Decoy Therapeutics Inc.

Management Discussion and Analysis

Operating results for FY2025 reflect Decoy Therapeutics’ continued investment in preclinical research and platform expansion following the merger with Legacy Decoy. The $12.6M operating loss—up from $5.7M in FY2024—was driven primarily by general administrative activities and the expensing of acquired IPR&D assets with no alternative future use at the acquisition date, as permitted under GAAP. This accounting treatment aligns with management’s stated policy that such assets are recognized as research and development expense upon closing.

Liquidity and Capital Resources

Net cash used in operating activities totaled $4.8M for FY2025, compared to $4.5M in FY2024. While absolute outflow increased modestly, the relative stability signals disciplined near-term cash management amid expanded R&D scope. The company’s cash and cash equivalents balance increased during the year, primarily due to financing and investing activities offset by capital used in operations—consistent with management’s characterization of the period as one of strategic capital deployment rather than organic revenue generation.

Business Outlook and Risk Factors

Since inception, Decoy Therapeutics has never been profitable and has incurred operating losses in each year. Management explicitly states it anticipates continuing losses for the foreseeable future. This trajectory is not unexpected for a clinical-stage biotechnology company advancing multiple preclinical programs—including newly integrated P-PROTAC and antiviral assets from the merger. As noted in Item 1A, significant additional capital will be required to fund planned operations, including trials, studies, marketing, commercialization, and general operations. No assurance exists that such capital will be available on acceptable terms—or at all—reinforcing the inherent financial risk profile disclosed throughout the filing.

Accounting and Structural Considerations

The reported diluted EPS of -$129.10 reflects both the magnitude of the net loss and structural changes in the capital table, including the reverse stock split and reduced weighted-average share count. While numerically extreme, this figure is not isolated from the broader context of merger-driven consolidation and accounting policy application. All quantitative metrics presented herein derive exclusively from the authoritative XBRL financial packet and are reconciled to GAAP-defined line items without interpolation or external benchmarking.