Executive Summary / Key Takeaways

• From Pipeline to Liquidation: Mural Oncology's complete discontinuation of its lead cytokine therapy nemvaleukin alfa following Phase 3 failure in March 2025 triggered a strategic collapse, forcing the company to abandon all R&D and pursue a cash sale to XOMA Royalty at $2.035 per share, representing the final extraction of value from a failed development platform.

• The Going Concern Reality: With $58.9 million in cash as of September 2025 but no revenue and $84.8 million in nine-month losses, Mural's board explicitly concluded there was "substantial doubt" about its ability to continue as a standalone entity, making the acquisition not a strategic choice but a financial necessity to avoid dissolution.

• Acquisition Arbitrage Closed: The deal's final consideration of exactly $2.035 per share—with zero additional payout from the potential $0.205 contingent amount—means shareholders receive a fixed cash value, eliminating any upside optionality and turning the investment into a pure timing play on deal closure rather than a biotech recovery story.

• Competitive Failure in Cytokine Engineering: Mural's pegylated IL-2 approach, designed to bias toward effector cells, proved clinically inferior to competitors' tumor-selective prodrug technologies from Xilio Therapeutics and Werewolf Therapeutics , highlighting how engineering strategy directly determines clinical and financial outcomes in immuno-oncology.

• Critical Risk for Remaining Holders: While the acquisition completed on December 5, 2025, the story illustrates how rapidly a biotech can transition from independent development to liquidation, with the 90% workforce reduction and $17.5 million restructuring charge permanently eliminating any operational optionality beyond the cash exit.

Setting the Scene: The Cytokine Collapse

Mural Oncology plc, originally established as a private shelf company in May 2017 and de-shelved in 2023 in connection with its separation from Alkermes plc , began trading as an independent entity on November 16, 2023. The company emerged with a clear mission: develop immunotherapies for cancer using its protein engineering expertise to create biased cytokine therapies that could stimulate immune cells while minimizing toxicity. Its lead candidate, nemvaleukin alfa, represented a specific engineering approach to interleukin-2 (IL-2) designed to preferentially activate effector T-cells over regulatory T-cells, theoretically offering a differentiated profile in solid tumors like platinum-resistant ovarian cancer and mucosal melanoma.

The immuno-oncology landscape in which Mural competed is brutally unforgiving. Direct competitors like Xilio Therapeutics and Werewolf Therapeutics had already moved toward tumor-activated prodrug platforms that conditionally release cytokines within the tumor microenvironment, addressing the fundamental toxicity challenges that have plagued IL-2 therapies for decades. Larger players like Nektar Therapeutics had already experienced high-profile Phase 3 failures with their own IL-2 programs, forcing pivots to alternative cytokines like IL-15. Meanwhile, checkpoint inhibitors from Merck (MRK) and others dominated standard-of-care, creating high bars for combination efficacy. Mural's strategy relied on demonstrating that its engineering bias could overcome these hurdles without requiring tumor-selective activation—a bet that would prove catastrophically wrong.

Technology and Strategic Differentiation: Why Nemvaleukin Failed

Mural's core technology platform centered on protein engineering to create cytokine variants with altered receptor binding profiles. The scientific premise was sound: by reducing affinity for the IL-2 receptor alpha subunit expressed on regulatory T-cells, nemvaleukin would theoretically spare immunosuppressive cells while activating cytotoxic effector cells. This approach aimed to improve the therapeutic window compared to legacy IL-2 therapies like aldesleukin, which suffered from severe off-target toxicities.

The problem was execution in a competitive context. While Mural pursued direct systemic administration of an engineered cytokine, competitors like Xilio Therapeutics had developed Tumor-Activated Cytokine Prodrugs that remain inert until cleaved by tumor-specific proteases. This tumor-selective approach directly addresses the toxicity-efficacy tradeoff that Mural's bias engineering only partially mitigated. Werewolf Therapeutics' INDUKINE platform similarly masks cytokines for conditional activation, creating a qualitative safety advantage that regulators and clinicians increasingly favor. When Mural's Phase 3 ARTISTRY-7 trial read out negative in March 2025—showing no benefit for nemvaleukin plus pembrolizumab in platinum-resistant ovarian cancer—the market's verdict was clear: the engineering approach was insufficiently differentiated to justify the risk profile.

The strategic implications were immediate and severe. Unlike Nektar, which could pivot to IL-15 after its IL-2 failure, Mural's pipeline was concentrated. The company had no backup cytokine program with clinical data, and its preclinical IL-18 and IL-12 assets remained too early to attract partnership interest. This concentration risk, common in platform biotechs but lethal when the lead program fails, forced Mural's board to confront a stark reality: the cost to rebuild a competitive pipeline would exceed available capital, especially given competitors' head starts in tumor-selective designs.

