Cullgen Inc.

Consolidated Balance Sheet

(in thousands, except share and per share data)

		December 31, 2025
Assets
Current assets:
Cash and cash equivalents		$	12,122
Short-term investments			28,085
Prepaid expenses and other current assets			6,786
Amounts due from related parties			-
Total current assets			46,993
Non-current assets:
Property and equipment, net			3,951
Operating lease right-of-use assets			2,478
Other non-current assets			209
Total non-current assets			6,638
Total assets		$	53,631
Liabilities, redeemable convertible preferred stock, and stockholders’ deficit
Current liabilities:
Accounts payable		$	1,211
Accrued expenses and other current liabilities			2,633
Operating lease liabilities, current			483
Deferred revenue, current			1,170
Total current liabilities			5,497
Non-current liabilities:
Operating lease liabilities, non-current			2,001
Deferred revenue, non-current			57
Total non-current liabilities			2,058
Total liabilities			7,555
Commitments and contingencies (Note 15)
Redeemable convertible preferred stock, $0.0001 par value per share, 57,821,355 shares authorized, 57,821,355 shares issued and outstanding as of December 31, 2025; aggregate liquidation preference of $116,000 as of December 31, 2025.			173,467
Stockholders’ deficit:
Common stock, $0.0001 par value per share, 143,329,269 shares authorized, 10,023,615 shares issued and outstanding as of December 31, 2025			1
Additional paid-in capital			5,127
Accumulated deficit			(132,179	)
Accumulated other comprehensive loss			(340	)
Total stockholders’ deficit			(127,391	)
Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit		$	53,631

The accompanying footnotes are an integral part of these consolidated financial statements.

Cullgen Inc.

Consolidated Statement of Comprehensive Loss

(in thousands, except share and per share data)

		Year Ended December 31, 2025
Collaboration revenue		$	15,373
Operating expenses:
Research and development expenses			19,330
General and administrative expenses			10,246
Total operating expenses			29,576
Other operating income, net			403
Loss from operations			(13,800	)
Foreign currency exchange loss			(198	)
Interest income			1,905
Other income, net			198
Loss before income taxes			(11,895	)
Income tax benefit			1,090
Net loss		$	(10,805	)
Accretion of redeemable convertible preferred stock			(14,801	)
Net loss attributable to common stockholders			(25,606	)
Net loss per share attributable to common stockholders - basic and diluted		$	(2.55	)
Weighted average common stocks outstanding - basic and diluted			10,023,615
Other comprehensive loss:
Unrealized gains on short-term investments			23
Reclassification adjustment for gains included in net loss			(10	)
Foreign currency translation adjustment			432
Comprehensive loss			(10,360	)
Comprehensive loss attributable to common stockholders			(25,161	)

The accompanying footnotes are an integral part of these consolidated financial statements.

Cullgen Inc.

Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

(in thousands, except share data)

		Redeemable convertible preferred stock								Common Stock								Additional Paid-in Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit				Total Stockholders’ Deficit
		Shares				Amount				Shares				Amount
Balance, January 1, 2025			57,821,355			$	158,666				10,023,615			$	1			$	4,190			$	(785	)		$	(106,573	)		$	(103,167	)
Stock-based compensation expense			—				—				—				—				937				—				—				937
Accretion of redeemable convertible preferred stock			—				14,801				—				—				—				—				(14,801	)			(14,801	)
Unrealized gains on short-term investments			—				—				—				—				—				23				—				23
Reclassification adjustment for gains included in net loss			—				—				—				—				—				(10	)			—				(10	)
Foreign currency translation adjustment			—				—				—				—				—				432				—				432
Net loss			—				—				—				—				—				—				(10,805	)			(10,805	)
Balance, December 31, 2025			57,821,355			$	173,467				10,023,615			$	1			$	5,127			$	(340	)		$	(132,179	)		$	(127,391	)

The accompanying footnotes are an integral part of these consolidated financial statements.

Cullgen Inc.

