XLO

Business Context and Reporting Period

Xilio Therapeutics, Inc. (XLO) is a clinical-stage biotechnology company developing tumor-activated immuno-oncology therapies. This Form 10-Q covers the quarterly period ended June 30, 2025. The company is classified as a non-accelerated filer, a smaller reporting company, and an emerging growth company. As of June 30, 2025, the company had 51,827,910 shares of common stock outstanding.

Key Financial Metrics

Debt and Liquidity: The company reported no debt principal repayments in the six months ended June 30, 2025. Total liabilities increased to $126.7 million, driven primarily by a $38.6 million liability for common stock warrants and deferred revenue of $70.9 million. Stockholders' equity was $7.1 million as of June 30, 2025.

Material Changes vs. Prior Period

• Revenue Growth: Collaboration and license revenue increased by $8.7 million (244%) compared to the prior year period. This was driven by revenue recognition from a new collaboration agreement with AbbVie entered into in February 2025 and continued recognition from the Gilead license agreement.
• Operating Expenses: Total operating expenses increased by $4.7 million to $39.2 million. Research and development (R&D) expenses rose by $2.0 million, primarily due to increased clinical development activities for vilastobart and new preclinical activities for XTX501, partially offset by the discontinuation of investment in XTX202. General and administrative (G&A) expenses increased by $3.7 million, largely due to higher personnel costs and professional fees.
• Restructuring: The company incurred no restructuring expenses in the current period, compared to $1.0 million in the prior year period related to a workforce reduction in March 2024.
• Capital Raise: In June 2025, the company closed a follow-on public offering of prefunded warrants and common stock warrants, receiving net proceeds of approximately $47.0 million. This significantly improved the cash position from $55.3 million at year-end 2024 to $121.6 million.

Guidance, Outlook, and Risks

Going Concern: The company has incurred significant operating losses since inception and expects to continue to do so. Management has raised substantial doubt about the company's ability to continue as a going concern within twelve months of the filing date. The company anticipates its existing cash will fund operations through the end of the third quarter of 2026. Additional capital will be required, potentially through the exercise of warrants (up to $100 million potential), milestone payments, or further equity/debt financings.

Outlook and Milestones:

• vilastobart: Phase 2 clinical trial data in metastatic microsatellite stable colorectal cancer was presented in May 2025. Additional data is expected in the first half of 2026.
• XTX301: Enrollment in Phase 1B monotherapy dose expansion is ongoing under the Gilead license.
• Warrants: Series B and Series C warrants from the June 2025 offering may provide up to $100 million in additional gross proceeds if exercised in cash by the second half of 2026.

Key Risks:

• Nasdaq Compliance: The company received a deficiency letter from Nasdaq in April 2025 regarding its stock price closing below $1.00 for 30 consecutive days. It has until October 1, 2025, to regain compliance or risk delisting.
• Supply Chain: Reliance on WuXi Biologics in China for manufacturing exposes the company to geopolitical risks, trade tariffs, and potential legislative restrictions (e.g., BIOSECURE Act).
• Development Uncertainty: All product candidates are in early clinical or preclinical stages; there is no guarantee of regulatory approval or commercial success.

Investor Verification Checklist

• Cash Runway: Verify the accuracy of the projection that current cash ($121.6 million) will sustain operations through Q3 2026 given the burn rate and potential for increased R&D costs.
• Warrant Exercise Probability: Assess the likelihood of the Series B and Series C warrants being exercised for cash to generate the potential $100 million in proceeds, noting the exercise price of $0.75 and current market conditions.
• Nasdaq Delisting Risk: Monitor the stock price to determine if the company will regain compliance with the $1.00 minimum bid price requirement by October 1, 2025, or if a reverse stock split is necessary.
• AbbVie Collaboration Terms: Review the specific performance obligations and revenue recognition timeline for the $49.1 million transaction price allocated to the AbbVie agreement to understand future revenue visibility.
• China Manufacturing Exposure: Evaluate the impact of potential U.S. legislation (such as the BIOSECURE Act) or trade tariffs on the company's ability to utilize WuXi Biologics for clinical and commercial supply.