SAB Biotherapeutics, Inc.: Form 10-Q for the period ended Jun 30, 2026

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Form 10-Q. Some of the information contained in this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. As a result of many factors, including those factors set forth in the section titled “Risk Factors,” our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors.” Please also refer to the section titled “Special Note Regarding Forward Looking Statements.”

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report” or “Form 10-Q”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. In addition, historic results, including results from preclinical studies and clinical trials of SAB-142 and other product candidates; do not guarantee that future research or trials will suggest the same conclusions, nor that historic results referred to herein will be interpreted in the same manner due to future preclinical and clinical trial results or otherwise. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the sections entitled “Risk Factors” in this Quarterly Report, our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and other periodic reports filed with the Securities and Exchange Commission (the “SEC”) and available at https://www.sec.gov/. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as expressly required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

Company Overview

We are a clinical-stage biopharmaceutical company focused on developing multi-specific, high-potency, human immunoglobulin G (hIgG) to treat and prevent immune and autoimmune disorders. Our programs are based on mechanisms of action that have achieved proof-of-concept in clinical trials in indications with significant unmet medical needs. We are focused on developing product candidates for disease targets where a differentiated approach has the greatest potential to be either first-in-class against novel targets or best-in-class against complex targets to treat diseases, including type 1 diabetes (T1D) and other autoimmune disorders. Our lead candidate, SAB-142, targets autoimmune T1D with a disease-modifying therapeutic approach that aims to change the T1D treatment paradigm by delaying onset and potentially preventing disease progression of Stage 3 T1D patients.

Using advanced genetic engineering and antibody science, we developed a proprietary technology which holds the potential to generate additional novel therapeutic candidates utilizing the human immune response, without the need for human donors or convalescent plasma. We believe it is the only technology capable of producing disease-targeted, hIgG in large quantities without human plasma donors.

We have optimized genetic engineering in the development of transchromosomic cattle, or Tc-Bovine™, to produce hIgG. Our engineering of our production platform drives IgG1 production across our pipeline. In addition, this differentiated approach using polyclonal antibodies has no biosimilar pathway, which provides a significant barrier to competitive polyclonal approaches.

Our proprietary platform holds the potential to generate additional novel therapeutic candidates to expand our pipeline, utilizing the human immune response to generate the optimal repertoire of hIgG for drug targets of interest. Our drug development production system is able to generate a diverse repertoire of specifically targeted, high-potency, hIgGs that can bind to multiple sites on targeted immunogens, making them ideally suited to address the complexities associated with many immune-mediated disorders and address a wide range of serious unmet needs in human diseases.

SAB-142: Our Lead Product Candidate

Our wholly owned lead product candidate, SAB-142 is a potentially disease-modifying, redosable immunotherapy in clinical development for the treatment of autoimmune type 1 diabetes (T1D). SAB-142 is a multi-specific, fully human anti-thymocyte globulin (hATG) with a mechanism of action analogous to that of rabbit ATG (rATG). rATG has demonstrated in multiple clinical trials the ability to slow disease progression in patients with new- or recent-onset of Stage 3 T1D. SAB-142, like rATG, directly targets multiple immune cells involved in destroying pancreatic beta cells, including modulation of “bad acting” T-lymphocytes. By stopping immune cells from attacking beta cells, this treatment has the potential to preserve insulin-producing beta cells. The mechanism of action of SAB-142 has been clinically validated in numerous clinical trials with a rabbit anti-thymocyte globulin (rATG). In addition, data from more than 800 human subjects have been treated with antibodies produced by our platform, including in the Phase 1 study of SAB-142, and we have seen no serum sickness rate and no incidence of neutralizing anti-drug antibodies (ADA). We expect this finding to continue through the clinical development of SAB-142.

There is an established regulatory path for T1D indications using the SAB-142 modality. Our regulatory pathway has also been established with the United States Food and Drug Administration (FDA), the United Kingdom Medicines and Healthcare products Regulatory Agency (MHRA), and the Therapeutic Goods Administration (TGA) in Australia. The FDA regulates polyclonal hIgG and monoclonal antibodies (mAbs) differently, as mAbs are regulated through the Center for Drug Evaluation and Research (CDER) while polyclonal antibodies (pAbs) are regulated by the Center for Biologics Evaluation and Research (CBER). CBER has approved more than 30 immunoglobulin products from both human- and animal-derived plasma. Further, CBER is very familiar with our production platform and pAb products. We have navigated three SAB drug products through seven clinical trials with one product having advanced to Phase 3, building our safety database as well as positive efficacy data. As our lead program SAB-142 advances, we intend to expand our pipeline in complementary indications through strategic utilization of our platform.

