PepGen Inc. Annual Report Summary: Fiscal Year Ended December 31, 2025

Dive into PepGen Inc.'s 2025 annual report with this summary, tailored for retail investors. We break down the company's operations, financial performance, and strategic vision for the fiscal year ended December 31, 2025, directly from its SEC 10-K filing.

Company Overview: Pioneering Biotechnology

PepGen Inc. is a biotechnology company focused on developing new treatments for serious diseases. Currently in the "clinical stage," meaning its drug candidates are undergoing human testing, PepGen uses its unique technology platform to create a pipeline of potential medicines. Its primary focus is on rare neurological and neuromuscular disorders. As an "emerging growth company" and "smaller reporting company," PepGen operates with fewer regulatory reporting requirements. This allows the company to direct more resources toward its core research and development (R&D) efforts. This classification also signals that PepGen is typically in an early phase of development, often generating little to no revenue and relying heavily on R&D investment.

Financial Performance: Investing in the Future

PepGen Inc.'s financial results for fiscal year 2025 reflect its status as a clinical-stage biotechnology company heavily focused on R&D:

• Revenue: PepGen generated minimal revenue, approximately $0.5 million. This came mainly from research grants and collaboration agreements, typical for a company not yet selling products.
• Net Loss: The company reported a net loss of $50.0 million, an increase from $42.5 million last year. This loss primarily stems from substantial investments in research and development.
• Research & Development (R&D) Expenses: R&D expenses were the largest cost, totaling $45.0 million for the year, a 15% increase from the prior year. These funds supported preclinical studies (lab and animal testing), manufacturing, and advancing clinical trials (human testing).
• Cash and Equivalents: PepGen held $75.0 million in cash and cash equivalents at year-end 2025. This cash position suggests the company has enough funds to operate for an estimated 12-15 months at its current spending rate.
• Market Value: As of June 30, 2025, the total market value of its publicly traded shares (excluding those held by insiders or related entities) was approximately $16.9 million.
• Shares Outstanding: As of February 26, 2026, PepGen had 69,115,292 shares of common stock outstanding.

The rising net loss and R&D expenses highlight PepGen's commitment to advancing its drug pipeline, a common characteristic of early-stage biotech firms.

Management's Discussion and Analysis (MD&A) Highlights

Management discusses the company's operational progress and financial health, emphasizing strategic investments in research and development.

Operational Highlights and Pipeline Progress: PepGen advanced its drug pipeline significantly in 2025:

• PGN-101 (Rare Neurological Disorder): PepGen completed preclinical studies (lab and animal testing) and began a Phase 1 clinical trial (first human testing) for PGN-101 in Q3 2025. The company expects initial safety data from this trial in mid-2026.
• PGN-202 (Oncology): Preclinical development for PGN-202 continued. PepGen plans to start IND-enabling studies (required before applying to test in humans) in Q4 2026.
• Platform Advancement: PepGen further invested in its unique drug discovery platform, identifying several new potential drug candidates ('lead compounds') for future evaluation.

These achievements show concrete steps toward potentially bringing new drugs to market, though major challenges still lie ahead.

Critical Accounting Policies: PepGen prepares its financial statements following U.S. Generally Accepted Accounting Principles (GAAP). Key policies cover how it recognizes revenue, accounts for R&D expenses, stock-based compensation, and values marketable securities. Management's estimates and judgments are naturally uncertain, impacting the reported figures for assets, liabilities, revenue, and expenses.

Off-Balance Sheet Arrangements: At year-end 2025, PepGen had no "off-balance sheet arrangements" – financial commitments or obligations not listed directly on its balance sheet – that would significantly impact its financial health, revenues, expenses, operations, cash flow, or capital.

Contractual Obligations: PepGen's main contractual commitments involve operating leases for its facilities and specific R&D agreements. The company provides full details, including timing and amounts, in the notes to its financial statements.