Consolidated Statement of Cash Flows

(in thousands)

		Year Ended December 31, 2025
Cash flows from operating activities:
Net loss		$	(10,805	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense			937
Non-cash operating lease expenses			834
Depreciation and amortization			817
Accretion of premium or discount on short-term investments			(88	)
Foreign currency exchange gain			(39	)
Others			42
Changes in operating assets and liabilities:
Prepaid expense and other current assets			(1,923	)
Amounts due from related parties			26
Accounts payable			(393	)
Amounts due to related parties			—
Deferred revenue			(9,971	)
Accrued expenses and other current liabilities			(1,136	)
Operating lease liabilities			660
Net cash used in operating activities			(21,039	)
Cash flows from investing activities:
Purchase of property and equipment			(1,717	)
Purchase of available-for-sale securities			(24,985	)
Purchase of time deposit investments			(8,000	)
Proceeds of available-for-sale securities			23,777
Proceeds of time deposit investments			19,000
Proceeds from disposal of property, plant and equipment			100
Net cash provided by investing activities			8,175
Cash flows from financing activities:
Payments of transaction costs			(2,573	)
Net cash used in financing activities			(2,573	)
Effect of exchange rate changes on cash, cash equivalents		$	324
Net decrease in cash and cash equivalents			(15,113	)
Cash and cash equivalents at beginning of year			27,235
Cash and cash equivalents at end of year		$	12,122
Supplemental disclosure of cash flow information:
Income tax paid			(1,500	)
Supplemental disclosure of non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities			1,542
Derecognition of the right-of-use assets and operating lease liabilities due to lease termination			84
Supplemental disclosure of non-cash investing and financing activities:
Accretion of redeemable convertible preferred stock			14,801
Unpaid transaction costs included in accrued expenses and other current liabilities			174

The accompanying footnotes are an integral part of these consolidated financial statements.

Cullgen Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

 

1. Description of Business and Liquidity

Cullgen Inc., or together with its subsidiaries, the Company, was incorporated in the state of Delaware on January 12, 2018. The Company is a privately held biopharmaceutical company dedicated to the development of medicines for the treatment of diseases lacking effective therapeutic approaches. The Company is headquartered in San Diego, California.

 

Risks and Uncertainties

The Company is subject to risks common to companies in the biopharmaceutical industry, including but not limited to, the need for additional capital, risks of failure of preclinical studies and clinical trials, dependence on key personnel, protection of proprietary technology, and development of technological innovations by competitors.

 

Liquidity and Capital Resources

Since its inception, the Company’s primary activities have been focused on performing research and development activities, building the Company’s intellectual property, recruiting personnel, and raising capital to support these activities. To date, the Company has funded its operations primarily with proceeds received from the issuances of redeemable convertible preferred stock and common stock, and through its collaboration agreements.

The Company currently expects that its existing cash, cash equivalents and short-term investments will be sufficient to fund operating expenses and capital requirements for at least the next 12 months. However, the Company may potentially continue to have an ongoing need to raise additional cash from outside sources to fund its operations. The Company plans to continue to fund its operations through capital raising, collaborations or partnerships with other companies.

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation and Consolidation

The accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its subsidiaries. All intercompany balances, transactions, and profits have been eliminated through the preparation of the consolidated financial statements.

 

Use of Estimates

The preparation of consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates include revenue recognition, accruals for research and development expenses, valuation of stock-based compensation awards, fair value of preferred stock warrant liabilities, and estimating the incremental borrowing rate for leases. Actual results may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

 

Foreign Currency

The Company’s functional currency and reporting currency are the U.S. dollar (“$” or U.S. dollar). Transactions in subsidiaries are recorded in the functional currency of the respective subsidiary. The determination of functional currency is based on the criteria of Accounting Standard Codification (“ASC”) 830, Foreign Currency Matters.

Cullgen Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

For subsidiaries whose functional currencies are not the U.S. dollar, the Company uses the average exchange rate for the period and the exchange rate at the balance sheet date, to translate the operating results and financial position to U.S. dollar, the reporting currency, respectively. Translation differences are recorded in accumulated other comprehensive loss, a component of stockholders’ deficit. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the transaction dates. Foreign currency denominated financial assets and liabilities are remeasured at the exchange rates prevailing at the balance sheet date. Remeasurement exchange gains and losses are included in the consolidated statement of comprehensive loss.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker (“CODM”), to allocate resources and assess performance. The Company’s CODM is its chief executive officer, who makes operating decisions, assesses performance and allocates resources on a consolidated basis. The Company has one reportable segment.

Cash and Cash Equivalents

The Company considers all highly liquid short-term investments with an original maturity of 90 days or less to be cash equivalents. The cash and cash equivalents balance on December 31, 2025, represents cash in readily available checking accounts, money market funds, U.S. treasury securities and commercial paper with an original maturity of 90 days or less.

Short-Term Investments

The Company’s short-term investments including short-term time deposit with maturity within 1 year and marketable securities. The Company classifies its marketable securities as available-for-sale securities, which include commercial paper, corporate debt securities and U.S. government agency securities. These securities recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive loss. Premiums or discounts from par value are amortized to investment income over the life of the underlying investment and are included in ‘interest income’ within the consolidated statement of comprehensive loss. All the Company’s available-for-sale securities are available to the Company for use in current operations. As a result, the Company classified all these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date.

