Results
Rallybio Corporation
08/06/2026 | Press release | Distributed by Public on 08/06/2026 06:03
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (our "Annual Report"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. See "Cautionary Note Regarding Forward-Looking Statements."
Our Business
We are a clinical-stage biotechnology company comprised of experienced biopharma industry leaders with extensive research, development, and rare disease expertise with a mission to develop and commercialize life-transforming therapies for patients with severe and rare diseases. Our lead program, RLYB116, is a differentiated complement component 5 ("C5") inhibitor with the potential to treat diseases of complement dysregulation. In addition, RLYB332, a long-acting matriptase-2 ("MTP-2") antibody for the treatment of diseases of iron overload is currently in preclinical development.
On March 1, 2026, Rallybio Corporation and subsidiaries ("Rallybio", the "Company", "we", "our", or "us") entered into an Agreement and Plan of Merger and Reorganization with Candid Therapeutics, Inc ("Candid") (the "Candid Merger Agreement") pursuant to which the parties intended to undertake a business combination (the "Candid Merger").
On May 3, 2026, Candid terminated the Candid Merger Agreement concurrently with entering into a Permitted Alternative Agreement (as defined in the Candid Merger Agreement) with UCB S.A. ("UCB"). As a result of the termination of the Candid Merger Agreement, we were paid on May 4, 2026 a $50.0 million Parent Termination Fee (as defined in the Candid Merger Agreement) and were reimbursed $0.4 million for certain expenses.
Following termination of the Candid Merger Agreement, Rallybio restarted the evaluation of strategic alternatives. On May 31, 2026, Rallybio entered into an Agreement and Plan of Merger and Reorganization (the "Merger Agreement") with Avenzo Therapeutics, Inc.("Avenzo"), a clinical-stage biotechnology company developing next-generation oncology therapies, pursuant to which, among other matters, Farmington Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Rallybio ("Merger Sub"), will merge with and into Avenzo with Avenzo surviving as a wholly owned subsidiary of Rallybio (such transaction, the "Merger"). In connection with the Merger, Rallybio will change its name to Avenzo Therapeutics, Inc. (together with its subsidiaries following the Merger, the "combined company"). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. The Merger will become effective at the time the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or such other date and time as is agreed upon by Rallybio and Avenzo and specified in the Certificate of Merger in accordance with the General Corporation Law of the State of Delaware ("DGCL") (such date, the "Closing Date," and such time, the "Effective Time").
In connection with the Merger, Avenzo entered into a subscription agreement (the "Subscription Agreement") with certain investors, pursuant to which Avenzo has agreed to sell, and such investors have agreed to purchase, shares of Avenzo Common Stock for an aggregate purchase price of $215.0 million, immediately prior to the Effective Time (such transaction, the "Concurrent Financing"). The closing of the Concurrent Financing is conditioned upon the satisfaction or waiver of each of the conditions to the closing of the Merger (the "Closing") as well as certain other conditions.
Subject to the terms and conditions of the Merger Agreement, at the Effective Time, (a) each then-outstanding share of common stock or preferred stock of Avenzo (each such share, an "Avenzo Share") (excluding any share described in clauses (b) or (c) below and Avenzo Shares held by stockholders who have exercised and perfected appraisal rights for such shares) will be converted into the right to receive a number of shares of Rallybio common stock, calculated in accordance with the Exchange Ratio as set forth in the Merger Agreement, (b) each Avenzo Share issued in the Concurrent Financing will be converted into the right to receive
a number of shares of Rallybio common stock calculated in accordance with the Merger Agreement, (c) any Avenzo Shares held as treasury shares or held or owned by Rallybio, Merger Sub or any subsidiary of Rallybio or Avenzo immediately prior to the Effective Time will be canceled and shall cease to exist, and no consideration shall be delivered in exchange therefor. Each then-outstanding option to purchase Avenzo Shares will be converted into an option to purchase Rallybio common stock, subject to adjustment as set forth in the Merger Agreement.