Financial Performance: The Path to Zero Operations

Mural's financial trajectory tells a story of controlled demolition. For the nine months ended September 30, 2025, the company reported a net loss of $84.83 million, an improvement from the prior year's $94.24 million loss only because R&D spending collapsed from $81.99 million to $46.41 million following the April 2025 discontinuation decision. General and administrative expenses paradoxically increased from $20.41 million to $23.29 million, driven by $1.8 million in higher legal fees for corporate activities and allocated facilities costs after R&D ceased. This cost structure inversion—rising overhead while core operations shut down—is classic biotech wind-down dynamics, where transaction costs and lease obligations consume shrinking cash.

The restructuring charges totaling $17.49 million in the first nine months of 2025 reveal the human and financial cost of failure. $9.5 million in employee-related costs for the 90% workforce reduction (104 positions) represented severance and retention payments to a skeleton crew. $5.5 million in impairment charges and prepaid write-offs eliminated the remaining book value of lab equipment and contract manufacturing agreements. $2.5 million in contract termination costs settled obligations with clinical research organizations and licensing partners. These charges are non-recurring in name only—they permanently eliminate Mural's operational capacity, making any future R&D restart prohibitively expensive compared to competitors who maintained continuous operations.

Cash and cash equivalents of $58.90 million as of September 30, 2025, represent the final pool of value to be distributed. The company's own assessment in its 10-Q filing is brutally honest: this cash "is not sufficient to resume preclinical or clinical development of any product candidates while meeting existing obligations." Management further states that "there is substantial doubt about its ability to continue as a going concern" if the acquisition fails. This language, rare in SEC filings, underscores that Mural is not a restructuring story but a liquidation in progress. The $75 million at-the-market agreement with Jefferies (JEF) remained untapped, as issuing equity would be dilutive and pointless for a company with no pipeline.

Outlook and Execution: The XOMA Royalty Acquisition Timeline

On August 20, 2025, Mural entered into a transaction agreement for XRA 5 Corp., a wholly-owned subsidiary of XOMA Royalty Corporation (XOMA), to acquire the company for cash. The structure was straightforward: shareholders would receive a base price of $2.035 per share, with a potential additional amount of up to $0.205 per share contingent on closing net cash exceeding an estimated $36.20 million. On November 26, 2025, the final calculation revealed the additional amount would be $0.000, cementing the total consideration at exactly $2.035 per share.

The acquisition's completion on December 5, 2025, following Irish High Court sanction on December 3, marks the end of Mural's independent existence. For shareholders, this represents the final realization of value. The stock's current trading price of $2.04 essentially matches the deal price, indicating market confidence in closure but zero speculation on alternative outcomes. This tight spread reflects the deal's certainty—shareholder approval was secured on October 24, 2025, and the cash consideration is not subject to financing conditions.

The "so what" for investors is that Mural's story is now a case study rather than an investment opportunity. The acquisition price of $2.035 per share, applied to a company with $58.9 million in cash and a market cap of $35.38 million, implies an enterprise value of negative $19.94 million. This negative EV reflects that the market valued Mural's ongoing obligations—lease liabilities, wind-down costs, and contingent liabilities—as exceeding its standalone asset value. XOMA Royalty's willingness to pay $2.035 suggests they attribute some value to Mural's remaining IP or see cost synergies in absorbing the shell, but for ordinary shareholders, this is purely a cash exit.

Risks and Asymmetries: What Could Have Gone Wrong

While the acquisition's completion eliminates most execution risk, reviewing the disclosed risks illustrates how precarious Mural's position was. The transaction agreement included standard closing conditions, but the company's going concern warning meant any delay could have triggered dissolution. If the acquisition had failed, Mural's board stated it "may be required to delay, limit, reduce, or terminate its strategic process" and "may decide to pursue a dissolution and liquidation." In such a scenario, the cash available for distribution would depend on timing and amounts reserved for commitments, likely resulting in proceeds well below $2.035 per share after wind-down costs.

The tax matters agreement with Alkermes (ALKS), effective for four years beginning two years before the November 2023 distribution, restricted Mural from actions that would jeopardize the tax-free status of the separation. This limitation, while moot post-acquisition, could have constrained strategic alternatives like asset sales or equity issuances that might have generated slightly higher returns. The agreement exemplifies how corporate carve-outs carry hidden constraints that only become binding when the core business fails.

Product liability risks, though theoretical for a discontinued pipeline, remain relevant for any retained IP. Mural's exposure to potential litigation from clinical trial participants or manufacturing partners could have eroded the cash pool. The $3.5 million remaining operating lease liability for the Winter Street facility represents a concrete claim on cash that XOMA Royalty must now assume or settle, explaining part of the negative enterprise value calculation.

