What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-11 · 175 added, 158 removed, 610 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

June 30, 2022

September 30, 2022

December 31, 2021

15 unchanged sentences

Long-term operating lease liability

Warrant liability

Total Liabilities

1 unchanged sentence

Stockholders’

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

Common stock, $ 0.00001 par value, 150,000,000 authorized at September 30, 2022 and December 31, 2021, and 29,283,285 and 29,211,643 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating Expenses:

4 unchanged sentences

Other income (expense):

Change in fair value of warrant liability

Change in fair value of derivative liability

Interest income, including amortization and accretion income

Other expense

Realized loss on marketable securities

Loss on disposal of assets

Other income (expense)

Total other income (expense)

25 unchanged sentences

Balance, June 30, 2021

Stock-based compensation expense

Stock option exercises

Balance, September 30, 2021

Other Comprehensive

9 unchanged sentences

Balance, June 30, 2022

Stock-based compensation expense

Stock option exercises

Unrealized loss on marketable securities

Balance, September 30, 2022

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

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

1 unchanged sentence

Depreciation expense

Change in fair value of warrant liability

Change in fair value of derivative liability

Stock-based compensation expense

Accretion on marketable securities

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

6 unchanged sentences

Purchase of marketable securities

Proceeds from sale of marketable securities

Maturities of marketable securities

15 unchanged sentences

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):

Six Months Ended

September 30,

Cash and cash equivalents, end of period

8 unchanged sentences

(the “Company”

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.

or “Aura”) is a clinical-stage biotechnology company envisioning a new way to treat cancer.

Leveraging a novel targeted oncology platform, the Company has the goal to develop a new standard of care across multiple cancer indications.

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 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's initial focus is on ocular and urologic oncology where the disease is diagnosed early and there is a high unmet medical need.

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.

The Company's VDCs are largely agnostic to tumor type and can recognize tumor associated glycosaminoglycans with unique heparan sulphate epitopes that are expressed on the cell surface of many tumor cells and in the tumor microenvironment.

Belzupacap sarotalocan, the Company's first VDC candidate, is being developed for the first-line treatment of early-stage choroidal melanoma, a rare disease with no drugs approved where the standard of care leaves many patients with blindness.

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 Boston, Massachusetts.

9 unchanged sentences

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

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.

Through September 30, 2022, the Company has funded its operations primarily with proceeds from the initial closings 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 $ 42.2 million and $ 23.6 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, the Company had cash and cash equivalents and marketable securities of $ 111.5 million and an accumulated deficit of $ 194.3 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 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.

As of the issuance date of these unaudited condensed consolidated financial statements for the nine months ended September 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 and six months ended June 30, 2022 and 2021 are also unaudited.

The financial data and other information disclosed in these notes related to the three months and nine months ended September 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 .

15 unchanged sentences

Recently Adopted Accounting Pronouncements

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.

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

Accounting Pronouncements Not Yet Adopted

12 unchanged sentences

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 June 30, 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 September 30, 2022 and December 31, 2021 (in thousands):

September 30,

Quoted prices

9 unchanged sentences

Total financial assets

Financial liabilities

Warrant Liability

Total financial liabilities

Quoted prices

5 unchanged sentences

Total financial assets

Financial liabilities

Warrant Liability

Total financial liabilities

The fair value of the warrant liability was determined based on Level 3 inputs and utilizing the Black-Scholes option pricing model (see Note 10).

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

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.

Changes in fair value are recognized in other (expense) income as “Change in fair value of warrant liability”

in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss (in thousands):

Common Stock ( 12,686 warrants)

Fair value at December 31, 2021

Change in fair value

Fair value at June 30, 2022

Property and Equipment, Net

Property and equipment, net, consisted of the following (in thousands):

September 30,

Assets under construction

4 unchanged sentences

Property and equipment, net

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.

