Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements in this Quarterly Report on Form 10-Q other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, the achievement of milestones and receipt of future payments, projected costs, prospects, plans, intentions, expectations, clinical trial results, compliance with listing requirements, future macroeconomic conditions and objectives could be forward-looking statements. The words "anticipates," "believes," "could," "designed," "estimates," "expects," "goal," "intends," "may," "plans," "projects," "should," "will," "would" and similar expressions (including the negatives thereof) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

We have based these forward-looking statements largely on our current assumptions, expectations, projections, intentions, objectives and/or beliefs about future events or occurrences and these forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, but not limited to, those described in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission. It is not possible for our management to predict all risks, nor can we assess the impact of all 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 we may make. The timing of certain events and circumstances and known and unknown risks and uncertainties could cause actual results to differ materially from those anticipated or implied in the forward-looking statements that we make. Therefore, you should not place undue reliance on our forward-looking statements. Our forward-looking statements in this Quarterly Report on Form 10-Q are based on current information and we do not assume any obligation to update any forward-looking statements except as required by the federal securities laws.

You should read the following Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A") together with the unaudited condensed consolidated financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q. This MD&A contains forward-looking statements that are subject to risks and uncertainties, such as those set forth in the sections of this Quarterly Report on Form 10-Q, "Risk Factors" and elsewhere. As a result, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

We are a clinical-stage, research and development biotechnology company focused on developing novel immunotherapy candidates for the treatment of different forms of cancer. We have developed two versatile and enabling platform technologies for rational design of precision immune modulatory drugs and have two clinical candidates and six preclinical candidates currently in development. Clinical candidate mipletamig is a CD123xCD3 T cell engager currently being clinically evaluated in the RAINIER trial, part one of a Phase 1b/2 program initiated in August 2024 for the treatment of frontline acute myelogenous leukemia (AML) in combination with standard of care venetoclax + azacitidine. Clinical candidate ALG.APV-527 targets 4-1BB (co-stimulatory receptor) and 5T4 (tumor antigen). The compound is designed to reactivate antigen-primed T cells to specifically kill tumor cells and is currently being evaluated for the treatment of multiple solid tumor types.

Along with our clinical candidates, the preclinical candidates, APVO603 and APVO711, were also developed using our ADAPTIR® protein technology platform. Our preclinical candidates APVO442, APVO455, APVO451 and APVO452 were developed using our ADAPTIR-FLEX® protein technology platform. We wholly own both platforms which enable us to efficiently design and create new molecules, supporting our pipeline growth. Based on the safety and tolerability results from mipletamig, which utilizes a unique CRIS-7 binding domain, the Company has built out its CD3 engaging portfolio to five molecules with a low cytokine release profile.

Our ADAPTIR and ADAPTIR-FLEX platforms are designed to generate monospecific and multi-specific antibody candidates capable of enhancing the human immune system against cancer cells. Both are modular platforms, which give us the flexibility to potentially generate immunotherapeutic candidates with a variety of mechanisms of action. This flexibility in design allows us to generate novel therapeutic candidates that may provide effective strategies against difficult to treat, as well as advanced forms of cancer. We have successfully designed and constructed numerous clinical-stage product candidates based on our ADAPTIR platform, which is designed to generate monospecific and bispecific immunotherapeutic proteins that specifically bind to one or more targets. This allows for the development of therapeutic molecules which may have structural and functional advantages over monoclonal antibodies. We have also developed a preclinical candidate based on the ADAPTIR-FLEX platform which is advancing in our pipeline. The structural differences of ADAPTIR and ADAPTIR FLEX molecules over monoclonal antibodies allow for the development of immunotherapies that are designed to engage immune effector cells and disease targets to produce signaling responses that modulate the immune system to kill tumor cells. We believe we are skilled at candidate generation, validation, and subsequent preclinical and clinical development.

