2026). |
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4.1 | | Form of Common Warrant (Incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the SEC on March 25, 2025). |
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4.2 | | Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed with the SEC on March 25, 2025). |
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4.3 | | Registration Rights Agreement dated October 8, 2025, by and between TransCode Therapeutics, Inc. and DEFJ, LLC (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 8, 2025). |
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4.4 | | Form of Convertible Promissory Notes issued to YA II PN, Ltd. (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on April 7, 2026). |
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4.5 | | Registration Rights Agreement, dated as of April 6, 2026, by and between TransCode Therapeutics, Inc. and YA II PN, Ltd. (Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on April 7, 2026). |
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4.6 | | Equity Issuance and Registration Rights Agreement by and between TransCode Therapeutics, Inc. and Unleash Immuno Oncolytics, Inc., dated March 2, 2026 (Incorporated by reference herein from Exhibit 4.22 to the Company’s Annual Report on Form 10-K, filed on April 15, 2026). |
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10.1 | | Standby Equity Purchase Agreement, dated as of April 6, 2026, between TransCode Therapeutics, Inc. and YA II PN, Ltd. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 7, 2026). |
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31.1* | | Certification of principal executive officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. |
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31.2* | | Certification of principal financial officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. |
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32.1** | | Certification of principal executive officer pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code. |
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32.2** | | Certification of principal financial officer pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code. |
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101.INS* | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH* | | Inline XBRL Taxonomy Extension Schema document. |
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101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase document. |
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101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase document. |
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101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase document. |
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101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase document. |
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104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed herewith. |
** | This certification is being furnished solely to accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRANSCODE THERAPEUTICS, INC. | |
Date: May 15, 2026 | /s/ Philippe P. Calais |
Philippe P. Calais | |
Chief Executive Officer | |
(Principal Executive Officer) |
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