Under the Exchange Ratio formula in the Merger Agreement, upon the Closing, on a pro forma basis and based upon the number of shares of Rallybio common stock expected to be issued in connection with the Merger and the Concurrent Financing, pre-Merger equityholders of Avenzo (other than investors in the Concurrent Financing) are expected to own approximately 56.6% of the combined company, pre-Merger equityholders of Rallybio will own approximately 2.8% of the combined company and the investors in the Concurrent Financing are expected to own approximately 40.6% (assuming gross proceeds from the Concurrent Financing of $215.0 million), in each case, calculated on a fully diluted basis, using the treasury stock method, and subject to certain assumptions, including (i) a valuation for Rallybio of $15.0 million (calculated after giving effect to the expected payment of the distribution of Rallybio's pre Closing cash), (ii) a valuation for Avenzo of $300.0 million, and (iii) the relative capitalization of Rallybio and Avenzo. The percentage of the combined company that each party's equityholders will own following the Closing is subject to certain adjustments as described in the Merger Agreement, including the amount of the final Rallybio Net Cash (as defined in the Merger Agreement) at Closing. At any time prior to the Closing, Rallybio will declare distributions (each a "Rallybio Distribution") of Rallybio Net Cash to holders of Rallybio common stock and, if applicable, securities convertible into or exchangeable or exercisable for shares of Rallybio common stock outstanding as of the applicable record date, subject to the terms of the Merger Agreement.
Immediately prior to the Effective Time, Rallybio and a rights agent (the "Rights Agent") are expected to enter into a Contingent Value Rights Agreement (the "CVR Agreement"), pursuant to which holders of record of certain Rallybio securities as of the close of business on the last business day prior to the Closing Date will receive one contingent value right (each, a "CVR") for each outstanding share of Rallybio common stock, pre-funded warrant, Rallybio restricted stock unit or In the Money Parent Option (as defined in the Merger Agreement) held as of such date. Pursuant to the CVR Agreement, each CVR holder will be entitled to receive their pro rata share of all of the net proceeds (including cash or the value of stock to the extent listed on a national exchange, at the time of disposition), if any, received by Rallybio as a result of payments ("CVR Payments") made to Rallybio of (i) any upfront, milestone, royalty and other payments received under any disposition agreement related to Rallybio's pre-Merger assets (the "Legacy Assets"), and (ii) all of the cash proceeds, if any, received from Recursion Pharmaceuticals, Inc. ("Recursion") under the Membership Interest Purchase Agreement, dated July 8, 2025, by and among Recursion, Exscientia Ventures I, Inc., Rallybio and Rallybio IPB, LLC (the "ENPP1 Purchase Agreement"). For a period of four months after the Closing Date, Rallybio will use commercially reasonable efforts to effect the disposition of the Legacy Assets with respect to a third party that Rallybio had been in discussions with regarding a disposition prior to the Closing Date, subject to certain limitations. Such net proceeds will be subject to certain permitted deductions, including for applicable tax payments, certain expenses incurred or other liabilities borne by Rallybio or its affiliates in respect of the Legacy Assets, and losses incurred by Rallybio or its affiliates due to a third-party proceeding in connection with such disposition.
We completed a confirmatory pharmacokinetic ("PK") and pharmacodynamic ("PD") study of RLYB116 in healthy volunteers in 2025 and reported data in the first quarter of 2026.
In July 2025, we entered into the ENPP1 Purchase Agreement to sell our interest in REV102, an Ectonucleotide Pyrophosphatase/Phosphodiesterase 1 ("ENPP1") inhibitor in preclinical development for the treatment of patients with hypophosphatasia ("HPP"), to Buyer (a subsidiary of our joint venture partner Recursion) (the "JV Sale"). In connection with the JV Sale, we received a total of $20.0 million in the third quarter of 2025 including $7.5 million from an upfront payment and $12.5 million from a milestone payment related to the initiation of additional preclinical studies. We are eligible to receive a $5.0 million milestone payment in connection with the initiation of dosing in a Phase 1 clinical study, as defined in the ENPP1 Purchase Agreement and low single-digit royalties on all future net sales by Recursion of products comprising or incorporating certain compounds developed by RE Ventures I, LLC, a limited liability company ("REV-I"). We may also be eligible to receive certain payments in the event of Recursion's sale of the REV102 program.
In April 2025, we announced the discontinuation of our RLYB212 program for the prevention of fetal and neonatal alloimmune thrombocytopenia ("FNAIT") based on PK data from the Phase 2 clinical trial that demonstrated an inability of the RLYB212 dose regimen to achieve predicted target concentrations, as well as the minimum target concentration required for efficacy.