The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in ‘Net loss’ within the consolidated statement of comprehensive loss. If any adjustment is required to reflect a decline in the value of the investment that the Company considers to be “other than temporary”, the Company recognizes a charge to the consolidated statement of comprehensive loss. No such adjustments were necessary during the periods presented.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments marketable. The Company maintains cash, cash equivalents, and short-term investments at accredited financial institutions and amounts may exceed federally insured limits. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts, or other hedging arrangements.

For the year ended December 31, 2025, all revenue was generated from one customer as part of the collaboration agreement described in Note 8.

Cullgen Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Property and Equipment, Net

Property, plant and equipment are stated at cost. Depreciation and amortization are calculated using the straight-line method over the following estimated useful lives, considering residual value, if any. The table below sets forth the estimated useful life and residual value:

Expenditures for maintenance and repairs are expensed as incurred. Upon retirement or sale, the cost of assets disposed of the related accumulated depreciation/amortization are removed from the accounts and any resulting gain or loss is recognized in the consolidated statement of comprehensive loss.

Direct costs that are related to the construction of property and equipment, and incurred in connection with bringing the assets to their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment, and the depreciation of these assets commences when the assets are ready for their intended use.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. When these events occur, the Company compares the carrying amount of the assets against the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When the sum of the estimated undiscounted future cash flows is less than the carrying value of the assets being evaluated, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets when the market prices are not readily available. The adjusted carrying amount of the assets is the new cost basis and is depreciated over the assets’ remaining useful lives. No impairment loss was recognized for the year ended December 31, 2025.

Revenue Recognition

When the Company enters into collaboration agreements, it assesses whether the arrangements fall within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) based on whether the arrangements involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. To the extent that the arrangement falls within the scope of ASC 808, the Company assesses whether the payments between the Company and its collaboration partner fall within the scope of other accounting literature. If it concludes that payments from the collaboration partner to the Company represent consideration from a customer, such as license fees and contract research and development activities, the Company accounts for those payments within the scope of Accounting Standards Update (ASU) No. 2014-09 (Topic 606), Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

The Company has no products approved for commercial sales and has not generated any revenue from commercial product sales. The total revenue to date has been generated principally from collaboration and license agreement.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Collaboration Revenue: The Company derives revenue from collaboration arrangements, under which the Company may grant licenses to its collaboration partners to further develop and commercialize its proprietary product candidates. The Company may also perform research and development activities under the collaboration agreements. Consideration under these contracts generally includes a nonrefundable upfront payment, development, regulatory and commercial milestones and other contingent payments, and royalties.

The Company assesses which activities in the collaboration agreements are considered distinct performance obligations that should be accounted for separately.

At the inception of each agreement, the Company determines the arrangement transaction price, which includes variable considerations, based on the assessment of the probability of achievement of future milestones and contingent payments and other potential considerations.

For arrangements that include multiple performance obligations, the Company allocates the transaction price to the identified performance obligations based on the standalone selling price, or SSP, of each distinct performance obligation. In instances where SSP is not directly observable, the Company develops assumptions that require judgment to determine the SSP for each performance obligation identified in the contract. These key assumptions may include full-time equivalent, or FTE, personnel effort, estimated costs, discount rates and probabilities of clinical development and regulatory success.

Upfront Payments: For collaboration arrangements that include a nonrefundable upfront payment, if the license fee and research and development services cannot be accounted for as separate performance obligations, the transaction price is deferred and recognized as revenue over time by measuring its progress towards the complete satisfaction of the relevant performance obligation using an appropriate input or output method based on the nature of the service promised to the customer. The Company uses judgement to assess the pattern of delivery of the performance obligation.

Research and Development Services: For amounts allocated to the Company’s research and development obligations in a collaboration arrangement, the Company recognizes revenue over time as delivery or performance of such services occurred.

Milestone and Contingent Payments: At the inception of the arrangement and at each reporting date thereafter, the Company assesses whether it should include any milestone and contingent payments or other forms of variable consideration in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of each milestone and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Since milestone and contingent payments may become payable to the Company upon the initiation of a clinical study or filing for or receipt of regulatory approval, the Company reviews the relevant facts and circumstances to determine when the Company should update the transaction price, which may occur before the triggering event. When the Company updates the transaction price for milestone and contingent payments, the Company allocates the changes in the total transaction price to each performance obligation in the agreement on the same basis as the initial allocation. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment, which may result in recognizing revenue for previously satisfied performance obligations in such period. The Company’s collaborators generally pay milestones and contingent payments after the achievement of the triggering event.

