NOTE 5. CIRM GRANT

In November 2020, California Institute for Regenerative Medicine (“CIRM”) awarded the Company $2.3 million in support of the research project related to a monoclonal antibody that depletes blood stem cells and enables chemotherapy-free transplants. The Company has received an aggregate of $2.3 million from CIRM through June 30, 2026. There are no further amounts available for future distribution to the Company under the grant.

Under the terms of the grant, both CIRM and the Company agreed to co-fund the research project and the amount of the Company’s co-funding requirement was predetermined as a part of the award. Under the terms of the CIRM grant, the Company is obligated to pay royalties and licensing fees based on 0.1% of net sales of CIRM-funded inventions per $1.0 million of CIRM grant. As an alternative to revenue sharing, the Company has the option to convert the award to a loan. In the event the Company exercises its right to convert the award to a loan, it would be obligated to repay the loan within ten business days of making such election. Repayment amounts vary dependent on when the award is converted to a loan, ranging from 60% of the award granted to amounts received plus interest at the rate of the three-month LIBOR rate plus 25% per annum. Since the Company may be required to repay some or all of the amounts awarded by CIRM, the Company had historically accounted for this award as a liability, recorded without discount or interest given the uncertainty as to amounts that would become due. In the absence of explicit U.S. GAAP guidance on contributions received by business entities from government entities, the Company applied the recognition and measurement guidance in ASC Topic 958-605 Not-for-Profit Entities: Revenue Recognition—Contributions to the CIRM grant by analogy.

During the three months ended June 30, 2026, the Company determined that the principal path for briquilimab is obtaining and monetizing a priority review voucher, proceeds from which are excluded from royalty-bearing net sales under the CIRM grant. As a result, the Company determined it would not elect to convert the award to a loan and concluded that repayment is no longer probable. Accordingly, the Company reversed the $2.3 million liability and recognized a corresponding gain in other income during the three months ended June 30, 2026. As of June 30, 2026, no amount related to the CIRM grant is recorded in other non-current liabilities in the condensed consolidated balance sheet (compared to $2.3 million as of December 31, 2025).