Forte Biosciences, Inc.

Forte Biosciences, Inc. is a clinical-stage biopharmaceutical company focused on developing FB102, a proprietary anti-CD122 monoclonal antibody therapeutic candidate with potential applications across broad autoimmune and autoimmune-related indications. The company's business model is centered on the research and development of this single lead product candidate, with revenue generation anticipated from product sales, royalties, license fees, milestones, or other upfront payments if collaborations or license agreements are established in the future. As of December 31, 2025, Forte Biosciences had approximately $77.0 million ¹ in cash and cash equivalents.

The core of Forte Biosciences' business revolves around FB102, an anti-CD122 monoclonal antibody. CD122 is a subunit of IL-2/IL-15 receptors, which are key regulators of NK cells and certain T cell subsets. In mechanistic in-vitro studies, FB102 significantly inhibited the proliferation of T cells (4-5x inhibition) and NK cells (6-8 fold inhibition) and also inhibited T cell activation, with inhibition levels comparable to unstimulated cells. Human donor regulatory T cell (Treg) studies stimulated with IL2 showed comparable proliferation in the presence and absence of FB102. In 4- and 13-week non-human primate (NHP) studies, a single dose of FB102 demonstrated significant reductions in the NK cell pharmacodynamic marker (up to approximately 80%-90% ²). Multiple doses at human therapeutic exposures resulted in Treg levels similar to vehicle, supporting the in-vitro data and mechanism of action.

Forte Biosciences is actively developing FB102 for multiple indications. Following the successful completion of Phase 1 healthy volunteer cohorts, a patient-based Phase 1b trial in celiac disease was initiated in the third quarter of 2024, and a patient-based Phase 1b trial for non-segmental vitiligo began in the first quarter of 2025. In June 2025, positive data from the celiac disease Phase 1b study were announced, showing a statistically significant benefit on the composite histological VCIEL endpoint (mean change from baseline of -1.849 for placebo subjects compared to 0.079 for FB102 treated subjects ³, p=0.0099 ⁴). The change in CD3-positive T cells (IELs) from baseline was an increase of 13.3 for placebo subjects compared to a decline of 1.5 for FB102 treated subjects ⁵ (p=0.0035 ⁶). The mean change in the Vh:Cd ratio from baseline was -0.173 (0.21) for placebo subjects compared to -0.046 (0.09) ⁷, representing a 73% ⁸ improvement for FB102 treated subjects. Gluten challenge induced GI symptoms showed a 42% ⁹ benefit for FB102 treated subjects (4.0 events per subject) compared to placebo (6.9 events per subject) ¹⁰. No dose-limiting toxicities or Grade 3 or higher SAEs were reported in the FB102 arm across trials.

For the fiscal year ended December 31, 2025, Forte Biosciences reported total operating expenses of $70.657 million ¹¹, resulting in a loss from operations of $70.657 million ¹². Interest income for the year was $2.715 million ¹³, while other expense, net, was $0.396 million ¹⁴. The net loss before taxes was $68.338 million ¹⁵, and income tax expense was $1.037 million ¹⁶, leading to a net loss of $69.375 million ¹⁷. Diluted EPS for the year was $(4.71) ¹⁸. As of December 31, 2025, the company had cash and cash equivalents of $76.957 million ¹⁹. Total liabilities were $21.788 million ²⁰, and total stockholders' equity was $60.991 million ²¹.

Comparing fiscal year 2025 to 2024, research and development expenses increased significantly to $58.247 million ²² in 2025 from $21.193 million ²³ in 2024, an increase of $37.054 million ²⁴. This was primarily driven by a $36 million ²⁵ increase in manufacturing and clinical expenses for the Phase 2 celiac disease trial and Phase 1b trials for vitiligo and alopecia areata, and a $0.4 million ²⁶ increase in discovery work, along with a $1.9 million ²⁷ increase in personnel-related expenses. General and administrative expenses decreased to $12.410 million ²⁸ in 2025 from $15.409 million ²⁹ in 2024, a decrease of $2.999 million ³⁰, mainly due to a $6.1 million ³¹ decrease in professional and legal advisory fees, partially offset by a $3.0 million ³² increase in personnel-related expenses, including $2.5 million ³³ in non-cash stock-based compensation. Interest income increased by $1.401 million ³⁴ due to higher average cash and cash equivalents balances.

Significant operational developments during the period include the successful completion of the Phase 1 healthy volunteer cohorts for FB102, leading to the initiation of a patient-based Phase 1b trial in celiac disease in Q3 2024 and a Phase 1b trial for non-segmental vitiligo in Q1 2025. Positive data from the celiac disease Phase 1b study were announced in June 2025, which subsequently led to the initiation of a Phase 2 celiac study in July 2025. The US FDA approved the IND application for a US arm of the Phase 2 celiac study in November 2025. Additionally, a Phase 1b alopecia areata study was initiated. The company also completed a public offering in June 2025, selling 5,630,450 ³⁵ shares of common stock at $12.00 ³⁶ per share and pre-funded warrants for 619,606 ³⁷ shares at $11.999 ³⁸ per pre-funded warrant, generating gross proceeds of $75.0 million ³⁹. The underwriters exercised their option in July 2025, purchasing an additional 148,258 ⁴⁰ shares for gross proceeds of $1.8 million ⁴¹.

Management explicitly states that the company expects to incur operating losses in the foreseeable future as it further develops FB102, which is currently in clinical development in two Phase 1b and one Phase 2 clinical trials. The company believes its existing cash and cash equivalents of approximately $77.0 million ⁴² as of December 31, 2025, will be sufficient to fund operations for at least 12 months from the filing date of this Form 10-K. However, significant additional funding will be required in the future to carry out all planned research and development activities, regulatory activities, any substantial additional development requirements requested by the FDA, and to commercialize product candidates.

The primary growth area for Forte Biosciences is the continued development of its lead product candidate, FB102, for various autoimmune and autoimmune-related indications. The company initiated a Phase 2 celiac study in July 2025, with topline readout expected in 2026. The US FDA approved the IND application for a US arm of this Phase 2 celiac study in November 2025. Furthermore, the Phase 1b non-segmental vitiligo trial is expecting topline data in the first half of 2026, and a Phase 1b alopecia areata study has been initiated with topline data also expected in 2026. Beyond these, FB102 is believed to have potential applications in type 1 diabetes (T1D).

Operationally, the company anticipates research and development expenses to continue increasing in the future as FB102 advances through the celiac Phase 2 trial, including its US arm, and multiple Phase 1b clinical trials, and if additional autoimmune indications are pursued. General and administrative expenses may fluctuate due to professional and advisory fees as the company builds out its infrastructure to support these clinical advancements. The company has outsourced the manufacturing of FB102 to third-party contract manufacturing organizations (CMOs) and preclinical/clinical development to clinical research organizations (CROs).

Regarding capital allocation, Forte Biosciences filed a new shelf registration statement on Form S-3 in March 2025, which became effective in April 2025, for the issuance of up to $300.0 million ⁴³ in securities. In June 2025, a public offering was closed, generating gross proceeds of $75.0 million ⁴⁴ from the sale of 5,630,450 ⁴⁵ shares of common stock and 619,606 ⁴⁶ pre-funded warrants. In July 2025, the underwriters exercised their option, purchasing an additional 148,258 ⁴⁷ shares of common stock for gross proceeds of $1.8 million ⁴⁸. The company expects to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, and other marketing or distribution arrangements.

Management has explicitly flagged several structural headwinds and execution risks. The company's future capital requirements and the period for which existing resources will support operations may vary significantly, and additional capital will be required to complete FB102's clinical development. The company does not have committed external sources of funds and cannot be certain that additional funding will be available on acceptable terms or at all. If additional funds are raised through equity, existing investors' ownership will be diluted. Debt financing may impose restrictive covenants. Collaborations may require relinquishing valuable rights or granting unfavorable licenses. The company's ability to raise additional funds may be adversely impacted by worsening global economic conditions, disruptions to credit and financial markets, trade policies, military conflicts, and inflationary pressures. If unable to raise sufficient capital, the company may have to delay, scale back, or discontinue development or commercialization of FB102 or other initiatives.

