HCWB 10-K & 10-Q changes, risk factors and insider trading
HCW Biologics Inc. · Nasdaq · Pharmaceutical Preparations · CIK 1828673 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure of which could result in a delisting of our securities.”
New heading “Our potential use of new and evolving technologies, such as artificial intelligence, may present risks and challenges that can impact our business, including by posing cybersecurity and other risks to our confidential and/or proprietary information, including personal information, and as a result we may be exposed to reputational harm and liability.”
Removed heading “We have identified certain material weaknesses in our internal control over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our common stock.”
Removed heading “On March 3, 2025, the Nasdaq Hearings Panel accepted our plan to regain compliance with all applicable continued listing rules of The Nasdaq Stock Market LLC (“Nasdaq”). There can be no assurance that the Company will be able to comply within the period of time granted by the Panel. If the Company does not execute our compliance plan or is delayed in doing so, the result could be the delisting of our Common Stock from Nasdaq.”
Removed heading “We face potential liability related to the privacy of health information we obtain from clinical trials sponsored by us or our collaborators, from research institutions and our collaborators, and directly from individuals.”
Largest changes
“Our clinical trial programs and research collaborations outside the United States may implicate international data protection laws, including in Europe the GDPR. If our privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices, and/or enforcement actions requiring us to change the way we use personal data and/or fines. In addition to statutory enforcement, a personal data breach can lead to negative publicity and a potential loss of business. …”see in full comparison
“We and our partners and vendors are subject to various federal, state, and foreign data protection laws and regulations (i.e., laws and regulations that address data privacy and security). If we fail to comply with these laws and regulations, we may be subject to litigation, regulatory investigations, enforcement notices, enforcement actions, fines, and criminal or civil penalties, as well as negative publicity and a potential loss of business.”see in full comparison
“We have identified certain material weaknesses in our internal control over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our common stock.”see in full comparison
“Our vendors may in turn incorporate AI tools into their products or services, and the providers of these AI tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to privacy and data security. Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. …”see in full comparison
“As government authorities issue further guidance on personal data export mechanisms and/or start taking enforcement action, we could suffer additional costs, complaints, and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. …”see in full comparison
“In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners. …”see in full comparison
Full comparison: every changed paragraph (66)
For the year ended December 31, 2025, the Company identified a material weakness related to proper assessment of whether impairment occurred for its long-lived assets. As a result the Company was at risk of a material misstatement in its financial statements by failing to recognize an impairment of $1.5 million for an impairment of the Company’s building, which could have resulted in overstating the value of long-term assets by $1.5 million. The Company implementedwill implement a remediation of this material weakness and material weaknesses identified in previous reporting periods. If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our commonCommon stock.Stock.
We and our Chief Executive Officer were involved in legal proceedings with Altor BioScience, LLC and NantCell (collectively, “Altor/NantCell”). In July 2024, the parties entered a Settlement Agreement which removed some of the uncertainties as to the outcome and cost of these proceedings. However, the Company had significant obligations as a result of legal fees incurred but not paid for the defense of the Company, as well as our Chief Executive Officer. On December 30, 2025, the Company executed a settlement agreement relating to approximately $7.5 million of outstanding legal fees included in the Company’s outstanding trade payables. The terms of the settlement included $2.0 million of cash settlement payments, consisting of a $500,000 payment made on or about December 31, 2025 and a $1.5 million payment to be made within one business day of receipt of payment of net proceeds of $3.1 million from the upfront cash license fee payable by Beijing Trimmune Biotech Co., Ltd. or its affiliates. As of March 20, 2026, these terms were amended. The parties agreed that the Company would pay $750,000 immediately, with the remaining $750,000 due upon the earlier of completing a financing in excess of $4.0 million in gross proceeds or August 31, 2026. The settlement also includes a contingent promissory note providing for certain potential payments in the event, and only to the extent, that the Company achieves certain defined milestones in the future, but such contingent promissory note does not include or represent a current liability or obligation that must be recognized by the Company as of December 31, 2025. The remaining outstanding legal fee obligations could have a material negative impact on our business and operations.
After receiving written notice from the Nasdaq Listing Qualifications Staff (the “Staff”) that, as of June 30, 2025, the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”), the Company was granted a hearing on September 25, 2025, at which the Company presented a compliance plan for regaining and maintaining compliance with the Equity Rule and all listing rules for the Nasdaq Capital Market tier to a Nasdaq Hearings Panel. On January 7, 2026, the Company received written notice from the Staff that as of December 31, 2025, the Company was compliant with the Equity Rule. On February 26, 2026, the Nasdaq Hearings Panel found that the Company regained compliance with all continued listing rules of The Nasdaq Capital Market. Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor per the January 7, 2026 letter. If, within that one-year monitoring period, the Staff again finds the Company to be out of compliance with the Equity Rule that was the subject of the exception, notwithstanding Rule 5810(c)(2), the Staff will issue a Delist Determination Letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable. On March 26, 2026, the Company received a written notice from the Staff which notified the Company that, for the 30 consecutive business days, the Company’s security did not maintain a minimum bid price of $1 per share, in accordance with Nasdaq Listing Rule 5810(c)(3)(A) (“Bid Price Rule”). Due to the fact that the Company effected a 1-for-40 reverse stock split on April 11, 2025, the Company was not afforded a 180-calendar day period to demonstrate compliance. The Company plans to request an appeal of this determination in a timely manner.
We and our Chief Executive Officer were involved in legal proceedings with Altor BioScience, LLC and NantCell (collectively, “Altor/NantCell”). In July 2024, the parties entered a Settlement Agreement which removed some of the uncertainties as to the outcome and cost of these proceedings. However, the Company has significant obligations that remain as a result of legal fees incurred but not paid for the defense of the Company as well as our Chief Executive Officer. If we cannot negotiate acceptable payment plans to satisfy these obligations, an adverse result could have a negative material impact on our business and operations.
As a result of the Settlement Agreement, the Company is unable to progress into Phase 2 clinical trials for HW9218, our lead product candidate for cancer indications. The Company is prepared to progress HCW9218 in Phase 2 clinical trials for non-oncology indications, however, we must secure supply of clinical materials to do so. As a condition of the Settlement Agreement, the Company transferred the master cell line for HCW9218 to ImmunityBio, who in turn agreed to enter a supply agreement with the Company by January 2025. As of the date of issuance of the Annual Report, there is no supply agreement in place. As a result the delay in securing supply, there is no assurance that the Company will be able to continue the clinical development of HCW9218 in non-oncology indications.
The Company has been out of compliance with three applicable rules with respect to its continued listing on The Nasdaq Stock Market, namely, Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Rule”), Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) and Nasdaq Listing Rule 5450(b)(2&3)(C) (the “MVPHS Rule”). As a result, the Listing Staff of The Nasdaq Stock Market LLC (“Nasdaq”) delivered notices of its determination that the Company’s Common Stock was subject to delisting from the Nasdaq Global Market tier of Nasdaq. Nasdaq granted the Company a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the delisting determination of the Nasdaq Listing Staff, which hearing was held on February 13, 2025, at which we presented our plan to regain compliance with all listing requirements. On March 3, 2025, the Panel granted our request to continue our listing on Nasdaq, subject to our demonstrating compliance with the Bid Price Rule on or before April 28, 2025 and our demonstrating compliance with all other Nasdaq Listing Rules on or before June 15, 2025. While the Company is exercising diligent efforts to maintain the listing of our Common Stock on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with the applicable Nasdaq Listing Rules. If the Company’s Common Stock were to be delisted from Nasdaq, it could have a material adverse effect on us and our stockholders.
Clinical drug development is a lengthy and expensive process with uncertain timelines and uncertain outcomes. If clinical trials of our product candidates are prolonged or delayed, we or any collaborators may be unable to obtain required regulatory approvals, and therefore be unable to commercialize our product candidates on a timely basisbasis, or at all.
Since our inception, we have devoted most of our financial resources and all of our efforts to research and development, including preclinical studies and our clinical trials, and have incurred significant operating losses. In addition, the Company and Dr. Wong, our Founder and Chief Executive Officer, were parties in an extended Arbitration, which was ongoing for over a year, during which time the Company incurred legal fees of nearly $28.4 million for its own defense and the defense of Dr. Wong. For the years ended December 31, 20232024 and 2024,2025, we reported a net loss of $25.0$30.0 million and $30.3$8.0 million, before equity dividend to investor, respectively. These losses are inclusive of reserve for credit losses and othernonoperating expenses of $5.3 million and $1.3 million for the yearsyear ended December 31, 2023 and 2024, respectively.2024. As of December 31, 2024,2025, we had $4.7$2.0 million in cash and cash equivalents,equivalents reported in the audited balance sheet of our audited financial statements included elsewhere in this Annual Report. From inception to December 31, 2024,2025, we incurred cumulative net losses of $98.1$105.8 million. To date, we have financed our operations primarily through the sale of our redeemable preferred stock (all of which converted to common stock upon the effective date of our initial public offering, or IPO); payments received under our Wugen License for certain rights to two of our internally-developed molecules; proceeds from our IPO; a first lien mortgage of $6.5 million; proceeds from a Paycheck Protection Program (“PPP”) loan obtained through the Coronavirus Aid, Relief and Economic Security Act (which was forgiven); issuance of senior secured notes; and sale of commonCommon stockStock and warrantsWarrants in private placements and direct registered offerings. Based on our current operating plans, we believe that our cash and cash equivalents as of December 31, 20242025 will not be sufficient for the Company to continue as a going concern for at least one year from the issuance date of the financial statements appearing elsewhere in this Annual Report.
We have identified certain material weaknesses in our internal control over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our common stock.
Two of the material weaknesses were identified and reported in the Annual Report on Form 10-K for the year ended December 31, 2023. As the Company reported in a Current Report on Form 8-K filed with the SEC on May 1, 2024, we were a victim of a criminal scheme involving the impersonation of a purchaser of Secured Notes. The scheme resulted in the misdirection of approximately $1.3 million held in Company accounts to a fraudulent account controlled by a third party and a default on a legally binding commitment to purchase Secured Notes. As a result of the default and the related misdirection of funds, management re-evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of December 31, 2023. Based on this assessment, management identified material weaknesses in two areas, including the methods used to review, evaluate and accept financing proposals from investors and lenders and the process used to enter unusual significant transactions. As a result of the material weakness to protect the Company’s assets from fraud committed by third parties, there was a $1.3 million loss recognized on the Company’s audited financial statements.
As of September 30, 2024, the Company identified two additional material weaknesses in internal controls over financing reporting related to the classification of the Cogent Loan and accounting for the Secured Notes. On August 15, 2022, the Company entered into the 2022 Loan Agreement with Cogent Bank, pursuant to which we received $6.5 million in proceeds to purchase a building. The loan is secured by a first priority lien on the building. As of September 30, 2024, certain subcontractors have filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction and improvements on the building. The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements. The Company did not identify and account for the loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision as of September 30, 2024.
The second material weakness identified as of September 30, 2024 related to accounting for complex transactions. This involved appropriately accounting for the Secured Notes and disclosing the amended terms that were executed during the third quarter of 2024. The Secured Notes were deemed to be a hybrid instrument, consisting of a debt host with embedded derivatives requiring bifurcation and accounting for separately. Prior to correcting the initial accounting treatment for the Secured Notes, as amended, the Company neglected to identify and account for the embedded derivatives. In addition, the disclosures for the Secured Notes would not have identified the embedded derivatives. The aggregation of these factors could have resulted in a material misstatement in the Company’s financial statements. For the reporting period ended September 30, 2024 and December 31, 2024, there was no impact to the financial statements related to correcting the accounting treatment for embedded derivatives. Another amended term for the Secured Notes is a fixed bonus payment that holders will receive if the Secured Notes are repaid on the Maturity Date. The Company determined that the fixed bonus payment should be accreted to the principal owed to holders over the term. As of and for the three and nine months ended September 30, 2024, the Company did not accrete the fixed bonus payment. Accretion during the reporting period ended September 30, 2024 did not materially misstate the amount owed to the holders. Accretion was reported in the year ended December 31, 2024 and reported within Depreciation expense. If the Company did not correct the accounting treatment for the accretion of the fixed bonus payment at maturity, we would understate our obligations. Over the term, this could have resulted in a material misstatement in the Company’s financial statements.
In the year ended December 31, 2024, the Company implemented various steps to remediated these material weaknesses. In the second quarter of 2024, a remediation plan was adopted to strengthen controls and procedures used by the Company to review and accept financial proposals, particularly where there are upfront payments and other forms of payments made by the Company to third parties. These efforts include development of a process for assessment and communication, as well as involvement of additional key stakeholders, such as members of our Board of Directors. In the fourth quarter of 2024, the Company enhanced its controls to evaluate triggering events in debt and other financial instruments, to ensure the appropriate classification of obligations as current or noncurrent in the correct period. In addition, the Company strengthened controls to ensure timeliness in the determination of proper accounting and reporting for complex transactions by engaging consultants with technical accounting expertise to support the Company in our accounting analysis and conclusions for complex transactions. Also, the fourth quarter of 2024, the Company engaged advisors to support and assist in the review and augmentation of design and effectiveness of controls over financial reporting.