Recent Developments

Comparison of the three and six months ended June 30, 2026 and 2025

Research and Development Expenses

We expense research and development costs as incurred. These expenses relate primarily to conducting non-clinical studies and clinical trials, fees to professional service providers for analytical testing, consulting costs, independent monitoring or other administration of our clinical trials and obtaining and evaluating data from our clinical trials and non-clinical studies, as well as costs of contract manufacturing services for clinical trial material, and costs of materials used in clinical trials and research and development. Our research and development expenses include:

We expect our research and development spending will be dependent upon such factors as the results from our clinical trials, the availability of reimbursement of research and development spending, the number of product candidates under development, the size, structure and duration of any clinical programs that we may initiate, and the costs associated with manufacturing our product candidates on a large-scale basis for later stage clinical trials. We may experience interruption of key clinical trial activities, such as site initiation, patient enrollment and clinical trial site monitoring, and key non-clinical activities. While a number of our programs are still in the preclinical trial phase, we do not provide a breakdown of the initial associated expenses as we are often evaluating multiple product candidates simultaneously. Costs are reported in preclinical research and discovery until the program enters the clinic.

Our research and development expenses by program for the three and six months ended June 30, 2026 and 2025 are shown in the following table:

Research and development expenses increased by $0.4 million from $3.3 million for the three months ended June 30, 2025 to $3.7 million for the three months ended June 30, 2026. Research and development expenses increased by $0.6 million, from $7.0

million for the six months ended June 30, 2025 to $7.6 million for the six months ended June 30, 2026. The increase was primarily due to higher mipletamig clinical study costs, preclinical projects testing costs, and consulting fees, offset by lower costs on ALG.APV-527.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs and professional fees in support of our executive, business development, finance, accounting, information technology, legal and human resource functions. Other costs include facility costs not otherwise included in research and development expenses.

General and administrative expenses decreased by $0.2 million from $2.9 million for the three months ended June 30, 2025 to $2.7 million for the three months ended June 30, 2026. General and administrative expenses were $5.7 million for the six months ended June 30, 2026 and 2025. The decrease was primarily due to lower employee costs.

Other Income, Net

Other income, net consists primarily of interest income from our cash equivalents and short term rental income. Other income, net was $0.1 million for the three months ended June 30, 2026 and $0.02 million for the three months ended June 30, 2025. Other income, net was $0.2 million for the six months ended June 30, 2026 and $0.1 million the six months ended June 30, 2025. The increase was primarily due to higher interest income from our money market accounts.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other factors. Although we believe that our judgments and estimates are appropriate, actual results may differ materially from our estimates and changes in these estimates are recorded when known. An accounting policy is considered critical if it is important to a company's financial condition and results of operations and if it requires the exercise of significant judgment and the use of estimates on the part of management in its application.

Refer to Note 1 for discussion of our accounting policies, significant judgments, and estimates.

Liquidity and Capital Resources

Cash Flows

The following table provides information regarding our cash flows for the six months ended June 30, 2026 and 2025:

Net cash used in operating activities of $13.4 million for the six months ended June 30, 2026 was primarily due to our net loss of $13.1 million for the period and changes in working capital accounts. Net cash used in operating activities of $13.7 million for the six months ended June 30, 2025 was primarily due to our net loss of $12.6 million for the period and changes in working capital accounts.

Net cash provided by financing activities of $1.6 million for the six months ended June 30, 2026 was primarily due to the issuance of common stock pursuant to the SEPAs and the Stock Purchase Agreement with Niowave. Net cash provided by financing activities of $14.4 million for the six months ended June 30, 2025 was primarily due to issuance of common stock.

Sources of Liquidity

Standby Equity Purchase Agreement

On June 16, 2025, we entered into the First SEPA with Yorkville. Pursuant to the First SEPA, the Company has the right, but not the obligation, to issue and sell to Yorkville from time to time up to $25.0 million of the Company's common stock during the 36 months following the execution of the First SEPA, subject to the restrictions and satisfaction of the conditions in the First SEPA. As consideration for Yorkville's irrevocable commitment to purchase the shares of common stock up to the First Commitment Amount, the Company paid a structuring fee in the amount of $25,000 to Yorkville, and the Company has agreed to pay a commitment

