Korro Bio, Inc. (KRRO)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, or the 2025 10-K. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. See also “Cautionary Statement Regarding Forward-Looking Statements.”

Overview

We are a biopharmaceutical company leveraging a novel oligonucleotide promoted editing of RNA, or OPERA, platform to develop a new class of genetic medicines for rare and highly prevalent diseases. OPERA provides precise, tissue-directed delivery of RNA-editing oligonucleotides, or REOs, that modify the targeted native mRNA transcript to repair or form a de-novo protein with enhanced functionality. The platform combines a suite of capabilities consisting of sophisticated knowledge of transcription biology through ADAR proteins (Adenosine Deaminases Acting on RNA), machine learning optimization of REOs, linker chemistry expertise, along with use of a highly targeted tissue-specific delivery methodology. As such, the OPERA platform has enabled us to generate and advance a portfolio of differentiated programs that are designed to harness the body’s natural RNA editing process, providing precise yet transient single base edits to produce therapeutic proteins with augmented activity versus its endogenous counterpart. By editing RNA instead of DNA, we are expanding the reach of genetic medicines by delivering additional precision and tunability, which has the potential for increased specificity and improved long-term tolerability. Using an REO-based approach, we expect to bring our medicines to patients by leveraging our proprietary OPERA platform with precedented delivery modalities, including N-acetylgalactosamine, or GalNAc, conjugated for delivery for subcutaneous administration, manufacturing know-how, and established regulatory pathways of approved oligonucleotide medicines. However, the scientific evidence to support the feasibility of developing our development candidates using our RNA editing technology is both preliminary and limited. Moreover, regulators have not yet established any definitive guidelines related to overall development considerations for RNA editing therapies and limited clinical data has been generated to date.

The versatility of RNA editing combined with our OPERA platform broadens the therapeutic target space significantly. The advent of large-scale genome sequencing has progressively revealed causal genetic variation underlying several human diseases, both rare and highly prevalent. Genetic mutations, including single nucleotide variants, or SNVs, implicated in disease have been found to be diverse in nature and can affect the function of genes and their associated downstream biochemical pathways. Data correlating DNA to RNA to disease phenotype have demonstrated that SNVs lead to a loss-of-function or a gain-of-function of the gene. In addition, the majority of SNVs implicated in complex diseases are due to modulation of gene function. By editing RNA to mimic an SNV, we believe we will be able to address unmet patient need by transiently modifying gene expression and the resultant protein function.

We continue to make meaningful advancements across our programs, including KRRO-121 as a potential first-in-class treatment for hyperammonemia that has the potential to address substantial unmet need in patients with poor ammonia control, including those with urea cycle disorders, or UCD, and hepatic encephalopathy, or HE. KRRO-121 is a GalNAc-conjugated REO for the potential treatment of hyperammonemia in patients with UCDs of any mutational background as well as patients with HE. Utilizing our proprietary OPERA platform, KRRO-121 is designed to obviate the need for a functional urea cycle and instead generate a stabilized, de novo glutamine synthetase, or GS, protein, a critical enzyme in an alternate pathway involved in ammonia clearance. This synthetic rescue approach is designed to augment ammonia clearance in hyperammonemia-driven diseases such as UCDs and HE. Our preclinical data support the potential for KRRO-121 to be a pan-UCD treatment that may control ammonia levels, along with the potential to enable diet liberalization, reduce dependence on nitrogen scavengers, and lower the risk of hyperammonemic crises. KRRO-121 also has the potential to enhance ammonia control in HE patients, which may reduce the risk of recurrent HE episodes. KRRO-121 may offer infrequent subcutaneous dosing, which, if confirmed in clinical studies, could offer significant improvement over current treatments that require multiple daily doses. KRRO-121 has the potential to be a differentiated, first-in-class, disease-modifying therapy for both UCD and HE. In August 2026, we announced the European Medicines Agency, or EMA, granted orphan drug designation for KRRO-121 for patients with UCDs. We remain on track to commence a first-in-human trial for KRRO-121 in the second half of 2026.

