What changed in this filing

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Item 1. Financial Statements

2024-08-13 compared with 2024-05-02 · 83 added, 58 removed, 369 unchanged (28% of the section changed)

25 unchanged sentences

Preferred stock, $ 0.001 par value per share;

5,000,000 undesignated authorized shares as of March 31, 2024 (unaudited) and December 31, 2023;

no shares issued or outstanding as of March 31, 2024 (unaudited) and December 31, 2023

5,000,000 undesignated authorized shares as of June 30, 2024 (unaudited) and December 31, 2023;

no shares issued or outstanding as of June 30, 2024 (unaudited) and December 31, 2023

Common stock, $ 0.001 par value per share;

170,000,000 authorized shares as of March 31, 2024 (unaudited) and December 31, 2023;

issued and outstanding shares – 68,354,033 as of March 31, 2024 (unaudited) and 63,286,404 as of December 31, 2023

170,000,000 authorized shares as of June 30, 2024 (unaudited) and December 31, 2023;

issued and outstanding shares – 75,796,198 as of June 30, 2024 (unaudited) and 63,286,404 as of December 31, 2023

Additional paid-in capital

10 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

License and collaboration agreement revenues

15 unchanged sentences

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Consolidated net loss

9 unchanged sentences

(in thousands, except share data)

Three months ended March 31, 2024 (unaudited)

Three and Six Months Ended June 30, 2024 (unaudited)

Comprehensive

8 unchanged sentences

Balance as of March 31, 2024

Three Months Ended March 31, 2023 (unaudited)

Issuance of common stock pursuant to employee stock purchase plan

Issuance of common stock from at-the-market offerings, net of offering costs

Stock-based compensation

Net unrealized loss on investments, net of tax

Balance as of June 30, 2024

Three and Six Months Ended June 30, 2023 (unaudited)

Comprehensive

8 unchanged sentences

Balance as of March 31, 2023

Issuance of common stock pursuant to employee stock purchase plan

Issuance of common stock upon release of restricted stock units

Issuance of common stock from at-the-market offerings, net of offering costs

Stock-based compensation

Net unrealized loss on investments, net of tax

Balance as of June 30, 2023

See accompanying notes.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Stock-based compensation

(Accretion) amortization of (discount) premium of available-for-sale investment securities

Accretion of available-for-sale investment securities

Amortization of right-of-use assets

Gain on disposal of property and equipment

Changes in operating assets and liabilities:

8 unchanged sentences

Maturities of available-for-sale investment securities

Net cash used in by investing activities

Proceeds from sale of property and equipment

Net cash provided by (used in) by investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock through employee stock purchase plan

Proceeds from issuance of common stock from at-the-market offerings, net of offering costs

22 unchanged sentences

Principles of Consolidation

Our unaudited condensed consolidated financial statements include our accounts and our 98 % majority-owned subsidiary in Hong Kong, Pangu BioPharma Limited (Pangu BioPharma).

Our unaudited interim condensed consolidated financial statements include our accounts and our 98 % majority-owned subsidiary in Hong Kong, Pangu BioPharma Limited (Pangu BioPharma).

All intercompany transactions and balances are eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S.

GAAP) and follow the requirements of the U.S.

13 unchanged sentences

Liquidity and Financial Condition

We have incurred net losses and negative cash flows from operations since our inception in 2005, including a consolidated net loss of $ 15.5 million for the three months ended March 31, 2024.

As of March 31, 2024, we had an accumulated deficit of $ 483.5 million.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 87.7 million as of March 31, 2024 will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.

We have incurred net losses and negative cash flows from operations since our inception in 2005, including a consolidated net loss of $ 16.3 million and $ 31.8 million for the three and six months ended June 30, 2024.

As of June 30, 2024, we had an accumulated deficit of $ 499.8 million.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 81.4 million as of June 30, 2024 will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years at a minimum.

2 unchanged sentences

The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts and the timing and nature of the regulatory approval process for our product candidates.

We anticipate that we will seek to fund our operations through equity offerings, grant funding, collaborations, strategic partnerships and/or licensing arrangements, and when we are closer to commercialization of our product candidates potentially through debt financings.

we may be unable to raise additional capital or enter into such arrangements when needed on favorable terms or at all.

