Revenue Performance - Revenue for the three months ended September 30, 2025, was $132.9 million, a decrease of $21.3 million, or 16%, compared to the same period in 2024, primarily due to a $31.9 million decline in Pay-TV revenue[158] - Revenue for the nine months ended September 30, 2025, was $331.6 million, a decline of $39.7 million, or 11%, primarily due to divestitures and a decrease in Pay-TV revenue[161] Expense Management - Total operating expenses for the three months ended September 30, 2025, were $113.0 million, a decrease of $38.5 million, or 25%, compared to the same period in 2024[163] - Research and development expenses for the three months ended September 30, 2025, were $29.9 million, a decrease of $23.7 million, or 44%, primarily due to lower spending following the Perceive Transaction[168] - Selling, general and administrative expenses for the three months ended September 30, 2025, were $42.5 million, a decrease of $14.0 million, or 25%, attributed to reduced employee headcount and lower stock-based compensation expenses[171] - Stock-based compensation (SBC) expense decreased by $5.6 million (37%) to $9.6 million for the three months ended September 30, 2025, compared to $15.2 million in the same period of 2024[173] - Depreciation expense increased by $0.6 million (19%) to $3.5 million for the three months ended September 30, 2025, compared to $2.9 million in the same period of 2024[174] - Amortization expense decreased by $2.9 million (27%) to $7.8 million for the three months ended September 30, 2025, compared to $10.7 million in the same period of 2024[176] Strategic Actions - The company completed the divestiture of its AutoSense in-cabin safety business in January 2024, enhancing focus on entertainment markets[152] - The company sold substantially all assets of Perceive Corporation for $80.0 million in cash, completed in October 2024, allowing a focus on entertainment-based solutions[153] - The company approved a restructuring plan on November 1, 2025, to reduce its global workforce by approximately 250 employees, expecting annualized cost savings of $30.0 million to $35.0 million[155] - A restructuring plan was approved on November 1, 2025, to reduce the global workforce by approximately 250 employees, with estimated charges between $16.0 million and $18.0 million[202] Cash Flow and Liquidity - Cash and cash equivalents decreased by $33.8 million to $96.8 million as of September 30, 2025, from $130.6 million as of December 31, 2024[189] - Net cash used in operating activities was $4.6 million for the nine months ended September 30, 2025, compared to $56.6 million in the same period of 2024[192] - Net cash used in investing activities was $14.6 million for the nine months ended September 30, 2025, compared to $12.9 million in the same period of 2024[195] - The company believes its current cash and cash equivalents, along with borrowings under the AR Facility, will be sufficient for at least the next 12 months[203] - The company may need to supplement cash and cash equivalents with additional outside sources as part of its liquidity strategy[203] - Poor financial results or unanticipated expenses could lead to additional financing requirements sooner than expected[204] - The company is monitoring its earnings and cash flow to assess its ability to access capital markets as needed[205] Debt and Interest Rate Exposure - The company issued a senior unsecured promissory note of $50.0 million in connection with the acquisition of Vewd, with an interest rate of 6.00% per annum, maturing on July 1, 2025[199] - On February 21, 2025, the company borrowed $40.0 million under the AR Facility, with expected interest payments of approximately $2.6 million for the next 12 months[201] - The company is exposed to interest rate risk, with $40.0 million of indebtedness under the AR Facility subject to variable interest rates, estimating a 1% increase in SOFR would raise interest expense by approximately $0.4 million annually[210] - The AR Facility is scheduled to terminate on February 21, 2028, unless terminated earlier[200] Financial Health Indicators - The current ratio improved to 2.4 as of September 30, 2025, compared to 1.6 as of December 31, 2024, indicating better short-term financial health[189] - There were no significant changes in critical accounting estimates during the nine months ended September 30, 2025[206]

Financial Performance - Total revenues for the three months ended September 30, 2025, were $17,062,000, a decrease of 12.7% compared to $19,546,000 for the same period in 2024[18]. - Net loss for the three months ended September 30, 2025, was $13,187,000, compared to a net loss of $16,205,000 for the same period in 2024, representing a 18.6% improvement[21]. - Gross profit for the nine months ended September 30, 2025, was $44,505,000, an increase of 14.0% from $39,031,000 for the same period in 2024[18]. - Total revenues for the nine months ended September 30, 2025, increased by 18% to $54.0 million compared to $45.8 million in the same period last year, driven by deeper market penetration and new accounts[158]. - Commercial revenue from the RECELL product was $15,427,000 for the three months ended September 30, 2025, compared to $19,059,000 for the same period in 2024, indicating a decline of about 19.3%[108]. - The Company recorded a net loss of $13,187,000 for the three months ended September 30, 2025, compared to a net loss of $16,205,000 for the same period in 2024, showing an improvement in loss[108]. - The Company’s basic net loss per share for the three months ended September 30, 2025, was $(0.46), an improvement from $(0.62) in the same period of 2024[126]. Operating Expenses - Operating expenses for the three months ended September 30, 2025, totaled $23,028,000, down from $30,162,000 in the same period of 2024, reflecting a 23.5% reduction[18]. - General and administrative expenses decreased by 25% to $7.2 million for the three months ended September 30, 2025, compared to $9.6 million in the prior year[154]. - General and administrative expenses decreased by 22%, or $5.8 million, to $20.3 million compared to $26.1 million in the same period last year[162]. - Research and development expenses decreased by 2%, or $0.4 million, to $15.1 million compared to $15.5 million in the same period last year[163]. - The company’s