We received an Investigational New Drug (IND) clearance from the FDA in May 2024 and announced positive topline data from our Phase 1 clinical trial of SAB-142 in January 2025, and December 2025. We initiated our pivotal Phase 2b clinical trial, called the SAFEGUARD study, in Q3 2025 and dosed the first patient in December 2025 with enrollment ongoing across multiple clinical trial sites in U.S., Australia, New Zealand, U.K. and European Union. SAFEGUARD Part A, a dose-ranging study in adult patients, completed enrollment in Q1 2026. SAFEGUARD Part B, a randomized double-blind, placebo-controlled, dose-ranging study, is actively enrolling. Upon Part A and B completion, all patients, including the placebo-control group, with residual beta cells at 12 months are eligible for the 12-month long-term efficacy and safety extension study (Part C).

In March 2026, we announced additional Phase 1 data demonstrating early signals of C-peptide preservation in adult patients with established autoimmune T1D, consistent with SAB-142's anticipated mechanism of action. In April 2026, we presented additional clinical and mechanistic data from our Phase 1 clinical trial of SAB-142 in adult patients with established autoimmune T1D. The Phase 1 T1D cohort included six adult participants (n=6), with four receiving SAB-142 at 2.5 mg/kg (n=4) and two receiving placebo (n=2). Participants ranged in age from 19 to 40 years. All participants with established T1D (Stage 3 T1D diagnosis within 28-40 months at the time of randomization) had residual beta cell function (C-peptide >0.2 nmol/L) and at least one T1D autoantibody at baseline. Phase 1 exploratory efficacy endpoints were measured at the End of Study Day 120 post SAB-142 administration. One placebo participant (n=1) completed through Day 120 as the other placebo participant discontinued early due to personal reasons. The results for SAB-142 highlighted C-peptide preservation, correlated with evidence of T cell exhaustion. Of the four SAB-142-treated participants, three demonstrated a super responder profile with C-peptide levels at or above baseline at Day 120. SAB-142 treated participants showed improved glycemic control, with mean time in range increasing from 73% at baseline to 85% at Day 120, without an associated increase in exogenous insulin use.

In May 2025, we confirmed our intent with the FDA to utilize the data from the SAFEGUARD study as supportive evidence for future regulatory approval. In April 2026, we received written correspondence from the FDA confirming that C-peptide area under the curve (AUC) may serve as a surrogate endpoint for accelerated approval.

Other Immunology Indications

T- and B-cells are multifunctional lymphocytes whose dysregulation was shown to have a central role in the pathogenesis of more than 80 autoimmune diseases, including T1D, systemic lupus erythematosus (SLE), rheumatoid arthritis (RA), multiple sclerosis (MS) and celiac disease. The therapeutic success to date of lymphocyte-mediating therapies in a variety of autoimmune diseases and our in vivo and in vitro pre-clinical and Phase 1 work from SAB-142 in T1D support direct progression into Phase 2 in other autoimmune indications.

Key Developments

In July 2026, Breakthrough T1D awarded a grant to support the investigator‑led Phase 3 clinical trial, called the PRISE‑hATG study, evaluating SAB‑142 in patients with Stage 3 T1D who are between 100 days and two years from diagnosis. We are co-funding the study. The PRISE-hATG study is a registrational clinical trial that could expand the potential future label of SAB-142 to patients with

Stage 3 T1D with onset up to two years from diagnosis.

During Q2 2026, we began construction of a second farm facility in South Dakota to increase manufacturing capacity and establish a redundant herd to support long-term commercial supply for SAB-142.

Components of Results of Operations

Operating Expenses

Research and Development Expenses

Research and development expenses primarily consist of salaries, benefits, incentive compensation, stock-based compensation, laboratory supplies and materials for employees and contractors engaged in research and product development, licensing fees to use certain technology in our research and development projects, fees paid to consultants and various entities that perform certain research and testing on our behalf. We expense all research and development costs in the period in which they are incurred.

We expect to continue to incur substantial research and development expenses as we advance our lead therapeutic candidate through Phase 2 clinical trials and invest in the necessary foundation to support potential commercialization. In addition, we expect to hire additional employees to further research and development and manufacturing activities. As a result, we expect that our research and development expenses will continue to increase in the future and vary from period to period.

General and Administrative Expenses

General and administrative expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our executive, accounting and finance, IT, office administration, legal and human resources functions as well as professional services fees, such as consulting, audit, tax and legal fees, and general corporate costs. We anticipate that general and administrative expenses will increase as we expand our workforce and invest in the advancement of our lead therapeutic candidate in preparation for potential commercialization. Additionally, as our operations grow in complexity and we progress toward potential commercialization, we may incur higher costs related to professional fees, director and officer insurance, and investor relations. We expect these expenses to vary from period to period.