fee to Yorkville in an amount equal to 2.00% of the First Commitment Amount in five equal installments. Pursuant to the First SEPA, we will not sell shares of our common stock to Yorkville that would result in the beneficial ownership of Yorkville and its affiliates (on an aggregated basis) exceeding 9.99% of our then outstanding common stock. For the six months ended June 30, 2026, the Company issued 0.11 million shares of common stock to Yorkville under the First SEPA for aggregate net proceeds of $0.7 million. As of June 30, 2026, the remaining availability under the First SEPA was $7.9 million. Such availability remains subject to certain restrictions and the satisfaction of specified conditions under the First SEPA, including a 9.99% beneficial ownership limitation. We filed a Registration Statement on Form S-1 for 6.9 million shares under the First SEPA on October 1, 2025. A subsequent Form S-1 may be needed to access additional shares under the First SEPA.

On January 8, 2026, we entered into the Second SEPA with Yorkville, pursuant to which the Company has the right, but not the obligation, to issue and sell to Yorkville from time to time up to $60.0 million of our common stock during the 36 months following the execution of the Second SEPA, subject to the restrictions and satisfaction of the conditions in the Second SEPA. The Company paid a structuring fee in the amount of $25,000 to Yorkville, and the Company has agreed to pay a commitment fee to Yorkville in an amount equal to 2.00% of the Second Commitment Amount in five equal installments. The Company has the option to pay the fourth and fifth installments in either cash or shares of common stock. Pursuant to the Second SEPA, we will not sell shares of our common stock to Yorkville that would result in the beneficial ownership of Yorkville and its affiliates (on an aggregated basis) exceeding 9.99% of our then outstanding common stock. For the six months ended June 30, 2026, the Company issued 0.2 million shares of common stock to Yorkville under the Second SEPA for aggregate net proceeds of $1.1 million. As of June 30, 2026, the remaining availability under the Second SEPA was $58.9 million. Such availability remains subject to certain restrictions and the satisfaction of specified conditions under the Second SEPA, including a 9.99% beneficial ownership limitation. We filed a Registration Statement on Form S-1 for 7.1 million shares under the Second SEPA agreement on January 28, 2026, which represents approximately $24.8 million based on the closing price as of August 12, 2026.

In addition, for the six months ended June 30, 2026, we paid $0.7 million of commitment fees to Yorkville in connection with the two SEPAs, compared to $0.1 million for the six months ended June 30, 2025.

On August 12, 2026, we entered into the Securities Purchase Agreement and Warrant Inducement Letters that included a standstill on our use of the First and Second SEPA to raise additional capital from the date of such agreements until 12 months after the date on which we obtain stockholder approval for the issuance of the Inducement Warrants and the PIPE Warrants (the "Stockholder Approval Date"). As such we will not have access to the First and Second SEPA for capital raising purposes until 12 months following the date on which stockholder approval is obtained.

At The Market Offering Agreement

On April 28, 2025, we entered the ATM Agreement with Roth, pursuant to which we may offer and sell up to $50 million of its common stock from time to time through Roth. The compensation to Roth for the shares sold pursuant to the ATM Agreement will be an amount equal to 3.0% of the gross sales price of the shares sold under the ATM Agreement. The sale of such shares of common stock by Roth will be effected under the Company's existing shelf Registration Statement on Form S-3, which was declared effective on February 26, 2025. We did not sell any shares under the ATM Agreement during the three months ended June 30, 2026. There is currently no remaining availability under the ATM Agreement due to the limitations of General Instruction I.B.6. Additional capacity is expected to become available after October 2026.

On August 12, 2026, we entered into the Securities Purchase Agreement and Warrant Inducement Letters that included a standstill on our use of the ATM Agreement to raise additional funds from the date of such agreements until 12 months after the Stockholder Approval Date. As such we may not have access to the ATM Agreement for capital raising purposes when capacity becomes available after October 2026.