stock-based compensation for the nine months ended September 30, 2025, was $8.146 million, compared to $10.698 million in the same period of 2024, indicating a reduction in compensation expenses[28]. - Stock-based payment expenses for the three months ended September 30, 2025, totaled $2.783 million, a decrease from $4.080 million for the same period in 2024[122]. Cash Flow and Liquidity - Cash and cash equivalents increased to $15,422,000 as of September 30, 2025, compared to $14,050,000 as of December 31, 2024[16]. - The company utilized $25.757 million in cash for operating activities during the nine months ended September 30, 2025, a decrease from $40.858 million used in the same period of 2024, indicating improved cash flow management[28]. - The company reported cash, cash equivalents, and marketable securities totaling $23.3 million as of September 30, 2025, providing a liquidity buffer for ongoing operations[34]. - As of September 30, 2025, the company had approximately $15.4 million in cash and cash equivalents and $7.9 million in marketable securities[165]. - The company completed a private placement on August 12, 2025, raising $14.8 million, which will be used for working capital requirements[166]. - Net cash used in operating activities was $25.8 million for the nine months ended September 30, 2025, down from $40.9 million in the same period last year[175]. - Net cash provided by investing activities was $12.4 million for the nine months ended September 30, 2025, compared to $34.9 million in the same period last year[176]. - Net cash provided by financing activities increased to $14.7 million for the nine months ended September 30, 2025, from $2.5 million in the same period last year[177]. Assets and Liabilities - Total current assets decreased to $41,367,000 as of September 30, 2025, from $57,000,000 as of December 31, 2024, a decline of 27.4%[16]. - Total liabilities increased to $70,394,000 as of September 30, 2025, compared to $74,968,000 as of December 31, 2024[16]. - The total stockholders' equity (deficit) as of September 30, 2025, was $(6,666,000), a decrease from $4,499,000 as of December 31, 2024[16]. - The company had accrued interest income receivable of $32,000 as of September 30, 2025, down from $121,000 as of December 31, 2024[62]. - Total intangible assets as of September 30, 2025, amounted to $5,830,000, with a net carrying amount of $5,204,000 after accumulated amortization of $626,000[8]. - The composition of the inventory as of September 30, 2025, included $2.1 million in raw materials, $100,000 in work in process, and $5.0 million in finished goods, totaling $7.2 million[97]. Debt and Financing - The Company entered into a credit agreement providing for a five-year senior secured credit facility of up to $90.0 million, with $40.0 million available on the Closing Date[84]. - As of September 30, 2025, the interest rate on the outstanding debt was 12.28%[86]. - The long-term portion of the credit facility has been classified as a current liability due to the Company's debt servicing obligations[38]. - The Company has not made any repayments on the outstanding debt balance as of September 30, 2025[85]. - The Company is actively evaluating strategies to obtain additional funding, including a potential equity financing of up to $200.0 million[39]. - There is substantial doubt about the Company's ability to continue as a going concern if it cannot maintain compliance with the minimum cash balance covenant[37]. Regulatory and Compliance - The Company was not in compliance with the trailing 12-month net revenue covenants for Q1 2025 ($73.0 million) and Q2 2025 ($78.0 million), but received waivers for both quarters[36]. - The trailing 12-month revenue covenant has been amended to $73.0 million for Q3 2025, $77.0 million for Q4 2025, $90.0 million for Q1 2026, and $103.0 million for Q2 2026, with a $115.0 million covenant for subsequent quarters[36]. - The Company entered into a sixth amendment to the Credit Agreement on November 5, 2025, amending the trailing 12-month revenue covenant to $70.0 million for the quarter ending December 31, 2025[128]. - The Centers for Medicare & Medicaid Services approved a New Technology Add-On Payment for the RECELL System, allowing up to $4,875 in additional reimbursement per case from October 1, 2025, to September 30, 2026[141]. Product Development and Market Strategy - The company’s RECELL GO mini device was approved by the FDA in December 2024, expanding its product offerings for treating smaller wounds[32]. - Cohealyx, a new collagen-based dermal matrix, was commercially launched in the U.S. on April 1, 2025, aimed at supporting cellular migration and revascularization[144]. - The Company aims to increase market penetration in U.S. burn centers and expand the adoption of the RECELL portfolio for traumatic and surgical wounds[143]. - The Company entered into a Distribution Agreement with Stedical, increasing its revenue share from 50% to 60% for PermeaDerm sales, with a target of $6.0 million in gross sales for 2025[111]. - The Regenity Agreement allows the Company to market and distribute Cohealyx in the U.S. and potentially in the EU, Japan, and Australia, with an initial term of five years[113]. Stock and Equity - The company’s total common stock increased from 25,682,078 shares at December 31, 2023, to 30,493,111 shares by September 30, 2025, indicating growth in equity financing[25]. - The Company raised $14.8 million through the issuance of 17,201,886 CDIs on August 12, 2025, equivalent to 3,440,377 shares of Common stock[118]. - The Company has an outstanding total of 5,147,459 share options as of September 30, 2025, an increase from 3,540,208 options at the end of 2024[122]. - The Company’s stockholders approved an amendment to increase the share reserve under the 2020 Omnibus Incentive Plan by an additional 2,500,000 shares, totaling 6,750,000 shares[119]. Miscellaneous - The report includes various exhibits related to corporate governance and agreements, such as the Certificate of Incorporation and amendments[194]. - The report was signed by the Interim Chief Executive Officer and Chief Financial Officer, indicating compliance with the Securities Exchange Act of 1934[196][198]. - The date of the report is November 6, 2025, reflecting the company's ongoing regulatory obligations[197].

