CGEM 10-K & 10-Q changes, risk factors and insider trading

Additionally, some of the clinical trials we conduct areare, and in the future may bebe, open-label in trial design and may be conducted at a limited number of clinical sites on a limited number of patients. An “open-label” clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect, as investigators and patients in open-label clinical trials are aware when theypatients are receiving treatment. Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. Moreover, patients selected for early clinical studies often include the most severe sufferers and their symptoms may have been bound to improve notwithstanding the new treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge. Because some of our clinical trials are open-label in clinical trial design, the results from these clinical trials may not be predictive of future clinical trial results with this or other product candidates for which we conduct an open-label clinical trial when studied in a controlled environment with a placebo or active control.

We may encounter substantial delays in preclinical studies and clinical trials or may not be able to conduct or complete preclinical studies or clinical trials on the expected timelines, if at all.

we or our investigators might have to suspend or terminate clinical trials of our product candidates for various reasons, including non-compliance with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristicscharacteristics, or a finding that the participants are being exposed to unacceptable health risks;

We are early in our development effortsefforts, with the exception of zipalertinib, and are substantially dependent on our lead product candidates. If we are unable to advance these or any of our other current and future product candidates through clinical development, or to obtain regulatory approval and ultimately commercialize any such product candidates, either by ourselves or with or by third parties or if we experience significant delays in doing so, our business may be materially harmed.

We are early in our development efforts.efforts with the exception of zipalertinib. We are developing CLN-978, our lead product candidate,CLN-978 for patients with autoimmune diseases through an ongoing Phase 1 clinical trial in patients with moderate-to-severe SLE in the U.S., Europe, and AustraliaAustralia, andan plan to initiate a company-sponsoredongoing Phase 1 clinical trial in patients with active, difficult-to-treat RA in Europe.Europe, Ourand leadan unpartnered oncology product candidate, CLN-619, is in aongoing Phase 1 clinical trial.trial in patients with active, moderate SjD in the U.S. and Europe. In collaboration with ouran partnersaffiliate atof Taiho Pharmaceutical Co., Ltd (“Taiho”), we are evaluating zipalertinib in athe pivotal Phase 2b portion of the REZILIENT1 clinical trial in patients with EGFRex20EGFR ex20ins non-small cell lung cancer ("NSCLC") who progressed after prior systemic therapy,therapy. andIn February 2026, Taiho completed a rolling submission of a new drug application (“NDA”) seeking accelerated approval of zipalertinib for the treatment of patients with relapsed EGFR ex20ins NSCLC. Taiho is also evaluating zipalertinib in a global Phase 3 clinical trial in combination with chemotherapy as a potential first-line treatment for EGFRex20EGFR ex20ins NSCLC adult patients.patients and in a Phase 2 parallel cohort trial. Additionally, our other product candidates, CLN-049 and CLN-617, are eachis in an ongoing Phase 1 clinical trials.trial in patients with relapsed or refractory acute myeloid leukemia or myelodysplastic syndrome. Our ability to generate product revenues, which we do not expect will occur for years, if ever, and our ability to generate collaboration revenue will depend heavily on the successful clinical development and eventual commercialization of our current and future product candidates, if approved. The success of our current and future product candidates will depend on several factors, including the following:

Although we believe our product candidates and programs are uncorrelated, negative results in the development process of one product candidate could impact other product candidates or programs. In autoimmune diseases, our product candidates may demonstrate different safety and or efficacy in each of the different diseases we plan on evaluating in our clinical trials. For each of our oncology product candidates, antitumor activity may be different in each of the different tumor types or patient populations we plan on evaluating in our clinical trials. Even as we build clinical experience with our product candidates, we may need to further discuss or meet with the FDA and other comparable foreign regulatory authorities to agree on the optimal patient population, clinical trial design, and size for each clinical trial in order to obtain regulatory approval, any of which may require significant additional resources and delay the timing of our clinical trials and ultimately the approval, if any, of any of our product candidates.

Difficulty in enrolling patients has delayed, and in the future could delay or preventprevent, clinical trials of our product candidates and ultimately delay or prevent regulatory approval.

Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of completion of our clinical trials depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and we have experienced delays related to enrollment in the past and may experience delays in the future in our clinical trials if we encounter difficulties in enrollment. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll enough eligible patients to participate in these clinical trials as required by the FDA or similar regulatory authorities outside the U.S., or as needed to provide appropriate statistical power for a given clinical trial. For example, in early phase autoimmune disease development, identification of patients with appropriate disease severity and/or willingness to accept the potential risks associated with a novel approach to treating their disease could impair enrollment. Similarly, because we are focused on patients with specific genetic mutations for the development of zipalertinib, our ability to enroll eligible patients may be limited or enrollment may be slower than we anticipate due to the small eligible patient population.

