EDGAR 10-K Filing

Company CIK: 1698530
Filing Year: 2025
Filename: 1698530_10-K_2025_0001698530-25-000019.json

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ITEM 1. BUSINESS
Item 1. Business.
Overview
Historically, we have been an early-stage biotechnology company focused on developing nucleic acid therapies targeting ribonucleic acid against validated targets. In September 2022, we announced a significant reduction in force, suspension of preclinical activities and halting of all research and development, and that we were exploring strategic alternatives to maximize stockholder value. In February 2024, we received an upfront payment of $500,000 from a licensing agreement for patents related to one of our historical drug candidates, and received a small, one-time payment and an entitlement to only modest royalties on future sales of the licensed technology that we do not believe will be material. In the second quarter, we recognized other income of $637,000 from the sale of our samples related to the licensed product. In the third quarter, we sold our historical biotechnology intellectual property and other assets (including the licensing agreement described above) pursuant to the purchase agreement and recognized other income of $1,500,000. We continue to engage in a broader exploration of strategic alternatives. This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
Following the purchase agreement, any value we may generate from our historical biotechnology intellectual property and other assets will be primarily through royalties and license fees that we may receive in the future under the purchase agreement. However, whether we receive any royalties or licenses fees, and the amounts and timing thereof, are uncertain and out of our control.
While the foregoing efforts are continuing, with respect to our historical assets, we do not expect they will generate significant value for stockholders. Therefore, we are engaging in a broader exploration of strategic alternatives. We obtained significant financing late in 2024 in order to continue operations and our exploration of strategic alternatives and consummate any transactions that we may identify.
Recent Developments
Change of Control
Effective as of November 12, 2024, we entered into a common stock purchase agreement (the “Initial Common Stock Purchase Agreement”) with HiTron Systems Inc. (“HiTron”), pursuant to which we agreed to issue and sell to HiTron 433,333 shares of our common stock, par value $0.0001 per share (the “Common Stock”), for an aggregate purchase price of $1.3 million, at a purchase price per share of $3.00.
On November 13, 2024, we entered into a subsequent agreement (the “Subsequent Common Stock Purchase Agreement”), pursuant to which we agreed to sell and issue to HiTron 2,900,000 additional shares of Common Stock for an aggregate purchase price of $8.7 million, at a purchase price per share of $3.00. The sale of shares under the Subsequent Common Stock Purchase Agreement closed on December 24, 2024.
As of March 12, 2025, HiTron beneficially owns 53% of the outstanding shares of Common Stock based on information available to the Company.
GPCR Share Purchase Agreement
On January 19, 2025, we entered into a Share Purchase Agreement with GPCR Therapeutics Inc, a Korean corporation, (“GPCR”) pursuant to which we acquired from GPCR all of the issued and outstanding equity securities of GPCR Therapeutics USA Inc., a California corporation (“GPCR USA”). In connection with the closing of the Share Purchase Agreement, the Company and GPCR entered into a License and Collaboration Agreement to further develop and commercialize GPCR’s technologies related to certain intellectual property and patents.
Current Focus
We currently expect to focus our efforts on the following:
•explore growth through acquisitions and transactions with potential partners that see opportunity in joining an existing, publicly-traded organization. The board of directors will consider any promising transactions that it believes can create value for stockholders, including in industries unrelated to our historical operations. These efforts may be focused in Asia where its significant investors and board members have relationships and business connections, although domestic transactions will also be considered. Transactions that may be explored could include acquisitions of other businesses or investments. There can be no assurance that any agreement, arrangement or understanding with respect to such a transaction will be reached, or the potential structure or financial and other terms of any agreement, arrangement or understanding that may be reached; and
•seek additional financing for the Company as needed to support these activities. Without a current source of revenue, it could be necessary to obtain substantial additional financing to pursue these activities and continue operations. There can be no assurance that such financing, or financing in sufficient amounts or on acceptable terms, will be received.
Our Intellectual Property
In our historical business, we built an intellectual property portfolio relating to our prior therapeutic candidates and our SNA technology platform. We have a patent portfolio that includes pending patent applications and issued patents in the United States and in foreign countries. In the past, our portfolio included patents licensed from Northwestern University under two separate license agreements related to SNA technology, as well as owned patents. Our licenses from Northwestern University were terminated in 2023, but we continue to own numerous issued patents and pending patent applications.
On January 28, 2024, we entered into a patent license agreement (the “Patent License Agreement”) to develop cavrotolimod for potential treatment for hepatitis with Bluejay Therapeutics, Inc. (“Bluejay”), a private clinical stage biopharmaceutical company. Under the terms of the Patent License Agreement, Bluejay will receive an exclusive license in the field of hepatitis to all of the Company’s relevant patents. In September 2024, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Flashpoint Therapeutics, Inc. (“Flashpoint”), pursuant to which we agreed to sell certain assets to Flashpoint. The assets sold to Flashpoint pursuant to the Asset Purchase Agreement consisted of our historical biotechnology intellectual property and other assets and included our spherical nucleic acid-related technology, research and development programs, and clinical assets. As a result of this sale of our assets, we no longer own any intellectual property.
Manufacturing and Supply
We do not currently own or operate manufacturing facilities. Following our restructuring in September 2022, we currently do not have any manufacturing or supply needs.
Competition
In our historical operations, we faced competition at the technology and therapeutic indication levels from both large and small biotechnology companies, academic institutions, government agencies and public and private research institutions. Many of our competitors had significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and
marketing approved products than we do. These competitors also competed with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Government Regulation and Product Approval
Governmental authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, packaging, promotion, storage, advertising, distribution, marketing, sales, and export and import of products such as those we historically were developing. Therapeutic candidates must be approved by the U.S. Food and Drug Administration (the “FDA”) through the New Drug Application (“NDA”) process before they may be legally marketed in the United States and are subject to similar requirements in other countries prior to marketing in those countries. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Although we are no longer pursuing clinical or preclinical development activities or research and development (“R&D”), any third parties interested in licensing or acquiring our assets would need to comply with such regulations. If we are able to consummate any such transaction, it is possible that our ability to realize value therefrom could be dependent on the counterparty’s ability to obtain necessary approvals.
Sales and Marketing
We currently do not have marketing, sales and distribution capabilities.
Employees
As of December 31, 2024, we had seven full time employees which were engaged in finance and general management activities after the wind down of our research and development programs. We have no collective bargaining agreement with our employees and we have not experienced any work stoppages. We consider our relations with our employees to be good.
Corporate Information
We were originally incorporated in the State of Delaware on February 6, 2017 under the name “Max-1 Acquisition Corporation.” Prior to the Merger (as defined below), Max-1 was a “shell” company registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, with no specific business plan or purpose until it began operating the business of Exicure Operating Company (Exicure OpCo) through a transaction on September 26, 2017, or the Merger. Exicure OpCo was originally formed as a limited liability company under the name AuraSense Therapeutics, LLC in the State of Delaware in June 2011 and was a clinical-stage biotechnology company developing gene regulatory and immuno-oncology therapeutics based on its proprietary SNA technology. AuraSense Therapeutics, LLC was subsequently converted into AuraSense Therapeutics, Inc., a Delaware corporation, on July 9, 2015, and changed its name on the same date to Exicure, Inc. Immediately after giving effect to the Merger and the initial closing of a private placement transaction on September 26, 2017, the business of Exicure OpCo became our business.
Our corporate headquarters are located at 400 Seaport Court, Suite 102, Redwood City, California 94063, and our telephone number is (847) 673-1700.
Available Information
We are subject to the informational requirements of the Exchange Act, and, accordingly, file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, with the Securities and Exchange Commission (the “SEC”). In addition, the SEC maintains a web site (http://www.sec.gov) that contains material regarding issuers that file electronically, such as ourselves, with the SEC.
We maintain a website at www.exicuretx.com, to which we regularly post copies of our press releases as well as additional information about us. Our filings with the SEC will be available free of charge through the website as soon as reasonably practicable after being electronically filed with or furnished to the SEC. Information contained in our website is not a part of, nor incorporated by reference into, this Annual Report on Form 10-K or our other filings with the SEC.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
In addition to other information contained in this Annual Report on Form 10-K, the following risks should be considered in evaluating our business and future prospects and an investment in our common stock. The risks and uncertainties described below are not the only ones we face. If any of the following risks and uncertainties develops into actual events, our business, financial condition, results of operations and cash flows could be materially adversely affected. In that case, the price of our common stock could decline and you may lose all or part of your investment.
Risks Related to Our Business
Our exploration of strategic alternatives may not be successful.
Given the Company’s current focus to explore growth through strategic transactions with potential partners, the Company’s ability to execute its current business plan depends on its ability to obtain additional funding via a strategic transaction or a series of strategic transactions, or to obtain funding to support such a transaction. We currently have no source of revenues, and our financial resources are limited to our cash and cash equivalents.
The Company plans to continue actively pursuing strategic alternatives. Strategic transactions are complex and time-consuming to identify, evaluate, negotiate and consummate in compliance with applicable laws and Nasdaq requirements. Our board and management do not have meaningful experience executing this type of endeavor in the U.S. public markets. Even if we are successful in entering into a strategic transaction, the terms and conditions of that transaction may restrict us from entering into future agreements with other potential collaborators. Additionally, such strategic transactions may not be favorable to investors nor deliver any anticipated benefits by the time of business integration.
We need to obtain substantial funding in order to continue operations and our exploration of strategic alternatives.
We require significant capital resources in order to continue to operate our business and conduct our exploration of strategic alternatives, and our limited liquidity could materially and adversely affect our business operations. Because we have no current source of revenue, our current available cash and cash equivalents provide us with very limited liquidity. Our existing cash and cash equivalents are sufficient for us to continue to fund our business operations for at least the next 12 months. Any such required additional capital may not be available on reasonable terms, if at all, due to a variety of factors, including uncertainty about the future direction of the Company and investor reaction to our new controlling stockholders and board and management composition, as well as broader conditions in the economy and capital markets, including recent volatility caused by inflation, questions about bank stability and other factors. The Company has already engaged in significant cost reductions, so our ability to further cut costs and extend our operating runway is limited.
We may not be able to redeem the investment in convertible notes receivable.
In March 2024, we notified the issuer of the investment in convertible notes receivable that we were exercising our redemption right with respect to the entire principal amount of the investment in convertible notes receivable after the first anniversary of their issue dates (May 3 and May 16, 2024, respectively) for an aggregate redemption price of $2.090 million (representing the principal amount plus 4.5% per annum yield to the redemption date). Refer to Note 4 - Investment in Convertible Notes Receivable for more details. We attempted to redeem the investment in convertible notes receivable during 2024. However, the issuer of such convertible notes appears to have closed its operations and has not responded to our redemption requests. If we are unable to successfully exercise our redemption right we may be unable to obtain any or all of the redemption price under such convertible notes, or otherwise recognize value from such convertible notes, which may adversely impact our financial condition and prospects. We will continue our redemption attempts, however, it is unlikely these investments will ever be redeemed.
Our controlling stockholders, executive officers and members of our board, have limited experience controlling or governing a public company operating in the United States status.
Our controlling stockholders have not previously controlled a U.S. public company. In addition, no members of our board of directors nor our chief executive officer nor chief financial officer have experience serving as directors or management of a U.S. publicly traded company. This could make it difficult to ensure that we comply with all applicable laws and stock exchange requirements, maintains adequate internal and disclosure controls and appropriately assesses and manages risk. This concern is exacerbated by the limited resources we have following prior reductions in force, and if there are further reductions in force or members of management leave the Company, it may be very difficult to manage this risk. The transitional state of the Company and ongoing exploration of strategic alternatives also exacerbates the challenging environment in this respect. If the board of directors does not successfully or efficiently manage their roles and responsibilities, including the significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of investors, our prospects may be adversely impacted.
Turnover of our board and senior management, and any inability to attract and retain qualified management and other key personnel, could impair our ability to implement our business plan.
As we continue our exploration of strategic alternatives, and potentially pursue transactions involving new business lines or industries, we may experience additional turnover in our board and senior management. Departures of our senior management team and board members have created, and will create if they continue, significant continuity risks and challenges to our ability to operate our business, assess and manage risks and comply with applicable laws. If key members of our senior management team depart, it will be important that we attract and retain qualified managers promptly and develop and implement an effective succession plan. We expect to face significant competition in attracting experienced executives and other key personnel, and there can be no assurance that we will be able to do so. In addition, there are significant uncertainties as to how our controlled status, transitional state of operations, financial condition and related matters will impact our ability to attract the necessary personnel and manage these succession risks. Depending on the circumstances of any management departures, it is also possible that we will be required to pay significant severance, adversely impacting our financial condition. Our need to raise capital and engage with potential partners in strategic transactions magnify these risks. If we are unable to adequately address these concerns in the near term and earn the confidence of potential investors and/or business partners, our prospects and financial condition would be adversely impacted.
Our consolidated financial statements have been prepared assuming that we will continue as a going concern.
Our ability to continue as a going concern will require us to obtain additional funding. Based on our current operating plans and existing working capital at December 31, 2024, our current liquidity is not sufficient to continue to fund operations. As a result, there is substantial doubt about our ability to continue as a going concern. Substantial additional financing will be needed by us in the very near term to fund our operations and exploration of strategic alternatives. The perception of our ability to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence by investors and employees. Obtaining additional financing contains risks, including:
•additional equity financing may not be available to us on satisfactory terms and any equity we are able to issue could lead to dilution for current stockholders;
•loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions;
•the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing; and
•if we fail to obtain required additional financing to grow our business we may need to seek bankruptcy protection in the near term.
Our common stock may be delisted from Nasdaq which could negatively impact the price of our common stock, liquidity and our ability to access the capital markets.
Our common stock is currently listed on Nasdaq under the symbol “XCUR.” As previously disclosed, we have received numerous deficiency notices with respect to various Nasdaq listing requirements in the past year and recently received a delisting determination from the Nasdaq staff. These related to:
•compliance with Nasdaq’s minimum bid price rule due to our common stock trading below $1.00 for a sustained period of time. We effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price. On September 13, 2023, we received a delinquency notification that the closing bid price of our common stock traded below $1.00 for the previous 30 consecutive business days. We effected a one-for-five reverse stock split on August 27, 2024 in order to attempt to raise the stock price. On September 13, 2024, we received a letter received from Nasdaq noting it met the closing bid price requirement;
•compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on our balance sheet as of December 31, 2024. We were not in compliance with this requirement based on its September 30, 2024 balance sheet. We believe we are in compliance with this requirement based on our December 31, 2024 balance sheet and expects to be in compliance going forward;
•compliance with Nasdaq’s corporate governance requirements with respect to board and committee composition. We have received numerous deficiency notifications with respect to these requirements in the past year. Although we are currently in compliance, there can be no assurance we will remain in compliance;
•compliance with Nasdaq’s requirement to hold an annual meeting. On January 11, 2024, Nasdaq notified us that we did not comply with listing requirements by not holding an annual meeting in 2023. We held our combined 2023 and 2024 annual meeting on June 28, 2024;
•on April 17, 2024, we received a delinquency notification as we had not filed our Annual Report Form 10-K for the year ended December 31, 2023. The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023. The Annual Report Form 10-K for the year ended December 31, 2023 was filed on June 6, 2024;
•although we filed our Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, we received a delisting determination from the Nasdaq staff as a result of not filing our Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file our Form 10-Q for the quarter ended March 31, 2024 (which was subsequently filed on June 17, 2024). The staff’s delisting determination also noted the failure to hold our 2023 annual meeting as another basis of the delisting determination;
•on May 28, 2024, we requested an appeal of the delisting determination to Nasdaq’s Hearings Panel (“Panel”), and the hearing took place on July 9, 2024. On July 31, 2024, we received formal notice that the Panel determined to continue our listing subject to us evidencing compliance with all applicable criteria for continued listing on The Nasdaq Capital Market by September 16, 2024. We received an additional extension to November 14, 2024 to satisfy the terms of the Panel’s decision and to ensure our continued listing on Nasdaq;
•as we did not meet Nasdaq’s listing requirements as of September 30, 2024, we requested another extension by the Panel to demonstrate compliance and another extension was granted. We thereafter presented our plan to regain compliance with the Equity Requirement to the Panel, subsequent to which the Panel ultimately granted us extensions through December 17, 2024 to do so; and
•on December 20, 2024, we received a letter from Nasdaq confirming that, as of December 17, 2024, we meet all requirements for continued listing on Nasdaq as required by the Panel’s decision dated November 20, 2024. In accordance with the Panel’s decision, on December 17, 2024, we made public disclosure under
cover of a Form 8-K, describing the transactions undertaken by us to achieve compliance with Listing Rule 5550(b)(1) and stated affirmatively that as of that date, we believe we have stockholders’ equity above the $2.5 million requirement and provided a pro-forma balance sheet as of December 17, 2024. Pursuant to Listing Rule 5815(d)(4)(B), we will be subject to a Mandatory Panel Monitor for a period of one year from the date of Nasdaq’s letter. If, within that one-year monitoring period, the Nasdaq Listing Qualifications staff (the “Staff”) finds us again out of compliance with the $2.5 million Equity Rule that was the subject of the exception, notwithstanding Rule 5810(c)(2), we will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the Staff will not be permitted to grant additional time for us to regain compliance with respect to that deficiency, nor will we be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, the Staff will issue a Delist Determination Letter and we will have an opportunity to request a new hearing with the initial Panel or a newly convened Panel if the initial Panel is unavailable. We will have the opportunity to respond/present to the Panel as provided by Listing Rule 5815(d)(4)(C). Our securities may be at that time delisted from Nasdaq.
Even though we regained compliance with Nasdaq’s listing requirements, there can be no assurance that we will remain in compliance with Nasdaq’s requirements and will not be delisted in the future.
If Nasdaq suspends or delists our securities from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant negative consequences including:
•limited availability of market quotations and liquidity for our securities;
•a determination that the common stock is a “penny stock” which would require brokers trading in the common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of common stock;
•a limited amount of analyst coverage, if any; and
•a decreased ability to issue additional securities or obtain additional financing in the future.
Suspension or delisting from Nasdaq could also result in other negative consequences, including the potential loss of institutional investor interest and make obtaining new financing much more challenging. In addition, fewer strategic opportunities may be available, particularly from counterparties that are interested in combining with a listed company.
We have a history of losses. We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock.
Since our inception in June 2011, we have devoted our resources to the development of SNA technology and are currently exploring strategic alternatives to maximize stockholder value. We have had significant operating losses since our inception. As of December 31, 2024, we have generated an accumulated deficit of $218.1 million, including $18,837 of additional paid-in capital reclassed to accumulated deficit upon C-corporation conversion. For the years ended December 31, 2024 and 2023, our net loss was $9.7 million and $16.9 million, respectively. Substantially all of our losses have resulted from expenses incurred in connection with our research programs and from general and administrative costs associated with our operations.
We have not generated, and do not expect to generate, any product revenue for the foreseeable future and currently have no source of revenue or committed financing, and we expect to continue to incur significant operating losses for the foreseeable future. The amount of future losses is uncertain. Our future financial performance and condition are substantially dependent on the results of our ongoing exploration of strategic alternatives, and we cannot predict whether we will be successful.