Investment Activity - For the three months ended September 30, 2025, the company acquired $20,048 in new investments and completed follow-on investments totaling approximately $50,170, resulting in gross investment originations of $91,567[515]. - The company received full repayments totaling $82,219 and recorded repayments of approximately $234,660 during the same period[515]. - Total investments in portfolio companies decreased to $91,567 in Q3 2025 from $290,639 in Q3 2024, representing a decline of 68.5%[530]. - Investments in new portfolio companies significantly dropped to $20,048 in Q3 2025 compared to $213,056 in Q3 2024, a decrease of 90.6%[530]. - Total investments repaid or sold increased to $234,660 in Q3 2025 from $282,328 in Q3 2024, marking a rise of 18.5%[530]. Portfolio Composition - As of September 30, 2025, the company has $6,513,456, or 216.8% of its net assets applicable to common shares, invested in 92 portfolio investments and CLOs[522]. - As of September 30, 2025, total investments amounted to $6,532,842, with a portfolio fair value of $6,513,456, showing a slight increase from $6,693,501 and $6,673,516 as of June 30, 2025[526]. - Control investments represented 52.3% of the portfolio fair value at $3,710,632, while non-control/non-affiliate investments accounted for 47.5% at $2,772,003 as of September 30, 2025[526]. - The consumer finance sector represented 11.4% of the total investments with a fair value of $1,047,551, an increase from 16.1% as of June 30, 2025[528]. - Residential real estate investment trusts (REITs) accounted for 14.2% of the portfolio fair value at $1,245,263, down from 19.1% in the previous quarter[528]. Investment Performance - The annualized current yield across all performing interest-bearing investments was 11.8% as of September 30, 2025, compared to 12.2% as of June 30, 2025[523]. - The total interest-bearing investments reached $5,554,987, with a fair value of $5,068,460 as of September 30, 2025[527]. - Investment income for the three months ended September 30, 2025, was $157,624, a decrease of 19.7% from $196,308 in 2024[584]. - Net investment income decreased to $79,350 for the three months ended September 30, 2025, down 11.4% from $89,877 in 2024[584]. - The net change in unrealized gains for the portfolio was $599 for the three months ended September 30, 2025, a significant improvement from a loss of $123,767 in the same period of 2024[604]. Debt and Financing - As of September 30, 2025, the company's debt consists of a Revolving Credit Facility, Public Notes, and Prospect Capital InterNotes®[564]. - As of September 30, 2025, the total outstanding debt was $1,935,415, with a net carrying value of $1,921,191[565]. - The Revolving Credit Facility has commitments of $2,121,500, with an accordion feature allowing increases up to $2,250,000, maturing on June 28, 2029[569]. - The company borrowed $215,000 and made repayments totaling $387,743 under the Revolving Credit Facility during the three months ended September 30, 2025[610]. - The company has $678,827 available for borrowing under the Revolving Credit Facility as of September 30, 2025[570]. Preferred Stock and Dividends - The company is no longer offering several series of preferred stock, focusing on the 7.50% Preferred Stock for future offerings[613]. - The preferred stock dividend reinvestment plan allows holders to reinvest dividends at a price of $25.00 for certain series and $23.75 for others if they elect to do so[616]. - The company declared monthly dividends for its 7.50% Preferred Stock at $0.156250 per share for December 2025, January 2026, and February 2026[657]. - The company announced monthly dividends for its Floating Rate Preferred Stock at $0.135417 per share for December 2025, January 2026, and February 2026[657]. - The company’s common stock dividends are set at $0.0450 per share for November 2025, December 2025, and January 2026[658]. Risk and Compliance - The company is subject to financial market risks, including changes in interest rates and equity price risk, due to geopolitical uncertainties[678]. - Interest rate sensitivity may materially affect the company's net investment income due to floating interest rates on loans[679]. - The company is in compliance with the financial covenants of the Deed of Trust as of September 30, 2025[661]. - Legal and other restrictions on resale may affect the liquidity of the company's investments[675]. - Changes in the market environment may cause realized gains or losses on investments to differ from unrealized gains or losses[676].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39385 RELAY THERAPEUTICS, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 47-3923475 (State or other jur ...

