Freenome Inc.
11/12/2026 | Press release | Distributed by Public on 11/12/2026 16:29
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis of Freenome, Inc.'s ("Freenome," "we," "us" and "our") financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements as of September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025, and the related notes included elsewhere in this Quarterly Report on Form 10-Q. It should also be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2025, and the related notes, included in the proxy statement/prospectus filed with the SEC on June 17, 2026, and the other information contained in this Quarterly Report on Form 10-Q.
Forward-Looking Statements
The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, and is intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. These statements include, among others, statements regarding our strategy, plans, expectations, financial condition, operations, product development and commercialization, clinical and regulatory progress, reimbursement, collaborations and licensing arrangements, and future performance. Forward-looking statements are based on current assumptions and expectations, are not guarantees of future results, and are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of factors that could cause actual results to differ materially, see "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings. Forward-looking statements speak only as of the date made. Except as required by law, we undertake no obligation to update them.
Overview
We are an early cancer detection company developing blood-based screening tests that leverage artificial intelligence and machine learning ("AI/ML") to advance multi-cancer and, ultimately, multi-disease detection. We founded Freenome to develop an automated, scalable multiomics discovery platform that integrates biological insights with AI/ML to identify early signs of disease. Our platform is designed to evaluate and integrate multiple analytes, including DNA, RNA and proteins, using differentiated laboratory automation capabilities and clinical studies to develop tests intended to address the biological heterogeneity of cancer.
In July 2026, the U.S. Food and Drug Administration ("FDA") approved SimpleScreen™ CRC, our blood-based colorectal cancer ("CRC") screening test for adults 45 years of age and older at average risk. In August 2026, the FDA granted Breakthrough Device Designation to SimpleScreen Lung, our blood-based lung cancer screening test intended for adults ages 50 to 80 with a smoking history of at least 20 pack-years who are not participating in guideline-recommended lung cancer screening. Breakthrough Device Designation provides opportunities for interaction with the FDA and prioritized review of future regulatory submissions but does not constitute FDA marketing authorization.
On September 9, 2026, our clinical laboratory received accreditation from the College of American Pathologists ("CAP"). On September 30, 2026, Abbott Cancer Diagnostics commercially launched SimpleScreen CRC in the United States. On October 20, 2026, we launched SimpleScreen Lung as a laboratory-developed test ("LDT"). SimpleScreen Lung was clinically validated in a case-control study among adults meeting American Cancer Society ("ACS") lung cancer screening eligibility criteria. In an independent cohort of 172 lung cancer cases and 436 controls, the test achieved 85% sensitivity at 50% specificity and a 99.8% negative predictive value ("NPV"), meaning approximately two of every 1,000 people with a negative result would be expected to have lung cancer. Stage-specific sensitivity was 82% for stage I, 75% for stage II, 91% for stage III, and 94% for stage IV. SimpleScreen Lung has not been reviewed, cleared or approved by the FDA. The commercial availability of SimpleScreen Lung as an LDT does not constitute FDA clearance or approval. We plan to seek FDA approval for SimpleScreen Lung.
With the launch of SimpleScreen Lung, eligible patients may have access to screening for both lung cancer and CRC through a single blood draw, using two independently validated tests with indication-specific intended uses, as part of our Personalized Cancer Detection approach.
Prior to the approval of SimpleScreen CRC, we had no products approved for commercial sale in the United States and had not generated material revenue. We continue to incur significant research and development and other expenses. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful commercialization of SimpleScreen CRC and SimpleScreen Lung and the development of future tests.
The Business Combination
On December 5, 2025, Freenome Holdings, Inc. ("Legacy Freenome") entered into a Business Combination Agreement with Perceptive Capital Solutions Corp. ("PCSC"), a publicly traded special purpose acquisition company, and certain of its subsidiaries. On July 20, 2026, we completed the transactions contemplated by the Business Combination Agreement, as amended on July 20, 2026 (the "Business Combination" or the "Closing").
In connection with the Business Combination, PCSC domesticated from the Cayman Islands to the State of Delaware, changed its name to Freenome, Inc. ("New Freenome"), and adopted a new certificate of incorporation and bylaws. Through a series of merger transactions, Legacy Freenome became a wholly owned subsidiary of New Freenome.
Upon the Closing, the outstanding shares of our common stock and preferred stock were converted into an aggregate of 68,065,429 shares of New Freenome common stock based on the Exchange Ratio. In addition, outstanding options to purchase shares of our common stock were converted into options to purchase an aggregate of 8,272,601 shares of New Freenome common stock, with the number of underlying shares and exercise prices adjusted proportionally based on the Exchange Ratio. Our outstanding restricted stock units were converted into restricted stock units covering an aggregate of 4,034,512 shares of New Freenome common stock.
We also received aggregate gross proceeds of approximately $310.7 million, including $240.0 million of gross proceeds from a private investment in public equity ("PIPE") financing that closed concurrently with the Business Combination. After giving effect to transaction costs, we received net proceeds of approximately $295.5 million. Deferred offering costs previously recorded on the balance sheet were reclassified as a reduction of the proceeds from the de-SPAC transaction upon the Closing.
In connection with the Closing on July 20, 2026, the outstanding principal and accrued interest under the convertible promissory note issued to Roche Holdings, Inc. automatically converted into approximately 6,460,616 shares of New Freenome common stock at a conversion price of $12.00 per share.
On September 8, 2026, approximately $50.5 million of principal and accrued and unpaid interest under the convertible promissory note originally issued to Exact Sciences Corporation ("Exact"), which became a wholly owned subsidiary of Abbott Laboratories on March 23, 2026, automatically converted into approximately 3,364,814 shares of New Freenome common stock at a conversion price of $15.00 per share.