Our internal computer systems, or those of contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our therapeutic development programs.
Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such events could cause interruptions of our operations. For instance, theft or other exposure of data may interfere with our ability to protect our intellectual property, trade secrets, and other information critical to our operations. We can provide no assurances that certain sensitive and proprietary information relating to one or more of our therapeutic candidates has not been, or will not in the future be, compromised. Although we have invested resources to enhance the security of our computer systems, there can be no assurances we will not experience additional unauthorized intrusions into our computer systems, or those of our contractors and consultants, that we will successfully detect future unauthorized intrusions in a timely manner, or that future unauthorized intrusions will not result in material adverse effects on our financial condition, reputation, or business prospects. Payments related to the elimination of ransomware may materially affect our financial condition and results of operations.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the development of our therapeutic candidates could be delayed.
Our information technology systems could face serious disruptions that could adversely affect our business.
Our information technology and other internal infrastructure systems, including corporate firewalls, servers, documents storage systems, backup systems, leased lines and connection to the Internet, face the risk of systemic failure that could disrupt our operations. A significant disruption in the availability of our information technology and other internal infrastructure systems could cause interruptions and delays in our operations.
Our business and operations could suffer in the event of system failures or unauthorized or inappropriate use of or access to our information technology systems.
We are increasingly dependent on our information technology systems and infrastructure for our business. We collect, store and transmit sensitive information including intellectual property, proprietary business information and personal information in connection with business operations. The secure maintenance of this information is critical to our operations and business strategy. Some of this information could be an attractive target of criminal attack or unauthorized access and use by third parties with a wide range of motives and expertise, including organized criminal groups, “hacktivists,” patient groups, disgruntled current or former employees and others. Cyber-attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology systems and infrastructure may be vulnerable to such attacks or may be breached, including due to employee error or malfeasance.
The pervasiveness of cybersecurity incidents in general and the risks of cyber-crime are complex and continue to evolve. Although we are making significant efforts to maintain the security and integrity of our information systems and are exploring various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Despite the implementation of security measures, our internal computer systems and those of our employees, contractors and consultants are vulnerable to damage or interruption from computer viruses, unauthorized or inappropriate access or use, natural disasters, pandemics (including COVID-19), terrorism, war, and telecommunication and electrical failures. Such events could cause interruption of our operations. For example, the loss or compromise of preclinical data for our therapeutic candidates could result in delays in our regulatory filings and development efforts, as well as delays in the commercialization of our products, and significantly increase our costs. To the extent that any disruption, security breach or unauthorized or inappropriate use or access to our systems were to result in a loss of or damage to our data, or inappropriate disclosure of confidential or proprietary information, including but not limited to patient, employee or vendor information, we could incur notification obligations to affected individuals and government agencies, liability, including potential lawsuits from patients, collaborators, employees, stockholders or other third parties and liability
under foreign, federal and state laws that protect the privacy and security of personal information, and the development and potential commercialization of our therapeutic candidates could be delayed. Existing insurance arrangements may not provide protection for the costs that may arise from such loss or damage. Any long-term disruption in our ability to access our information technology systems could have a material adverse effect on our operations, our business, results of operations and stock price.
Our current operations are concentrated in one location and any events affecting this location may have material adverse consequences.
Our current operations are located in our facilities situated in Chicago, Illinois. Any unplanned event, such as flood, fire, explosion, earthquake, extreme weather condition, medical epidemics, power shortage, telecommunication failure or other natural or man-made accidents or incidents that result in us being unable to fully utilize the facilities, may have a material adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions. Loss of access to these facilities may result in increased costs, delays in the development of our therapeutic candidates or interruption of our business operations. As part of our risk management policy, we maintain insurance coverage at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities, we cannot assure you that the amounts of insurance will be sufficient to satisfy any damages and losses. If our facilities are unable to operate because of an accident or incident or for any other reason, even for a short period of time, any or all of our research and development programs may be harmed. Any business interruption may have a material adverse effect on our business, financial position, results of operations and prospects.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, and the rules and regulations of The Nasdaq Capital Market. Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we are required to perform system and process evaluation and testing of our internal control over financial reporting to allow our management to report on the effectiveness of our internal control over financial reporting. However, while we remain a non-accelerated filer, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
During the evaluation and testing process, we identified material weaknesses as described under Part II, Item 9 of this Form 10-K. If we fail to remediate that material weakness, or if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. Further, we may in the future discover weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Moreover, our internal controls over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. Moreover, we are aware that the remote working arrangements implemented in connection with the COVID-19 pandemic potentially present new areas of risk, and we continue to carefully monitor any impact to our internal controls and procedures.
Our limited resources and recent reductions in force, as well as the turnover in our board of directors and the potential for future management changes, present significant continuity risk and could impact our ability to maintain effective internal control over financial reporting.
If we are unable to assert that our internal control over financial reporting is effective, investors could lose confidence in the reliability of our financial statements, the market price of our stock could decline and we could be subject to sanctions or investigations by The Nasdaq Capital Market, the SEC or other regulatory authorities.
The restatement of our prior quarterly financial statements may affect stockholder and investor confidence in us or harm our reputation, and may subject us to additional risks and uncertainties, including increased costs and the increased possibility of legal proceedings and regulatory inquiries, sanctions or investigations.
Management identified material weaknesses in the Company’s internal control over financial reporting and restated its first quarter and second quarter unaudited interim condensed consolidated via Forms 10-Q/A. As a result of the restatement, we have incurred, and may continue to incur, unanticipated costs for accounting and legal fees in connection with, or related to, such restatement. In addition, such restatement could subject us to a number of additional risks and uncertainties, including the increased possibility of legal proceedings and inquiries, sanctions or investigations by the SEC or other regulatory authorities. Any of the foregoing may adversely affect our reputation, the accuracy and timing of our financial reporting, or our business, results of operations, liquidity and financial condition, or cause stockholders, investors, members and customers to lose confidence in the accuracy and completeness of our financial reports or cause the market price of our common stock to decline.
Risks Related to Government Regulation
We are subject to European data protection laws, including the European Union’s General Data Protection Regulation 2016/679, (“GDPR”). If we fail to comply with existing or future data protection regulations, our business, financial condition, results of operations and prospects may be materially adversely affected.
By virtue of our prior clinical trial activities in the United Kingdom and Europe, we are subject to European data protection laws, including the GDPR. The GDPR which came into effect on May 25, 2018, establishes new requirements applicable to the processing of personal data (i.e., data which identifies an individual or from which an individual is identifiable), affords new data protection rights to individuals (e.g., the right to erasure of personal data) and imposes penalties for serious breaches of up to 4% annual worldwide turnover or €20 million, whichever is greater. Individuals (e.g., study subjects) also have a right to compensation for financial or non-financial losses (e.g., distress). There may be circumstances under which a failure to comply with the GDPR, or the exercise of individual rights under the GDPR, would limit our ability to utilize clinical trial data collected on certain subjects. The GDPR imposes additional responsibility and liability in relation to our processing of personal data. This may be onerous and we may be unsuccessful in implementing all measures required by data protection authorities or courts in interpretation of the GDPR, which may materially adversely affect our business, financial condition, results of operations and prospects.
Risks Related to Ownership of Our Common Stock
The influence of our significant stockholders could make our Common Stock less attractive to some investors or otherwise harm the trading price of our Common Stock.
HiTron beneficially owns approximately 53% of the outstanding shares of Common Stock. CBI USA, Inc. (“CBI USA”) and DGP Co., Ltd. (“DGP”), also Korean companies, collectively own approximately 9% of outstanding Common Stock and exercise significant influence over us. We previously had been a “controlled company” under the corporate governance rules for Nasdaq-listed companies. We obtained a majority independent board based on the phase-in requirements for companies after they lose “controlled company” status. Due to the recent change in control, the majority of our board members and management are directly affiliated with HiTron. Investors may be hesitant to invest in the Company given the influence of HiTron, CBI and DGP. In addition, should the interest or interests of our controlling stockholders differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for Nasdaq-listed companies.
Additionally, it is possible we could pursue strategic or financing transactions with our controlling stockholders or their affiliates. The interests of the controlling stockholders and other stockholders would diverge in this case, and the lack of an independent board to evaluate such a transaction could adversely impact other stockholders. These conflicts of interest (or the perception that they could occur) might adversely affect our business and prospects for obtaining financing or completing a strategic transaction.
For so long as CBI USA and DGP own a significant stake, they (and/or their transferees) will have substantial control over the elections of our directors and to approve any other corporate action requiring the affirmative vote of holders of a majority of the outstanding shares of our Common Stock. This could deter investment in the Company and adversely impact our stock price and ability to obtain financing. These impacts may be more pronounced in the near term as investors assess the direction of the Company under the control of CBI USA and DGP and the actions of the new board and management. DGP’s recently announced agreement to sell its shares to a third party could also deter investment as it creates uncertainty as to the transferee’s intentions with respect to the Company. If DGP’s sale is completed, the third party transferee would become the Company’s largest stockholder.
Potential partners considering engaging in a strategic transaction with the Company could have similar concerns. Given our urgent need for additional funding and/or to complete a strategic transaction, it is imperative that our controlling stockholders and our board and management earn the confidence of investors and potential partners in the near term and there is no assurance this will occur.
The market price of our common stock has been, and is likely to continue to be, highly volatile, and you may not be able to resell your shares at or above the price you paid for them.
Our stock price will continue to be volatile. As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the shares. The market price for our common stock may be influenced by a variety of factors, including the other risks described in this section titled “Risk Factors” and the following:
•our ability or inability to raise additional capital and the terms on which we raise it;
•the development, execution and announcement of any proposed strategic alternative;
•investors may react negatively to our controlled status and the influence of our controlling stockholder or our reconstituted board and/or our uncertain business strategy;
•strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;
•we are unable to achieve the perceived benefits of our Company as rapidly or to the extent anticipated by financial or industry analysts; and
•changes in general economic, industry, political and market conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic.
•our ability to avoid suspension and/or delisting of our common stock by Nasdaq.
In addition, the stock markets in general, and the markets for pharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that has been often unrelated to the operating performance of the issuer. These broad market and industry factors, such as those related to the COVID-19 pandemic, Russia’s invasion of Ukraine, and the Israel/Hamas war and retaliatory actions taken by the United States, NATO and others, may seriously harm the market price of our common stock, regardless of our operating performance.
Raising additional funds by issuing securities may cause dilution to existing stockholders and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.
Until such time, if ever, as we can generate substantial revenues, we expect to attempt to finance our cash needs through a combination of equity offerings and debt financings. As discussed elsewhere, it may be very challenging to obtain equity or debt financing given the current transitional state of the Company. However, to the extent that we raise additional capital through the issuance of shares or other securities convertible into shares, our stockholders will be diluted. Future issuances of our common stock or other equity securities, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock and impair our ability to raise capital through future offerings of equity or equity-linked securities.
We cannot be certain if the reduced reporting requirements applicable to us will make our common stock less attractive to investors.
We were an “emerging growth company” as defined in the JOBS Act until December 31, 2023. As such, we took advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, as an emerging growth company, we were only required to provide two years of audited financial statements. Even though we no longer qualify as an emerging growth company, we still qualify as a “smaller reporting company” and a “non-accelerated filer” which allows us to continue to take advantage of many of the same or similar exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.
Anti-takeover provisions in our charter documents and under the General Corporation Law of the State of Delaware could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management.
Provisions in our amended and restated certificate of incorporation, as amended, and our bylaws may delay or prevent an acquisition of us or a change in our management. These provisions include a classified board of directors, a prohibition on actions by written consent of our stockholders, and the ability of the Board of Directors of the Company, or the Board, to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which prohibits stockholders owning in excess of 15% of the outstanding combined organization voting stock from merging or combining with the combined organization. Although we believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our Board, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then-current management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of management.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any of the following types of actions or proceedings under Delaware statutory or common law: derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws or any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. This provision would not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or any other claims for which a court or forum other than the Court of Chancery has exclusive jurisdiction or for which the Court of Chancery does not have subject matter jurisdiction. Furthermore, Section 22 of the Securities Act of 1933, as amended, or the Securities Act, creates concurrent jurisdiction for federal and state courts over all Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
Our amended and restated certificate of incorporation also provides that any person purchasing or otherwise acquiring any interest in any shares of our common stock shall be deemed to have notice of and to have consented to this provision of our amended and restated certificate of incorporation.
This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents even though an action, if successful, might benefit our stockholders. Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The Court of Chancery may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. If a court were to find this exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in any action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could have a material adverse effect on our business, financial condition or results of operations.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
We have incurred substantial losses during our history and do not expect to be profitable in the near future, if ever. Our net operating loss, or NOL, carryforwards generated in tax years beginning on or before December 31, 2017, are only permitted to be carried forward for 20 years under applicable U.S. tax law. Under the Tax Cuts and Jobs Act, as modified by the CARES Act, our federal NOLs generated in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is be limited to 80% of taxable income. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL, and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes may be limited. We have experienced ownership changes in the past. We completed a review of our changes in ownership through December 31, 2022 and determined that we experienced an “ownership change” within the meaning of Section 382(g) during the fourth quarter of 2022. This ownership change has and will continue to subject our net operating loss carryforwards to an annual limitation, which will significantly restrict our ability to use them to offset our taxable income in periods following the ownership change.
We determined that at the date of the 2022 ownership change, we had a net unrealized built-in loss (“NUBIL”). The NUBIL was determined based on the difference between the fair market value of our assets and their tax basis at the ownership change date. Because of the NUBIL, certain deductions recognized during the five-year period beginning on the date of the IRC Section 382 ownership change (the “recognition period”) are subject to the same limitation as the net operating loss carryforwards or certain other deductions.
As of December 31, 2023, we determined that we ceased operations of our historical business enterprise which subjects us to a zero limitation as defined under IRC Section 382(c). Therefore, we are restricted in our ability to use any of the historical net operating losses that occurred before the most recent ownership change in the fourth quarter of 2022.
General Risk Factors
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock due to our low stock price.
The Financial Industry Regulatory Authority, (“FINRA”), has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced securities will not be suitable for at least some customers. If
these FINRA requirements are applicable to us or our securities, which we believe they are, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.
If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. Our research coverage by securities and industry analysts is currently limited. In addition, because we did not become a reporting company by conducting an underwritten initial public offering of our common stock, security analysts of brokerage firms may not provide wider coverage of our Company. In addition, investment banks may be less likely to agree to underwrite secondary offerings on our behalf than they might if we became a public reporting company by means of an underwritten initial public offering, because they may be less familiar with our Company as a result of more limited coverage by analysts and the media, and because we became public at an early stage in our development. The failure to receive wider research coverage or support in the market for our shares will have an adverse effect on our ability to develop a liquid market for our common stock and the trading price for our stock would be negatively impacted.
In the event we obtain wider securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our target studies and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
Our corporate headquarters moved to Redwood City, California in January 2025. The Company was formerly located in Chicago, Illinois, where we leased approximately 30,000 square feet of space (the “Chicago Lease”). The Chicago Lease commenced on July 1, 2020, and expires on July 1, 2030. During 2023 and 2024, we subleased approximately 57% of the space through the expiration date. In February 2025, the Company terminated the Chicago Lease and related sublease.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
On December 13, 2021, Mark Colwell filed a putative securities class action lawsuit against the Company, David A. Giljohann and Brian C. Bock in the United States District Court for the Northern District of Illinois, captioned Colwell v. Exicure, Inc. et al., Case No. 1:21-cv-06637. On February 4, 2021, plaintiff filed an amended putative securities class action complaint. On March 20, 2023, the court entered an order appointing James Mathew as lead plaintiff and Bleichmar Fonti & Auld LLP as lead counsel in the action pursuant to the Private Securities Litigation Reform Act of 1995. On May 26, 2023, lead plaintiff filed a second amended complaint against the Company, Dr. Giljohann, Mr. Bock, and Grant Corbett. The second amended complaint alleges that Dr. Giljohann, Mr. Bock, and Dr. Corbett made materially false and/or misleading statements related to the Company’s clinical programs purportedly causing losses to investors who acquired Company securities between January 7, 2021 and December 10, 2021. The second amended complaint does not quantify any alleged damages but, in addition to attorneys’ fees and costs, lead plaintiff seeks to recover damages on behalf of himself and others who acquired the
Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result. On October 8, 2024, the court granted preliminary approval of the settlement in the securities class action and set a schedule for final approval proceedings, including a final approval hearing on January 13, 2025. On January 13, 2025, the court entered final judgment approving the settlement.
The settlement described above will be fully covered by insurance. However, the settlement will include a reservation of rights by the insurers against the Company for the unsatisfied portion of its self-insured retainer. As a result, the Company recorded an accrual as of September 30, 2024 for the amount of the unsatisfied retainer, approximately $1.14 million.
In March and April 2022, three different stockholders filed separate shareholder derivative lawsuits on behalf of the Company against Dr. Giljohann and Mr. Bock, Jeffrey L. Cleland, Elizabeth Garofalo, Bosun Hau, Bali Muralidhar, Andrew Sassine, Matthias Schroff, James Sulat and Timothy Walbert. The cases in the ordered filed are captioned Puri v. Giljohann, et al., Case No. 1:22-cv-01083; Sim v. Giljohann, et al., Case No. 1:22-cv-01217; and Stourbridge Investments LLC v. Exicure, Inc. et al., Case No. 1:22-cv-00526. Complaints in these cases (collectively, the “Derivative Complaints”) assert, among other things, that the Company included false or misleading statements in its proxy statement for its 2021 Annual Meeting of Stockholders, also alleging certain breaches of fiduciary duties. The Derivative Complaints seek contribution from Dr. Giljohann and Mr. Bock under federal securities laws. The Puri and Stourbridge complaints further assert for a variety of related state law claims, including unjust enrichment, abuse of control, gross mismanagement, and corporate waste. Plaintiffs seek restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well stockholder adoption of certain board oversight measures.
On March 18, 2022, James McNabb, through counsel, sent a written demand to the Company (the “Demand Letter”) demanding that the Board of Directors investigate certain allegations and commence proceedings on the Company’s behalf against certain of the Company’s current officers and directors for alleged breaches of fiduciary duties and corporate waste. The Derivative Complaints and Demand Letter are currently stayed, and the Company is engaged in settlement discussions with plaintiffs’ counsel regarding these matters.
On October 3, 2023, a former employee filed a complaint against the Company and its executives related to the former employee’s separation from the Company in August. The parties proceeded with paper discovery and this matter did not settle at an in-person settlement conference on July 17, 2024. As a result, we are in the discovery phase of this litigation. The parties exchanged discovery and a status conference was held on February 11, 2025, wherein opposing counsel asserted alleged various discovery deficiencies. The parties are working through these alleged discovery deficiencies and anticipate deposing the plaintiff as well as witnesses on behalf of the Company and the individual defendants themselves in the coming months.
We may also be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases.
Market Information
Our common stock was approved for listing on the Nasdaq Capital Market under the symbol “XCUR” and began trading on July 31, 2019. As disclosed elsewhere in this Report, we are currently in the process of appealing a delisting determination by the Nasdaq staff and there can be no assurance our common stock will remain trading and listed on Nasdaq.
On March 12, 2025, the last reported sale price of our common stock on Nasdaq was $10.57 per share.