In addition to the potentially small populations, the eligibility criteria of our planned clinical trials for some of our product candidates will further limit the pool of available clinical trial participants as we require that patients have specific characteristics, such as a certain severity or stage of disease progression, to include them in a clinical trial. Additionally,For example, in the processongoing ofPhase finding eligible patients may prove costly. We also may not be able to identify, recruit, and enroll a sufficient number of patients to complete our clinical studies because of the perceived risks and benefits of the product candidate under clinical trial, the availability and efficacy of competing therapies and clinical trials, the proximity and availability of1 clinical trial sites for prospectiveCLN-978 patients, the availability ofin patients with appropriatemoderate diseaseto severitysevere and extent of prior therapySLE in autoimmunethe diseaseU.S., indications,we experienced more screening failures than anticipated due to our initial eligibility criteria, which led to a delay in enrollment in the availabilityclinical of genetic sequencing information for patient tumors so that we can identify patients with the targeted genetic mutations for our oncology studies, and the patient referral practices of physicians. If patients are unwilling to participate in our studies for any reason, the timeline for recruiting patients, conducting studies, and obtaining regulatory approval of potential products may be delayed.trial.

From time to time, we may publicly disclose preliminary or topline data from our preclinical studies and clinical trials, which are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. For example, in April 2024, we announced the expansion of the development of CLN-978 in autoimmune diseases based on the treatment of three patients in a Phase 1 dose escalation trial of CLN-978 in patients with relapsed/refractory B cell non-Hodgkin lymphoma (“B-NHL”). Results from our ongoing Phase 1b1 clinical trials of CLN-978 in systemicpatients lupuswith erythematosusSLE, RA, and SjD or other future trials may differ from the results of our prior Phase 1 trial in CLN-978 in relapsed/refractory B-NHL. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. From time to time, we may also disclose interim data from our clinical trials. Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment and treatment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects and our ability to obtain approval for, and commercialize, our product candidates may be harmed. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our common stock.

EachOur ofclinical ourstage product candidates CLN-978, CLN-049, and zipalertinib have INDs which are currently in effect. However, we may not be able to file future INDs or similar regulatory submissions for our other product candidates on the timelines we expect. Additionally, we may experience manufacturing delays or other delays with IND-enabling studies, or the FDA or other comparable regulatory authorities may require additional preclinical studies that we did not anticipate. Moreover, we cannot be sure that submission of an IND or similar regulatory submissions will result in the FDA or other comparable regulatory authority allowing clinical trials to begin, or that, once begun, issues will not arise that result in a decision by us, by IRBs or independent ethics committees, or by the FDA or other comparable regulatory authorities to suspend or terminate clinical trials, including as a result of a clinical hold. Additionally, even if the FDA or other comparable regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or other similar regulatory submission, we cannot guarantee that they will not change their requirements or expectations in the future. These considerations also apply to new clinical trials we may submit as amendments to existing INDs or to a new IND. Any failure to file INDs or similar regulatory submissions on the timelines we expect or to obtain regulatory approvals for our clinical trials may prevent us from completing our clinical trials or commercializing our products on a timely basis, if at all.

Our product candidates may cause undesirable side effects. Additionally, the administration process or related procedures also can cause adverse side effects. Adverse events that occur in our clinical trials may cause us, or cause the FDA or other comparable regulatory authorities, or IRBs, RECs, or equivalent organizations to order us to halt, delay or amend preclinical development or clinical development of our product candidates and could result in more restrictive labeling or the denial of regulatory approval of our product candidates for any or all targeted indications. Even if serious adverse events are unrelated to study treatment, such occurrences could affect patient enrollment or the ability of enrolled patients to complete the clinical trial. In addition, if any of our product candidates are tested or used in combination with other drugs, such as our plans to potentially use CLN-619 in combination with other agents, these combinations may have additional side effects, which could be more severe than those caused by either therapy alone.

Furthermore, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates or those of our competitors may only be uncovered when a significantly larger number of patients have been exposed to the product candidate. For example, while we believe that CLN-978, zipalertinibzipalertinib, and CLN-619CLN-049 have demonstrated manageable tolerability profiles thus far, there can be no assurance that they or any of our other product candidates will not cause more severe side effects in a greater proportion of patients.

