7. Government Grants

In May and June 2026, the Company entered into Notices of Award with the California Institute for Regenerative Medicine, or CIRM, for preclinical development funding for the Company’s STX-1400 and STX-1200 programs, respectively. The awards provide for aggregate CIRM funding commitments of approximately $25.7 million, consisting of approximately $13.0 million for STX-1400 and approximately $12.7 million for STX-1200, subject to the achievement of specified operational milestones, compliance with reporting requirements, availability of CIRM funds and other conditions. The awards have estimated project periods extending from April 2026 through September 2029 for the STX-1400 program and from April 2026 through March 2029 for the STX-1200 program. The Company is also required to provide aggregate co-funding of approximately $7.1 million from non-CIRM sources.

The CIRM awards include 5% holdback payments that are payable only upon CIRM’s receipt and approval of specified final reporting requirements. The awards also include reporting, operational milestone, intellectual property, access, affordability and revenue sharing provisions applicable to CIRM-funded technology. Under the terms of the awards, the Company may be required to make future revenue sharing payments and royalties on commercial sales of products developed using CIRM-funded technology, generally at low single-digit percentage rates. Certain intellectual property, access, affordability and revenue sharing obligations may continue beyond the project periods specified in the award agreements. As of June 30, 2026, the Company had not recognized any receivable or grant income related to the holdback amounts because the related conditions had not been satisfied.

During the three and six months ended June 30, 2026, the Company received initial CIRM disbursements of approximately $3.8 million. Amounts recognized in earnings were recorded as a reduction of research and development expense, while amounts received in advance of qualifying expenditures were recorded as a government grant liability. As of June 30, 2026, the Company recorded a government grant liability of approximately $1.8 million within accrued expenses and other current liabilities for amounts received in advance of qualifying expenditures.