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Discontinued Operations and TSA | 12 Months Ended
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Dec. 31, 2025
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations and TSA | 3. Discontinued Operations and TSA On September 30, 2024, the Company completed the sale of its VOWST Business to SPN. The Company has determined the sale of the VOWST Business represents a strategic shift that will have a major effect on its business and therefore met the criteria for classification as discontinued operations on September 30, 2024. Accordingly, the VOWST Business is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. The related assets and liabilities of the VOWST Business are classified as assets and liabilities of discontinued operations in the consolidated balance sheets and the results of operations from the VOWST Business as discontinued operations in the consolidated statements of operations. Applicable amounts in prior years have been recast to conform to this discontinued operations presentation. The Company recognized a gain on the sale of the VOWST Business upon closing. As of December 31, 2025 and 2024, there were no assets or liabilities of discontinued operations. The following table presents the gain on the sale of the VOWST Business as of December 31, 2024, pursuant to the Purchase Agreement:
|  | December 31, |
|  | 2024 |
Consideration received |  |  |
Upfront payment (1) |  | $ | 79,788 |
Prepaid milestone |  |  | 60,000 |
Deferred revenue from termination of 2016 License Agreement |  |  | 95,364 |
Settlement of net collaboration payable at close |  |  | 27,465 |
Premium on equity financing |  |  | 1,484 |
Deferred income from termination of 2021 License Agreement |  |  | 3,606 |
Accrued liabilities due to SPN - related party |  |  | (33,458 | )
Total fair value transferred for business |  | $ | 234,249 |
Net assets transferred |  |  |
Inventory |  | $ | 63,442 |
Prepaid expenses and other current assets |  |  | 2,219 |
Property and equipment, net |  |  | 3,966 |
Operating lease assets |  |  | 17,929 |
Other non-current assets |  |  | 39,328 |
Accrued expenses and other current liabilities |  |  | (31,547 | )
Operating lease liabilities |  |  | (14,413 | )
Net assets transferred |  | $ | 80,924 |
Transaction costs |  | $ | 6,618 |
Gain on sale, pre-tax |  | $ | 146,707 |
Income tax |  |  | — |
Gain on sale, net of tax |  | $ | 146,707 |
[1] The upfront payment consists of $100,000, less $17,857 owed by the Company to an affiliate of SPN under the prior license agreement between the Company and the SPN affiliate, less approximately $2,355 in satisfaction of costs due under the Bacthera Manufacturing Agreement. For the year ended December 31, 2024, the gain from sale of the VOWST Business, net of tax of $146,707 was included in the net income (loss) from discontinued operations, net of tax line item of the Company’s consolidated statements of operations and comprehensive income (loss). While the Company has net income from discontinued operations for the year ended December 31, 2024, the Company realized a tax loss for the full year ended December 31, 2024, for which it is more likely than not that the Company will not realize a benefit. The Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2025, 2024 and 2023. The following table presents the financial results of the discontinued operations:
| Year Ended December 31, |
| 2025 |  |  | 2024 |  |  | 2023 |
Revenue: |  |  |  |  |  |  |  |
Collaboration revenue - related party | $ | — |  |  | $ | — |  |  | $ | 126,325 |
Total revenue |  | — |  |  |  | — |  |  |  | 126,325 |
Operating expenses: |  |  |  |  |  |  |  |
Research and development expenses |  | — |  |  |  | 5,809 |  |  |  | 28,263 |
General and administrative expenses |  | — |  |  |  | 4,066 |  |  |  | 10,244 |
Collaboration (profit) loss sharing - related party |  | — |  |  |  | (1,496 | ) |  |  | 704 |
Total operating expenses |  | — |  |  |  | 8,379 |  |  |  | 39,211 |
(Loss) income from discontinued operations |  | — |  |  |  | (8,379 | ) |  |  | 87,114 |
Other income (expense): |  |  |  |  |  |  |  |
Gain on sale of VOWST business |  | — |  |  |  | 146,707 |  |  |  | — |
Interest expense |  | — |  |  |  | (12,192 | ) |  |  | (10,708 | )
Other expense |  | — |  |  |  | (229 | ) |  |  | — |
Income (loss) from discontinued operations, pre-tax | $ | — |  |  | $ | 125,907 |  |  | $ | 76,406 |
Income tax |  | — |  |  |  | — |  |  |  | — |
Net income (loss) from discontinued operations, net of tax | $ | — |  |  | $ | 125,907 |  |  | $ | 76,406 |