The Business Combination was accounted for as a reverse recapitalization, with the Company determined to be the accounting acquirer and PCSC treated as the acquired company for financial reporting purposes. Accordingly, the historical financial statements of the Company became the historical financial statements of New Freenome upon the Closing.
As a result of the Business Combination, we became the successor to an SEC-registered and Nasdaq-listed company. We have incurred and expect to continue to incur recurring expenses associated with operating as a public company, including directors' and officers' liability insurance, director compensation, and increased accounting, legal, compliance, administrative, personnel, audit, and other professional service costs.
Key Trends, Opportunities and Uncertainties
Since our inception, we have incurred significant operating losses and negative cash flows from our operations. Our primary uses of cash to date have been conducting R&D, acquiring Oncimmune in 2023, raising capital, building infrastructure, developing intellectual property, hiring personnel and providing general and administrative support for these operations. To date, we have funded our operations primarily through private placements of our convertible preferred stock, convertible notes and funds received pursuant to our license agreements. As of September 30, 2026, we had raised aggregate gross proceeds of approximately $1.6 billion from these financings, and had cash, cash equivalents and short-term marketable securities of $430.0 million.
We have incurred operating losses in each year since our inception. Our net losses were $72.5 million for the nine months ended September 30, 2026. As of September 30, 2026, we had an accumulated deficit of $1.4 billion. We expect our expenses and operating losses will increase as we:
•accelerate the development of our AI/ML-driven multiomics platform that seeks to identify the early biological signals of disease;
•expand our commercial and data infrastructure to support future launch of multiple blood-based cancer detection tests;
•further advance our R&D programs;
•seek to identify additional indications;
•expand commercial and operational personnel;
•maintain, expand, enforce, defend and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio; and
•seek regulatory approvals for any future product candidates for which we successfully complete clinical trials.
Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of regulatory approvals and R&D activities.
As of the date of this Quarterly Report, we do not believe that inflation has had a material effect on our business, financial condition, or results of operations. Given our early stage of operations, if our costs become subject to significant inflationary pressures, we may not fully offset such higher costs. Our inability or failure to do so could harm our business, financial condition, and results of operations.
Based on our current operating plan, we believe the cash, cash equivalents and short-term marketable securities available as of September 30, 2026, including the net proceeds from the July 20, 2026 Business Combination and the $100.0 million regulatory milestone payment received from Exact, now a wholly owned subsidiary of Abbott Laboratories, on September 22, 2026, will be sufficient to fund our operations into 2028. This estimate is based on assumptions that may prove to be incorrect, and we could use our capital resources sooner than expected. Accordingly, we may need to raise additional capital in the future through equity offerings, debt financings, collaborations, licensing arrangements or other strategic transactions. If additional funding is not available on acceptable terms, or at all, it could adversely affect our business, financial condition and ability to execute our long-term operating plans.
Abbott Laboratories, which acquired Exact, exclusively commercializes SimpleScreen CRC in the United States, and Freenome manufactures the test. We may incur manufacturing and other costs to fulfill our obligations under the commercial arrangement, and we continue to incur significant research and development and other operating expenses to advance our other products and product candidates. We receive milestone payments and expect to receive royalties under the arrangement. We expect to fund our cash needs through cash on hand, cash generated from operations, if any, and, as needed, equity offerings, debt financings or other capital sources, including collaborations, licenses, royalty financings and similar arrangements. We may be unable to raise additional funds or enter into such arrangements when needed on favorable terms or at all. If we are unable to do so, we may need to delay, limit, reduce or terminate product development or future commercialization efforts, or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves. See "Liquidity and Capital Resources".
Exact Sciences License Agreement
In August 2025, we entered into an exclusive license agreement with Exact for U.S. rights to our blood-based colorectal cancer screening test. Exact became a wholly owned subsidiary of Abbott Laboratories on March 23, 2026. The agreement provided for an upfront payment of $75.0 million, received in November 2025, as partial consideration for the rights and licenses granted. It also provides for up to $700.0 million in development milestone payments tied to specified regulatory and screening-guideline milestones, as well as royalties on product sales based on profitability. We earned a $100.0 million milestone upon FDA approval of SimpleScreen CRC in July 2026 and received payment on September 22, 2026. Exact committed to contribute $20.0 million annually for three years toward development costs under the agreed development plan. During the nine months ended September 30, 2026, we received a payment of $20.0 million from Exact, for research and development services performed during that period.
In August 2025, we entered into a Convertible Promissory Note Purchase Agreement with Exact. Under the agreement, we issued Exact a senior unsecured convertible promissory note with an aggregate principal amount of $50.0 million. The note accrues interest at 5% per annum and matures in August 2030. On September 8, 2026, approximately $50.5 million of principal and accrued interest automatically converted into 3,364,814 shares of Freenome, Inc. common stock at a conversion price of $15.00 per share.
Roche License Agreement
In November 2025, we entered into an exclusive license and option agreement with Roche Sequencing Solutions, Inc. ("Roche Sequencing"). The agreement grants Roche Sequencing (i) an exclusive option to obtain an exclusive, royalty-bearing, sublicensable (subject to certain restrictions) license under certain of our intellectual property rights to exploit kitted assays for cancer screening, including colorectal and lung cancer, outside the United States, and (ii) a preferred partner right to negotiate a definitive agreement to offer centralized testing services for cancer screening outside the United States. The agreement also provides for our evaluation of Roche's SBX sequencing platform (the "SBX Evaluation") and related research and development milestones.