Registration Statement

On February 14, 2025, we filed a Registration Statement on Form S-3 covering the offering, issuance, and sale up to $100 million in common stock, preferred stock, and various series of debt securities and/or warrants to purchase any of such securities, which included the unsold securities from the prior registration statement. On June 20, 2025, we filed the latest amendment to the prospectus supplement to the Registration Statement on Form S-3 filed on February 14, 2025 pursuant to General Instruction I.B.6 of Form S-3, which updates the amount of shares that we are eligible to sell under the ATM Agreement to $8.0 million. So long as the aggregate market value of our common stock held by non-affiliates is less than $75 million, we will not sell shares under the ATM Agreement with a value of more than one-third of the aggregate market value of our common stock held by non-affiliates in any 12-month period due to the limitations of General Instruction I.B.6 of Form S-3 and the current public float of our common stock. If our public float increases such that we may sell additional amounts under the ATM Agreement and the prospectus, we will file another amendment to the prospectus supplement prior to making additional sales. The limitations of General Instruction I.B.6 do not apply to sales of our shares under the SEPAs with Yorkville as the sales of such shares were registered under a separate registration statement on Form S-1. In May 2026, the SEC proposed amendments to the registered offering framework that, if adopted, would expand eligibility to use Form S-3 and eliminate the limitations currently applicable to smaller issuers under General Instruction I.B.6.

Common Warrants

As of August 13, 2026, we have an aggregate of 6,058,397 common warrants outstanding with exercise prices ranging from $4.03 to $363,369.60 per share. For additional information on our currently outstanding warrants, see the table below.

(1) The 2026 August common warrants and inducement warrants are exercisable upon the receipt of stockholder approval.

IXINITY Milestone Payments

On February 28, 2020, Aptevo entered into the LLC Purchase Agreement with Medexus, pursuant to which we sold all of the issued and outstanding limited liability company interests of Aptevo BioTherapeutics LLC, a wholly owned subsidiary of Aptevo. On March 29, 2023, we entered into and closed a Purchase Agreement with XOMA pursuant to which we sold to XOMA our right, title, and interest to all future deferred payments from Medexus and a portion of potential milestones. As consideration, we received $9.6 million at closing from XOMA and an additional $0.05 million post-closing payment. Aptevo continues to be eligible to receive up to $5.8 million in milestone payments from Medexus upon achievement of certain regulatory and IXINITY net sales threshold. These milestone payment opportunities must be achieved by February 2035, after which any unachieved milestones will expire.

Niowave, Inc.

On May 25, 2026, Aptevo entered into the Niowave Collaboration Agreement to develop radiopharmaceutical product candidates combining our proprietary molecules with Niowave's radioisotopes. Additionally, we entered into a Stock Purchase Agreement pursuant to which Niowave purchased 98,522 shares of our common stock and 53,201 common warrants for aggregate gross proceeds of $500,000. The Stock Purchase Agreement also provides Niowave the right, but not the obligation, to purchase up to 97,373 additional shares of our common stock in the future at prevailing market prices, subject to specified conditions and an aggregate beneficial ownership limitation of 19.99% of our outstanding common stock. Any future issuance of shares under this right would depend on Niowave's election to purchase such shares and the satisfaction of the applicable conditions under the agreement.

Grant Agreement

On June 29, 2026, Aptevo entered into a grant award agreement with the Andy Hill Cancer Research Endowment (CARE) Fund, a grantmaking entity of the State of Washington, to support IND-enabling studies for APVO451, the Company's novel trispecific antibody for solid tumor immunotherapy. Under the agreement, the Company is eligible to receive reimbursement of allowable costs up to approximately $1.5 million during the grant period, which extends from June 2026 through June 2028. Payments under the agreement are made on a reimbursement basis for eligible costs incurred during the grant period and are subject to the Company's continued compliance with the agreement, including progress toward agreed-upon milestones, submission of annual progress and financial reports, documentation of eligible expenditures, and satisfaction of non-state matching contribution requirements. The agreement requires the Company to demonstrate at least a one-to-one use of non-state matching contributions in relation to grant payments. Reimbursement requests are subject to documentation requirements and review by the grantor or its administrator.