As of December 31, 2024, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2024, our disclosure controls and procedures were effective at a reasonable assurance level. However, we cannot assure you that any such actions we have or will take will prevent or avoid potential future material weaknesses. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations.
The remediation efforts are intended both to address the identified material weakness and to enhance our overall financial control environment. This material weakness and any other failure to maintain effective internal control over financial reporting could result in a loss of confidence in the reliability of our financial statements which could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.
We cannot assure you that the measures we have taken to date,date to strengthen internal controls over financial reporting, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
As of December 31, 2025, management identified a material weakness related to management’s assessment of long-lived assets for impairment. As a result the Company was at risk of a material misstatement in its financial statements by failing to recognize an impairment of $1.5 million for an impairment of the Company’s building, which could have resulted in overstating the value of long-lived assets by $1.5 million.
Material weaknesses in the Company’s internal controls over financial reporting were identified in previous reporting periods not presented in the Annual Report. Upon detecting material weaknesses, the Board of Directors and management implemented a remediation plan to strengthen internal controls, resulting in remediation of previously identified material weaknesses. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies or determine to modify remediation measures. We cannot assure you that the measures we have taken to date, and may take in the future, will be sufficient to remediate the control deficiencies that led to the material weakness in internal control over financial reporting or that we will prevent or avoid potential future material weaknesses. Effective internal controls are necessary for us to provide reliable financial reports. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure of which could result in a delisting of our securities.
On June 26, 2025, we received formal notice from the Nasdaq Listing Qualifications Staff (the “Staff”) that we were in compliance with the Equity Rule for continued listing of our securities on the Nasdaq Capital Market tier. We were also notified that we will remain subject to a “Panel Monitor,” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), for a period of one year from the date of the Nasdaq notice, through June 23, 2026. If, during the term of the Panel Monitor, we do not continue to remain in compliance with the Equity Rule, we will not have the opportunity to submit a compliance plan for review by the Staff and will instead need to request a hearing before the Nasdaq Hearing Panel (the “Panel”) to address the deficiency, with such request staying any further action with respect to the listing of our securities on Nasdaq pending completion of the hearing process.
On August 19, 2025, we received written notice from the Staff that, as of June 30, 2025, we were non-compliant with the Equity Rule, so our securities would be suspended from trading on Nasdaq on August 28, 2025 unless we request a hearing by August 26, 2025. On August 26, 2025, we timely requested a hearing before the Panel, which stayed the suspension of trading of our securities on Nasdaq pending completion of the hearing process, which included a hearing held before the Panel on September 25, 2025 at which the Company presented a detailed compliance plan, including the filing of the registration statement that includes this prospectus and the offering contemplated herein.
On October 13, 2025, the Panel granted the Company an extension of time in which to regain compliance with all continued listing rules of the Exchange. The Panel’s determination followed the Company’s hearing on September 25, 2025, at which the Company presented, and the Panel considered, the Company’s plan to regain compliance with the Equity Rule. The Panel granted the Company’s request for continued listing on the Nasdaq, subject to, among other things, the Company demonstrating compliance with the Equity Rule by December 31, 2025, and with all other Nasdaq continued listing rules by February 16, 2026.
The Panel also required that the Company provide prompt notification of any significant events that occur during the exception period that may affect the Company’s compliance with Nasdaq requirements. In addition, the Company was required to timely file Form 10-Q for the third quarter (which it did), and to provide notice of the status of certain elements of the Company’s compliance plan. Any compliance documentation submitted by the Company will be subject to review by the Panel, which may, in its discretion, request additional information before determining that the Company has complied with the terms of the exception. The Panel has discretion to review its decision to grant an exception period within 45 calendar days after issuance of the written decision.
On January 7, 2026, the Company received written notice from the Staff that, as of December 31, 2025, the Company was compliant with the Equity Rule. The Company remained subject to the Panel’s decision letter to maintain compliance with all listing rules for continued listing through February 16, 2026. On February 26, 2026, the Nasdaq Hearings Panel found that the Company had regained compliance with all continued listing rules of The Nasdaq Capital Market. Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor per the January 7, 2026 letter. Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of this letter. If, within that one-year monitoring period, Staff finds the Company again out of compliance with the Equity Rule that was the subject of the exception, notwithstanding Rule 5810(c)(2), the Staff will issue a Delist Determination Letter and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable. On March 26, 2026, the Company received a written notice from the Staff which notified the Company that, for the 30 consecutive business days, the Company’s security did not maintain a minimum bid price of $1 per share, in accordance with Nasdaq Listing Rule 5810(c)(3)(A) (“Bid Price Rule”). Due to the fact that the Company effected a 1-for-40 reverse stock split on April 11, 2025, the Company was not afforded a 180-calendar day period to demonstrate compliance. The Company plans to request an appeal of this determination in a timely manner.
Nasdaq also recently proposed a rule that, if approved, would require companies to maintain a minimum market value of listed securities (“MVLS”) of at least $5 million. If we are unable to satisfy these standards, or if Nasdaq’s proposed rule is approved and we fail to maintain a MVLS of at least $5 million for 30 consecutive trading days, we could be subject to delisting, which would have a negative effect on the price of our Common Stock, impair your ability to sell or purchase our Common Stock or Warrants when you wish to do so, and potentially cause you to lose the value of your investment in us. In the event of a delisting, we would expect to take actions to restore our compliance with the listing standards, but we can provide no assurance that any action we take to restore our compliance would allow our Common Stock to become listed again, stabilize the market price or improve the liquidity of our Common Stock, prevent our Common Stock from dropping below the minimum bid price requirement, or prevent future noncompliance with the listing requirements.
If we are delisted from Nasdaq, our Common Stock may be eligible for trading on an over-the-counter market. If we are not able to obtain a listing on another stock exchange or quotation service for our Common Stock, it may be extremely difficult or impractical for stockholders to sell their shares of Common Stock. Moreover, if we are delisted from Nasdaq, but obtain a substitute listing for our Common Stock, it will likely be on a market with less liquidity, and therefore experience potentially more price volatility than experienced on Nasdaq. Stockholders may not be able to sell their shares of Common Stock on any such substitute market in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading market. As a result of these factors, if our Common Stock is delisted from Nasdaq, the value and liquidity of our Common Stock would likely be significantly adversely affected. A delisting of our Common Stock from Nasdaq could also adversely affect our ability to obtain financing for our operations and/or result in a loss of confidence by investors, employees and/or business partners.
On March 3, 2025, the Nasdaq Hearings Panel accepted our plan to regain compliance with all applicable continued listing rules of The Nasdaq Stock Market LLC (“Nasdaq”). There can be no assurance that the Company will be able to comply within the period of time granted by the Panel. If the Company does not execute our compliance plan or is delayed in doing so, the result could be the delisting of our Common Stock from Nasdaq.
On March 3, 2025, the Company was granted an extension through April 28, 2025, to comply with the Bid Price Rule and through June 15, 2025 to comply with all Exchange Listing Rules by the Nasdaq Hearings Panel (the “Panel”). The Nasdaq Listing and Hearing Review Council may, on its own motion, determine to review any Panel decision within 45 calendar days after issuance of the written decision. If the Listing Council determines to review this Decision, it may affirm, modify, reverse, dismiss or remand the decision to the Panel. The Company will be immediately notified in the event the Listing Council determines that this matter will be called for review.
As previously disclosed, the Company is currently out of compliance because the Company’s market value of listed securities (“MVLS”) closed below the $50,000,000 MVLS threshold required for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(3)(A) (the “MVLS Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company was provided a compliance period of 180 calendar days in which to regain compliance with the MVLS continued listing requirement, or until December 16, 2024 (the “Compliance Date”). The Company did not regain compliance with the MVLS Rule by the given deadline and, accordingly, the Listing Qualifications Staff (“Staff”) notified the Company that its securities were subject to delisting from Nasdaq unless the Company timely requested a hearing before the Panel (which we did). Additionally, on August 12, 2024, the Company received written notices from the Staff of Nasdaq which notified the Company that, for the 30 consecutive business days ended August 6, 2024, the Company’s security did not maintain a minimum bid price of $1 per share, in accordance with Nasdaq Listing Rule 5810(c)(3)(A) (“Bid Price Rule”). Also on August 12, 2024, the Company received written notification from the Staff that for the 30 consecutive business days ended August 8, 2024, the Company’s market value of publicly held securities (“MVPHS”) closed below the $15,000,000 MVPHS threshold required for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(2)(C) (the “MVPHS Rule”). The Company was granted a compliance period of 180 calendar days from the date of the notice (“Compliance Period”) for these delinquencies, in accordance with Nasdaq Listing Rule 5810(c)(3)(A) for the Bid Price Rule and Nasdaq Listing Rule 5450(b)(2)C) for the MVPHS Rule. The Company did not regain compliance with the Bid Price Rule by February 3, 2025 or the MVPHS Rule by February 4, 2025. Accordingly, by letter dated February 5, 2025, the Staff notified the Company that its securities were subject to delisting from Nasdaq unless the Company timely requested a hearing. The Company timely requested and received a hearing at which time it outlined its compliance plan before the Panel. The Panel accepted our compliance plan and granted us the above-referenced extensions.
During the extension periods, the Company intends to implement its compliance plan and continue to actively monitor MVLS, the Bid Price and MVPHS while it considers all options available to it and to take other action, if necessary and as deemed appropriate by the Company’s Board, to remedy the deficiency, including potentially effecting a reverse stock split, entering into a $20.0 million equity life of credit and converting at least $6.6 million in senior secured notes to equity. On February 21, 2025, the Company filed its Definitive Proxy for a Special Meeting to obtain the requisite stockholder approvals to ensure it has the ability to take the certain of the actions that are part of its compliance plan. There can be no assurance that the Company will be able to comply within the period of time granted by the Panel.
Included in the Company’s balance sheet in the accompanying audited financial statements as of December 31, 2025 are $17.8$13.1 million of obligations included in accounts payable that represent amounts past due. ThesePast due amounts include $13.5$6.2 million due for legal fees incurred as a result of mounting a defense for the Company and our Founder and Chief Executive Officer in a long-running arbitration proceeding that was settled on July 13, 2024 and dismissed at the end of 2024. AfterIn yearJanuary end,2025, we received a $2.0 million insurance payment which was used to offset obligations for legal fees for our Founder and Chief Executive Officer. Also included in outstanding obligations is $4.3 million of obligations included in accounts payable for amounts owed for construction of a manufacturing facility that the Company is building at a property it owns in Miramar, Florida (the “Property”). and past due amounts owed for contract development and manufacturing services. As of December 31, 2024,2025, certain subcontractors had filed mechanics liens related to unpaid invoices issued in connection with the facility. On December 16, 2024, BE&K Building Group, the prime contractor on the project, sentAs the Company reported in a draft,Form unfiled8-K, lawsuiton andApril requested the parties discuss payment. On January 22,17, 2025, the Company entered intoreceived a forbearancesummons agreementand witha copy of a complaint filed by BE&K to allowin the CompanyCircuit until March 31, 2025 to continue efforts to find the financing required to complete the construction and renovationCourt of the Property.17th PursuantJudicial Circuit in and for Broward County, Florida (the “BE&K Complaint”). Other Defendants named in the BE&K Complaint elected to file counterclaims and cross-claims as part of their responses to the forbearanceBE&K agreement,Complaint. On August 8, 2025, B&I Contractors, Inc. (“B&I”), one of the Companydefendants madein anthe initialBE&K paymentComplaint, filed a motion for summary judgment (the “MSJ”) as to the Count I (Foreclosure of $1.0Construction millionLien). inThe partialCompany satisfaction of amounts owingresponded to the BE&K and itsFisk subcontractors.Complaints and cross-claims and filed a timely response to the B&I MSJ. The cases have been consolidated. On February 19, 2026, a stipulation was submitted to the Court for a settlement and release agreement between the Company and B&I calling for payment of a total of $860,000 in installments in settlement of amounts owed and an allowance for interest and other fees the last installment of which is payable on or before May 31, 2026. The Company has continued to pursue financing alternatives to provide the funding needed to come current in past amounts due and complete the construction and renovation of the PropertyProperty.
The success of our business development efforts, including license agreements, depends on our ability to realize theand anticipate the benefits of these transactions and is subject to numerous risks and uncertainties, many of which are outside of our control.
