5. License Agreements

AlloTera Therapeutics License

On May 21, 2026, the Company elected to exercise its option to terminate the exclusive worldwide license agreement with AlloTera Therapeutics, Inc. (the “AlloTera Therapeutics License”) for ex vivo rights to the Company’s molecules HCW9201 and HCW9206. The termination was made pursuant to Section 1(b) of the 12-month suspension letter agreement the parties entered into on May 29, 2025.

Beijing Trimmune Biotech Co. Ltd. License

On November 17, 2025, the Company and Trimmune entered into an Amended and Restated License, Research and Co-Development Agreement (“Trimmune License”) following the assignment of the original License, Research and Co-Development Agreement, which includes an exclusive license to HCW11-006 for in vivo applications (“WY Biotech License”) from WY Biotech Co., Ltd. to Trimmune. The parties restructured the terms of the original WY Biotech License to include the assignment of rights to Trimmune. In addition to the license for HCW11-006, the parties agreed that for additional consideration, Trimmune has an option to license the exclusive China rights to clinical development and commercialization for in vivo applications of HCW9302, the Company’s clinical-stage molecule currently being evaluated for the treatment of an autoimmune disorder.

On March 16, 2026, the Company received the full nonrefundable upfront license fee, consisting of $3.5 million in gross cash proceeds, or $2.9 million net of foreign taxes, and a transferable minority equity ownership interest in Trimmune with a fair value of $3.5 million, whereupon the transaction was deemed closed and the contract was binding.

In addition, the Company is eligible to receive up to $16.0 million in development and regulatory milestone payments, royalties on future product sales, and a share of proceeds from certain future transactions involving the licensed molecule. Trimmune is responsible for all research, development, manufacturing, regulatory, and commercialization costs in its territory, including the Phase 1 clinical trial in China. Following completion of that trial, the Company has a payment-free, milestone-free, and royalty-free option (the “Opt-in Right”) to recapture development and commercialization rights to HCW11-006 in the United States, Canada, Central America, and South America (the “Opt-in Territory”). If the Company exercises its Opt-in Right, it will be responsible for the costs of clinical development in its territory.

Because the Trimmune License and the equity interest were negotiated as a package with a single commercial objective, the Company combined and accounted for them as a single arrangement under ASC 606. The equity interest represents non-cash consideration, measured at its fair value of $3.5 million at contract inception. The corresponding equity investment is accounted for under the measurement alternative in ASC 321. The Company identified two distinct performance obligations: (i) the delivery of licensed intellectual property— comprising the licensed patent rights, licensed know-how, a related license to HCW9109, and a technology transfer (collectively, the “Licensed IP”); and (ii) post-transfer development services consisting of an improved cell line and a master cell bank (collectively, the “Services”). The transaction price at inception was $6,650,000, reflecting the $7.0 million in upfront consideration, less $350,000 that was carved out as a contract liability related to prepaid optional post-transfer services. Development and regulatory milestone payments, royalties, and sales-based sublicensing consideration are fully constrained at inception and excluded from the transaction price. Non-sales-based sublicensing consideration remains constrained until the related uncertainty is resolved.

The Company allocated the transaction price to the two performance obligations using a relative standalone selling price basis. The standalone selling price of the Services was estimated using contemporaneous third-party Contract Research Organization (“CRO”) and Contract Manufacturing Organization (“CMO”) contracted pricing. The standalone selling price of the Licensed IP was estimated using the residual approach. The Licensed IP has significant standalone functionality and the Company does not expect to undertake activities that will change that functionality. Accordingly, the license is a right to use the Company’s functional intellectual property, and revenue allocated to the Licensed IP performance obligation was recognized at the point in time control of the Licensed IP transferred to Trimmune. Trimmune simultaneously receives and consumes the benefits of the Services as they are performed; accordingly, revenue allocated to the Services is recognized over time using a cost-to-cost measure of progress. Milestone payments will be recognized when the related constraint is resolved, typically upon achievement of the underlying clinical or regulatory event. Royalties and sales-based sublicensing consideration will be recognized when the underlying sales occur. The Opt-in Right is not a repurchase feature and does not require deferral of revenue at inception. If exercised, the Opt-in Right will be accounted for as a contract modification at that time.

For the three and six months ended June 30, 2026, the Company recognized $121,730 and $6.7 million of revenue, respectively, under the Trimmune License. For the three months ended June 30, 2026, revenues were comprised of $121,730 of Services revenue. For the six months ended June 30, 2026, revenues were comprised of $6.3 million allocated to the Licensed IP recognized at closing and $351,730 of Services revenue earned through the reporting period. As of June 30, 2026, the contract liability of $348,270 reported in the accompanying condensed consolidated balance sheet represents $40,000 of remaining Services consideration and the $308,270 prepayment associated with the optional post-transfer services. The carrying value of the Company’s equity interest in Trimmune was $3.5 million as of June 30, 2026, which is included in investments in the accompanying condensed balance sheet. See Note 1. Organization and Significant Accounting Policies – Investments.

Transaction Price and Contract Liability as of June 30, 2026

 Schedule of Transaction Price and Contract Liability

Trimmune is a variable interest entity. Through equity ownership in Trimmune, licensing fees, Opt-In Rights, milestone payments and other potential payments, the Company has variable interests. The investment at risk is limited to the Company’s shares in Trimmune and contractual rights. As of the closing date of the Trimmune License, the Company concluded that it is not the primary beneficiary and should not consolidate the entity. There have been no reconsideration events in the three months ended June 30, 2026 that change the conclusion. The Company has no control over the operating and business activities that most significantly impact the entity’s economic performance. The Company has contractually agreed to cede its voting rights as they relate to operations of the entity. This was accomplished through a voting rights agreement in which all shares are voted by the Chief Executive Officer of Trimmune and an agreement related to voting on the joint steering committee by which the Company agreed that Trimmune will have the tie-breaking vote. As a result, the Company’s role is to act as an advisor and expert for technical advice, but it does not have any power to control the activities of the entity. The Company’s exposure to loss is limited to its investment and rights under the contractual arrangement with Trimmune. Risk of economic loss is borne by Trimmune’s investors, who are not related parties with the Company. The Company is not obligated to participate in future investment rounds in Trimmune, nor does the Company have contractual obligations or guarantees to Trimmune or any of its employees or investors.