Xilio Therapeutics(XLO) - 2025 Q2 - Quarterly Report

Part I Financial Information Financial Statements Xilio's June 30, 2025, financials show increased cash and liabilities, a $29.1 million net loss, and significant going concern doubts Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $121,551 | $55,291 | | Total current assets | $123,716 | $60,234 | | Total assets | $133,813 | $71,075 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $53,260 | $27,261 | | Common stock warrant liabilities | $38,550 | $0 | | Total liabilities | $126,744 | $53,477 | | Accumulated deficit | $(412,862) | $(383,753) | | Total stockholders' equity | $7,069 | $17,598 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Collaboration and license revenue | $8,084 | $2,357 | $11,014 | $2,357 | | Research and development | $15,330 | $11,216 | $23,596 | $21,616 | | General and administrative | $7,120 | $5,815 | $15,635 | $11,954 | | Total operating expenses | $22,450 | $17,061 | $39,231 | $34,548 | | Loss from operations | $(14,366) | $(14,704) | $(28,217) | $(32,191) | | Net loss | $(15,844) | $(13,925) | $(29,109) | $(31,128) | | Net loss per share, basic and diluted | $(0.16) | $(0.24) | $(0.34) | $(0.73) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,501 | $9,451 | | Net cash used in investing activities | $(423) | $(21) | | Net cash provided by financing activities | $52,194 | $20,997 | | Increase in cash, cash equivalents and restricted cash | $66,272 | $30,427 | Notes to Condensed Consolidated Financial Statements - The company has incurred significant operating losses, with a net loss of $29.1 million for the six months ended June 30, 2025, and an accumulated deficit of $412.9 million, raising substantial doubt about its ability to continue as a going concern[33] - To fund operations, the company will need to raise additional capital through warrant exercises, milestone payments from Gilead and AbbVie, equity/debt financings, or other collaborations, with potential cost reduction strategies if capital is not secured[34] - In February 2025, the company entered a collaboration with AbbVie for up to four programs, receiving an initial $52.0 million ($42.0 million upfront cash and $10.0 million from a private placement) and is eligible for up to approximately $2.1 billion in additional contingent payments[55][61] - In March 2024, the company entered a license agreement with Gilead for its XTX301 (IL-12) program, receiving $55.0 million ($30.0 million upfront cash and $25.0 million from private placements) and is eligible for up to $592.5 million in additional contingent payments, including a $75.0 million transition fee[72][74] - In June 2025, the company closed a follow-on public offering of prefunded warrants and accompanying common stock warrants, receiving initial gross proceeds of $50.0 million, with potential for an additional $100.0 million if certain warrants are exercised for cash by the second half of 2026[32][89][96] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports Xilio, a clinical-stage biotech, has $121.6 million cash, funding through Q3 2026, but faces going concern doubts and needs more capital Overview - Xilio is a clinical-stage biotechnology company developing tumor-activated immuno-oncology (I-O) therapies to improve outcomes for cancer patients while minimizing systemic side effects[123] - The company's most advanced product candidates are vilastobart (anti-CTLA-4 mAb) and XTX301 (engineered IL-12), with vilastobart in a Phase 2 trial and XTX301 in a Phase 1 trial under a license agreement with Gilead[123] - The company is also advancing preclinical programs, including XTX501 (masked PD-1/IL-2 bispecific) and masked T cell engagers, partly in collaboration with AbbVie[123] Results of Operations Comparison of Results for the Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration and license revenue | $8,084 | $2,357 | $5,727 | | Research and development | $15,330 | $11,216 | $4,114 | | General and administrative | $7,120 | $5,815 | $1,305 | | Net loss | $(15,844) | $(13,925) | $(1,919) | Comparison of Results for the Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration and license revenue | $11,014 | $2,357 | $8,657 | | Research and development | $23,596 | $21,616 | $1,980 | | General and administrative | $15,635 | $11,954 | $3,681 | | Net loss | $(29,109) | $(31,128) | $2,019 | - The increase in collaboration revenue for both the three and six-month periods in 2025 was primarily due to revenue recognized under the new agreement with AbbVie and increased revenue from the Gilead agreement[147][155] - R&D expenses increased in Q2 2025 due to higher clinical development costs for vilastobart and manufacturing activities for XTX501, partially offset by the discontinuation of the XTX202 program[148] Liquidity and Capital Resources - As of June 30, 2025, the company had cash and cash equivalents of $121.6 million[165][178] - Management anticipates that existing cash will be sufficient to fund operating expenses and capital expenditure requirements through the end of the third quarter of 2026[178] - The company's recurring operating losses and negative cash flows raise substantial doubt about its ability to continue as a going concern, with future operations dependent on raising additional capital through warrant exercises, milestone payments, or other financing activities[178] Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,501 | $9,451 | | Net cash used in investing activities | $(423) | $(21) | | Net cash provided by financing activities | $52,194 | $20,997 | Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide this information - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, Xilio Therapeutics is not required to provide the information under this item[191] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal control - The company's principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at a reasonable assurance level[193] - There were no changes in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[194] Part II Other Information Risk Factors Xilio faces substantial risks including going concern doubts, potential delisting, unproven early-stage products, clinical/manufacturing challenges, third-party reliance, and IP/regulatory hurdles Risks Related to Financial Position and Capital Requirements - Recurring losses from operations raise substantial doubt about the company's ability to continue as a going concern, potentially requiring cost reduction strategies like delaying or reducing R&D programs without additional capital[198][199] - The company's common stock may be delisted from Nasdaq for failing to meet the minimum bid price requirement of $1.00 per share, which could negatively impact its ability to access capital markets[206] - The company has a history of significant operating losses, with an accumulated deficit of $412.9 million as of June 30, 2025, and expects these losses to continue for the foreseeable future[212] Risks Related to Product Discovery and Development - The company's business is highly dependent on the success of its current product candidates (vilastobart and XTX301), which are in early stages of development and require significant additional clinical work[224] - The company's technological approach to discovering and developing tumor-activated product candidates is unproven, with no guarantee it will lead to commercially valuable products[265] - Clinical trials may be substantially delayed, suspended, or terminated due to numerous unforeseen events, including regulatory hurdles, patient enrollment difficulties, and unfavorable results[239] - Interim and preliminary data from clinical trials may change as more patient data becomes available, and final data could be materially different[253] Risks Related to Manufacturing and Supply - Manufacturing biologics is complex and subject to problems like contamination or lot failures, which could delay development and commercialization programs[273][276] - The company relies on a single CDMO, WuXi Biologics, based in China, exposing it to risks related to supply interruptions, regulatory compliance, and geopolitical tensions, including potential U.S. trade restrictions or sanctions[280][285][516] Risks Related to Dependence on Third Parties - The company relies on third-party CROs to conduct clinical trials, and their unsatisfactory performance could harm the business and delay programs[291][292] - Success is dependent on collaborations with Gilead and AbbVie, where partners have significant discretion over development and commercialization, with no guarantee of success or future payments[295][297] Risks Related to Intellectual Property - The company's success depends on its ability to obtain and maintain patent protection, as insufficient scope could allow competitors to develop similar products, adversely affecting commercialization[338][339] - The company relies on in-licensed patent rights for its product candidates (e.g., from City of Hope and WuXi Biologics) and faces risks of losing these rights if it fails to comply with license obligations[359][360] - The company may face third-party claims of intellectual property infringement, which could be expensive, time-consuming, and prevent or delay development efforts[384] Risks Related to Regulatory Approval and Legal Compliance - The regulatory approval process for biologics is expensive, lengthy, and uncertain, and the company, lacking experience in filing for marketing approval, may be unable to obtain it for its product candidates[411][412] - Disruptions at the FDA and other government agencies due to funding cuts, shutdowns, or other events could hinder their ability to provide guidance and review submissions in a timely manner[423] - Current and future healthcare legislation, such as the Inflation Reduction Act (IRA), may increase the difficulty and cost of obtaining reimbursement and limit the prices for the company's products if approved[464][476] - The company is subject to stringent and evolving data privacy laws (e.g., GDPR, CCPA), and failure to comply could result in significant fines and penalties[492][498] Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[582] Exhibits This section lists key exhibits filed with the Form 10-Q, including corporate documents and officer certifications - The Exhibit Index lists key corporate and financial documents filed with the report, such as the Restated Certificate of Incorporation, Warrant Agreements, and Officer Certifications pursuant to the Sarbanes-Oxley Act[585]