Financial Performance - Collaboration revenue for Q3 2025 was $0, a decrease of $2.9 million compared to $2.9 million in Q3 2024, as the collaboration agreement with AbbVie terminated in July 2025[115] - Total operating expenses for Q3 2025 were $60.1 million, an increase of $6.7 million from $53.4 million in Q3 2024[114] - The net loss for Q3 2025 was $57.5 million, compared to a net loss of $47.1 million in Q3 2024, reflecting an increase of $10.4 million[114] - Collaboration revenue increased by $0.6 million, from $6.3 million for the nine months ended September 30, 2024 to $6.9 million for the same period in 2025, driven by increased research and development activities allocated to AbbVie[122] - The net loss for the nine months ended September 30, 2025 was $142.5 million, compared to a net loss of $212.7 million for the same period in 2024, reflecting an improvement of $70.2 million[131] - Cash used in operating activities for the nine months ended September 30, 2025 was $143.0 million, compared to $68.7 million for the same period in 2024[135] Expenses - Research and development expenses increased by $12.0 million, from $37.2 million in Q3 2024 to $49.2 million in Q3 2025, driven by increased costs associated with various product candidates[117] - General and administrative expenses rose by $1.4 million, from $9.5 million in Q3 2024 to $10.9 million in Q3 2025, primarily due to increased personnel-related costs[118] - Research and development expenses rose by $44.9 million, from $81.7 million for the nine months ended September 30, 2024 to $126.5 million for the same period in 2025[124] - General and administrative expenses increased by $9.2 million, from $22.5 million for the nine months ended September 30, 2024 to $31.7 million for the same period in 2025, mainly due to higher personnel-related costs[127] - Share-based compensation expense totaled $6.7 million in Q3 2025, up from $4.9 million in Q3 2024, indicating a rise of $1.9 million[114] Clinical Development - Varegacestat demonstrated an objective response rate of 75% in evaluable patients and a median tumor volume reduction of 88% in the Phase 2 RINGSIDE study[99] - IM-3050 is designed to target FAP, which is expressed in 75% of solid tumors, and aims to deliver radioactive 177Lu directly to FAP-expressing cells[101] - The company has three clinical assets and three preclinical assets, with plans to submit IND applications for three solid tumor ADC candidates in 2026[96] - The Phase 1 trial for IM-1021 is ongoing, with initial data expected to be presented in 2026[100] Cash and Funding - As of September 30, 2025, the company had cash and cash equivalents of $272.6 million and an accumulated deficit of $658.3 million[131] - Cash provided by financing activities for the nine months ended September 30, 2025 was $207.6 million, consisting of gross proceeds from the 2025 Financing and the 2024 ATM Agreement[139] - The company expects expenses to increase substantially as it advances clinical development and seeks regulatory approval for its product candidates[141] - The company anticipates that existing cash and cash equivalents will be sufficient to fund current and planned operating expenses for at least 12 months from the filing date of the report[142] - Future funding requirements will depend on various factors including the costs of clinical trials and regulatory reviews[143] - The company expects to finance cash needs through equity offerings, debt financings, and collaborations due to extreme volatility in global credit and financial markets[144] Company Status and Compliance - As of June 30, 2025, the market value of common stock held by non-affiliates exceeded $700 million, leading to the company no longer qualifying as an emerging growth company effective December 31, 2025[150] - The company has no material non-cancelable purchase commitments, and expected cash requirements do not include potential contingent payments related to asset acquisitions[145] - The company may face challenges in raising additional funds through equity or debt financings, which could delay or limit research and development efforts[144] - The company qualifies as an emerging growth company under the JOBS Act, allowing it to take advantage of reduced disclosure requirements[148] - The company has elected not to "opt out" of the extended transition period for complying with new accounting standards, affecting comparability with other public companies[149] - The company will be subject to new disclosure and compliance requirements as it transitions out of emerging growth company status[150] - There have been no material changes in critical accounting policies and estimates from the previous fiscal year[146] - The company has not disclosed specific quantitative and qualitative disclosures about market risk as it is not required for smaller reporting companies[152]