Complement Dysregulation
RLYB116 is an innovative, once-weekly, small volume, subcutaneously injected inhibitor of C5 in development for the treatment of patients with complement-related diseases. We have completed two Phase 1 clinical trials in healthy participants that included the study of RLYB116 as both a single-ascending dose and a multiple-ascending dose. After the first Phase 1 clinical trial, we completed manufacturing process enhancements that were designed to improve the tolerability of RLYB116. In 2025, we completed the confirmatory Phase 1 clinical trial evaluating the PK/PD properties of RLYB116. The confirmatory trial achieved its two key objectives including: a significant improvement in the tolerability of RLYB116 and demonstration of complete and sustained inhibition of terminal complement. These results, which we reported in the first quarter of 2026, support the study of RLYB116 as a potential best-in-class therapeutic for multiple complement mediated diseases.
Hematological Disorders
In May 2022, we obtained worldwide exclusive rights to RLYB331, a preclinical, monoclonal antibody that is designed to inhibit MTP-2. The inhibition of MTP-2 significantly increases levels of hepcidin, decreases iron load and treats ineffective erythropoiesis. In 2024, we re-engineered RLYB331 to extend its half-life and completed non-clinical studies that demonstrated favorable tolerability, dose-dependent PK, and sustained PD effects with RLYB332, a long-acting version of RLYB331. These findings, which were presented in a poster at the 66th annual meeting of the American Society of Hematology, support the continued development of RLYB332 as a potentially best-in-class therapeutic for treating diseases of iron overload.
Our Operations
Since inception, we have devoted substantially all of our resources to raising capital, organizing and staffing the Company, business planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting our intellectual property portfolio, developing and progressing our product candidates, preparing for and conducting clinical trials and establishing arrangements with third parties for the manufacture of our product candidates and component materials, including activities relating to our preclinical development and manufacturing activities for each of our programs. We do not have any product candidates approved for sale and have not generated any revenue from product sales.
Since our inception, we have funded our operations primarily through equity financings. From our inception and prior to our initial public offering ("IPO"), we received proceeds of approximately $182.5 million from equity financings. In August 2021, we closed our IPO and issued and sold 891,250 shares of common stock, inclusive of 116,250 shares sold pursuant to the full exercise of the underwriters' option to purchase additional shares, at a public offering price of $104.00 per share. We received net proceeds of approximately $83.0 million, after deducting underwriting discounts and commissions and other offering costs.
In November 2022, we completed a follow-on offering of approximately $54.8 million pursuant to which we issued 725,456 shares of common stock, inclusive of 100,456 shares of common stock sold pursuant to the partial exercise of the underwriters' option to purchase additional shares at a price of $48.00 per share and to certain investors in lieu of common stock, pre-funded warrants to purchase up to an aggregate of 416,673 shares of common stock at a price of $47.9992, which represents the per share public offering price for the shares less the $0.0008 per share exercise price for each pre-funded warrant. The net proceeds from the November 2022 follow-on offering were approximately $50.8 million, after deducting underwriting discounts and commissions and other offering costs.
In April 2024, we entered into a securities purchase agreement (the "JJDC Securities Purchase Agreement") with Johnson & Johnson Innovation - JJDC, Inc. ("JJDC"), pursuant to which we sold to JJDC, in an unregistered offering, 454,545 shares of our common stock at a price of $14.56 per share, which represented a 10% premium on our closing stock price on April 9, 2024, for aggregate gross proceeds of approximately $6.6 million, before deducting offering expenses. We agreed, among other things, to file with the Securities and Exchange Commission (the "SEC") a registration statement covering the resale of the shares, which we filed on May 10, 2024.
In July 2025, we announced that we had entered into the ENPP1 Purchase Agreement to sell our interest in REV102, an ENPP1 inhibitor in preclinical development for the treatment of patients with HPP, to Buyer (a subsidiary of our joint venture partner Recursion). In connection with the JV Sale, we received a total of $20.0 million in the third quarter of 2025 including $7.5 million from an upfront payment and $12.5 million from a milestone payment related to the initiation of additional preclinical studies. We are eligible to receive a $5.0 million milestone cash payment in connection with the initiation of dosing in a Phase 1 clinical study, as defined in the ENPP1 Purchase Agreement and low single-digit royalties on all future net sales by Recursion of products comprising or incorporating certain compounds developed by REV-I. We may also be eligible to receive certain payments in the event of Recursion's sale of the REV102 program.
As of June 30, 2026, we had cash and cash equivalents of $92.8 million. We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements for at least 12 months beyond the filing of this Quarterly Report on Form 10-Q, although we anticipate that the Merger will close prior to the end of 2026. See "-Liquidity and Capital Resources."