Depreciation expense was $ 0.3 million and $ 0.2 million for the three months ended September 30, 2022 and 2021, respectively.

Depreciation expense was $ 0.9 million and $ 0.6 million for the nine months ended September 30, 2022 and 2021 , respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

September 30,

Prepaid insurance

4 unchanged sentences

Marketable securities consist of the following (in thousands):

June 30, 2022

September 30, 2022

Amortized Cost

4 unchanged sentences

Government agencies

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

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

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

September 30,

Accrued research and development expenses

1 unchanged sentence

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 29,266,848 and 29,211,643 shares were issued and outstanding at June 30, 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 29,283,285 and 29,211,643 shares were issued and outstanding at September 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.

9 unchanged sentences

2021 Stock Option and Incentive Plan

The 2021 Stock Option and Incentive Plan, (the "2021 Plan"), was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021.

The 2021 Stock Option and Incentive Plan, or the 2021 Plan, was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021.

The 2021 Plan permits the granting of both options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and options that do not so qualify.

3 unchanged sentences

2021 Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan, (the "ESPP"), was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021.

The 2021 Employee Stock Purchase Plan, or the ESPP, was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021.

A total of 335,217 shares of common stock were initially reserved for issuance under this plan, which increased on January 1, 2022 and will continue to increase each January 1 thereafter through January 1, 2031, by the least of (i) 335,217 shares of common stock, (ii) 1 % of the outstanding number of shares of common stock on the immediately preceding December 31 or (iii) such lesser number of shares of common stock as determined by the administrator of the ESPP.

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

The purchase price of the shares under the ESPP are at 85 % of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the purchase date.

As of September 30, 2022, 627,333 shares were available to be issued under the ESPP.

The Company recognized $ 0.01 million share-based compensation expense related to the ESPP for the nine months ended September 30, 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.

With the transfer of the available options from the 2018 Plan to the 2021 Plan, there were 3,435,004 options available for grant under the 2021 Plan at September 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 six months ended June 30, 2022:

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

Aggregate Intrinsic

2 unchanged sentences

Cancelled/Forfeited

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.

Outstanding at September 30, 2022

Exercisable at September 30, 2022

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2022 and 2021 was $ 11.09 and $ 3.97 per share, respectively.

The fair value of options vested during the nine months ended September 30, 2022 and 2021 was $ 2.1 million and $ 1.0 million, respectively.

The total intrinsic value of options exercised was $ 0.8 million and $ 0.01 million for the nine months ended September 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 six months ended June 30, 2022 and 2021 was measured with the following weighted-average assumptions:

Six Months Ended

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

Nine Months Ended

September 30,

Three Months Ended

September 30,

Risk-free interest rate

5 unchanged sentences

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

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

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

Restricted Stock Units

1 unchanged sentence

Unvested at December 31, 2021

Unvested at June 30, 2022

Unvested at September 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 six months ended June 30, 2022.

No restricted stock units vested during the nine months ended September 30, 2022.

Stock-based Compensation Expense

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

General and administrative

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.

As of September 30, 2022 , there was $ 14.8 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.69 years.

As of September 30, 2022 , there was $ 2.2 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.08 years.

Common Stock Warrants

1 unchanged sentence

Each Series B Warrant was immediately exercisable and expires ten years from the original date of issuance.

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 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 as of June 30, 2022.

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

The estimated fair value of the warrants and the significant assumptions used were as follows:

Common Stock Warrants

Expected term (years)

Risk free rate

Dividend yield

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

A total of 173,827 of the Series B Warrants were outstanding and 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.

As a result, the 12,686 common stock warrants were converted into equity instruments and remain outstanding as of September 30, 2022.

In January 2012, the Company adopted the Aura Biosciences 401(k) Profit Sharing Plan and Trust (the “401(k) Plan”) for its employees, which is designed to be qualified under Section 401(k) of the Internal Revenue Code.

1 unchanged sentence

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

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.

