What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-07 · 99 added, 145 removed, 318 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

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Preferred stock, $ 0.001 par value per share;

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

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

5,000,000 undesignated authorized shares as of March 31, 2025 (unaudited) and December 31, 2024, no shares issued or outstanding as of March 31, 2025 (unaudited) and December 31, 2024

Common stock, $ 0.001 par value per share;

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

issued and outstanding shares – 75,811,286 as of September 30, 2024 (unaudited) and 63,286,404 as of December 31, 2023

170,000,000 authorized shares as of March 31, 2025 (unaudited) and December 31, 2024, issued and outstanding shares – 89,002,825 as of March 31, 2025 (unaudited) and 84,038,922 as of December 31, 2024

Additional paid-in capital

Accumulated other comprehensive gain (loss)

Accumulated other comprehensive loss

Accumulated deficit

8 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

License and collaboration agreement revenues

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(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Consolidated net loss

Other comprehensive loss:

Change in unrealized gain on available-for-sale investments, net of tax

Change in unrealized loss on available-for-sale investments, net of tax

Comprehensive loss

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(in thousands, except share data)

Three and Nine Months Ended September 30, 2024 (unaudited)

Three Months Ended March 31, 2025 (unaudited)

Comprehensive

3 unchanged sentences

Issuance of common stock upon release of restricted stock units

Issuance of common stock upon exercise of stock options

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

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Net unrealized loss on investments, net of tax

Net (loss) gain

Balance as of March 31, 2025

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

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

Stock-based compensation

Net unrealized gain on investments, net of tax

Balance as of September 30, 2024

Three and Nine Months Ended September 30, 2023 (unaudited)

Three Months Ended March 31, 2024 (unaudited)

Comprehensive

4 unchanged sentences

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

Issuance of common stock from underwritten follow-on public offering, net of offering costs

Stock-based compensation

Net unrealized gain on investments, net of tax

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

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

Stock-based compensation

Net unrealized gain on investments, net of tax

Balance as of September 30, 2023

Net (loss) gain

Balance as of March 31, 2024

See accompanying notes.

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Cash flows from operating activities:

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Stock-based compensation

Accretion of available-for-sale investment securities

Accretion of discount 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:

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Maturities of available-for-sale investment securities

Proceeds from sale of property and equipment

Net cash provided by (used in) by investing activities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock through employee stock purchase plan

Proceeds from issuance of common stock through option exercises

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

Proceeds from issuance of common stock from underwritten follow-on public offering, net of offering costs

Principal paid on finance lease liabilities

9 unchanged sentences

Purchases of property and equipment in accounts payable

Right-of-use assets obtained in exchange for lease obligation

See accompanying notes.

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Principles of Consolidation

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

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

The accompanying interim unaudited 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.

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These statements do not include all disclosures required by U.S.

GAAP and should be read in conjunction with our financial statements and accompanying notes for the fiscal year ended December 31, 2023, contained in our Annual Report on Form 10-K filed with the SEC on March 14, 2024.

GAAP and should be read in conjunction with our financial statements and accompanying notes for the fiscal year ended December 31, 2024, contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 13, 2025.

The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period.

Risks and Uncertainties

Global economic and business activities continue to face widespread macroeconomic uncertainties, including global geopolitical tension, armed conflicts, potential future health pandemics, labor shortages, inflation and monetary supply shifts, liquidity concerns at, and failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets and recession risks, which has resulted in further volatility in the U.S.

and global financial markets and which has led to and may continue to lead to, additional disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally.

The ultimate long-term impact of these evolving geopolitical and macroeconomic conditions on our business is uncertain, although we continue to actively monitor the impact of these factors on our results of operations, financial condition and cash flows.

The extent of the impact of these factors on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected timeframe, will depend on future developments, which are uncertain and cannot be predicted;

however, any continued or renewed disruption resulting from these factors could negatively impact our business.

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 $ 17.3 million and $ 49.1 million for the three and nine months ended September 30, 2024.

As of September 30, 2024, we had an accumulated deficit of $ 517.1 million.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 68.9 million as of September 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 have incurred net losses and negative cash flows from operations since our inception in 2005, including a consolidated net loss of $ 14.9 million for the three months ended March 31, 2025.

As of March 31, 2025, we had an accumulated deficit of $ 546.9 million.

We currently have an “at-the-market” offering program (the Jefferies ATM Offering Program) through an Open Market Sale Agreement SM with Jefferies LLC (Jefferies).

During the three months ended March 31, 2025, we sold an aggregate of 4,941,895 shares of common stock at a weighted-average price of $ 3.93 per share for proceeds of approximately $ 18.8 million under the Jefferies ATM Offering Program, net of offering costs.