Financial Performance - Total revenues for Q3 2025 were $3,681,000, a decrease of 2.6% compared to $3,779,000 in Q3 2024[25]. - Net loss attributable to Lineage for Q3 2025 was $29,781,000, compared to a net loss of $3,034,000 in Q3 2024, representing an increase in loss of 878.5%[25]. - The company reported a comprehensive loss of $29,940,000 for Q3 2025, compared to a comprehensive loss of $3,421,000 in Q3 2024, an increase of 772.5%[27]. - For the nine months ended September 30, 2025, Lineage Cell Therapeutics reported a net loss of $64.384 million, compared to a net loss of $15.336 million for the same period in 2024, indicating a significant increase in losses[33]. - Total revenue for the three months ended September 30, 2025, was $3,681,000, a decrease of 2.6% compared to $3,779,000 for the same period in 2024[59]. - Total revenue for the nine months ended September 30, 2025, was $7,948,000, an increase of 19.9% compared to $6,631,000 for the same period in 2024[59]. Assets and Liabilities - Total assets decreased to $89,639,000 as of September 30, 2025, down from $113,218,000 as of December 31, 2024, a decline of 20.9%[23]. - Total liabilities increased significantly to $68,843,000 as of September 30, 2025, compared to $36,206,000 as of December 31, 2024, an increase of 90.2%[23]. - The company’s accumulated deficit increased to $467,849,000 as of September 30, 2025, compared to $403,465,000 as of December 31, 2024, an increase of 15.9%[23]. - The total shareholders' equity decreased to $20,796,000 as of September 30, 2025, down from $77,012,000 as of December 31, 2024, a decline of 73.0%[23]. - The total cash, cash equivalents, and restricted cash at the end of September 30, 2025, was $40.977 million, a decrease from $28.306 million at the end of September 30, 2024[33]. Research and Development - Research and development expenses for Q3 2025 were $3,271,000, slightly up from $3,171,000 in Q3 2024, an increase of 3.2%[25]. - The company is developing multiple allogeneic cell therapy programs, including OPC1 for spinal cord injuries and PNC1 for vision loss, indicating a broad pipeline of therapeutic candidates[37]. - Lineage's lead cell therapy program, OpRegen, is currently in a Phase 2a clinical trial for geographic atrophy secondary to age-related macular degeneration, with potential milestone payments of up to $620 million from Roche[36]. - The company is conducting the DOSED clinical study for OPC1, which includes participants with chronic spinal cord injuries, with the first participant dosed in August 2025[39]. - OpRegen is currently in a Phase 2a clinical trial for geographic atrophy (GA) secondary to age-related macular degeneration (AMD), with positive 36-month visual acuity results showing a mean change in Best Corrected Visual Acuity (BCVA) of +9.0 ETDRS letters[144]. Financing and Capital - The company issued 7,895 common shares through registered direct financing, raising $3.795 million during the nine months ended September 30, 2025[31]. - The company has $40.5 million in cash, cash equivalents, and marketable securities as of September 30, 2025, which is expected to support operations for at least the next twelve months[48]. - The company has received a $14.3 million grant from the California Institute for Regenerative Medicine (CIRM) to support OPC1 clinical development and has applied for an additional $7.0 million[39]. - Cash provided by financing activities for the nine months ended September 30, 2025, was $6.6 million, consisting of net proceeds from the sale of common shares and warrants[184]. - The company may seek additional capital through equity offerings, debt financings, or strategic alliances, but there is no assurance that adequate capital will be available on favorable terms[193]. Operational Highlights - The company has produced scalable cGMP banking systems for three product candidates, supporting a production capability exceeding the expected patient population for OpRegen and OPC1[41]. - The company is responsible for completing activities related to its ongoing phase 1/2a clinical study for OpRegen, with enrollment now complete[113]. - The company has obligations to licensors and government entities that may result in future payments, but the timing and amounts are uncertain[51]. - The company has incurred significant operating losses since inception, primarily funded through equity securities and research grants[49]. - The company plans to leverage its scalable cGMP cell therapy production capability to produce cost-effective allogeneic cell transplant products[149]. Legal and Regulatory - The company has not recorded a deferred tax benefit or provision expense during the nine months ended September 30, 2025, or 2024[105]. - Lineage has not recorded any liabilities for indemnification agreements as of September 30, 2025, and maintains liability insurance policies to limit financial exposure[134]. - The company has not accrued for a contingent liability related to a legal proceeding involving HBL, as the likelihood of a material adverse effect is not probable nor estimable[131]. - The Israeli regional conflict has temporarily impacted operations, but as of the report date, there has been no material adverse effect on operations[154]. Stock and Equity - The company issued and sold 1.0 million common shares under its at-the-market offering program for gross proceeds of $1.3 million during the nine months ended September 30, 2025[178]. - As of September 30, 2025, the company had 230,327,537 common shares issued and outstanding, an increase from 220,416,326 shares as of December 31, 2024[80]. - The company is authorized to issue up to 450,000,000 common shares, with no preferred shares issued or outstanding as of the reporting dates[79]. - The balance of outstanding stock options increased from 16,658,000 at December 31, 2024, to 23,976,000 at September 30, 2025, with a weighted average exercise price of $1.06[98]. - Total stock-based compensation expense for the three months ended September 30, 2025, was $1.199 million, compared to $1.330 million for the same period in 2024[99].