The Company made matching contributions in the amount of $ 0.4 m illion and $ 0.2 million for the nine months ended September 30, 2022 and 2021 , respectively.

Commitments and Contingencies

1 unchanged sentence

The Company has historically entered into lease arrangements for its facilities.

The Company has one operating lease for its office and laboratory facility with required future minimum payments.

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

The Company has one operating lease for its office and laboratory facility with required future minimum payments as of September 30, 2022 and one operating lease that was terminated in August 2022.

For more information on these leases, please see sections below in this footnote.

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 .

4 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.

In August 2022, the Company entered into a termination agreement with the landlord to the end lease effective August 31, 2022, which resulted in the Company paying the landlord a termination expense of $ 0.3 million.

The Company recognized a loss on the lease of $ 0.3 million which was recorded as a loss on disposal of assets on the condensed statements of operations and comprehensive loss and derecognized $ 0.6 million in lease liabilities and corresponding right-of-use asset on the condensed balance sheets.

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 commenced on August 1, 2022 , and 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 .

As of September 30, 2022, the Company has incurred an immaterial amount of expenses related to the expansion.

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 and six months ended June 30, 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 nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Amortization of finance right-of-use assets

4 unchanged sentences

Cash paid for amounts included in the measurement of lease liability—finance leases

Cash paid for amounts included in the measurement of lease liability—operating leases

Cash paid for amounts included in the measurement of lease liabilities—operating leases

Weighted-average remaining lease term—finance leases (years)

2 unchanged sentences

Weighted-average discount rate—operating leases

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.

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

Operating lease payments as of

June 30, 2022

September 30, 2022

Total lease payments

Total operating lease liabilities at June 30, 2022

Total operating lease liabilities at September 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 and six months ended June 30, 2022 and 2021, respectively.

The Company recognized no expenses related to this agreement and related amendments for the three and nine months ended September 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.

During the nine months ended September 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.

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

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

4 unchanged sentences

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

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.

During the nine months ended September 30, 2022 and 2021, the Company recognized $ 0.1 million and $ 0.03 million of expenses related to this agreement, respectively.

Effective in September 2022, the Company entered into a new non-exclusive, perpetual license agreement with Life Technologies for licensed products.

Under this agreement, the Company is required to pay an initial license fee of $ 0.4 million for the first licensed product and $ 0.5 million for each additional licensed product.

In addition, the agreement allows the Company the right to sublicense which would lead to a $ 0.2 million payment for each sublicense per licensed product and a $ 0.03 million payment for use of the cell line document package.

In the event of a change of control, there will be a change of control fee of $ 0.5 million.

During the nine months ended September 30, 2022, the Company recognized $ 0.4 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 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.

During the nine months ended September 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 milestones related to this agreement and related amendments for the six months ended June 30, 2022 and 2021.

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

An eighth amendment was effective in September 2022, requiring payment of $ 0.04 million within 30 days of November 1, 2022, and payment of another $ 0.03 million within 30 days of the 12th anniversary of the CRADA, which will be in August 2023.

This eighth amendment extended the term of the CRADA to September 30, 2024.

During the nine months ended September 30, 2022, the Company recognized $ 0.04 million of expenses related to this agreement.

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.

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

The Company recognized $ nil million and $ 0.03 million for patent licensing fees for the nine months ended September 30, 2022 and 2021, respectively.

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 June 30, 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 six months ended June 30, 2022 and 2021.

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

The Company recognized no expenses related to this agreement and related amendments for the nine months ended September 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 and six months ended June 30, 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 nine months ended September 30, 2022 and 2021 as follows (in thousands, except share and per share data):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

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:

Six Months Ended

Nine Months Ended

September 30,

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 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.

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 nine months ended September 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 June 30, 2022 , the Company had no unrecognized income tax benefits that would reduce the Company’s effective tax rate if recognized.

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

Subsequent Events

1 unchanged sentence

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 .