We have incurred significant operating losses since inception, including operating losses of $5.7 million and $10.1 million for the three months ended June 30, 2026 and 2025, respectively and $14.4 million and $19.7 million for the six months ended June 30, 2026 and 2025, respectively. The increase in total other income of $50.0 million was a result of the termination of the Candid Merger Agreement on May 4, 2026 and payment of the related termination fee. As of June 30, 2026, we had an accumulated deficit of $266.6 million. These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. We have not commercialized any products and have never generated revenue from the commercialization of any product. There can be no assurances, however, that additional funding will be available on terms acceptable to us, or at all.
Components of Results of Operations
Revenue
We do not have any product candidates approved for sale and have not generated any revenue from product sales. In April 2024, we entered into a two-year collaboration agreement (the "J&J Collaboration Agreement") with Johnson & Johnson ("J&J"), through its wholly-owned subsidiary, Momenta Pharmaceuticals, Inc. Our collaboration and license revenue to date is related to data collection and data submission performance obligations pursuant to the two-year J&J Collaboration Agreement to facilitate the advancement of research into products to address unmet needs relating to FNAIT. Pursuant to the J&J Collaboration Agreement, we received an upfront payment of $0.5 million from J&J for the information dissemination and data provision services under the agreement. We were also eligible to receive additional payments upon certain triggers related to the companies' FNAIT studies, however, in connection with our decision in April 2025 to discontinue development of RLYB212, we do not expect payments regarding the achievement of certain enrollment-related events.
We determined there were performance obligations as follows:
(1) Data collection and submission revenue - derived from Rallybio's ongoing management of the studies including the maintenance of a minimum site footprint, the license to utilize, and timely, semi-annual submission of the anonymized data, in the required formats.
(2) Dissemination of J&J materials & participant revenue - derived from Rallybio's dissemination of content, information or materials related to the J&J-Sponsored Studies that are developed by J&J and are provided by Rallybio for the purpose of disseminating such content, information, or materials to staff at Rallybio study sites to provide to potential eligible participants regarding J&J's independent study.
We determined the J&J Collaboration Agreement and JJDC Securities Purchase Agreement represented combined agreements. In accordance with Accounting Standards Codification 606, Revenue Recognition and Accounting Standards Codification Topic 820, Fair Value Measurement, total consideration of $1.2 million for the shares of common stock from the JJDC Securities Purchase Agreement, which represents the premium of $0.7 million and discount for lack of marketability of $0.5 million, has been allocated to revenue and was recognized over the two-year expected performance period. As of June 30, 2026, all revenue was recognized due to the performance obligations being satisfied. On April 9, 2026, the J&J Collaboration Agreement terminated upon completion of the initial term of the agreement.
Operating Expenses
Research and Development Expenses
Research and development expenses consist of costs incurred in connection with our research and development activities, including our drug discovery efforts and the development of our product candidates. We expense research and development costs as incurred, which include:
▪external research and development expenses incurred under agreements with third parties, such as contract research organizations ("CROs") as well as investigative sites and consultants that conduct our clinical trials and other scientific development services;
▪costs related to manufacturing material for our clinical trials, including expenses related to the manufacturing scale-up and fees paid to contract manufacturing organizations ("CMOs");
▪employee-related expenses, including salaries, bonuses, benefits, share-based compensation and other related costs for those employees involved in research and development efforts;
▪costs of outside consultants, including their fees, and related travel expenses;
▪expenses to acquire technologies, such as intellectual property, to be used in research and development including in-process research and development ("IPR&D") that has no alternative future use at the time of asset acquisitions;
▪costs related to compliance with quality and regulatory requirements; and
▪facilities, depreciation and other indirect costs allocated to employees and activities supporting our research and development efforts.
Costs for certain activities are recognized based on an evaluation of the progress to completion of each specific contract using information and data provided to us by our vendors and analyzing the progress of our research studies or other services performed. Significant judgments and estimates are made in determining the expenses incurred at the end of any reporting period.
Our direct, external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our process development, manufacturing and clinical development activities. Our direct external research and development expenses also include fees incurred under license and intellectual property purchase agreements. We track these external research and development costs on a program-by-program basis.
We do not allocate employee costs, facility costs, including depreciation, or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources and third-party consultants primarily to conduct our research and development activities as well as for managing our process development, manufacturing and clinical development activities.
The successful development of any product candidate is highly uncertain. If we continue to progress the development of our product candidates, we will need to raise substantial additional capital in the future to fund the future development of these programs. We intend to focus our near term research and development efforts on completing the ongoing activities and preparing our programs for a potential transaction or sale.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits and share-based compensation for our personnel in executive, legal, business development, finance and accounting, and other administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees paid for accounting, auditing, tax and consulting services, insurance costs, travel expenses and direct and allocated facility costs not otherwise included in research and development expenses.
