What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-12 · 195 added, 119 removed, 573 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2022

June 30, 2022

December 31, 2021

19 unchanged sentences

Stockholders’

Common stock, $ 0.00001 par value, 150,000,000 authorized at March 31, 2022 and December 31, 2021, and 29,217,236 and 29,211,643 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Common stock, $ 0.00001 par value, 150,000,000 authorized at June 30, 2022 and December 31, 2021, and 29,266,848 and 29,211,643 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

6 unchanged sentences

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands except for share and per share data)

(in thousands, except share and per share data)

Three Months Ended

Six Months Ended

Operating Expenses:

5 unchanged sentences

Change in fair value of warrant liability

Interest income (expense), including amortization and accretion income

Loss on disposal of assets

Total other expense

Change in fair value of derivative liability

Interest income, including amortization and accretion income

Other expense

Total other income (expense)

Net loss attributable to common stockholders—basic and diluted (Note 13)

2 unchanged sentences

Comprehensive loss:

Net loss attributable to common stockholders

Other comprehensive items:

10 unchanged sentences

Series D-1 and D-2

Other Comprehensive

Stockholders’

Income (Loss) Amount

Equity (Deficit)

Balance, December 31, 2020

4 unchanged sentences

Balance, March 31, 2021

Convertible Preferred Stock

Series C-1 and C-2

Series D-1 and D-2

Stock-based compensation expense

Stock option exercises

Balance, June 30, 2021

Other Comprehensive

Stockholders’

Income (Loss) Amount

Equity (Deficit)

Balance, December 31, 2021

3 unchanged sentences

Balance, March 31, 2022

Stock-based compensation expense

Stock option exercises

Unrealized loss on marketable securities

Balance, June 30, 2022

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

2 unchanged sentences

Change in fair value of warrant liability

Change in fair value of derivative liability

Stock-based compensation expense

Accretion on marketable securities

Changes in operating assets and liabilities:

6 unchanged sentences

Purchase of marketable securities

Maturities of marketable securities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of Series E convertible preferred stock, net of issuance costs

Proceeds from exercise of stock options

1 unchanged sentence

issuance costs

Proceeds from issuance of Series E convertible preferred stock, net of issuance costs

Payment made for deferred offering costs

Net cash provided by financing activities

4 unchanged sentences

Purchases of property and equipment in accounts payable and accrued expenses and other liabilities

Remeasurement of operating lease right-of-use assets and liabilities for lease modification

Initial measurement of right-of-use assets and lease liabilities for operating lease

Remeasurement of right-of-use assets and lease liabilities for lease modification

Right-of-use assets obtained in exchange for operating lease liabilities

Deferred offering costs in accounts payable

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheets that sum to the total of the same such amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands):

Three Months Ended

Six Months Ended

Cash and cash equivalents, end of period

9 unchanged sentences

or “Aura”) is a clinical-stage biotechnology company leveraging its novel targeted oncology platform to develop a potential new standard of care across multiple cancer indications, with an initial focus on ocular and urologic oncology.

Within these unaudited condensed consolidated financial statements, unless the context otherwise requires, references to the Company or Aura refer to Aura Biosciences, Inc.

The Company’s proprietary platform enables the targeting of a broad range of solid tumors using Virus-Like Particles, or VLPs, that can be conjugated with drugs or loaded with nucleic acids to create Virus-Like Drug Conjugates, or VDCs.

Within these unaudited condensed consolidated financial statements, unless the context otherwise requires, references to the Company or Aura refer to Aura Biosciences, Inc and its subsidiary on a consolidated basis.

The Company’s proprietary platform enables the targeting of a broad range of solid tumors using Virus-Like Particles, or VLPs, that are manufactured using standard recombinant protein technology.

These synthetic VLPs can be conjugated with drugs or loaded with nucleic acids to create Virus-Like Drug Conjugates, or VDCs.

The Company’s VDCs are largely agnostic to tumor type and can recognize a surface marker, known as HSPGs, that are specifically modified and more broadly expressed on many tumors.

The Company is developing AU-011, its first VDC product candidate for the first line treatment of primary choroidal melanoma, a rare disease with no drugs approved.

The Company is also developing AU-011 for additional ocular oncology indications and in non-muscle invasive bladder cancer.

The Company is developing belzupacap sarotalocan, its first VDC product candidate for the first line treatment of primary choroidal melanoma, a rare disease with no drugs approved.

The Company is also developing belzupacap sarotalocan for additional ocular oncology indications, including choroidal metastases, and in non-muscle invasive bladder cancer, or NMIBC.

Aura’s team combines expertise in cancer cell biology, ophthalmology, and targeted therapies together with experience in the development and commercialization of orphan products for significant unmet medical needs.

Aura’s headquarters are located in Cambridge, Massachusetts.

Aura’s headquarters are located in Boston, Massachusetts.

The Company’s operations to date have consisted primarily of conducting research and development and raising capital.

