10-Q: Exicure Reports Q3 Loss, Going Concern Doubts Amid Biotech Shift

Exicure, Inc. reported an increased net loss for Q3 2025 and expressed substantial doubt about its ability to continue as a going concern, despite strategic shifts into new biotechnology and entertainment ventures.

Summary

• Exicure, Inc. (XCUR) reported a net loss of $2.437 million for the three months ended September 30, 2025, compared to a net loss of $1.091 million for the same period in 2024.
• For the nine months ended September 30, 2025, the net loss was $2.048 million, an improvement from $2.520 million in the prior year, primarily due to a significant gain on early lease termination.
• Cash and cash equivalents decreased significantly to $4.438 million as of September 30, 2025, from $12.508 million at December 31, 2024.
• The company acquired GPCR Therapeutics USA Inc. on January 19, 2025, for a total purchase price of $7.881 million, including cash, equity, and contingent consideration.
• GPCR USA is conducting a Phase 2 clinical trial for GPC-100 in Multiple Myeloma patients, with administration to 19 patients completed in Q2 2025 and results expected in Q4 2025.
• Exicure formed a South Korean subsidiary, KC Creation Co., Ltd., on March 26, 2025, to pursue collaborations, eco-friendly renewable energy, and Korean entertainment content.
• Operating expenses for the nine months ended September 30, 2025, decreased by 62% to $1.977 million, largely due to a $5.974 million gain on early lease termination of the Chicago office.
• Research and development expenses increased to $2.631 million for the nine months ended September 30, 2025, from $0 in the prior year, reflecting the acquisition of GPCR USA and resumption of R&D activities.
• General and administrative expenses increased by 31% to $5.230 million for the nine months ended September 30, 2025, primarily due to the GPCR USA acquisition and increased professional services.
• The company recognized a $6.0 million gain from the early termination of its Chicago lease effective January 31, 2025.
• 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 obligation.
• Substantial doubt exists about the company's ability to continue as a going concern due to insufficient cash and expected negative cash flows, necessitating additional financing.

Sentiment

Score: 2

Explanation: The company faces severe liquidity issues with substantial doubt about its ability to continue as a going concern. While there are strategic shifts and a new clinical asset, the immediate financial health and operational challenges, including material weaknesses in internal controls and a high cash burn, overshadow these potential long-term positives. The diversification into non-biotech areas also introduces significant uncertainty.

Positives

• Net loss for the nine months ended September 30, 2025, improved to $2.048 million from $2.520 million in the prior year, primarily driven by a significant gain on early lease termination.
• The early termination of the Chicago lease resulted in a $6.0 million gain, reducing future lease obligations.
• The acquisition of GPCR Therapeutics USA Inc. introduces a new biotechnology asset with an ongoing Phase 2 clinical trial for GPC-100 in blood cancer patients, with results anticipated in Q4 2025.
• The settlement of the securities class action lawsuit for $5.625 million was fully covered by insurance, limiting the company's direct financial impact to its $1.0 million self-insured retention.
• The company successfully raised $1.6 million through common stock purchase agreements in February 2025.
• The formation of KC Creation Co., Ltd. in South Korea aims to diversify business lines into eco-friendly renewable energy and Korean entertainment content, potentially enhancing long-term value and brand synergy.

Negatives

• Cash and cash equivalents significantly decreased from $12.508 million at December 31, 2024, to $4.438 million at September 30, 2025.
• Net loss for the three months ended September 30, 2025, increased to $2.437 million from $1.091 million in the prior year.
• Net cash used in operating activities increased substantially to $7.408 million for the nine months ended September 30, 2025, compared to $2.065 million in the prior year.
• The company has no revenue for the three and nine months ended September 30, 2025, compared to $500 thousand in revenue for the nine months ended September 30, 2024.
• General and administrative expenses increased by 31% for the nine months ended September 30, 2025, due to the GPCR USA acquisition and increased professional services.
• The company accrued $484 thousand in liquidated damages due to delays in filing registration statements for common stock purchasers.
• A material weakness in internal control over financial reporting was identified related to management's review of non-routine activities and the design/implementation of controls around accounting and IT processes.