Total Other Income, Net
Total other income, net, includes interest income earned on cash, cash equivalents and marketable securities, and income and expense items.
Loss on Investment in Joint Venture
We recognize the pro-rata share of losses in the joint venture with Recursion (as successor in interest to Exscientia) on the condensed consolidated statements of operations and comprehensive income (loss) within the loss on investment in joint venture line item, with a corresponding change to the joint venture investment asset on the condensed consolidated balance sheets for equity method investments for which we do not have a controlling interest in. In July 2025, we sold our interest in REV102 to Recursion.
Income Tax Expense
Income tax expense includes current taxes on income recognized from the termination of the Candid Merger Agreement which resulted in a termination fee being recorded during the quarter. We continue to maintain a full valuation allowance against our deferred tax assets.
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations:
|
FOR THE THREE MONTHS ENDED JUNE 30, |
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| (in thousands) | 2026 | 2025 | CHANGE | ||||||||||||||
| Revenue: | |||||||||||||||||
| Collaboration and license revenue | $ | - | $ | 212 | $ | (212) | |||||||||||
| Total revenue | - | 212 | (212) | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 758 | 6,074 | (5,316) | ||||||||||||||
| General and administrative | 4,895 | 4,195 | 700 | ||||||||||||||
| Total operating expenses | 5,653 | 10,269 | (4,616) | ||||||||||||||
| Loss from operations | (5,653) | (10,057) | 4,404 | ||||||||||||||
| Total other income, net | 50,642 | 641 | 50,001 | ||||||||||||||
| Income (loss) before equity in losses of joint venture | 44,989 | (9,416) | 54,405 | ||||||||||||||
| Income tax expense | 1,324 | - | 1,324 | ||||||||||||||
| Loss on investment in joint venture | - | 287 | (287) | ||||||||||||||
| Net income (loss) | $ | 43,665 | $ | (9,703) | $ | 53,368 | |||||||||||
Revenue
There was no collaboration and license revenue for the three months ended June 30, 2026 due to the expiration of the J&J Collaboration Agreement in April 2026. Collaboration and license revenue was $0.2 million for the three months ended June 30, 2025.
Operating Expenses
Research and Development Expenses
The following table summarizes our research and development costs for each of the periods presented:
|
FOR THE THREE MONTHS ENDED JUNE 30, |
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| (in thousands) | 2026 | 2025 | CHANGE | ||||||||||||||
| Direct research and development by program | |||||||||||||||||
| RLYB212 | $ | (48) | $ | 1,377 | $ | (1,425) | |||||||||||
| RLYB116 | 525 | 1,274 | (749) | ||||||||||||||
| Other program candidates | 5 | 95 | (90) | ||||||||||||||
| Other unallocated research and development costs | |||||||||||||||||
| Personnel expenses (including share-based compensation) | 180 | 3,161 | (2,981) | ||||||||||||||
| Other expenses | 96 | 167 | (71) | ||||||||||||||
| Total research and development expenses | $ | 758 | $ | 6,074 | $ | (5,316) | |||||||||||
Research and development expenses were $0.8 million for the three months ended June 30, 2026, compared to $6.1 million for the three months ended June 30, 2025. The decrease of $5.3 million in 2026 as compared to 2025 was primarily due to:
▪a $1.4 million decrease in RLYB212 development costs, primarily related to a decrease in clinical costs and other related development costs as a result of our discontinuation of the FNAIT program in April 2025;
▪a $0.7 million decrease in RLYB116 development costs, primarily related to a decrease in clinical and manufacturing costs and other related development costs; and
▪a $3.0 million decrease in personnel expenses, primarily related to lower ongoing headcount during the three months ended June 30, 2026 as compared to the same period in 2025, in addition to a decrease in share-based compensation and no bonus accrual or expected bonus payments for research and development in 2026.
General and administrative expenses were $4.9 million for the three months ended June 30, 2026, compared to $4.2 million for the three months ended June 30, 2025. The increase of $0.7 million in 2026 as compared to 2025 was primarily due to:
▪a $2.3 million increase primarily related to legal fees, professional fees and other related general and administrative expenses, the vast majority of which were incurred in connection with the Merger.
This increase was partially offset by:
▪a $1.6 million decrease in personnel expenses, primarily related to lower ongoing headcount during the three months ended June 30, 2026 as compared to the same period in 2025, in addition to a decrease in share-based compensation and a decrease in the bonus accrual.