8 unchanged sentences

The Company received approximately $ 78.3 million in net proceeds after deducting underwriting discounts, commissions and offering expenses.

Liquidity and Going Concern

Through March 31, 2022, the Company has funded its operations primarily with proceeds from the initial closing and additional closings of its convertible preferred stock financings, through its license agreements, and through its IPO.

The Company has incurred recurring losses and negative operating cash flows from operations since its inception, including net losses of $ 12.8 million and $ 5.9 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the Company had cash and cash equivalents and marketable securities of $ 133.3 million and an accumulated deficit of $ 165.0 million.

Through June 30, 2022, the Company has funded its operations primarily with proceeds from the initial closing and additional closings of its convertible preferred stock financings, through its license agreements, and through its IPO.

The Company has incurred recurring losses and negative operating cash flows from operations since its inception, including net losses of $ 26.3 million and $ 14.8 million for the six months ended June 30, 2022 and 2021 , respectively.

As of June 30, 2022, the Company had cash and cash equivalents and marketable securities of $ 122.1 million and an accumulated deficit of $ 178.4 million.

The Company expects to continue to generate operating losses for the foreseeable future.

As of the issuance date of these unaudited condensed consolidated financial statements for the three months ended March 31, 2022, the Company expects that its cash and cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of these condensed consolidated financial statements.

As of the issuance date of these unaudited condensed consolidated financial statements for the six months ended June 30, 2022 , the Company expects that its cash and cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of these condensed consolidated financial statements.

The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations.

3 unchanged sentences

In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows.

The financial data and other information disclosed in these notes related to the three months ended March 31, 2022 and 2021 are also unaudited.

The financial data and other information disclosed in these notes related to the three months and six months ended June 30, 2022 and 2021 are also unaudited.

The unaudited condensed results of operations are not necessarily indicative of the operating results that may occur for the full fiscal year ending December 31, 2022.

3 unchanged sentences

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2021, in the Company's Annual Report on Form 10-K filed with the SEC on March 23, 2022, there have been no changes to the Company's significant accounting policies except as noted below.

There have been no changes to the Company's significant accounting policies except as noted below.

Marketable Securities

8 unchanged sentences

Recently Adopted Accounting Pronouncements

The Company assessed the recent accounting pronouncements for the three months ended March 31, 2022 and determined no pronouncements have material impact to the condensed consolidated financial statements.

The Company assessed the recent accounting pronouncements for the six months ended June 30, 2022 and determined no pronouncements have material impact to the condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,”

which was subsequently amended in November 2018 through ASU No.

2018-19, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses.”

2016-13 will require entities to estimate lifetime expected credit losses for trade and other receivables, net investments in leases, financing receivables, debt securities and other instruments, which will result in earlier recognition of credit losses.

Further, the new credit loss model will affect how entities in all industries estimate their allowance for losses for receivables that are current with respect to their payment terms.

2018-19 further clarifies that receivables arising from operating leases are not within the scope of Topic 326.

Instead, impairment from receivables of operating leases should be accounted for in accordance with Topic 842, Leases.

As per the latest ASU 2020-02, FASB deferred the timelines for certain small public and private entities, thus the new guidance will be adopted by the Company for the annual reporting period beginning January 1, 2023, including interim periods within that annual reporting period.

The standard will apply as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted.

The Company does not expect adoption of this new guidance to have a material impact on its results of operations, financial condition, and financial statement disclosures.

Fair Value of Assets and Liabilities

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of March 31, 2022 and December 31, 2021 (in thousands):

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of June 30, 2022 and December 31, 2021 (in thousands):

Quoted prices

24 unchanged sentences

Significant changes to these assumptions would result in increases or decreases to the fair value of the warrant liability.

During the three months ended March 31, 2022 and 2 0 21, there were no transfers into or out of Level 3.

During the six months ended June 30, 2022 and 2021, t here were no transfers into or out of Level 3.

The following table set forth a summary of changes in the fair value of the common stock warrants, which represents a recurring fair value measurement that is classified within Level 3 of the fair value hierarchy.

4 unchanged sentences

Change in fair value

Fair value at March 31, 2022

Fair value at June 30, 2022

Property and Equipment, Net

6 unchanged sentences

Property and equipment, net

Depreciation expense was $ 0.3 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively.

Depreciation expense wa s $ 0.3 million and $ 0.2 million for the three months ended June 30, 2022 and 2021 , respectively.

Depreciation expense was $ 0.6 million an d $ 0.4 million for the six months ended June 30, 2022 and 2021 , respectively.

Prepaid Expenses and Other Current Assets

4 unchanged sentences

Prepaid expenses and other current assets

Marketable Securities

Marketable securities consist of the following (in thousands):

March 31, 2022

June 30, 2022

Amortized Cost

4 unchanged sentences

Government agencies

There were no impairments of the Company’s assets measured and carried at fair value during the three months ended March 31, 2022.