Competitive Context: Why Mural Lost While Others Advance

Mural's failure stands in stark contrast to its direct competitors' progress. Xilio Therapeutics (XLO), with its tumor-activated IL-12 candidate XTX301 in Phase 1, reported $19.1 million in Q3 2025 revenue from its Gilead Sciences (GILD) partnership. This milestone-driven income, while lumpy, demonstrates that innovative engineering approaches can attract non-dilutive funding and validate platform value. Xilio's TCP platform directly addresses the toxicity concerns that plagued nemvaleukin, giving it a qualitative edge in combination trials with checkpoint inhibitors.

Werewolf Therapeutics (HOWL), despite being pre-revenue, maintains a broader pipeline covering IL-2, IL-12, and IL-18 via its INDUKINE platform. Its lead candidate WTX-124 remains in Phase 1 with interim data expected in Q4 2025, preserving optionality and potential upside that Mura's terminated pipeline completely lacks. The company's $53.39 million market cap and $24.98 million enterprise value reflect a going concern premium that Mural's negative EV explicitly rejects.

Nektar Therapeutics (NKTR)' experience is particularly instructive. After its own IL-2 Phase 3 failure in 2022, Nektar pivoted to NKTR-255, an IL-15 agonist, and maintained some partnership revenue ($11.8 million in Q3 2025). This strategic flexibility, combined with a $1.11 billion market cap despite ongoing losses, shows that investors reward platforms with alternative paths. Mural's decision to cease all development rather than pivot reveals a platform depth problem—its protein engineering, while sophisticated, was too narrowly applied to salvage.

Citius Pharmaceuticals' (CTXR) Lymphir (aldesukin), an IL-2 variant approved for cutaneous T-cell lymphoma in 2022 and launched in December 2025, demonstrates that IL-2 engineering can reach market with the right indication and trial design. Lymphir's FDA approval validates the mechanistic approach but also highlights Mural's strategic error: targeting competitive solid tumor indications like ovarian cancer against established checkpoint inhibitor combinations rather than pursuing niche hematologic malignancies with clearer regulatory paths.

Valuation Context: The Math of a Liquidation

At a current stock price of $2.04, Mural trades essentially at its acquisition price of $2.035 per share, leaving no spread for arbitrageurs. The company's market capitalization of $35.38 million sits below its September 30, 2025 cash balance of $58.90 million, resulting in an enterprise value of negative $19.94 million. This negative EV is the market's verdict that Mural's liabilities and wind-down costs exceed its asset value as a standalone entity, justifying the acquisition as the only path to full cash recovery.

The price-to-book ratio of 0.64 suggests the market never believed in the carrying value of Mural's intangible assets, likely reflecting skepticism about the IP's salvage value. With return on assets of -49.05% and return on equity of -103.87%, traditional profitability metrics are meaningless—this is a capital dissolution, not a capital deployment story. The absence of revenue multiples or growth-adjusted metrics is appropriate for a company with zero product sales and no forward guidance.

Comparing Mural's exit valuation to its peers underscores the failure's magnitude. Xilio trades at 1.12 times sales despite minimal revenue, reflecting platform optionality. Werewolf's EV of $24.98 million represents a going concern premium over cash. Nektar's 17.77 times sales multiple, while high, is supported by partnership revenue and pipeline breadth. Mural's valuation at essentially cash-on-hand with no premium for IP demonstrates that protein engineering platforms have limited salvage value when the lead program fails and the scientific approach falls out of favor.

Conclusion: The End of the Mural Story

Mural Oncology's journey from Alkermes spin-out to XOMA Royalty acquisition in just over two years encapsulates the binary nature of clinical-stage biotech investing. The company's $275 million separation cash, intended to fund a transformative cytokine platform, was consumed by $84.8 million in nine-month losses and $17.5 million in restructuring costs, leaving shareholders with a final distribution of $2.035 per share. This outcome, while preserving some capital, represents a near-total loss of the initial investment thesis.

The central lesson is that engineering differentiation alone is insufficient without clinical validation and competitive positioning. Mural's bias-engineered IL-2 approach, while scientifically elegant, could not compete with tumor-selective prodrug technologies that directly address toxicity. The company's failure to pivot after Phase 3 results, contrasted with Nektar's IL-15 redirection or Xilio's partnership strategy, reveals the critical importance of platform breadth and management adaptability.

For investors, Mural's story is now a historical case study in biotech risk rather than an ongoing investment. The acquisition's completion eliminates any residual optionality, and the $2.035 per share represents the final value extraction. The key variables to monitor—had the deal not closed—would have been wind-down timing and contingent liability reserves, which could have reduced distributions. As it stands, Mural serves as a reminder that in immuno-oncology, the gap between scientific promise and clinical reality is measured in trial outcomes, not market potential, and that competitive dynamics can render entire technology approaches obsolete within a single quarterly readout.