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.

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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 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.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 78.8 million as of March 31, 2025 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.

Restricted Cash

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

As of March 31, 2025, restricted cash was approximately $ 2.4 million, which was held as a security deposit in conjunction with our corporate headquarters facility lease and financing leases as discussed further in Note 4 - Commitments and Contingencies.

Employee Retention Credit

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law providing numerous tax incentives and other stimulus measures, including an employee retention credit (ERC), which is a refundable tax credit against certain employment taxes.

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 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.

We determined that we had met the requirement for a decline in gross receipts.

Accounting Standards Codification (ASC) Topic 105, Generally Accepted Accounting Principles describes the decision-making framework when no guidance exists in U.S.

GAAP for a particular transaction.

Specifically, ASC 105-10-05-2 instructs companies to look for guidance for a similar transaction within U.S.

GAAP and apply that guidance by analogy.

We accounted for the ERC by analogy to International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, of International Financial Reporting Standards (IFRS).

Under an IAS 20 analogy, a business entity would recognize the credit on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the ERC is intended to compensate when there is reasonable assurance that the entity will comply with any conditions attached to the ERC and the ERC will be received.

Under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act), we were eligible to claim the employee retention credit (ERC), which is a refundable tax credit against certain employment taxes.

During the year ended December 31, 2023, we amended certain payroll tax filings and applied for a refund of $ 1.2 million of ERC benefits.

The refund was recorded within the other receivables in our consolidated balance sheets, and as a $ 0.8 million reduction of research and development expenses and a $ 0.4 million reduction of general and administrative expenses in our consolidated statements of operations for the year ended December 31, 2023.

The refund was recorded within the other receivables in our audited consolidated balance sheets, and as a $ 0.8 million reduction of research and development expenses and a $ 0.4 million reduction of general and administrative expenses in our audited consolidated statements of operations for the year ended December 31, 2023.

As of March 31, 2025, we have received $ 1.0 million of ERC benefits, and have $0.2 million in other receivables related to the remaining ERC benefits to be received.

Allowance of Credit Losses

For available-for-sale securities in an unrealized loss position, we first assess whether we intend to sell, or if it is more likely than not that we will be required to sell, the security before recovery of its amortized cost basis.

For available-for-sale investments in an unrealized loss position, we first assess whether we intend to sell, or if it is more likely than not that we will be required to sell, the security before recovery of its amortized cost basis.

If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings.

For available-for-sale securities that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors.

For available-for-sale investments that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors.

In making this assessment, we consider the severity of the impairment, any changes in interest rates, market conditions, changes to the underlying credit ratings and forecasted recovery, among other factors.

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 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 interim condensed consolidated balance sheets.

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.

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 investments for purposes of identifying and measuring an impairment.

Accrued interest receivable on available-for-sale investments is recorded within other receivables on our unaudited 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 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.

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.

Accrued Expenses

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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 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.

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.

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

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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 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.

Our ROU assets consist of a non-cancelable operating lease for our corporate headquarters and financing leases for various research and development and information technology equipment.

We do not separate lease and non-lease components for our long-term leases.

Revenue Recognition

We evaluate our agreements under ASC Topic 606, Revenue from Contracts with Customers and ASC Topic 808, Collaborative Arrangements .

We evaluate our agreements under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and ASC Topic 808, Collaborative Arrangements .

We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.

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

Nine Months Ended September 30,

Common stock warrants

1 unchanged sentence

Employee stock purchase plan

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM) in making decisions regarding resource allocation and assessing performance.

We view our operations and manage our business in one operating segment, which includes all activities related to the discovery and development of our product candidates.

Our CODM is our Chief Executive Officer , who reviews and evaluates consolidated research and development expenses, general and administrative expenses, net loss, net cash used in operating activities and our consolidated cash and cash equivalents for purposes of making operating decisions, allocating resources and planning and forecasting future periods.

The table below summarizes the significant expense categories regularly reviewed by our CODM for the three months ended March 31, 2025 and 2024.

License and collaboration agreement revenues

Research and development expenses:

Efzofitimod expenses

Preclinical development and other shared research and development expenses

Non-cash expenses (depreciation and stock-based compensation)

Total research and development expenses

General and administrative expenses:

Other general and administrative expenses

Non-cash expenses (depreciation and stock-based compensation)

Total general and administrative expenses

Other segment items (1)

Consolidated net loss

(1) Other segment items included interest income and interest expense.

Recent Accounting Pronouncements

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.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (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.

The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We adopted the standard on January 1, 2025 .

The adoption did not have a material effect on our consolidated financial statements disclosures.

In November 2024, the FASB issued ASU 2024-03, which requires entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items on the face of the income statement.