There were no impairments of the Company’s assets measured and carried at fair value dur ing the six months ended June 30, 2022 .

Accrued Expenses and Other Current Liabilities

3 unchanged sentences

Accrued expenses and other current liabilities

The Company had 150,000,000 authorized shares of common stock, par value $ 0.00001 per share, of which 29,217,236 and 29,211,643 shares were issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

The Company had 150,000,000 authorized shares of common stock, par value $ 0.00001 per share, of which 29,266,848 and 29,211,643 shares were issued and outstanding at June 30, 2022 and December 31, 2021, respectively.

Upon closing of the IPO on November 2, 2021, all of the Company's outstanding shares of convertible preferred stock automatically converted into 22,550,561 shares of common stock.

18 unchanged sentences

On January 1, 2022, the shares reserved for issuance was increased to 627,333 shares.

The first offering period has not yet been decided by the Company’s Board of Directors or designated committee of the Company’s Board of Directors.

With the transfer of the available options from the 2018 Plan to the 2021 Plan, there were 3,447,892 options available for grant under the 2021 Plan at March 31, 2022.

Stock Options

With the transfer of the available options from the 2018 Plan to the 2021 Plan, there were 3,570,917 options available for grant under the 2021 Plan at June 30, 2022.

The Board is authorized to administer the 2021 Plan.

8 unchanged sentences

The Board or any committee to which the Board delegates authority may, with the consent of the affected plan participants, re-price or otherwise amend outstanding awards consistent with the terms of the 2021 Plan.

The following table summarizes stock option activity under the 2018 Plan and 2021 Plan for the three months ended March 31, 2022:

The following table summarizes stock option activity under the 2018 Plan and 2021 Plan for the six months ended June 30, 2022:

Aggregate Intrinsic

(in thousands)

Outstanding at December 31, 2021

Cancelled/Forfeited

Outstanding at March 31, 2022

Exercisable at March 31, 2022

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2022 and 2021 is $ 11.98 and $ 3.56 per share, respectively.

The total intrinsic value of options exercised was $ 0.1 million and $ 0.01 million for the three months ended March 31, 2022 and 2021, respectively.

Outstanding at June 30, 2022

Exercisable at June 30, 2022

The weighted-average grant date fair value of stock options granted during the six months ended June 30, 2022 and 2021 was $ 11.56 and $ 3.56 per share, respectively.

The fair value of options vested during the six months ended June 30, 2022 and 2021 was $ 1.2 million and $ 0.5 million, respectively.

The total intrinsic value of options exercised was $ 0.6 million and $ 0.01 million for the six months ended June 30, 2022 and 2021, respectively.

The Company has elected to use the Black-Scholes option pricing model to determine the fair value of options granted and generally recognizes the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award.

The determination of the fair value of stock-based payment awards utilizing the Black-Scholes option pricing model is affected by the estimated fair value of the Company’s common stock and a number of other assumptions, including expected volatility, expected life, risk-free interest rate, and expected dividends.

The fair value of the stock options issued for the three months ended March 31, 2022 and 2021 was measured with the following weighted-average assumptions:

The fair value of the stock options issued for the six months ended June 30, 2022 and 2021 was measured with the following weighted-average assumptions:

Six Months Ended

Three Months Ended

Risk-free interest rate

Expected term

Expected term (years)

Expected volatility of the underlying stock

1 unchanged sentence

Restricted Stock Units

The Company has granted restricted stock units with service vesting based conditions.

The Company has granted restricted stock units with service-based vesting conditions.

Unvested shares of restricted common stock may not be sold or transferred by the holder.

They are legally issued and outstanding.

These restrictions lapse accordingly to the time-based vesting of each award.

A summary of the restricted stock units activity during the three months ended March 31, 2022 is as follows:

A summary of the restricted stock units activity during the six months ended June 30, 2022 is as follows:

Restricted Stock Units

1 unchanged sentence

Unvested at December 31, 2021

Unvested at March 31, 2022

Unvested at June 30, 2022

As a result of the 2021 Equity Incentive Plan, the Company granted restricted stock units which vest in increments of 25 % annually over a period of four years .

No restricted stock units vested during the three months ended March 31, 2022.

No restricted stock units vested during the six months ended June 30, 2022.

Stock-based Compensation Expense

1 unchanged sentence

Three Months Ended

Six Months Ended

Research and development

General and administrative

As of March 31, 2022, there was $ 16.0 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 3.14 years.

As of March 31, 2022, there was $ 2.9 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.58 years.

As of June 30, 2022 , there was $ 14.9 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.87 years.

As of June 30, 2022 , there was $ 2.4 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.33 years.

Common Stock Warrants

2 unchanged sentences

Pursuant to FASB ASC Topic 480, Distinguishing Liabilities from Equity, the Series B Warrants were classified as a liability and are re-measured to fair value at each balance sheet date and immediately prior to exercise.