We are also advancing our other early-stage research and development programs. In May 2026, we announced KRRO-111, our development candidate for the potential treatment of AATD. KRRO-111 is a proprietary GalNAc-conjugated REO that is delivered subcutaneously to the liver cells, where it is engineered to co-opt the hepatocytes’ endogenous ADAR enzyme and repair a pathogenic SNV on alpha-1 antitrypsin, or AAT, mRNA to restore production of normal AAT protein. This therapeutic profile and titratable dosing position KRRO-111 as a potential best-in-class candidate. In preclinical studies, KRRO-111 demonstrated best-in-class RNA editing where over 90% of the AAT transcripts in the liver cells have been corrected, translating into approximately 90% M-AAT

18

protein. In a repeat-dose study, KRRO-111 was administered to PiZZ mice with a loading phase followed by dosing once every two weeks. KRRO-111 demonstrated a reduction of non-inclusion Z-AAT by approximately 95% and a reduction in pre-existing aggregates by approximately 62% at day 28 with RNA editing in a mouse model of AATD. Pre-existing aggregates were progressively cleared, with inclusion-associated Z-AAT significantly reduced by approximately 62% at day 28, consistent with autophagic clearance of accumulated protein following successful editing. By simultaneously increasing circulating M-AAT protein and decreasing pathogenic Z-AAT aggregates in the lung, KRRO-111 has the potential to be the best-in-disease agent, improving both lung and liver manifestations of the disease. We also expect to nominate a development candidate for a third GalNAc-conjugated program in the second half of 2026.

Since inception, we have focused primarily on organizing and staffing our company, business planning, raising capital, securing related intellectual property, and conducting research and development activities for our potential programs and development candidates. Since inception, we have funded our operations primarily through the private placement of our equity securities. To date, we have raised approximately $501.0 million of aggregate gross proceeds from sales of our equity securities.

We have incurred significant operating losses since inception. Our net losses were $38.5 million and $49.2 million for the six months ended June 30, 2026 and 2025, respectively. We had an accumulated deficit of $422.4 million as of June 30, 2026. We expect to continue to incur significant and increasing expenses and operating losses and negative operating cash flows for the foreseeable future as we continue our research and development efforts, advance development candidates through clinical development, and seek regulatory approvals for our development candidates. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies, initiation and conduct of any clinical trials, and our expenditures on other research and development activities, including the expansion of our pipeline.

We do not have any development candidates approved for sale and have not generated any revenue from product sales. We will not generate revenue from product sales unless and until we successfully obtain regulatory approval for our development candidates, if ever, and as appropriate, move pipeline candidates into the clinic and complete clinical development. If we obtain regulatory approval for our development candidates and do not enter into third-party commercialization partnerships, we expect to incur significant expenses related to developing commercialization capabilities to support product sales, marketing, manufacturing and distribution activities. As a result, we will need substantial additional funding to support our continuing operations and pursue our development and growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private offerings of securities, debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to raise capital or enter into such agreements as, and when needed, could have a negative effect on our business, results of operations and financial condition.

Financial Operations Overview

Revenue

We have not generated any revenue from product sales, and do not expect to generate any revenue from the sale of products in the near future. During the six months ended June 30, 2026 and 2025, we recognized $0.0 million and $4.0 million of collaboration revenue, respectively, which is related to our research collaboration and license agreement with Novo Nordisk. In November 2025, we agreed to a 12-month pause on such collaboration with Novo Nordisk, accordingly, we do not expect to recognize any material collaboration revenue under such agreement during the 12-month hold period.