We are conducting clinical trials for our product candidates outside the U.S., including in Europe and Australia.Australia, and Genrix is conducting a clinical trial for velinotamig in China, for which we intend to use the data generated to accelerate global clinical development of the program. The acceptance of study data from clinical trials conducted outside the U.S. or another jurisdiction by the FDA or comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all. If data from foreign clinical trials are intended to serve as the basis for marketing approval in the U.S., the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice, and (ii) the clinical trials were performed by clinical investigators of recognized competence and pursuant to good clinical practice ("GCP") regulations. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many foreign regulatory authorities have similar approval requirements. In addition, foreign clinical trials are subject to the applicable local laws of the foreign jurisdictions where the clinical trials are conducted. We would need to conduct additional trials if the FDA or any comparable foreign regulatory authority does not accept data from clinical trials conducted outside of the U.S. or the applicable foreign jurisdiction, which could be costly and time-consuming, and which may result in product candidates that we may develop not receiving approval for commercialization in the U.S. or any such foreign jurisdiction.

We intend tomay develop CLN-619 and potentially other product candidates in combination with other therapies, which exposeswould expose us to additional risks.

We intend tomay develop CLN-619 and potentially other product candidates in combination with one or more approved or unapproved therapies to treat cancer or other diseases. Even if any product candidate we develop were to receive marketing approval for use in combination with other approved therapies, the FDA, the EMA, or comparable foreign regulatory authorities outside of the U.S. could still revoke approval of the therapy used in combination with our product. If the therapies used in combination with our product candidates are replaced as the standard of care for the indications we choose for any of our product candidates, the FDA, EMA or comparable foreign regulatory authorities may require us to conduct additional clinical trials. The occurrence of any of these risks could result in our own products, if approved, being removed from the market or being less successful commercially.

In connection with the clinical development of our product candidates for certain indications, we may need to develop or obtain access to in vitro companion diagnostic tests to identify patient subsets within a disease category who may derive benefit from our product candidates, as we are targeting certain genetically defined populations for our treatments. Such companion diagnostics may be used during our clinical trials and may be required in connection with the FDA approval of our product candidates. To be successful, we or our collaborators will need to address a number of scientific, technical, regulatory, and logistical challenges. Companion diagnostics are subject to regulation by the FDA, the EMA, and other comparable regulatory authorities as medical devices and require separate regulatory approval prior to commercialization.

Investment in biopharmaceutical product development is a highly speculative undertaking and entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval, and become commercially viable. WeWith the exception of zipalertinib, we are still in the early stages of development of our product candidates.development. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. We have financed our operations primarily through the sale of equity securities.

continue our research and development efforts and submit INDs or other regulatory filings for our current and future product candidates;

Our ability to become profitable depends upon our ability to generate revenue. Other than a previous licensing agreement, we have not generated any other license or collaboration revenue or any sales revenue from any of our product candidates. We do not expect to generate significant sales revenue or commercial revenue from the sale or license of one or more of our preclinical programs or product candidates unless or until we successfully complete clinical development and obtain regulatory approval of, and then successfully commercialize, at least one of our product candidates or, alternatively, enter into agreements with third parties for the purchase, collaboration, or license of one of our product candidates. We are currently advancing CLN-978, CLN-619,CLN-049, and zipalertinib (pursuant to the co-development agreement with an affiliate of Taiho), CLN-049, and CLN-617 in clinical development, in addition to our other programs that are in the preclinical stages of development and will require additional preclinical studies. All of our product candidates will require additional clinical development, regulatory review and approval, substantial investment, access to sufficient commercial manufacturing capacity, and significant marketing efforts before we can generate any revenue from product sales.

the equal cost-sharing structure for clinical development and commercialization costs of zipalertinib in the U.S. and the equal profit-sharing structure from potential future U.S. sales of zipalertinib, each pursuant to the co-development agreement with an affiliate of Taiho, subject to certain adjustments for any approved indications independently developed by Taiho;

The development of pharmaceutical products is capital intensive. We are currently advancing CLN-978, CLN-619,CLN-049, and zipalertinib (pursuant to the co-development agreement with an affiliate of Taiho), CLN-049, and CLN-617 in clinical development and making further investments in our preclinical programs. We expect our expenses to increase in parallel with our ongoing activities, as described above under the risk factor entitled “We have incurred significant losses since inception, and we expect to incur losses over the next several years and may not be able to achieve or sustain revenues or profitability in the future.” We have estimated our current additional funding needs based on assumptions that may prove to be wrong. Changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. We cannot be certain that additional funding will be available on acceptable terms, or at all. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of public or private equity offerings, debt financings, governmental funding, collaborations, strategic partnerships, and alliances, or marketing, distribution, or licensing arrangements with third parties. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our identification, discovery, and preclinical or clinical development programs, or any future commercialization efforts.