The development and commercialization of biopharmaceutical products is subject to extensive regulation, and the regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time-consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates on a timely basisbasis, if at all, our business will be substantially harmed.
Our product candidates could fail to receive regulatory approval for many reasons including but not limited to flaws in trial design, dose selection, patient enrollment criteria and failure to demonstrate an acceptable risk:benefitrisk-benefit profile. In addition, data obtained from clinical trials is susceptible to varying interpretations, and regulators may not interpret our data as favorably as we do, which may further delay, limit or prevent marketing approval. The lengthy approval process, as well as the unpredictability of future clinical trial results, may result in our failing to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations, and prospects. The FDA and other regulatory authorities have substantial discretion in the approval process, and determining when or whether regulatory approval will be obtained for any of our product candidates. As a result, we may be required to conduct additional preclinical studies, alter our proposed clinical trial designs, or conduct additional clinical trials to satisfy the regulatory authorities in each of the jurisdictions in which we hope to conduct clinical trials and develop and market our products, if approved. Further, even if we believe the data collected from clinical trials of our product candidates are promising, such data may not be sufficient to support approval by the FDA or any other regulatory authority.
In the future, we may decide to pursue accelerated approval for one or more of our product candidates. Under the FDA’s accelerated approval program, the FDA may approve a drug or biologic for a serious or life-threatening illnessdisease or condition that providesaddresses meaningfulan therapeuticunmet benefitmedical to patients over existing treatmentsneed based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality,mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.benefit. Many cancer therapies rely on accelerated approval, and the treatment landscape can change quickly as the FDA converts accelerated approvals to full approvals on the basis of successful confirmatory trials.
The recent enactment of FDORA included provisions related to the accelerated approval pathway. Pursuant to FDORA,Further, the FDA is authorized to require a post-approval study to be underway prior to approval or within a specified time period following approval. FDORA also requires theThe FDA tomust also specify conditions of any required post-approval study, which may include milestones such as a target date of study andcompletion. requiresApplicants sponsors tomust submit progress reports for required post-approval studies and any conditions required by the FDA.FDA FDORAnot enableslater than 180 days following approval and not less frequently than every 180 days thereafter until completion or termination of the study. The FDA tocan initiate an enforcement action for the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or to submit timely reports.
FDA-regulated industries, such as ours, face substantial uncertainty regarding the regulatory environment we will face as we proceed with research and development, and possibly in future commercialization, efforts following the inauguration of President Trump in January 2025 (the “Administration”). Some of these efforts have manifested to date in the form of personnel measures that could impact the FDA’s ability to hire and retain key personnel, which could result in delays in or limitations on our ability to obtain guidance from the FDA on our product candidates in development and obtain the requisite regulatory approvals in the future.
FDA-regulated industries, such as ours, face substantial uncertainty regarding the regulatory environment we will face as we proceed with research and development, and possibly in future commercialization, efforts following the inauguration of President Trump in January 2025 (the “Administration”). Some of these efforts have manifested to date in the form of personnel measures that could impact the FDA’s ability to hire and retain key personnel, which could result in delays in or limitations on our ability to obtain guidance from the FDA on our product candidates in development and obtain the requisite regulatory approvals in the future. Moreover, the new Administration has proposed action to freeze or reduce the budget of the National Institutes of Health (“NIH”) as related to its funding for medical research, which could decrease the ability of facilities that rely on NIH funding to enroll and conduct clinical trials or increase the costs to us of conducting clinical trials. There remains general uncertainty regarding future activities. The new Administration could issue or promulgate executive orders, regulations, policies or guidance that adversely affect us or create a more challenging or costly environment to pursue the development and sale of new therapeutic products. For example, on January 20, 2025, President Trump announced an executive order establishing the Department of Government Efficiency to maximize government efficiency and productivity. Pressures on and uncertainty surrounding the U.S. federal government’s budget and potential changes in budgetary priorities could adversely affect the funding for existing programs and grants and increase the costs to us of conducting clinical trials. Alternatively, state governments may attempt to address or react to changes at the federal level with changes to their own regulatory frameworks in a manner that is adverse to our operations. If we or our collaborators become negatively impacted by future governmental orders, regulations, policies or guidance as a result of the new Administration, there could be a material adverse effect on us and our business.
Moreover, the policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates. The standards that the FDA and its foreign counterparts use when regulating us require judgment and can change, which makes it difficult to predict with certainty their application. We may also encounter unexpected delays or increased costs due to new government regulations, for example, from future legislation or administrative action, or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review. It is impossible to predict whether legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or the impact of such changes, if any. For example, the Oncology Center of Excellence within the FDA has advanced Project Optimus, which is an initiative to reform the dose optimization and dose selection paradigm in oncology drug development to emphasize selection of an optimal dose, which is a dose or doses that maximizes not only the efficacy of a drug but the safety and tolerability as well. This shift from the prior approach, which generally determined the maximum tolerated dose, may require sponsors to spend additional time and resources to further explore a product candidate’s dose-response relationship to facilitate optimum dose selection in a target population. Other recent Oncology Center of Excellence initiatives have included Project FrontRunner, a new initiative with a goal of developing a framework for identifying candidate drugs for initial clinical development in the earlier advanced setting rather than for treatment of patients who have received numerous prior lines of therapies or have exhausted available treatment options; Project Confirm, which is an initiative to promote the transparency of outcomes related to accelerated approvals for oncology indications and provide a framework to foster discussion, research and innovation in approval and post-marketing processes, with the goal to enhance the balance of access and verification of benefit for therapies available to patients with cancer and hematologic malignancies; and Project Equity, which is an initiative to ensure that the data submitted to the FDA for approval of oncology medical products adequately reflects the demographic representation of patients for whom the medical products are intended. More recently, as part of FDORA, sponsors will be required to submit Diversity Action Plans (“DAPs”) for Phase 3 studies or other pivotal studies of new drugs. DAPs must include the sponsor’s goals for enrollment for such studies, disaggregated by age group, sex, and racial and ethnic demographic characteristics of clinically relevant study populations; the sponsor’s rationale for such goals; and an explanation of how the sponsor intends to meet such goals. Actions taken in the early days of the new presidential administration have created significant uncertainty as to whether Project Equity will continue and whether the statutory requirements related to DAPs will be implemented by FDA in the near future.options. We are considering these and other policy changes as they relate to our programs.
Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. Furthermore, disruptions at FDA or other government agencies, including statutory, legislative, and policy changes, reduced funding of government agencies, and government shutdowns could also impact the ability of regulatory authorities and government agencies to function normally and support our operations. For example, starting in January 2025, the U.S. government has reduced the number of federal employees, including at FDA, by establishing voluntary termination programs, by position eliminations or by involuntary terminations. Changes in FDA staffing could result in delays in the FDA’s responsiveness or in its ability to review submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all. In addition, the U.S. federal government has shut down repeatedly since 1980, including for a period of 3543 days beginningin on December 22, 2018.2025. During a shutdown, certain regulatory authorities and agencies, such as the FDA, have had to furlough key personnel and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Healthcare reform initiatives culminated in the enactment of the IRA in August 2022, which, among other things, allowsrequires HHS to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that CMS reimburses under Medicare Part B and Part D. The negotiated price may not exceed a statutory ceiling price. Only high-expenditure single-source drugs that have been approved for at least 11 years for single-source biologics (7 years for single-source drugs) are eligible to be selected by CMS for negotiation, with the negotiated price taking effect two years after the selection year. For 2026, the first year in which negotiated prices become effective, CMS selected 10 high-cost Medicare Part D products in 2023, negotiations began in 2024, and the negotiated maximum fair price for each product has been announced. These negotiations resulted in significant price reductions for the products from their 2023 list prices, ranging from 38 to 79 percent, with an average price reduction of 59.4 percent. In addition, CMS has selected and announced the negotiated maximum fair price for 15 additional Medicare Part D drugsdrugs, forwhich negotiatedwill maximumbecome fair pricingeffective in 2027. For 2028, CMS selected an additional 15 drugs, whichcomprised mayof bedrugs covered under eitherMedicare Part D and, for the first time, drugs payable under Medicare Part BB. or Part D, will be selected, and forFor 2029 and subsequent years, 20 Part B or Part D drugs will be selected. ACurrently, a drug or biological product that has an orphan drug designation for only one rare disease or condition will be excluded from the IRA’s price negotiation requirements, but will lose that exclusion if it receives designations for more than one rare disease or condition, or if is approved for an indication that is not within that single designated rare disease or condition, unless such additional designation or such disqualifying approvals are withdrawn by the time CMS evaluates the drug for selection for negotiation. However, as a result of a statutory amendment enacted in July 2025, beginning with the 2028 negotiated price applicability year, a drug may be designated for more than one rare disease or condition and still be excluded from price negotiation, as long as the only approved indications are for such rare diseases or conditions. The negotiated prices have represented, and will continue to represent, a significant discount from average prices to wholesalers and direct purchasers. The law also imposes rebates on Medicare Part D and Part B drugs whose prices have increased at a rate greater than the rate of inflation, and in November 2024, CMS finalized regulations for these inflation rebates. The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties. These provisions may be subject to legal challenges. For example, the provisions related to the negotiation of selling prices of high-expenditure single-source drugs and biologics have been challenged in multiple lawsuits brought by pharmaceutical manufacturers. Thus, while it is unclear how the IRA will be implemented, it will likely have a significant impact on the pharmaceutical industry.
The current administration is pursuing policies to reduce regulations and expenditures across government including at HHS, which include the FDA and CMS, and related agencies. For example, on May 12, 2025, President Trump issued an Executive Order that, among other things, required HHS, within 30 days, to establish and communicate to drug manufacturers most favored nation, or MFN, price targets designed to bring drug prices for American patients in line with those in comparably developed nations. If significant progress towards MFN pricing is not achieved, the Executive Order requires HHS to propose a rulemaking to implement MFN pricing. Recently, on December 23, 2025, CMS issued proposed regulations to establish, under the Center for Medicare and Medicaid Innovation, two mandatory MFN demonstration models under Medicare Parts B and D, respectively. If these rules or other MFN pricing rules are finalized, they are likely to reduce prices of at least some drugs in the United States, if they are also sold in comparator countries. Even if we do not market drugs in such countries, we will be indirectly affected if our drugs competed with drugs whose prices were reduced as a result of MFN pricing initiatives.
At the state level in the United States, legislatures are increasingly enacting laws and implementing regulations designed to control pharmaceutical and biologic product pricing, including price constraints, restrictions on certain product access, reporting on price increases and the introduction of high-cost drugs. In some states, laws have been enacted to encourage importation of lower cost drugs from other countries and bulk purchasing. For example, the FDA releasedissued a final rule in September 2020 providing guidance for states to build and submit plans for importing drugs from Canada, and FDA authorized the first such plan in Florida in January 2024, which has been extended until JulyMay 2025.2026. It is unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subject to legal challenges in the United States or Canada. Other states have also submitted proposals that are pending review by the FDA. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our drug products that we successfully commercialize or put pressure on our product pricing.
Further, these investigators are not our employees and we will not be able to control, other than by contract, the amount of resources, including time,time which they devote to our product candidates and clinical trials. If independent investigators fail to devote sufficient resources to the development of our product candidates, or if their performance is substandard, it may delay or compromise the prospects for approval and commercialization of any product candidates that we develop. In addition, the use of third-party service providers may require us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated.
Any cybersecurity incident could adversely affect our business, by leading to, for example, the loss of trade secrets or other intellectual property, demands for ransom or other forms of blackmail, or the unauthorized disclosure of personal or other sensitive information of our employees, clinical trial patients, customers, and others. Although to our knowledge we have not experienced any material cybersecurity incident to date, if such an event were to occur, it could seriously harm our development programs and our business operations. We could be subject to regulatory actions taken by governmental authorities, litigation under laws that protect the privacy of personal information, or other forms of legal proceedings, which could result in significant liabilities or penalties. Further, a cybersecurity incident may disrupt our business or damage our reputation, which could have a material adverse effect on our business, prospects, operating results, share price, stockholder value, and financial condition. We could also incur substantial remediation costs, including the costs of investigating the incident, repairing or replacing damaged systems, restoring normal business operations, implementing increased cybersecurity protections, and paying increased insurance premiums. Additionally, we may implement, and we continue to evaluate, artificial intelligence-based information technology systems in certain aspects of our operations. The use of such systems presents risks, including data security, privacy, regulatory compliance risks, and the potential for system errors or misuse, which could adversely affect our business, financial condition, or results of operations.
Our potential use of new and evolving technologies, such as artificial intelligence, may present risks and challenges that can impact our business, including by posing cybersecurity and other risks to our confidential and/or proprietary information, including personal information, and as a result we may be exposed to reputational harm and liability.