Holders of Record
As of March 12, 2025, we had 6,317,771 shares of common stock outstanding held by 101 stockholders of record, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC. All of the shares of common stock held by brokerage firms, banks and other financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC, and are considered to be held of record by Cede & Co. as one stockholder.
Dividend Policy
We currently intend to retain future earnings, if any, for use in the operation of our business and to fund future growth. We have never declared or paid cash dividends on our common stock and we do not intend to pay any cash dividends on our common stock for the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors in light of conditions then-existing, including factors such as our results of operations, financial condition and requirements, business conditions and covenants under any applicable contractual arrangements.
Securities Authorized for Issuance under Equity Compensation Plans
Information about our equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Annual Report.
Unregistered Sales of Equity Securities and Use of Proceeds
Other than as listed below, there were no unregistered sales of equity securities sold during the period covered by this Annual Report on Form 10-K that were not previously included in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
On December 10, 2024, we entered into a common stock purchase agreement (the “MIRTO Purchase Agreement”) with MIRTO Co., LTD. (“MIRTO”), pursuant to which we agreed to issue and sell to MIRTO 87,808 shares of our Common Stock, for an aggregate purchase price of approximately $0.5 million, at a purchase price per share of $4.61. The transactions under the MIRTO Purchase Agreement closed on December 24, 2024.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. RESERVED.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K. You should review the disclosure under the heading “Risk Factors” in this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Historically, we have been an early-stage biotechnology company focused on developing nucleic acid therapies targeting ribonucleic acid against validated targets. In September 2022, we announced a significant reduction in force, suspension of preclinical activities and halting of all research and development, and that we were exploring strategic alternatives to maximize stockholder value. In February 2024, we received an upfront payment of $500,000 from a licensing agreement for patents related to one of our historical drug candidates, and received a small, one-time payment and an entitlement to only modest royalties on future sales of the licensed technology that we do not believe will be material. In the second quarter, we recognized other income of $637,000 from the sale of our samples related to the licensed product. In the third quarter, we sold our historical biotechnology intellectual property and other assets (including the licensing agreement described above) pursuant to the purchase agreement and recognized other income of $1,500,000. We continue to engage in a broader exploration of strategic alternatives. This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
Following the purchase agreement, any value we may generate from our historical biotechnology intellectual property and other assets will be primarily through royalties and license fees that we may receive in the future under the purchase agreement. However, whether we receive any royalties or licenses fees, and the amounts and timing thereof, are uncertain and out of our control.
While the foregoing efforts are continuing, with respect to our historical assets, we do not expect they will generate significant value for stockholders. Therefore, we are engaging in a broader exploration of strategic alternatives. We obtained significant financing late in 2024 in order to continue operations and our exploration of strategic alternatives and consummate any transactions that we may identify.
Operating, financing, and cash flow considerations
Since our inception in 2011, we have primarily funded our operations through sales of our securities, loans and collaborations. Effective as of November 12, 2024, we entered into the Initial Common Stock Purchase Agreement with HiTron, pursuant to which we agreed to issue and sell to HiTron 433,333 shares of our common stock, par value $0.0001 per share (the “Common Stock”), for an aggregate purchase price of $1.3 million, at a purchase price per share of $3.00. On November 13, 2024, we entered into the Subsequent Common Stock Purchase Agreement, pursuant to which we agreed to sell and issue to HiTron 2,900,000 additional shares of Common Stock for an aggregate purchase price of $8.7 million, at a purchase price per share of $3.00. The issuance of such shares under the Subsequent Common Stock Purchase Agreement closed on December 24, 2024.
On December 9, 2024, we entered into a common stock purchase agreement (the “SangSang Purchase Agreement”) with SangSangIn Investment & Securities Co., Ltd. (“SangSang”), pursuant to which we agreed to issue and sell to SangSang 433,332 shares of our Common Stock, for an aggregate purchase price of approximately $2.0 million, at a purchase price per share of $4.61. The transactions under the SangSang Purchase Agreement closed on December 24, 2024.
As of December 31, 2024, our cash and cash equivalents cash were approximately $12.5 million. Our current liquidity may not be sufficient to fund operations for the next 12 months. As a result, there is substantial doubt about
our ability to continue as a going concern. Additional financing will be needed to fund our ongoing operations and exploration of strategic alternatives and pursue any alternatives that we identify. If we are unable to raise capital, the Company could seek bankruptcy protection and/or cease operations, which may result in our stockholders receiving no or very little value in respect of their shares of our common stock.
We expect to seek financing through equity offerings. However, it may be difficult to obtain financing given our current condition and uncertainty over its future direction. Therefore, we may be unable to raise capital at all or on favorable terms. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to continue operations.
Recent Developments
Change of Control
As discussed above, effective as of November 12, 2024, we entered into the Initial Common Stock Purchase Agreement with HiTron, pursuant to which we agreed to issue and sell to HiTron 433,333 shares of Common Stock for an aggregate purchase price of $1.3 million, at a purchase price per share of $3.00.
On November 13, 2024, we entered into the Subsequent Common Stock Purchase Agreement, pursuant to which we agreed to sell and issue to HiTron 2,900,000 additional shares of the Company’s Common Stock, for an aggregate purchase price of $8.7 million, at a purchase price of $3.00 per share. The issuance of such shares under the Subsequent Common Stock Purchase Agreement closed on December 24, 2024.
As of March 12, 2025, HiTron beneficially owns 53% of the outstanding shares of Common Stock based on information available to the Company.
Nasdaq Listing Requirements Deficiency Notices
As previously disclosed, we have received numerous deficiency notes with respect to various Nasdaq listing requirements in the past year. These related to:
•Compliance with Nasdaq’s minimum bid price rule due to our stock trading below $1.00 for a sustained period of time. We effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price. On September 13, 2023, we received a delinquency notification that the closing bid price of our stock traded below $1.00 for the previous 30 consecutive business days. We effected a one-for-five reverse stock split on August 27, 2024 in order to attempt to raise the stock price. On September 13, 2024, we received a letter received from Nasdaq noting it met the closing bid price requirement.
•Compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on our balance sheet as of December 31, 2024. We were not in compliance with this requirement based on its September 30, 2024 balance sheet. We believes it is in compliance with this requirement based on its December 31, 2024 balance sheet and expects to be in compliance going forward.
•Compliance with Nasdaq’s corporate governance requirements with respect to board and committee composition . We has received numerous deficiency notifications with respect to these requirements in the past year. Although we are currently in compliance, there can be no assurance it will remain in compliance.
•Compliance with Nasdaq’s requirement to hold an annual meeting. On January 11, 2024, Nasdaq notified us that it did not comply with listing requirements by not holding an annual meeting in 2023. We held its combined 2023 and 2024 annual meeting on June 28, 2024.
•On April 17, 2024, we received a delinquency notification as it had not filed its Annual Report Form 10-K for the year ended December 31, 2023. The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023. The Annual Report Form 10-K for the fiscal year ended December 31, 2023 was filed on June 6, 2024.
•Although we filed its Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, we received a delisting determination from the Nasdaq staff as a result of not filing its Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file its Form 10-Q for the quarter ended March 31, 2024 (which was subsequently filed on June 17, 2024). The staff’s delisting determination also noted the failure to hold its 2023 annual meeting as another basis of the delisting determination.
•On May 28, 2024, we requested an appeal of the delisting determination to Nasdaq’s Hearings Panel (“Panel”), and the hearing took place on July 9, 2024. On July 31, 2024, we received formal notice that the Panel determined to continue our listing subject to us evidencing compliance with all applicable criteria for continued listing on The Nasdaq Capital Market by September 16, 2024. We received an additional extension to November 14, 2024 to satisfy the terms of the Panel’s decision and to ensure our continued listing on Nasdaq.
•As we did not meet Nasdaq’s listing requirements as of September 30, 2024, we has requested another extension by the Panel to demonstrate compliance and another extension was granted. We thereafter presented its plan to regain compliance with the Equity Requirement to the Panel, subsequent to which the Panel ultimately granted us extensions through December 17, 2024 to do so.
•On December 20, 2024, we received a letter from Nasdaq confirming that, as of December 17, 2024, we meet all requirements for continued listing on Nasdaq as required by the Panel’s decision dated November 20, 2024. In accordance with the Panel’s decision, on December 17, 2024, we made public disclosure under cover of a Form 8-K, describing the transactions undertaken by us to achieve compliance with Listing Rule 5550(b)(1) and stated affirmatively that as of that date, it believes it has stockholders’ equity above the $2.5 million requirement and provided a pro-forma balance sheet as of December 17, 2024. Pursuant to Listing Rule 5815(d)(4)(B), we will be subject to a Mandatory Panel Monitor for a period of one year from the date of Nasdaq’s letter. If, within that one-year monitoring period, the Nasdaq Listing Qualifications staff (the “Staff”) finds us again out of compliance with the $2.5 million Equity Rule that was the subject of the exception, notwithstanding Rule 5810(c)(2), we will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the Staff will not be permitted to grant additional time for us to regain compliance with respect to that deficiency, nor will we be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, the Staff will issue a Delist Determination Letter and we will have an opportunity to request a new hearing with the initial Panel or a newly convened Panel if the initial Panel is unavailable. We will have the opportunity to respond/present to the Panel as provided by Listing Rule 5815(d)(4)(C). Our securities may be at that time delisted from Nasdaq.
Even if we regains compliance with Nasdaq’s listing requirements and addresses the outstanding deficiency notices to Nasdaq’s satisfaction, there can be no assurance that we will remain in compliance with Nasdaq’s requirements and will not be delisted.
Reverse Stock Split
On August 26, 2024, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, or the Amendment, with the Secretary of State of the State of Delaware to effect a one-for-five (1-for-5) reverse stock split of our outstanding common stock. The Amendment became effective at 5:00 p.m. Eastern Time on August 27, 2024.
The Amendment provided that, at the effective time of the Amendment, every five (5) shares of our issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in par value per share. The reverse stock split effected all shares of our common stock outstanding immediately prior to the effective time of the Amendment. As a result of the reverse stock split, proportionate adjustments have been made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options, restricted share unit award issued by us and outstanding immediately prior to the effective time of the Amendment, which resulted in a proportionate decrease in the number of shares of our common stock reserved for issuance upon exercise or vesting of such stock options, restricted share unit award, and, in the case of stock options, a proportionate increase in the exercise price of all such stock options. In addition, the number of shares reserved for issuance under our equity compensation plans immediately prior to the effective time of the Amendment was reduced proportionately.
No fractional shares were issued as a result of the reverse stock split. Stockholders of record who would otherwise be entitled to receive a fractional share received a full share in lieu thereof. The reverse stock split affected all stockholders proportionately and did not affect any stockholder’s percentage ownership of our common stock (except to the extent that the reverse stock split results in any stockholder owning only a fractional share).
Our common stock began trading on The Nasdaq Capital Market on a split-adjusted basis when the market opened on August 28, 2024. The new CUSIP number for our common stock following the reverse stock split is 30205M 309.
Critical Accounting Estimates
We prepare our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.
Recent adopted accounting pronouncements
In the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements. See Note 2, Significant Accounting Policies, of the notes to our consolidated financial statements in this Annual Report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations.
Components of Statements of Operations
Revenue
For the year ended December 31, 2024, the Company’s revenue was generated from a patent license agreement to develop cavrotolimod for potential treatment for hepatitis with a private clinical stage biopharmaceutical company. Under the terms of the agreement, this biopharmaceutical company received an exclusive license in the field of hepatitis to all of the Company’s relevant patents. We have never generated any commercial product revenue and do not expect to generate any product revenue in the near term.
Research and development expense
Research and development expense consisted of costs associated with our research activities, including basic research on our SNA technology platform, discovery and development of novel SNAs as prospective therapeutic candidates, preclinical and clinical development activities for SNAs we have nominated for clinical development as well as maintaining and protecting our intellectual property. Our research and development expenses in the prior year presented include:
•employee-related expenses, including salaries, bonuses, benefits and equity-based compensation expense;
•early research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, and consultants;
•preclinical and clinical development expenses with third parties such as contract research organizations, contract manufacturing organizations, and consultants;
•costs of maintaining and protecting our intellectual property portfolio, including legal advisory fees, license fees, sublicense fees, patent maintenance and other similar fees;
•laboratory materials and supplies;
•facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies.
We expensed research and development costs as they were incurred. A significant portion of our research and development costs were not tracked by project as they benefit multiple projects or our technology.
As previously announced, we halted all research and development activities in 2022 and no longer incurred research and development expenses after the first quarter of 2023.
General and administrative expense
General and administrative expense consists primarily of salaries and related benefits, including equity-based compensation, related to our executive, finance, legal, business development and support functions. Other general and administrative expenses include travel expenses, professional fees for auditing, tax and legal services and allocated facility-related costs not otherwise included in research and development expenses.
Litigation legal expense
Litigation legal expense consists of expenses from its self-insured retention related to the securities litigation lawsuit.
Right-of-use asset impairment loss
This loss resulted from the impairment analysis of the Company’s right-of-use asset related to its office lease.
Changes in fair value of investment in convertible notes receivable
The changes in fair value of investment in convertible notes receivable relate to the impairment of the convertible notes receivable and reserved their entire $2 million amount.
Dividend income
Dividend income consists of income earned on our money market funds that are recorded as cash equivalents on our consolidated balance sheets.
Interest income
Interest income consists of income earned on our available for sale securities that are recorded as short-term investments on our consolidated balance sheets, as well as income earned on our cash balances.
Interest expense
Interest expense includes amounts pursuant to debt agreements executed in 2024 that were later converted to equity.
Gain on settlement of accounts payable
During the year, the Company agreed to settle overdue legal expenses incurred in the prior year at a discounted amount resulting in a gain on this transaction.
Other income
The Company sold samples of its clinical products during the second quarter to a private clinical stage biopharmaceutical company. In the fourth quarter, the Company sold certain assets pursuant to the purchase agreement with the Purchaser.
Results of Operations
Comparison of the Year Ended December 31, 2024 and 2023
The following table summarizes the results of our operations for the years ended December 31, 2024 and 2023:
Year Ended
December 31,
(dollars in thousands) 2024 2023 Change
Revenue:
Revenue $ 500 $ - $ 500 100 %
Total revenue 500 - 500 100 %
Operating expenses:
Research and development expense - 1,423 (1,423) (100) %
General and administrative expense 5,449 11,715 (6,266) (53) %
Litigation legal expense 1,562 938 624 67 %
Right-of-use asset impairment loss 5,721 - 5,721 100 %
Loss from sale of property and equipment - 920 (920) 100 %
Total operating expenses 12,732 14,996 (2,264) (15) %
Operating loss (12,232) (14,996) 2,764 (18) %
Other (expense) income, net:
Changes in fair value of investment in convertible notes receivable - (2,000) 2,000 100 %
Dividend income 5 52 (47) (90) %
Interest income 8 32 (24) (75) %
Interest expense (18) - (18) (100) %
Gain on settlement of accounts payables 407 - 407 100 %
Other income, net 2,137 (2) 2,139 100 %
Total other income (expense), net 2,539 (1,918) 4,457 (232) %
Net loss before provision for income taxes (9,693) (16,914) 7,221 (43) %
Provision for income taxes 8 - 8 (100) %
Net loss $ (9,701) $ (16,914) $ 7,213 (43) %
Revenue
On February 5, 2024, the Company entered into a patent license agreement to develop cavrotolimod for potential treatment for hepatitis with a private clinical stage biopharmaceutical company. Under the terms of the agreement, this biopharmaceutical company received an exclusive license in the field of hepatitis to all of the Company’s relevant patents. $500,000 was paid to the Company after the execution of this agreement.
Our ability to generate revenues in the future is dependent on our ability to successfully explore and execute strategic alternatives. Therefore, there is substantial uncertainty as to how, when or if we might be able to generate revenues in the future.
Research and development expense
Research and development expense was $0 for the year ended December 31, 2024, a $1.4 million decrease from the year ended December 31, 2023. In 2022, the Company suspended its clinical, preclinical, and discovery program activities and reduced headcount as it began exploring strategic alternatives in April 2023. As a result, after
the first quarter of 2023, the Company determined it was no longer appropriate to record any research and development expenses.
General and administrative expense
Year Ended
December 31,
(dollars in thousands) 2024 2023 Change
General and administrative expense $ 5,449 $ 11,715 $ (6,266) (53) %
Full time employees 7 6 1
General and administrative expense was $5.4 million for the year ended December 31, 2024, representing an decrease of $6.3 million, or 53%, from $11.7 million for the year ended December 31, 2023. The decrease for the year ended December 31, 2024 was due to higher costs in 2023 from separation pay of former executives and related stock based compensation expense, payroll and related benefits, legal and consulting fees, facility and lease costs, depreciation from assets sold, and the research and development wind down costs that no longer met the criteria to be classified as research and development due to the shift in our historical operations suspending all research and development activities as previous discussed.
Litigation legal expense
The increase of $0.6 million for the year ended December 31, 2024 was due to accruals recorded for the amount of the unsatisfied self-insured retainer and legal defense costs related to the securities litigation lawsuit.
Right-of-use asset impairment loss
This loss resulted from the impairment analysis of the Company’s right-of-use asset related to its office lease.
Loss from sale of property and equipment
In the third quarter of 2023, the Company sold the majority of its scientific equipment through a third party auctioneer and incurred a loss on the sale of these assets as a result.
Changes in fair value of investment in convertible notes receivable
Changes in fair value became known and the Company impaired the entire $2 million amount of these convertible notes receivable. As a result, the convertible notes receivable is recognized at a fair value of $0 as of December 31, 2024.
Gain on settlement of accounts payable
During the year, the Company agreed to settle overdue legal expenses incurred in the prior year at a discounted amount resulting in a gain on this transaction.
Other Income
The Company sold samples of its clinical products during the second quarter to a private clinical stage biopharmaceutical company. On September 27, 2024, the Company entered into and closed the sale of certain assets pursuant to the purchase agreement with the Purchaser. The assets sold to Purchaser include the Company’s spherical nucleic acid-related technology, research and development programs, and clinical assets (the “Acquired Assets”) to the Purchaser as described in the purchase agreement. The Company will receive gross proceeds of $1,500 from the sale of the Acquired Assets.
Provision for income taxes
The effective tax rate for the year ended December 31, 2024 is attributable to the fact that the Company is subject to state income taxes. The effective income tax rate for the year ended December 31, 2024 was (0.1)%
because the Company generated tax losses and provided a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized. The effective tax rate for the year ended December 31, 2023 of 0% was attributable to the fact the Company was subject to the IRC Section 174 regulations requiring companies to capitalize certain research and experimental expenditures and IRC Section 382 loss limitation rules on our ability to utilize net operating losses to offset the capitalization requirement, with the ownership change being in the fourth quarter of 2022. This resulted in current income tax expense in 2022.
As of December 31, 2023, the Company has “discontinued the original business” of Exicure within the meaning of Section 382(c). This change has and will continue to subject our net operating loss carryforwards as of the fourth quarter of 2022 to an annual zero limitation, which will fully restrict our ability to use loss carryforwards and deductions from built in loss assets generated before the ownership change date to offset our taxable income in periods following the ownership change.