We have a co-development agreement with an affiliate of Taiho tofor co-develop and, at our option, co-commercialize zipalertinib in the U.S.zipalertinib. Pursuant to the terms of the co-development agreement with an affiliate of Taiho,agreement, development costs for zipalertinib are shared equally between us and Taiho, with each party receiving 50% of any future pre-tax profits from potential U.S. sales of zipalertinib.zipalertinib, subject to certain adjustments for any additional indications independently developed by Taiho. Additionally, we have a license agreement with Chongqing Genrix Biopharmaceutical Co., Ltd. (“Genrix”) pursuant to which we in-licensed velinotamig.

We intend to engage in various acquisitions and strategic partnerships in the future, including licensing or acquiring products, intellectual property rights, technologies, or businesses. Any acquisition or strategic partnership, including the co-development agreement with an affiliate of Taiho,Taiho and our license agreement with Genrix, may entail numerous risks to us, including:

retention of key employees,personnel, the loss of keyinstitutional personnel,knowledge, and uncertainties in our ability to maintain key business relationships;

As of February 19,18, 2025,2026, the number of shares of our common stock outstanding excludes approximately 13.717.3 million shares of common stock issuable upon the exercise of stock options, having a weighted-average exercise price of $15.31$14.51 per share. The exercise of outstanding stock options for common stock would be substantially dilutive to existing stockholders. As of February 19,18, 2025,2026, the number of shares of our common stock outstanding also excludes approximately 0.3 million shares of common stock issuable upon the exercise of pre-funded warrants having an exercise price of $0.001 per share, approximately 2.32.0 million shares of common stock issuable upon vesting of restricted stock units (assuming the Company achieves its corporate stock price metrics at the target achievement level),units, approximately 1.81.1 million shares of common stock reserved for future issuance under our 2021 Stock Option and Incentive Plan and 2.22.7 million shares of common stock reserved for future issuance under our 2021 Employee Stock Purchase Plan, as amended.Plan. Any dilution or potential dilution may cause our stockholders to sell their shares, which may contribute to a downward movement in the stock price of our common stock.

Our operations and financial condition have been and could continue to be adversely affected by global or regional economic conditions if markets decline in the future, whether related to a public health crisis similar to the COVID-19 pandemic, thechanges Russianin invasioninternational ofrelations Ukraine,or theglobal Israel-Hamas war, U.S.-China relations, U.S.-Iran relations,conflicts, higher inflation or interest rates, recession, natural disasters, impacts of and issues related to climate change, business disruptions, our ability to adequately staff operations or otherwise. Additionally, escalation in interest rates, in conjunction with banking failures, may lead to financial institutions being more prudent with capital deployment and tightening lending, especially in relation to construction and real estate development.

An element of our strategy is to form or seek strategic alliances, create joint ventures or collaborations, or enter into licensing arrangements with third parties for programs, product candidates, technologies or intellectual property that we believe are novel, employ differentiated mechanisms of action, are more advanced in development than competitors, or have a combination of these attributes. We face significant competition in seeking appropriate strategic partners and licensing and acquisition opportunities, and the negotiation process is time-consuming and complex. Identifying, selecting, and acquiring promising product candidates requires substantial technical, financial and human resources expertise. Efforts to do so may not result in the actual acquisition or license of a successful product candidate, potentially resulting in a diversion of our management’s time and the expenditure of our resources with no resulting benefit. For example, if we are unable to identify programs that ultimately result in approved products, we may spend material amounts of our capital and other resources evaluating, acquiring, and developing products that ultimately do not provide a return on our investment. We have terminated programs and expect to terminate programs in the future if they do not meet our criteria for advancement. For example, following a review of the data from our Phase 1emerging clinical trialdata in CLN-418,patients with NSCLC and multiple myeloma, we decided not to discontinuepursue further development of CLN-418CLN-619, and terminatedafter a review of the licenseemerging agreementclinical data in patients with Harbouradvanced BioMedsolid UStumors, Inc.we decided not to pursue further development of CLN-617.

Certain agreements provide our licensors, collaborators, or other shareholders in our CLN-049 development subsidiariessubsidiary with rights that could delay or impact the potential sale of our development subsidiaries or could impact our ability to sell assets, or enter into strategic alliances, collaborations, or licensing arrangements with other third parties.

We license intellectual property from third parties for several of our product candidates and have raised capital from third-party investors for CLN-619, CLN-049 and CLN-617.CLN-049. These third parties have certain rights that could delay collaboration, licensing or other arrangement with another third party, and the existence of these rights may adversely impact the ability to attract an acquirer or partner. These rights include rights of negotiation and fees payable upon a sale of assets or change of control of a subsidiary that are contained in license agreements, as well as rights such as drag-along rights in agreements with shareholders of the subsidiary.