We may receive up to $100.0 million in milestone payments, as well as royalties on non-U.S. test sales of Licensed Products ranging from the low single digits to the mid-teens, depending on sales. The agreement also provides for up to $24.0 million in aggregate SBX research and development milestone payments. On September 29, 2026, Roche Sequencing delivered the SBX instrument platform to us, triggering an $8.0 million milestone payment. We recorded an $8.0 million receivable as of September 30, 2026.
In November 2025, we also issued to Roche Holdings, Inc. ("Roche Holdings") a convertible promissory note with an aggregate principal amount of $75.0 million. The convertible promissory note bore interest at 5% per annum and had a maturity date in May 2027. In connection with the Closing on July 20, 2026, the outstanding principal and accrued interest under the note automatically converted into approximately 6,460,616 shares of New Freenome common stock at a conversion price of $12.00 per share.
Components of Results of Operations
Revenue
We recognize license and collaboration revenue in the United States under our exclusive license agreement with Exact, pursuant to which we granted exclusive commercialization rights, as well as development, data, and manufacturing and other licenses.
We also generate revenue from the sale and distribution of EarlyCDT Lung test kits in the United Kingdom and other international markets, royalties on EarlyCDT Lung tests performed, and the sale of EarlyCDT Lung test plates through our U.K.-based subsidiary, Freenome Ltd.
In addition, we generate revenue from diagnostic and research services performed using our proprietary multiomics platform under a Research Services Agreement with a related party.
Following FDA approval of SimpleScreen CRC in July 2026, the $100.0 million milestone under our agreement with Exact was earned and included in the transaction price. Exact paid the milestone on September 22, 2026. Based on the updated transaction price, we recognized approximately $182.5 million in revenue under the agreement during the three months ended September 30, 2026. This included $22.5 million cumulative catch-up adjustment to revenue recognized in the fourth quarter of 2025 and the six months ended June 30, 2026, and $2.5 million related to development services. For the nine months ended September 30, 2026, we collected $120.0 million in cash under the agreement and recognized $187.7 million in revenue. As of September 30, 2026, we had $11.4 million of contract assets under the agreement, which we expect to bill in future periods.
Operating Expenses
Cost of services
Cost of services reflects the aggregate costs incurred in delivering our products and services and is composed of material and service costs including personnel costs, cost of consumables, kits, contract maintenance, labor, and freight associated with the service and other revenue. Our cost of services will increase with commercialization of our products.
Research and Development Expenses
Research and Development ("R&D") has been, and will continue to be, central to our business model. Our R&D expenses to date have been primarily attributable to the development of our next-generation blood tests for early cancer detection, development of our multiomics platform, and clinical validation of our early colorectal cancer detection test. Our R&D expenses primarily include salaries and benefits, stock-based compensation expenses, direct research and development expenses (testing cost, pre-clinical and clinical trial costs including external R&D expenses incurred under arrangements with third parties), materials, laboratory supplies and equipment, information technology (including cloud computing and data storage, equipment and computer hardware costs, and software related expenses), facility costs (including rent, depreciation and amortization, repairs and maintenance and other facility related expenses), consulting, contractor costs, along with other expenses.
Payments, including non-refundable advance payments, made prior to the receipt of goods or services to be used in R&D activities are deferred and recognized as an expense in the period in which the related goods are received or services are rendered. Costs to develop our technology capabilities are recorded as R&D expenses unless they meet the criteria to be capitalized as internal-use software costs.
Prior to obtaining premarket regulatory approval for our diagnostic tests, we expensed pre-launch inventory costs as R&D expenses unless future economic benefits were considered probable. Accordingly, materials, equipment, and validation costs associated with our diagnostic workflow process that did not have an alternative future use were recognized as R&D expense.
In June 2026, in anticipation of FDA approval of our colorectal cancer screening test, we began capitalizing qualifying inventory costs associated with commercial production as we determined that future economic benefits associated with such costs were expected to be realized. As a result, we capitalized approximately $1.9 million of qualifying raw material costs as inventory. Costs incurred that do not qualify for capitalization, including costs for which no future economic benefit is expected, continue to be recognized as research and development expense.
We accrue and expense nonclinical study and clinical trial activities performed by third parties based on the actual work completed in accordance with agreements established with our service providers.
We have not historically tracked or recorded R&D expenses on a program-by-program basis and, therefore, have not reported program costs. We do not allocate indirect costs to specific product development programs because these costs support multiple programs and our technology platform and, as such, are not separately classified.
We expect our R&D expenses to continue to increase as we advance our technology platform, support additional product development activities, and conduct future clinical studies.
The timing and costs of our R&D activities remain uncertain and may vary significantly due to the inherently unpredictable nature of product development and clinical research. We expect to continue evaluating our development priorities and allocating resources among our programs based on nonclinical and clinical results, regulatory developments, and our ongoing assessment of each program's commercial potential.
Our future development costs may vary significantly based on various factors such as timely and successful completion of nonclinical studies and ongoing and future clinical trials, positive results from our current and future clinical trials, receipt of marketing approvals from applicable regulatory authorities, establishment and maintenance of arrangements with third parties, intellectual property updates and continued acceptable safety, tolerability and efficacy profile of any current and future product candidates that we may develop following approval.
Stock-based compensation expense included in R&D was $11.0 million and $13.6 million for the three and nine months ended September 30, 2026, respectively. Of the $11.0 million recognized for the three months ended September 30, 2026, $9.9 million related to converted RSUs for which the service conditions had been satisfied as of September 30, 2026. Incremental stock-based compensation expense in research and development related to the October 2025 option repricing was $0.2 million and $0.6 million for the three and nine months ended September 30, 2026, respectively.
General and Administrative Expenses
Our general and administrative ("G&A") expenses primarily consist of costs for our executive, accounting and finance, legal, human resources, marketing, and other administrative support functions. These expenses consist principally of personnel costs, including salaries, bonuses, fringe benefits, stock-based compensation expenses, and travel expenses, as well as professional services fees such as consulting, audit, tax, and legal fees, and general corporate costs and allocated overhead expenses.
