10-K: Exicure Faces Going Concern Doubts Amid Strategic Pivot

Exicure, Inc. reports a net loss of $4.9 million for 2025, continues to explore strategic alternatives, and faces substantial doubt about its ability to continue as a going concern.

Summary

• Exicure has shifted its focus from early-stage biotechnology to exploring broader strategic alternatives, including private company acquisitions, capital raising, and strategic partnerships.
• The company acquired GPCR Therapeutics USA Inc. (GPCR USA) on January 19, 2025, for a total purchase price of $7.881 million, which included $5.246 million in contingent consideration.
• GPCR USA completed its Phase 2 clinical trial for blood cancer patients in January 2026, and Exicure intends to make a $1.0 million milestone payment to GPCR in Q2 2026 in common stock.
• Exicure sold its historical biotechnology intellectual property and other assets in Q3 2024 for $1.5 million, with potential for modest future royalties.
• A wholly-owned South Korean subsidiary, KC Creation Co., Ltd., was formed and subsequently sold on November 24, 2025, resulting in a $98,000 loss on disposal.
• The net loss for the year ended December 31, 2025, was $4.9 million, an improvement from a $9.7 million net loss in 2024.
• Cash and cash equivalents stood at $3.7 million as of December 31, 2025, which management believes is insufficient to fund operations for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern.
• The company received a notice of default and an unlawful detainer complaint for approximately $0.7 million in unpaid rent for its Redwood City office.
• A securities class action lawsuit was settled for $5.625 million, fully covered by insurance, with Exicure paying $1.0 million to satisfy its self-insured retention.
• An agreement in principle has been reached for global resolution of three stockholder derivative lawsuits, with preliminary court approval granted on March 19, 2026.
• Exicure accrued $250,000 for a former employee's breach of contract and unpaid wages claim, with potential for significantly higher liability if Illinois Wage Payment and Collection Act (IWPCA) claims are successful.
• Internal controls over financial reporting were deemed ineffective as of December 31, 2025, due to material weaknesses related to management's review of non-routine activities and control design/implementation.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as highly negative due to the explicit 'going concern' warning, critically low cash reserves, significant legal challenges, and ineffective internal controls, despite a reduced net loss.

Positives

• Net loss decreased from $9.7 million in 2024 to $4.9 million in 2025, representing a 49% reduction.
• Successfully settled a securities class action lawsuit for $5.625 million, with the settlement fully covered by insurance after the company paid its $1.0 million self-insured retention.
• Reached an agreement in principle for global resolution of three stockholder derivative lawsuits, with preliminary court approval granted.
• Regained compliance with Nasdaq listing requirements by filing its Form 10-Q for the period ended March 31, 2025.
• GPCR USA completed its Phase 2 clinical trial in January 2026, a significant milestone for the acquired business.
• Recognized a $6.0 million gain on the early termination of the Chicago Lease.
• Received a waiver for $191,000 in penalty amounts owed to DGP from registration rights agreements.

Negatives

• Substantial doubt exists about the company's ability to continue as a going concern due to insufficient liquidity ($3.7 million cash as of December 31, 2025) and no current revenue source.
• Received a payment demand letter and notice of default for approximately $0.7 million in unpaid rent for the Redwood City office, followed by an unlawful detainer complaint.
• Internal control over financial reporting was not effective as of December 31, 2025, due to material weaknesses in management's review of non-routine activities and the design/implementation of controls.
• The company is unable to redeem a $2.090 million investment in convertible notes receivable as the issuer appears to have closed operations.
• Incurred a $98,000 loss on the sale of its wholly-owned South Korean subsidiary, KC Creation.
• Accrued $250,000 for a former employee's breach of contract claim, with potential for significantly higher liability if IWPCA claims are successful due to accruing monthly interest.
• Experienced significant turnover in board and senior management, with new members having limited experience controlling/governing a U.S. public company.
• The market price of common stock has been, and is likely to continue to be, highly volatile.
• The influence of significant stockholders (HiTron, CBI USA, DGP) could make common stock less attractive to some investors.
• The ability to use net operating loss carryforwards is severely limited due to ownership changes and the cessation of historical business operations, resulting in a zero limitation under IRC Section 382(c).