Risks

• Substantial uncertainties exist regarding the exploration of strategic alternatives, including the ability to identify partners, consummate transactions, obtain sufficient funding, and generate stockholder value.
• The company's ability to raise additional capital is needed to fund operations and strategic alternatives, particularly given the current lack of a revenue source and substantial doubt about its ability to continue as a going concern.
• Risk of delisting from The Nasdaq Capital Market due to inability to maintain minimum stockholders' equity, stock price, and comply with governance requirements.
• Any strategic plan or alternative may involve unexpected costs, liabilities, delays, and may not deliver anticipated benefits to stockholders.
• Estimates of expenses, cash use, future cash needs, ongoing losses, and capital requirements may prove inaccurate.
• Uncertainty about investor and business partner reaction to recent changes in control, board, and management composition, and the ability of new leadership to earn confidence despite limited experience with U.S. public companies.
• Potential turnover of senior management in the near term and inability to attract/retain qualified personnel could create continuity risk and impair capital raising and strategic execution.
• Challenges in complying with all applicable laws, especially with recent turnover, reductions in force, limited resources, and potential entry into new business areas.
• Difficulty for investors to assess operations primarily within subsidiaries whose performance is consolidated.
• Ability to obtain and maintain intellectual property protection for technologies and operate without infringing others' IP rights.
• Impact of macroeconomic conditions, including global inflation, central bank actions, capital market/bank instability, exchange rate fluctuations, supply chain disruptions, energy/fuel prices, and geopolitical events (Ukraine, Russia, Middle East conflicts).
• Impact of government laws and regulations (taxes, tariffs) and political events (federal government shutdown).

Future Outlook

The company expects to incur significant expenses and negative cash flows for the foreseeable future. Management believes existing cash and cash equivalents are insufficient to fund operations for the next 12 months, raising substantial doubt about its ability to continue as a going concern. Additional financing is needed to fund ongoing operations, support GPCR USA, and explore strategic alternatives. The company aims to announce clinical trial results for GPC-100 during the fourth quarter of 2025 and is evaluating the impact of new tax legislation (OBBBA) on its financial statements.

Management Comments

• 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 its ongoing operations, support of GPCR USA's operations, and exploration of strategic alternatives and pursuing any alternatives that management identifies.
• If we are unable to raise capital, the Company may seek bankruptcy protection and/or cease operations in the near term, which may result in the Company's stockholders receiving no or very little value in respect of their shares of the Company's common stock.
• We expect to seek financing through equity offerings. However, it may be difficult to obtain financing given the Company's current condition and uncertainty over its future direction.
• The remediation plan for material weaknesses in internal control will include enhancing review procedures within the accounting department, implementing additional review procedures, and considering additional personnel.

Industry Context

Exicure is undergoing a significant transformation, shifting from its historical early-stage biotechnology focus (which involved suspending R&D and selling IP) to a diversified strategy. The acquisition of GPCR USA re-establishes a presence in clinical-stage biotechnology, specifically in blood cancer, aligning with ongoing innovation in targeted therapies. Simultaneously, the formation of KC Creation to pursue eco-friendly renewable energy and Korean entertainment content represents a radical departure from its biotech roots, indicating a broad pivot to non-traditional areas for a publicly traded biotech company. This diversification strategy is unusual and could be seen as an attempt to find new revenue streams given the challenges in its original sector, but it also introduces significant execution risk in unfamiliar industries.

Comparison to Industry Standards

• The company's current cash position of $4.438 million and substantial negative cash flow from operations ($7.408 million for nine months) are significantly below the liquidity and operational efficiency typically seen in established clinical-stage biotechnology companies, which often require substantial capital to fund trials.
• The diversification into eco-friendly renewable energy and Korean entertainment content is highly unconventional for a company previously focused on nucleic acid therapies, making direct comparisons to industry standards difficult. This strategy deviates sharply from the focused R&D pipelines of typical biotech firms like Moderna (mRNA vaccines) or Regeneron (antibody therapies).
• The identified material weaknesses in internal control over financial reporting are a concern, as robust internal controls are a standard expectation for public companies, especially those in complex, regulated industries like biotechnology.
• The ongoing Phase 2 clinical trial for GPC-100 in Multiple Myeloma patients, while a positive step, is still in early stages. Successful completion and positive results would be a key benchmark, but many biotech companies face high attrition rates in clinical development. For example, companies like Bristol Myers Squibb or Johnson & Johnson have extensive oncology pipelines with multiple drugs in late-stage trials or on the market, setting a high bar for clinical success and commercialization.