A total of 12,686 of The Series B Warrants were outstanding as of March 31, 2021.

A total of 173,827 of the Series B Warrants were outstanding as of June 30, 2021.

The Series B Warrants were converted into warrants to purchase 12,686 shares of common stock with an exercise price of $ 17.03 upon the completion of the IPO in November 2021.

A total of 12,686 of the common stock warrants remained outstanding at March 31, 2022.

A total of 12,686 of the common stock warrants remained outstanding as of June 30, 2022.

The warrants were valued using the Black-Scholes option pricing model.

7 unchanged sentences

The Company makes matching contributions of 100 % of the first 6 % of employee contributions.

The Company made matching contributions in the amount of $ 0.1 million for the three months ended March 31, 2022 and 2021.

The Company made matching contributions in the amount of $ 0.3 m illion and $ 0.1 million for the six months ended June 30, 2022 and 2021 , respectively.

Commitments and Contingencies

3 unchanged sentences

The lease does not contain any options to renew, terminate, or purchase the underlying asset.

On March 31, 2021, the Company executed an amendment to the facility lease which included an extension of the expiration date of the original leased premises, the addition of 4,516 square feet of laboratory space with an expected commencement date of May 1, 2021 , and the addition of 1,000 square feet of laboratory space with an expected commencement date of June 15, 2021 .

On March 31, 2021, the Company executed an amendment to the facility lease which included an extension of the expiration date of the original leased premises, the addition of 4,516 square feet of laboratory space with a commencement date of May 1, 2021 , and the addition of 1,000 square feet of laboratory space with a commencement date of June 15, 2021 .

The lease term for the original and new spaces will expire on July 31, 2023 , with an option to renew for an additional 12 months .

3 unchanged sentences

The Company remeasured the lease liability and corresponding right-of-use asset for the original space as of the effective date of the amendment to reflect the extended term and recorded in the second quarter of 2021 an additional right-of-use asset and lease liability upon lease commencement of each of the additional space.

On May 16, 2022, the Company entered into an office and laboratory lease in Boston, MA with an initial 10 -year term and one renewal option to extend the lease for an additional seven years .

Estimated payments due under the initial term total $ 35.2 million.

The lease requires a letter of credit totaling $ 0.8 million which is classified as long-term restricted cash and deposits on the condensed consolidated balance sheet.

The landlord will reimburse the Company up to $ 0.5 million for certain costs related to expansion of the laboratory space.

As of June 30, 2022, the Company has not received access to the space and construction plans have not started.

In addition, as of June 30, 2020, there are no right of use assets and lease liabilities on the condensed consolidated balance sheet.

The term of the lease commenced on August 1, 2022 .

The Company also leases office and laboratory equipment for which the related expense is immaterial.

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s leases for the three months ended March 31, 2022 and 2021 (in thousands):

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s leases for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended

Six Months Ended

Amortization of finance right-of-use assets

9 unchanged sentences

Weighted-average discount rate—operating leases

The following table reconciles the future minimum commitments to the Company’s operating lease liabilities at March 31, 2022 (in thousands):

The following table reconciles the future minimum commitments to the Company’s operating lease liabilities at June 30, 2022 (in thousands):

The table does not include the Boston lease entered into as the lease commenced on August 1, 2022.

Operating lease payments as of

March 31, 2022

June 30, 2022

Total lease payments

Total operating lease liabilities at March 31, 2022

Total operating lease liabilities at June 30, 2022

current portion of lease liabilities

14 unchanged sentences

The term of the LI-COR Exclusive Agreement expires on a country-by-country basis, until the longer of (i) ten years from the first commercial sale of a licensed product in such country and (ii) the last to expire valid claim in such country.

The Company recognized no expenses related to this agreement and related amendments for the three months ended March 31, 2022, and 2021, respectively.

The Company recognized no expenses related to this agreement and related amendments for the three and six months ended June 30, 2022 and 2021, respectively.

LI-COR Non-Exclusive License and Supply Agreement

5 unchanged sentences

The 2014 Non-Exclusive Agreement also required the Company to make certain payments upon the achievement of specified development and commercial milestones of up to $ 0.4 million in aggregate.

During the six months ended June 30, 2022 and 2021, the Company recognized immaterial milestones related to this agreement.

Life Technologies Corporation

In December 2014, the Company entered into a non-exclusive, perpetual license agreement with Life Technologies Corporation (“Life Technologies”), which allows for five licensed products.

Under this agreement the Company is required to pay an initial license fee of $ 0.1 each product.

Under this agreement the Company is required to pay an initial license fee of $ 0.1 million for each product.

An annual development fee of $ 0.1 million is due within a year from payment of the initial license fee and due annually or earlier of (i) payment of a commercialization fee or (ii) all development work is terminated.

3 unchanged sentences

The cost of this amendment was a one-time fee of $ 0.05 million.

During the three months ended March 31, 2022, and 2021, the Company recognized $ 0.05 million and $ 0.02 million of expenses related to this agreement.

