Note 1. Nature of Business and Significant Accounting Policies

Organization and Liquidity

Aptevo Therapeutics Inc. (Aptevo, we, us, or the Company) is a clinical-stage biotechnology company developing novel multispecific immunotherapies for the treatment of cancer. The Company’s lead clinical candidate, mipletamig, is currently being evaluated in frontline acute myeloid leukemia in combination with standard-of-care venetoclax + azacitidine. Aptevo’s pipeline is generated from its proprietary ADAPTIR™ and ADAPTIR-FLEX™ platforms and includes bispecific and trispecific candidates designed to create multiple oncology value drivers across hematologic malignancies and solid tumors. In preclinical development, Aptevo is advancing APVO451, a nectin-4-targeted trispecific immunotherapy candidate for solid tumors and is pursuing strategic opportunities in radiopharmaceutical therapeutics to extend its tumor-targeting expertise into additional cancer treatment approaches. For more information, visit www.aptevotherapeutics.com.

We are currently trading on the Nasdaq Capital Market under the symbol "APVO."

The accompanying financial statements have been prepared on a basis that assumes we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty of our ability to continue as a going concern, nor do they include adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. For the six months ended June 30, 2026, we had a net loss of $13.1 million. We had an accumulated deficit of $288.3 million as of June 30, 2026. For the six months ended June 30, 2026, net cash used in our operating activities was $13.4 million. We have suffered recurring losses from operations and negative cash flows from operating activities. In the second quarter of 2026, we raised approximately $0.6 million in aggregate net proceeds through the issuance of common stock under the Standby Equity Purchase Agreement with YA II PN, LTD., a Cayman Islands exempt limited company (“Yorkville”), dated June 16, 2025 (the “First SEPA”) and the Standby Equity Purchase Agreement with Yorkville, dated January 8, 2026 (the “Second SEPA” and collectively with the First SEPA, the “SEPAs”). We also received $0.5 million of gross proceeds from a strategic equity investment by Niowave. In addition, we raised $0.6 million during the subsequent events period under the SEPAs. We also entered into a private placement financing and related warrant inducement transaction involving the issuance of common stock, pre-funded warrants and common warrants, resulting in aggregate gross proceeds of $4.5 million before deducting placement agent fees and other offering expenses. When considered in aggregate, these factors raise substantial doubt about our ability to continue as a going concern for the one-year period from the date of issuance of these financial statements. We will need to raise additional funds to support our operating and capital needs in addition to our existing cash resources, cash to be generated from future milestones related to IXINITY sales and regulatory approvals achieved by Medexus Pharmaceuticals ("Medexus"), sales of common stock under the SEPAs, and exercise of common warrants. We may choose to raise additional funds to support our operating and capital needs in the future.

We continue to face significant challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to: (a) changes we may make to the business that affect ongoing operating expenses; (b) changes we may make in our business strategy; (c) changes we may make in our research and development spending plans; (d) macroeconomic conditions such as rising inflation, potential trade war, and other costs as well as political events such as a U.S. federal government shutdown, evolving healthcare policies, ongoing conflicts in Europe and the Middle East and military actions; and (e) other items affecting our forecasted level of expenditures and use of cash resources; (f) whether and to what extent potential milestones are received from Medexus with respect to IXINITY. We may attempt to obtain other public or private financing, collaborative or licensing arrangements with strategic partners, or through credit lines or other debt financing sources to increase the funds available to fund operations. However, we may not be able to secure such funding in a timely manner or on favorable terms, if at all. Furthermore, if we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences, and privileges senior to those of our existing stockholders. If we raise additional funds through collaboration, licensing, or other similar arrangements, it may be necessary to relinquish valuable rights to our potential products or proprietary technologies, or grant licenses on terms that are not favorable to us. Without additional funds, we may be forced to delay, scale back, or eliminate some of our research and development activities or other operations and potentially delay product development in an effort to provide sufficient funds to continue our operations. If any of these events occur, our ability to achieve our development goals may be adversely affected. Given the continuing global economic and geopolitical climate, including stock market volatility and potential trade war, we may experience delays or difficulties in the financing environment and raising capital due to economic uncertainty.