Total Other Income, Net
Total other income, net, for the three months ended June 30, 2026 was $50.6 million compared to $0.6 million for the three months ended June 30, 2025. The increase in total other income of $50.0 million was primarily a result of the termination of the Candid Merger Agreement, which resulted in a termination fee of $50.0 million paid to us on May 4, 2026.
Income Tax Expense
Income tax expense for the period was primarily driven by current taxes on income recognized from the termination of the Candid Merger Agreement which resulted in a termination fee being recorded during the quarter. We continue to maintain a full valuation allowance against its deferred tax assets.
Loss on Investment in Joint Venture
Loss on investment in joint venture was $0.3 million for the three months ended June 30, 2025. In July 2025, we sold our interest in REV102 to Recursion which resulted in no loss on investment in joint venture for the three months ended June 30, 2026.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations:
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FOR THE SIX MONTHS ENDED JUNE 30, |
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| (in thousands) | 2026 | 2025 | CHANGE | ||||||||||||||
| Revenue: | |||||||||||||||||
| Collaboration and license revenue | $ | 212 | $ | 424 | $ | (212) | |||||||||||
| Total revenue | 212 | 424 | (212) | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 3,629 | 11,799 | (8,170) | ||||||||||||||
| General and administrative | 10,969 | 8,352 | 2,617 | ||||||||||||||
| Total operating expenses | 14,598 | 20,151 | (5,553) | ||||||||||||||
| Loss from operations | (14,386) | (19,727) | 5,341 | ||||||||||||||
| Total other income, net | 51,097 | 1,459 | 49,638 | ||||||||||||||
| Income (loss) before equity in losses of joint venture | 36,711 | (18,268) | 54,979 | ||||||||||||||
| Income tax expense | 1,324 | - | 1,324 | ||||||||||||||
| Loss on investment in joint venture | - | 874 | (874) | ||||||||||||||
| Net income (loss) | $ | 35,387 | $ | (19,142) | $ | 54,529 | |||||||||||
Revenue
Collaboration and license revenue was $0.2 million and $0.4 million for the six months ended June 30, 2026 and 2025.
Operating Expenses
Research and Development Expenses
The following table summarizes our research and development costs for each of the periods presented:
|
FOR THE SIX MONTHS ENDED JUNE 30, |
|||||||||||||||||
| (in thousands) | 2026 | 2025 | CHANGE | ||||||||||||||
| Direct research and development by program | |||||||||||||||||
| RLYB212 | $ | 8 | $ | 3,815 | $ | (3,807) | |||||||||||
| RLYB116 | 921 | 1,893 | (972) | ||||||||||||||
| Other program candidates | 7 | (68) | 75 | ||||||||||||||
| Other unallocated research and development costs | |||||||||||||||||
| Personnel expenses (including share-based compensation) | 2,460 | 5,750 | (3,290) | ||||||||||||||
| Other expenses | 233 | 409 | (176) | ||||||||||||||
| Total research and development expenses | $ | 3,629 | $ | 11,799 | $ | (8,170) | |||||||||||
Research and development expenses were $3.6 million for the six months ended June 30, 2026, compared to $11.8 million for the six months ended June 30, 2025. The decrease of $8.2 million in 2026 as compared to 2025 was primarily due to:
▪a $3.8 million decrease in RLYB212 development costs, primarily related to a decrease in clinical costs and other related development costs as a result of our discontinuation of the FNAIT program in April 2025;
▪a $1.0 million decrease in RLYB116 development costs, primarily related to a decrease in clinical and manufacturing costs and other related development costs; and
▪a $3.3 million decrease in personnel expenses, primarily related to lower ongoing headcount during the six months ended June 30, 2026 as compared to the same period in 2025, in addition to a decrease in share-based compensation and no bonus accrual or expected bonus payments for research and development in 2026.
These decreases were partially offset by:
▪an increase in personnel expenses, primarily related to severance recognized in connection with the Merger.
General and administrative expenses were $11.0 million for the six months ended June 30, 2026, compared to $8.4 million for the six months ended June 30, 2025. The increase of $2.6 million in 2026 as compared to 2025 was primarily due to:
▪a $4.9 million increase primarily related to legal fees, professional fees and other related general and administrative expenses, the vast majority of which were incurred in connection with the Merger.
