Form 4: Gilead Converts Xilio Warrants, Boosts Stake

Gilead Sciences, a 10% owner and director of Xilio Therapeutics, converted 13.3 million Series B Warrants into Prefunded Warrants, increasing its beneficial ownership.

Summary

• Gilead Sciences, Inc., a 10% owner and director of Xilio Therapeutics, Inc., executed a transaction on November 26, 2025.
• Gilead exercised 13,335,000 Series B Warrants.
• Upon exercise, Gilead acquired 13,335,000 Prefunded Warrants instead of common stock.
• The effective exercise price for the Prefunded Warrants was $0.7499 per warrant, derived from the Series B Warrant exercise price of $0.75 less the Prefunded Warrant exercise price of $0.0001.
• Following this transaction, Gilead beneficially owns a total of 36,645,266 Prefunded Warrants.
• The Prefunded Warrants are exercisable at any time after issuance and have no expiration date.
• The Series B Warrants, which were exercisable from November 1, 2025, and would have expired on December 2, 2025 (with potential extension to December 31, 2025), are now fully exercised and no longer beneficially owned by Gilead.

Sentiment

Score: 7

Explanation: The transaction indicates continued strategic interest from a major pharmaceutical company (Gilead) in Xilio Therapeutics, converting expiring warrants into long-term, flexible prefunded warrants. This is generally positive for Xilio as it signals ongoing support and potential future investment, while for Gilead, it secures future equity upside at a low exercise price.

Positives

• Gilead Sciences has increased its beneficial ownership in Xilio Therapeutics through the acquisition of Prefunded Warrants, indicating continued strategic interest.
• The Prefunded Warrants have no expiration date, providing Gilead with long-term flexibility to convert to common stock.
• The low exercise price of $0.0001 for the Prefunded Warrants makes future conversion to common stock highly capital efficient.

Negatives

• The transaction involves the conversion of warrants rather than a direct purchase of common stock, which might suggest a cautious approach to immediate equity exposure.
• The 19.99% beneficial ownership limitation restricts Gilead's ability to fully exercise warrants into common stock if it would exceed this threshold, potentially limiting its direct control or influence.

Risks

• Beneficial Ownership Limitation: A holder of the warrants cannot exercise them if, after giving effect to such exercise, the holder and its affiliates would beneficially own more than 19.99% of the outstanding shares of Xilio Therapeutics' Common Stock, as per Section 13(d) of the Securities Exchange Act of 1934. This limits Gilead's immediate ability to convert all warrants into voting shares.

Future Outlook

The acquisition of Prefunded Warrants with no expiration date provides Gilead Sciences with long-term optionality to increase its common stock ownership in Xilio Therapeutics, subject to beneficial ownership limitations.

Industry Context

This transaction reflects a strategic investor (Gilead Sciences, a major pharmaceutical company) maintaining and potentially increasing its stake in a smaller biotechnology company (Xilio Therapeutics). Such investments are common in the biotech sector, where larger firms often invest in or acquire smaller companies with promising pipelines. The use of warrants allows for future equity upside while potentially deferring immediate capital outlay or avoiding immediate dilution impact on the market.

Comparison to Industry Standards

• The use of warrants, particularly prefunded warrants, is a common financing and investment mechanism in the biotechnology and pharmaceutical sectors, allowing strategic investors like Gilead to gain exposure and potential upside in smaller companies like Xilio Therapeutics without immediate full equity investment or triggering certain ownership thresholds.
• The 19.99% beneficial ownership limitation is a standard provision often included in such agreements to avoid triggering certain regulatory requirements (e.g., 'poison pill' defenses or HSR Act filings) that apply to ownership stakes of 20% or more. This is a common practice seen in similar strategic investments across the industry.
• The structure of converting Series B Warrants into Prefunded Warrants with a nominal exercise price is a typical way to effectively 'pre-pay' for future equity, providing the holder with a long-term call option on the underlying stock.

Related Party Transactions

• Gilead Sciences, Inc. is a 10% owner and director of Xilio Therapeutics, Inc., making this warrant transaction a related party dealing.

Stakeholder Impact

• Shareholders (Xilio Therapeutics): The conversion of warrants by a significant investor like Gilead could be viewed positively, signaling confidence. However, future exercise of Prefunded Warrants into common stock would dilute existing shareholders.
• Gilead Sciences: Increases its long-term optionality and potential equity upside in Xilio Therapeutics.

Next Steps

• Gilead Sciences may choose to exercise the Prefunded Warrants into common stock of Xilio Therapeutics at any time, subject to the 19.99% beneficial ownership limitation.

Key Dates

Recommendation

This Form 4 filing details an insider transaction where Gilead Sciences converted existing Series B Warrants into Prefunded Warrants in Xilio Therapeutics. While it signifies Gilead's continued strategic interest and long-term optionality in Xilio, it does not represent new capital infusion or a direct purchase of common stock at market price. The transaction primarily restructures an existing investment. Investors should 'hold' to observe future developments, particularly regarding Xilio's pipeline progress and any further actions by Gilead, as the immediate impact on Xilio's operational fundamentals is neutral, but the long-term commitment from a major player is a positive signal.

Keywords

Gilead Sciences, Xilio Therapeutics, SEC Form 4, Warrants, Prefunded Warrants, Series B Warrants, Beneficial Ownership, Insider Transaction, Equity Securities, Biotechnology, Pharmaceuticals