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We generated limited revenue from our collaboration agreements, which have since been terminated. We have funded our operations to date with proceeds received from equity financings and payments received in connection with collaboration agreements, which have since been terminated. Currently we are exploring strategic alternatives and generating limited revenue. As of December 31, 2024, our cash and cash equivalents cash were $12.5 million.
We incurred net losses of approximately $9.7 million and $16.9 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we have generated an accumulated deficit of $218.1 million, including $18,837 of additional paid-in capital reclassed to accumulated deficit upon C-corporation conversion, since inception and expect to incur significant expenses and negative cash flows for the foreseeable future.
Our current liquidity is not sufficient to continue to fund existing obligations and operations. As a result, there is substantial doubt about our ability to continue as a going concern. Additional financing will be needed to fund our ongoing operations and exploration of strategic alternatives and pursue any alternatives that we identify. We may need to seek bankruptcy protection and/or cease operations in the near term, which may result in our stockholders receiving no or very little value in respect of their shares of our common stock.
See “Funding Requirements” below for additional information on our future capital needs.
Cash Flows
The following table shows a summary of our cash flows for the years ended December 31, 2024 and 2023:
Years Ended
December 31,
(in thousands) 2024 2023
Net cash used in operating activities $ (2,910) $ (10,357)
Net cash used in investing activities - (1,078)
Net cash provided by financing activities 13,402 3,674
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 10,492 $ (7,761)
Operating activities
Net cash used in operating activities was $2.9 million and $10.4 million for the years ended December 31, 2024 and 2023, respectively. The decrease in cash used in operating activities for the year ended December 31, 2024 of $7.4 million was due to the reduction of operating activities, spending and lower headcount.
Investing activities
Net cash used in investing activities was $0.0 million and $1.1 million for the years ended December 31, 2024 and 2023, respectively. The decrease in cash used in investing activities of $1.1 million was primarily due to a decrease in proceeds from the maturity, net of purchases, of available-for-sale securities.
Financing activities
Net cash provided by financing activities of $13.4 million for year ended December 31, 2024 is primarily due to the stock purchase agreements closed in November and December 2024. Net cash provided by financing activities of $3.7 million for the year ended December 31, 2023 is primarily due to the Private Placement closed in February 2023.
Funding Requirements
Our existing cash and cash equivalents may not be sufficient to enable us to fund our existing obligations and ongoing operating expenses for the near term. Our future capital requirements are difficult to forecast and will depend on many factors, including:
•the results of our exploration of strategic alternatives, including any potential transactions;
•the results of any future or pending litigation against the Company;
•the extent to which we encounter increased costs as a result of global and macroeconomic conditions, including rising inflation and interest rates, supply chain disruptions, fluctuating exchange rates, and increases in commodity, energy and fuel prices; and
•unknown legal, administrative, regulatory, accounting, and information technology costs as well as additional costs associated with operating as a public company.
Until such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs primarily through equity offerings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. Further, the global financial markets have experienced significant disruptions over the past couple of years due to the COVID-19 pandemic, the ongoing conflict between Russia and Ukraine, and worsening global macroeconomic conditions, including actions taken by central banks to counter inflation, volatility in the capital markets and related market uncertainty, may impact our ability to obtain additional financing when needed on favorable terms or at all. Any further disruption or slowdown in the global financial markets and economy may negatively affect our ability to raise funding through equity or debt financings on attractive terms or at all, which could in the future negatively affect our operations.
Going Concern
In accordance with Accounting Standards Codification 205-40, Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. In the absence of a significant source of recurring revenue, our continued viability is dependent on our ability to continue to raise
additional capital to finance our operations. As discussed above, there are substantial uncertainties about our ability to raise such financing.
Contractual Obligations and Commitments
Chicago Lease
Refer to Note 5 - Leases to the Notes to our Consolidated Financial Statements included herein.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide this information required under this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
EXICURE, INC.
PAGE
Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID 688)
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Operations for the years ended December 31, 2024 and 2023
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2024 and 2023
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Exicure, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Exicure, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph - Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 , the Company has incurred significant losses and negative cash flows since inception, and may need to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2023.
New York, New York
March 18, 2025
EXICURE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31,
2024 2023
ASSETS
Current assets:
Cash, cash equivalents and restricted cash $ 12,508 $ 816
Other receivable 521 15
Prepaid expenses and other current assets 644 1,193
Total current assets 13,673 2,024
Property and equipment, net 26 54
Right-of-use asset - 6,517
Other noncurrent assets 1,357 2,985
Total assets
$ 15,056 $ 11,580
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,031 $ 1,631
Accrued expenses and other current liabilities 2,040 879
Total current liabilities 3,071 2,510
Lease liability, noncurrent 5,213 6,039
Total liabilities
$ 8,284 $ 8,549
Commitments and Contingencies (Note 15)
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 10,000,000 shares authorized, no shares issued and outstanding, December 31, 2024 and December 31, 2023
- -
Common stock, $0.0001 par value per share; 200,000,000 shares authorized, 6,026,841 issued and outstanding, December 31, 2024; 1,832,988 issued and outstanding, December 31, 2023 *
1 -
Additional paid-in capital 206,035 192,594
Accumulated deficit (199,264) (189,563)
Total stockholders' equity
6,772 3,031
Total liabilities and stockholders’ equity
$ 15,056 $ 11,580
* reflects a one-for-five (1:5) reverse stock split effected on August 27, 2024
See Accompanying Notes to Consolidated Financial Statements.
EXICURE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Year Ended
December 31,
2024 2023
Revenue:
Revenue $ 500 $ -
Total revenue 500 -
Operating expenses:
Research and development expense - 1,423
General and administrative expense 5,449 11,715
Litigation legal expense 1,562 938
Right-of-use asset impairment loss 5,721 -
Loss from sale of property and equipment - 920
Total operating expenses 12,732 14,996
Operating loss (12,232) (14,996)
Other (expense) income, net:
Changes in fair value of investment in convertible notes receivable - (2,000)
Dividend income 5 52
Interest income 8 32
Interest expense (18) -
Gain on settlement of accounts payables 407 -
Other income (expense), net 2,137 (2)
Total other income (expense), net 2,539 (1,918)
Net loss before provision for income taxes (9,693) (16,914)
Provision for income taxes 8 -
Net loss $ (9,701) $ (16,914)
Basic and diluted loss per common share * $ (4.75) $ (10.55)
Weighted-average basic and diluted common shares outstanding * 2,043,278 1,602,790
* reflects a one-for-five (1:5) reverse stock split effected on August 27, 2024
See Accompanying Notes to Consolidated Financial Statements.
EXICURE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except shares)
Common Stock
Shares * $ Additional Paid-in- Capital Accumulated Deficit Total Stockholders’ Equity
Balance at January 1, 2023 1,096,017 $ - $ 187,571 $ (172,649) $ 14,922
Reclassification of common stock warrants to liability - - (800) - (800)
Equity-based compensation - - 1,348 - 1,348
Vesting of restricted stock units and related repurchases 56,971 - (122) - (122)
Issuance of common stock, net 680,000 - 4,597 - 4,597
Net loss - - - (16,914) (16,914)
Balance at December 31, 2023 1,832,988 $ - $ 192,594 $ (189,563) $ 3,031
Equity-based compensation - - 22 - 22
Vesting of restricted stock units and related repurchases 166 - - - -
Issuance of common stock, debt to equity conversion 339,214 - 1,018 1,018
Sale of common stock, financings 3,854,473 1 12,401 - 12,402
Net loss - - - (9,701) (9,701)
Balance at December 31, 2024 6,026,841 $ 1 $ 206,035 $ (199,264) $ 6,772
* reflects a one-for-five (1:5) reverse stock split effected on August 27, 2024
See Accompanying Notes to Consolidated Financial Statements.
EXICURE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2024 2023
Cash flows from operating activities:
Net loss $ (9,701) $ (16,914)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 28 634
Amortization of right-of-use asset 796 741
Equity-based compensation 22 1,348
Right-of-use asset impairment loss 5,721 -
Gain on settlement of accounts payables (407) -
Changes in fair value of investment in convertible notes receivable - 2,000
Loss from sale of property and equipment - 920
Changes in operating assets and liabilities:
Accounts receivable (506) -
Prepaid expenses and other current assets 977 733
Other noncurrent assets - 38
Accounts payable (193) 1,270
Accrued expenses 1,180 (399)
Other liabilities (827) (728)
Net cash used in operating activities (2,910) (10,357)
Cash flows from investing activities:
Purchase of available-for-sale securities - (2,000)
Proceeds from sale of property and equipment - 922
Net cash (used in) provided by investing activities - (1,078)
Cash flows from financing activities:
Proceeds from sale of common stock 12,402 5,440
Payment of common stock financing costs - (843)
Proceeds from short term debt 1,000 -
Payment of exercise of common stock warrants - (800)
Payments for minimum statutory tax withholding related to net share settlement of equity awards - (123)
Net cash provided by financing activities 13,402 3,674
Net (decrease) in cash, cash equivalents, and restricted cash 10,492 (7,761)
Cash, cash equivalents, and restricted cash - beginning of year 2,016 9,777
Cash, cash equivalents, and restricted cash - end of year $ 12,508 $ 2,016
See Accompanying Notes to Consolidated Financial Statements.
EXICURE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2024 2023
Supplemental disclosure of cash flow information
Non-cash operating activities:
Reclass prepaid expenses from noncurrent to current $ 428 $ -
Non-cash financing activities:
Equity effect of debt to equity conversion $ 1,018 $ -
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the amounts shown in the consolidated statements of cash flows:
Year Ended December 31,
2024 2023
Cash, cash equivalents and restricted cash $ 12,508 $ 816
Restricted cash included in other noncurrent assets - 1,200
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 12,508 $ 2,016
See Accompanying Notes to Consolidated Financial Statements.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Description of Business, Basis of Presentation and Going Concern
Description of Business
Exicure, Inc. has historically been an early-stage biotechnology company focused on developing nucleic acid therapies targeting ribonucleic acid against validated targets. In September 2022, the Company announced a significant reduction in force, suspension of preclinical activities and halting of all research and development, and that the Company was exploring strategic alternatives to maximize stockholder value. In the first quarter, the Company entered into a licensing agreement for patents related to one of our historical drug candidates, and received a small, one-time payment and an entitlement to only modest royalties on future sales of the licensed technology that we do not believe will be material. In the second quarter, the Company sold some of our samples related to the licensed product. In the third quarter, the Company entered into a sale agreement to sale our historical biotechnology intellectual property and other assets pursuant to the purchase agreement. The Company continues to engage in a broader exploration of strategic alternatives. This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
On January 19, 2025, we entered into a Share Purchase Agreement with GPCR Therapeutics Inc, a Korean corporation, (“GPCR”) pursuant to which we acquired from GPCR all of the issued and outstanding equity securities of GPCR Therapeutics USA Inc., a California corporation (“GPCR USA”). In connection with the closing of the Share Purchase Agreement, the Company and GPCR entered into a License and Collaboration Agreement to further develop and commercialize GPCR’s technologies related to certain intellectual property and patents.
GPCR USA has an ongoing Phase 2 clinical trial focused on blood cancer patients, particularly those eligible for hematopoietic stem cell transplantation. Its current clinical trial involves the combined administration of G-CSF, GPC-100 (Burixafor) and propranolol. GPCR USA plans to complete the administration of GPC-100 to 20 patients by the end of April and aims to announce the clinical trial results by September.
Throughout these consolidated financial statements, the terms the “Company,” and “Exicure” refer to Exicure, Inc. and where appropriate, its wholly owned subsidiary, Exicure Operating Company. Exicure Operating Company holds all material assets and conducts all business activities and operations of Exicure, Inc.
Basis of Presentation
These consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and accounting principles generally accepted in the United States of America (“US GAAP”) as defined by the Financial Accounting Standards Board (“FASB”) within the FASB Accounting Standards Codification (“ASC”) and are presented in thousands, except number of shares and per share data.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Exicure, Inc. and its wholly owned subsidiary, Exicure Operating Company. All intercompany transactions and accounts are eliminated in consolidation.
Reverse Stock Split
At the Company’s Special Meeting of Stockholders held on August 15, 2024, the Company’s stockholders approved a proposal to approve and adopt an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of its shares of common stock, issued and outstanding or reserved for issuance, at a ratio within the range from 1-for-2 to 1-for-15, with such ratio to be determined in the discretion of the Board of Directors. On August 20, 2024, the Company’s Board of Directors adopted resolutions to effect as soon as reasonably practicable the reverse split of the issued and outstanding shares of the Common Stock at a ratio of 1-for-5.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
The Company effected a reverse stock split of its Common Stock at a ratio of 1-for-5 as of 5:00 p.m. Eastern Time on August 27, 2024. No fractional shares were issued in connection with the reverse stock split. Stockholders of record who would otherwise be entitled to receive a fractional share received a full share in lieu thereof. An additional 102,837 shares were issued as a result of the fractional shares rounded up. All information presented in the accompanying unaudited condensed consolidated financial statements, unless otherwise indicated herein, assumes a 1-for-5 reverse stock split of the Company’s outstanding shares of Common Stock, and unless otherwise indicated, all such amounts and corresponding conversion price or exercise price data set forth herein have been adjusted to give effect to such assumed reverse stock split.
Going Concern
At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date that the financial statements are issued. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern for a period of one year after the date that the financial statements are issued. As of December 31, 2024, the Company expects to incur significant expenses and negative cash flows for the foreseeable future. As of December 31, 2024, the Company’s cash and cash equivalents were $12,508. Management believes that given the Company’s current cash position, operating plans and forecasted negative cash flows from operating activities over the next twelve months, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. Additional financing will be needed to fund our ongoing operations, support of GPCR USA’s operations, and exploration of strategic alternatives and pursuing any alternatives that we identify.
Management believes that the Company’s existing cash and cash equivalents are insufficient to continue to fund its operating expenses and additional funding is needed. There can be no assurance that such additional financing will be available and, if available, can be obtained on acceptable terms.
The accompanying consolidated financial statements have been prepared as though the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Use of Estimates
The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on certain assumptions which it believes are reasonable in the circumstances and while actual results could differ from those estimates, management does not believe that any change in those assumptions in the near term would have a significant effect on the Company’s financial position, results of operations or cash flows. Actual results in future periods could differ from those estimates.
Reclassification
Certain accounts in the prior period consolidated statement of operations have been reclassified to conform to the presentation of the current year consolidated financial statements. These reclassifications had no effect on the previously reported operating results.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
2. Significant Accounting Policies
Cash and cash equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of December 31, 2024, cash equivalents represented funds held in a money market account.
Restricted cash
The Company secures a standby letter of credit with a restricted certificate of deposit account as part of its Chicago lease agreement, which was used to pay the lease during 2024. The Company considers the restricted certificate of deposit account in the amount of $109 to be restricted cash because its use to the Company is contractually limited and presents the balance within current assets on the accompanying consolidated balance sheet at December 31, 2024 and 2023.
Fair value of financial instruments
The Company has estimated the fair value of its financial instruments. The carrying amounts for cash, cash equivalents, and accounts payable approximate their fair value due to the relatively short-term nature of these instruments. The Company records short-term investments at their estimated fair value based on quoted market prices for identical or similar instruments.
Investment in Convertible Notes Receivable
Securities are classified as current or noncurrent based on the remaining contractual maturities of the securities. Securities are designated by the Company at the point of investment, as either trading, AFS, or held to maturity. Under ASC 825, Financial Instruments, the Company elected the fair value option for all outstanding convertible notes receivable. Management evaluates the performance of the securities on a fair value basis. Under the fair value option, the notes receivable are measured at each reporting period based upon their exit value in an orderly transaction and unrealized gains or losses from changes in fair value are recorded in the Condensed Consolidated Statements of Operations.
Investment in convertible notes receivable at fair value totaled $0 as of December 31, 2024. As of December 31, 2024, the aggregate cost of the investment in convertible notes receivable accounted for under the fair value option was $0, which included principal balances of $2,000 and the change in fair value of $2,000.
Concentrations of credit risk and other risks and uncertainties
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with reputable financial institutions. The Company’s cash accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per financial institution in the United States. The Company's cash equivalent securities are insured by the Securities Investor Protection Corp. (“SIPC”) up to $500,000 per account, with a limit of $250,000 in cash. The Company has not experienced any credit losses in such accounts. The Company has no financial instruments with off-balance sheet risk of loss.
The Company is currently not profitable and no assurance can be provided that it will ever be profitable. The Company’s research and development activities have required significant investment since inception and operations are expected to continue to require cash investment in excess of its revenues. See also Note 1, Going Concern, for more information.
Property and equipment
Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the various classes of property and equipment, which range from three to seven years. Leasehold
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
improvements are amortized using the straight-line method over the shorter of the remaining terms of the respective leases or the estimated lives of the assets. Depreciation begins at the time the asset is placed in service.
Property and equipment are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss for the year ended December 31, 2024 resulted from an analysis of the Company’s right-of-use asset related to its office lease. No impairment losses were recorded for the year ended December 31, 2023.
Warrants
The Company accounts for freestanding warrants within stockholder’s equity or as liabilities based on the characteristics and provisions of each instrument. The Company evaluates outstanding warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. If none of the criteria in the evaluation in these standards are met, the warrants are classified as a component of stockholders’ equity and initially recorded at their grant date fair value without subsequent remeasurement. Warrants that meet the criteria are classified as liabilities and remeasured to their fair value, estimated using the Black-Scholes option-pricing model, at the end of each reporting period with changes in the fair value of the liability recorded in other income (expense), net in the consolidated statements of operations.
Revenue recognition
The core principle of ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company allocates the transaction price to all contractual performance obligations included in the contract. If a contract has more than one performance obligation, we allocate the transaction price to each performance obligation based on standalone selling price, which depicts the amount of consideration we expect to be entitled in exchange for satisfying each performance obligation. The Company recognizes revenue when it was satisfied or fulfilled it’s obligation to the customer.
Equity-based compensation
The Company measures the cost of equity-based awards at fair value and records the cost of the awards, net of estimated forfeitures, on a straight-line basis over the requisite service period. The Company measures fair value for all common stock options using the Black-Scholes option-pricing model. The fair value of common stock option awards is affected by the valuation assumptions, including the expected volatility based on comparable market participants, expected term of the common stock option, risk-free interest rate, and expected dividends. For all equity-based awards, the fair value measurement date is the date of grant and the requisite service period is the period over which the recipient is required to provide service in exchange for the equity-based awards, which is generally the vesting period.
Segments and geographic information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business as one operating segment. All long-lived assets of the Company are located in the United States.
Leases
The Company determines if an arrangement is a lease at contract inception. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized on the balance sheet at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or to terminate the lease when it is
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
reasonably certain that the Company will exercise that option. The Company uses the implicit interest rate when readily determinable and uses the Company’s incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at the commencement date in determining the present value of the lease payments.
The lease payments used to determine the Company’s operating lease assets may include lease incentives, stated rent increases and escalation clauses linked to rates of inflation when determinable. In addition, the Company’s lease arrangements may contain lease and non-lease components. The Company combines lease and non-lease components, which are accounted for together as a single lease component. Variable lease payments, such as real estate taxes and facility maintenance costs that are allocated by the lessor to the lessee and are not based on an index or a rate, are excluded from the measurement of the lease liability.
Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Short-term leases, defined as leases that have a lease term of twelve months or less at the commencement date, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease. Costs for variable lease payments that are not included in the lease liability are recognized as expense as incurred.
Research and development expense
Research and development expenses are charged to expense as incurred in performing research and development activities in accordance with ASC 730, Research and Development. The costs include employee-related expenses including salaries, benefits, and stock-based compensation expense, costs of funding research performed by third parties that conduct research and development and preclinical and clinical activities on the Company’s behalf, the cost of purchasing lab supplies and non-capital equipment used in preclinical and clinical activities and in manufacturing preclinical and clinical study materials, consultant fees, facility costs including rent, depreciation and maintenance expenses, fees for acquiring and maintaining licenses under third party licensing agreements, including any sublicensing or success payments made to the Company’s licensors, and overhead and other expenses directly related to research and development operations. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the accrual or prepaid is adjusted accordingly. The Company defers and capitalizes non-refundable advance payments made by the Company for research and development activities until the related goods are received or the related services are performed. In circumstances where amounts have been paid in excess of costs incurred, the Company records a prepaid expense.
Income taxes
The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, is applied during the years in which temporary differences are expected to be settled and is reflected in the financial statements in the period of enactment. The measurement of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. At December 31, 2024 and 2023, the Company established a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Recent Accounting Pronouncements Adopted
Segment Reporting Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures which will require companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”). The pronouncement is effective for annual filings for the year ended December 31, 2024. The Company adopted this standard for our fiscal year 2024 annual financial statements and interim financial statements thereafter and have applied this standard retrospectively for all prior periods presented in the financial statements. See Note 9 - Segment Reporting for further information.
Accounting Pronouncements Not Yet Adopted
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The standard requires that public business entities disclose additional information about specific expense categories in the notes to financial statements for interim and annual reporting periods. The standard will become effective for us for our fiscal year 2027 annual financial statements and interim financial statements thereafter and may be applied prospectively to periods after the adoption date or retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company plans to adopt the standard when it becomes effective in our fiscal year 2027 annual financial statements, and the Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the Consolidated Financial Statements.
Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Update No. 2023-09 aims to enhance the transparency and decision usefulness of income tax disclosures. Update No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). Update 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. Update No. 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company has not yet adopted this standard for our fiscal year 2024 annual financial statements and is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the Consolidated Financial Statements. See Note 10 - Income Taxes for further information.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
3. Supplemental Balance Sheet Information
Prepaid expenses and other current assets
December 31,
2024 2023
Prepaid insurance $ 444 $ 508
Prepaid franchise tax - 259
Lease costs 37 235
Prepaid professional fees 70 95
Prepaid software 61 72
Other 32 24
Prepaid expenses and other current assets $ 644 $ 1,193
Other noncurrent assets
December 31,
2024 2023
Restricted cash $ - $ 1,200
Prepaid insurance, noncurrent 1,357 1,785
Other noncurrent assets $ 1,357 $ 2,985
Property and equipment, net
December 31,
2024 2023
Scientific equipment $ 246 $ 246
Computers and software 3 3
Furniture and fixtures 30 30
Property and equipment, gross 279 279
Less: accumulated depreciation (253) (225)
Property and equipment, net $ 26 $ 54
Depreciation and amortization expense was $28 and $634, for the years ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2023, the Company sold scientific equipment with a net book value of $1,834 and recognized a loss of $920 in the accompanying statement of operations for the year ended December 31, 2023. There were no sales in 2024.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Accrued expenses and other current liabilities
December 31,
2024 2023
Current lease liability $ 722 $ 626
Accrued payroll-related expenses - 71
Accrued litigation legal fee 1,138 -
Accrued other expenses 180 182
Accrued expenses and other current liabilities $ 2,040 $ 879
4. Investment in Convertible Notes Receivable
In May 2023, the Company entered into two subscription agreements to purchase non-guaranteed private placement convertible notes receivable (the “Notes Receivable”) for a subscription amount of $1 million each. The Notes Receivable mature in May 2026 and the yield to maturity is 4.5% per annum. The Company has the option to request that the issuer redeem part or the entire principal amount of the Notes Receivable on the first anniversary after the issue date and every three months thereafter before the maturity date. The conversion ratio will be one hundred percent (100%) of the Notes Receivable’s face value. The Company also has the ability to convert the debt into shares based on the number of shares computed by dividing the face value of each security by a calculated conversion price, which is subject to adjustment provisions, determined at the time of issuance. The securities may be converted from May 3, 2024, the first anniversary of the issue date of the first agreement, to April 15, 2026, one month prior to the maturity date to the second agreement. In March 2024, the Company notified the issuer of the Notes Receivable that it was exercising its redemption right with respect to the entire principal amount of the Notes Receivable after the first anniversary of their issue dates (May 3 and May 16, 2024, respectively) for an aggregate redemption price of $2.090 million (representing the principal amount plus 4.5% per annum yield to the redemption date). The issuer has taken the position that the Notes Receivable are not redeemable until August 3, 2024 and August 16, 2024.
The Company’s debt securities are classified as AFS pursuant to ASC 320 - Investments - Debt Securities. AFS securities are recorded at fair value. During the year ended December 31, 2023, management did not believe these AFS investments are recoverable and booked a change in fair value to record them at a fair value of $0 and believes their fair value is still $0 as of December 31, 2024.
5. Leases
The Company’s lease arrangements at December 31, 2024 consist of (i) a lease for office space at its headquarters in Chicago, Illinois that commenced in July 2020 (the “Chicago Lease”) and (ii) leases for office equipment (the “Office Equipment Leases”). The Chicago Lease and the Office Equipment Leases are classified as operating leases. See the subsequent event footnote for information on the early termination of the Chicago lease that terminated in February 2025.
Chicago Lease
The Company has approximately thirty thousand square feet of office space in Chicago, Illinois (the “Chicago Lease”). The original term (the “Original Term”) of the Chicago Lease is 10 years, commencing on July 1, 2020 (the “Commencement Date”), which is the date the premises were ready for occupancy under the terms of the Chicago Lease. The Company has options to extend the term of the Chicago Lease for two additional successive periods of five years each (the “Extension Periods”) at the then prevailing effective market rental rate.
The initial annual base rent during the Original Term is approximately $1,113 for the first 12-month period of the Original Term, payable in monthly installments beginning on the Commencement Date. Base rent thereafter is subject to annual increases of 3%, for an aggregate amount of $12,761 over the Original Term. The Company must also pay its proportionate share of certain operating expenses and taxes for each calendar year during the term.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
During the first 12-month period of the Original Term, the base rent and the Company's proportionate share of operating expenses and taxes are subject to certain abatements.
Upon execution of the Chicago Lease, the Company paid to the landlord the first installment of base rent and the estimated monthly amount of its pro rata share of taxes and its pro rata share of operating expenses in the aggregate amount of $87 which amount had been adjusted for the abatement as set forth in the lease agreement. The Company also paid the landlord a net amount of $697 toward tenant improvements.
As part of the agreement for the Chicago Lease, the Company is required to maintain a standby letter of credit during the term of the lease, which had a balance of $109 at December 31, 2024, and was secured by a restricted certificate of deposit account and presented within current assets on the Company’s consolidated balance sheet at December 31, 2024.
The Company recognized a right of use asset of $8,931 and a lease liability of $8,147 on the Commencement Date. Because the rate implicit in the Chicago Lease is not readily determinable, the Company used its incremental borrowing rate of 8.3% on the Commencement Date to determine the present value of the lease payments over the Original Term. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The weighted-average discount rate related to the Company’s operating lease asset and related operating lease liabilities was 8.3%. See Footnote 17 - Subsequent Events for details on the early termination of the Chicago Lease.
The following table summarizes lease costs in the Company’s consolidated statement of operations:
December 31,
2024 2023
Operating lease costs $ 858 $ 789
Variable lease costs 290 690
Short term lease costs 41 -
Total lease costs $ 1,189 $ 1,479
The Company made cash payments for operating leases of $1,217 and $1,808 during the years ended December 31, 2024 and 2023, respectively. On June 11, 2024, the Company received a formal notice from its landlord indicating the landlord will draw on the restricted cash account designated for the lease as a result of past due rent for December 2023 through June 2024. The landlord continued to make monthly withdrawals from the restricted cash account and the Company is current on its rent payments. These draws are within the terms and conditions of the lease and the related restricted cash account.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Maturities of the Company’s lease liability as of December 31, 2024 were as follows:
Years Ending December 31, Operating Leases
2025 $ 1,167
2026 1,310
2027 1,349
2028 1,390
2029 1,432
Thereafter 726
Total $ 7,374
Less: imputed interest (1,439)
Total lease liability $ 5,935
Current operating lease liability $ 722
Noncurrent operating lease liability 5,213
Total lease liability $ 5,935
Sublease of Office Space
The Company entered into a sublease agreement with Cyclopure, Inc. (the “Subtenant”) to sublease approximately 57% of its office space pursuant to that certain sublease agreement (the “Sublease Agreement”), dated as of May 4, 2023. The term of the Sublease Agreement began on May 15, 2023 and ends on June 30, 2030, the expiration date of the Chicago Lease. The first three months under the Sublease Agreement are rent free. Beginning August 15, 2023, the Company began charging the Subtenant for 57% of the base rent under the Chicago Lease, and the subtenant is responsible for its pro rata share of operating expenses and taxes payable.
In 2024, the Company did not receive payments from the Subtenant as the Subtenant paid $584 directly to the Company’s landlord. In 2023, the Subtenant paid the Company $550. On October 21, 2024, the Subtenant provided notice that it is exercising its right to termination under the Sublease, effective as of November 30, 2024. However, the Company sent a formal notice disputing the subtenant’s right to terminate the Sublease as the provisions for termination were not met and has $121 in other receivables related to the Subtenant’s past due rent.
6. Debt
On May 3, 2024, the Company executed a promissory note (“Note”) and subsequently received a loan in the amount of $300 from an individual investor. All principal and accrued interest were due and payable on the earlier of (i) May 3, 2025 or (ii) upon an event of default, at such time, such amounts declared by the investor would become due and payable by Company. Interest accrued on this Note at 6.0% and was payable at maturity.
On June 3, 2024, the Company executed another promissory note (“DGP Note”) and subsequently received a loan in the amount of $700 from DGP, a related party. All principal and accrued interest were due and payable on the earlier of (i) March 25, 2025 or (ii) upon an event of default, at such time, such amounts declared by the investor would become due and payable by Company. Interest accrued on this DGP Note at 6.0% and was payable at maturity.
On September 11, 2024, the Company executed two Debt for Equity Exchange Agreements converting the existing debt and related interest described above into shares of its common stock. The Company exchanged in full satisfaction of the principal and accrued interest obligations on the Note into 101,991 of its common stock shares. The Company exchanged in full satisfaction of the principal and accrued interest obligations on the DGP Note into 237,223 shares of its common stock. As this was considered a troubled debt restructuring with a related party, the difference between fair value and book value was recognized within additional paid in capital.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
7. Stockholders’ Equity
Preferred Stock
The Company has 10,000,000 shares of preferred stock, par value $0.0001 authorized and no shares issued and outstanding.
Common Stock
The Company has 200,000,000 shares of common stock, par value $0.0001, authorized. As of December 31, 2024 and December 31, 2023, the Company had 6,026,841 and 1,832,988 shares issued and outstanding, respectively.
The holders of shares of the Company’s common stock are entitled to one vote per share on all matters to be voted upon by the Company’s stockholders and there are no cumulative rights. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of the Company’s common stock are entitled to receive ratably any dividends that may be declared from time to time by the Board out of funds legally available for that purpose. In the event of the Company’s liquidation, dissolution or winding up, the holders of shares of the Company’s common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock then outstanding. The Company’s common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Company’s common stock. The outstanding shares of the Company’s common stock are fully paid and non-assessable.
Common Stock Purchase Agreements
In an agreement dated November 6, 2024 and executed on November 12, 2024, the Company entered into a common stock purchase agreement (the “Initial Common Stock Purchase Agreement”) with HiTron Systems Inc. (“HiTron”), pursuant to which the Company agreed to issue and sell to HiTron 433,333 shares (the “Initial Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at a purchase price of $3.00 per share (the “Initial Purchase”).
On November 13, 2024, in a subsequent agreement (the “Subsequent Common Stock Purchase Agreement”), the Company agreed to sell and issue to HiTron 2,900,000 additional shares of Common Stock (the “Subsequent Shares” and together with the Initial Shares, the “Shares”), for $8.7 million, at a purchase price of $3.00 per share (the “Subsequent Purchase”). The Subsequent Common Stock Purchase Agreement provides HiTron with the right to nominate additional members of the Board in proportion to its equity interest, subject to approval by the Board and compliance with SEC and Nasdaq rules.
On December 9, 2024, the Company entered into a Common Stock Purchase Agreement with SangSangIn Investment & Securities Co., Ltd. (“SangSang”), pursuant to which the Company agreed to issue and sell to SangSang 433,332 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at a purchase price of $4.61 per share.
On December 10, 2024, the Company entered into a common stock purchase agreement (the “MIRTO Purchase Agreement”) with MIRTO Co., LTD. (“MIRTO”), pursuant to which the Company agreed to issue and sell to MIRTO 87,808 shares of our Common Stock, for an aggregate purchase price of approximately $0.5 million, at a purchase price per share of $4.61. The transactions under the MIRTO Purchase Agreement closed on December 24, 2024.
Registration Rights Agreements
In connection with the HiTron Common Stock Purchase Agreements and SangSang Common Stock Purchase Agreement, the Company entered into registration rights agreements (the “Registration Rights Agreements”) with HiTron and SangSang, pursuant to which the Company agreed to register the resale of the Shares. Under these
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Registration Rights Agreements, the Company has agreed to file registration statements covering the resale of the Shares no later than the sixth (60th) day following the applicable closing (the “Filing Deadline”). The Company has agreed to use reasonable best efforts to cause such registration statement to become effective as promptly as practicable after the filing thereof but in any event on or prior to the Effectiveness Deadline (as defined in these Registration Rights Agreements), and to keep such registration statement continuously effective until the earlier of (i) the date the Shares covered by such registration statement have been sold or may be resold pursuant to Rule 144 without restriction, or (ii) the date that is two (2) years following the applicable closing date. The Company has also agreed, among other things, to pay all reasonable fees and expenses (excluding any underwriters’ discounts and commissions and all fees and expenses of legal counsel, accountants and other advisors for HiTron or SangSang except as specifically provided in these Registration Rights Agreements) incident to the performance of or compliance with these Registration Rights Agreements by the Company.
In the event a registration statement has not been filed within 90 days following the closing date, subject to certain limited exceptions, then the Company has agreed to make pro rata payments to HiTron as liquidated damages in an amount equal to 0.5% of the aggregate amount invested by HiTron in the Shares per 30-day period or pro rata for any portion thereof for each such month during which such event continues, subject to certain caps set forth in the Registration Rights Agreements.
The Filing Deadline has passed for both of these agreements, however, the Company is making its best efforts to file such registration statements as soon as reasonably possible.
September 2022 PIPE
Securities Purchase Agreement
On September 26, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with CBI USA, pursuant to which the Company agreed to issue and sell to CBI USA in a private placement an aggregate of 680,000 shares of Common Stock, at a purchase price of $8.00 per share. The private placement closed on February 24, 2023 (the “Closing Date”). The Company received gross proceeds of $5,440 from the September 2022 PIPE (or net proceeds of $4,597 after transaction expenses).
CBI USA funded the acquisition pursuant to the Securities Purchase Agreement through a loan from its affiliate, DGP Co., Ltd. (“DGP”). On June 23, 2023, DGP exercised its the option pursuant to the loan and acquired the 680,000 shares of Common Stock initially acquired by CBI USA pursuant to the Securities Purchase Agreement. DGP subsequently agreed to sell its shares to a third party, with the closing of 10% (68,000 shares) occurring in February 2024, and sold 424,611 to another third party on February 24, 2025. CBI USA and DGP, collectively, beneficially own 9% of the outstanding shares of Common Stock based on information available to the Company.
September 2022 Registration Rights Agreement
In connection with the Securities Purchase Agreement, the Company entered into a registration rights agreement with CBI USA (the “Registration Rights Agreement’). CBI USA assigned its rights under the Registration Rights Agreement to DGP when DGP acquired the 680,000 shares of Common Stock initially sold to CBI USA. Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement covering the resale of the shares of Common Stock sold pursuant to the Securities Purchase Agreement, to use reasonable best efforts to cause such registration statement to become effective as promptly as practicable, and to keep such registration statement continuously effective until the earlier of (i) the date the shares covered by such registration statement have been sold or may be resold pursuant to Rule 144 without restriction, or (ii) the date that is two (2) years following the Closing Date.
In the event the registration statement was not filed within 90 days following the Closing Date, subject to certain limited exceptions, the Company agreed to make payments as liquidated damages in an amount equal to 0.5% of the aggregate amount invested in the shares of Common Stock pursuant to the Securities Purchase Agreement per 30-day period or pro rata for any portion thereof for each such month during which such event
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
continues, subject to certain caps set forth in the Registration Rights Agreement. The Company paid $27 to CBI USA and accrued $191 to DGP pursuant to this provision. On February 19, 2025, the Company received a waiver letter from DGP confirming they agreed to waive the outstanding $191 penalty amount owed to DGP. On February 24, 2025, DGP sold 424,611 of their shares to an unaffiliated company.
Common Stock Warrants
Warrants to purchase 115,253 shares of common stock at a price of $40.5155 per share that were acquired in the December 2021 registered-direct offering transaction remained outstanding. The warrants are classified as equity. As a result of the closing of the September 2022 PIPE, a warrant holder elected to exercise their option within 30 days of the closing of the September 2022 PIPE (February 24, 2023) to receive a cash payout for the outstanding warrants in the amount of the Black-Scholes value of each warrant as prescribed in the warrant agreement. The Company paid $800 to this warrant holder on June 23, 2023 and 105,231 warrants were settled as a result.
As of December 31, 2024, warrants to purchase 10,022 shares of common stock at a price of $40.5155 per share that were acquired in the December 2021 registered-direct offering transaction remain outstanding.
8. Equity-Based Compensation
2017 Equity Incentive Plan
On September 22, 2017, the Company’s stockholders approved the Exicure, Inc. 2017 Equity Incentive Plan (the “2017 Plan”), which became effective on November 15, 2017. The 2017 Plan provides for the issuance of incentive awards of up to 38,950 shares of Exicure common stock, which includes 14,466 shares of Exicure common stock to be issued to officers, employees, consultants and directors, plus a number of shares not to exceed 25,559 that are subject to issued and outstanding awards under the Exicure OpCo 2015 Equity Incentive Plan (the “2015 Plan”) and were assumed in the merger transaction on September 26, 2017. Awards that may be awarded under the 2017 Equity Incentive Plan include non-qualified and incentive stock options, stock appreciation rights, bonus shares, restricted stock, restricted stock units, performance units and cash-based awards. The number of shares of common stock reserved for issuance under the 2017 Equity Incentive Plan automatically increases on January 1 of each year, beginning on January 1, 2020, by the lesser of (i) 30,667 shares, (ii) 5% of the total number of shares of its capital stock outstanding on December 31 of the preceding calendar year, or (iii) a lesser number of shares determined by the Compensation Committee of the Board (the “Compensation Committee”). No future awards will be made under the 2015 Plan upon the effectiveness of the 2017 Plan. On January 1, 2024, pursuant to the terms of the 2017 Plan, the number of awards that are reserved and may be awarded under the 2017 Plan was automatically increased by 30,667 awards. As of December 31, 2024, the aggregate number of awards available for grant under the 2017 Plan was 121,700.