We anticipate that we will seek to fund our operations through equity offerings, grant funding, collaborations, strategic partnerships and/or licensing

arrangements, and when we are closer to commercialization of our product candidates potentially through debt financings.

However, we may be unable to raise additional capital or enter into such arrangements when needed on favorable terms or at all.

Our failure to raise capital or enter into such arrangements when needed would have a negative impact on our financial condition and ability to develop our product candidates.

Restricted Cash

As of March 31, 2024, restricted cash was approximately $ 3.2 million, which was held as a security deposit in conjunction with our new facility lease and financing leases as discussed further in Note 4 - Commitments and Contingencies.

As of June 30, 2024, restricted cash was approximately $ 2.9 million, which was held as a security deposit in conjunction with our facility lease and financing leases as discussed further in Note 4 - Commitments and Contingencies.

Employee Retention Credit

1 unchanged sentence

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC.

As a result of the foregoing legislation, we determined that we are eligible to claim an ERC benefit on qualified wages that we paid to our employees between March 2020 and September 2021.

As a result of the foregoing legislation, we determined that we were eligible to claim an ERC benefit on qualified wages that we paid to our employees between March 2020 and September 2021.

Our credit was primarily derived from qualified wages during January 2021 through September 2021 based on gross receipts for each calendar quarter in 2021 compared to the corresponding calendar quarter in 2019.

14 unchanged sentences

The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account.

Any impairment that has not been recorded through an allowance for credit losses is included in other comprehensive income (loss) on the unaudited condensed consolidated statements of operations and comprehensive loss.

Any impairment that has not been recorded through an allowance for credit losses is included in other comprehensive income (loss) on the unaudited interim condensed consolidated statements of operations and comprehensive loss.

We elected the practical expedient to exclude the applicable accrued interest from both the fair value and amortized costs basis of our available-for-sale securities for purposes of identifying and measuring an impairment.

Accrued interest receivable on available-for-sale securities is recorded within prepaid expenses and other current assets on our unaudited condensed consolidated balance sheets.

Accrued interest receivable on available-for-sale securities is recorded within prepaid expenses and other current assets on our unaudited interim condensed consolidated balance sheets.

Our accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which we consider to be in the period in which we determine the accrued interest will not be collected by us.

Use of Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S.

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure for these items in our unaudited condensed consolidated financial statements and accompanying notes.

The most significant estimates in our unaudited condensed consolidated financial statements relate to clinical trial and research and development expenses.

Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ materially from these estimates and assumptions.

Our unaudited interim condensed consolidated financial statements are prepared in accordance with U.S.

The preparation of our unaudited interim condensed consolidated financial statements requires us to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure for these items in our unaudited interim condensed consolidated financial statements and accompanying notes.

The most significant estimates in our unaudited interim condensed consolidated financial statements relate to clinical trial and research and development expenses.

Although these estimates are based on our knowledge of

current events and actions we may undertake in the future, actual results may ultimately differ materially from these estimates and assumptions.

Accrued Expenses

10 unchanged sentences

We determine the lease term at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise.

Rent expense for operating leases is recognized on a straight-line basis over the lease term and is included in operating expenses in our unaudited condensed consolidated statements of operations.

For financing leases, interest expense and amortization of the ROU is included in operating expenses in our unaudited condensed consolidated statements of operations and variable lease payments are expensed as incurred.

Rent expense for operating leases is recognized on a straight-line basis over the lease term and is included in operating expenses in our unaudited interim condensed consolidated statements of operations.

For financing leases, interest expense and amortization of the ROU is included in operating expenses in our unaudited interim condensed consolidated statements of operations and variable lease payments are expensed as incurred.

If a lease is modified, the modified contract is evaluated to determine whether it is or contains a lease.

2 unchanged sentences

For a modification that is not a separate contract, we reassess the lease classification using the modified terms and conditions and the facts and circumstances as of the effective date of the modification and recognize the amount of the remeasurement of the lease liability for the modified lease as an adjustment to the corresponding ROU asset.