Geographic, regulatory, and macro factors also pose constraints. The company's Australian subsidiary conducts R&D activities, including clinical trials, and benefits from an R&D cash rebate. There is a risk that if the company is ineligible for or unable to receive this rebate, or if past rebates are deemed ineligible, or if the Australian government reduces or eliminates the rebate, business and results of operations could be adversely affected. Furthermore, the company's ability to successfully monitor or conduct clinical trials and R&D activities in Australia due to geographic distance is a concern, and there is no assurance that results from Australian trials will be accepted by the FDA or other foreign authorities. Changes in the legal and regulatory environment, including FDA regulations, could limit future business activities, increase operating or regulatory costs, reduce demand for product candidates, or result in litigation. The U.S. Supreme Court's overruling of the Chevron doctrine in Loper Bright Enterprises v. Raimondo in June 2024 may invite lawsuits against the FDA, potentially leading to uncertainties and disruptions in the industry and regulatory review processes. The Inflation Reduction Act of 2022, which includes prescription drug provisions allowing the federal government to negotiate prices for certain high-priced Medicare drugs and imposing inflation rebates, could significantly impact the pharmaceutical industry and the company's ability to set adequate pricing for new drugs. The GENEROUS Model, a voluntary initiative by CMS, could also lead to further pressure on drug prices.

Forte Biosciences faces material risks including the requirement for significant additional capital to fund operations, with existing cash and cash equivalents of $77.0 million ⁴⁹ as of December 31, 2025, projected to last only through at least twelve months from the Form 10-K filing date. The business is almost entirely dependent on the success of FB102, which is still in clinical development, and early preclinical and clinical trial results may not be predictive of later-stage success. The company has a limited operating history and has incurred net losses in every year since inception, with a net loss of $69.375 million ⁵⁰ for the year ended December 31, 2025, and an accumulated deficit of $223.4 million ⁵¹. Clinical development is a lengthy and expensive process with uncertain outcomes, and delays or failures could occur at any stage. Significant adverse events or an unfavorable safety profile in clinical trials could inhibit regulatory approval or market acceptance. The market opportunities for FB102 may be limited, and estimates of target patient populations may be inaccurate. The company faces intense competition from larger, more resourced life sciences companies. Even if approved, FB102 may fail to achieve market acceptance. Operations could be adversely impacted by public health emergencies or other disruptions, and the company will need to grow its organization, which may be difficult to manage. Loss of key management personnel or failure to recruit skilled personnel could impair development efforts. Internal computer systems or those of third-party contractors may suffer security breaches, leading to data loss or operational disruptions. Employee misconduct, including noncompliance with regulatory standards, poses a risk. International operations expose the company to differing regulatory requirements, economic instability, and compliance challenges. Failure to obtain and maintain patent protection for FB102 could allow competitors to commercialize similar products. Third-party claims of intellectual property infringement could prevent or delay commercialization, and litigation is expensive and time-consuming. The company relies heavily on third parties for preclinical studies, clinical trials, and manufacturing, increasing risks of delays or insufficient supply. Unstable market and economic conditions, including military conflicts and financial institution failures, could adversely affect the business and stock price. Changes in U.S. trade policy, such as tariffs, could increase material costs. The company's Australian subsidiary's R&D tax rebates are subject to review and potential reduction or elimination. Noncompliance with Nasdaq's minimum bid price requirement could lead to delisting, negatively affecting stock price and trading liquidity. Compliance with public company laws and regulations incurs additional costs and demands on management. Anti-takeover provisions in charter documents and Delaware law could make acquisitions more difficult. The company does not anticipate paying cash dividends in the foreseeable future. Future sales of common stock by existing stockholders could cause the stock price to decline.

Management's message to shareholders emphasizes the company's focus on advancing FB102, its current lead product candidate, through clinical development for broad autoimmune and autoimmune-related indications. They highlight the successful completion of Phase 1 healthy volunteer cohorts and the positive data from the Phase 1b celiac disease study, which has led to the initiation of a Phase 2 celiac study in July 2025, with a topline readout expected in 2026. Additionally, Phase 1b trials for non-segmental vitiligo and alopecia areata are underway, with topline data for both also expected in 2026. Management explicitly states that the company expects to incur operating losses in the foreseeable future as it continues these development efforts. They believe that the existing cash and cash equivalents of approximately $77.0 million ⁵² as of December 31, 2025, will be sufficient to fund operations for at least 12 months from the filing date of this Form 10-K, but acknowledge the need for significant additional funding to complete development and commercialization. The strategic priorities for the period ahead are clearly centered on the continued clinical advancement of FB102 across its targeted indications and securing the necessary capital to support these programs.