The guidance addresses investors’ requests for more detailed expense information, which they said is critical to understanding an entity’s performance, assessing its prospects for future cash flows, and comparing its performance both over time and with that of other entities.

The standard is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 with early adoption permitted .

We are currently evaluating the disclosure requirements related to the new standard.

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Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As such, fair value is a market-based measurement that should be determined based on assumptions that market

participants would use in pricing an asset or liability.

As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

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for Identical

As of September 30, 2024

As of March 31, 2025

Cash equivalents

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Total assets measured at fair value

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

September 30, 2024

As of March 31, 2025 and December 31, 2024, available-for-sale investments are detailed as follows (in thousands):

March 31, 2025

Contractual Maturity

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

Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive income (loss).

Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive loss.

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 interim condensed consolidated statements of operations and comprehensive loss during the nine months ended September 30, 2024.

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

As of September 30, 2024 , seven out of 21 available-for-sale investments were in a gross unrealized loss position of which three available-for-sale investments with a market value of $ 5.0 mil lion were in such position for greater than 12 months.

As of September 30, 2024 and December 31, 2023, accrued interest receivable on available-for-sale securities was $ 0.3 million and $ 0.3 million, respectively.

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, 2025.

As of March 31, 2025, all available-for-sale investments had a variety of effective maturity dates of less than one year .

As of March 31, 2025, 16 out of 24 available-for-sale investments were in a gross unrealized loss position of which one available-for-sale investment with a market value of $ 1.0 million was in such position for greater than 12 months.

As of March 31, 2025 and December 31, 2024, accrued interest receivable on available-for-sale investments was $ 0.3 million and $ 0.2 million, respectively.

License, Collaboration and Other Agreements

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Efzofitimod was observed to be generally well-tolerated with no drug-related serious adverse events, and PK findings were consistent with previous studies of efzofitimod.

Kyorin is also participating in the EFZO-FIT TM study as the local sponsor in Japan.

Kyorin is also participating in the EFZO-FIT study as the local sponsor in Japan.

In February 2023, Kyorin dosed the first patient in Japan in the EFZO-FIT study which triggered a $ 10.0 million milestone payment to us.

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Either party may terminate the Kyorin Agreement in the event that the other party breaches the agreement and fails to cure the breach, becomes insolvent or challenges certain of the intellectual property rights licensed under the agreement.

We assessed our license and collaboration with Kyorin in accordance with Topic 606 and concluded that Kyorin is a customer.

We identified the following performance obligations under the Kyorin Agreement:

1) the license of efzofitimod for ILD in Japan;

and 2) free clinical trial material for Kyorin’s Phase 1 clinical trial.

Kyorin is participating in the EFZO-FIT study and received approval from the Pharmaceuticals and Medical Devices Agency (PMDA) to commence the EFZO-FIT study in Japan in December 2022.

Additionally, i n February 2023, Kyorin dosed the first patient in Japan in the EFZO-FIT study which triggered a $ 10.0 million milestone payment to us.

We recognized this $ 10.0 million milestone payment as revenue during the year ended December 31, 2022, as we determined the milestone became probable of achievement as of December 31, 2022, with Kyorin having scheduled site visits for patient screenings by that time.

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

We did no t recognize any revenue from Kyorin during the three months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024 and 2023, we recognized $ 0.2 million and $ 0.4 million, respectively, in collaboration revenue from Kyorin for drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

We assessed our license and collaboration with Kyorin in accordance with Topic 606 which applies to delivered goods or services to a customer and concluded that Kyorin is a customer.

For the three months ended March 31, 2025 and 2024, we recognized $ 0 and

$ 0.2 million, respectively, in collaboration revenue from Kyorin for drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

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

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Corporate Headquarters Facility Lease

In May 2022, we entered into a lease (the Lease) with San Diego Creekside, LLC (Landlord), as lessor, pursuant to which we agreed to lease from Landlord approximately 23,696 rentable square feet (subject to increase pursuant to the terms of the Lease) of office and laboratory space.

In May 2022, we entered into a non-cancelable facility lease that is subject to base lease payments that started at $ 5.75 per square foot of rentable area per month for the first 12 months of the lease and which escalate 3.0 % annually over the term of the lease, and additional charges for common area maintenance and other costs.

The term of the lease (the Lease Term) commenced on March 20, 2023 (the Lease Commencement Date) and will continue for 124 months from the Lease Commencement Date.

We also have one option to extend the Lease Term for five

Base rent during such extension period would be at the fair market rent for the Premises (as that term is defined in the Lease).

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.

W e 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 September 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.

In April 2024, we finalized an amendment to the Lease (the Lease Amendment), effective June 2023.

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 September 30, 2024 were as follows (in thousands):

We also have one option to extend the Lease Term for five years .