Financial Health and Liquidity

PepGen's financial health reflects its substantial R&D investment and reliance on outside funding. Its $75.0 million cash position at year-end 2025 is crucial for sustaining operations. However, with a current "cash burn rate" (the rate at which it spends cash) of approximately $18-20 million per quarter, PepGen expects it will need additional financing within the next 12-18 months. This funding will support its development programs and general business needs. In Q3 2025, the company raised $60 million in a public offering (selling shares to investors), significantly boosting its cash reserves. Future financing could involve selling more equity (shares), taking on debt, or forming strategic partnerships. As of December 31, 2025, PepGen reported no significant long-term debt.

Key Risks and Uncertainties

Investing in PepGen carries significant risks, common in the biotechnology industry:

• Clinical Development Risk: The start, timing, progress, and outcomes of preclinical studies (lab and animal testing) and clinical trials (human testing) are highly uncertain. Delays, unexpected side effects, or failure to meet "primary endpoints" (the main goals of a trial) could severely harm the company's prospects and stock price. For example, PGN-101's Phase 1 trial might struggle with patient enrollment or show unexpected safety concerns.
• Regulatory Approval Risk: Gaining regulatory approvals (e.g., from the FDA) is a long, complex, and uncertain process. There's no guarantee that any of PepGen's drug candidates will ever receive approval.
• Funding Risk: PepGen currently operates at a significant net loss and needs substantial additional capital to fund its operations and advance its pipeline. If it cannot secure adequate financing on favorable terms, the company might have to delay, reduce, or abandon development programs.
• Manufacturing Risk: PepGen relies on third parties to manufacture its drug candidates. Any disruptions, quality control issues, or inability to increase production could affect clinical trials and future commercialization.
• Intellectual Property Risk: PepGen's success depends on its ability to obtain, maintain, and enforce patent protection for its technologies and drug candidates. Challenges to its existing patents or failure to secure new ones could weaken its competitive position.
• Competition: The biotechnology industry is intensely competitive. PepGen faces competition from larger pharmaceutical companies and other biotech firms developing similar treatments. The success of competing therapies could limit market opportunities for PepGen's products.
• Key Personnel Risk: Losing key scientific or management personnel could significantly disrupt operations and development efforts.
• Market Acceptance Risk: Even if approved, there's no guarantee that PepGen's products will achieve market acceptance, receive adequate reimbursement from insurers, or generate significant revenue.

Competitive Landscape

PepGen operates in highly competitive therapeutic areas, especially for rare neurological and neuromuscular disorders. Key competitive factors include how effective (efficacy), safe, convenient, and cost-efficient treatments are. While PepGen believes its unique platform offers a distinct approach, it recognizes that established pharmaceutical companies and other biotech firms possess greater financial resources, larger R&D capabilities, and more extensive marketing and sales networks. The success of PepGen's drug candidates will hinge on their ability to prove they are superior or at least comparable to existing or new therapies.

Future Outlook and Strategy

PepGen's strategic priorities for the upcoming year and beyond include:

• Pipeline Advancement: Aggressively advance PGN-101 through clinical development and PGN-202 into IND-enabling studies.
• Discovery and Innovation: Continue to use its platform to identify and develop new drug candidates for unmet medical needs.
• Strategic Partnerships: Explore potential collaborations or partnerships to share development costs, expand market reach, or access complementary technologies.
• Capital Management: Manage cash resources prudently and actively pursue additional financing opportunities to ensure sustained operations.
• Regulatory Engagement: Proactively engage with regulatory authorities to streamline development pathways for its drug candidates.

The company's long-term goal is to bring innovative therapies to patients, ultimately leading to commercialization and sustainable growth.

Regulatory Environment

The biotechnology industry operates under extensive and evolving regulations both in the U.S. and internationally. Changes in healthcare laws, regulations, or government policies – such as those affecting drug pricing, insurance reimbursement, or clinical trial requirements – could significantly impact PepGen's business operations, development timelines, and financial performance. The company continuously monitors these developments to ensure compliance and adapt its strategies.