Clinical Development - Mipletamig reported an 89% remission rate among evaluable frontline AML patients, with 100% remission in Cohort 3 of the ongoing RAINIER trial[99]. - No cytokine release syndrome (CRS) observed among evaluable frontline patients to date, distinguishing it from other treatments[99]. - The ongoing Phase 1b trial for mipletamig was initiated in August 2024, with favorable results reported to date[91]. - The company has two clinical candidates and six preclinical candidates currently in development, focusing on novel immunotherapy for cancer treatment[91]. - The company has an obligation to make a $2.0 million milestone payment upon dosing the first patient in a Phase 2 clinical trial of mipletamig under the OMT License Agreement[124]. Financial Performance - Research and development expenses increased by $0.9 million to $4.0 million for the three months ended September 30, 2025, compared to $3.1 million for the same period in 2024[102]. - General and administrative expenses rose by $1.5 million to $3.6 million for the three months ended September 30, 2025, compared to $2.1 million for the same period in 2024[104]. - Net cash provided by financing activities was $32.7 million for the nine months ended September 30, 2025, compared to $8.9 million for the same period in 2024[109]. - Total research and development expenses for the nine months ended September 30, 2025, were $11.0 million, up from $10.5 million in the same period in 2024[102]. - For the nine months ended September 30, 2025, net cash used in operating activities was $20.4 million, indicating ongoing operational losses[117]. - The company anticipates significant operating losses for the next several years as it continues to develop its product candidates, requiring substantial additional funding[117]. Capital Raising and Agreements - The company raised $18.7 million net in the third quarter, extending cash runway into Q4 2026[99]. - The company entered into a Standby Equity Purchase Agreement (SEPA) with Yorkville, allowing the issuance of up to $25 million in common stock over 36 months, with $15 million raised from 8.3 million shares issued as of September 30, 2025[110]. - Under the At The Market Offering Agreement (ATM Agreement), the company raised $7.6 million from the issuance of 2.8 million shares at an average price of $2.74 per share for the nine months ended September 30, 2025[111]. - The company has no remaining availability under the ATM Agreement due to limitations, but has $10 million remaining under the SEPA[111][118]. - The company has 12,535,033 common warrants outstanding, which could yield up to $23.9 million in gross proceeds if exercised[115]. - The company received $9.6 million from XOMA for the sale of future deferred payments and potential milestones related to IXINITY, with an additional $5.8 million in milestone payments contingent on regulatory achievements[114]. Market and Operational Challenges - The company may face delays in clinical trials and partnerships due to macroeconomic factors, including inflation and potential impacts on partners' financial stability[120]. - The company has cash and cash equivalents of $21.1 million and an accumulated deficit of $269.2 million as of September 30, 2025[116].

Financial Performance - Total revenues for Q3 2025 reached $420.9 million, a 11.0% increase from $378.5 million in Q3 2024[15] - Net income attributable to Hess Midstream LP for Q3 2025 was $97.7 million, compared to $58.6 million in Q3 2024, representing a 66.7% increase[15] - The company reported a basic net income per Class A share of $0.75 for Q3 2025, up from $0.63 in Q3 2024, marking a 19.0% increase[15] - Net income for the nine months ended September 30, 2025, was $516.6 million, an increase of 6.3% compared to $486.9 million in 2024[22] - Consolidated net income for Q3 2025 was $175.5 million, with net income attributable to Hess Midstream LP at $97.7 million, or $0.75 basic earnings per Class A Share[127] - Revenues for the three months ended September 30, 2025, increased to $420.9 million, up from $378.5 million in the same period of 2024, representing an increase of 11.4%[96] - Adjusted EBITDA for the nine months ended September 30, 2025, reached $936.7 million, compared to $844.2 million for the same period in 2024, reflecting a growth of 10.9%[98] - Adjusted EBITDA for Q3 2025 was $320.7 million, an increase of $33.8 million compared to Q3 2024[129] Assets and Liabilities - Total assets as of September 30, 2025, were $4,437.7 million, up from $4,151.0 million as of December 31, 2024, reflecting a 6.9% growth[11] - Long-term debt as of September 30, 2025, was $3,764.9 million, up from $3,449.4 million as of December 31, 2024, reflecting an increase of 9.1%[11] - Total liabilities increased to $4,011.2 million as of September 30, 2025, from $3,685.7 million as of December 31, 2024, representing an increase of 8.8%[11] - Total current assets increased to $168.2 million as of September 30, 2025, compared to $149.4 million as of December 31, 2024, a growth of 12.5%[11] - Total debt as of September 30, 2025, had a carrying value of $3,794.9 million and a fair value of approximately $3,840.1 million[81] Cash Flow and Expenses - Net cash provided by operating activities increased to $738.2 million, up from $681.8 million, reflecting a growth of 8.3%[22] - Operating and maintenance expenses for Q3 2025 were $98.1 million, an increase from $89.0 million in Q3 2024, indicating a 10.2% rise[15] - Interest expense, net, for the nine months ended September 30, 2025, was $168.9 