Awards granted under the 2017 Plan are contingent on the participants’ continued employment or provision of non-employee services and are subject to forfeiture if employment or continued service terminates for any reason. The initial award granted to an employee or consultant generally vests 25% on the first 12-month anniversary of the grant date and vests 1/48th monthly thereafter until fully vested at the end of 48 months. Subsequent awards granted to employees or consultants generally vest 1/48th monthly until fully vested at the end of 48 months. The initial stock option grant to a non-employee director vests 1/36th monthly until fully vested at the end of 36 months. Subsequent stock option grants to a non-employee director vests 1/12th monthly until fully vested at the end of 12 months. The term of common stock option grants is 10 years unless terminated earlier as described above.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Employee Stock Purchase Plan
The 2017 Employee Stock Purchase Plan (the “ESPP”) was adopted by the Board in September 2017 and approved by the Company’s stockholders in September 2017. Through the ESPP, eligible employees may authorize payroll deductions of up to 15% of their compensation to purchase common stock. The maximum number of shares that an employee may purchase on any exercise date in an offer period will be the smaller of (i) 50 shares or (ii) such number of shares as has a fair market value (determined as of the offering date for such offer period) equal to $25,000 within one calendar year minus the fair market value of any other shares of common stock that are attributed to such calendar year. The purchase price per share at each purchase date is equal to 85% of the lower of (i) the closing market price per share of Exicure common stock on the employee’s offering date or (ii) the closing market price per share of Exicure common stock on the exercise date. Each offering period is approximately six-months in duration and the first offering period began on November 16, 2020 and ended on May 14, 2021. No shares were issued during 2024 or 2023.
The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2018 and each January 1 thereafter through January 1, 2027, by the least of (i) 2,000 shares; (ii) 0.3% of the outstanding shares of common stock on the last day of the immediately preceding calendar year; or (iii) a lesser number of shares determined by the Board. As of December 31, 2024, there were 12,394 shares available for issuance under the ESPP. On January 1, 2025, the number of shares of common stock available for issuance under the ESPP increased by 10,000 shares.
Equity-based compensation expense is classified in the statements of operations as follows:
Year Ended December 31,
2024 2023
Research and development expense $ - $ 154
General and administrative expense 22 1,194
$ 22 $ 1,348
Unamortized equity-based compensation expense at December 31, 2024 was $10, which is expected to be amortized over a weighted-average period of 0.9 years.
The Company utilizes the Black-Scholes option-pricing model to determine the fair value of common stock option grants. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model also requires the input of highly subjective assumptions. In addition to an assumption on the expected term of the option grants as discussed below, application of the Black-Scholes model requires additional inputs for which we have assumed the values described in the table below:
Year Ended
December 31,
Expected term 5.8 to 5.8 years
Risk-free interest rate 3.83% to 3.83%; weighted avg. 3.83%
Expected volatility 100.9% to 100.9%; weighted avg. 100.9%
Forfeiture rate 5 %
Expected dividend yield - %
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
The expected term is based upon the “simplified method” as described in Staff Accounting Bulletin Topic 14.D.2. Currently, the Company does not have sufficient experience to provide a reasonable estimate of an expected term of its common stock options. The Company will continue to use the “simplified method” until there is sufficient experience to provide a more reasonable estimate in conformance with ASC 718-10-30-25 through 30-26. The risk-free interest rate assumptions were based on the U.S. Treasury bond rate appropriate for the expected term in effect at the time of grant. For stock options granted after December 31, 2021, the expected volatility is based on the volatility of shares of the Company. For stock options granted prior to January 1, 2022, the expected volatility is based on calculated enterprise value volatilities for publicly traded companies in the same industry and general stage of development. The estimated forfeiture rates were based on historical experience for similar classes of employees. The dividend yield was based on expected dividends at the time of grant.
The fair value of the underlying common stock and the exercise price for the common stock options granted during the year ended December 31, 2023 is summarized in the table below. No options were granted during 2024.
Common Stock Options Granted During Period Ended: Fair Value of Underlying Common Stock Exercise Price of Common Stock Option
Year ended December 31, 2023 $1.58;
weighted avg. $1.58
$1.58;
weighted avg. $1.58
The weighted-average grant date fair value of common stock options granted in the years ended December 31, 2023 was $6.30 per common stock option, respectively.
A summary of common stock option activity as of the periods indicated is as follows:
Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands)
Outstanding - December 31, 2022 44,567 $ 23.70 7.5 $ -
Granted 2,000 7.90
Forfeited (44,140) 27.00
Outstanding - December 31, 2023 2,427 $ 21.40 5.4 $ -
Forfeited (84) 27.55
Outstanding - December 31, 2024 2,343 $ 27.55 4.4 $ -
Exercisable - December 31, 2024 2,343 $ 27.55 4.4 $ -
Vested and Expected to Vest -
December 31, 2024 2,343 $ 27.55 4.4 $ -
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
A summary of restricted stock unit activity of the periods indicated is as follows:
Restricted Stock Units Weighted-Average Grant Date Fair Value
Unvested balance - December 31, 2022 4,177 $ 63.25
Granted 59,198 5.10
Vested (61,805) 9.55
Forfeited (961) 72.90
Unvested balance - December 31, 2023 609 $ 52.05
Granted - -
Vested (237) 92.94
Forfeited (84) 17.25
Unvested balance - December 31, 2024 288 $ 47.93
The grant date fair value of restricted stock units is based on the Company’s closing stock price at the date of grant. At vesting, each outstanding restricted stock unit will be exchanged for one share of the Company’s common stock. The restricted stock units granted in the past generally vest evenly on a quarterly basis over a period of 4 years in exchange for continued service provided by the restricted stock unit recipient during that vesting period.
A summary of performance-based restricted stock unit activity of the periods indicated is as follows:
Restricted Stock Units Weighted-Average Grant Date Fair Value
Unvested balance - December 31, 2022 97,643 $ 3.45
Settled (97,643) 1.91
Unvested balance - December 31, 2023 - $ -
Unvested balance - December 31, 2024 - $ -
The grant date fair value of performance-based restricted stock units is based on the Company’s closing stock price at the date of grant. At vesting, each outstanding restricted stock unit will be exchanged for one share of the Company’s common stock. Certain performance metrics must be met by the performance measurement date in 2023 in order for the performance-based restricted stock units granted during 2022 to vest as follows: one-third on May 16, 2023, one-third on May 16, 2024, and one-third on May 16, 2025, in exchange for continued service provided by the performance-based restricted stock unit recipient during that vesting period.
Repricing of Outstanding and Unexercised Options
On March 24, 2022, the Board unanimously approved the repricing of all outstanding and unexercised stock options granted under the 2015 Plan and 2017 Plan (the “Plans”) and held by current employees, executive officers, and directors of the Company (the “Eligible Stock Options”). Effective April 1, 2022, the exercise price of the eligible stock options was reduced to $5.51, the closing price of its common stock on April 1, 2022. Except for the modification to the exercise price of the Eligible Stock Options, all other terms and conditions of each of the Eligible Stock Options will remain in full force and effect.
Pursuant to the Plans, the Board, as the administrator of the Plans, has discretionary authority, exercisable on such terms and conditions that it deems appropriate under the circumstances, to reduce the exercise price in effect for outstanding options under the Plans. In approving the repricing, the Board considered the impact of the current exercise prices of outstanding stock options on the incentives provided to employees and directors, the lack of retention value provided by the outstanding stock options to employees and directors, and the impact of such options on the capital structure of the Company. As of March 24, 2022, there were 46,645 stock options outstanding under
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
the Plans, and all of the Company’s outstanding stock options had exercise prices in excess of the current fair market value of the Company’s common stock as of March 24, 2022, which is why the Board made the determination to deem all outstanding and unexercised stock options held by current employees, executive officers, and directors as Eligible Stock Options.
9. Segment Reporting
The Company manages our business activities on a consolidated basis and operate as a single operating segment: Biotechnology. Our revenue this year was solely from one patent license agreement with a private clinical stage biopharmaceutical company. Under the terms of the agreement, this biopharmaceutical company will receive an exclusive license in the field of hepatitis to all of the Company’s relevant patents for $500, see Note 16 for further details. The accounting policies of the Biotechnology segment are the same as those described in Note 2 - Summary of Significant Accounting Policies.
Our CODM is our President and Chief Executive Officer, Andy Yoo. The CODM uses net loss, as reported on our Consolidated Statements of Comprehensive Income, in evaluating performance of the Biotechnology segment and determining how to allocate resources of the Company as a whole. The CODM does not review assets in evaluating the results of the Biotechnology segment, and therefore, such information is not presented.
The following table provides the operating financial results of our Biotechnology segment:
Year Ended
December 31,
2024 2023
Total revenues $ 500 $ -
Significant segment expenses:
Research and development expense - 1,423
General and administrative expense 5,449 11,715
Litigation legal expense 1,562 938
Right-of-use asset impairment loss 5,721 -
Loss from sale of property and equipment - 920
Total operating expenses 12,732 14,996
Interest and dividend income 13 84
Interest expense (18) -
Other income (expense) 2,544 (2)
Total other income (expense) 2,539 (1,918)
Segment net loss $ (9,701) $ (16,914)
10. Income Taxes
Pre-tax loss before income taxes was $9,693 and $16,914 for the years ended December 31, 2024 and 2023, respectively, which consists entirely of losses in the U.S. and resulted in $8 and $0 provision for income tax expense during the years then ended, respectively.
Components for the provision for income taxes consist of the following:
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Year Ended
December 31,
2024 2023
Current
Federal $ - $ -
State and local 8 -
Total current tax expense $ 8 $ -
Provision for income tax expense $ 8 $ -
The differences between income taxes computed using the U.S. federal income tax rate and the provision for income taxes are as follows:
Year Ended
December 31,
2024 2023
Federal income tax expense at statutory rate $ (2,035) 21.0 % $ (3,552) 21.0 %
State income tax expense at statutory rate (672) 6.9 (1,167) 6.9
Permanent differences 14 (0.1) 285 (1.7)
State rate differential 25 (0.3) 72 (0.5)
Change in valuation allowance 2,670 (27.6) (39,891) 236.9
Other 6 - - -
Reduction of worthless attributes - - 44,253 (262.6)
$ 8 (0.1) % $ - - %
The effective tax rate for the year ended December 31, 2024 is attributable to the fact that the Company is subject to state income taxes. The effective income tax rate for the year ended December 31, 2024 was (0.1)% because the Company generated tax losses and provided a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
The significant components of the Company’s net deferred tax assets are as follows:
December 31,
2024 2023
Deferred Tax Assets
Net operating losses $ 3,957 $ 3,145
Capitalized R&D expenses 556 741
Accrued expenses 318 41
Operating lease liability 1,661 1,900
Investment Loss Adjustment 560 570
Less: Valuation allowance (6,920) (4,250)
Total deferred tax assets 132 2,147
Deferred Tax Liabilities
Prepaid expenses (125) (217)
Fixed assets and other (7) (15)
Deferred Rent - (57)
Right-of-use asset - (1,858)
Total deferred tax liabilities (132) (2,147)
Deferred taxes, net $ - $ -
The Company’s effective income tax rate for the year ended December 31, 2024 is (0.1)%. The Company has recorded a full valuation allowance against its deferred tax assets. This determination is based on significant negative evidence, including:
•Cumulative losses: The Company has been in a significant cumulative loss position since its inception in 2011.
•Projected realization of net operating loss carry forward amounts: Projections of future pre-tax book loss and taxable losses based on the Company's recent actual performance and current industry data indicate it is more likely than not that the benefits will not be recognized.
At December 31, 2024, the Company had a federal net operating loss carryforward of $13,951, which are indefinitely lived. At December 31, 2024, the Company had $13,951 of state net operating loss carryforwards, which will begin to expire in 2044.
The Company experienced an “ownership change” within the meaning of Section 382(g) (“Section 382”) of the Internal Revenue Code of 1986, as amended, during the fourth quarter of 2022. In general, the annual use limitation equals the aggregate value of our stock at the time of the ownership change multiplied by a specified tax-exempt interest rate.
The Company determined that at the date of the 2023 ownership change, we had a net unrealized built-in loss (“NUBIL”). The NUBIL was determined based on the difference between the fair market value of our assets and their tax basis as the ownership change date. Because of the NUBIL, certain deductions recognized during the five-year period beginning on the date of the IRC Section 382 ownership change (the “recognition period”) are subject to the same limitation as the net operating loss carryforwards or certain other deductions. As of 2023, the business model has substantially changed which fully limits our ability to recognize these deductions. As the Company disposed of the majority of their operating business, they are subject to a zero limitation under Section 382 of the Internal Revenue Code which makes the net operating losses unusable. Accordingly, the Company has not recorded federal and state net operating losses from prior to ownership change. In December 2024, the Company had another
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
ownership change and a formal analysis was not performed as any further limitation would not have a material impact on the financial statements due to the valuation allowance.
At December 31, 2024 and 2023, the Company had no unrecognized tax benefits. The Company's estimate of the potential outcome of any uncertain tax positions is subject to management's assessment of relevant risks, facts and circumstances existing at that time. The Company evaluates uncertain tax positions to determine if it is more-likely-than-not that they would be sustained upon examination. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes.
The Company is subject to taxation in the U.S. and various state jurisdictions. The Company remains subject to examination by U.S. federal and state tax authorities for the years 2020 through 2024. There are no pending examinations in any jurisdiction.
11. Loss Per Common Share
Basic loss per common share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per common share is calculated using the treasury share method by giving effect to all potentially dilutive securities that were outstanding. Potentially dilutive options, restricted stock units and warrants to purchase common stock that were outstanding during the periods presented were excluded from the diluted loss per share calculation for the periods presented because such shares had an anti-dilutive effect due to the net loss reported in those periods. Therefore, basic and diluted loss per common share is the same for each of the years ended December 31, 2024 and 2023.
The following is the computation of loss per common share for the years ended December 31, 2024 and 2023:
Year Ended
December 31,
2024 2023
Net loss $ (9,701) $ (16,914)
Weighted-average basic and diluted common shares outstanding 2,043,278 1,602,790
Loss per share - basic and diluted $ (4.75) $ (10.55)
The outstanding securities presented below were excluded from the calculation of loss per common share, for the periods presented, because such securities would have been anti-dilutive due to the Company’s loss per share during that period:
December 31,
2024 2023
Options to purchase common stock 2,343 2,427
Restricted stock units 288 609
Performance stock units - -
Warrants to purchase common stock 10,022 10,022
12. Fair Value Measurements
ASC Topic 820, Fair Value Measurement, establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, as follows: Level 1 Inputs - unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date; Level 2 Inputs - other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3 Inputs - unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Cash and cash equivalents were measured using level 1 inputs as of December 31, 2024 and 2023. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the December 31, 2024 and year ended December 31, 2023. The carrying amount of the Company’s receivables and payables approximate their fair value due to their maturity.
13. Defined Contribution Plan
The Company maintains a defined contribution savings plan for the benefit of its employees. Company contributions are determined under various formulas. The expense recognized for this plan was $37 and $119 for the years ended December 31, 2024 and 2023, respectively.
14. Commitments and Contingencies
Legal Proceedings
On December 13, 2021, Mark Colwell filed a putative securities class action lawsuit against the Company, David A. Giljohann and Brian C. Bock in the United States District Court for the Northern District of Illinois, captioned Colwell v. Exicure, Inc. et al., Case No. 1:21-cv-06637. On February 4, 2021, plaintiff filed an amended putative securities class action complaint. On March 20, 2023, the court entered an order appointing James Mathew as lead plaintiff and Bleichmar Fonti & Auld LLP as lead counsel in the action pursuant to the Private Securities Litigation Reform Act of 1995. On May 26, 2023, lead plaintiff filed a second amended complaint against the Company, Dr. Giljohann, Mr. Bock, and Grant Corbett. The second amended complaint alleges that Dr. Giljohann, Mr. Bock, and Dr. Corbett made materially false and/or misleading statements related to the Company’s clinical programs purportedly causing losses to investors who acquired Company securities between January 7, 2021 and December 10, 2021. The second amended complaint does not quantify any alleged damages but, in addition to attorneys’ fees and costs, lead plaintiff seeks to recover damages on behalf of himself and others who acquired the Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result. On October 8, the court granted preliminary approval of the settlement in the securities class action and set a schedule for final approval proceedings, including a final approval hearing on January 13, 2025. On January 13, 2025, the court entered final judgment approving the settlement.
The settlement described above will be fully covered by insurance. However, the settlement will include a reservation of rights by the insurers against the Company for the unsatisfied portion of its self-insured retainer. As a result, the Company recorded an accrual as of September 30, 2024 for the amount of the unsatisfied retainer of approximately $1.1 million needed to bridge the $2.5 million retainer that the Company is liability for under its self-insured retention.
In March and April 2022, three different stockholders filed separate shareholder derivative lawsuits on behalf of the Company against Dr. Giljohann and Mr. Bock, Jeffrey L. Cleland, Elizabeth Garofalo, Bosun Hau, Bali Muralidhar, Andrew Sassine, Matthias Schroff, James Sulat and Timothy Walbert. The cases in the ordered filed are captioned Puri v. Giljohann, et al., Case No. 1:22-cv-01083; Sim v. Giljohann, et al., Case No. 1:22-cv-01217; and Stourbridge Investments LLC v. Exicure, Inc. et al., Case No. 1:22-cv-00526. Complaints in these cases (collectively, the “Derivative Complaints”) assert, among other things, that the Company included false or misleading statements in its proxy statement for its 2021 Annual Meeting of Stockholders, also alleging certain breaches of fiduciary duties. The Derivative Complaints seek contribution from Dr. Giljohann and Mr. Bock under federal securities laws. The Puri and Stourbridge complaints further assert for a variety of related state law claims, including unjust enrichment, abuse of control, gross mismanagement, and corporate waste. Plaintiffs seek restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well stockholder adoption of certain board oversight measures.
On March 18, 2022, James McNabb, through counsel, sent a written demand to the Company (the “Demand Letter”) demanding that the Board of Directors investigate certain allegations and commence proceedings on the Company’s behalf against certain of the Company’s officers and directors for alleged breaches of fiduciary duties
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
and corporate waste. The Derivative Complaints and Demand Letter are currently stayed, and the Company is engaged in settlement discussions with plaintiffs’ counsel regarding these matters.
On October 3, 2023, a former employee filed a complaint against the Company and its executives related to the former employee’s separation from the Company. The parties proceeded with paper discovery and this matter did not settle at an in-person settlement conference on July 17, 2024. As a result, we are in the discovery phase of this litigation. The parties exchanged discovery and a status conference was held on February 11, 2025, wherein opposing counsel asserted alleged various discovery deficiencies. The parties are working through these alleged discovery deficiencies and anticipate deposing the plaintiff as well as witnesses on behalf of the Company and the individual defendants themselves in the coming months.