This increase was partially offset by:
▪a $2.3 million decrease in personnel expenses, primarily related to lower ongoing headcount during the six months ended June 30, 2026 as compared to the same period in 2025. In addition, there was a decrease in share-based compensation and a decrease in the bonus accrual in 2026 that was offset by an increase in severance recognized in connection with the Merger.
Total Other Income, Net
Total other income, net, for the six months ended June 30, 2026 was $51.1 million compared to $1.5 million for the six months ended June 30, 2025. The increase in total other income of $49.6 million was primarily a result of the termination of the Candid Merger Agreement, which resulted in a termination fee of $50.0 million paid to us on May 4, 2026.
Income Tax Expense
Income tax expense for the period was primarily driven by current taxes on income recognized from the termination of the Candid Merger Agreement and the related termination fee which was recorded during the quarter. We continue to maintain a full valuation allowance against our deferred tax assets.
Loss on Investment in Joint Venture
Loss on investment in joint venture was $0.9 million for the six months ended June 30, 2025. In July 2025, we sold our interest in REV102 to Recursion which resulted in no loss on investment in joint venture for the six months ended June 30, 2026.
Liquidity and Capital Resources
Sources of Liquidity
On February 6, 2026, we executed a reverse stock split of our issued and outstanding common stock, par value $0.0001, at a ratio of 1-for-8 with a record date of December 30, 2025 (the "Reverse Stock Split"). All common stock, per share and related information included herein have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.
Since our inception, we have funded our operations primarily through equity financings. From our inception and prior to our IPO, we received proceeds of approximately $182.5 million from equity financings. In August 2021, we closed our IPO and issued and sold 891,250 shares of common stock, inclusive of 116,250 shares sold pursuant to the full exercise of the underwriters' option to purchase additional shares, at a public offering price of $104.00 per share. We received net proceeds of approximately $83.0 million, after deducting underwriting discounts and commissions and other offering costs.
In August 2022, we filed a Registration Statement on Form S-3 (the "Shelf") with the SEC in relation to the registration and potential future issuance of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof in the aggregate amount of up to $300.0 million. The Shelf was declared
effective on August 15, 2022. Pursuant to General Instruction I.B.6 to Form S-3 ("Instruction I.B.6"), a company with a public float of less than $75.0 million measured at certain time periods may not issue securities under Registration Statements on Form S-3 in excess of one-third of its public float in a 12-month period. We are subject to the limitations of Instruction I.B.6, which may limit the amount of funds we can raise using the Shelf or any other Registration Statement on Form S-3. In connection with the Shelf, we also simultaneously entered into a Sales Agreement with TD Securities (USA) LLC (f/k/a Cowen and Company, LLC) ("TD Cowen"), which was amended on March 13, 2025 (as amended, the "Sales Agreement"). In accordance with the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $9.55 million from time to time at prices through TD Cowen acting as our agent. Pursuant to the Sales Agreement, sales of our common stock, if any, will be made in sales deemed to be "at the market offerings" as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the "Securities Act"). Under the Sales Agreement, TD Cowen will be entitled to compensation equal to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. As of June 30, 2026, we had not sold any shares of common stock pursuant to the Sales Agreement.
In November 2022, we completed a follow-on offering of approximately $54.8 million consisting of 725,456 shares of common stock, inclusive of 100,456 shares of common stock sold pursuant to the partial exercise of the underwriters' option to purchase additional shares at the price of $48.00 per share, and to certain investors in lieu of common stock, pre-funded warrants to purchase up to an aggregate of 416,673 shares of common stock at a price of $47.9992, which represents the per share public offering price for the shares less the $0.0008 per share exercise price for each pre-funded warrant. The net proceeds from the November 2022 follow-on offering were approximately $50.8 million, after deducting underwriting discounts and commissions and other offering costs.
In April 2024, we entered into the JJDC Securities Purchase Agreement, pursuant to which we sold to JJDC in an unregistered offering, 454,545 shares of our common stock at a price of $14.56 per share, which represented a 10% premium on our closing stock price on April 9, 2024, for aggregate gross proceeds of approximately $6.6 million, before deducting offering expenses. We agreed, among other things, to file with the SEC a registration statement covering the resale of the shares within 120 days following the closing of the offering. We filed this registration statement on May 10, 2024.