During the six months ended June 30, 2022 and 2021 , the Company recognized $ 0.05 million and $ 0.03 million of expenses related to this agreement.

National Institute of Health (NIH)-Biologic Materials License Agreement

8 unchanged sentences

This agreement was first amended in 2012, 2013, 2014, 2015, 2016, 2018 and most recently in September of 2020.

During 2011-2022, the Company paid an aggregate of $ 0.4 million in research collaboration fees, $ nil and $ 0.03 million of which was paid in 2022 and 2021, respectively.

During the six months ended June 30, 2022 and 2021, the Company paid $ nil million and $ 0.03 million of research collaboration fees related to this agreement.

A seventh amendment was made in October 2020, requiring payment of $ 0.04 million within 30 days of October 1, 2020, and another $ 0.03 million within 30 days of the 10th anniversary of the CRADA, which was paid in July 2021.

This seventh amendment extended the term of the CRADA to September 30, 2022.

The Company recognized no expenses related to this agreement and related amendments for the three months ended March 31, 2022, and 2021, respectively

The Company recognized no milestones related to this agreement and related amendments for the six months ended June 30, 2022 and 2021.

National Institute of Health (NIH)-Exclusive Patent License Agreement

4 unchanged sentences

Additionally, the Company’s payment obligations to the NIH are subject to an annual minimum royalty payment of low five figures.

As of March 31, 2022, the Company has paid NIH approximately $ 0.4 million in aggregate milestones under the NIH license agreement.

The Company recognized no expenses for patent licensing fees for the three months ended March 31, 2022, and 2021, respectively.

The Company recognized no expenses for patent licensing fees for the six months ended June 30, 2022 and 2021.

In 2015, 2018 and 2019, the Company amended its exclusive patent license to include updates on the status of the commercial development and update/expand the list of licensed patents and patent applications.

5 unchanged sentences

0.01 million was accrued in 2016 and paid in 2017 by the Company.

The milestones for the successful Phase I, II and III clinical trials are based on receiving a final report and achieving the primary endpoints defined in that trial, and those milestones have not been achieved as of March 31, 2022.

Upon the sublicense by the Company of a product for which royalties are payable under the agreement, low- to mid-single-digit royalty payments would be due by the Company.

The non-milestone payments in this agreement are subject to an anti-stacking clause.

The Company did no t incur any expense in the three months ended March 31, 2022, and 2021.

The Company did no t incur any expense in the six months ended June 30, 2022 and 2021.

In July 2019, the Company entered into an exclusive license agreement with Clearside Biomedical, Inc.

5 unchanged sentences

The Clearside License agreement expires on a country-by-country basis upon the later of the last to expire patent or ten years from the date of the first commercial sale of a product.

The Company recognized no expenses related to this agreement and related amendments for the three months ended March 31, 2022, and 2021, respectively.

The Company recognized no expenses related to this agreement and related amendments for the six months ended June 30, 2022 and 2021 .

Net Loss Per Share

1 unchanged sentence

Diluted net loss per share is the same as basic net loss per share for the periods presented since the effects of potentially dilutive securities are antidilutive given the net loss of the Company.

The Company has calculated basic and diluted net loss per share for the three months ended March 31, 2022 and 2021 as follows (in thousands, except share and per share data):

The Company has calculated basic and diluted net loss per share for the three and six months ended June 30, 2022 and 2021 as follows (in thousands, except share and per share data):

Three Months Ended

Six Months Ended

Accruals of dividends of preferred stock

3 unchanged sentences

The following potentially dilutive securities were excluded from the computation of the diluted net loss per share for the periods presented because their effect would have been antidilutive:

Three Months Ended

Six Months Ended

Convertible preferred stock

4 unchanged sentences

Total potential dilutive shares

The Company estimates an annual effective tax rate of 0 % for the year ending December 31, 2022 as the Company incurred losses for the three months ended March 31, 2022, and is forecasting additional losses through the remainder of fiscal year ending December 31, 2022, resulting in an estimated net loss for both financial statement and tax purposes for the year ending December 31, 2022.

The Company estimates an annual effective tax rate of 0 % for the year ending December 31, 2022 as the Company incurred losses for the three and six months ended June 30, 2022, and is forecasting additional losses through the remainder of fiscal year ending December 31, 2022, resulting in an estimated net loss for both financial statement and tax purposes for the year ending December 31, 2022.

Therefore, no federal or state income taxes are expected and none have been recorded at this time.

2 unchanged sentences

Accordingly, the deferred tax assets have been reduced by a full valuation allowance, since the Company does not currently believe that realization of its deferred tax assets is more likely than not.

As of March 31, 2022, the Company had no unrecognized income tax benefits that would reduce the Company’s effective tax rate if recognized.

As of June 30, 2022 , the Company had no unrecognized income tax benefits that would reduce the Company’s effective tax rate if recognized.