million, compared to $150.0 million for the same period in 2024, reflecting an increase of 12.6%[98] - The company reported depreciation expense of $159.9 million, an increase of 5.3% from $151.8 million in 2024[22] - Total operating costs and expenses in Q3 2025 were $162.0 million, up from $146.8 million in the prior-year quarter, primarily due to higher employee costs and depreciation[129] Shareholder Activities - The company declared a quarterly cash distribution of $0.7548 per Class A Share for the quarter ended September 30, 2025, an increase of $0.0178 per share compared to the previous quarter[102] - The company repurchased 5,151,842 Class B Units for approximately $190.0 million on May 9, 2025[47] - In Q2 2025, the company repurchased $10.0 million of Class A Shares, receiving 267,532 shares[50] - In Q3 2025, the company repurchased $70.0 million of Class A Shares, receiving 1,706,118 shares[51] - The company incurred approximately $2.9 million in costs related to the repurchase transactions during the nine months ended September 30, 2025, compared to $2.4 million in the same period of 2024[55] Mergers and Acquisitions - The company completed a merger with Chevron on July 18, 2025, resulting in Chevron becoming the direct parent of Hess[31] - The successful integration of Hess' business following the Merger is critical for realizing anticipated benefits and synergies, which may impact financial results[218] - The Merger, completed in July 2025, may disrupt current plans or operations and affect employee retention, potentially impacting financial performance[219] Market and Operational Insights - Revenues from fee-based commercial agreements with Chevron for the three and nine months ended September 30, 2025, were 96% and 97%, respectively, compared to 98% for the same periods in 2024[63] - The company generates substantially all revenues through long-term commercial agreements with Chevron, minimizing direct exposure to commodity price fluctuations[209] - The markets for oil and natural gas are expected to remain volatile, which could impact production rates and investments by the company and its partners[178][179] - The company operates in three reportable segments: gathering, processing and storage, and terminaling and export, evaluated based on Adjusted EBITDA[93] Debt and Financing - The Partnership issued $800.0 million of 5.875% fixed-rate senior unsecured notes due 2028, redeeming the previous 5.625% notes due 2026, resulting in an extinguishment loss of approximately $2.0 million[74] - The Partnership received an investment grade rating of 'BBB-' from S&P Global Ratings on July 24, 2025, allowing for more flexible debt covenants[75] - As of September 30, 2025, the Partnership had $1.4 billion in senior unsecured credit facilities, with $356.0 million drawn from the revolving credit facility and $370.0 million from the Term Loan A facility[79] - A 15% increase or decrease in interest rates would affect the fair value of fixed-rate debt by approximately $75.4 million or $71.9 million, respectively[211] Risks and Controls - There were no changes in internal control over financial reporting that materially affected the company's controls as of September 30, 2025[213] - The company has not implemented any derivative instruments to hedge interest rate exposure as of September 30, 2025[210] - Risks associated with the Merger include potential operational challenges and unforeseen expenses that could adversely affect financial results and share prices[218]

Financial Performance - Total revenues for the third quarter of 2025 were $376.0 million, a decrease of $17.5 million or 4.5% compared to $393.6 million in the same quarter of 2024[6] - Net income increased to $86.5 million in the third quarter of 2025, up 95.7% from $44.2 million in the prior year quarter[8] - Adjusted EBITDA for the third quarter of 2025 was $201.9 million, down 5.5% from $213.6 million in the third quarter of 2024, with an Adjusted EBITDA margin of 53.7%[9] - Comprehensive income for Q3 2025 was $83,439,000, a significant increase from $13,056,000 in Q3 2024[32] - Net income for the three months ended September 30, 2025, was $86,532,000, a 95.7% increase from $44,215,000 in 2024[38] - The net profit margin improved to 23.0% from 11.2% in the previous year[38] Revenue Breakdown - Residential data revenues were $227.6 million, a decrease of $2.8 million or 1.2% year-over-year, while business data revenues increased by $0.2 million or 0.4%[6] - Residential video revenue declined by 16.2% to $44,971,000 from $53,650,000 year-over-year[32] - The average revenue per user (ARPU) for residential data increased by 3.2% to $82.17 from $79.61[43] Cash Flow and Operating Activities - The company experienced a net cash provided by operating activities of $156.5 million, down from $176.2 million in the same quarter of 2024[10] - Net cash provided by operating activities decreased by 11.2% to $156,519,000 from $176,209,000 year-over-year[40] Capital Expenditures and Debt Management - Capital expenditures for the third quarter of 2025 totaled $71.8 million, a decrease of 6.8% compared to $77.0 million in the prior year quarter[10] - Payments on long-term debt increased significantly to $194,545,000 from $54,704,000 year-over-year[40] - The company paid down $197.9 million of debt during the third quarter of 2025, bringing total debt paydowns for the year to $313.2 million[6] - Long-term debt reduced to $2,687,106,000 from $3,571,536,000[34] Customer Metrics - Total residential customers decreased by 5.4% to 934,200 from 