Revenue subject to governmental withholding taxes is recognized on a gross basis with the withholding taxes recorded as a component of income tax expense.

Cullgen Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Research and Development Expenses

The Company records accrued expenses for estimated costs of the research and development activities conducted by third party service providers, which include outsourced research and development expenses, stock-based compensation and professional services. The Company records the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced, and includes these costs in current liabilities and within research and development expense.

Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized and recognized as an expense as the goods are delivered or the related services are performed.

For outsourced research and development expenses, such as professional fees payable to third parties for preclinical studies, clinical trials and research services and other consulting costs, the Company estimates the expenses based on the services performed, pursuant to contracts with research institutions that conduct and manage preclinical studies, clinical trials and research services on the Company’s behalf. The Company estimates these expenses based on discussions with internal management personnel and external service providers as to the progress or stage of completion of services and the contracted fees to be paid for such services. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel and related costs for the Company’s executive, finance, legal, human resources, and administrative personnel, including salaries, benefits, stock-based compensation, and bonuses; legal, accounting, and other professional service fees; other corporate expenses including employee business expenses, facilities expense as well as information technology costs.

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — This level consists of quoted prices in active markets for identical assets or liabilities.

 

Level 2 — This level consists of quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.

 

Level 3 — This level consists of unobservable inputs in situations where there is little or no market activity of the asset and liability, and the reporting entity makes estimates of assumptions relating to the pricing of the asset or liability, including assumptions regarding risk.

The Company’s cash equivalents, short-term investments and preferred stock warrant liabilities are carried at fair value, determined according to the fair value hierarchy described above. The carrying values reported in the Company’s consolidated balance sheet for cash, accounts payable, and accrued expenses are reasonable estimates of their fair values due to the short-term nature of these items.

Cullgen Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Leases

The Company accounts for leases under ASU 2016-02, Leases (Topic 842). The Company determines if an arrangement includes a lease at inception. Right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The right-of-use asset includes any lease payments made on or before the lease commencement date, less lease incentives received. The incremental borrowing rate is used in determining the present value of future payments. The Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The determination of the Company’s incremental borrowing rate requires judgment, and the Company considers various factors, including level of collateralization, estimated credit rating, and the currency in which the lease is denominated. The lease terms may include options to extend or terminate the lease. Lease expense for operating leases is recognized on a straight-line basis over the non-cancelable lease term. Variable lease expense relates primarily to office lease common area maintenance, insurance, and property taxes, is expensed as incurred, and is excluded from the calculation of the lease liability and right-of-use asset. The Company does not have any finance leases.

The Company has elected not to recognize a right-of-use asset and lease liability for short-term leases. A short-term lease is a lease with an expected lease term of 12 months or less and which does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Lease agreements that include lease and non-lease components are accounted for as a single lease component.

Stock-Based Compensation

Employee share-based awards

The Company accounts for its share-based payments in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). The Company determines whether an award should be classified and accounted for as a liability award or equity award. With the assistance of an independent third-party valuation firm, the Company determines the grant-date fair value of the share-based awards to measure share-based compensation cost. In accordance with ASC 718, the Company recognizes share-based compensation cost for equity awards with a performance condition based on the probable outcome of that performance condition. Compensation cost is only recognized if it is probable that the performance condition will be achieved and shall not be recognized if it is not probable that the performance condition will be achieved. The Company accounts for forfeitures as they occur. For awards with graded vesting that vest based solely on a service condition, the Company uses the straight-line method to recognize compensation cost.

Cancellation of awards

A cancellation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation cost shall be recognized immediately at the cancellation date.

Modification of awards

A change in any of the terms or conditions of the awards is accounted for as a modification of the award. When the vesting conditions (or other terms) of the share-based awards are modified, the Company first determines on the modification date whether the original vesting conditions were expected to be satisfied, regardless of the entity’s policy election for accounting for forfeitures. If the original vesting conditions are expected to be satisfied, the Company will recognize the remaining unrecognized compensation cost for the original award over the remaining requisite service period based on the grant-date fair value of the original award. If the original vesting conditions are not expected to be satisfied, the grant-date fair value of the original equity awards is ignored and the fair value of the equity award measured at the modification date is recognized if the modified award ultimately vests.

Classification and Accretion of Redeemable Convertible Preferred Stock

The Company classified redeemable convertible preferred stock outside of stockholders’ deficit because the shares contained certain redemption features that were not solely within the control of the Company. Costs incurred in connection with the issuance of each series of redeemable convertible preferred stock were recorded as a reduction of gross proceeds from issuance.