In addition, we will also owe the licensorslicensor of CLN-049 and CLN-617 a success fee in the event of a sale or other disposition of the majority of the assets of the CLN-049 development subsidiariessubsidiary. holdingThis these product candidates. These feesfee will reduce the net proceeds we receive from any such sale or disposition of assets.

We have also entered into investor rights and voting agreements with third-party investors, which may delay or impact our ability to sell our equity interests in or the assets of our CLN-049 development subsidiaries.subsidiary. For example, we would need to comply with certain notice and other provisions, such as a drag-along provision in the event of sale of the subsidiary, which may delay or prevent a specific transaction or make transacting with our subsidiaries and us less attractive to third parties.

In the U.S. and markets in other countries, patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental authorities or healthcare programs, such as Medicare and Medicaid, and private payors, such as health plans, is critical to new product acceptance. Our ability to successfully commercialize our product candidates will depend in part on the extent to which adequate coverage and reimbursement for these products and related treatments will be available from government authorities and programs as well as private health insurersplans and other organizations. Government authorities and other third-party payors decide which products will be covered and establish reimbursement levels for the products (or the services provided using the products). If coverage and adequate reimbursement is not available, or is available but limited, we may not be able to successfully commercialize our product candidates. Under such circumstances, we may not be able to establish or maintain pricing sufficient to realize a sufficient return on our investment.

Reimbursement rates may also vary according to the use of the drug and the clinical setting in which the drug is used; theyrates may be based on reimbursement levels already set for lower cost drugs andor rates may be incorporated into existing payments for other services. Adequate third-party reimbursement may not be available to enable us to maintain net price levels sufficient to realize an appropriate return on our investment in product development.

GeneralOther legislativerecent costgovernment controlactions measuresalso may also affect reimbursementprices or payments for prescription drugs. For example, the Trump administration’s recently announced tariff on branded or patented drugs may adversely impact our productability candidates.to realize an adequate return on the sale of drug products (if approved) that are imported from abroad or manufactured using products or materials imported from abroad. The timeline for implementation of this tariff has not yet been finalized. As another example, the Budget Control Act, as amended, resulted in the imposition of reductions in Medicare (but not Medicaid) payments to providers in 2013 and will remain in effect throughinto 2032 unless additional congressionalCongressional action is taken. Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations.

CLN-978Velinotamig is a CD19xCD3BCMAxCD3 bispecific T cell engager ("TCE") that we are developing for autoimmune diseases. CLN-978Chongqing Genrix Biopharmaceutical Co., Ltd. ("Genrix"), from which we licensed velinotamig, is being investigated inenrolling a global Phase 1 clinical trial in China in patients with moderateautoimmune todiseases, severeinitially systemicin lupuspatients erythematosuswith (“SLE”).SLE, Wefollowed planby toplanned sharefuture expansion into other indications, and initial clinical data forwill CLN-978be in SLEshared in the fourth quarter of 2025.2026. InWe intend to use the seconddata quartergenerated offrom 2025, we plan to initiate a company-sponsoredthis Phase 1 clinical trial to evaluateaccelerate CLN-978global clinical development. Following the completion of the Genrix Phase 1 clinical trial, we will conduct all further development of velinotamig in patientsautoimmune with rheumatoid arthritis (“RA”), designed and executed in collaboration with the Friedrich-Alexander University of Erlangen-Nuremberg and Università Cattolica del Sacro Cuore, Rome.diseases.

In addition to the product candidates described above, we are actively developing several preclinical programs byin leveragingautoimmune our own internal expertisediseases and through partnerships with external collaborators.oncology.

Previously,CLN-418 we were evaluating CLN-418,is a fully humanB7H4x4-1BB bispecific immune activator targeting B7H4 and 4-1BBantibody that we licensed from Harbour BioMed US IncInc. (“Harbour”) and were previously evaluating in a Phase 1 clinical trial. In August 2024, following a review of the data from the Phase 1 clinical trial,trial in solid tumors, we notified Harbour of our decision to terminate the license and collaboration agreement for CLN-418 (the “Harbour License Agreement”), effective November 2024. In connection with the termination of the Harbour License Agreement, we discontinued development of CLN-418 and returned development and commercial rights for CLN-418 to Harbour to focus our resources on our other product candidates.Harbour.

Since our inception in 2016, we have focused all of our efforts and financial resources on raising capital, organizing and staffing our company, identifying, acquiring or in-licensing and developing product and technology rights, establishing and protecting our intellectual property portfolioportfolio, and developing and advancing our programs. We do not have any products approved for sale and have not generated any revenue from product sales.