Leases
Refer to Note 7, Leases, for a discussion of the commitments associated with the Company’s lease agreements.
15. Related-Party Transactions
Pursuant to a Consulting Agreement, effective as of September 25, 2022, between the Company and Alta Companies LTD (“Alta”), the Company paid Alta $218 on February 27, 2023 for a consulting fee earned as a result of the September 2022 PIPE closing. Paul Kang, a director of the Company since February 2023 and former CEO of the Company, is the President of Alta. There were no related party transactions with Alta in 2024. Refer to the subsequent event in Footnote 17.
Also, refer to the Note and the DGP Note in Footnote 6.
16. License and Purchase Agreements
License Agreement
On February 5, 2024, the Company entered into a patent license agreement to develop cavrotolimod for potential treatment for hepatitis with a private clinical stage biopharmaceutical company. Under the terms of the agreement, this biopharmaceutical company will receive an exclusive license in the field of hepatitis to all of the Company’s relevant patents. $500 was paid to the Company after the execution of this agreement. This payment was recognized as revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company will also be entitled to modest royalties on future net sales on all licensed technology during the term of the licensed patents. The Company determined that the amount of variable consideration would be constrained until the period the uncertainty related to the consideration is relieved. This patent license agreement was assigned to, and assumed by, the purchaser pursuant to this purchase agreement, but any royalties would be passed through to the Company.
Purchase Agreement
On September 27, 2024, the Company entered into and closed the sale of certain assets pursuant to an Asset Purchase Agreement (the “Purchase Agreement”). The assets sold to the purchaser consist of the Company’s historical biotechnology intellectual property and other assets and include the Company’s spherical nucleic acid-related technology, research and development programs, and clinical assets (the “Sold Assets”). The Company will receive gross proceeds of $1,500 from the sale of the Sold Assets. The gross proceeds were recognized as other income. The Company will be entitled to royalties and license fees in connection with future sales or licenses derived from the Sold Assets for a period of 10 years as set out in further detail in the purchase agreement. The Company determined that the amount of variable consideration would be constrained until the period the uncertainty related to the consideration is relieved. The Company received $150 in September, $550 in October, and $400 in December. The remaining $400 will be received in March.
Licenses of intellectual property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from consideration allocated to the license when the license is transferred to the customer and the customer is able to
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
use and benefit from the licenses. For licenses that are combined with other promises, the Company utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone payments: At the inception of each arrangement that includes development milestone payments, the Company evaluates the probability of reaching the milestones and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur in the future, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore revenue recognized is constrained as management is unable to assert that a reversal of revenue would not be possible. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. To date, the Company has not recognized any milestone payment revenue from any of its collaboration agreements.
Royalties: For arrangements that include sales-based royalties, including milestone payments based on levels of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its collaboration agreements.
17. Subsequent Events
GPCR Share Purchase Agreement
On January 19, 2025, the Company entered into a Share Purchase Agreement with GPCR Therapeutics Inc, a Korean corporation, (“GPCR”) pursuant to which the Company acquired from GPCR all of the issued and outstanding equity securities of GPCR Therapeutics USA Inc., a California corporation (“GPCR USA”). The transactions contemplated under the Share Purchase Agreement closed concurrently with execution. GPCR USA was, until immediately prior to closing under the Share Purchase Agreement, a wholly owned subsidiary of GPCR. The Company purchased GPCR USA’s six million common shares outstanding for $1.6 million. It is not yet known how much goodwill versus intangibles will be recognized. It is also not yet known the acquisition date fair value of the major classes of consideration transferred.
In connection with the closing of the Share Purchase Agreement, the Company and GPCR entered into a License and Collaboration Agreement (“L&C Agreement”) to further develop and commercialize GPCR’s technologies related to certain intellectual property and patents. The L&C Agreement requires the Company to make milestone payments to GPCR upon the achievement of specific milestone events relating to clinical trials, marketing authorizations, and net sales, as well as for the Company to pay a recurring royalty payment based on 10% of net sales, as set forth in the L&C Agreement.
Termination of Chicago Lease Agreement
On February 14, 2025, the Company executed a Lease Termination Agreement with its landlord effective as of January 31, 2025. As a result of this early termination for the Chicago lease that expired in June 2030, the Company vacated the Chicago office and stopped any further amounts owed to its landlord. There were no additional fees or costs related to the early termination. The Company expects to recognize a $6 million gain in the first quarter of 2025 related to this early termination.
EXICURE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Common Stock Purchase Agreement
On February 14, 2025, the Company entered into a Common Stock Purchase Agreement with Shin Chang Partners and RMS0718 Co., Ltd. (the “Purchasers”), pursuant to which the Company agreed to issue and sell to each of the Purchasers 145,454 shares of the Company’s common stock, par value $0.0001 per share, at a purchase price of $5.50 per share for gross proceeds of approximately $2 million.
Consulting Agreement
Pursuant to a Consulting Agreement, effective as of February 27, 2025, between the Company and Alta, the Company entered into a Consulting Agreement with Paul Kang, a director of the Company since February 2023, and the former CEO of the Company,

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Limitations on Effectiveness of Controls
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness described below.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the guidelines established in Internal Control-Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on the results of its evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2024.
Attestation Report of the Registered Public Accounting Firm
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm as we are a non-accelerated filer as of December 31, 2024.
Material Weakness in Internal Control Over Financial Reporting
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Management identified material weaknesses in the Company’s internal control over financial reporting related to the following:
1.Management’s review of the accounting treatment of non-routine activities.
2.The Company failed to design and implement controls around all accounting and information technology processes and procedures.
These matters have been reviewed with our Audit Committee.
Remediation Plan
We are evaluating the material weakness and are developing a plan of remediation to strengthen the effectiveness of the design and operation of our internal control environment. The remediation plan will include enhancing our review procedures within our accounting department, implementing additional review procedures with respect to accumulation and evaluation of information that is known or knowable to the Company at the time, and applying that information to the applicable accounting guidance. Subject to our ability to obtain additional financing and the results of our review of strategic alternatives, we will also consider whether additional personnel are necessary.
Changes in Internal Control Over Financial Reporting
Other than as described above, there were no changes in our internal control over financial reporting during the year ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
During the quarter ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5- 1 trading arrangement” or “non-Rule 10b5- 1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
Directors
Our Board of Directors is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Any vacancies on our Board of Directors resulting from death, resignation, disqualification, removal or other causes, and any newly created directorships resulting from any increase in the number of directors, shall be filled by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors. Any director elected to fill a vacancy shall hold office for the remainder of the unexpired term in which the vacancy occurred or newly created directorship was created and until such director’s successor shall have been elected and qualified.
Our Board of Directors presently has 7 directors. Andy Yoo, Seung Ik Baik, Ho Jung John, Chang Keun Choi, Minwoo Kang, Sangwook Song, and Dongho Lee. Andy Yoo, Seung Ik Baik, Ho Jung John, Chang Keun Choi, Minwoo Kang, Sangwook Song were delegated to the Board of Directors by HiTron pursuant to its rights under the Subsequent Common Stock Purchase Agreement.
Class III Directors (Term Expires 2026)
Seung Ik Baik, age 39, has served as a member of our Board of Directors since November 2024 and served as CFO and Secretary of the Company since December 2024. Mr. Baik has 17 years of experience in corporate finance, accounting, and private equity. Currently, he is the Chief Strategic Officer at the YooSoo Group, an affiliate of HiTron. Mr. Baik serves as the Independent Director at The Technology, a listed company in South Korea, where he manages partnerships with Korean accounting firms, law firms, financial institutions, and regulatory bodies. His role includes overseeing compliance and regulatory initiatives, supporting strategic growth, and advising the Board and Managing Director on financial performance and organizational development. In addition to his role at The Technology, Mr. Baik has served as General Manager at Balancers Private Equity Fund (PEF) since 2013. Previously, Mr. Baik worked as a Senior Accountant at CYS Chartered Accountants & Business Advisors in Australia, where he prepared financial statements, handled tax compliance, and provided strategic tax planning and business structuring advice to clients. Mr. Baik holds a Master of Commerce in Applied Finance and a Bachelor of Commerce in Accounting from Griffith University, Australia.
Ho Jung John, age 65, has served as a member of our Board of Directors since December 2024. Mr. John is a seasoned executive with over 35 years of leadership experience in various industries, with extensive background in human resource development, strategic management, financial oversight, and global business operations. Mr. John began his career at Korea Telecom Inc. in 1985, serving as a Human Resource Development Manager until 1994, where he contributed to talent development and organizational growth strategies. From 1994 to 2002, he served as the CEO of Status Entertainment Inc., overseeing strategic direction and operations in the entertainment industry. Subsequently, from 2002 to 2008, he was the CEO of Korea Cityplan Partners Co., Ltd. Mr. John held the position of CEO at Australia Cityplan Partners Pty., Ltd. from 2008 to 2018, leading the company’s global operations and strategic initiatives. He joined HiTron in 2023 as Managing Director of Finance and has served as Vice President of Management since July 2024, where he focuses on enhancing organizational structure to foster collaboration and improving business processes to optimize quality and time management. Mr. John graduated from Hankuk University of Foreign Studies with a Bachelor’s degree in Chinese Language, Literature & Culture.
Class I Directors (Term Expires 2027)
Dongho Lee, age 63, has served as a member of our Board of Directors since August 2023. Since 2021, Mr. Lee has served as the President & CEO of Lumios Co. Ltd., a South Korean company that specializes in investment and provides real estate related consulting services to local development projects. He is currently an independent Director and member of the Audit Committee of Quantapia Inc., a renewable energy company listed in South Korea. Mr. Lee began his professional career in finance as a FINRA-licensed financial advisor in asset management in New
York from 1989 and in Korea from 1995. Since 2000, Mr. Lee has served in various corporate executive and management positions, from CEO and CFO to advisor to the board of directors, at various companies in both Korea and the United States. From 2007 to 2011, he was the CSO & SVP of Finance at Englewood Lab Inc., a cosmetics R&D and manufacturing company in Englewood, NJ. From 2012 to 2018, he was the COO of Tchopstix, Inc., a restaurant group in Indianapolis, IN. Mr. Lee graduated from Korea University with a Bachelor’s degree in Business Administration with emphasis in Finance.
Andy Yoo, age 45, has served as a member of our Board of Directors since November 2024 and served as the CEO and President of the Company since December 2024. Mr. Yoo is currently the Chairman and the largest shareholder of HiTron, a listed company in South Korea. Mr. Yoo serves as a member of HiTron’s executive committee, its governing and decision-making body for matters affecting its overall management and strategic direction. Mr. Yoo is also a Managing Director of Balancers Co., Ltd. Previously, Mr. Yoo worked at PKF public accounting practice in Australia, serving most recently as senior accountant, overseeing more than 100 clients and government bodies and professionals across. He also founded CYS public accounting practice and played significant roles on other leadership during his tenure as an accountant. Mr. Yoo holds a Bachelor of Commerce in Accounting from Griffith University, Australia.
Class II Directors (Term Expires 2025)
Chang Keun Choi, age 54, has served as a member of our Board of Directors since December 2024. Mr. Choi is an accomplished executive with over 20 years of experience in the IT service and technology industries, where he has a proven track record of guiding organizations through transformative growth, IPO processes, and international expansion. Since 1998, Mr. Choi has served in various corporate executive, management and advisory roles in various IT service companies, including Freewebmedia (1998 to 2006), Mytrademaster (2007 to 2014), ClumL (2022 to 2024), The Technology (2023 to 2024), and Service Industry Association (2024 to present). He is currently the Founder and CEO of Einsis Inc, one of the fastest-growing TPM service companies in Korea, providing stable and sustainable IT maintenance solutions to customers in the APAC region. Mr. Choi graduated from Korea University with a Bachelor’s degree in Industrial Engineering,
Sangwook Song, age 61, has served as a member of our Board of Directors since December 2024. He is an experienced executive with background in financial services, corporate governance, and strategic management, spanning various industries, including banking, corporate management, and public service. Mr. Song began his career at Donghwa Bank, gaining experience in financial operations and risk management as Manager. He subsequently contributed to the strategic direction and growth of TASTECH Co., Ltd. as Director and oversaw financial audits and ensured regulatory compliance at Credit Counseling and Recovery Service as Lead Auditor. He also played a significant role in legislative support and policy development as Executive Assistant at the National Assembly of the Republic of Korea. Throughout his career, Mr. Song has held several executive positions, including as Representative Director of Nature and Environment Co., Ltd., Everrich Partners, and Gold Pacific and as General Director of Management of Samcheongpartners Co., Ltd. Mr. Song graduated from Pusan National University College of Law with a Bachelor’s degree in Law.
Minwoo Kang, age 47, has served as a member of our Board of Directors since December 2024. Mr. Kang is a Certified Public Accountant with over 17 years of experience in audit, corporate finance, M&A, internal control systems, financial oversight, and regulatory compliance, spanning various industries. He began his career in 2007 at EY Hanyoung Accounting Corporation in the Strategy and Transactions team. Since 2010, he has been with Anse Accounting Corporation, where he conducted comprehensive audits, managed M&A Processes, and performed tax adjustments for major corporations. Mr. Kang holds a Bachelor’s degree in Economics from Korea University.
Executive Officers
The following sets forth information about our executive officers as of March 13, 2025.
Name
Position
Age
Andy Yoo
Chief Executive Officer
Seung Ik Baik Chief Financial Officer 39
Andy Yoo. Biographical information for Mr. Yoo is presented above under the caption “Directors.”
Seung Ik Baik. Biographical information for Mr. Baik is presented above under the caption “Directors.”
Joshua Miller. Mr. Miller is the Chief Accounting Officer, not an Executive Officer, and does not perform any significant policy making functions for the Company.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors, and greater than ten percent stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2024, all Section 16(a) filing requirements applicable to our officers, directors, and greater than ten percent beneficial owners were complied with, except that: a late report on Form 4 was filed by Joshua Miller on March 6, 2024 reporting a transaction dated February 16, 2024; a late report on Form 4 was filed by Mr. Miller on May 23, 2024 reporting a transaction dated May 16, 2024; a late report on Form 4 was filed by Mr. Miller on August 21, 2024 reporting a transaction dated August 21, 2024; a late report on Form 4 was filed by Mr. Miller on November 26, 2024 reporting a transaction dated November 16, 2024; and a late report on Form 3 was filed on December 23, 2024 relating to an initial statement of beneficial ownership of securities by Sangsangin Investment & Securities Co., Ltd., which became an insider on December 12, 2024. Additionally, Andy Yoo, Ik Baik, Ho Jung John, Chang Keun Choi, Sangwook Song, and Minwoo Kang, each a member of our board of directors, have not filed their required Form 3 with the SEC in connection with their appointment to the board.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The Code of Business Conduct and Ethics is available on our website at www.exicuretx.com. If we make any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.
Audit Committee Matters
Our Audit Committee is currently comprised of Minwoo Kang, Chang Keun Choi, and Dongho Lee. Mr. Kang serves as the chairperson of the Audit Committee. Our Board of Directors has determined that all members are “independent” for Audit Committee purposes as that term is defined in the applicable rules of the SEC and Nasdaq rules.
Our Board has determined that Mr. Kang qualifies as an “audit committee financial expert,” as defined under the applicable rules of the SEC.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
Compensation Overview
This section provides a discussion of the total compensation awarded to, earned by, or paid to, during the years ended December 31, 2024 and 2023: (1) the individuals who served as our principal executive officer during the fiscal year ended December 31, 2024, (2) our next two most highly compensated executive officers serving as of December 31, 2024 who earned more than $100,000 during the fiscal year ended December 31, 2024 (of which we had none), and (3) any individual who would otherwise be included in (2) above but for the fact that such individual was not serving as an executive officer of ours as of December 31, 2024. We refer to these individuals in this
prospectus as our named executive officers. Our named executive officers for 2024 who appear in the Summary Compensation Table are:
•Andy Yoo, our Chief Executive Officer;
•Seung Ik Baik, our Chief Financial Officer
•Paul Kang, our former Chief Executive Officer; and
•Jiyoung Hwang, our former Chief Financial Officer
Summary Compensation Table
The following table provides a summary of compensation paid or accrued for the years ended December 31, 2024 and 2023 to our named executive officers, amounts in dollars:
Name and principal position Year Salary
($)
Bonus
($)
All other
compensation
($)
Total
($)
Andy Yoo (1)
Chief Executive Officer
2024 25,000 - - 25,000
Paul Kang (2)
Former Chief Executive Officer
2024 150,000 - - 150,000
2023 50,000 - - 50,000
Seung Ik Baik (3)
Chief Financial Officer
2024 3,611 - - 3,611
Jiyoung Hwang (4)
Former Chief Financial Officer
2024 150,000 - - 150,000
2023 49,432 - - 49,432
(1) Effective December 20, 2024, Mr. Yoo was appointed as Chief Executive Officer, succeeding Mr. Kang.
(2) Effective August 21, 2023, Mr. Kang was appointed as Chief Executive Officer. Effective February 27, 2025. Mr. Kang resigned as Chief Executive Officer.
(3) Effective December 20, 2024, Mr. Baik was appointed as Chief Executive Officer, succeeding Ms. Hwang.
(4) Effective August 28, 2023, Ms. Hwang was appointed as Chief Financial Officer, succeeding Mr. Kim. Effective December 20, 2024, Ms. Hwang resigned as Chief Financial Officer.
Employment Agreements
We had employment agreements with each of our named executive officers who were still serving in their positions at the end of 2024. These employment agreements are described below. Refer to the footnotes to the Summary Compensation Table above with respect to named executive officers who were no longer serving at the end of 2024.
Andy Yoo. We and Mr. Yoo entered into an Employment Agreement dated December 20, 2024. Under the terms of this Employment Agreement, Mr. Yoo’s annual base salary was $300,000.
Paul Kang. We and Mr. Kang entered into an Employment Agreement dated August 28, 2023. Under the terms of this Employment Agreement, Mr. Kang’s annual base salary was $150,000. Refer to the subsequent event in Footnote 17 for consulting agreement entered into in February 2025.
Seung Ik Baik. We and Mr. Baik entered into an Employment Agreement dated December 20, 2024. Under the terms of this Employment Agreement, Mr. Baik’s annual base salary was $130,000.
Outstanding Equity Awards at Fiscal Year-End
Neither Mr. Yoo, Mr. Kang, nor Mr. Baik had any outstanding equity awards, and none of our named executive officers who were not serving with the Company at the end of fiscal 2024 still had any outstanding equity awards.
Defined Contribution Plan
We sponsor a defined contribution plan intended to qualify under Section 401 of the Internal Revenue Code (the “Code”) as a 401(k) plan. Employees who are at least 21 years of age are generally eligible to participate and may enter the plan on the first day of any month following the employment start date. Participants may make pre-tax contributions or Roth 401(k) contributions up to the maximum limit established by the Code. Our 401(k) plan also has a “catch-up contribution” feature for employees aged 50 or older (including those who qualify as “highly compensated” employees) who can defer amounts over the statutory limit that applies to all other employees below age 50. Participant contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participant’s directions. Participants are immediately and fully vested in their contributions. We provide matching contributions under the plan of up to 100% of the first 50% of the participant’s elective contributions.