We expect our general and administrative expenses to increase in future periods as we support the growth of our business, commercialize SimpleScreen CRC, expand our infrastructure and pursue commercialization of additional diagnostic test candidates, if approved. As a public company, we also expect to continue incurring expenses for accounting, audit, legal, regulatory and tax services; Nasdaq and SEC compliance; directors' and officers' insurance; investor relations; and other public-company requirements.
Stock-based compensation expense included in G&A expenses was $30.9 million and $34.0 million for the three and nine months ended September 30, 2026, respectively. Of the $30.9 million recognized for the three-month period, $29.8 million related to converted RSUs for which the service conditions had been satisfied as of September 30, 2026. The October 2025 option repricing resulted in incremental stock-based compensation expense included in general and administrative expenses of $0.3 million and $0.7 million for the three and nine months ended September 30, 2026, respectively.
Other Income (Expense), Net
Other income (expense), net, consists of interest and investment income, interest expense on our convertible notes, and losses from the fair value remeasurement of the Exact Convertible Note. For the three and nine months ended September 30, 2026, the remeasurement losses were $11.6 million and $11.7 million, respectively, and were recognized before the note converted on September 8, 2026.
Comparison of the Three and Nine Months Ended September 30, 2026 and 2025
The following table summarizes the results of our operations for the periods indicated (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| License and collaboration revenue | $ | 182,547 | $ | - | $ | 187,702 | $ | - | |||||||||||||||
| Service and other revenue | 942 | 1,035 | 2,283 | 2,530 | |||||||||||||||||||
| Total revenue | 183,489 | 1,035 | 189,985 | 2,530 | |||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Cost of services | $ | 478 | 611 | 1,415 | 1,494 | ||||||||||||||||||
|
Research and development
|
68,417 | 50,627 | 174,804 | 145,486 | |||||||||||||||||||
|
General and administrative
|
44,628 | 15,055 | 71,252 | 41,070 | |||||||||||||||||||
|
Total operating costs and expenses
|
113,523 | 66,293 | 247,471 | 188,050 | |||||||||||||||||||
| Income (loss) from operations | 69,966 | (65,258) | (57,486) | (185,520) | |||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||
|
Interest and investment income
|
$ | 2,969 | 1,420 | 5,698 | 5,137 | ||||||||||||||||||
| Interest expense | (1,188) | (644) | (8,951) | (646) | |||||||||||||||||||
| Convertible note remeasurement loss | (11,631) | - | (11,731) | - | |||||||||||||||||||
|
Other income (expense), net
|
(6) | 13 | (8) | (45) | |||||||||||||||||||
|
Net income (loss)
|
$ | 60,110 | $ | (64,469) | $ | (72,478) | $ | (181,074) | |||||||||||||||
Revenue
The following table summarizes our revenues for the following periods (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||
| License and collaboration revenue | $ | 182,547 | $ | - | $ | 182,547 | $ | 187,702 | $ | - | $ | 187,702 | |||||||||||||||||||||||
| Service and other revenue | 942 | 1,035 | (93) | 2,283 | 2,530 | (247) | |||||||||||||||||||||||||||||
| Total revenue | $ | 183,489 | $ | 1,035 | $ | 182,454 | $ | 189,985 | $ | 2,530 | $ | 187,455 | |||||||||||||||||||||||
License and collaboration revenue was $182.5 million for the three months ended September 30, 2026, compared with no revenue for the same period in 2025. The increase was primarily driven by $180.0 million of revenue recognized under our collaboration agreement with Exact following FDA approval of SimpleScreen CRC in July 2026. The approval triggered the effectiveness of the exclusive commercialization license and transfer of control of the license to Exact, resolving the constraint on the $100.0 million FDA approval milestone. The milestone was included in the transaction price and allocated to the performance obligations under the Exact License Agreement using the relative stand-alone selling price methodology applied at contract inception. This resulted in $157.5 million of revenue related to the exclusive commercialization license and a $22.5 million cumulative catch-up adjustment related to intellectual property licenses and development cost reimbursements. The remaining $2.5 million of revenue related to research and development services performed during the quarter. Revenue recognized upon FDA approval relates to a discrete event; future revenue under the agreement will depend on the achievement of additional development and regulatory milestones and reimbursement of development costs. See Note 6 to our condensed consolidated financial statements for additional details.
Service and other revenue decreased by $0.1 million to $0.9 million for the three months ended September 30, 2026, from $1.0 million for the same period in 2025. The decrease was primarily due to diagnostic and research services performed under a research and service agreement with Roche, which generated $0.3 million of revenue in the three months ended September 30, 2025 and none in 2026. Revenue for the three months ended September 30, 2026 included $0.5 million of royalties on EarlyCDT Lung tests performed,
$0.3 million from the sale and distribution of EarlyCDT Lung test kits in the United Kingdom and other international markets, and $0.1 million from the sale of EarlyCDT Lung test plates.
License and collaboration revenue was $187.7 million for the nine months ended September 30, 2026, compared with no revenue for the same period in 2025. The increase was primarily driven by $180.0 million of revenue recognized under our collaboration agreement with Exact following FDA approval of SimpleScreen CRC in July 2026. The approval triggered the effectiveness of the exclusive commercialization license and transfer of control of the license to Exact, resolving the constraint on the $100.0 million FDA approval milestone. The milestone was included in the transaction price and allocated to the performance obligations under the Exact Sciences License Agreement using the relative stand-alone selling price methodology applied at contract inception. This resulted in $157.5 million of revenue related to the exclusive commercialization license and a $22.5 million cumulative catch-up adjustment related to intellectual property licenses and development cost reimbursements. The remaining $7.7 million of revenue related to research and development services performed under the agreement, of which $2.5 million was recognized in the third quarter and $5.2 million in the first half of 2026. See Note 6 to our condensed consolidated financial statements for additional details.
