v3.26.1
Related Party Transactions and Transactions with the Former Parent
 6 Months Ended
Jun. 30, 2026
Related Party Transactions [Abstract]  
Related Party Transactions and Transactions with the Former Parent
8.
Related Party Transactions and Transactions with the Former Parent

Relationship with the Former Parent

Upon the effectiveness of the Spin-Off, the Former Parent ceased to be a related party to the Company and accordingly, no related party transactions or balances are reported subsequent to February 2026.

In February 2026, the Company entered into agreements with the Former Parent in connection with the Spin-Off, including the following:

•
Separation and Distribution Agreement - sets forth the principal actions to be taken in connection with the Spin-Off, including the transfer of assets and assumptions of liabilities, and establishes certain rights and obligations between the Company and Avidity following the Spin-Off, including procedures with respect to claims subject to indemnification and related matters.
•
Transition Services Agreement - stipulates that the Company will provide certain transition services to Avidity, and Avidity will provide certain transition services to the Company.

Relationship with the Former Parent prior to the Spin-Off

Pursuant to the Separation Agreement, immediately prior to the Spin-Off the Former Parent made a cash contribution to the Company which resulted in a cash balance of approximately $270.0 million.

Prior to the Separation, the Company did not historically operate as a standalone business and the condensed financial statements were derived from the consolidated financial statements and accounting records of the Former Parent. The following disclosure summarizes activity between the Company and the Former Parent prior to the Separation, including the affiliates of the Former Parent that were not part of the Spin-Off.

Net Deficit of the Former Parent

Net transfers from Avidity represent the net effect of transactions between Avidity and the Company prior to the Separation. The components of net transfers from Avidity are as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Net transfers from Former Parent as reflected in the condensed statement of cash flows

 

$

—

 

 

$

12,173

 

 

$

301,505

 

 

$

23,276

 

Stock-based compensation

 

 

—

 

 

 

1,700

 

 

 

12,177

 

 

 

2,910

 

Net lease expense for Avidity

 

 

—

 

 

 

(743

)

 

 

63

 

 

 

(1,510

)

Depreciation for Avidity

 

 

—

 

 

 

(132

)

 

 

(331

)

 

 

(158

)

Net assets distributed from Avidity

 

 

—

 

 

 

—

 

 

 

—

 

 

 

742

 

Net transfers from Former Parent as reflected in the condensed statement of changes in deficit

 

$

—

 

 

$

12,998

 

 

$

313,414

 

 

$

25,260

 

Cost Allocations

The condensed financial statements reflect allocations of certain expenses from the condensed consolidated financial statements of Avidity prior to the Spin-Off, including research and development expenses and general and administrative expenses. These allocations include, but are not limited to, executive management, employee compensation and benefits, facilities and operations, information technology, business development, financial services (such as accounting, audit, and tax), legal, insurance, and stock-based compensation.

These allocations to the Company are reflected in the condensed statements of operations and comprehensive loss as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Cost allocations

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

$

—

 

 

$

3,907

 

 

$

11,688

 

 

$

6,510

 

General and administrative expenses

 

 

—

 

 

 

3,223

 

 

 

10,799

 

 

 

5,311

 

Total cost allocations

 

$

—

 

 

$

7,130

 

 

$

22,487

 

 

$

11,821

 

Management believes these cost allocations are a reasonable reflection of services provided to, or the benefit derived by, the Company during the periods presented. The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by the Company employees, and strategic decisions made in areas such as research and development, information technology and infrastructure.

Stock-Based Compensation

Prior to the Spin-Off, the Company participated in Avidity’s share-based compensation plans, the costs of which have been allocated to the Company and recorded in research and development and general and administrative expenses in the condensed statements of operations and comprehensive loss. Refer to Note 7 for additional information.