Risks

• The exploration of strategic alternatives may not be successful, timely, or generate anticipated value for stockholders.
• Inability to obtain substantial additional funding to continue operations and strategic alternatives, particularly given the current lack of a revenue source and substantial doubt about the ability to continue as a going concern.
• Inability to redeem the $2.090 million investment in convertible notes receivable.
• Executive officers and board members have limited experience controlling or governing a U.S. publicly traded company, which could lead to non-compliance with laws and inadequate internal/disclosure controls.
• Potential turnover of senior management and inability to attract and retain qualified personnel could create significant continuity risk and impair the ability to raise capital and execute strategic alternatives.
• The common stock may be delisted from Nasdaq, negatively impacting its price, liquidity, and the company's ability to access capital markets.
• Continued significant operating losses are expected, and the company may never achieve or maintain profitability.
• Internal computer systems, or those of contractors or consultants, may fail or suffer security breaches, leading to operational disruptions, intellectual property compromise, or liability.
• Current operations are concentrated in one location (Redwood City, California), making them vulnerable to events affecting this location and subject to a legal complaint for unpaid rent.
• Failure to maintain proper and effective internal controls could impair the ability to produce accurate financial statements and result in a loss of investor confidence.
• The restatement of prior quarterly financial statements may affect stockholder and investor confidence, harm reputation, and lead to increased costs and legal/regulatory inquiries.
• Failure to comply with European data protection laws, including GDPR, could materially adversely affect the business.
• The influence of significant stockholders could make the common stock less attractive to some investors or otherwise harm its trading price.
• Raising additional funds by issuing securities may cause dilution to existing stockholders, and debt/licensing arrangements may restrict operations or require relinquishing proprietary rights.
• Reduced reporting requirements as a smaller reporting company and non-accelerated filer may make the common stock less attractive to investors.
• Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult and prevent attempts by stockholders to replace management.
• The designation of the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions could limit stockholders' ability to obtain a favorable judicial forum.
• The ability to use net operating loss carryforwards and certain other tax attributes may be limited due to ownership changes and the cessation of historical business operations.
• FINRA sales practice requirements may limit a stockholder's ability to buy and sell the stock due to its low stock price.
• If securities or industry analysts do not publish research or reports, or if they issue an adverse or misleading opinion, the stock price and trading volume could decline.

Future Outlook

Exicure expects to focus its efforts on exploring growth through acquisitions and transactions with potential partners, including in industries unrelated to its historical operations, with a potential focus on Asia. The company will seek additional financing to support these activities, acknowledging that substantial capital is needed due to the lack of a current revenue source. Future financial performance is highly dependent on the success of these strategic alternatives. Exicure anticipates continued significant operating losses and may not achieve profitability. A $1.0 million milestone payment to GPCR in common stock is planned for Q2 2026. The company will continue attempts to redeem a $2.090 million investment in convertible notes receivable, though success is unlikely. In the former employee lawsuit, the company intends to move for partial summary judgment on IWPCA claims, as an unsuccessful motion could lead to significantly higher liability. Remediation plans for material weaknesses in internal controls are being developed, including enhanced review procedures and consideration of additional personnel, contingent on securing financing. New accounting standards (ASU 2024-03, ASU 2025-12, ASU 2025-11) are planned for adoption in fiscal year 2026.

Management Comments

• "Management decided to sell this subsidiary (KC Creation) on November 24, 2025."
• "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."
• "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."
• "Management, after consultation with legal counsel, believes that the resolution of these matters (ordinary course claims) will not have a material adverse effect on the Company's financial position, results of operations, or cash flows."
• "Management believes that this amount (accounts receivable due from KC Creation) will be uncollectable after the sale."
• "Our legal counsel believes we will not be successful in our breach of contract defense and that we will likely settle for no less than $250,000 to $300,000."
• "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."

Industry Context

StockSavvy.ai notes Exicure's pivot from early-stage biotechnology to a broader exploration of strategic alternatives, including acquisitions in unrelated industries, reflects a common trend among struggling small-cap biotech firms seeking new avenues for value creation when their core R&D pipelines falter. The acquisition of GPCR USA, a clinical-stage company focused on blood cancer, indicates a renewed, albeit diversified, interest in the biotech space, potentially leveraging existing public company infrastructure for private entities seeking market access. The emphasis on Asian markets aligns with the influence of its significant Korean investors.

Comparison to Industry Standards

• The company's shift from its original SNA technology platform and R&D halt in 2022, followed by the sale of its historical IP, is a stark contrast to established biotech firms like Regeneron or Amgen, which continuously invest heavily in R&D to maintain robust pipelines.
• The acquisition of GPCR USA and its Phase 2 clinical trial for GPC-100 in Multiple Myeloma patients places Exicure back into a competitive oncology landscape, albeit with a single asset. Larger players like Bristol Myers Squibb (with Abecma) or Johnson & Johnson (with Darzalex) have multiple approved therapies and extensive pipelines in this area, making Exicure's re-entry a high-risk, high-reward strategy.
• The 'going concern' warning and limited cash reserves ($3.7 million) are significantly below industry averages for clinical-stage biotech companies, which typically require substantial capital to fund trials and operations. For instance, a Phase 2 trial can cost tens of millions of dollars, highlighting the urgent need for financing.
• The material weaknesses in internal controls are a governance concern, especially compared to larger, more mature public companies that typically have robust control environments.

