PART I. FINANCIAL INFORMATION Presents Werewolf Therapeutics' unaudited condensed consolidated financial statements and management's discussion for Q2 and H1 2025 Item 1. Financial Statements Presents Werewolf Therapeutics' unaudited condensed consolidated financial statements for Q2 and H1 2025, showing a net loss and decreased cash Condensed Consolidated Balance Sheets Total assets decreased to $92.6 million by June 30, 2025, driven by reduced cash, while equity fell due to net losses Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $77,596 | $110,995 | | Total current assets | $80,439 | $113,066 | | Total assets | $92,566 | $126,929 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $15,171 | $15,180 | | Total liabilities | $51,102 | $53,539 | | Accumulated deficit | $(450,659) | $(414,588) | | Total stockholders' equity | $41,464 | $73,390 | Condensed Consolidated Statements of Operations Net loss for Q2 2025 was $18.0 million, with H1 2025 net loss at $36.1 million, and collaboration revenue at zero Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $1,143 | $0 | $1,885 | | Research and development | $13,143 | $15,271 | $26,263 | $28,179 | | General and administrative | $4,399 | $4,832 | $9,270 | $9,828 | | Operating loss | $(17,542) | $(18,960) | $(35,533) | $(36,122) | | Net loss | $(17,982) | $(17,249) | $(36,071) | $(33,442) | | Net loss per share, basic | $(0.40) | $(0.40) | $(0.80) | $(0.79) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $73.4 million to $41.5 million by June 30, 2025, primarily due to the $36.1 million net loss - Total stockholders' equity declined from $73.4 million at December 31, 2024 to $41.5 million at June 30, 2025, primarily due to a net loss of $36.1 million for the six-month period26 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $34.1 million in H1 2025, leading to a $33.7 million net decrease in cash Six Months Ended June 30, Cash Flow Summary (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,112) | $(29,474) | | Net cash used in investing activities | $0 | $(128) | | Net cash provided by financing activities | $388 | $10,539 | | Net decrease in cash | $(33,724) | $(19,063) | Notes to Condensed Consolidated Financial Statements Details accounting policies, the conclusion of the Jazz collaboration, the K2HV loan, and the company's liquidity outlook - The company is an early-stage biopharmaceutical company pioneering therapeutics to stimulate the immune system for cancer treatment31 - With $77.6 million in cash and cash equivalents as of June 30, 2025, the company expects to fund its operating expenses and capital expenditure requirements for at least the next twelve months, but will require additional funding thereafter33 - In June 2024, the company completed its last material performance obligation under the Collaboration Agreement with Jazz Pharmaceuticals, resulting in the recognition of all remaining deferred revenue from that agreement44 - In May 2024, the company repaid its loan with Pacific Western Bank and entered into a new loan agreement with K2 HealthVentures (K2HV), drawing down $30.0 million in gross proceeds5556 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, clinical program updates for WTX-124 and WTX-330, and liquidity, confirming cash sufficiency into Q4 2026 Overview Werewolf develops conditionally activated immunotherapies, with lead candidates WTX-124 and WTX-330 in Phase 1/1b and Phase 1b/2 trials respectively - The company's most advanced product candidates, WTX-124 (IL-2) and WTX-330 (IL-12), are systemically delivered, conditionally activated INDUKINE molecules for treating various tumor types91 - WTX-124 is being evaluated in a Phase 1/1b clinical trial as a monotherapy and in combination with KEYTRUDA, with plans to present interim data from expansion arms in the second half of 202592 - WTX-330 initiated a Phase 1b/2 clinical trial in Q1 2025, with the first patient dosed in Q2 2025 for the treatment of advanced or metastatic solid tumors93 Results of Operations Q2 2025 saw zero revenue and decreased R&D expenses, while H1 2025 net loss increased to $36.1 million due to lower interest income Comparison of Three Months Ended June 30, (in thousands) | Item | 2025 | 2024 | $ Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $1,143 | $(1,143) | | Research and development | $13,143 | $15,271 | $(2,128) | | General and administrative | $4,399 | $4,832 | $(433) | | Net loss | $(17,982) | $(17,249) | $(733) | - The $2.1 million decrease in Q2 2025 R&D expenses was primarily due to a $1.8 million decrease in manufacturing costs for WTX-330 and a $0.5 million decrease in personnel costs116119 Comparison of Six Months Ended June 30, (in thousands) | Item | 2025 | 2024 | $ Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $1,885 | $(1,885) | | Research and development | $26,263 | $28,179 | $(1,916) | | General and administrative | $9,270 | $9,828 | $(558) | | Net loss | $(36,071) | $(33,442) | $(2,629) | - The $1.9 million decrease in H1 2025 R&D expenses was mainly from a $2.2 million reduction in manufacturing costs and a $0.7 million decrease in personnel costs, partially offset by a $0.7 million increase in clinical trial costs for WTX-124 and WTX-330126127 Liquidity and Capital Resources As of June 30, 2025, the company had $77.6 million in cash, sufficient into Q4 2026, but requires substantial additional funding - As of June 30, 2025, the company had cash and cash equivalents of $77.6 million147 - Management estimates that existing cash will be sufficient to fund operational expenses and capital expenditure requirements into the fourth quarter of 2026147 - The company has an active K2HV Loan Agreement with $30.0 million drawn and up to an additional $20.0 million available through May 1, 2026, subject to lender consent139140 - The company's at-the-market (ATM) offering capacity is limited to an aggregate offering price of up to $12.5 million due to the "Baby