We may use and integrate artificial intelligence (AI) into our business processes through implementation of AI and through the adoption of commercially available tools. Use of this technology could pose cybersecurity, data privacy, IT, intellectual property, regulatory, legal, operational, competitive, reputational and other risks and challenges that could affect our business. Specifically, risks related to accuracy, bias, artificial intelligence hallucinations, discrimination, harmful content, misinformation, fraud, scams, targeted attacks (including model poisoning or data poisoning), surveillance, data leakage, environmental harms, and other harms may flow from any use or deployment of AI technologies. If we enable or use solutions that draw controversy due to perceived or actual negative societal impact, we may experience brand or reputational harm, competitive harm or legal liability.
A growing number of legislators and regulators are adopting laws and regulations and have focused enforcement efforts on the adoption of AI, and use of such technologies in compliance with ethical standards and societal expectations. These developments may increase our compliance burden and costs in connection with use of AI and lead to legal liability if we fail to meet evolving legal standards or if use of such technologies results in harms or other causes of action we did not predict. For example, the EU’s Artificial Intelligence Act (“AI Act”) is now in effect and is expected to undergo amendments, as introduced in the EU’s November 2025 Digital Omnibus. As enacted, the AI Act imposes significant obligations on providers and deployers of AI systems, and encourages providers and deployers of AI systems to account for EU ethical principles in their development and use of these systems. The scope of requirements depends on legal and risk determinations that rely on novel legal provisions that have not yet been interpreted by courts or regulators, and non-compliance can lead to significant fines.
In the U.S., the AI regulatory environment is complex and uncertain. Over the past year, states have advanced, and in some cases passed, dozens of laws focusing on AI governance and regulation, including regarding deployment of AI in healthcare settings. At the federal level, the Trump Administration has endorsed a federal moratorium on the enforcement of state AI laws, including through a December 11, 2025, executive order on “Ensuring a National Policy Framework for Artificial Intelligence.” So far, these efforts have not been successful at curtailing state action on AI regulation, contributing to a complicated legislative patchwork, which may be litigated in state and federal courts. In addition, various federal regulators have issued guidance and focused enforcement efforts on the use of AI in regulated sectors. The FDA, for example, issued guidance on the use of AI in medical devices, requiring detailed risk management and review processes to obtain approvals. If we develop or use AI systems governed by these laws or regulations, we will need to meet various standards of data quality, transparency, monitoring and human oversight, and we would need to adhere to specific and potentially burdensome and costly ethical, accountability, and administrative requirements, with the potential for significant enforcement or litigation in the event of any perceived non-compliance.
The rapid evolution of AI will require the application of significant resources to design, develop, test and maintain such systems to help ensure that AI is implemented in accordance with applicable law and regulation and in a socially responsible manner and to minimize any real or perceived unintended harmful impacts. The use of certain AI technologies can also give rise to intellectual property risks, including by disclosing or otherwise compromising our confidential or proprietary intellectual property, or by undermining our ability to assert or defend ownership rights in intellectual property created with the assistance of artificial intelligence tools.
Our vendors may in turn incorporate AI tools into their products or services, and the providers of these AI tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to privacy and data security. Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. In addition, the use of generative AI models in our internal or third-party systems may create new attack surfaces or methods for adversaries, which could impact us and our vendors. The integration of AI systems, by us or by our vendors, may increase cybersecurity risk. Any of these effects could damage our reputation, result in the loss of valuable property and information, cause us to breach applicable laws and regulations, and adversely impact our business.
We face potential liability related to the privacy of health information we obtain from clinical trials sponsored by us or our collaborators, from research institutions and our collaborators, and directly from individuals.
We and our partners and vendors are subject to various federal, state, and foreign data protection laws and regulations (i.e., laws and regulations that address data privacy and security). If we fail to comply with these laws and regulations, we may be subject to litigation, regulatory investigations, enforcement notices, enforcement actions, fines, and criminal or civil penalties, as well as negative publicity and a potential loss of business.
In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners. For example, most healthcare providers, including research institutions from which we or our collaborators obtain patient health information, are subject to privacy and security regulations promulgated under HIPAA, as amended HITECH. Under HIPAA, we could potentially face substantial criminal or civil penalties if we knowingly receive individually identifiable health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements for disclosure of individually identifiable health information, or otherwise violate applicable HIPAA requirements related to the protection of such information. Even when HIPAA does not apply, failing to take appropriate steps to keep consumers’ personal information secure may constitute a violation of the Federal Trade Commission Act.
In addition, we may maintain sensitive personally identifiable information, including health information, that we receive throughout the clinical trial process, in the course of our research collaborations, and directly from individuals (or their healthcare providers) who enroll in our patient assistance programs. As such, we may be subject to state laws (for example, the CCPA and the California Privacy Rights Act) requiring notification of affected individuals and state regulators in the event of a breach of personal information.
Our clinical trial programs and research collaborations outside the United States may implicate international data protection laws, including in Europe the GDPR. If our privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices, and/or enforcement actions requiring us to change the way we use personal data and/or fines. In addition to statutory enforcement, a personal data breach can lead to negative publicity and a potential loss of business. Further, following the United Kingdom’s withdrawal from the E.U. effective as of December 31, 2020, we have to comply with the GDPR and the GDPR as incorporated into United Kingdom national law, which may have differing requirements. If we fail to comply with United Kingdom data protection laws, we may be subject to litigation, regulatory investigations, enforcement notices, and/or enforcement actions, as well as negative publicity and a potential loss of business.
We are also subject to evolving EEA laws on data export, as we may transfer personal data from the EEA to other jurisdictions. Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States. For example, on July 16, 2020, the CJEU invalidated the Privacy Shield, under which personal data could be transferred from the EEA to United States entities who had self-certified under the Privacy Shield scheme. Moreover, it is uncertain whether the standard contractual clauses will also be invalidated by the European courts or legislature.
As government authorities issue further guidance on personal data export mechanisms and/or start taking enforcement action, we could suffer additional costs, complaints, and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. These laws and regulations may apply, not only to us, but also to vendors that store or otherwise process data on our behalf, such as information technology vendors. If such a vendor misuses data we have provided to it, or fails to safeguard such data, we may be subject to litigation, regulatory investigations, enforcement notices, and/or enforcement actions, as well as negative publicity and a potential loss of business.
On June 26, 2025, we received formal notice from Nasdaq that we were in compliance with the Equity Rule for continued listing of our securities on the Nasdaq Capital Market tier. We were also notified that we will remain subject to a “Panel Monitor,” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), for a period of one year from the date of the Nasdaq notice, through June 23, 2026. If, during the term of the Panel Monitor, we do not continue to remain in compliance with the Equity Rule, we will not be provided with the opportunity to submit a compliance plan for review by the Staff and must instead request a hearing before Nasdaq to address the deficiency, with such request staying any further action with respect to the listing of our securities on Nasdaq pending completion of the hearing process.
On August 19, 2025, we received written notice from the Staff that as of June 30, 2025, we were non-compliant with the Equity Rule, so our securities would be suspended from trading on Nasdaq on August 28, 2025 unless we request a hearing by August 26, 2025. On August 26, 2025, we timely requested a hearing before the Panel, which stayed the suspension of trading of our securities on Nasdaq pending completion of the hearing process, which included a hearing held before the Panel on September 25, 2025 at which the Company presented a detailed compliance plan, including the filing of the registration statement that includes this prospectus and the offering contemplated herein.
Management's Discussion & Analysis (MD&A)
New heading “Business Development Transactions”
New heading “Beijing Trimmune Biotech Co., Ltd. License”
New heading “Commercial-Ready Molecules Used as Reagents”
New heading “Contract Development and Manufacturing Facility for Biologics”
New heading “Nonoperating Loss”
New heading “Impairment of Long-Lived Asset”
New heading “Change in Fair Value of Investment and Contingent Liability”
New heading “Gain (Loss) on Sale of Put Shares”
New heading “Gain on Extinguishment of Liability”
New heading “Legal Expenses (Recoveries), Net”
New heading “Change in Fair Value of Investment”
New heading “Change in Fair Value of Investment and Contingent Liability”
New heading “Loss on Sale of Put Shares”
New heading “Noncash Transactions”
New heading “Settlement Agreements for Payment of Past Due Amounts”
New heading “Standby Equity Purchase Agreement”
Removed heading “Clinical Development”
Removed heading “Reserve for Credit Losses and Other Expenses”
Largest changes
As of December 31,see in full comparison2024,2025,ourtheprincipalCompanysourcehadof liquidity was $4.7$2.0 million in cash and cash equivalents, including money market investments, and as a result, there was substantial doubt over whether the Company had sufficient capital to operate for the next twelve months from the issuance date of this Annual Report. We considered elements of our financing plan that were probable and likely to be implemented within the next year. While we have already begun to successfully execute our financing plan, includingaraising$6.9$16.3 millionfinancingfor the year ended December 31, 2024 anda license agreement with $7.0$11.5 millioninforminimumtheguaranteesyearpaymentsendedwhichDecember 31, 2025. In addition, during year ended December 31, 2025, the Companyexpectsstrengthened our balance sheet by extinguishing $7.7 million of debt through restructuring and conversion toreceiveequity, including restructuring $7.4 million of Secured Notes and accumulated accretion of a fixed bonus payable upon Maturity Date and converting $270,000 of unsecured promissory notes according to the terms in2025,theweagreement,concludedasthatwellremainingasstepsentering settlement agreements with vendors regarding past due amounts owed which resulted inourreducingfinancingaccountsplanpayablearebynot$5.5probablemillionandasthusoftheyDecemberwere31,not sufficient to include in our going concern analysis.2025.
“On August 15, 2022, the Company entered into the 2022 Loan Agreement with Cogent Bank, pursuant to which it received $6.5 million in proceeds to purchase a building that will become the Company's new headquarters. The loan is secured by a first priority lien on the building. As of December 31, 2024, certain subcontractors have filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction of its new manufacturing facilities and upgraded research laboratories. …”see in full comparison
“The Company owns a property which we are renovating to create offices, laboratories, and a biologics manufacturing facility to produce clinical trial quantities of material to serve our needs, the needs of our licensees, and other small clinical-stage immunotherapeutic companies. We are actively seeking financing to complete this project. …”see in full comparison
“As of December 31, 2024, certain subcontractors have filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction of its new manufacturing facilities and upgraded research laboratories. The loan agreement with Cogent Bank contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements; however, as of the reporting date, the lender has not elected to do so. …”see in full comparison
“The Company recognized a Reserve for credit losses of $5.3 million, reflecting our conclusion that it was not probable that we would recover the interest reserve deposit established upon entering the credit agreement with Prime Capital Ventures (the “Lender”) based on facts known as of December 31, 2023. As reported in the Company’s Form 8-K filed on January 12, 2024, on January 10, 2024, the Company exercised its right to terminate its credit agreement, dated April 21, 2023, with the Lender, as permitted under the terms of the credit agreement. …”see in full comparison
Full comparison: every changed paragraph (192)
HCW Biologics Inc. (“HCWBHCW Biologics” or the “Company”) is a clinical-stage biopharmaceutical company developing proprietarytransformative immunotherapiesfusion immunotherapeutics to support or treat diseases promoted by chronic inflammation,inflammation. especiallyWe age-relatedhave andcreated senescence-associatednovel diseases.compounds Our immunotherapeuticsthat represent a new class of drugdrugs that we believe hashave the potential to fundamentally change the treatment of autoimmune disorders and other proinflammatory diseases, cancer and manysenescence-associated dysplasia. Among other things, we have begun commercialization of certain commercial-ready proprietary compounds for use as reagents in the production of immunotherapeutics for the treatment of infectious diseases and conditionscancer. thatWe arewant promotedour byproducts chronic inflammation — and in doing so,to improve patients’ healthspan as well as their quality of lifelife, and possibly extend longevity.
By leveraging our extensive immunology expertise, we have developed fusion immunotherapeutics representing a new class of drug that we believe has the potential to fundamentally change the treatments for autoimmune diseases, cancer, senescence-associated dysplasia, and many other diseases promoted by chronic inflammation — and in doing so, improve patients’ quality of life and possibly extend longevity.
HCW Biologics has an experienced team led by Dr. Hing C. Wong, our Founder and CEO, who discovered and developed the immunotherapeutic Anktiva® (also known as ALT-803, an IL-15 receptor agonist) through pivotal trials. This blockbuster immunotherapeutic treatment for cancer was sold to ImmunityBio, Inc. in 2017 in a $1.0 billion acquisition. In April 2024, Anktiva® was approved by the U.S. Food and Drug Administration for its first indication, the treatment of BCG-Unresponsive Non-Muscle Invasive Bladder Cancer.