Note 2. Collaboration Agreements

Niowave, Inc.

On May 25, 2026, our wholly owned subsidiary, Aptevo Research and Development LLC (“Aptevo R&D” or the “Company”), entered into a Collaboration Agreement (“Niowave Collaboration Agreement”) with Niowave, Inc. (“Niowave”) to develop

Note 3. Fair Value Measurements

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, it gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The level in the fair value hierarchy within which the fair value measurement is reported is based on the lowest level input that is significant to the measurement in its entirety. The three levels of the hierarchy are as follows:

Level 1— Quoted prices in active markets for identical assets and liabilities;

Level 2— Inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3— Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

At June 30, 2026 and December 31, 2025, we had $8.2 million and $20.5 million in Level 1 money market funds, respectively. The carrying amounts of our money market funds approximate their fair value. At June 30, 2026 and December 31, 2025, we did not have any Level 2 or Level 3 assets.

Note 4. Cash and Cash Equivalents

The Company’s cash equivalents are highly liquid investments with a maturity of 90 days or less at the date of purchase and include time deposits and investments in money market funds.

Note 5. Leases

Office Space Lease - Operating

We have an operating lease related to our office and laboratory space in Seattle, Washington with a term through April 2030 and two options to extend the lease term, each by five years. As of June 30, 2026, we are not reasonably certain to exercise the two options to extend the lease term and our lease liability is recorded through April 30, 2030.

For the three and six months ended June 30, 2026 and 2025, we recorded $0.2 million and $0.5 million related to variable lease expense, respectively.

Note 6. Prepaid Expenses, Other Current Assets, Accrued Expenses, and Other Current Liabilities

Note 7. Grant Agreement

On June 29, 2026, we entered into a grant award agreement with the Andy Hill Cancer Research Endowment (CARE) Fund, a grantmaking entity of the State of Washington, to support IND-enabling studies for APVO451, the Company’s novel trispecific antibody for solid tumor immunotherapy. Under the agreement, the Company is eligible to receive reimbursement of allowable costs up to approximately $1.5 million during the grant period, which extends from June 2026 through June 2028. Payments under the agreement are made on a reimbursement basis for eligible costs incurred during the grant period and are subject to the Company’s continued compliance with the agreement, including progress toward agreed-upon milestones, submission of annual progress and financial reports, documentation of eligible expenditures, and satisfaction of non-state matching contribution requirements. The agreement requires the Company to demonstrate at least a one-to-one use of non-state matching contributions in relation to grant payments. Reimbursement requests are subject to documentation requirements and review by the grantor or its administrator.

We assessed the grant award agreement in accordance with ASC 832 – Government Assistance (“ASC 832”) and ASC 606 and determined that the arrangement is a grant related to income, as the grantor is not a customer and the grant arrangement does not involve the transfer of goods or services that are outputs of the Company’s ordinary activities in exchange for consideration. The Company recognizes reimbursable amounts when the applicable grant conditions have been satisfied and receipt of the reimbursement is probable. Such amounts are recorded as reductions of research and development expense over the periods in which the related qualifying costs are incurred, with a corresponding receivable recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

Note 8. Net Loss per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period using the as-if converted method. For the purpose of this calculation, warrants, stock options and restricted stock units ("RSUs") are only included in the calculation of diluted net loss per share when their effect is dilutive.

We utilize the control number concept in the computation of diluted earnings per share to determine whether potential common stock instruments are dilutive. The control number used is net loss for the period. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories. The deemed dividend as a result of the down round feature of the Company’s common warrants is recorded as a distribution to stockholders rather than an expense because it does not result from the Company’s operating activities. Accordingly, the deemed dividend is reflected below net loss as an adjustment to arrive at net loss attributable to common stockholders, but does not impact net loss. This adjustment increases the loss attributable to common stockholders and is included in the numerator used to calculate basic and diluted net loss per share.

The following table presents the computation of basic and diluted net loss per share (in thousands, except share and per share amounts):