In July 2025, we announced that we had entered into the ENPP1 Purchase Agreement to sell our interest in REV102, an ENPP1 inhibitor in preclinical development for the treatment of patients with HPP, to Buyer (a subsidiary of our joint venture partner, Recursion). In the third quarter of 2025, we received a total of $20.0 million in connection with the JV Sale, including $7.5 million from an upfront payment and $12.5 million from a milestone payment related to the initiation of additional preclinical studies. We are eligible to receive a $5.0 million milestone cash payment in connection with the initiation of dosing in a Phase 1 clinical study, as defined in the ENPP1 Purchase Agreement and low single-digit royalties on all future net sales by Recursion of products comprising or incorporating certain compounds developed by REV-I. We may also be eligible to receive certain payments in the event of Recursion's sale of the REV102 program.
In May 2026, we received $50.0 million in connection with the termination of the Candid Merger Agreement.
As of June 30, 2026, we had $92.8 million of cash and cash equivalents.
Uses of Liquidity
We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years. See "Contractual Obligations" below.
Funding Requirements
We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements for at least 12 months beyond the filing of this Quarterly Report on Form 10-Q, although we anticipate that the Merger will close prior to the end of 2026.
Because of the numerous risks and uncertainties, length of time and scope of activities associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the actual amount of funds we will require for development, approval and any approved marketing and commercialization activities.
Until such time, if ever, as we generate significant revenue from product sales, we expect to finance our operations through the sale of equity, debt financings, marketing and distribution arrangements and collaborations, strategic alliances and licensing arrangements or other sources. We currently have no credit facility or committed sources of capital. Any future sales of equity will result in dilution to our existing stockholders. If we raise additional funds through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and we may need to dedicate a substantial additional portion of any operating cash flows to the payment of principal and interest on such indebtedness. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, intellectual property, future revenue streams 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 may be required to delay, limit, reduce or terminate product candidate development or future commercialization efforts.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
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FOR THE SIX MONTHS ENDED JUNE 30, |
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| (in thousands) | 2026 | 2025 | |||||||||
| Net cash provided by (used in) operating activities | $ | 37,941 | $ | (18,584) | |||||||
| Net cash provided by investing activities | 23,400 | 14,116 | |||||||||
| Net cash provided by financing activities | 134 | 10 | |||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 61,475 | $ | (4,458) | |||||||
Operating Activities
During the six months ended June 30, 2026, net cash provided by operating activities was $37.9 million as compared to $18.6 million net cash used during the six months ended June 30, 2025. The increase in net cash provided by operating activities during the six months ended June 30, 2026 as compared to net cash used during the six months ended June 30, 2025 was primarily a result from the termination of the Candid Merger Agreement, in addition to a decrease in research and development activities; offset by an increase in general and administration activities.
Investing Activities
Net cash provided by investing activities was $23.4 million during the six months ended June 30, 2026 as compared to $14.1 million of net cash provided by investing activities during the six months ended June 30, 2025. The increase of $9.3 million in net cash provided by investing activities was primarily related to proceeds of $23.4 million from maturities of highly-rated debt securities during the six months ended June 30, 2026, as compared to proceeds from maturities of highly-rated debt securities of $25.5 million, partially offset by purchases of highly-rated debt securities of $9.9 million during the six months ended June 30, 2025.
Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2026 was $134 thousand primarily representing proceeds from the issuance of common stock from the exercise of stock options and under the stock purchase plan. Net cash provided by financing activities during the six months ended June 30, 2025 was $10 thousand primarily representing the issuance of common stock under the stock purchase plan.
Contractual Obligations
There have been no other material changes in our contractual obligations and commitments during the six months ended June 30, 2026 from those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations" in our Annual Report.
Critical Accounting Policies and Significant Judgments and Estimates
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our unaudited condensed 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 in our condensed 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 making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
For a complete discussion of our significant accounting policies and recent accounting pronouncements, see Note 2 to the unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q and Note 2 to the consolidated financial statements in our Annual Report. We believe that the following accounting policy is the most critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.
Research and Development Expenses
As part of the process of preparing our condensed consolidated financial statements, we are required to estimate our research and development expenses that are incurred as of each reporting period. This process involves reviewing open contracts and purchase orders, communicating with our personnel and with vendors to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.
We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. 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 will exceed the level of services provided and result in a prepayment of the research and development 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 our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
Emerging Growth Company and Smaller Reporting Company
As an emerging growth company (an "EGC") under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act, for EGCs include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements. Additionally, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an EGC. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. Therefore, the
reported results of operations contained in our condensed consolidated financial statements may not be directly comparable to those of other public companies.
We are also a "smaller reporting company" meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to an EGC, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Off-Balance Sheet Arrangements
As of June 30, 2026 and December 31, 2025, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
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