Service and other revenue decreased by $0.2 million to $2.3 million for the nine months ended September 30, 2026, from $2.5 million for the same period in 2025. The decrease was primarily due to diagnostic and research services performed under a research and service agreement with Roche Sequencing, which generated $0.3 million of revenue in the nine months ended September 30, 2025 and none in 2026. Revenue for the nine months ended September 30, 2026 included $1.3 million of royalties on EarlyCDT Lung tests performed, $0.8 million from the sale and distribution of EarlyCDT Lung test kits in the United Kingdom and other international markets, and $0.2 million from the sale of EarlyCDT Lung test plates.
Cost of services
The following table summarizes our cost of services for the following periods (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Cost of services | $ | 478 | $ | 611 | $ | (133) | $ | 1,415 | $ | 1,494 | $ | (79) | |||||||||||||||||||||||
The decrease in cost of services for the three and nine months ended September 30, 2026, compared with the corresponding periods in 2025, was not material. As we expand commercial activities, we expect cost of services to increase as we incur and recognize costs associated with commercial products and testing.
Research and Development Expenses
The following table summarizes our research and development expenses for the following periods (in thousands):
| Three Months Ended September 30, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Salaries and benefits | $ | 18,147 | $ | 18,073 | $ | 74 | - | % | |||||||||||||||
| Facility, depreciation and amortization | 18,293 | 15,591 | 2,702 | 17 | % | ||||||||||||||||||
| Materials, laboratory supplies and equipment | 9,715 | 9,232 | 483 | 5 | % | ||||||||||||||||||
| Information technology | 4,216 | 2,687 | 1,529 | 57 | % | ||||||||||||||||||
| Direct research and development costs | 5,595 | 2,587 | 3,008 | 116 | % | ||||||||||||||||||
| Stock-based compensation | 11,023 | 1,326 | 9,697 | 731 | % | ||||||||||||||||||
| Consulting and contractor | 1,151 | 878 | 273 | 31 | % | ||||||||||||||||||
| Other | 277 | 253 | 24 | 9 | % | ||||||||||||||||||
| Total | $ | 68,417 | $ | 50,627 | $ | 17,790 | 35 | % | |||||||||||||||
Research and development expenses increased by $17.8 million, from $50.6 million for the three months ended September 30, 2025, to $68.4 million for the three months ended September 30, 2026.
The increase was primarily attributable to:
•$9.8 million increase in personnel-related expenses, including salaries, benefits, and stock-based compensation, primarily due to $9.9 million of stock-based compensation expense related to converted RSUs for which the service conditions had been satisfied as of September 30, 2026. This increase was partially offset by decreases in other personnel-related expenses;
•$3.0 million increase in direct research and development costs, primarily due to $3.4 million of expense for free sample cohorts received from Roche, partially offset by decreases in other individually immaterial costs.
•$2.7 million increase in facilities, depreciation, and amortization expenses, primarily due to higher amortization of leasehold improvements associated with our headquarters and laboratory facilities. This increase was partially offset by a reduction in other facilities-related costs;
•$1.5 million increase in information technology-related expenses, including software, cloud-computing, and data-storage costs;
•$0.5 million increase in materials, laboratory supplies, and equipment expenses, primarily due to increased raw material purchases following the commencement of Early Access Program ("EAP") testing in early 2026 to operationalize the end-to-end commercial workflow for the CRC test, as well as increased spending on development projects; and
•$0.3 million increase in consulting and contractor expenses and other expenses.
The following table summarizes our research and development expenses for the following periods (in thousands):
| Nine Months Ended September 30, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Salaries and benefits | $ | 54,763 | $ | 53,497 | $ | 1,266 | 2 | % | |||||||||||||||
| Facility, depreciation and amortization | 57,117 | 47,036 | 10,081 | 21 | % | ||||||||||||||||||
| Materials, laboratory supplies and equipment | 25,433 | 18,909 | 6,524 | 35 | % | ||||||||||||||||||
| Information technology | 10,125 | 8,655 | 1,470 | 17 | % | ||||||||||||||||||
| Direct research and development costs | 9,708 | 9,298 | 410 | 4 | % | ||||||||||||||||||
| Stock-based compensation | 13,599 | 4,027 | 9,572 | 238 | % | ||||||||||||||||||
| Consulting and contractor | 3,206 | 3,130 | 76 | 2 | % | ||||||||||||||||||
| Other | 853 | 934 | (81) | (9) | % | ||||||||||||||||||
| Total | $ | 174,804 | $ | 145,486 | $ | 29,318 | 20 | % | |||||||||||||||
Research and development expenses increased by $29.3 million, from $145.5 million for the nine months ended September 30, 2025, to $174.8 million for the nine months ended September 30, 2026.
The increase was primarily attributable to:
•$10.8 million increase in personnel-related expenses, including salaries, benefits, and stock-based compensation, primarily due to $9.9 million of stock-based compensation expense related to converted restricted stock units ("RSUs") for which the service conditions had been satisfied as of September 30, 2026. This increase was partially offset by decreases in other personnel-related expenses;
•$10.1 million increase in facilities, depreciation, and amortization expenses, primarily due to higher amortization of leasehold improvements associated with our headquarters and laboratory facilities. This increase was partially offset by a reduction in other facilities-related costs;
•$6.5 million increase in materials, laboratory supplies, and equipment expenses, primarily due to increased raw material purchases following the commencement of EAP testing in early 2026 to operationalize the end-to-end commercial workflow for the CRC test, as well as increased spending on development projects;
•$1.5 million increase in information technology-related expenses, including software, cloud-computing, and data-storage costs; and
•$0.4 million increase in direct research and development costs, primarily due to $3.4 million of expense for free sample cohorts received from Roche, partially offset by lower clinical trial costs.
