Business Description

Description of Business and Basis of Presentation Description of Business Avidity Biosciences, Inc. (the Company or Avidity) is a biopharmaceutical company committed to delivering a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates (AOCs). The Company’s proprietary AOC platform is designed to combine the specificity of monoclonal antibodies with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics. Agreement and Plan of Merger & Separation and Distribution Agreement On October 25, 2025, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Novartis AG, a company limited by shares ( Aktiengesellschaft ) incorporated under the laws of Switzerland (Novartis or Parent), and Ajax Acquisition Sub, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Parent (Merger Sub), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the Merger), with the Company surviving the Merger as an indirect wholly owned subsidiary of Parent. In connection with the Merger, the Company, Atrium Therapeutics, Inc., a newly formed Delaware corporation and wholly owned subsidiary of the Company (SpinCo), and Parent (with respect to certain sections specified therein) also entered into a Separation and Distribution Agreement, dated October 25, 2025 (the Separation and Distribution Agreement), to effect a pre-closing reorganization of certain assets related the Company’s early stage precision cardiology programs and certain collaboration agreements. The transfer of assets to SpinCo includes certain of our assets that triggered a right of first negotiation, or ROFN, with an existing collaboration partner of ours, or the ROFN Holder. During the ROFN period, which expired on February 5, 2026, we were permitted to negotiate the sale of our assets subject to the ROFN with the ROFN Holder, and, if an agreement had been reached, consummate the sale of all or a portion of such assets. If such a sale had been consummated, SpinCo could have received less than all of the SpinCo Business. Liquidity Since inception, the Company has relied on various means of raising capital, including public offerings, various sales agreements, the sale and issuance of convertible preferred stock, funding under collaboration agreements, and a private placement of common stock. The Company has devoted substantially all of its resources to organizing and staffing the Company, business planning, raising capital, developing its proprietary AOC platform, identifying potential product candidates, establishing its intellectual property portfolio, conducting research, preclinical studies, advancing its clinical programs and providing other general and administrative support for these operations. In addition, the Company has a limited operating history, has incurred operating losses since inception and expects that it will continue to incur net losses into the foreseeable future as it continues the development of its product candidates and development programs. As of December 31, 2025, the Company had an accumulated deficit of $1.6 billion, cash and cash equivalents of $382.5 million, and marketable securities of $1.3 billion. The Company believes that existing cash, cash equivalents and marketable securities will be sufficient to fund the Company’s operations for at least 12 months from the date of the filing of this Form 10-K. The Company plans to finance its future cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. If the Company is not able to secure adequate additional funding, it may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or delay or reduce the scope of its planned development programs. Any of these actions could materially harm the Company’s business, results of operations, and future prospects. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC).…