For additional information about our revenue recognition policy and our collaboration and license agreement with Novo Nordisk, which is now paused, see Note 11 in the condensed consolidated financial statements included in this Quarterly Report.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery of novel genetic medicines and the development of our development candidates, salaries and benefits, and third-party license fees. We expense research and development costs as incurred, which include:

•
employee-related expenses, including salaries, bonuses, benefits, stock-based compensation and other related costs for those employees involved in research and development efforts;

•
expenses incurred under agreements with contract research organizations, or CROs, that conduct our preclinical studies and clinical trials;

•
costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in manufacturing preclinical study materials, as well

[Excerpt truncated for page length; source filing is linked above.]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth under the heading “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. See also “Cautionary Statement Regarding Forward-Looking Statements.”

Overview

We are a biopharmaceutical company with a mission to discover, develop and commercialize a new class of genetic medicines based on editing RNA, enabling the treatment of both rare and highly prevalent diseases.

We are generating a portfolio of differentiated programs that are designed to harness the body’s natural RNA editing process to effect a precise yet transient change to a single nucleoside (adenosine to an inosine edit). By editing RNA instead of DNA, we are expanding the reach of genetic medicines by delivering additional precision and tunability, which has the potential for increased specificity and improved long-term tolerability. We use an oligonucleotide-based approach and expect to bring our medicines to patients by leveraging our proprietary platform with precedented delivery modalities, including N-acetylgalactosamine, or GalNAc, -conjugated delivery for subcutaneous administration, manufacturing know-how, and established regulatory pathways of approved oligonucleotide medicines. However, the scientific evidence to support the feasibility of developing our development candidates using our RNA editing technology is both preliminary and limited. Moreover, regulators have not yet established any definitive guidelines related to overall development considerations for RNA editing therapies and limited clinical data has been generated to date.

The versatility of RNA editing combined with our OPERA platform broadens the therapeutic target space significantly. The advent of large-scale genome sequencing has progressively revealed causal genetic variation underlying several human diseases, both rare and highly prevalent. Genetic mutations, including SNVs implicated in disease have been found to be diverse in nature and can affect the function of genes and their associated downstream biochemical pathways. Data correlating DNA to RNA to disease phenotype have demonstrated that SNVs lead to a loss-of-function or a gain-of-function of the gene. In addition, the majority of SNVs implicated in complex diseases are due to modulation of gene function. By editing RNA to mimic a SNV, we believe we will be able to address unmet patient need by transiently modifying gene expression and the resultant protein function.

We continue to make meaningful advancements across our programs, including KRRO-121 as a potential first-in-class treatment for hyperammonemia that has the potential to address substantial unmet need in patients with poor ammonia control, including those with UCD and HE. KRRO-121 is an RNA-editing oligonucleotide conjugated with GalNAc in development for the potential treatment of UCDs of any mutational background in adults and adolescents. Utilizing our proprietary platform, we designed KRRO-121 to edit the GLUL transcript (the gene for the GS protein), to generate a stabilized, de novo variant of GS with enhanced ammonia clearance capacity. This synthetic rescue approach creates a compensating protein rather than repairing the underlying urea cycle defect. By editing GS mRNA to create a de novo protein with a single amino acid change that prevents glutamine-induced proteasomal degradation, we aim to maintain consistent ammonia clearance capacity irrespective of the specific enzyme deficiency in patients with UCD and to reduce ammonia levels in patients with HE. We anticipate a regulatory filing to enable commencement of a first-in-human trial in the second half of 2026.

In November 2025, we announced that KRRO-110 did not reach projected levels of functional protein following a single administration and pivoted to GalNAc delivery for patients with AATD with development candidate nomination expected in the second quarter of 2026. We are developing a next-generation GalNAc-conjugated RNA editing oligonucleotide for the treatment of AATD that has the potential to be disease-modifying and provide a differentiated therapeutic option.