The increase was partially offset by:
•$0.1 million decrease in other expenses.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the following periods (in thousands):
| Three Months Ended September 30, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Salaries and benefits | $ | 7,038 | $ | 6,400 | $ | 638 | 10 | % | |||||||||||||||
| Consulting and contractor | 4,025 | 5,169 | (1,144) | (22) | % | ||||||||||||||||||
| Stock-based compensation | 30,921 | 1,505 | 29,416 | 1,955 | % | ||||||||||||||||||
| Information technology | 1,538 | 1,144 | 394 | 34 | % | ||||||||||||||||||
| Facility, depreciation and amortization | 431 | 401 | 30 | 7 | % | ||||||||||||||||||
| Other | 675 | 436 | 239 | 55 | % | ||||||||||||||||||
| Total | $ | 44,628 | $ | 15,055 | $ | 29,573 | 196 | % | |||||||||||||||
G&A expenses increased by $29.6 million, from $15.1 million for the three months ended September 30, 2025, to $44.6 million for the three months ended September 30, 2026.
The increase in G&A expenses was primarily attributable to:
•$30.1 million increase in personnel-related expenses, including salaries, benefits, and stock-based compensation, primarily due to $29.8 million of stock-based compensation expense related to converted RSUs for which the service conditions had been satisfied as of September 30, 2026;
•$0.4 million increase in information technology-related expenses; and
•$0.2 million increase in other expenses.
The increase was partially offset by:
•$1.1 million decrease in consulting and contractor expenses.
The following table summarizes our general and administrative expenses for the following periods (in thousands):
| Nine Months Ended September 30, | Change | Change | |||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Salaries and benefits | $ | 19,649 | $ | 19,103 | $ | 546 | 3 | % | |||||||||||||||
| Consulting and contractor | 9,950 | 12,112 | (2,162) | (18) | % | ||||||||||||||||||
| Stock-based compensation | 33,982 | 3,818 | 30,164 | 790 | % | ||||||||||||||||||
| Information technology | 4,406 | 3,280 | 1,126 | 34 | % | ||||||||||||||||||
| Facility, depreciation and amortization | 1,743 | 1,607 | 136 | 8 | % | ||||||||||||||||||
| Other | 1,522 | 1,150 | 372 | 32 | % | ||||||||||||||||||
| Total | $ | 71,252 | $ | 41,070 | $ | 30,182 | 73 | % | |||||||||||||||
G&A expenses increased by $30.2 million, from $41.1 million for the nine months ended September 30, 2025, to $71.3 million for the nine months ended September 30, 2026.
The increase in G&A expenses was primarily attributable to:
•$30.7 million increase in personnel-related expenses, including salaries, benefits, and stock-based compensation, primarily due to $29.8 million of stock-based compensation expense related to converted RSUs for which the service conditions had been satisfied as of September 30, 2026;
•$1.1 million increase in information technology-related expenses;
•$0.4 million increase in other expenses; and
•$0.1 million increase in facilities, depreciation, and amortization expenses, primarily due to higher amortization of leasehold improvements associated with our headquarters and laboratory facilities, partially offset by a reduction in other facilities-related costs.
The increase was partially offset by:
•$2.2 million decrease in consulting and contractor expenses.
Other income (expense), net
The following table summarizes our other income (expense), net, for the following periods (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||||||||||||||
|
Interest and investment income
|
$ | 2,969 | $ | 1,420 | $ | 1,549 | $ | 5,698 | $ | 5,137 | $ | 561 | |||||||||||||||||||||||
| Interest expense | (1,188) | (644) | (544) | (8,951) | (646) | (8,305) | |||||||||||||||||||||||||||||
| Convertible note remeasurement loss | (11,631) | - | (11,631) | (11,731) | - | (11,731) | |||||||||||||||||||||||||||||
|
Other income (expense), net
|
(6) | 13 | (19) | (8) | (45) | 37 | |||||||||||||||||||||||||||||
| Total other income (expense), net | $ | (9,856) | $ | 789 | $ | (10,645) | $ | (14,992) | $ | 4,446 | $ | (19,438) | |||||||||||||||||||||||
Interest and Investment Income, Net
Interest and investment income, net, increased by $1.5 million, from $1.4 million for the three months ended September 30, 2025, to $3.0 million for the three months ended September 30, 2026. Interest and investment income, net, increased by $0.6 million, from $5.1 million for the nine months ended September 30, 2025, to $5.7 million for the nine months ended September 30, 2026. The increases were primarily attributable to higher interest income resulting from increased balances of cash, cash equivalents, and marketable securities related to proceeds from the Business Combination and PIPE Financing.
Interest expense
Interest expense increased by $0.5 million to $1.2 million for the three months ended September 30, 2026, and by $8.3 million to $9.0 million for the nine months ended September 30, 2026, compared with $0.6 million in each prior-year period. The nine-month increase was primarily due to $7.7 million of non-cash interest expense and amortization of debt issuance costs. Interest expense on the Roche Convertible Note, which converted at the July 20, 2026 closing, was $0.8 million for the three months and $7.3 million for the nine months, including $2.1 million of coupon interest. Interest expense also included interest accrued on the Exact convertible note before its September 8, 2026 conversion. Neither note was outstanding at September 30, 2026.