Subsequent Events

Subsequent events have been evaluated through the date of filing of the unaudited condensed consolidated financial statements.

The Company has not identified any subsequent events that require disclosure.

The Company has identified the following subsequent events that require disclosure.

On May 16, 2022, the Company entered into an office and laboratory lease in Boston, MA with an initial 10 -year term and one renewal option to extend the lease for an additional seven years .

Estimated payments due under the initial term total $ 35.2 million.

The lease requires a letter of credit totaling $ 0.8 million which is classified as long-term restricted cash and deposits on the condensed consolidated balance sheet.

The landlord will reimburse the Company up to $ 0.5 million for certain costs related to expansion of the laboratory space.

The term of the lease commenced on August 1, 2022 .

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

9 unchanged sentences

Our VDCs are largely agnostic to tumor type and can recognize a surface marker, known as heparan sulfate proteoglycans, or HSPGs, that are specifically modified and broadly expressed on many tumors.

AU-011, our first VDC candidate, is being developed for the first line treatment of primary choroidal melanoma, a rare disease with no drugs approved.

Belzupacap sarotalocan, our first VDC candidate, is being developed for the first line treatment of primary choroidal melanoma, a rare disease with no drugs approved.

We have completed a Phase 1b/2 trial using intravitreal administration that has demonstrated a statistically significant growth rate reduction in patients with prior active growth and high levels of tumor control with visual acuity preservation in a majority of patients, as assessed using clinical endpoints in alignment with the feedback from U.S.

Food and Drug Administration, or the FDA.

These data supported advancement into a Phase 2 dose escalation trial, where we are currently evaluating suprachoroidal, or SC, administration of AU-011.

These data supported advancement into a Phase 2 dose escalation trial, where we are currently evaluating suprachoroidal, or SC, administration of belzupacap sarotalocan.

We plan to present six to twelve-month safety and efficacy data from this trial in 2022 and make a decision on the route of administration to initiate a pivotal trial in the second half of 2022.

We are also developing AU-011 for additional ocular oncology indications and plan to file an IND in the United States in the second half of 2022 for choroidal metastases.

We are also developing belzupacap sarotalocan for additional ocular oncology indications and plan to file an IND in the United States in the second half of 2022 for choroidal metastases.

Leveraging our VDCs’

broad tumor targeting capabilities, we also plan to initiate a Phase 1a trial in non-muscle invasive bladder cancer, or NMIBC, our first non-ophthalmic solid tumor indication, in the second half of 2022 and present data from this trial in 2023.

We were incorporated as a Delaware corporation in 2009 and our headquarters are located in Cambridge, Massachusetts.

broad tumor targeting capabilities and having received fast track designation by the FDA for belzupacap sarotalocan for the treatment of non-muscle invasive bladder cancer, or NMIBC, we intend to initiate a Phase 1 trial in NMIBC, our first non-ophthalmic solid tumor indication, in the third quarter of 2022 and plan to present initial data from this trial in 2023.

We were incorporated as a Delaware corporation in 2009 and, as of August 1, 2022, our headquarters are located in Boston, Massachusetts.

Since our inception, we have focused our efforts on identifying and developing potential product candidates, conducting preclinical studies and clinical trials, organizing and staffing our company, business planning, establishing our intellectual property portfolio, raising capital, conducting discovery, research and development activities and providing general and administrative support for these operations.

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We have funded our operations primarily through the sale of convertible preferred stock, common stock, and warrants.

From inception through March 31, 2022, we have raised an aggregate of approximately $218.6 million of gross proceeds primarily from private placements of our equity and convertible preferred stock as well as through the issuance of our common stock.

From inception through June 30, 2022, we have raised an aggregate of approximately $218.9 million of gross proceeds primarily from private placements of our equity and convertible preferred stock as well as through the issuance of our common stock.

In November 2021, we issued and sold 6,210,000 shares of our common stock, including the full exercise of the underwriters’

option to purchase additional shares at a price to the public of $14.00 per share for aggregate gross proceeds of $86.9 million in our IPO.

option to purchase additional shares at a price to the public of $14.00 per share for aggregate gross proceeds of $86.9 million in our initial public offering.

We received approximately $78.3 million in net proceeds after deducting underwriting discounts, commissions and offering expenses.

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Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates.

Our net losses were $12.8 million and $5.9 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we had an accumulated deficit of $165.0 million.

Our net losses were $26.3 million and $14.8 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had an accumulated deficit of $178.4 million.

In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

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We expect that our expenses and capital requirements will increase substantially if and as we:

conduct our current and future clinical trials of AU-011;

conduct our current and future clinical trials of belzupacap sarotalocan;

progress the preclinical and clinical development of new indications;

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of March 31, 2022, we had cash and cash equivalents and marketable securities of $133.3 million.

As of June 30, 2022, we had cash and cash equivalents and marketable securities of $122.1 million.

We believe that our existing cash and cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into 2024.