In May 2025, we announced a strategic plan to streamline our operations, including a reduction in workforce by 19%, or 21 positions. In November 2025, we implemented a strategic restructuring to extend cash runway, including a further workforce reduction of approximately 34%. Please see Note 16 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Since inception, we have focused primarily on organizing and staffing our company, business planning, raising capital, securing related intellectual property, and conducting research and development activities for our potential programs and development candidates. Since inception, we have funded our operations primarily through the private placement of our equity securities. To date, we have raised approximately $223.6 million of aggregate gross proceeds from the sale of our convertible preferred stock, $117.3 million from the sale of shares of common stock issued in a private placement that closed immediately

100

prior to the November 2023 business combination, $70.0 million from the April 2024 private placement of shares of our common stock, $5.1 million from sales under our at-the-market offering program, and $85.0 million from the March 2026 private placement.

We have incurred significant operating losses since inception. Our net losses were $117.3 million and $83.6 million for the years ended December 31, 2025 and 2024, respectively. We had an accumulated deficit of $383.8 million as of December 31, 2025. We expect to continue to incur significant and increasing expenses and operating losses and negative operating cash flows for the foreseeable future as we continue our research and development efforts, advance development candidates into and through clinical development, and seek regulatory approvals for our development candidates. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies, initiation and conduct of any clinical trials, and our expenditures on other research and development activities, including the expansion of our pipeline.

We do not have any development candidates approved for sale and have not generated any revenue from product sales. We will not generate revenue from product sales unless and until we successfully obtain regulatory approval for our development candidates, if ever, and as appropriate, move pipeline candidates into the clinic and complete clinical development. If we obtain regulatory approval for our development candidates and do not enter into third-party commercialization partnerships, we expect to incur significant expenses related to developing commercialization capabilities to support product sales, marketing, manufacturing and distribution activities. As a result, we will need substantial additional funding to support our continuing operations and pursue our development and growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private offerings of securities, debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to raise capital or enter into such agreements as, and when needed, could have a negative effect on our business, results of operations and financial condition.

Recent Developments

At-the-Market Offering Program

In January 2026, we issued 501,861 shares of common stock under our December 2024 at-the-market sales agreement for gross proceeds of $5.1 million, before deducting estimated offering expenses.

March 2026 Private Placement

On March 9, 2026, we entered into a subscription agreement with certain new and existing accredited investors to issue and sell in a private placement an aggregate of 4,501,928 shares of our common stock at a purchase price of $11.11 per share and pre-funded warrants to purchase up to an aggregate of 3,148,836 shares of our common stock (at an exercise price of $0.001 per share) at a price of $11.109 per pre-funded warrant. The private placement, which closed March 10, 2026, resulted in gross proceeds of approximately $85.0 million before deducting placement agent fees and estimated offering expenses.

Financial Operations Overview

Revenue

We have not generated any revenue from product sales, and do not expect to generate any revenue from the sale of products in the near future. During the year ended December 31, 2025 and 2024, we recognized $6.4 million and $2.3 million of collaboration revenue, respectively, which is related to our research collaboration and license agreement with Novo Nordisk. In

101

November 2025, we agreed to a 12 month pause on such collaboration with Novo Nordisk, and accordingly, we do not expect to recognize any material collaboration revenue under such agreement during the 12-month hold period.

For additional information about our revenue recognition policy, see Note 2 and Note 12 to our audited consolidated financial statements included in this Annual Report on Form 10-K.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research and development activities, including our discovery of novel genetic medicines and the development of our development candidates, salaries and benefits, and third-party license fees. We expense research and development costs as incurred, which include:

•
employee-related expenses, including salaries, bonuses, benefits, stock-based compensation and other related costs for employees engaged in research and development efforts;

•
expenses incurred under agreements with CROs that conduct our preclinical studies and clinical trials;

•
costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in manufacturing preclinical study materials, as well as supplies and materials used to manufacture clinical trial materials;

•
costs of outside consultants and contractors engaged in research and development activities, including their fees and travel expenses;

•
payments made under third-party licensing agreements; and

•
direct and allocated expenses for facilities.

Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data such as information provided to us by our vendors and analyzing the progress of our preclinical studies, clinical trials or other services performed. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. Significant judgment and estimates are made in determining the accrued expense balances and prepaid expense balances at the end of any reporti

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]