Loss on remeasurement of convertible note
We recorded a non-cash loss on remeasurement of the convertible note of $11.6 million and $11.7 million for the three and nine months ended September 30, 2026 related to change in fair value of the Exact convertible note before its conversion on September 8, 2026.
Cash Flows
Comparison of the Nine Months Ended September 30, 2026 and 2025
The following table summarizes our cash flows during the periods indicated (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||
| 2026 | 2025 | $ | |||||||||||||||
| Net cash flows used in operating activities | $ | (58,696) | $ | (141,682) | $ | 82,986 | |||||||||||
| Net cash flows (used in) provided by investing activities | (124,521) | 107,041 | (231,562) | ||||||||||||||
| Net cash flows provided by financing activities | 285,499 | 41,537 | 243,962 | ||||||||||||||
Operating Activities
For the nine months ended September 30, 2026, net cash used in operating activities was $58.7 million, primarily attributable to our net loss of $72.5 million and $70.7 million of net cash used by changes in operating assets and liabilities, partially offset by net non-cash adjustments of $84.5 million. Non-cash adjustments primarily included stock-based compensation expense of $47.6 million, depreciation and amortization of $18.3 million, a loss on remeasurement of the convertible note of $11.7 million, non-cash interest expense and amortization of debt issuance costs of $7.7 million, and non-cash lease expense of $1.9 million, partially offset by net accretion and amortization of investments in marketable securities of $2.7 million. The $70.7 million of net cash used by changes in operating assets and liabilities primarily reflected a decrease of $31.7 million in deferred revenue, a decrease of $13.4 million in other long-term liabilities, an increase of $11.8 million in prepaid expenses and other current assets, an increase of $7.5 million in accounts receivable (including an $8.0 million receivable for the SBX platform delivery milestone from Roche), a decrease of $7.5 million in operating lease liabilities, and an increase of $1.9 million in inventory, partially offset by an increase of $4.0 million in accounts payable.
For the nine months ended September 30, 2025, net cash used in operating activities was $141.7 million, primarily attributable to our net loss of $181.1 million, partially offset by non-cash charges of $26.3 million and $13.1 million of net cash provided by changes in operating assets and liabilities. Non-cash charges primarily included depreciation and amortization of $18.1 million, stock-based compensation expense of $7.8 million, and non-cash lease expense of $3.4 million, partially offset by net accretion and amortization of investments in marketable securities of $3.1 million. The $13.1 million of net cash provided by changes in operating assets and liabilities primarily reflected increases of $8.4 million in deferred revenue, $4.9 million in operating lease liabilities, $1.3 million in accounts payable, and $1.0 million in accrued expenses and other current liabilities, partially offset by a decrease of $2.1 million in accrued compensation and other related benefits and an increase of $0.8 million in prepaid expenses and other current assets.
Investing Activities
Net cash used in investing activities was $124.5 million during the nine months ended September 30, 2026, and consisted of net purchases of marketable securities of $109.3 million ($271.6 million of purchases, partially offset by $162.3 million of proceeds from maturities) and $15.2 million used for the purchase of property and equipment.
Net cash provided by investing activities was $107.0 million during the nine months ended September 30, 2025, and consisted primarily of net proceeds from the maturity and purchase of marketable securities of $127.4 million, offset by $20.3 million used for the purchase of property and equipment.
Financing Activities
Net cash provided by financing activities was $285.5 million during the nine months ended September 30, 2026 and consisted primarily of $295.5 million of proceeds from the issuance of common stock upon the Business Combination and PIPE Financing, partially offset by $8.9 million of payments of transaction costs related to the Business Combination and $1.1 million of payments for taxes on the net settlement of equity awards.
Net cash provided by financing activities was $41.5 million during the nine months ended September 30, 2025 and consisted primarily of proceeds from the issuance of a convertible note to Exact.
Liquidity and Capital Resources
Sources of Liquidity
We have historically financed our operations primarily through the sale of equity securities and the issuance of convertible notes and, to a lesser extent, upfront payments received under licensing arrangements. As of September 30, 2026, we had cash, cash equivalents, and marketable securities of $430.0 million, including cash and cash equivalents of $180.4 million. In connection with the July 20, 2026 closing, approximately $77.5 million of principal and accrued interest outstanding under the Roche Convertible Note automatically converted into shares of Freenome, Inc. common stock. On September 8, 2026, approximately $50.5 million of principal and accrued and unpaid interest under the convertible promissory note originally issued to Exact automatically converted into 3,364,814 shares of Freenome, Inc. common stock at a conversion price of $15.00 per share. Following these conversions, neither of those convertible notes remained outstanding.
Since our inception, we have incurred significant operating losses and negative cash flows from operations. During the nine months ended September 30, 2026, we incurred a net loss of $72.5 million, used $58.7 million of cash in operating activities, and had an accumulated deficit of $1.4 billion.
Since inception, we have received aggregate gross proceeds of approximately $1.6 billion from the sale of convertible preferred stock in private placements, the issuance of convertible notes, and upfront payments and cost-sharing arrangements under our strategic collaborations. As described above, upon closing of the Business Combination, we received aggregate gross proceeds of $310.7 million, including $240.0 million in gross proceeds from a PIPE financing. After giving effect to transaction costs, New Freenome received net proceeds of approximately $295.5 million.
In August 2025, we entered into an exclusive license agreement with Exact, which became a wholly owned subsidiary of Abbott Laboratories in March 2026, to advance commercialization of our blood-based colorectal cancer screening test. Under the agreement, we received a $75.0 million upfront payment as partial consideration for the rights and licenses granted. We may also receive up to $700.0 million in specified development and regulatory milestone payments. In July 2026, following FDA approval of SimpleScreen CRC, we earned a $100.0 million milestone payment, which we received on September 22, 2026. In addition, Exact is obligated to reimburse us for up to $20.0 million per year of mutually agreed development costs over a three-year period.