The Company utilized its proprietary drug discovery and development platforms to create novel fusion immunotherapeutics, including multi-specific cytokines, targeted second- generation immune checkpoint inhibitors, and immune-cell engagers, which have the capabilities to rebalance immune cells to reestablish immune tolerance or rejuvenate subsets of immune cells that specifically target cancerous and infected cells, and accumulated, nonfunctional senescent cells. Our specialty is to develop treatments administered by subcutaneous injection, with an eye toward cost containment and cost savings as well as quality-of-life for patients.
Advancing our programs may be accomplished through Company-sponsored programs or with a corporate partner. Business development transactions are considered a key aspect of our financing strategy. We continually assess our programs to determine the optimal path to successfully complete clinical development and launch commercialization.
The Company has selected the following compounds for our clinical development programs, which are currently being developed in Company-sponsored programs:
HCW9302 is a clinical-stage compound that is an injectable, first-in-kind interleukin 2 (“IL-2”) fusion protein complex constructed using the Company’s proprietary TOBI platform technology. Its mechanism of action involves binding to IL-2αβγ receptors predominantly expressed on regulatory T (“Treg”) cells, thereby activating and expanding Treg cells that can suppress unwanted immune and inflammatory responses. Beijing Trimmune Biotech Co., Ltd. (“Trimmune”) has an option to license the rights to the China market for HCW9302.
HCW11-018b is a preclinical molecule that is a novel, tetra-valent T-Cell engager we call the Big BiTE, since it consists of a BiTE (common for all T-Cell Engagers) and an Enhancer (which makes the HCWB T-Cell Engager the “BIG BiTE”). HCW11-018b is designed to address key challenges for first generation T-Cell Engagers: manufacturability, preclinical safety profile, and ability to treat solid tumors.
HCW11-040 is a preclinical molecule that is a unique combination of cytokines and pembrolizumab, a generic form of Keytruda®, in a multi-functional fusion molecule. This lead product candidate exhibits the ability to expand Tpex cells without a cytokine storm in preclinical studies. In addition, it exhibits superior immune-cell activation, expansion, and cytotoxicity against cancer cells and tumors when compared to pembrolizumab in in-vitro and in-vivo studies.
2024 was a pivot point for us. In July 2024, we entered a settlement and general release agreement (“Settlement Agreement”) resolving a long-running arbitration proceeding brought against the Company and Dr. Hing C. Wong, our Founder and Chief Executive Officer, by Altor BioScience, LLC, NantCell, Inc. and ImmunityBio, Inc. (collectively herein, “ImmunityBio”). With the Settlement Agreement, we closed the chapter on an approximately 18-month period during which our clinical development, business development and capital-raising activities were placed substantially on “hold,” awaiting resolution of claims made against us and Dr. Wong by ImmunityBio. See Part I, Item 3. - “Legal Proceedings.” The Settlement Agreement related to the Company’s TOBI Molecules, including HCW9218 and HCW9302, our lead product candidates, among others.
The Company retains all rights to develop and commercialize HCW9302, our clinical-stage, lead product candidate for our autoimmune and proinflammatory disease program. In addition, we hold exclusive rights to develop and commercialize HCW9218 in non-oncology indications, as well as HCW9206 and HCW9201 in all indications. The Settlement Agreement had no impact on our exclusive worldwide license agreement with Wugen Inc. (“Wugen License”). We entered the Wugen License in 2020, granting Wugen Inc. (“Wugen”) limited rights to develop cell-based immunotherapeutic treatments for cancer indications using HCW9206 and HCW9201. WU-NK-101, the Wugen product developed using the licensed molecules, is now being evaluated in a Phase 2 clinical study in solid tumors. ImmunityBio controls the supply of HCW9218, and one of the critical components of continuing our development of HCW9218 is successfully obtaining a supply agreement with ImmunityBio.
In the fourth quarter of 2024, we revealed a new drug discovery and development platform, with a novel scaffolding or “backbone” of proteins called T-cell Receptor β Chain constant region (“TRBC”). The TRBC platform leverages our in-depth knowledge of T cell and natural killer (“NK”) cell immunology. We have developed molecules in each of these classes for treatments of hematologic and solid tumors, virally infected cells, and cellular senescence diseases associated with aging. TRBC Molecules are grouped into three classes, based on their utilities: Class I: Multi-Functional Immune Cell Stimulators; Class II: Second-Generation Immune Checkpoint Inhibitors and Multi-Specific Targeting Fusions; and Class III: Enhanced Immune Cell Engagers. The Company is making an efficacy assessment using relevant animal models, by the end of 2025, results of these studies are expected to show the optimal construction for lead product candidates(s).
With clarity on ownership of intellectual property, the Company reassessed its clinical development pipeline and the future direction of our Company. Our expertise is in immunotherapeutic treatments and our clinical development pipeline will remain so. Our focus continues to be to develop protein-based immunotherapies that are administered by subcutaneous injection. We remain focused on diseases promoted by chronic inflammation driven by senescence, including cancer, especially age-related diseases. The diseases we will target will have no curative FDA approved treatments. Finally, we have selected programs that include life-threatening diseases, such as pancreatic and ovarian cancer, as well as “quality-of-life” indications, such as alopecia areata and senile lentigo. HCW9302 will remain one of our lead product candidates. Future drug discovery and new drug development will be based on TRBC Molecules. There are several potential candidates in each class of TRBC Molecules from which the Company will select lead molecules for each program. Part of this selection will be to determine which TRBC molecules will be developed in-house and which are more appropriate to develop through business development transactions, such as out-licensing agreements.
BusinessClinical Development Transaction
HCW9302: On November 17, 2025, the first patient was dosed at The Ohio State University Wexner Medical Center for the Company-sponsored, multi-center first-in-human clinical trial to evaluate HCW9302 in patients with alopecia areata (NCT07049328). This marks a major milestone in the Company’s clinical development program in autoimmune diseases. A preliminary human data read out for this study is expected in the first half of 2026.
HCW11-018b: IND-enabling activities are expected to be completed in the first half of 2027. The Company intends to file an IND application shortly thereafter, for authorization to evaluate HCW11-018b, our second-generation T-Cell engager, in patients with pancreatic cancer.
HCW11-040: IND-enabling activities are expected to be completed in second half of 2027. The Company intends to file an IND application shortly thereafter, for authorization to evaluate HCW11-040, our second-generation immune checkpoint inhibitor, in neonatal infants with a chronic lung condition called BPD.
Business Development Transactions
Beijing Trimmune Biotech Co., Ltd. License
The Company is developing HCW11-006 through a corporate partnership with Beijing Trimmune Biotech Co., Ltd. (“Trimmune”). Trimmune is a new operating entity formed for the purpose of development and commercialization of HCW11-006, by WY Biotech Co., Ltd. (“WY Biotech”), a China-based company specializing in the early-stage development of recombinant protein drugs and gene/cell therapies, and the Company. Trimmune investors include CITIC Medical Fund, a multi-billion-dollar investment fund focused on innovative companies primarily targeting pharmaceuticals, biotechnology, medical devices, and diagnostics, and TigerYeah Capital Fund of TigerMed, a global leading Contract Research Organization. Trimmune is led by a team with an impressive track record for success in the development and commercialization of innovative drugs that treat diseases with large, unmet medical needs for the Chinese market. HCW11-006 is a preclinical molecule that combines several different immune functional domains as part of a group of compounds characterized as multi-functional immune cell stimulators.
As of March 16, 2026, we received the full payment of the upfront licensing fee for the exclusive worldwide license for HCW11-006, a preclinical molecule, from Trimmune. The Company received $3.5 million in gross proceeds, or $2.9 million net of taxes. In addition to the cash portion of the upfront license fee, before taxes, the Company also received a minority co-founder equity interest in Trimmune. In addition, for additional compensation, Trimmune has a option to license the China rights to HCW9302.
HCW Biologics is eligible to receive additional payments under the license, including development milestone payments and double-digit royalties on future product sales, as well as a portion of the proceeds from certain future transaction(s) involving the licensed molecule, if and when such transaction(s) occur. Upon completion of Phase 1 by the licensee, the Company may exercise its Opt-In Rights to reclaim the rights to the Americas market. For an additional fee, Trimmune may exercise an option to license the China rights to HCW9302, the Company’s clinical-stage molecule, currently being evaluated in a Phase 1 trial in an autoimmune disorder.
Commercial-Ready Molecules Used as Reagents
During the year ended December 31, 2025, the Company launched two of its proprietary fusion protein molecules as commercial-ready molecules used as reagents to be used to support the production of immunotherapeutics to treat infectious diseases and cancer. While the Company’s focus remains on the development of fusion immunotherapeutics for the treatment of diseases promoted by chronic inflammation, the Company intends to market these reagents directly or through a corporate partnership to generate revenue which could offset development costs for its immunotherapeutic treatments. On March 13, 2026, Science Advances, a peer-reviewed, high-impact journal, released a publication with the Company’s data that showed the Company’s proprietary, commercial-ready compound, HCW9206, could fundamentally change how CAR-T cell therapies are manufactured and potentially improve how they perform against diseases such as cancer and HIV. These findings support the Company’s belief that HCW9206 is a leap forward in both clinical potential and manufacturing efficiency.
On November 17, 2024, the Company entered an exclusive worldwide license agreement with WY Biotech Co., Ltd. (“WY Biotech”), a China-based company specializing in the early-stage development of recombinant protein drugs and gene/cell therapies, to develop and commercialize HCW11-006, one of the Company’s product candidates generated with our TRBC drug discovery platform, for therapeutic use (the “WY License Agreement”). Key terms of the WY License Agreement include that WY Biotech has agreed to pay HCWB $7.0 million in an upfront payment.
As the Company disclosed in the Form 8-K filed on March 19, 2025, the Company and WY Biotech agreed to amend the WY Biotech License Agreement due to a delay in WY Biotech coming to a definitive agreement with their designated contract development and manufacturing organization (“CDMO”). Specifically, in order to accommodate the delay, the parties agreed to restructure the payment schedule for the $7.0 million upfront license fees, including delaying the initial $4.0 million portion thereof that was originally due on or about March 17, 2025, to reduce the performance milestones that the Company must complete in order to earn the full $7.0 million nonrefundable upfront payment in June 2025, and to provide that either party may terminate the Agreement if WY Biotech is not able to definitively engage its CDMO by June 2025. Under the amended terms, the Company expects to fulfill our performance obligations and earn the full $7.0 million upfront fee in June 2025. There were no other material changes to the WY Biotech License Agreement, which involves the grant to WY Biotech of an exclusive, world-wide license to use and apply HCW11-006 for in vivo applications. See Exhibits 10.27 and 10.28 to this Annual Report on Form 10-K.
The Company has now completed extensive preclinical studies that further support our belief in the potential for HCW11-006 for both an in vivo and ex vivo therapy. The in vivo therapy is licensed by WY Biotech, however, the Company retained all rights to the ex vivo therapy and applications as a reagent in cell-based therapy treatments, including cell-based therapies, such as CAR-T therapies. The Company considers WY Biotech License provisions for the Opt-In Right to take over the development of HCW11-006 for the Americas markets to be an important feature of the WY Biotech License. We believe our right to recapture this market is a potentially high value opportunity. Further, we will be able to base our decision to opt-in on the human-data read-out from a Phase 1 clinical trial, which will mitigate our development risks and provide valuable clinical information about the potential for the indications we will use for Phase 2 clinical studies. See Part I, “Business —Out-License Programs.”
The Company has identified the Class III TRBC Molecules, Immune Cell Engagers, as the next program for out-licensing. In light of recent transactions coupled with the challenges of clinical development, we plan to take advantage of industry interest in this breakthrough drug. The Company continually assesses our portfolio of molecules in order to identify potential business development opportunities.
During the second half of 2025, the Company sold 600,000 shares of Common Stock through its Standby Equity Purchase Agreement (“SEPA”) with Square Gate Capital for an aggregate of approximately $2.5 million in gross proceeds. As of November 20, 2025, the Company will be restricted from using the SEPA for a standstill period of 6 months, in accordance with terms of the November 2025 Inducement Transaction.
On May 15, 2025, the Company raised $5.0 million before commissions and transaction costs payable by us through the sale of 671,150 Units for $7.45 per Unit, each consisting of one share of Common Stock (or Pre-funded Warrant that may be exercised to purchase one share of Common Stock) plus two Common Stock Warrants each of which can be exercised to purchase one share of Common Stock. The Common Stock Warrants had an exercise price of $7.45 per share, were exercisable immediately upon issuance, and will expire on the five-year anniversary of the original issuance date.