Management Changes

Corporate Governance

Legal Proceedings

• **Redwood City Sublease Dispute**: Received a Three Day Notice to Pay Rent or Quit from Dren Bio Management, Inc. on March 3, 2026, demanding approximately $0.7 million in unpaid rent. Dren Bio filed a Complaint for Unlawful Detainer against GPCR USA on March 9, 2026, seeking restitution of premises, forfeiture of sublease, unpaid rent, damages, and attorneys' fees. The company is reviewing the complaint and evaluating defenses.
• **Securities Class Action (Colwell v. Exicure, Inc. et al.)**: The court entered final judgment approving a $5.625 million settlement on January 13, 2025. The settlement was fully covered by insurance, but the company paid $1.0 million on August 13, 2025, to satisfy its self-insured retention obligation.
• **Stockholder Derivative Lawsuits (Puri v. Giljohann, et al.; Sim v. Giljohann, et al.; Stourbridge Investments LLC v. Exicure, Inc. et al.)**: Parties reached an agreement in principle for global resolutions around July 22, 2025. A formal settlement agreement was executed on March 18, 2026, and preliminary court approval was granted on March 19, 2026. A final approval hearing is set for June 2, 2026.
• **Former Employee Breach of Contract Claim**: A complaint was filed on October 3, 2023, for breach of contract and unpaid wages under the Illinois Wage Payment and Collection Act (IWPCA). Legal counsel believes the company will likely settle for $250,000 to $300,000 for the breach of contract, but IWPCA claims (including 5% monthly interest) could significantly increase liability. The company accrued $250,000 as of December 31, 2025. A Final Pretrial Conference is scheduled for June 3, 2026, and the company intends to move for partial summary judgment on the IWPCA claims.

Related Party Transactions

• **CBI USA Private Placement**: CBI USA, a holder of more than 5% of outstanding voting securities, purchased 680,000 shares of common stock at $8.00 per share in a private placement that closed on February 24, 2023.
• **DGP Co., Ltd. (DGP) Registration Rights**: The company paid $27,000 to CBI USA and accrued $191,000 to DGP (a related party) for liquidated damages due to delays in filing registration statements in 2024. DGP subsequently waived the $191,000 penalty on February 19, 2025.
• **Paul Kang Consulting Fees**: The company executed a Consulting Agreement with Alta Companies LTD (controlled by former CEO and director Paul Kang) on February 27, 2025. The company paid Alta $99,000 after execution and began paying $12,500 monthly for transitional consulting services.
• **YOOSOO Co., Ltd. Lease**: KC Creation (a former wholly-owned subsidiary) executed a lease agreement with YOOSOO Co., Ltd., a related party of Exicure HiTron Inc., on May 22, 2025. This lease was terminated prior to the sale of KC Creation.
• **HiTron Stock Purchases**: Exicure HiTron Inc. purchased 433,333 shares for $1.3 million ($3.00/share) on November 12, 2024, and an additional 2,900,000 shares for $8.7 million ($3.00/share) on December 24, 2024. HiTron beneficially owns 25% of outstanding shares as of March 17, 2026. Former CEO Andy Yoo and former CFO Seung Ik Baik may be deemed to beneficially own HiTron's shares.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from future equity raises, potential loss of value due to 'going concern' doubt, continued stock price volatility, and the influence of major shareholders. Potential benefits could arise from successful strategic alternatives or GPCR USA's clinical development.
• **Employees**: Experience uncertainty due to significant turnover in senior management, limited resources, and prior reductions in force. Further reductions are possible if financing is not secured.
• **Creditors**: Face a heightened risk of non-payment due to the 'going concern' doubt and limited liquidity, as evidenced by the ongoing Dren Bio lawsuit for unpaid rent.
• **Customers/Partners**: Uncertainty regarding the company's long-term viability and strategic direction could impact their willingness to engage in new partnerships or licensing agreements, potentially hindering future growth opportunities.

Next Steps

• Continue exploring strategic alternatives, including private company acquisitions, raising additional capital, and strategic partnerships.
• Seek additional financing to support ongoing operations and strategic activities.
• Make a $1.0 million milestone payment to GPCR in Q2 2026 in the form of common stock.
• Continue redemption attempts for the $2.090 million convertible notes receivable.
• Reviewing the unlawful detainer complaint and evaluating available defenses and potential responses.
• A hearing on final approval of the derivative lawsuit settlement is scheduled for June 2, 2026.
• An in-person Final Pretrial Conference for the former employee lawsuit is scheduled for June 3, 2026.
• Intends to move for partial summary judgment on the IWPCA claims in the former employee lawsuit.
• Developing a remediation plan to strengthen internal control over financial reporting, including enhancing review procedures and considering additional personnel.
• Plans to adopt new accounting standards (ASU 2024-03, ASU 2025-12, ASU 2025-11) in fiscal year 2026.

Key Dates

Recommendation

The company explicitly states 'substantial doubt about our ability to continue as a going concern' and has critically low cash reserves ($3.7 million) with no current revenue. This fundamental financial instability, coupled with significant legal challenges (unpaid rent lawsuit, ongoing employee lawsuit with potentially escalating costs), material weaknesses in internal controls, and a history of management turnover, presents an extremely high-risk profile. While strategic alternatives are being explored, there is no assurance of success or sufficient funding. The stock is highly speculative, and the risks far outweigh any potential upside from the acquired GPCR USA asset.

Keywords

Exicure, XCUR, Biotechnology, Strategic Alternatives, Going Concern, GPCR Therapeutics, Clinical Trials, Blood Cancer, Multiple Myeloma, Nasdaq Listing, Corporate Governance, Financial Reporting, Internal Controls, Legal Proceedings, Shareholder Lawsuits, Capital Raise, Dilution, Risk Factors, Executive Compensation, Related Party Transactions, SEC Filing, 10-K