FBRX

Business Context and Reporting Period

Forte Biosciences, Inc. (FBRX) is a clinical-stage biopharmaceutical company focused on developing FB102, a proprietary anti-CD122 monoclonal antibody for autoimmune indications. This Form 10-K covers the fiscal year ended December 31, 2025. The company is a non-accelerated filer and a smaller reporting company. As of December 31, 2025, Forte had 19 full-time employees.

Key Financial Metrics

Note: The company has no debt obligations reported in the balance sheet liabilities section.

Material Changes vs. Prior Period

• Increased R&D Spend: R&D expenses surged by $37.0 million (175% increase) to $58.2 million. This was driven by a $36 million increase in manufacturing and clinical expenses for the Phase 2 celiac disease trial and Phase 1b trials for vitiligo and alopecia areata.
• Reduced G&A: G&A expenses decreased by $3.0 million (19% decrease) to $12.4 million, primarily due to a $6.1 million reduction in professional and legal fees (including litigation settlements), partially offset by higher personnel costs.
• Capital Raising: The company raised approximately $76.8 million in gross proceeds in 2025 through a public offering ($75.0 million) and the exercise of an underwriter option ($1.8 million), compared to $53.0 million raised in a private placement in 2024.
• Cash Position: Cash and cash equivalents increased by $54.7 million year-over-year, bolstered by financing activities and the redemption of short-term investments.

Guidance, Outlook, and Risks

Management Commentary and Clinical Progress

• FB102 Celiac Disease: In June 2025, the company announced positive Phase 1b data showing statistically significant benefits on histological endpoints and a 42% reduction in gluten-challenge induced GI symptoms. A Phase 2 study was initiated in July 2025 with topline data expected in 2026.
• Other Indications: Phase 1b trials for non-segmental vitiligo and alopecia areata are ongoing, with topline data expected in the first half of 2026.
• Liquidity: Management believes current cash resources ($77.0 million) are sufficient to fund operations for at least 12 months from the filing date. However, the company anticipates continued net losses and will require significant additional capital to complete development and commercialization.

Risks and Contingencies

• Capital Requirements: The company has no approved products and no revenue. Failure to secure additional funding could force delays or termination of clinical programs.
• Regulatory Uncertainty: Risks include potential FDA delays due to staffing changes, budget constraints, or new regulatory policies under the current administration.
• Legal Proceedings: The company is involved in litigation regarding insurance coverage for prior director liability claims. A Delaware court ruled in January 2026 that two insurers are liable up to $5 million for defense and settlement costs; an interim payment of $2.3 million was received in March 2026.
• Intellectual Property: The company is challenging the validity of a third-party patent (University of Massachusetts) via post-grant review, which is currently on appeal.

Investor Verification Checklist

• Cash Runway: Verify the accuracy of the 12-month liquidity projection given the high burn rate ($50.9M operating cash outflow in 2025).
• Phase 2 Trial Design: Review the specific endpoints and enrollment targets for the newly initiated Phase 2 celiac disease study to assess the probability of success.
• Financing Terms: Examine the terms of the June 2025 public offering and pre-funded warrants for potential dilution impacts on existing shareholders.
• Legal Settlements: Monitor the status of the insurance litigation recovery and any remaining exposure from the Camac Fund dispute.
• Patent Status: Track the outcome of the appeal regarding the University of Massachusetts patent challenge, which could impact commercial freedom to operate.