On November 20, 2025, the Company raised $4.0 million before commissions and transaction costs payable by us through an inducement to exercise warrants to purchase 1,510,205 shares of Common Stock at $2.66 per share. These warrants were issued in November 2024 and May 2025, and immediately before the transaction had an exercise price of $7.45 per share. In addition, the Company agreed to issue to the investor unregistered warrants to purchase an aggregate of 3,020,410 shares of the Company’s Common Stock with an exercise price of $2.41 per share (the “New Warrants”). The New Warrants will be immediately exercisable and will expire on the five and one-half year anniversary of the original issuance date. On January 29, 2026, the SEC declared effective a resale registration statement on Form S-1 (File Number 333-292652) covering the New Warrants.
On February 19, 2026, the Company raised $1.5 million before commission and transaction costs payable by us through the sale of 2,477,292 Units for $0.6055 per Unit, each consisting of one share of Common Stock (or Pre-funded Warrant that may be exercised to purchase one share of Common Stock) plus one Common Stock Warrant each of which can be exercised to purchase one share of Common Stock. In a private transaction, the Company agreed to reprice the 3,020,410 warrants that were issued in November 2025 from $2.41 per share to $0.0655 per share. The investor’s ability to exercise the Common Stock Warrants issued in this transaction and the reduction of the exercise price for the warrants issued in November 2024 are both subject to stockholder approval. The Company filed a definitive proxy on March 13, 2026 for a Special Stockholders’ Meeting to be held on April 27, 2026.
On February 20, 2024, we sold an aggregate of 1,785,718 shares of our common stock to certain of our officers and directors, at a purchase price of $1.40 per share, for an aggregate purchase price of $2.5 million.
Through October 31, 2024, the Company issued an aggregate of $6.9 million in Senior Notes, which are secured by the Company’s shares of Wugen common stock which were consideration for the license fee for the Wugen License. The holders of $6.6 million of the outstanding principal for the Senior Notes have agreed to Principal Terms for the conversion into shares of the Company’s Common Stock at a conversion price of $0.65 per share, warrants to purchase $3.3 million of the Company’s Common Stock at an exercise price of $0.65 per share, and some of the Company’s shares of Wugen common stock. The conversion is subject to stockholder approval. See Part II, Item 9B, “Other Information” for more information on the Special Meeting of the Stockholders.
On November 18, 2024, the Company entered a $6.9 million securities purchase agreement with an institutional investor, involving a registered direct offering and a concurrent private placement of common stock and warrants. The offering, priced above market under Nasdaq rules and closed on November 20, 2024. As a result of this offering, the Company issued 6,717,000 shares of Common Stock and warrants to purchase 6,717,000 shares of Common Stock at $1.03 per shares, at a combined price of $1.03 per unit consisting of one share of Common Stock and one five-year warrant to purchase a share of Common Stock.
An important part of the Company’s future financing plans is the ability to access the public markets for the sale of securities. This requires that the Company remain in compliance with all Nasdaq Listing Rules. As of the date of issuance of these financial audited statements, the Company is compliant with all listing rules of the Nasdaq Capital Market tier.
When we were notified of deficiencies in compliance with Nasdaq listing rules, we requested and were granted an opportunity to present our plan to regain compliance to Nasdaq. On MarchOctober 3,13, 2025, the Nasdaq Hearings Panel (the “Panel”) of The Nasdaq Stock Market LLC (“Nasdaq” or the “Exchange”) granted the Company an extension in which to regain compliance with all Nasdaq continued listing rules.rules of the Exchange. The Panel’s determination followedfollows athe Company’s hearing on FebruarySeptember 13,25, 2025, at which the Company presented, and the Panel consideredconsidered, the Company’s plan to regain compliance with Listing Rules 5450(a)(1), 5450(b)(2)(A) and 5450(b)(2&3)(C), the minimumEquity bidRule. price (“Bid Price”), the market value of publicly held securities (“MVPHS”) and the market value of listed securities (“MVLS”) rules, respectively. As a result of the extension, theThe Panel granted the Company’s request for continued listing on the Exchange, providedsubject thatto, among other things, the Company demonstratesdemonstrating compliance with the Bid PriceEquity Rule by AprilDecember 28,31, 2025, and with all other Exchange continued listing rules by JuneFebruary 15,16, 2025.2026.
On February 26, 2026, the Nasdaq Hearings Panel found that the Company regained compliance with all continued listing rules of The Nasdaq Capital Market. Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor. Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of this letter. If, within that one-year monitoring period, Staff finds the Company again out of compliance with the Equity Rule that was the subject of the exception, the Staff will issue a Delist Determination Letter. In such a case, the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable.
Contract Development and Manufacturing Facility for Biologics
The Company remains committed to establishing some control over our clinical supply of materials, and the supply of licensed molecules for our licensees, as well as other clinical-stage companies developing biologics. We have retained manufacturing rights for the licensed molecules under our license agreements. With the threat of pharmaceutical tariffs hanging over the biopharmaceutical industry and a push to “re-shore” manufacturing, especially pharmaceuticals, a growing list of major drug makers are bolstering their manufacturing footprints in the U.S.
For the year ended December 31, 2025, the Company recognized an impairment of $1.5 million related to its Property. In its assessment of potential indicators of impairment of the asset, the Company concluded that during the year, legal procedures were initiated by holders of mechanics liens against the Company’s Property with claims for nonpayment on April 17, 2025, and the Company was notified by Cogent Bank that it exercised its discretion to make a demand that the Company cure the mechanics liens on October 24, 2025. See See Part I, Item 3. – “Legal Proceedings.” The Company has continued to pursue financing alternatives to provide the funding needed to come current in past amounts due and complete the construction and renovation of the Property.
Clinical Development
On January 28, 2025, the Company received clearance of its IND from the FDA to initiate a first-in-human Phase 1 dose escalation clinical trial to evaluate one of its lead drug candidates, HCW9302, in patients with moderate-to-severe alopecia areata, a common autoimmune disease in humans that currently has no curative FDA approved treatments.
As of December 31, 2024, the Company was required to close the Phase 2 clinical study to evaluate HCW9218 in combination with neoadjuvant chemotherapy in the treatment of ovarian cancer sponsored by the University of Pittsburgh Medical Center, as required under the Settlement Agreement, due to lack of enrollment.
Our operations have been affected by many headwinds, including inflationary pressures, tariffs, rising interest rates, ongoing global supply chain disruptions resulting from increased geopolitical tensions such as the war between Russia and Ukraine, the war in the Middle East, China-Taiwan relations, financial market volatility and currency movements. These headwinds, specifically the supply chain disruptions, have adversely impacted our ability to procure certain services and materials, which in some cases impacts the cost and timing of clinical trials and IND-enabling activities. In addition, we have been impacted by inflation when procuring materials required for the buildout of our new headquarters, the costs for recruiting and retaining employees and other employee-related costs. Further, rising interest rates would also increase borrowing costs to the extent that the Company takes on any additional debt. The Company uses a number of strategies to effectively navigate these issues, including product redesign, alternate sourcing, and establishing contingencies in budgeting and timelines. However, the extent and duration of such events and conditions, and resulting disruptions to our operations, are highly unpredictable.
For discussion of risks related to potential impacts of supply chain, inflation, geopolitical and macroeconomic challenges on our operations, business results and financial condition, see Part I, Item 1A. “Risk Factors” in this Annual Report.
We have no products approved for commercial sale and have not generated any revenue from commercial product sales of internally-developed immunotherapeutic products for the treatment of autoimmune disorders, cancer and othersenescence-associated age-relateddysplasia. diseases.Since Theinception, principalour sole source of ourrevenue revenues to date have been generatedis from worldwide exclusive licenses for rights to developlicense and commercializea someclinical ofdevelopment oursupply proprietary molecules. See Note 1 to our audited financial statements included elsewhere in this Annual Report for more information.agreement.
The Company entered the Wugen License with Wugen at the end of 2020, and we entered a development supply agreement with Wugen to provide it with clinical development materials needed for research and clinical development in Q1 2021. During the year ended December 31, 2025, the Company agreed to a request from Wugen to suspend the Wugen License, which will run for a period of one year from the effective date of the suspension, or until May 29, 2026. The Company expects to generate revenue for ancillary services provided to Wugen during this time, as provided for under the amended Wugen license. During the suspension, the Company is free to enter licenses with other parties for the molecules that are subject of the Wugen license.
We derive revenue from a license agreement granting rights to Wugen to further develop and commercialize products based on two of our internally-developed molecules. Consideration under our contract included a nonrefundable upfront payment, development, regulatory and commercial milestones, and royalties based on net sales of approved products. Additionally, HCW Biologics retained manufacturing rights and has agreed to provide Wugen with clinical and research grade materials for clinical development and commercialization of licensed products under separate agreements.
WeConsideration under our contract included a nonrefundable upfront payment, development, regulatory and commercial milestones, and royalties based on net sales of approved products. In addition, the Company earned revenue from supplying Wugen with clinical and research grade materials for clinical development and commercialization of licensed products under a separate development supply agreement. For the recognition of revenue, we assessed which activities in the Wugen License should be considered distinct performance obligations that should be accounted for separately. We develop assumptions that require judgement to determine whether the license to our intellectual property is distinct from the research and development services or participation in activities under the Wugen License.
Performance obligations relating to the granting a license and delivery of licensed product and R&D know-how were satisfied when transferred upon the execution of the Wugen License on December 24, 2020. The Company recognized revenue for the related consideration at a point in time. The revenue recognized from a transaction to supply clinical and research grade materials entered into under the MSA and covered by a Statement of Work,Work (“SOW”), represents one performance obligation that is satisfied over time. The Company recognizes revenue generated for supply of material for clinical development using an input method based on the costs incurred relative to the total expected cost, which determines the extent of the Company’s progress toward completion.
WY BiotechTrimmune License
We expect to derive revenue from a license agreement granting rights tofor WY Biotech to further developdevelopment and commercialize products based on onecommercialization of ourin internally-developedvivo molecules.applications using HCW11-006. Consideration under our contract included a nonrefundable upfront payment, development, regulatory and commercial milestones, andas well as royalties based on net sales of approved products. This closing occurred in the first quarter of 2026.
We assessed which activities in the WY Biotech License, as amended, should be considered distinct performance obligations that should be accounted for separately. We concluded that there is one performance obligation relating to the granting of a license and delivery of the Technology Transfer Report for certification of the licensed molecule required to develop the preclinical licensed molecule. Therefore, the Company will not recognize revenue until the Technology Transfer Report is delivered for certification of the licensed molecule, which we anticipate will take place in the second quarter of 2025.
We expense research and development costs as they are incurred. Costs for contract manufacturing are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the agreement, and the pattern of payments for goods and services will change depending on the material. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.
General and administrative expenses consist primarily of employee-related expenses, including salaries, related benefits, and stock-based compensation expenseexpenses for employees in the executive, legal, finance andfinance, accounting, human resources,resources and other administrative functions.personnel, Generalas well as professional fees (including legal, audit and administrativetax expenses also include third-party costs such asservices), insurance costs, fees for professional services, such as legal fees in the ordinary course of business, auditing and tax services, facilities administrative costs,expenses, and other expenses.public company compliance costs.
Legal Expenses (Recoveries), Net
Legal expenses (recoveries), net consist of legal fees incurred in connection with the Arbitration and related proceedings involving the Company and Dr. Hing C. Wong, net of insurance reimbursements received.