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See “—Liquidity and Capital Resources”

Impact of the COVID-19 Pandemic

Impact of the Ongoing COVID-19 Pandemic

The ongoing COVID-19 pandemic continues to present substantial public health and economic challenges around the world, and to date has led to the implementation of various responses, including government-imposed quarantines, stay-at-home orders, travel restrictions, mandated business closures and other public health safety measures.

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Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our AU-011 program, and include:

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our belzupacap sarotalocan program, and include:

employee-related expenses, including salaries, related-benefits and stock-based compensation expense for employees engaged in research and development functions;

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expenses incurred under agreements with contract research organizations, or CROs, as well as consultants that conduct and provide supplies for our preclinical studies and clinical trials;

the cost of manufacturing AU-011, including the potential cost of CMOs that manufacture product for use in our preclinical studies and clinical trials and perform analytical testing, scale-up and other services in connection with our development activities;

the cost of manufacturing belzupacap sarotalocan, including the potential cost of CMOs that manufacture product for use in our preclinical studies and clinical trials and perform analytical testing, scale-up and other services in connection with our development activities;

costs associated with preclinical activities and development activities;

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Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses.

We allocate our direct external research and development costs across the entire AU-011 program.

Preclinical expenses consist of external research and development costs associated with activities to support our current and future clinical programs, but are not allocated by specific indications due to the overlap of the potential benefit of those efforts across the entire AU-011 program.

We allocate our direct external research and development costs across the entire belzupacap sarotalocan program.

Research and development activities are central to our business.

We expect that our research and development expenses will increase for the foreseeable future as we continue clinical development for AU-011 and continue to discover and develop additional product candidates.

We expect that our research and development expenses will increase for the foreseeable future as we continue clinical development for belzupacap sarotalocan and continue to discover and develop additional product candidates.

If any of our product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

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Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:

Three Months Ended

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Change in fair value of warrant liability

Interest income (expense), including amortization of discount

Loss from disposal of assets

Total other expense

Change in fair value of derivative liability

Interest income, including amortization of discount

Other expense

Total other income (expense)

Other comprehensive items:

Unrealized loss on marketable securities

Total other comprehensive loss

Net loss and comprehensive loss

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2022 and 2021:

The following table summarizes our research and development expenses for the three months ended June 30, 2022 and 2021:

Three Months Ended

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Total research and development expenses

Research and development expenses increased to $8.3 million for the three months ended March 31, 2022 from $4.2 million for the three months ended March 31, 2021, primarily due to ongoing manufacturing and development costs for AU-011 and higher personnel expenses from growing headcount .

Research and development expenses increased to $9.5 million for the three months ended June 30, 2022 from $6.6 million for the three months ended June 30, 2021, primarily due to ongoing preclinical costs, clinical costs for belzupacap sarotalocan, and higher personnel expenses from growing headcount.

General and Administrative Expenses

General and administrative expenses increased to $4.5 million for the three months ended March 31, 2022 from $1.7 million for the three months ended March 31, 2021, primarily driven by personnel expenses, as well as increases in general corporate expenses related to operating as a public company.

General and administrative expenses increased to $4.3 million for the three months ended June 30, 2022 from $2.2 million for the three months ended June 30, 2021, primarily driven by personnel expenses, as well as increases in general corporate expenses related to operating as a public company.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Change in fair value of warrant liability

Change in fair value of derivative liability

Interest income, including amortization of discount

Other expense

Total other income (expense)

Other comprehensive items:

Unrealized loss on marketable securities

Total other comprehensive loss

Net loss and comprehensive loss

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2022 and 2021:

Six Months Ended

(in thousands)

Clinical trials

Manufacturing development

Personnel/overhead expenses

Total research and development expenses

Research and development expenses increased to $17.8 million for the six months ended June 30, 2022 from $10.8 million for the six months ended June 30, 2021, primarily due to ongoing preclinical costs, clinical costs for belzupacap sarotalocan, and higher personnel expenses from growing headcount.

General and Administrative Expenses

General and administrative expenses increased to $8.8 million for the six months ended June 30, 2022 from $3.9 million for the six months ended June 30, 2021, primarily driven by personnel expenses, as well as increases in general corporate expenses related to operating as a public company.

Liquidity and Capital Resources

To date we have funded our operations primarily through the sale of convertible preferred stock, and common stock.

Through March 31, 2022, we have raised an aggregate of approximately $218.6 million of gross proceeds primarily from private placements of our equity and convertible preferred stock and warrants, as well as through the issuance of our common stock.

Through June 30, 2022, we have raised an aggregate of approximately $218.9 million of gross proceeds primarily from private placements of our equity and convertible preferred stock and warrants, as well as through the issuance of our common stock.