We have funded our operations primarily through the sale of equity securities and from licensing or selling the rights to our product candidates. As of December 31, 2024,2025, we have received net proceeds of $842.2 million from equity financings. We have received $18.9 million in revenue from a previous license agreement and cash proceeds offinancings, $275.0 million from the sale of our equity interest in our zipalertinib development subsidiary to Taiho. In April 2024, we sold shares of our common stockTaiho, and pre-funded$18.9 warrants for shares of our common stockmillion in revenue from a privateprevious placementlicense (the “2024 Private Placement”) for net proceeds of $262.7 million, after deducting offering expenses of $17.3 million. Refer to Note 7 of our notes to the consolidated financial statements in this Annual Report on Form 10-K for additional detail regarding the 2024 Private Placement.agreement.

We have not generated any revenue from the sale of products since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all.inception.

The $11.5$0.2 million increase in general and administrative expenses in 20242025 compared to 20232024 was primarily due to an increaseincreases in professional fees ($4.7$1.7 million), anand increaselegal costs ($1.6 million), offset partially by decreases in equity-based compensation expense ($4.4 million), an increase in personnel costs ($1.7$2.2 million), and an increase in occupancy, insurance and otherpersonnel costs ($0.9$1.0 million).

The $7.6$7.7 million increasedecrease in other income in 20242025 compared to 20232024 was primarily related to higherlower interest income earned.

Net loss attributable to noncontrolling interests is determined as the difference in the noncontrolling interests in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactions between our development subsidiaries and third parties. Refer to Note 7 of our notes to the consolidated financial statements included in this Annual Report on Form 10-K for additional details of capital transactions between our development subsidiaries and third parties.

We have a history of significant operating losses and have had negative cash flows from operations since our inception and expect to continue to generate operating losses for the foreseeable future. We have not yet commercialized any productsproducts, and we do not expect to generate revenue from sales of products for several years, if at all. To date, we have funded our operations primarily with proceeds from the sale of equity securities and from licensing or selling the rights to our product candidates. As of December 31, 2024,2025, we had cash, cash equivalents, and short-term investments of $399.0$377.9 million, and long-term investments and interest receivable of $207.9$61.1 million.

Based on our current operational plans and assumptions, we expect that our current cash, cash equivalents, investments, and interest receivable,receivable will be sufficient to fund operations into 2028.2029. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We cannot guarantee that we will be able to raise additional capital on reasonable terms or at all.

In April 2024, we completed a private placement (the "2024 Private Placement") in which we issued approximately 14.4 million shares of our common stock and pre-funded warrants to purchase approximately 0.3 million additional shares of our common stock. We received net proceeds of $262.7 million from the 2024 Private Placement, after deducting offering costs of $17.3 million. Refer to Note 7 of our notes to the consolidated financial statements in this Annual Report on Form 10-K for additional detail regarding the 2024 Private Placement.

During 2023,2025, our financing activities provided $40.8$1.1 million of cash, which primarily consisted of $38.4 million of net proceeds from the issuance of common stock under our ATM, proceeds of $1.8 million from the issuance of a convertible note by our CLN-619 development subsidiary to a noncontrolling interest, and net issuance of common stock under our equity-based compensation plans of $0.5 million.plans.

continue the research and development of our current and future product candidates and programs;

We have certain paymentcontractual obligations under various license and collaboration agreements. Under these agreements, we arewill be required to make milestone payments upon successful completion and achievement of certain intellectual property, clinical, regulatory, and sales milestones. The payment obligations under the license and collaboration agreements are contingent upon future events, such as our achievement of specified development, clinical, regulatory, and commercial milestones, and we will be required to make milestone and royalty payments in connection with the sale of products developed under these agreements. In addition, under our co-development agreement, if Taiho generates sufficient data to support commercial purposes or a regulatory submission for new zipalertinib indications that it independently develops, half of Taiho’s independent development costs, subject to certain adjustments, will be deducted from future pre-tax profits related to potential U.S. sales of zipalertinib. As the achievement and timing of these future milestonecontractual paymentsobligations are not probable or estimable, such amounts have not been included in our consolidated balance sheets as of December 31, 20242025 and 2023.2024.

As of December 31, 2024,2025, total future minimum lease payments were $2.3$3.1 millionmillion, with $1.5$1.0 million payable within 12 months. See Note 12 of our consolidated financial statements included in this Annual Report on Form 10-K for further detail on our lease obligations and the timing of expected future payments.