Nonoperating Loss
Legal expenses consist of fees incurred by the Company in its own defense and that of officers and employees in connection with a legal matter brought against the Company and Dr. Hing C. Wong, our Founder and Chief Executive Officer, by a former employer of Dr. Wong.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors previously disclosed by us in our Annual Report. The risk factors included our Annual Report continue to apply to us and describe risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the forward-looking statements contained in this Quarterly Report. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business, financial condition and results of operations.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Reverse Stock Split”
New heading “May 2026 Sale of Common Stock, Pre-Funded Warrants and Common Stock Warrants”
New heading “July 2026 Sale of Units Comprised of Common Stock, Pre-Funded Warrants and Rights to Receive Common Stock Warrants”
New heading “Preparing for Business Development Transaction for Commercial-Ready Reagents”
New heading “Settlement of Accounts Payable Obligations”
New heading “Nasdaq Compliance”
New heading “Clinical Development”
New heading “Preliminary Human Data Readout for Phase 1 Clinical Study Evaluating HCW9302 as Monotherapy in Alopecia Areata”
New heading “Milestone for HCW11-018b, Leading Product Candidate in Company’s Tetravalent T-Cell Engager Program”
New heading “AlloTera Therapeutics License”
New heading “Change in Fair Value of Investment and Contingent Liability”
New heading “Gain on Extinguishment of Liability”
New heading “Gain on Extinguishment of Liability”
New heading “Change in Fair Value of Warrant Liability”
New heading “Comparison of the Six Months ended June 30, 2025 and June 30, 2026”
New heading “Research and Development Expenses”
New heading “General and Administrative Expenses”
New heading “Legal Expenses (Recoveries), Net”
New heading “Interest Expense”
New heading “Change in Fair Value of Investment and Contingent Liability”
New heading “Gain on Extinguishment of Liability”
New heading “Change in Fair Value of Warrant Liability”
New heading “Other Income, Net”
New heading “Earnings per Share”
Removed heading “Clinical Development Highlights”
Removed heading “Trimmune License”
Removed heading “Commercial-Ready Molecules Used as Reagents”
Removed heading “Compliance with Nasdaq Listing Rules”
Removed heading “Change in Fair Value of Investment”
Removed heading “Fair Value Measurements”
Largest changes
“On October 24, 2025, the Company was notified by Cogent Bank that it exercised its discretion to make a demand that the Company cure the defaults no later than thirty (30) days after receipt of this letter in strict compliance with Section 7.2(3) of the Loan Agreement by: …”see in full comparison
see in full comparisonOurThe Company’s operations have been affected by many headwinds, including inflationary pressures, tariffs, rising interest rates, ongoing global supply chain disruptions resulting from increased geopolitical tensions such as the warbetween Russia and Ukraine, the warin the Middle East, the conflict between Russia and Ukraine, China-Taiwan relations, financial market volatility and currency movements.TheseTheheadwinds,Companyspecifically the supply chain disruptions, have adversely impacted our ability to procure certain services and materials, which in some cases impacts the cost and timing of clinical trials and IND-enabling activities. In addition, we havehas been impacted byinflationinflation, and may continue to be so, whenprocuringsecuring materialsrequiredneeded forthe buildout ofournew headquarters,operations, the costs for recruiting and retaining employees and other employee-related costs.Further,Managementrising interest rates would also increase borrowing costs to the extent that the Company takes on any additional debt. The Company usesemploys a number of strategies to effectively navigate these issues, including product redesign, alternate sourcing, and establishing contingencies in budgeting and timelines.However,Future developments in these and other areas present material uncertainty and risk with respect to the Company’s clinical trials, IND-enabling activities, as well as the Company’s financial condition and results of operations. The extent and duration of such events and conditions, and resulting disruptions to our operations, are highly unpredictable.
“An important part of the Company’s future financing plans is the ability to access the public markets for the sale of securities. This requires that the Company remain in compliance with all Nasdaq Listing Rules. On May 5, 2026, the Company was granted a Hearing before a Nasdaq Hearings Panel to appeal a determination by the Nasdaq Listing Qualifications Staff (the “Staff”) to delist the Company’s securities from The Nasdaq Capital Market (“Nasdaq”) due to the Company’s non-compliance with the $1.00 minimum bid price requirement. …”see in full comparison
“July 2026 Sale of Units Comprised of Common Stock, Pre-Funded Warrants and Rights to Receive Common Stock Warrants”see in full comparison
“Preliminary Human Data Readout for Phase 1 Clinical Study Evaluating HCW9302 as Monotherapy in Alopecia Areata”see in full comparison
“Milestone for HCW11-018b, Leading Product Candidate in Company’s Tetravalent T-Cell Engager Program”see in full comparison
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The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our unaudited
condensed interim financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) our audited
financial financial
statements and related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial
Condition Condition
and Results of Operations” for the fiscal year ended December 31, 2025 included in the Annual Report on Form 10-K filed
with the
U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026 (the “Annual Report”). Our historical
results results
are not necessarily indicative of the results that may be expected for any period in the future. Unless the context requires
otherwise, otherwise,
references in this Quarterly Report on Form 10-Q to the “Company,” “HCW Biologics,” “HCWBHCWB,”,
“we,”
“us” and “our” refer to HCW Biologics Inc.
HCW
Biologics Inc. (“HCW Biologics” or the “Company”) is a clinical-stage biopharmaceutical company developing transformative
fusion immunotherapeutics to support or treat diseases promoted by chronic inflammation. We have created novel compounds that represent
a new class
of drugs that we believe have the potential to fundamentally change the treatment of autoimmune disorders and other inflammatory diseases,
diseases, cancer and senescence-associated dysplasia. AmongIn other things,addition, we have begun commercialization of certain commercial-ready
proprietary compounds
for use as reagents into support the production of immunotherapeutics for the treatment of infectious diseases and cancer.
We want our products to improve patients’ healthspan as well as their quality of life, and possibly extend longevity.
Clinical
Development Highlights
The
Company has selected the following compounds for our clinical development programs, which are currently being developed in Company-sponsored
programs:
HCW9302
Clinical-stage
compound that is an injectable, first-in-kind interleukin 2 (“IL-2”) fusion protein complex constructed using the Company’s
proprietary TOBI platform technology. Its mechanism of action involves binding to IL-2αβγ receptors predominantly expressed
on regulatory T (“Treg”) cells, thereby activating and expanding Treg cells that can suppress unwanted immune
and inflammatory responses. Beijing Trimmune Biotech Co., Ltd. (“Trimmune”) has an option to license the rights to the China
market for HCW9302.
On
November 17, 2025, the first patient was dosed at The Ohio State University Wexner Medical Center for the Company-sponsored, multi-center
first-in-human clinical trial to evaluate HCW9302 in patients with alopecia areata (NCT07049328). This marks a major milestone in the
Company’s clinical development program in autoimmune diseases. With continued patient enrollment, a full Phase 1 human data readout
is expected in Q4 2026.
HCW11-018b
HCW11-018b,
the lead candidate of the “Big BiTE” program, is a tetra-valent T-cell engager designed to enhance anti-tumor activities
and tolerability to treat a wide spectrum of solid tumors. The Company presented a poster at the American Association of Cancer Research
Annual Meeting 2026, which took place from April 17 – 22, 2026 in San Diego, California.
The
Company’s preclinical data showed HCW11-018b could significantly shrink well-established tumors and prevent cancer metastasis in
xenograft animal models with broad coverage for human solid tumor indications. The new data in the poster has revealed the mechanism
of action that drives these results. HCW11-018b utilizes Cis-binding (or cis-interaction) to regulate immune cell reactivity that masks
the receptors which prevent trans-binding and inhibit membrane flexibility. The data showed that HCW11-018b is only activated within
the tumor microenvironment, which is expected to increase the efficacy and tolerability of this tetra-valent T Cell Engager against human
tumor cells.
IND-enabling
activities are expected to be completed in the first half of 2027. The Company intends to file an IND application shortly thereafter,
for authorization to evaluate HCW11-018b in patients with pancreatic cancer.
HCW11-040
HCW11-040
is a preclinical molecule that is a unique combination of cytokines and pembrolizumab, a generic form of Keytruda®, in a multi-functional
fusion molecule. This lead product candidate exhibits the ability to expand exhausted progenitors T (“Tpex”) cells without a cytokine storm in preclinical studies.
In addition, it exhibits superior immune-cell activation, expansion, and cytotoxicity against cancer cells and tumors when compared to
pembrolizumab in in-vitro and in-vivo studies.
IND-enabling
activities for HCW11-040 are expected to be completed in the second half of 2027. The Company intends to file an IND application shortly
thereafter, for authorization to evaluate HCW11-040 in neonatal infants with bronchopulmonary dysplasia (“BPD”). BPD is a
chronic lung disease affecting premature infants, characterized by lung damage from oxygen and ventilator use. Infants who have BPD may
have long-term problems, including increased risk of asthma, respiratory infections, and potential delays in development.
Reverse Stock Split
The Company completed a one-for-six reverse stock split on June 30, 2026 (the “Reverse Stock Split”). All share amounts and price per share amounts discussed herein reflect the Reverse Stock Split.
Advancing
our programs may be accomplished through Company-sponsored programs or with a corporate partner. Business development transactions are
considered a key aspect of our financing strategy. We continually assess our programs to determine the optimal path to successfully complete
clinical development and launch commercialization.
Trimmune
License
The
Company is developing HCW11-006 through a corporate partnership with Beijing Trimmune Biotech Co., Ltd. (“Trimmune”). Trimmune
is a new operating entity formed for the purpose of development and commercialization of HCW11-006, by WY Biotech Co., Ltd. (“WY
Biotech”), a China-based company specializing in the early-stage development of recombinant protein drugs and gene/cell therapies,
and the Company. Trimmune investors include CITIC Medical Fund, a multi-billion-dollar investment fund focused on innovative companies
primarily targeting pharmaceuticals, biotechnology, medical devices, and diagnostics, and TigerYeah Capital Fund of TigerMed, a global
leading Contract Research Organization. Trimmune is led by a team with an impressive track record for success in the development and
commercialization of innovative drugs that treat diseases with large, unmet medical needs for the Chinese market. HCW11-006 is a preclinical
molecule that combines several different immune functional domains as part of a group of compounds characterized as multi-functional
immune cell stimulators.
As
of March 16, 2026, we received the full payment of the upfront licensing fee for the exclusive worldwide license for HCW11-006, a preclinical
molecule, from Trimmune. The Company received $3.5 million in gross proceeds, or $2.9 million net of taxes. In addition to the cash portion
of the upfront license fee, before taxes, the Company also received a minority co-founder equity interest in Trimmune. In addition, for
additional compensation, Trimmune has an option to license the China rights to HCW9302.
HCW
Biologics is eligible to receive additional payments under the license, including development milestone payments and double-digit royalties
on future product sales, as well as a portion of the proceeds from certain future transaction(s) involving the licensed molecule, if
and when such transaction(s) occur. Upon completion of Phase 1 by the licensee, the Company may exercise its Opt-In Rights to reclaim
the rights to the Americas market. For an additional fee, Trimmune may exercise an option to license the China rights to HCW9302, the
Company’s clinical-stage molecule, currently being evaluated in a Phase 1 trial in an autoimmune disorder. These elements were
not deemed to be probable, and the Company did not recognize these events in the three months ended March 31, 2026.
Commercial-Ready
Molecules Used as Reagents
On
March 13, 2026, Science Advances, a peer-reviewed, high-impact journal, released a publication with the Company’s data that showed
the Company’s proprietary, commercial-ready compound, HCW9206, could fundamentally change how CAR-T cell therapies are manufactured
and potentially improve how they perform against diseases such as cancer and HIV. These findings support the Company’s belief that
HCW9206 is a leap forward in both clinical potential and manufacturing efficiency. The Company is actively seeking an appropriate corporate partner to commercialize the reagent program.
May 2026 Sale of Common Stock, Pre-Funded Warrants and Common Stock Warrants
On May 21, 2026, the Company completed a $4.0 million private placement with a group of existing stockholders, in which the Company sold 474,496 units, each of which consisted of one share of Common Stock, or a Pre-Funded Warrant in lieu thereof, and a Common Stock Warrant to purchase one share of Common Stock. Net proceeds to the Company after placement agent commissions and offering costs were $3.5 million. On June 18, 2026, the SEC declared effective a resale registration statement on Form S-1 (File No. 333-296577) covering the resale of shares of Common Stock and warrants issued in this private placement. Investors included a single institutional investor and certain of our directors and executive officers. Scott Garrett, Chairman of our board of directors, purchased $250,000 of securities, Hing C. Wong, our Founder and Chief Executive Officer, purchased $160,000 of securities, and Rebecca Byam, our Chief Financial Officer, purchased $20,000 of securities. Such purchases were made on the same terms and conditions as those offered to other investors. On June 22, 2026, the holder exercised all Pre-Funded Warrants issued in this transaction to purchase 403,322 shares of Common Stock for $0.0001 per share.
July 2026 Sale of Units Comprised of Common Stock, Pre-Funded Warrants and Rights to Receive Common Stock Warrants
Subsequent to June 30, 2026, on July 29, 2026, the Company completed a private placement with certain accredited investors in which the Company sold 618,682 units, each unit consisting of one share of Common Stock, or a Pre-Funded Warrant in lieu thereof, and (ii) the right to receive one Common Stock Warrant upon, and subject to, stockholder approval of the issuance of such Common Stock Warrants, which approval the Company is obligated to seek pursuant to the terms of the purchase agreement. Gross proceeds of the offering were approximately $1.6 million before deducting offering expenses. Hing C. Wong, Ph.D., our Founder and Chief Executive Officer, Scott Garrett, Chairman of our board of directors, and Lee Flowers, our Senior Vice President of Business Development, participated in the private placement on the same terms and conditions as the other investor.
Preparing for Business Development Transaction for Commercial-Ready Reagents
Two of our internally-developed, multi-cytokine fusion protein molecules, HCW9201 and HCW9206, were licensed to AlloTera Therapeutics in 2020. During 2025, AlloTera Therapeutics was refocusing its clinical development programs, and the Company agreed to a suspension of the AlloTera Therapeutics License. On May 21, 2026, the Company elected to terminate the AlloTera Therapeutics License according to the terms provided in the suspension agreement.