Shelf Limitation" under Form S-3 rules145 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is exempt from providing market risk disclosures - As a smaller reporting company, the registrant is not required to provide the information for this item161 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level162 - There were no changes during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting163 PART II. OTHER INFORMATION Presents other information including significant risk factors and a list of exhibits filed with the Form 10-Q Item 1A. Risk Factors Details risks including limited operating history, dependence on early-stage candidates, funding needs, reliance on third parties, and intense competition Risks Related to Financial Position and Capital Requirements The company faces risks from its limited operating history, accumulated deficit of $450.7 million, ongoing losses, and the need for substantial additional funding - The company has a limited operating history, an accumulated deficit of $450.7 million as of June 30, 2025, and expects to incur significant losses for the foreseeable future166167 - Substantial additional funding is required to complete the development and commercialization of product candidates, and an inability to raise this capital could force the company to delay, reduce, or eliminate its R&D programs170 - The K2HV Loan Agreement contains operating covenants that restrict the company's ability to incur future debt, pay dividends, and dispose of assets, among other limitations177 Risks Related to Discovery, Development, and Commercialization Business success depends on early-stage candidates and an unproven platform, facing risks in development, manufacturing, and intense competition - The company's business is highly dependent on the success of its initial INDUKINE and INDUCER molecules, which are in early stages of development and require significant additional development187 - The PREDATOR platform approach is unproven, and there is no guarantee it will produce commercially valuable products196 - Manufacturing the company's novel multi-domain biologics is complex, has never been done at commercial scale, and is subject to risks of delay or failure200 - The company faces substantial competition from major pharmaceutical and biotechnology companies developing immunotherapies, including numerous companies developing IL-2 and IL-12 based therapies238241242 Risks Related to Dependence on Third Parties Reliance on third-party CROs and CMOs for clinical trials and manufacturing, and a license agreement with Harpoon Therapeutics, poses significant operational risks - The company depends on third-party CROs to conduct preclinical studies and clinical trials and is responsible for ensuring their compliance with regulations like cGCP259261 - Without its own clinical manufacturing capabilities, the company relies on third-party CMOs, exposing it to risks of supply disruption, quality issues, and regulatory non-compliance265 - The company relies on a license agreement with Harpoon Therapeutics for patent rights essential to its PREDATOR platform and product candidates285 Risks Related to Intellectual Property Success hinges on obtaining and maintaining patent protection, which is uncertain, and managing risks of infringement claims and trade secret protection - The company's success depends on obtaining and maintaining patent protection for its PREDATOR platform and product candidates, but the scope and validity of such protection are uncertain275276 - The company may face third-party claims of intellectual property infringement, which could be expensive and time-consuming to defend and could prevent or delay development efforts309 - The company relies on trade secret protection for key aspects of its technology, but it cannot guarantee that these secrets will not be disclosed or independently discovered by competitors305 Risks Related to Regulatory Approval and Legal Compliance Regulatory approval is expensive and uncertain, with ongoing compliance burdens, healthcare fraud laws, data privacy regulations, and potential FDA disruptions posing risks - The regulatory approval process is expensive, time-consuming, and uncertain, and the company has no experience in filing for marketing approvals338 - Disruptions at the FDA and other government agencies due to funding cuts, personnel losses, or other factors could hinder the timely approval of product candidates347 - The company is subject to healthcare fraud and abuse laws, which could expose it to criminal sanctions, civil penalties, and exclusion from government healthcare programs if found non-compliant415 - The company must comply with complex and evolving state, national, and international privacy and data security laws, with non-compliance potentially leading to significant fines and reputational damage425 Risks Related to Business Operations and Public Company Status Risks include dependence on key personnel, cybersecurity threats, stock price volatility, and increased public company compliance costs - The company is highly dependent on retaining key employees and faces fierce competition for qualified personnel in the Boston area450451 - The company is exposed to risks from cyberattacks, which could lead to data loss, operational disruption, and financial loss453454 - The company's stock price is volatile, and it may be delisted from Nasdaq if it fails to meet continued listing requirements, such as the minimum bid price465467 - In the past, the company has identified material weaknesses in its internal control over financial reporting, which have since been fully remediated480 Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - This section lists the exhibits filed with the report, including corporate governance documents, an employment agreement, and officer certifications required by the Sarbanes-Oxley Act493
Werewolf Therapeutics(HOWL) - 2025 Q2 - Quarterly Report