A description of recently issued and adopted accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 of our consolidated financial statements included in this Annual Report on Form 10-K.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 10-K"), which could materially affect our business, financial condition or future results. The risk factors disclosure in our 2025 10-K is qualified by the information that is described in this Quarterly Report on Form 10-Q. The risks described in our 2025 10-K are not our only risks. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes to our risk factors as previously disclosed in the 2025 10-K.10-K except as follows:

We are a biopharmaceutical company developing potential first- or best-in-class, high-impactdisease-modifying therapiesT cell engagers for autoimmune diseases and cancer. We pursue promising therapeutic targets while leveraging our core expertise in T cell engagers, which are established in oncology and are now advancing into autoimmune diseases. With a clinical-stage pipeline built on a rigorous scientific approach and purposeful innovation, we are advancing our mission to deliver new standards of care for patients.

Immunology Pipeline

CLN-978 is a CD19xCD3 T cell engager that we are developing for autoimmunerheumatic diseases.diseases driven by pathogenic B cells. In the Phase 1 OUTRACE Program, CLN-978 is being evaluated in patients with systemic lupus erythematosus (“SLE”), rheumatoid arthritis (“RA”), and Sjögren’s disease (“SjD”). The OUTRACE SLE Study is an ongoing global Phase 1 clinical trial in patients with treatment-refractory moderate to severe SLE. The OUTRACE RA Study is a Phase 1 clinical trial in patients with difficult-to-treat RA, which is ongoing in Europe. We plan to shareshared initial clinical data in patients with SLE and RA in a poster presentation at the European Alliance of Associations for Rheumatology (“EULAR”) European Congress of Rheumatology and additional clinical data, including initial multi-dose regimen data in patients with RA, at an investor event in June 2026. We also plan to share additional multi-dose regimen data in patients with RA and SLE in the third quarterand fourth quarters of 2026.2026, respectively, and expect to begin Phase 2 expansion in both disease areas by early 2027. The OUTRACE SjD Study is an ongoing global Phase 1 clinical trial in patients with treatment-refractory moderate to severe Sjögren’s disease. We plan to share initial clinical data in patients with Sjögren’s disease in the fourth quarter of 2026.

Velinotamig is a BCMAxCD3 T cell engager that we are developing for autoimmune diseases.diseases driven by pathogenic autoantibodies produced by long-lived plasma cells. Chongqing Genrix Biopharmaceutical Co., Ltd. ("Genrix"), from which we licensed velinotamig, is enrolling a Phase 1/2 clinical trial in China in patients with treatment-refractory autoimmune diseases, startinginitially in patients with moderate to severe SLE. In June 2026, we shared initial clinical observations from two SLE andpatients towith benephritis followedfrom bythe plannedtrial. expansion into other indications, and initialAdditional multi-dose regimen data from the dosetrial escalationare phaseexpected in patients with SLE willto be shared in the fourth quarter of 2026. WeIn intendearly 2027, we plan to useinitiate thea data generated from thisglobal Phase 1/2 basket clinical trial toin acceleratepatients globalwith clinicalautoimmune development.cytopenias, including immune thrombocytopenia and autoimmune hemolytic anemia.

Oncology Pipeline

We hold the worldwide intellectual property rights for CLN-978. We hold the worldwide, excluding mainland China, Hong Kong, Macau and Taiwan (collectively referred to as “greater China”), intellectual property rights for velinotamig. We hold the worldwide intellectual property rights for CLN-049 through a development subsidiary in which we had a 98% ownership interest as of MarchJune 31,30, 2026. We are co-developing zipalertinib, for which Taiho holds the intellectual property rights, with an affiliate of Taiho.

We have funded our operations primarily through the sale of equity securities and from licensing or selling the rights to our product candidates. As of MarchJune 31,30, 2026, we have received net proceeds of $842.2 million from equity financings. We have received $275.0$18.9 million in revenue from a previous license agreement and cash proceeds of $18.9$275.0 million from the sale of our equity interest in our former zipalertinib development subsidiary to Taiho.

As of MarchJune 31,30, 2026, we had cash, cash equivalents, and short-term investments of $351.9$334.5 million, and long-term investments and interest receivable of $41.4$21.4 million. Interest receivable is included in prepaid expenses and other current assets on the consolidated balance sheets and represents accrued and unpaid interest on our marketable securities. We have a history of significant operating losses and have had negative cash flows from operations since our inception. As of MarchJune 31,30, 2026, we had an accumulated deficit of $637.8$691.5 million. We expect to continue to generate operating losses for the foreseeable future. Our future viability is dependent on the success of our research and development and our ability to access additional capital to fund our operations. There can be no assurance that our current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

The following table summarizes our research and development expenses for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

The $0.7$16.6 million increasedecrease in research and development expenses in the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 was primarily due to a one-time upfront in-licensing fee for velinotamig ($20.0 million) paid in 2025, and decreases in chemistry, manufacturing and controls ("CMC") costs ($0.5 million), and personnel related costs ($0.5 million), offset partially by increases in clinical development costs of($4.4 $0.8million), million.and preclinical costs ($0.4 million).