Our ROU assets consist of non-cancelable operating leases and financing leases.

Non-cancelable operating leases consist of leases for our corporate headquarters and additional laboratory space.

Our ROU assets consist of a non-cancelable operating lease for our corporate headquarters and financing leases.

Financing leases consist of leases for various research and development and information technology equipment.

22 unchanged sentences

Potentially dilutive securities not considered for the calculation of diluted net loss per share are as follows (in common stock equivalents):

Six Months Ended June 30,

Common stock warrants

2 unchanged sentences

Recent Accounting Pronouncements

In December 2023, the FASB, issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction.

In December 2023, the Financial Accounting Standards Board, issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction.

The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively.

23 unchanged sentences

for Identical

As of March 31, 2024

As of June 30, 2024

Cash equivalents

17 unchanged sentences

Total assets measured at fair value

As of March 31, 2024 and December 31, 2023, available-for-sale investments are detailed as follows (in thousands):

March 31, 2024

As of June 30, 2024 and December 31, 2023, available-for-sale investments are detailed as follows (in thousands):

June 30, 2024

Contractual Maturity

3 unchanged sentences

Corporate debt securities

Within 2 years

Within 1 year

government agencies

13 unchanged sentences

When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made.

We recorded no allowance for credit losses in the unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2024.

As of March 31, 2024, all available-for-sale investments had a variety of effective maturity dates of less than two years .

As of March 31, 2024, $ 76.7 million of our short-term investments had maturities less than one year and $ 1.0 million had maturities greater than one year.

As of March 31, 2024, 24 out of 28 available-for-sale investments were in a gross unrealized loss position of which one available-for-sale investment with a market value of $ 2.0 million was in such position for greater than 12 months.

As of March 31, 2024 and December 31, 2023, accrued interest receivable on available-for-sale securities for each of the period-ended was $ 0.3 million.

We recorded no allowance for credit losses in the unaudited interim condensed consolidated statements of operations and comprehensive loss during the six months ended June 30, 2024.

As of June 30, 2024, all available-for-sale investments had a variety of effective maturity dates of less than one year .

As of June 30, 2024, 25 out of 27 available-for-sale investments were in a gross unrealized loss position of which four available-for-sale investments with a market value of $ 8.0 million were in such position for greater than 12 months.

As of June 30, 2024 and December 31, 2023, accrued interest receivable on available-for-sale securities for each of the period-ended was $ 0.3 million.

License, Collaboration and Other Agreements

18 unchanged sentences

We received this $ 10.0 million milestone payment in February 2023.

For the three months ended March 31, 2024 and 2023, we recognized $ 0.2 million and $ 0 in collaboration revenue from Kyorin for drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

For the three and six months ended June 30, 2024, we recognized $ 0 and $ 0.2 million in collaboration revenue from Kyorin for drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

We did no t recognize any revenue from Kyorin during the three and six months ended June 30, 2023.

The remaining milestones and royalty payments under the Kyorin Agreement are variable consideration.

11 unchanged sentences

Under the terms of the Lease, the base rent during the first 12 months of the Lease Term was $ 5.75 per square foot of rentable area per month, and the base rent following the first 12 months of the Lease Term is subject to certain upward adjustments of approximately 3.0 % annually.

As of March 31, 2024, we received a $ 5.3 million allowance for tenant improvements, which represents the full allowance to which we were entitled under the Lease.

We provided a $ 0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of March 31, 2024.

As of June 30, 2024, we received $ 5.3 million in allowance payments for tenant improvements, which represents the full allowance to which we were entitled under the Lease.

We provided a $ 0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of June 30, 2024.

During the second quarter of 2023, additional common area amenities were completed by the Landlord which provided us with access to an estimated 1,500 additional rentable square feet.

1 unchanged sentence

The additional rentable square feet was adjusted to 1,170 square feet for a total of 24,866 rentable square feet and our base rent increased for this additional rentable square feet at the same monthly base rent per rentable square foot as contemplated in the Lease.