In April 2024, we entered into a lease amendment for additional common area amenities, effective as of June 2023.

The amendment increased the total rentable square feet from 23,696 rentable square feet to 24,866 rentable square feet.

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, 2025.

Future minimum payments under the facility lease and a reconciliation to the operating lease liability as of March 31, 2025 were as follows (in thousands):

Operating Leases

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Long-term operating lease liability, net of current portion

For the three months ended September 30, 2024 and 2023, we recorded an operating lease expense o f $ 0.4 m illion and $ 0.3 million, respectively.

For the nine months ended September 30, 2024 and 2023, we recorded an operating lease expense of $ 1.1 million and $ 1.4 million, respectively.

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

For each of the three months ended March 31, 2025 and 2024, we recorded an operating lease expense of $ 0.4 million and $ 0.3 million, respectively.

As of March 31, 2025, the weighted-average remaining lease term was 8.3 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 September 30, 2024 were as follows (in thousands):

Future minimum payments under the financing lease and reconciliation to the financing lease liability as of March 31, 2025 were as follows (in thousands):

Financing Leases

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Long-term financing lease liability, net of current portion

As of September 30, 2024, the weighted-averag e remaining lease term was 2.3 years and the weighted-average discount rate was 8.3 %.

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

As of March 31, 2025, the weighted-average remaining lease term was 1.8 years and the weighted-average discount rate was 8.3 %.

As of March 31, 2025, we have a $ 1.7 million deposit held as collateral for the leased equipment, and this deposit is included in restricted cash.

Stockholders’ Equity

Underwritten Follow-On Public Offerings

In February 2023, we completed an underwritten follow-on public offering of 23,125,000 shares of our common stock, including the partial exercise of the underwriters’ option to purchase additional shares, at a price to the public of $ 2.25 per share.

The total net proceeds from the offering were approximately $ 48.1 million, after deducting underwriting discounts, commissions and offering expenses payable by us.

At the Market Offering Programs

In April 2022, we entered into an Open Market Sale Agreement SM with Jefferies LLC (Jefferies) implementing an “at-the-market” offering program (the Jefferies ATM Offering Program), pursuant to which we may offer and sell, from time to time and at our option, up to an aggregate of $ 65.0 million of shares of our common stock through Jefferies, acting as sales agent.

In April 2022, we entered into an Open Market Sale Agreement SM with Jefferies implementing the Jefferies ATM Offering Program.

In December 2024, we amended the Jefferies ATM Offering Program.

Under the Jefferies ATM Offering Program we may offer and sell, from time to time and at our option, up to an aggregate of $ 215.0 million of shares of our common stock (inclusive of $ 65.0 million of sales made prior to the amendment) through Jefferies, acting as sales agent.

Jefferies is entitled to a fixed commission rate of up to 3.0 % of the gross sales proceeds of shares sold under the Jefferies ATM Offering Program.

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 nine months ended September 30, 2024, we sold an aggregate of 12,463,407 shares of common stock at a weighted-average price of $ 1.77 per share for net proceeds of approximately $ 21.4 million under the Jefferies ATM Offering Program.

During the year ended December 31, 2024, we sold an aggregate of 20,653,450 shares of common stock at a weighted-average price of $ 2.02 per share for proceeds of approximately $ 40.3 million under the Jefferies ATM Offering Program, net of offering costs.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance was as follows:

September 30, 2024

Common stock warrants

March 31, 2025

Common stock options and restricted stock units

2 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 nine months ended September 30, 2024:

The following table summarizes our stock option activity under all equity incentive plans for the three months ended March 31, 2025:

Stock Options

2 unchanged sentences

Canceled/forfeited/expired

Outstanding as of September 30, 2024

Outstanding as of March 31, 2025

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 September 30,

Nine Months Ended September 30,

Expected term (in years)

2 unchanged sentences

3.8 % – 4.0 %

3.6 % – 4.5 %

Expected volatility

1 unchanged sentence

80.3 % – 80.5 %

81.5 % – 83.0 %

Expected dividend yield

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

The following table summarizes our restricted stock unit activity under all equity incentive plans for the three months ended March 31, 2025:

Number of Outstanding

2 unchanged sentences

Balance as of December 31, 2024

Balance as of September 30, 2024

Balance as of March 31, 2025

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 September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

Total stock-based compensation expense

Subsequent Events

From October 1, 2024 through November 5, 2024, we sold an aggregate of 8,131,121 shares of common stock at a weighted-average price of $ 2.38 through the Jefferies ATM Offering Program for net proceeds of $ 18.8 million.

With such issuance, the full amount of the Jefferies ATM Offering Program has been sold and such program is no longer available.

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