The $2.0following milliontable decreasesummarizes inour general and administrative expenses infor the three and six months ended MarchJune 31,30, 2026 compared to the same period inand 2025 was primarily due to a decrease (in equity-based compensation costs of $1.8 million.thousands):

The $2.5following milliontable decreasesummarizes inour other income for the three and six months ended MarchJune 31,30, 2026,2026 compared to the same period inand 2025 was(in primarily related to lower investment income.thousands):

We have a history of significant operating losses and have had negative cash flows from operations since our inception and expect to continue to generate operating losses for the foreseeable future. We have not yet commercialized any products, and we do not expect to generate revenue from sales of products for several years, if at all. To date, we have funded our operations primarily with proceeds from the sale of equity securities and from licensing or selling the rights to our product candidates. As of MarchJune 31,30, 2026, we had cash, cash equivalents, and short-term investments of $351.9$334.5 million, and long-term investments and interest receivable of $41.4$21.4 million.

Based on our current operationaloperating plans and assumptions, we expect that our current cash, cash equivalents, investments, and interest receivable will be sufficient to fund operations through at least twelve months from the date of issuance of our consolidated financial statements. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We cannot guarantee that we will be able to raise additional capital on reasonable terms or at all.

In April 2026, we entered into a sales agreement with TD Securities (USA) LLC (“TD Cowen”) to establishcontinue anour at-the-market equity offering program,ATM, pursuant to which we can offer and sell up to $200.0 million of our common stock through TD Cowen at prevailing market prices from time to time. We made no sales under the ATM through June 30, 2026.

Comparison of Cash Flows for the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

The following table summarizes our sources and uses of cash for the threesix months ended MarchJune 31,30, 2026 and 2025 (in thousands):

For the threesix months ended MarchJune 31,30, 2026, our operating activities used $46.0$84.3 million of cash, which primarily consisted of our operating expenses, excluding non-cash items, of $46.0$94.7 million, and a $3.3 million net change in our non-tax operating assets and liabilities, partially offset by interest income, excluding accretion on marketable securities, of $3.3$6.4 million.million, and a $4.2 million net change in our non-tax operating assets and liabilities. The non-cash operating expenses primarily consisted of equity-based compensation expense.

For the threesix months ended MarchJune 31,30, 2025, our operating activities used $43.2$100.8 million of cash, which primarily consisted of our operating expenses, excluding non-cash items, of $45.5$111.4 million and a $1.8$0.6 million net change in our non-tax operating assets and liabilities, partially offset by interest income, excluding accretion on marketable securities, of $4.3$8.5 million.million, and an income tax refund of $3.0 million related to the utilization of federal research and development credits generated during 2023 that were carried back to tax year 2022. The non-cash operating expenses primarily consisted of equity-based compensation expense.

For the threesix months ended MarchJune 31,30, 2026, our investing activities provided $32.4$73.1 million of cash, which consisted of $52.5$107.8 million of proceeds from the maturities of marketable securities, partially offset by $20.1$34.7 million of purchases of marketable securities.

For the threesix months ended MarchJune 31,30, 2025, our investing activities provided $36.8$90.2 million,million of cash, which consisted of $162.6$294.6 million of proceeds from the maturities of marketable securities, partially offset by $125.8$204.4 million of purchases of marketable securities.

For the threesix months ended MarchJune 31,30, 2026, our financing activities provided $0.4$1.5 million of cash, which consisted of net proceeds from the issuance of common stock under our equity-based compensation plans.

We have certain contractual obligations under various license and collaboration agreements. Under these agreements, we will be required to make milestone payments upon successful completion and achievement of certain intellectual property, clinical, regulatory, and sales milestones, and we will be required to make milestone and royalty payments in connection with the sale of products developed under these agreements. In addition, under our co-development agreement, if Taiho generates sufficient data to support commercial purposes or a regulatory submission for new zipalertinib indications that it independently develops, half of Taiho’s independent development costs, subject to certain adjustments, will be deducted from future pre-tax profits related to potential U.S. sales of zipalertinib. As the achievement and timing of these future contractual obligations are not probable or estimable, such amounts have not been included in our consolidated balance sheets as of MarchJune 31,30, 2026 and December 31, 2025.

As of MarchJune 31,30, 2026, we had total future minimum lease payments of $2.8$2.4 million, withof $1.0which $0.9 million were payable within twelve months. See Note 9 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further detail on our lease obligations and the timing of expected future payments.

Recently Issued and Adopted Accounting Pronouncements

A description of recently issued and adopted accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 of our consolidated financial statements included in this Quarterly Report on Form 10-Q.