Director Compensation
Under our director compensation policy, as amended, each of our directors is eligible to receive cash compensation for service on our Board of Directors and committees of our Board of Directors.
2024 Director Compensation
Cash Compensation
Following the closing of the Private Placement in February 2023, each director is entitled to an annual retainer of $20,000. None of our current directors have received any equity grants, and none of our prior directors received equity grants in 2024.
Director Compensation Table
The following table presents information regarding the compensation earned for service by our directors during the year ended December 31, 2024, amounts in dollars.
Name Fees Earned or
Paid In Cash
($) Option
Awards (13)
($)
Total
($)
Paul Kang (1)
20,000 - 20,000
Jiyoung Hwang (2)
20,000 - 20,000
Hyuk Joon (Raymond) Ko (3)
19,194 - 19,194
Dongho Lee (4)
20,000 - 20,000
Hojoon Lee (5)
17,778 - 17,778
Minhee Eom (6)
19,194 - 19,194
Andy Yoo (7)
2,167 - 2,167
Ho Jung John (8)
645 - 645
Chang Keun Choi (9)
645 - 645
Sangwook Song (10)
645 - 645
Minwoo Kang (11)
645 - 645
Seung Ik Baik (12)
2,167 - 2,167
Eui Yull Hwang (13)
2,778 - 2,778
(1) Mr. Kang was appointed to the Board of Directors effective February 24, 2023.
(2) Ms. Hwang was appointed to the Board of Directors effective February 24, 2023 and resigned on February 28, 2025.
(3) Mr. Ko was appointed to the Board of Directors effective August 21, 2023 and resigned on December 17, 2024.
(4) Mr. D. Lee was appointed to the Board of Directors effective August 21, 2023.
(5) Mr. Hojoon Lee was appointed to the Board of Directors effective August 21, 2023 and resigned on November 21, 2024.
(6) Ms. Eom was appointed to the Board of Directors effective September 26, 2023 and resigned on December 17, 2024.
(7) Mr. Yoo was appointed to the Board of Directors effective November 21, 2024.
(8) Mr. John was appointed to the Board of Directors effective December 17, 2024.
(9) Mr. Choi was appointed to the Board of Directors effective December 17, 2024.
(10) Mr. Song was appointed to the Board of Directors effective December 17, 2024.
(11) Mr. Kang was appointed to the Board of Directors effective December 17, 2024.
(12) Mr. Baik was appointed to the Board of Directors effective November 21, 2024.
(13) Mr. Hwang was appointed to the Board of Directors effective September 26, 2024 and resigned on November 21, 2024.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table provides information about the securities authorized for issuance under our equity compensation plans as of December 31, 2024, which as of that date consisted of our 2017 Equity Incentive Plan and 2017 Employee Stock Purchase Plan.
Plan category Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
Weighted-average
exercise price
of outstanding options, warrants and rights
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(a) (b) (c)
Equity compensation plans approved by stockholders 2,631 $ 27.55 134,094 (1) (2)
Equity compensation plans not approved by stockholders - - -
Total 2,631 $ 27.55 134,094
(1) Represents 121,700 and 12,394 shares of common stock available for issuance under the 2017 Equity Incentive Plan and 2017 Employee Stock Purchase Plan, respectively, as of December 31, 2024.
(2) The number of shares of common stock reserved for issuance under the 2017 Equity Incentive Plan automatically increases on January 1 of each year, beginning on January 1, 2020, by the lesser of (i) 30,667 shares, (ii) 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or (iii) a lesser number of shares determined by the Compensation Committee. Effective January 1, 2024, pursuant to the terms of the 2017 Equity Incentive Plan, the number of awards that are reserved and may be awarded under the 2017 Equity Incentive Plan was automatically increased by 30,667 awards. The number of shares of common stock reserved for issuance under the 2017 Employee Stock Purchase Plan automatically increases on January 1 of each year, beginning on January 1, 2018, by the lesser of (i) 10,000 shares of common stock, (ii) 0.3% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or (iii) such lesser number of shares determined by our Board. Effective January 1, 2024, pursuant to the terms of the 2017 Employee Stock Purchase Plan, the number of shares that are reserved and may be issued under the 2017 Employee Stock Purchase Plan was automatically increased by 10,000 shares.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the ownership of our common stock as of March 13, 2025 by: (i) each of our directors; (ii) each of our named executive officers named in the 2024 Summary Compensation Table above; (iii) all of our current executive officers and directors as a group; and (iv) all those known by us to be beneficial owners of more than five percent of our common stock.
Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities, or have the right to acquire such powers within 60 days. Common stock subject to options that are currently exercisable or exercisable within 60 days of Mach 31, 2025 are deemed to be outstanding and beneficially owned by the person holding the options. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them. Percentage ownership calculations are based on 6,317,771 shares outstanding as of March 12, 2025, adjusted as required by rules promulgated by the SEC.
This table is based upon information supplied by our officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Except as otherwise noted below, the address for each executive officer and director listed in the table is c/o Exicure, Inc., 400 Seaport Court, Suite 102, Redwood City, California 94063.
Beneficial Ownership
Beneficial Owner
Greater than 5% Stockholders Number of Shares
Beneficially Owned (#) Percentage of
Common Stock
Beneficially Owned (%)
HiTron Systems, Inc. (1)
3,333,333 52.8 %
DGP Co., Ltd. (2)
424,612 6.7 %
SangSang Investment & Securities Co., Ltd. (3)
433,332 6.9 %
Directors and Named Executive Officers
Dongho Lee - *
Andy Yoo (1)
3,333,333 52.8 %
Ho Jung John (1)
- *
Chang Keun Choi - *
Sangwook Song
- *
Minwoo Kang
- *
Seung Ik Baik (1)
- *
All directors and executive officers as a group (7 persons)
3,333,333 52.8 %
* Indicates beneficial ownership of less than one percent of the outstanding shares of common stock.
(1) Based on information available to the Company, Andy Yoo is the chief executive officer and largest stockholder of HiTron Systems, Inc. (“HiTron”). The Company is also aware that Ho Jung John and Seung Ik Baik are HiTron’s vice president and chief strategy officer, respectively. As a result, each of Mr. Yoo, Mr. John, and Ms. Baik may be deemed to beneficially own the share of our common stock and securities held by HiTron. The address for HiTron is 99-13 Masan-Gil, Miyang-Myeon, Anseong-si, Gyeonggi-do, Korea.
(2) Based on most recent Schedule 13D/A filed by DGP Co., Ltd. on September 16, 2024. Per the Schedule 13D filed June 26, 2023, the address of DGP Co., Ltd. 23, Geurintekeu-ro, Yeonggwang-eup, Yeonggwang-gun, Jeollanam-do, Republic of Korea 57024.
(3) Based on most recent Schedule 13D/A filed by SangSang Investments & Securities Co., Ltd. on December 23, 2024. The address of SangSang is 49F, Parc.1,108, Yeoui-daero, Yeongdeungpo-gu, Seoul, Republic of Korea 07335.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Certain Relationships and Related Party Transactions
Policies and Procedures for Related Party Transactions
Our Board of Directors adopted a written related person transaction policy to set forth the policies and procedures for the review and approval or ratification of related person transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K promulgated under the Exchange Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds or will exceed the lesser of $120,000 or 1% of the average of our total assets as of the end of the last two completed fiscal years and a related person had, has or will have a direct or indirect material interest, including purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. As provided by our Audit Committee charter, our Audit Committee is responsible for reviewing and approving in advance the related party transactions covered by our related transaction policies and procedures.
A related party transaction reviewed under the policy will be considered approved or ratified if it is authorized by the Audit Committee of our Board of Directors or the chairperson of the Audit Committee in accordance with the standards set forth in the policy after full disclosure of the related party’s interests in the transaction. As appropriate
for the circumstances, the Audit Committee or the chairperson of the Audit Committee, as applicable, shall review and consider:
•the related party’s interest in the transaction;
•the approximate dollar value of the amount involved in the related party transaction;
•the approximate dollar value of the amount of the related party’s interest in the transaction without regard to the amount of any profit or loss;
•whether the transaction was undertaken in our ordinary course of business;
•whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party;
•required public disclosure, if any; and
•any other information regarding the related party transaction in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
Related Party Transactions
The following is a description of related party transactions we have entered into since January 1, 2022 with our directors, executive officers and holders of more than 5% of our outstanding voting securities and their affiliates, whom we refer to as our related persons, in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets as of the end of the last two completed fiscal years, other than the compensation arrangements we describe in the sections titled “Director Compensation” and “Executive Compensation” in this Proxy Statement.
CBI USA Private Placement
On September 26, 2022, the Company entered into the Securities Purchase Agreement with CBI USA, pursuant to which the Company agreed to issue and sell to CBI USA in a private placement an aggregate of 680,000 shares of the Company’s common stock at a purchase price of $8.00 per share (the “Private Placement”). CBI USA was already a holder of more than 5% of our outstanding voting securities at the time we entered into the Securities Purchase Agreement as a result of a previous private placement completed in May 2022. The Private Placement closed on February 24, 2023. Since the registration statement was not filed within 90 days following the Closing Date of the Registration Rights Agreement, the Company paid $27 to CBI USA and accrued $191 to DGP pursuant to the liquidated damages provision in this agreement. On February 19, 2025, the Company received a waiver letter from DGP confirming they agreed to waive the outstanding $191 penalty amount owed to DGP.
Paul Kang Consulting Fees
The Company engaged entities controlled by Mr. Kang to provide business development consulting services in 2023. The Company paid the entities controlled by Mr. Kang $0 and $218 for the years ended December 31, 2024 and 2023, respectively, for such services to date. Mr. Kang was not yet serving as a director at the time he was engaged to provide these services.
DGP Promissory Note
On June 3, 2024, the Company executed another promissory note (“DGP Note”) and subsequently received a loan in the amount of $700 from DGP. All principal and accrued interest will be due and payable on the earlier of (i) ten months from the date of this DGP Note or (ii) upon an event of default, at that time, such amounts declared by the investor will become due and payable by Company. Interest will accrue on this DGP Note at 6.0% and is payable at maturity.
On September 11, 2024, the Company executed Debt for Equity Exchange Agreements converting the existing debt and related interest described above into shares of its common stock. The Company exchanged in full satisfaction of the principal and accrued interest obligations on the DGP Note into 237,223 shares of its common stock. As this was considered a troubled debt restructuring with a related party, the difference between fair value and book value was recognized within additional paid in capital.
Independence of the Board of Directors and Controlled Company Exemption
The following current directors were determined to be independent under the applicable Nasdaq standards: Dongho Lee, Chang Keun Choi, and Minwoo Kang. The following former directors who served during 2024 were also determined to be independent under such standards: Hyuk Joon (Raymond) Ko, Minhee Eom, and Eui Yull Hwang.
Following the closing of the private placement to CBI USA in February 2023, we became a “controlled company” under Nasdaq rules. As a result, we were exempt from the requirements that a majority of our Board of Directors be independent and that we have an independent compensation committee and an independent nominating committee or function. Following the consummation of this private placement, our Board of Directors dissolved the Compensation Committee and Nominating and Corporate Governance Committee. In August 2023, CBI USA and its affiliate, DGP Co., Ltd., filed a Schedule 13D/A reporting that they no longer owned 50% of outstanding shares as a result of dilutive issuances, and thus we were no longer a “controlled company” under Nasdaq rules. Thereafter, we reinstated our Compensation Committee and Nominating and Corporate Governance Committee and appointed our three independent directors to those committees in compliance with Nasdaq rules with respect to those committees during 2024. We relied on the phase-in provisions of the Nasdaq rules with respect to the requirement that a majority of our Board of Directors be independent and complied with that requirement within 12 months to prevent losing the “controlled company” status.
Following the closing of the stock purchase agreement to HiTron in December 2024, we again became a “controlled company” by a different company under Nasdaq rules.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services.
Independent Registered Public Accounting Firm Fees and Services
The following table sets forth the aggregate fees billed to us for the years ended December 31, 2024 and 2023 by Marcum LLP, Chicago, Illinois (PCAOB ID: 688), our independent registered public accounting firm for such years.
Year Ended
December 31,
2024 2023
Audit Fees(1)
$ 236,520 $ 432,846
Total Fees $ 236,520 $ 432,846
(1) Audit fees for the fiscal years ended December 31, 2024 and 2023 consist of fees for professional services rendered in connection with the audit of our annual financial statements and review of our quarterly financial statements.
All fees described above were pre-approved by the Audit Committee of the Board of Directors.
Pre-Approval Policies and Procedures
The Audit Committee has adopted policies and procedures for the pre-approval of audit and non-audit services provided by our independent registered public accounting firm. The policy generally requires pre-approval for specified services in the defined categories of audit services, audit-related services and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual explicit case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting.
The Audit Committee will review both audit and non-audit services performed by the independent registered public accounting firm and the fees charged for such services on at least an annual basis. Among other things, the Audit Committee will review non-audit services proposed to be provided by the independent registered public accounting firm and pre-approve such services only if they are compatible with maintaining the independent registered public accounting firm’s status as an independent registered public accounting firm. All services provided by Marcum LLP in 2024 and 2023 were pre-approved by our Audit Committee after review of each of the services proposed for approval.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibit and Financial Statement Schedules.
(a) The following documents are filed as part of this report:
1. Financial Statements
See Index to Financial Statements on page 36 of this Annual Report on Form 10-K.
2. Financial Statement Schedules
All financial statement schedules are omitted because they are not applicable or the required information is included in the financial statements or notes thereto.
3. Exhibits
Exhibit Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File/Reg. Number
3.1 Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on November 15, 2017.
10-K (Exhibit 3.3) 3/11/2021 001-39011
3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Exicure, Inc., effective June 29, 2022.
8-K (Exhibit 3.1) 6/29/2022 001-39011
3.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Exicure, Inc., effective August 27, 2024.
8-K (Exhibit 3.1) 8/26/2024 001-39011
3.4 Amended and Restated Bylaws, as currently in effect.
8-K (Exhibit 3.4) 10/2/2017 000-55764
4.1 Description of Securities
10-K (Exhibit 4.4) 3/10/2020 001-39011
10.1+ 2015 Equity Incentive Plan and forms of awards thereunder, assumed in the Merger.
8-K (Exhibit 10.1) 10/2/2017 000-55764
10.2+ 2017 Equity Incentive Plan and forms of award agreements thereunder.
8-K (Exhibit 10.2) 10/2/2017 000-55764
10.3+ 2017 Employee Stock Purchase Plan.
8-K (Exhibit 10.3) 10/2/2017 000-55764
10.4+ Form of Indemnification Agreement by and between the Company and each of its directors and executive officers.
8-K (Exhibit 10.4) 10/2/2017 000-55764
10.5 Lease Agreement dated as of February 28, 2020 by and between 2430 N. Halsted, LLC and Exicure, Inc.
10-Q (Exhibit 10.1) 5/14/2020 001-39011
10.6 Form of Securities Purchase Agreement, dated May 9, 2022, by and among Exicure, Inc. and the purchaser parties thereto.
8-K (Exhibit 10.1) 5/13/2022 001-39011
10.7 Registration Rights Agreement, dated May 9, 2022, by and among Exicure, Inc. and the purchasers party thereto.
8-K (Exhibit 10.2) 5/13/2022 001-39011
10.8 Securities Purchase Agreement, dated September 26, 2022, by and between Exicure, Inc. and CBI USA.
8-K (Exhibit 10.1) 9/27/2022 001-39011
10.9 Registration Rights Agreement, dated September 26, 2022, by and between Exicure, Inc. and CBI USA.
8-K (Exhibit 10.2) 9/27/2022 001-39011
10.10+ Separation and Release Agreement, dated April 26, 2023, among Exicure, Inc. and Matthias Schroff.
8-K (Exhibit 10.2) 5/2/2023 001-39011
10.11+ Separation and Release Agreement, dated April 26, 2023, among Exicure, Inc. and Elias Papadimas.
8-K (Exhibit 10.3) 5/2/2023 001-39011
10.12 Convertible Bond Subscription Agreement, dated May 3, 2023, among Cyworld Z Co., Ltd. and Exicure, Inc.
8-K (Exhibit 10.1) 5/9/2023 001-39011
10.13 Convertible Bond Subscription Agreement, dated May 16, 2023, among Cyworld Z Co., Ltd. and Exicure, Inc.
8-K (Exhibit 10.1) 5/18/2023 001-39011
10.14+ Separation and Release Agreement, dated May 27, 2023, among Exicure, Inc. and Sarah Longoria.
+ 8-K (Exhibit 10.1) 6/1/2023 001-39011
10.15+ Amended and Restated Employment Agreement, dated May 24, 2023, among Exicure, Inc. and Joshua Miller.
8-K (Exhibit 10.2) 6/1/2023 001-39011
10.16+ Retention Agreement, dated May 24, 2023, among Exicure, Inc. and Joshua Miller.
8-K (Exhibit 10.3) 6/1/2023 001-39011
10.17+ First Amendment to the Separation and Release Agreement of Matthias Schroff, dated June 12, 2023, among Exicure, Inc. and Matthias Schroff.
8-K (Exhibit 10.9) 6/14/2023 001-39011
10.18+ Employment Agreement, dated Aug. 28, 2023, among Exicure, Inc. and Paul Kang
8-K (Exhibit 10.1) 8/23/2023 001-39011
10.19+ Employment Agreement, dated Aug. 28, 2023, among Exicure, Inc. and Jiyoung Hwang
8-K (Exhibit 10.2) 8/23/2023 001-39011
10.20 Debt for Equity Exchange Agreement
8-K (Exhibit N/A) 9/12/2024 001-39011
10.21 Common Stock Purchase Agreement, dated November 6, 2024, by and between Exicure, Inc. and HiTron Systems, Inc.
8-K (Exhibit 10.1) 11/14/2024 001-39011
10.22 Form of Registration Rights Agreement by and between Exicure, Inc. and HiTron Systems, Inc.
8-K (Exhibit 10.1) 11/14/2024 001-39011
10.23 Common Stock Purchase Agreement, dated November 13, 2024, by and between Exicure, Inc. and HiTron Systems, Inc.
8-K (Exhibit 10.1) 11/14/2024 001-39011
10.24 Common Stock Purchase Agreement, dated December 9, 2024, by and between Exicure, Inc. and SangSangIn Investment & Securities Co., Ltd.
8-K (Exhibit 10.1) 12/11/2024 001-39011
10.25 Form of Registration Rights Agreement by and between Exicure, Inc. and SangSangIn Investment & Securities Co., Ltd.
8-K (Exhibit 10.2) 12/11/2024 001-39011
21.1 Subsidiaries of Exicure, Inc.
10-K (Exhibit 21.1) 3/25/2022 001-39011
23.1 Consent of Marcum LLP, independent registered public accounting firm.
X
24.1 Power of Attorney (included on the signature page hereto).
X
31.1 Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2 Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1** Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
97 Compensation Recoupment Policy
X
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X
+ Indicates a management contract or compensatory plan.
* Indicates that portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
** This certification is not deemed filed with the SEC and is not to be incorporated by reference into any filing of Exicure, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Form 10-K), irrespective of any general incorporation language contained in such filing.