On November 1, 2022, the Company filed a shelf registration statement on Form S-3, or the 2022 Shelf, with the SEC in relation to the registration of up to an aggregate offering price of $ 250.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof.

The Company also simultaneously entered into an Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC., or the Sales Agent, to provide for the offering, issuance and sale by the Company of up to an aggregate of $ 75.0 million of its common stock from time to time in “at-the-market”

offerings under the 2022 Shelf and subject to the limitations thereof.

The Company will pay to the Sales Agent cash commissions of up to 3.0 percent of the gross proceeds of sales of common stock under the Sales Agreement.

The Company has not issued any shares or received any proceeds from any offerings under the 2022 Shelf through November 10, 2022.

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

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Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”

We are a clinical-stage biotechnology company leveraging our 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.

We are a clinical-stage biotechnology company envisioning a new way to treat cancer.

Leveraging our novel targeted oncology platform, we have the goal to develop a new standard of care across multiple cancer indications.

Our initial focus is on ocular and urologic oncology where the disease is diagnosed early and there is a high unmet medical need.

Our 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.

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.

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 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 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 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.

Our VDCs are largely agnostic to tumor type and can recognize tumor associated glycosaminoglycans with unique heparan sulphate epitopes that are expressed on the cell surface of many tumor cells and in the tumor microenvironment.

Belzupacap sarotalocan, our first VDC candidate, is being developed for the first-line treatment of early-stage choroidal melanoma, a rare disease with no drugs approved where the standard of care leaves many patients with blindness.

The U.S Food and Drug Administration, or the FDA, has granted Orphan Drug Designation and Fast Track Designation for belzupacap sarotalocan for the treatment of uveal melanoma.

We are currently evaluating suprachoroidal, or SC, administration of belzupacap sarotalocan in a Phase 2 study.

We presented six-month interim safety and efficacy data from this trial in October 2022 at the American Academy of Ophthalmology’s Annual Meeting showing a favorable safety profile with minimal inflammation and no treatment-related SAEs reported as of August 19, 2022.

The interim data also showed high levels of visual acuity preservation and tumor control, with a statistically significant growth rate reduction (p = 0.0007).

We have aligned with regulatory agencies and finalized the design of the global Phase 3 trial.

The trial will evaluate the efficacy and safety of belzupacap sarotalocan with suprachoroidal administration, for the first-line treatment of early-stage choroidal melanoma.

We are also developing belzupacap sarotalocan for additional ocular oncology indications and plan to file an IND in the United States in the fourth quarter of 2022 for choroidal metastasis, the most common intraocular malignancy that is caused by multiple primary cancers in the body that metastasize to the eye and is treated by the same ocular oncologists that treat choroidal melanoma.

In addition to our ocular oncology franchise, we are leveraging our targeted oncology platform to develop belzupacap sarotalocan for the treatment of non-muscle invasive bladder cancer, or NMIBC where we received Fast Track Designation by the FDA.

We initiated enrollment in a Phase 1 trial in September 2022 and we 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.

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

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.

From inception through September 30, 2022, we have raised an aggregate of approximately $219.0 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’

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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 $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.

Our net losses were $42.2 million and $23.6 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $194.3 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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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 June 30, 2022, we had cash and cash equivalents and marketable securities of $122.1 million.

As of September 30, 2022, we had cash and cash equivalents and marketable securities of $111.5 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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To date, we’ve only encountered minor delays in our manufacturing process due to a supply chain constraint with one of our vendors.

Beyond the impact on our pipeline, the extent to which COVID-19 ultimately impacts our business, results of operations and financial condition will depend on future developments, which remain highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, the emergence of new variants, new information that may emerge concerning the severity of COVID-19 or the effectiveness of actions taken to contain COVID-19 or treat its impact, including vaccination campaigns, among others.