Under the Roche License and Option Agreement, we are eligible to receive up to $100.0 million in milestone payments and tiered royalties on non-U.S. test sales, ranging from the low single digits to the mid-teens, depending on sales levels. The agreement also provides for up to $24.0 million in aggregate milestone payments in connection with the SBX Evaluation, consisting of three milestones of $8.0 million each. Roche delivered the SBX platform on September 29, 2026, which triggered the first $8.0 million milestone, payable within 30 days of delivery. As of September 30, 2026, we recorded an $8.0 million receivable from Roche, a related party, and a corresponding contract liability. We have not recognized revenue on this milestone.
Future Funding Requirements
As of September 30, 2026, we had cash, cash equivalents, and short-term marketable securities of $430.0 million. Based on our current operating plan, we believe these balances, together with expected cash receipts not already included in them, will be sufficient to fund our operations into 2028. This estimate is a forward-looking statement that involves risks and uncertainties, and actual results could differ materially. In addition, the process of commercializing our approved products, conducting nonclinical studies and clinical trials, and developing future product candidates is costly, and the timing and extent of related expenditures are uncertain. Accordingly, we may need to raise additional capital in the future.
Our future capital requirements will depend on many factors, including:
•the type, number, scope, progress, timing, results, and costs of our discovery activities, nonclinical studies, and clinical trials for our current and future products and product candidates;
•the costs, timing, and outcome of regulatory review of our current and future product pipeline;
•the timing and terms of establishing and maintaining license, collaboration, and other strategic arrangements;
•the costs of obtaining, maintaining, defending, and enforcing our patents and other intellectual property rights;
•our efforts to enhance our operational infrastructure and hire additional personnel to support our obligations as a public company;
•the costs associated with expanding our workforce and engaging consultants as our development and commercialization activities increase;
•the costs and timing of establishing or expanding sales and marketing capabilities for approved products;
•our ability to achieve market acceptance, obtain coverage and adequate reimbursement from third-party payers, and generate sufficient market share and revenue from approved products; and
•the costs associated with acquiring or licensing additional products, technologies, or intellectual property.
Although we have completed the Business Combination and received the related proceeds, and our SimpleScreen CRC test has received FDA approval, we expect to continue to require substantial capital to support the commercialization of our approved product, advance our research and development programs, pursue additional regulatory approvals, expand our commercial infrastructure, and fund our operations. We may seek to finance our future cash needs through equity offerings, debt financings, or other capital sources, including license agreements, royalty financings, collaborations, and other strategic arrangements.
However, we may be unable to raise additional funds or enter into such arrangements when needed on favorable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders may be diluted, and the terms of these securities could include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt and equity financings, if available, may also involve agreements that include covenants restricting our ability to incur additional indebtedness, make capital expenditures, or take other actions.
If we raise additional capital through license agreements, collaborations, or other strategic arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs, approved products, or future product candidates, or grant licenses on terms that may not be favorable to us. Our inability to obtain additional funding or enter into such arrangements when needed could adversely affect our financial condition and our ability to execute our business strategy. If additional capital is unavailable when required, we may be forced to delay, limit, or reduce investments in commercialization activities, research and development programs, or future product development initiatives.
Contractual Obligations and Commitments
Convertible Notes
The $50.0 million convertible promissory note originally issued to Exact, now a wholly owned subsidiary of Abbott Laboratories, automatically converted on September 8, 2026. Approximately $50.5 million of principal and accrued and unpaid interest converted into 3,364,814 shares of Freenome, Inc. common stock at a conversion price of $15.00 per share.
The $75.0 million convertible promissory note issued to Roche Holdings automatically converted in connection with the July 20, 2026 closing into 6,460,616 shares of Freenome, Inc. common stock at a conversion price of $12.00 per share.
Leases
Our lease portfolio consists primarily of operating leases for our current corporate headquarters, laboratory facilities, and warehouse facilities, with lease terms ranging from 1 to 11 years. Under the terms of the leases, as of September 30, 2026, our lease obligations consist of $311.9 million in payments through March 31, 2035.
Purchase Commitments
As of September 30, 2026, we have entered into a non-cancellable cloud services agreement and committed to purchase cloud computing services totaling $119.1 million through January 31, 2029.
Our other non-cancellable unconditional purchase commitments with a remaining term over one year were $9.0 million as of September 30, 2026.
License and Collaboration Agreements
See Notes 6 and 7 to the accompanying unaudited condensed consolidated financial statements for a detailed description of our license and collaboration agreements.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which are prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and judgments on an ongoing basis. 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. Our actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies," to our audited consolidated financial statements and related notes included in the proxy statement/prospectus filed with the SEC on June 17, 2026, and in Note 1, "Organization and Business," to our unaudited condensed consolidated financial statements included in our Current Report on Form 8-K/A filed on August 13, 2026. Except as described below, during the three and nine months ended September 30, 2026, there were no material changes to our critical accounting policies and estimates from those disclosed in our most recent filing.
Prior to regulatory approval, we expensed pre-launch inventory costs as research and development expense. Beginning in June 2026, in anticipation of FDA approval of SimpleScreen CRC, we began capitalizing the purchase price of reagents used in commercial testing, as we determined that regulatory approval and future economic benefits were probable. The FDA approved SimpleScreen CRC in July 2026. Reagent costs incurred before June 2026 were expensed as research and development and have not been capitalized. Capitalized inventory is expensed to cost of goods sold when the related test is performed. See Note 2 to our condensed consolidated financial statements.
Recent Accounting Pronouncements
See Note 1, Organization and Summary of Significant Accounting Policies, to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
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