In November 2021, we issued and sold a total of 6,210,000 shares in our IPO of our common stock, including the full exercise of the underwriters’

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The following table summarizes our cash flows for each of the periods presented:

Three Months Ended

Six Months Ended

(in thousands)

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Operating Activities

During the three months ended March 31, 2022, net cash used in operating activities was $15.2 million, primarily due to our net loss of $12.8 million and decrease in accrued expenses and other liabilities related to less employee accrued compensation and clinical trial accruals, partially offset by the non-cash charge related to stock compensation expense.

During the three months ended March 31, 2021, net cash used in operating activities was $5.1 million, primarily due to our net loss of $6.0 million and a decrease in accrued expenses and other liabilities related to less clinical trial accruals partially offset by an increase in accounts payable due to growth in our business, the advancement of our product candidates, and the timing of vendor invoicing and payments.

During the six months ended June 30, 2022, net cash used in operating activities was $25.8 million, primarily due to our net loss of $26.3 million and decrease in accounts payable related to the timing of vendor invoicing and payments, partially offset by the non-cash charge related to stock compensation expense.

During the six months ended June 30, 2021, net cash used in operating activities was $11.6 million, primarily due to our net loss of $14.8 million offset by an increase in accounts payable related to the timing of vendor invoicing and payments, partially offset by the non-cash charge related to stock compensation expense.

Investing Activities

Net cash used in investing activities during the three months ended March 31, 2022 was $25.5 million due to purchases of property and equipment and marketable securities.

Net cash used in investing activities during the three months ended March 31, 2021 was $0.1 million due to purchases of property and equipment.

Net cash used in investing activities during the six months ended June 30, 2022 was $68.9 million due to purchases of marketable securities and purchases of property and equipment offset by maturities of marketable securities.

Net cash used in investing activities during the six months ended June 30, 2021 was $0.7 million due to purchases of property and equipment.

Financing Activities

During the three months ended March 31, 2022, net cash provided by financing activities was $0.01 million from proceeds from stock options exercises.

During the three months ended March 31, 2021, net cash provided by financing activities was $87.5 million from the net proceeds from the sale of the second tranche of the Series D-2 preferred stock, net proceeds from the sale of Series E preferred stock, and proceeds from stock option exercises.

During the six months ended June 30, 2022, net cash provided by financing activities was $0.3 million from proceeds from stock options exercises.

During the six months ended June 30, 2021, net cash provided by financing activities was $87.2 million from the net proceeds from the sale of the second tranche of the Series D-2 preferred stock, net proceeds from the sale of Series E preferred stock, and proceeds from stock option exercises offset by deferred offering cost payments.

Funding Requirements

Our plan of operation is to continue implementing our business strategy, continue research and development of AU-011 and any other product candidates we may acquire or develop and continue to expand our research pipeline and our internal research and development capabilities.

Our plan of operation is to continue implementing our business strategy, continue research and development of belzupacap sarotalocan and any other product candidates we may acquire or develop and continue to expand our research pipeline and our internal research and development capabilities.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our current and future product candidates.

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our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers;

addressing any potential interruptions or delays resulting from factors related to the COVID-19 pandemic;

addressing any potential interruptions or delays resulting from factors related to the ongoing COVID-19 pandemic;

the effect of competing technological and market developments;

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A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.

As of March 31, 2022, we had cash and cash equivalents and marketable securities of $133.3 million.

As of June 30, 2022, we had cash and cash equivalents and marketable securities of $122.1 million.

Based on our research and development plans, we believe that our existing cash and cash equivalents, will be sufficient to fund our operations into 2024.

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Material Cash Requirements

The following table summarizes our contractual obligations and commitments as of March 31, 2022.

The following table summarizes our contractual obligations and commitments as of June 30, 2022.

Payments Due by Period

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(1) Amounts in the table above reflect payments due for our lease of office space in Cambridge, Massachusetts, that expires in July 2023.

On May 16, 2022, the Company entered into an office and laboratory lease in Boston, MA, with estimated payments due under the initial term total $35.2 million.

Payments began on the lease commencement date of August 1, 2022.

Except as disclosed in the table above, we have no long-term debt or finance leases and no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase-order basis.

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These payments are not included in the preceding table as the amount and timing of such payments are not known.

There were no material changes to our contractual obligations and commitments during the three months ended March 31, 2022, from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

There were no material changes to our contractual obligations and commitments during the six months ended June 30, 2022, from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

included in the Annual Report on the Form 10-K.

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Our actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2022, there were no material changes to our critical accounting policies from those described in the section titled “Management’s Discussion and Analysis of Financial Condition and Operations”

During the six months ended June 30, 2022, there were no material changes to our critical accounting policies from those described in the section titled “Management’s Discussion and Analysis of Financial Condition and Operations”

included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC.

Recent Accounting Pronouncements

We assessed the recent accounting pronouncements for the three months ended March 31, 2022 and determined no pronouncements have material impact to the condensed consolidated financial statements.

We assessed the recent accounting pronouncements for the six months ended June 30, 2022 and determined no pronouncements have material impact to the condensed consolidated financial statements.

Emerging Growth Company Status

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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