We are positioning HCW9206 and HCW9201 as commercial-ready reagents for use in supporting the manufacture of cell-based immunotherapeutics to treat cancer and infectious diseases. The extensive research done in collaboration with the Albert Einstein College of Medicine showed that HCW9206 and similar molecules developed by the Company appear to support more efficient production of CAR-T cells that keep fighting disease longer. We intend to enter into a commercialization partnership with a biopharmaceutical manufacturing company in the second half of 2026.
Since inception in December 2020, the Company has recognized $16.2 million in revenue derived from the AlloTera Therapeutics License, including upfront license fees in cash and shares of AlloTera Therapeutics common stock, purchases of the Company’s inventory of certain molecules needed for manufacturing, and purchases of materials for its clinical trials. In addition, the Company received over $1.8 million in reimbursements for its R&D expenses. The upfront license fee is nonrefundable, and as such, the Company retains ownership of the 2.2 million shares of AlloTera Therapeutics common stock.
Settlement of Accounts Payable Obligations
The Company continues to strengthen its balance sheet through repayment and restructuring of obligations. In the three months ended June 30, 2026, the Company settled $2.8 million of overdue accounts payable, including $1.1 million owed to B&I Contractors, Inc. (“B&I”) and $1.7 million owed to Eirgenix. Settlement terms fully resolved all amounts claimed to be owed by the Company to these vendors. In the three months ended June 30, 2026, the Company paid Eirgenix $620,000 and paid B&I $512,655. In the six months ended June 30, 2026, the Company paid Eirgenix $1,240,000 and paid B&I $865,655.
Nasdaq Compliance
On June 26, 2025, the Company received formal notice from The Nasdaq Stock Market LLC (“Nasdaq”) that the Company is in compliance with Listing Rule 5550(b)(1) (the “Equity Rule”). On June 29, 2026, the Company received written notice from the Nasdaq Listing Staff that the Nasdaq Hearings Panel found that the Company had regained compliance with the Bid Price Rule, subject to certain restrictions. The Company will be subject to a Mandatory Panel Monitor until June 17, 2027. See Part II, Item 1, “Legal Proceedings – Other Matters.”
Clinical Development
Preliminary Human Data Readout for Phase 1 Clinical Study Evaluating HCW9302 as Monotherapy in Alopecia Areata
On June 16, 2026, the Company disclosed a preliminary human data readout for the Phase 1 clinical study evaluating HCW9302 in patients with alopecia areata. The Company believes that based on the human data readout and extensive preclinical studies, HCW9302 is potentially a best-in-class IL-2 based treatment for autoimmune diseases by expanding and activating regulatory T cells. Preliminary results indicate that HCW9302 is well tolerated, with no dose-limiting toxicities or significant known IL-2-treatment-related adverse effects, including no reported incidence of capillary leak syndrome, cytokine release syndrome, or increase in blood eosinophil counts.
The readout was for two dose cohorts in a dose-escalating study. All patients, including the first dose cohort at one (1) microgram/kg body weight and the second dose cohort at three (3) micrograms/kg body weight, received a single subcutaneous dose of HCW9302 monotherapy. In the second dose cohort, all three participants showed preliminary indications of improvement in their Severity of Alopecia Tool (“SALT”) scores. These three participants, all with mild alopecia, showed a ≥25% reduction in SALT scores compared to baseline at four and/or nine weeks after dosing. Treatment of patients in the third dose cohort (i.e., eight (8) micrograms/kg body weight) is underway and evaluation of correlative study endpoints is ongoing.
There were no reported incidences of capillary leak or cytokine release syndromes associated with high dose intravenous IL-2 therapy. Additionally, HCW9302 treatment did not increase blood eosinophil counts, another serious side effect commonly associated with IL-2 therapy. All reported HCW9302 treatment emergent adverse events were mild in severity and self-limiting and resolved without medical intervention. The most common side effect was temporary injection-site reaction.
Dosing of the third dose cohort is underway at eight (8) micrograms/kg body weight. The Company has not reported any dose limiting toxicities in the patients treated to date. Patient enrollment continues to be strong, and the Company has added a third clinical site to the study. The full Phase 1 human data readout for the HCW9302 study remains on track to be released in the fourth quarter of 2026. Primary endpoints are safety and a recommended Phase 1 dose. Working with collaborators, the Company is conducting ancillary studies to supplement this data.
Milestone for HCW11-018b, Leading Product Candidate in Company’s Tetravalent T-Cell Engager Program
The Company requested a Type B (pre-IND application) meeting with the U.S. Food and Drug Administration (“FDA”) to discuss the development and regulatory strategy for its investigational lead product candidate, HCW11-018b, a tetravalent T-cell engager (“TCE”) constructed with the Company’s proprietary TRBC drug development platform. The Company would like to reach agreement with FDA on requirements for a clinical study before we submit an IND application to evaluate HCW11-018b in cancer. This clinical trial is on track to initiate in the first half of 2027, provided we secured FDA authorization.
HCW11-018b is intended to treat solid tumors and is administered by subcutaneous injection. In preclinical studies, it has shown the ability to target tissue factor-expressing cancer cells and activate CD3-positive effector T cells, while simultaneously reducing immunosuppression in the tumor microenvironment. Immunosuppression in the tumor microenvironment can limit effector T-cell infiltration and antitumor activity in solid tumors, particularly in gynecologic and pancreatic cancers.
The Company believes that our robust, streamlined, and cost-efficient manufacturing process will produce high-quality cGMP material to support clinical development. Our manufacturing process for HCW11-018b is based on high-producing recombinant CHO cell lines and a proprietary monoclonal antibody needed for the affinity purification process. This monoclonal antibody will be manufactured under GMP standards using a top-tier CDMO.
TCEs have emerged as a potent therapeutic modality to treat cancer. First-generation TCEs represented a breakthrough in immunotherapy but they continue to face significant challenges, including limited antigen selection, poor efficacy in solid tumors, tolerability and safety concerns, and complex manufacturing processes. Extensive preclinical studies of HCW11-018b —including assessments of in vitro and in vivo potency, antigen specificity, pharmacokinetics, toxicity in nonhuman primates, and its therapeutic window — suggest that HCW11-018b may be able to overcome the limitations of earlier-generation TCEs.
On
February 19, 2026, the Company raised $1.5 million before commission and transaction costs payable by us through the sale of 2,477,292
Units for $0.6055 per Unit, each consisting of one share of Common Stock (or Pre-funded Warrant that may be exercised to purchase one
share of Common Stock) plus one Common Stock Warrant each of which can be exercised to purchase one share of Common Stock. In a private
transaction, the Company agreed to reprice the 3,020,410 of Existing Warrants that were issued in November 2025 from $2.41 per share to $0.6055 per
share. However, under Nasdaq rules, the investor’s ability to exercise the Common Stock Warrants issued in this transaction and
the reduction of the exercise price for the Existing Warrants issued in November 2024 are both subject to stockholder approval. Pursuant to the
terms of the warrants, the Company submitted two proposals to our stockholders at a Special Stockholders’ Meeting held on April
27, 2026, which had to be adjourned due to lack of quorum. These two proposals will be included in the matters put to a stockholders’
vote at the Company’s Annual Meeting, to be held on June 15, 2026.
Compliance
with Nasdaq Listing Rules
An
important part of the Company’s future financing plans is the ability to access the public markets for the sale of securities.
This requires that the Company remain in compliance with all Nasdaq Listing Rules. On May 5, 2026, the Company was granted a Hearing
before a Nasdaq Hearings Panel to appeal a determination by the Nasdaq Listing Qualifications Staff (the “Staff”)
to delist the Company’s securities from The Nasdaq Capital Market (“Nasdaq”) due to the Company’s
non-compliance with the $1.00 minimum bid price requirement. As of the date of issuance, the Company has not received the Panel’s determination.
OurThe
Company’s operations have been affected by many headwinds, including inflationary pressures, tariffs, rising interest rates, ongoing
global supply
chain disruptions resulting from increased geopolitical tensions such as the war between Russia and Ukraine, the war in the Middle East, the conflict between
Russia and Ukraine, China-Taiwan relations, financial market volatility and currency movements. TheseThe headwinds,Company specifically the supply chain disruptions,
have adversely impacted our ability to procure certain services and materials, which in some cases impacts the cost and timing of clinical
trials and IND-enabling activities. In addition, we havehas been impacted by inflationinflation,
and may continue to be so, when procuringsecuring materials requiredneeded for the buildout
of our new headquarters,operations, the costs for recruiting and retaining employees and other
employee-related costs. Further,Management rising interest
rates would also increase borrowing costs to the extent that the Company takes on any additional debt. The Company usesemploys a number of strategies
to effectively navigate these issues, including product redesign, alternate
sourcing, and establishing contingencies in budgeting and
timelines. However,Future developments in these and other areas present material uncertainty
and risk with respect to the Company’s clinical trials, IND-enabling activities, as well as the Company’s financial condition
and results of operations. The extent and duration of such events and conditions, and resulting disruptions to our operations, are highly
unpredictable.
For
discussion of risks related to potential impacts of supply chain, inflation, geopolitical and macroeconomic challenges on our operations,
business results and financial condition, see Part I, Item 1A. “Risk Factors” in the Annual Report filed on March 31, 2026.
AlloTera Therapeutics License
Wugen
License
The
Company entered the WugenAlloTera Therapeutics License with Wugen at the end of 2020, and we entered a development supply agreement with Wugenthem to provide
it with clinical development materials needed for research and clinical development in the first quarter of 2021. On May 29, 2025, the
Company agreed to
a request from Wugen to suspend the Wugen License for a periodone-year of one year from the effective datesuspension of the suspension,AlloTera Therapeutics License, while they assessed the strategic direction of their clinical
ordevelopment untilprograms. On May 29,21, 2026. During the suspension,2026, the Company is freeelected to enter licenses with other parties forterminate the molecules
thatAlloTera areTherapeutics subjectLicense according to the terms of the
suspension Wugen license.agreement. The Company expectshas launched a commercial-ready program to generatecommercialize revenuethe two molecules formerly licensed to AlloTera
Therapeutics as reagents to support the manufacturing process of cell-based immunotherapies for ancillarycancer servicesand suchinfectious as storage of clinical supply of material provided
to Wugen while the license is in suspension.diseases.
The Company will continue to hold the upfront, nonrefundable license fee from AlloTera Therapeutics, including the in-kind payment of 2.2 million shares of their common stock.
The
upfront, nonrefundable license fee included 2.2 million shares of Wugen common stock, which the Company will continue to hold even if
the Wugen Licenses is terminated.
On
March 16, 2026,
the Company received the full nonrefundable upfront license fee, consisting of $3.5 million in gross cash proceeds, or
$2.9 million net
of taxes, and a transferable minority equity ownership interest in Trimmune with a fair value of $3.5 million, whereupon
whereupon the transaction was deemed closed and the contract was binding. The Company elected to use the measurement alternative under ASC 321-10-35-2
to account for the investment in Trimmune shares — cost less impairment, with adjustment for observable price changes in orderly
transactions for the identical or a similar investment of the same issuer.
In
addition to the upfront license fee and Opt-In Rights, the Company is eligible to receive additional development milestone payments and
double-digit double-digit
royalties on future product sales. Further, in the event Trimmune elects to exercise its option to license HCW9302 in China
or Asia, the Company will receive additional consideration. None of these elements met the threshold for recognition under Topic 606
as of MarchJune 31,30, 2026.
In
accordance with the terms of the Trimmune License, the closing took place upon receipt of
the full upfront payment.The Company recognized $6.5 million in revenue for the three months ended March 31, 2026 in the accompanying condensed
statement of operations and deferred revenue of $470,000 in the accompanying condensed balance sheet. Deferred revenue relates to the Services Performance
Obligation, for services not yet completed primarily for building of the master cell bank.
General
and Administrative Expenses
HCWB insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 6 Form 4 filings (4 insiders, 2 trade dates, 344,732 shares, about $531.7K) and open-market sales in 0 filings. Net open-market shares: 344,732 (purchases minus sales); net value about $531.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-29 | Wong Hing C |
Open-market purchase | 23,210 | $2.59 | $60.1K |
| 2026-07-29 | Flowers Lee |
Open-market purchase | 7,736 | $2.59 | $20.0K |
| 2026-07-29 | Garrett Scott T |
Open-market purchase | 7,736 | $2.59 | $20.0K |
| 2026-05-22 | Wong Hing C |
Open-market purchase | 113,879 | $1.41 | $160.6K |
| 2026-05-22 | Garrett Scott T |
Open-market purchase | 177,936 | $1.41 | $250.9K |
| 2026-05-22 | Byam Rebecca |
Open-market purchase | 14,235 | $1.41 | $20.1K |
Well-known investors holding HCWB (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 19,942 | $99.5K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 26,083 | $9.4K | — | Sold out |