Management Changes

Corporate Governance

Legal Proceedings

• A securities class action lawsuit (Colwell v. Exicure, Inc. et al.) was settled for $5.625 million, with final judgment entered 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.
• Three related stockholder derivative lawsuits and a demand letter are subject to an agreement in principle for global resolutions, reached around July 22, 2025, pending formal agreement and court approval.
• A former employee filed a breach of contract complaint on October 3, 2023, which remains pending. Discovery is ongoing with depositions scheduled for November and December 2025, and the company intends to prepare a motion for summary judgment if settlement efforts fail.

Related Party Transactions

• On February 27, 2025, the company executed a Consulting Agreement with Alta Companies LTD, whose President, Paul Kang, was a former director and CEO of Exicure. The company paid Alta $99 thousand initially and $12.5 thousand monthly.
• KC Creation Co., Ltd. (a wholly-owned subsidiary) executed a lease agreement on May 22, 2025, with YOOSOO Co., Ltd., a related party of Exicure HiTron Inc. This is a 'Jeonse type' lease with no lease payments, only a security deposit and monthly maintenance fee.
• In 2024, the company received a $700 thousand loan from DGP Co., Ltd. (a related party) via a promissory note, which was later converted into common stock shares on September 12, 2024.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from potential future equity offerings and the possibility of receiving 'no or very little value' if the company cannot raise capital and seeks bankruptcy protection. The stock price is likely to be negatively impacted by the going concern warning and operational challenges.
• **Employees**: The company previously underwent a significant reduction in force in 2022. The current financial instability and potential for further restructuring or cessation of operations pose job security risks.
• **Customers/Partners**: GPCR Therapeutics Inc. (the licensor and former parent of GPCR USA) and other potential partners may face uncertainty regarding Exicure's long-term viability and ability to fulfill collaboration agreements, especially given the contingent consideration structure.
• **Creditors**: The 'going concern' warning indicates increased risk for current and future creditors, as the company's ability to meet its obligations is in doubt.
• **Regulatory Authorities**: The identified material weaknesses in internal control over financial reporting will require close monitoring and remediation efforts to ensure compliance with SEC regulations.

Next Steps

• Announce clinical trial results for GPC-100 during the fourth quarter of 2025.
• Complete discovery and schedule a settlement conference for the former employee breach of contract complaint, with potential motion for summary judgment if not resolved.
• Continue evaluating the material weakness in internal control over financial reporting and implement a remediation plan, including enhancing review procedures and potentially hiring additional personnel.
• Seek additional financing, primarily through equity offerings, to fund ongoing operations and strategic alternatives.
• Continue exploration of strategic alternatives to maximize stockholder value.

Key Dates

Recommendation

The filing presents a dire financial situation, explicitly stating 'substantial doubt about our ability to continue as a going concern' due to rapidly depleting cash reserves ($4.438 million) and significantly increased cash burn from operations ($7.408 million for nine months). While the company has acquired a clinical-stage asset (GPCR USA) and is attempting diversification, these efforts are nascent and highly speculative, especially given the lack of current revenue and the significant execution risks in unfamiliar industries like entertainment and renewable energy. The identified material weaknesses in internal controls further compound the operational and financial risks. The explicit warning of potential bankruptcy protection or cessation of operations, leading to 'no or very little value' for stockholders, makes this a strong sell recommendation for any existing holdings, and certainly not a buy or hold for new investors.

Keywords

Biotechnology, SEC Filing, 10-Q, Going Concern, Clinical Trial, GPC-100, Multiple Myeloma, GPCR Therapeutics, Strategic Alternatives, Capital Raise, Nasdaq Listing, Corporate Governance, Internal Controls, South Korea, Entertainment Content, Renewable Energy