In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. As such, the research and development and general and administrative expenses in discontinued operations include corporate costs incurred directly to solely support the VOWST Business. The Company also entered into a Transition Services Agreement (“TSA”) with NESA, an affiliate of SPN, in connection with the Transaction, through which the Company provided certain manufacturing services until December 31, 2025, and other transition services, for the duration specified in the schedule to the TSA for each service. For the years ended December 31, 2025 and 2024, the Company recognized $13,311 and $6,292 of TSA reimbursement income in other income in the Company’s consolidated statements of operations and comprehensive income. For the years ended December 31, 2025 and 2024, the Company incurred $6,544 and $3,532 of expenses related to manufacturing services and $3,592 and $3,136 of TSA labor and passthrough expenses to support the transition services, including finance and accounting, information technology, human resources, operations, and other services. For the years ended December 31, 2025 and 2024, $14,897 and $3,724 was billed to NESA related to transition services performed by the Company, and the Company received $91,605 and $1,656 from NESA during the periods including the first installment payment of $50,000 received in January 2025 and the second installment payment of $25,000 received in July 2025 which were conditioned on the Company’s material compliance with obligations under the TSA. The $75,000 of installment payments were recognized in Gain on sale of VOWST Business within continuing operations in the Company’s consolidated statements of operations and comprehensive income for the year ended December 31, 2025 as the gain was realizable. As of December 31, 2025 and 2024, the Company had $360 and $2,068 in accounts receivable due from SPN - related party in the Company’s consolidated balance sheets. The Company has estimated costs associated with certain accrued liabilities due to SPN - related party as a loss contingency in accordance with ASC 450, Contingencies. These contingent liabilities are presented as Accrued Liabilities due to SPN - related party from continuing operations on the consolidated balance sheets as of December 31, 2025 and December 31, 2024 and consist of the following (in thousands):
|  | December 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Profit Sharing Payments |  | $ | 1,701 |  |  | $ | 11,230 |
Royalties associated with the MSK Agreement |  |  | 1,309 |  |  |  | 2,786 |
VOWST post-marketing safety surveillance study |  |  | 268 |  |  |  | 771 |
80.1% of lease cost of Waltham facility |  |  | — |  |  |  | 1,501 |
Employment-related costs for conveying employees |  |  | — |  |  |  | 1,462 |
Total accrued liabilities due to SPN - related party |  | $ | 3,278 |  |  | $ | 17,750 |
The contingent liabilities accrued on the Company's consolidated balance sheets are remeasured at December 31, 2025 based on i) cash payments made by the Company to reduce the accrued liabilities due to SPN - related party and ii) revised estimates of the total remaining liabilities due to SPN - related party. For the years ended December 31, 2025 and 2024, the Company recognized a gain on sale of VOWST Business of $5,685 and $5,684, respectively, as a result of the change in the accrued liabilities due to SPN - related party. The Company has excluded from its consolidated balance sheets the effects of certain milestone payments received by the Company after the Product has achieved net sales-based milestones. These contingent receivables will be recognized as a gain contingency, in accordance with ASC 450, Contingencies, in continuing operations in the period when the contingencies are resolved. The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows. There were no cash flows related to discontinued operations for the year ended December 31, 2025. For the years ended December 31, 2024 and 2023, capital expenditures related to the VOWST Business were $112 and $2,272, respectively. Depreciation expense related to the VOWST Business for the same periods was $989 and $2,019, respectively. Non-cash operating lease costs related to the VOWST Business for the years ended December 31, 2024 and 2023 were $1,447 and $2,123, respectively, while the share based compensation expense for the same periods were $1,884 and $2,773, respectively. The collaboration loss sharing (related party) related to the VOWST Business was $0 and $5,158 for the years ended December 31, 2024 and 2023, respectively. Excluding the gain of $146,707 recognized on the sale of the VOWST Business presented in the consolidated statements of cash flows for the year ended December 31, 2024, there were no other material operating or investing non-cash items related to the VOWST Business for any period presented.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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