987,100 in the prior year[43] - Total customers declined by 4.4% to 1,042,300 from 1,089,800 year-over-year[43] Operating Expenses - Operating expenses (excluding depreciation and amortization) decreased by 8.2% to $96,038,000[32] - Selling, general and administrative expenses increased by 14.0% to $100,835,000[32] Liquidity and Financial Position - As of September 30, 2025, the company had $1.195 billion of committed excess liquidity under its $1.25 billion capacity Revolver[6] - The weighted average cost of debt was 3.9% for the third quarter of 2025[6] - Total assets decreased to $5,694,391,000 from $6,525,895,000 as of December 31, 2024[34] - Equity investments decreased to $651,645,000 from $815,812,000[34] Strategic Focus - The company continues to focus on a multi-phase strategy to return to sustainable growth despite higher than expected churn in residential data customers[6]

Financial Performance - The company reported net losses of $34.7 million and $105.7 million for the three and nine months ended September 30, 2025, respectively, with an accumulated deficit of $934.8 million as of the same date[93]. - Net loss for the three months ended September 30, 2025, was $34.7 million, an improvement of $7.6 million compared to a net loss of $42.2 million in the same period of 2024[108]. - For the nine months ended September 30, 2025, cash used in operating activities was $142.3 million, primarily due to a net loss of $105.7 million[130]. - For the nine months ended September 30, 2024, cash used in operating activities was $174.9 million, with a net loss of $117.0 million[131]. Revenue and Expenses - The company has not generated any product or royalty revenue from product sales and does not expect to do so until successful development and marketing approval of product candidates[93]. - Collaboration revenue decreased to $3.3 million for the three months ended September 30, 2025, down from $15.3 million in the same period of 2024, a decline of $12.0 million[109]. - For the nine months ended September 30, 2025, collaboration revenue was $14.8 million, down from $46.3 million in 2024, a decrease of $31.5 million[116]. - Research and development expenses were $29.4 million for the three months ended September 30, 2025, compared to $48.0 million for the same period in 2024, a decrease of $18.6 million[110]. - Research and development expenses for the nine months ended September 30, 2025, were $90.6 million, down from $139.5 million in 2024, a decrease of $48.9 million[117]. - Total operating expenses for the nine months ended September 30, 2025, were $131.2 million, compared to $184.1 million in 2024, a decrease of $52.8 million[115]. - General and administrative expenses decreased to $11.5 million for the three months ended September 30, 2025, from $15.8 million in 2024, a reduction of $4.3 million[112]. Cash and Financing - The company’s cash, cash equivalents, and marketable securities totaled $291.1 million as of September 30, 2025, providing runway through 2027[94]. - The company expects to fund operations into the second half of 2027 based on current cash resources, but may seek additional financing opportunistically[124]. - The company entered into an at-the-market sales agreement to sell up to $125 million of common stock, having issued 5,415,162 shares for approximately $14.7 million in net proceeds as of September 30, 2025[126]. - Cash provided by investing activities for the same period was $171.0 million, mainly from maturities of marketable securities totaling $359.0 million[132]. - Cash provided by financing activities was $14.8 million, primarily from proceeds from the sale of securities under a sales agreement with TD Securities[134]. - As of September 30, 2025, the company had cash, cash equivalents, and marketable securities totaling $291.1 million[138]. - Approximately $2.8 million of cash exceeded FDIC insurance limits as of September 30, 2025[139]. Development and Research - The company plans to submit an Investigational New Drug (IND) application for the AL137 program in 2026 and for the AL050 program in 2027[87][89]. - The company is co-developing nivisnebart with GSK for early Alzheimer's disease, with a Phase 2 trial completion expected in 2026[83]. - The company’s research and development expenses are primarily related to the discovery and development of product candidates, including nivisnebart[100][101]. - The company is advancing its proprietary Alector Brain Carrier (ABC) technology to enhance therapeutic delivery across the blood-brain barrier[76][85]. Agreements and Deferred Revenue - Under the GSK Agreement, the company received $700 million in upfront payments, with potential additional milestone payments of up to $1.5 billion[96]. - The deferred revenue balance related to the GSK Agreement was $179.0 million as of September 30, 2025, expected to be recognized over the research and development period[99]. Workforce and Operational Changes - The company has committed to a workforce reduction of approximately 47% following the results of the Phase 3 INFRONT-3 clinical trial[94]. Risk Factors - The company has not had a formal hedging program for foreign currency, and foreign currency transaction gains and losses have not been material to financial statements[140]. - The company is exposed to interest rate risks but maintains a portfolio of high credit quality securities to preserve capital[137]. - A 100 basis point change in interest rates would result in a fair value change of approximately $0.8 million due to the company's interest-earning instruments[138].