Nonoperating Income (Expense)

Gain (loss) on change in fair value of warrant liabilities

Gain (loss) on change in fair value of warrant liabilities consists of the changes in the fair value of our Preferred Tranche C Warrants, Business Combination Public Warrants and Private Placement Warrants.

Other Income (expense)

Other income primarily consists of income associated with the refundable portion of Australian research and development tax credits and dividend income from non-interest bearing short-term investments.

Interest income

Interest income consists of interest earned on our investments in debt securities, cash, and cash equivalents.

Interest expense

Interest expense consists primarily of interest expense associated with finance lease arrangements.

Results of Operations

The following tables set forth our results of operations for the three months ended June 30, 2026 and 2025 (in thousands):

Research and Development Expenses

The following table represents our research and development expenses for the three months ended June 30, 2026 and 2025 (in thousands):

Research and development expenses increased by $9.2 million, or 131.1%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to increased clinical trial costs and related headcount to support the advancement of SAB-142 into our Registrational Phase 2b SAFEGUARD study.

General and Administrative

General and administrative expenses increased by $4.5 million or 163.4%, in the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to increased headcount costs, including related stock based compensation.

Changes in Fair Value of Warrant Liabilities

Changes in fair value of warrant liabilities increased by $0.5 million, or 77.2% during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to the increase in fair value of our Preferred Tranche C Warrants.

Interest Expense

Interest expense in the three months ended June 30, 2026 was consistent with interest expense in the three months ended June 30, 2025.

Interest Income

Interest income increased by $1.7 million or 12,107.1% during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to higher average investment balances as a result of the March 2026 Public Offering and the July 2025 Purchase Agreement.

Other Income

Other income, increased by $0.1 million, or 18.6%, in the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily driven by an increase in dividend and investment income due to higher average investment balances as a result of the March 2026 Public Offering and the July 2025 Purchase Agreement, partially offset by a decrease in the Australian research and development tax credit.

The following tables set forth our results of operations for the six months ended June 30, 2026 and 2025 (in thousands):

Research and Development Expenses

The following table represents our research and development expenses for the six months ended June 30, 2026 and 2025 (in thousands):

31

Research and development expenses increased by $14.9 million, or 101.8%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to increased clinical trial costs and related headcount to support the advancement of SAB-142 into our Registrational Phase 2b SAFEGUARD study.

General and Administrative

General and administrative expenses increased by $8.0 million, or 136.0%, in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to increased headcount costs, including related stock based compensation.

Changes in Fair Value of Warrant Liabilities

Changes in fair value of warrant liabilities increased by $6.0 million, or 136.1% during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to the increase in fair value of our Preferred Tranche C Warrants.

Interest Expense

Interest expense in the six months ended June 30, 2026 was consistent with interest expense in the six months ended June 30, 2025.

Interest Income

Interest income increased by $2.7 million, or 3,526.3%, during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to higher average investment balances as a result of the March 2026 Public Offering and the July 2025 Purchase Agreement.

Other Income

Other income increased by $0.1 million, or 16.0% in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily driven by an increase in dividend and investment income due to higher average investment balances as a result of the March 2026 Public Offering and the July 2025 Purchase Agreement, partially offset by a decrease in the Australian research and development tax credit.

Liquidity and Capital Resources

As of June 30, 2026, we had an accumulated deficit of $152.3 million. We expect to continue to incur operating losses for the foreseeable future as we fund product development, regulatory approval efforts, clinical trials, and commercial readiness activities, and we will require additional capital to support our long-term plans.

In July 2025, we completed the Series B Offering, generating approximately $175.0 million in gross proceeds before fees and expenses through the sale of Series B Preferred Stock (convertible into common stock following stockholder approval) together with the Release Date Warrants and Enrollment Date Warrants.

In March 2026, we completed the March 2026 Public Offering, generating aggregate net proceeds of approximately $88.7 million after underwriting discounts, commissions, and offering expenses. The net proceeds are intended to fund the Phase 2b SAFEGUARD study of SAB-142 and for general corporate purposes.

See Note 8, Stockholders’ Equity, in our condensed consolidated financial statements for more information about the Series B Offering and March 2026 Public Offering.

Based on our current level of operating expenses, existing resources will be sufficient to cover operating cash needs through the twelve months following the date of this report. In the future, we may seek additional funding through a combination of equity or debt financings, or other third-party financing, collaborative or other funding arrangements.

Shelf Registration Statement

On December 29, 2025 we filed a Registration Statement on Form S-3 (Registration No. 333-292482) (the “Shelf Registration Statement”), declared effective on January 7, 2026 by the SEC, which includes a base prospectus that allows us to offer and sell, from time to time, in one or more offerings, common stock, preferred stock, debt securities, warrants, rights or units up to an aggregate public offering price of $300.0 million. The Shelf Registration Statement is intended to preserve our flexibility to raise capital from time to time, if and when needed.

Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:

Operating Activities

Net cash used in operating activities increased by $9.2 million in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This increase was primarily driven by an increase in net cash used in operations, partially offset by non-cash adjustments, including stock-based compensation and changes in fair value of warrant liabilities. The year-over-year increase in cash used was due to our continued investment in the development of our lead product candidate, SAB-142.

Investing Activities

Net cash used in investing activities increased by $80.4 million in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to increased purchases of short-term investments, partially offset by proceeds from sales and maturities of investments.

Financing Activities

Net cash provided by financing activities increased by $92.6 million in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to the March 2026 Public Offering and exercise of warrants.

Contractual Obligations and Commitments

We have a clinical master services agreement with Fortrea for CRO services related to our Phase 2b study of SAB-142 and expect to make ongoing payments to Fortrea over the next 12 to 18 months in connection with these services.

In April 2026, we entered into a Master Manufacturing Services Agreement with Emergent for manufacturing services related to SAB-142, which includes a minimum aggregate spend of $36.0 million following FDA approval, over a five-year term. We expect to make substantial payments to Emergent over the next 24 to 36 months in connection with this agreement.

We terminated our office lease in Miami Beach, Florida and entered into a new lease for expanded space at the same location. The new lease commenced January 1, 2026 and has a five-year term. During the second quarter of 2026, we also reduced the leased space under our operating lease with Sanford Health; the terms of the original agreement remained unchanged, including the lease term ending December 31, 2029. Additionally, our office, laboratory, and warehouse space lease renewed in November 2023 has a three-year term expiring in November 2026, and we are evaluating our options with respect to renewal, extension, or relocation ahead of that expiration. As of June 30, 2026, our total operating and finance lease liabilities were approximately $1.9 million and $3.2 million, respectively. See Note 6, Leases, in our condensed consolidated financial statements for further details.

Except as described above, as of June 30, 2026, there were no material changes outside of the ordinary course of business to our commitments and contractual obligations.

Off-Balance Sheet Arrangements

We did not have, for the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

We have prepared our condensed consolidated financial statements in accordance with U.S. GAAP. Our preparation of these condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.

Our most critical accounting estimates and assumptions are included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 9, 2026 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed with the SEC on May 12, 2026. There have been no significant changes to our critical accounting policies during the three months ended June 30, 2026. See Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements for further details.

JOBS Act Accounting Election

The Jumpstart Our Business Startups (“JOBS”) Act, enacted in April 2012, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have and intend to continue to take advantage of all of the reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards, for an emerging growth company under Section 107 of the JOBS Act.

We may use these provisions until the last day of our fiscal year in which the fifth anniversary of the completion of our initial public offering occurred. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenue exceeds $1.235 billion, or we issue more than $1.07 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

We have elected to take advantage of certain of the reduced disclosure obligations in this Form 10-Q and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our shareholders may be different than the information you receive from other public companies in which you hold stock.

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, until those standards apply to private companies. We have elected to take advantage of the benefits of this extended transition period and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date that we are no longer an emerging growth company or affirmatively and irrevocably opt out of the exemption provided by Section 7(a)(2)(B) of the Securities Act upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which we will adopt the recently issued accounting standard.

Concentration of Credit Risk

The Company recognized no revenue for the three and six months ended June 30, 2026. To date, no receivables have been written off.

Interest Rate Risk

As of June 30, 2026 and December 31, 2025, we had cash, cash equivalents, U.S. treasury securities, corporate bonds, investments in exchange traded mutual funds, and money market funds of $208.0 million and $143.5 million, respectively, all of which was maintained in bank accounts, money market funds, mutual funds, and U.S. treasury securities. Our primary exposure to market risk is to interest income volatility, which is affected by changes in the general level of interest rates. A 10% change in the market interest rates would not have a material effect on our business, financial condition, or results of operations.

Foreign Currency Risk

We conduct materially all of our business in U.S. dollars. We do not have any foreign currency or other derivative financial instruments. Our primary exposure to changes in foreign currency exchange rates relates mainly to SAB Australia. We do not currently hedge our foreign currency exchange rate risk. As of June 30, 2026 and December 31, 2025, our liabilities denominated in foreign currencies were not material. Accordingly, we do not believe a 10% increase or decrease in current exchange rates would have a material effect on our financial results.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on the evaluation as of June 30, 2026, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 9, 2026, which we strongly encourage you to review (the “2025 Annual Report”). There have been no material changes from the risk factors described in our 2025 Annual Report.