Future minimum payments under the facility leases and reconciliation to the operating lease liability as of March 31, 2024 were as follows (in thousands):

Future minimum payments under the facility leases and reconciliation to the operating lease liability as of June 30, 2024 were as follows (in thousands):

Operating Leases

4 unchanged sentences

Long-term operating lease liability, net of current portion

For each of the three months ended March 31, 2024 and 2023, we recorded an operating lease expense of $ 0.3 million and $ 0.7 million, respectively.

As of March 31, 2024, the weighted-average remaining lease term was 9.3 years and the weighted average discount rate was 8.8 %.

For the three months ended June 30, 2024 and 2023, we recorded an operating lease expense of $ 0.4 million and $ 0.5 million, respectively.

For the six months ended June 30, 2024 and 2023, we recorded an operating lease expense of $ 0.7 million and $ 1.1 million, respectively.

As of June 30, 2024, the weighted-average remaining lease term was 9.0 years and the weighted average discount rate was 8.8 %.

Financing Leases

In April 2022, we entered into a master financing lease agreement to lease various research and development and information technology equipment over a 48-month term.

Future minimum payments under the financing lease and reconciliation to the financing lease liability as of March 31, 2024 were as follows (in thousands):

Future minimum payments under the financing lease and reconciliation to the financing lease liability as of June 30, 2024 were as follows (in thousands):

Financing Leases

3 unchanged sentences

Long-term financing lease liability, net of current portion

As of March 31, 2024, the weighted-average remaining lease term was 2.8 years and the weighted-average discount rate was 8.3 %.

As of March 31, 2024, we have a $ 2.5 million deposit held as collateral for the leased equipment, and this deposit is included in restricted cash.

As of June 30, 2024, the weighted-average remaining lease term was 2.5 years and the weighted-average discount rate was 8.3 %.

As of June 30, 2024, we have a $ 2.2 million deposit held as collateral for the leased equipment, and this deposit is included in restricted cash.

Stockholders’ Equity

6 unchanged sentences

During the year ended December 31, 2023, we sold an aggregate of 10,530,795 shares of common stock at a weighted-average price of $ 1.82 per share for net proceeds of approximately $ 18.4 million under the Jefferies ATM Offering Program.

During the three months ended March 31, 2024, we sold an aggregate of 5,045,518 shares of common stock at a weighted-average price of $ 1.79 per share for net proceeds of approximately $ 8.6 million under the Jefferies ATM Offering Program of which $ 0.8 million was included in other receivables as of March 31, 2024.

During the six months ended June 30, 2024, we sold an aggregate of 12,448,319 shares of common stock at a weighted-average price of $ 1.77 per share for net proceeds of approximately $ 21.3 million under the Jefferies ATM Offering Program.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance was as follows:

March 31, 2024

June 30, 2024

Common stock warrants

3 unchanged sentences

Shares available under the employee stock purchase plan

The following table summarizes our stock option activity under all equity incentive plans for the three months ended March 31, 2024:

The following table summarizes our stock option activity under all equity incentive plans for the six months ended June 30, 2024:

Stock Options

2 unchanged sentences

Canceled/forfeited/expired

Outstanding as of March 31, 2024

Outstanding as of June 30, 2024

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Expected term (in years)

1 unchanged sentence

3.6 % – 3.8 %

3.8 % – 4.5 %

3.6 % – 4.0 %

Expected volatility

76.7 % – 77.1 %

81.8 % – 83.0 %

76.7 % – 80.5 %

81.8 % – 83.0 %

Expected dividend yield

The following table summarizes our restricted stock unit activity under all equity incentive plans for the three months ended March 31, 2024:

The following table summarizes our restricted stock unit activity under all equity incentive plans for the six months ended June 30, 2024:

Number of Outstanding

2 unchanged sentences

Balance as of December 31, 2023

Balance as of March 31, 2024

Balance as of June 30, 2024

Stock-based Compensation

The allocation of stock-based compensation for all options and restricted stock units and stock issued pursuant to our employee stock purchase plan is as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

1 unchanged sentence

Total stock-based compensation expense

Subsequent Events

From April 1, 2024 through April 30, 2024, we sold an aggregate of 656,907 shares of common stock at a weighted-average price of $ 1.76 through the Jefferies ATM Offering Program for net proceeds of $ 1.1 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements