CADL

Business Context and Reporting Period

Candel Therapeutics, Inc. (CADL) is a clinical-stage biopharmaceutical company developing off-the-shelf viral immunotherapies for cancer. This Form 10-K covers the fiscal year ended December 31, 2025. The company focuses on two primary product candidates: aglatimagene besadenovec (adenovirus-based) and linoserpaturev (HSV-based). The company is classified as an Emerging Growth Company and a Smaller Reporting Company.

Key Financial Metrics

Note: The company has not generated any revenue from product sales to date. The reduction in net loss in 2025 was significantly influenced by an $8.2 million gain from the change in fair value of warrant liabilities.

Material Changes vs. Prior Period

• Operating Expenses: Increased by $14.9 million (45%) year-over-year. Research and Development (R&D) expenses rose $11.2 million, primarily driven by a $9.5 million increase in clinical development costs for aglatimagene programs. General and Administrative (G&A) expenses increased $3.7 million, largely due to $2.7 million in new commercial readiness costs.
• Debt Structure: In October 2025, the company entered into a new Loan and Security Agreement with Trinity Capital Inc. (Trinity LSA) for up to $130 million. The company drew down the first tranche of $50 million and used proceeds to fully repay its prior $20 million loan with Silicon Valley Bank.
• Warrant Liabilities: The change in fair value of warrant liabilities shifted from a $20.8 million expense in 2024 to an $8.2 million gain in 2025, driven by lower volatility and changes in the underlying stock price.
• Capital Raises: In 2025, the company raised approximately $19.3 million in net proceeds from a Registered Direct Offering and At-The-Market (ATM) offerings. A subsequent $100 million Follow-On Offering occurred in February 2026 (subsequent event).

Guidance, Outlook, and Management Commentary

Clinical Milestones and Outlook

• Aglatimagene (Prostate Cancer): In December 2024, the company announced positive topline data from its pivotal Phase 3 trial, meeting the primary endpoint of Disease-Free Survival (DFS) with a Hazard Ratio of 0.70. The FDA granted Regenerative Medicine Advanced Therapy (RMAT) designation in May 2025. The company plans to submit a Biologics License Application (BLA) in Q4 2026.
• Aglatimagene (NSCLC): Phase 2a data announced in March 2025 showed a median overall survival (mOS) of 21.5 months in patients with progressive disease despite immune checkpoint inhibitor (ICI) treatment, compared to ~10 months for standard of care. A pivotal Phase 3 trial is planned to initiate in Q2 2026.
• Aglatimagene (Pancreatic Cancer): Final Phase 2a data showed significant survival benefit (mOS 31.4 months vs. 12.5 months control). However, in October 2025, the company decided to pause further development in this indication unless externally funded.
• Linoserpaturev (Glioblastoma): Investigator-sponsored Phase 1b data continues to show survival benefits. The company expects to present mature mOS data in Q4 2026 and has received IND clearance for a potential future Phase 2 study.

Liquidity and Funding

Management expects that existing cash ($119.7 million as of Dec 31, 2025) combined with net proceeds from the February 2026 Follow-On Offering ($93.5 million) will fund operations into the first quarter of 2028. The company anticipates continued significant operating losses as it advances clinical trials and prepares for potential commercialization.

Risks and Contingencies

• Regulatory Risk: While the Phase 3 prostate cancer trial met its primary endpoint, FDA approval is not guaranteed. The company relies on a Special Protocol Assessment (SPA) with the FDA.
• Capital Requirements: The company will require substantial additional funding to commercialize aglatimagene and advance other programs. Failure to raise capital could force delays or cessation of operations.
• Debt Covenants: The Trinity LSA contains financial covenants requiring the maintenance of minimum cash balances if market capitalization falls below $550 million.
• RTW Purchase Agreement: In February 2026, the company entered an agreement to receive $100 million upon FDA approval of aglatimagene for prostate cancer in exchange for a tiered royalty on future U.S. net sales (capped at $250 million).

Key Facts for Investor Verification

• Phase 3 Prostate Cancer Data: Verify the statistical significance and clinical relevance of the DFS improvement (HR 0.70, p=0.0155) and the FDA's acceptance of the endpoint for BLA submission.
• BLA Timeline: Confirm the company's ability to submit the Biologics License Application for aglatimagene in Q4 2026 as planned.
• Liquidity Runway: Assess the sufficiency of the ~$213 million in cash (including Feb 2026 proceeds) to fund operations through Q1 2028, considering the high burn rate associated with Phase 3 trials and commercial readiness.
• Debt Obligations: Review the terms of the Trinity LSA, specifically the interest rate (Prime + 3.0% or 9.75%), the 4.25% exit fee, and the financial covenants regarding minimum cash balances.
• RTW Agreement Conditions: Understand the conditions precedent for the $100 million payment from RTW Investments, specifically the requirement for FDA marketing approval by a specified date.
• Portfolio Prioritization: Note the decision to pause aglatimagene development in pancreatic cancer and the reliance on external funding for that specific program.