Liquidity

We have financed our operations to date primarily through royalty and purchase agreements with various partners, sale of business products and segments, public offerings of our common stock, loan proceeds, milestone payments, research and development funding from strategic partners, revenue generated from our previously owned commercial products, and funds received at the date of our spin-off from Emergent. We had cash and cash equivalents of $ 9.8 million and an accumulated deficit of $288.3 million as of June 30, 2026.

For the six months ended June 30, 2026, net cash used in our operating activities was $13.4 million.

Our future success is dependent on our ability to fund and develop our product candidates. We anticipate that we will continue to incur significant operating losses for the next several years as we incur expenses to continue to execute on our development strategy to advance our preclinical and clinical stage assets. We will not generate revenues from our development stage product candidates unless and/or until we or our collaborators successfully complete development and obtain regulatory approval for such product

candidates, which we expect will take a number of years and is subject to significant uncertainty. If we obtain regulatory approval for one of our development stage product candidates, we expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution, to the extent that such costs are not paid by collaborators. We do not have sufficient cash to complete the clinical development of any of our development stage product candidates and will require additional funding in order to complete the development activities required for regulatory approval of such product candidates. We will require substantial additional funds to continue our development programs and to fulfill our planned operating goals, and our existing cash resources are not expected to be sufficient to fund operations for at least one year from the date the financial statements are issued.

We may experience delays in opportunities to partner our product candidates, due to financial and other impacts on potential partners. Additionally, we may experience potential impacts on our future milestones from Medexus due to effects of macroeconomic impacts, including, but not limited to, bank failure, and the rising and fluctuating inflation, which may impact Medexus' ability to continue to successfully commercialize the IXINITY businesses.

There are numerous risks and uncertainties associated with research, development, and commercialization of pharmaceutical products. Accordingly, our future funding requirements may vary from our current expectations and will depend on many factors, including, but not limited to:

If we are unable to raise substantial additional capital in the next year, whether on terms that are acceptable to us or at all, then we may be required to:

The sale of additional equity or convertible debt securities may result in additional dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock or through credit facilities, these securities and/or the loans under credit facilities could provide for rights senior to those of our common stock and could contain covenants that would restrict our operations. Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. We also expect to seek additional funds through arrangements with collaborators, licensees or other third parties. These arrangements would generally require us to relinquish or encumber rights to some of our technologies or drug candidates, and we may not be able to enter into such arrangements on acceptable terms, if at all. Due to the macroeconomic factors, we may experience delays in clinical trials and non-clinical work, and opportunities to partner our product candidates, due to financial and other impacts on potential partners.

Contractual Obligations

We have an operating lease related to our office and laboratory space in Seattle, Washington. This lease was amended in March 2019 to extend the term of the amended lease through April 2030 and provided two options to extend the lease term, each by five years, as well as a one-time option to terminate the lease in April 2023, with nine months' notice, or by July 2022. On May 26, 2022, we further amended our office and laboratory lease to remove the one-time termination option in April 2023. In exchange for removing the termination option, we received six months of free rent. As a result, we recorded an additional $4.4 million of lease liability and right-of-use asset on the consolidated balance sheet in May 2022.

We have a non-exclusive Commercial Platform License Agreement with OMT ("OMT License Agreement") for certain transgenic rodents of OMT's OmniAb platform. Our OMT License Agreement obligates us to make milestone and royalty payments upon achievement of certain regulatory approvals and commercialization of our product candidates. Mipletamig and APVO603 are the product candidates currently subject to this agreement. Pursuant to our agreement, we are required to make a $2.0 million milestone payment upon dosing the first patient in a Phase 2 clinical trial of mipletamig.

Our principal commitments include obligations under vendor contracts to purchase research services and other purchase commitments with our vendors. In the normal course of business, we enter into services agreements with contract research organizations, contract manufacturing organizations and other third parties. Generally, these agreements provide for termination upon notice, with specified amounts due upon termination based on the timing of termination and the terms of the agreement. The actual amounts and timing of payments under these agreements are uncertain and contingent upon the initiation and completion of the services to be provided.