If we or any of the third parties with whom we engage, however, were to experience any additional shutdowns or other prolonged business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially or negatively affected, which could have a material adverse impact on our business, results of operations and financial condition.

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Other Income (Expense)

Our other income (expense) consists of changes in the fair value of our warrant liability, accretion and interest income on marketable securities, loss on disposal of fixed assets, and interest income on our invested cash balances.

Our other income (expense) consists of accretion, interest income and realized losses on marketable securities, loss on disposal of fixed assets, and interest income on our invested cash balances.

Since our inception, we have not recorded any U.S.

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Results of Operations

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:

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

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

Three Months Ended

September 30,

(in thousands)

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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

Loss on disposal of assets

Realized loss on marketable securities

Other income (expense)

Total other income (expense)

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Research and Development Expenses

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

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

Three Months Ended

September 30,

(in thousands)

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Total research and development expenses

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.

Research and development expenses increased to $11.3 million for the three months ended September 30, 2022 from $6.4 million for the three months ended September 30, 2021, primarily due to ongoing preclinical costs, manufacturing and development costs for belzupacap sarotalocan, and higher personnel expenses from growing headcount

General and Administrative Expenses

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

General and administrative expenses increased to $4.8 million for the three months ended September 30, 2022 from $2.5 million for the three months ended September 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 Nine Months Ended September 30, 2022 and 2021

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

Nine Months Ended

September 30,

(in thousands)

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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

Loss on disposal of assets

Realized loss on marketable securities

Other income (expense)

Total other income (expense)

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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

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

Nine Months Ended

September 30,

(in thousands)

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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.

Research and development expenses increased to $29.1 million for the nine months ended September 30, 2022 from $17.2 million for the nine months ended September 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.

General and administrative expenses increased to $13.6 million for the nine months ended September 30, 2022 from $6.4 million for the nine months ended September 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 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.

Through September 30, 2022, we have raised an aggregate of approximately $219.0 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:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Operating Activities

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.

During the nine months ended September 30, 2022, net cash used in operating activities was $36.6 million, primarily due to our net loss of $42.2 million and decrease in accounts payable related to the timing of vendor invoicing and payments, partially offset by increases in stock compensation expense and accrued expenses and other liabilities related to personnel expenses and clinical trials .

During the nine months ended September 30, 2021, net cash used in operating activities was $20.3 million, primarily due to our net loss of $23.6 million, partially offset by increases in stock compensation expense and accrued expenses and other liabilities related to personnel expenses and clinical trials.

Investing Activities

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.

Net cash used in investing activities during the nine months ended September 30, 2022 was $51.0 million due to purchases of marketable securities offset by purchases of property and equipment and maturities of marketable securities.

Net cash used in investing activities during the nine months ended September 30, 2021 was $1.3 million due to purchases of property and equipment.

Financing Activities

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.

During the nine months ended September 30, 2022, net cash provided by financing activities was $0.4 million from proceeds from stock options exercises.

During the nine months ended September 30, 2021, net cash provided by financing activities was $86.1 million from net proceeds from the sale of Series E, second tranche of the Series D-2, and proceeds from stock options exercises, offset by payments made for deferred offering costs.

Funding Requirements

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the extent to which we acquire or invest in businesses, products, and technologies;

unfavorable global economic conditions, which may exacerbate the magnitude of the factors discussed above.

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

As of September 30, 2022, we had cash and cash equivalents and marketable securities of $111.5 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 June 30, 2022.

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

Payments Due by Period

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Operating lease commitments(1)

(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.

(1) Amounts in the table above reflect payments due for our lease of office and lab space in Boston, Massachusetts, that expires in August 2032.

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.

The lease commenced on 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 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.

Critical Accounting Policies and Significant Judgments and Estimates

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

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”

During the nine months ended September 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 six months ended June 30, 2022 and determined no pronouncements have material impact to the condensed consolidated financial statements.

We assessed the recent accounting pronouncements for the nine months ended September 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