APVO

Business Context and Reporting Period

Aptevo Therapeutics Inc. (APVO) is a clinical-stage biotechnology company focused on developing novel immunotherapy candidates for cancer treatment using its proprietary ADAPTIR and ADAPTIR-FLEX platforms. The company has two clinical candidates: mipletamig (CD123xCD3 T cell engager for acute myelogenous leukemia) and ALG.APV-527 (4-1BB x 5T4 bispecific for solid tumors), along with six preclinical candidates. This 10-K covers the fiscal year ended December 31, 2025.

Key Financial Metrics

Note: The company has no product revenue. Expenses are driven by clinical trials and corporate operations.

Material Changes vs. Prior Period

• Increased Net Loss: Net loss increased by approximately $1.9 million (7.9%) year-over-year, primarily due to higher General and Administrative expenses ($1.6 million increase) driven by employee, consulting, and legal costs.
• R&D Spend Shift: While total R&D remained relatively flat, spending on the lead candidate mipletamig increased significantly from $3.8 million to $6.6 million to support the RAINIER Phase 1b/2 trial. Conversely, costs for ALG.APV-527 decreased from $2.6 million to $0.5 million following the conclusion of its dose escalation trial.
• Liquidity Improvement: Cash and cash equivalents more than doubled from $8.7 million to $21.6 million, fueled by $38.5 million in financing proceeds from equity offerings and warrant exercises.
• Capital Structure: The company executed two reverse stock splits in 2025 (1-for-20 and 1-for-18) to maintain Nasdaq listing compliance. Stockholders' equity increased from $4.8 million to $17.4 million.

Guidance, Outlook, Risks, and Unusual Items

Outlook and Capital Resources

Management has concluded that substantial doubt exists regarding the company's ability to continue as a going concern for the one-year period following the issuance of the financial statements. The company requires additional capital to fund clinical development and operations. To mitigate this, Aptevo has secured access to capital through:

• Standby Equity Purchase Agreements (SEPAs): A $25 million facility (First SEPA) with Yorkville (entered June 2025) and a new $60 million facility (Second SEPA) entered in January 2026. As of year-end, $8.7 million remained available under the First SEPA.
• At-The-Market (ATM) Offering: An ATM agreement with Roth Capital Partners was utilized, though availability is currently limited by SEC rules regarding public float.

Clinical Progress

• Mipletamig: The RAINIER trial (frontline AML) is ongoing. Early data shows a 100% freedom from cytokine release syndrome (CRS) in frontline patients and an 86% clinical benefit rate.
• ALG.APV-527: Phase 1 dose escalation is complete with 58% of patients achieving stable disease. The company is evaluating next steps for dose expansion.

Risks and Contingencies

• Going Concern: Recurring losses and negative cash flows raise substantial doubt about the ability to continue operations without further financing.
• Delisting Risk: The company previously received notice of non-compliance with Nasdaq stockholders' equity requirements but regained compliance in July 2025. Continued compliance with listing standards (including bid price and market value) remains critical.
• Management Transition: Effective April 1, 2026, CEO Marvin L. White will transition to Executive Chair, and COO Jeffrey G. Lamothe will become President and CEO.
• Warrant Down-Rounds: The company recorded a deemed dividend of $1.6 million in 2025 due to the triggering of down-round provisions on warrants issued in June 2025, which increased the net loss attributable to common stockholders.

Investor Verification Checklist

• Cash Runway: Verify the current cash burn rate against the $21.6 million cash balance and the utilization status of the $68.7 million total SEPA capacity to assess the timeline for the next capital raise.
• Nasdaq Compliance: Monitor the stock price to ensure it remains above the $1.00 minimum bid price requirement, noting the immediate delisting risk if the price falls below $1.00 for 30 consecutive days following the recent reverse splits.
• Clinical Data Readout: Track the timeline and results of the RAINIER trial for mipletamig, as this is the primary value driver and potential catalyst for future funding.
• Warrant Dilution: Review the terms of the outstanding 676,968 warrants, particularly the down-round features, to understand potential future dilution if the stock price declines further.
• Going Concern Status: Assess the likelihood of securing additional financing on acceptable terms given the "substantial doubt" disclosure and current market conditions.