What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-10 · 203 added, 285 removed, 500 unchanged (49% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30, 2022

March 31, 2023

December 31, 2022

7 unchanged sentences

Right of use assets - operating lease

Other long-term assets

Property and equipment, net

9 unchanged sentences

Stockholders’

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

Common stock, $ 0.00001 par value, 150,000,000 authorized at March 31, 2023 and December 31, 2022, and 37,800,102 and 37,771,918 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating Expenses:

5 unchanged sentences

Interest income, including amortization and accretion income

Realized loss on marketable securities

Loss on disposal of assets

1 unchanged sentence

Total other income (expense)

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

Net loss per share attributable to common stockholders—basic and diluted

Net loss per common share—basic and diluted

Weighted average common stock outstanding—basic and diluted

1 unchanged sentence

Other comprehensive items:

Unrealized loss on marketable securities

Total other comprehensive loss

Unrealized gain (loss) on marketable securities

Total other comprehensive gain (loss)

Total comprehensive loss

1 unchanged sentence

Aura Biosciences, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’

Equity (Deficit)

Condensed Consolidated Statements of Stockholders’

(in thousands, except share data)

Convertible Preferred Stock

Series C-1 and C-2

Series D-1 and D-2

Other Comprehensive

Stockholders’

Balance, December 31, 2021

Issuance of Series D Tranche 2, convertible preferred stock, net of issuance costs of $ 18

Issuance of Series E convertible preferred stock, net of issuance costs of $ 232

Stock-based compensation expense

Stock option exercises

Unrealized loss on marketable securities

Balance, March 31, 2022

Stock-based compensation expense

Stock option exercises

Balance, June 30, 2021

Stock-based compensation expense

Stock option exercises

Balance, September 30, 2021

Other Comprehensive

2 unchanged sentences

Stock-based compensation expense

Employee Stock Purchase Plan Issuance

Stock option exercises

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Balance, March 31, 2023

Stock-based compensation expense

Stock option exercises

Unrealized loss on marketable securities

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)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

6 unchanged sentences

Prepaid expenses and other assets

Other long-term assets

Accounts payable

4 unchanged sentences

Purchase of marketable securities

Proceeds from sale of marketable securities

Maturities of marketable securities

Maturities and proceeds from the sale of marketable securities

Net cash used in investing activities

1 unchanged sentence

Proceeds from exercise of stock options

Proceeds from issuance of Series D convertible preferred stock, net of

issuance costs

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

Payment made for deferred offering costs

Proceeds from ESPP purchase

Net cash provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

2 unchanged sentences

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

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

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):

September 30,

Cash and cash equivalents, end of period

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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 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.

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

Within these 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 initial focus is on ocular and urologic oncology where the disease is diagnosed early and there is a high unmet medical need for targeted local therapies.

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 a subset of modified tumor associated glycosaminoglycans that are part of the heparan sulphate chain of HSPGs expressed on the cell surface of many tumor cells and in the tumor microenvironment.

Bel-sar, 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 bel-sar for additional ocular oncology indications, including choroidal metastasis, and in non-muscle invasive bladder cancer, or NMIBC.

Aura’s headquarters are located in Boston, Massachusetts.

1 unchanged sentence

The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, the successful development and commercialization of products, fluctuations in operating results and financial risks, need for additional financing or alternative means of financial support or both to fund its current operating plan, protection of proprietary technology and patent risks, compliance with government regulations, dependence on key personnel and collaborative partners, competition, customer demand, management of growth, and the effectiveness of marketing by the Company.

Reverse Stock Split

On October 22, 2021, the Company effected a reverse stock split of the Company’s common stock on a 1-for-13.7 basis, or the Reverse Stock Split.

In connection with the Reverse Stock Split, the conversion ratio for the Company’s convertible preferred stock was proportionately adjusted such that the common stock issuable upon conversion of such preferred stock was decreased in proportion to the Reverse Stock Split.

Accordingly, all common stock share and per share amounts, for all periods presented in these unaudited condensed consolidated financial statements, have been retroactively adjusted, to reflect this reverse stock split and adjustment of the convertible preferred stock conversion ratios.

Initial Public Offering

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

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.

Through March 31, 2023, the Company has funded its operations primarily with proceeds from the initial and additional closings of its convertible preferred stock financings, and through its IPO, follow-on offering and at-the-market offering, or ATM transaction.

On December 5, 2022, the Company issued and sold 7,705,000 shares of common stock, including the full exercise of the underwriters’

option to purchase additional shares at a price to the public of $ 12.00 per share for aggregate gross proceeds of $ 92.5 million, or the Follow-On Offering.

The Company received approximately $ 86.7 million in net proceeds from the Follow-On Offering after deducting underwriting discounts, commissions and offering expenses.

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 the Open Market Sale Agreement SM , or 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 common stock from time to time in the ATM under the 2022 Shelf and subject to the limitations thereof.

The Company issued 732,189 shares of common stock at an average price of $ 12.51 for aggregate gross proceeds of $ 9.2 million as of December 31, 2022 under the ATM, and issued no common stock for the three months ended March 31, 2023.

On November 2, 2021, the Company completed its IPO, in which it issued and sold 6,210,000 shares of 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.

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

The Company has incurred recurring losses and negative operating cash flows from operations since its inception, including net losses of $ 17.5 million and $ 12.8 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the Company had cash and cash equivalents and marketable securities of $ 173.5 million and an accumulated deficit of $ 228.4 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 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.

As of the issuance date of these unaudited condensed consolidated financial statements for the three months ended March 31, 2023 , 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 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 nine months ended September 30, 2022 and 2021 are also unaudited.

The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 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, 2023.

1 unchanged sentence

GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission, or the SEC.

Management believes that the disclosures provided here are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K.

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.

Marketable Securities

All marketable securities have original maturities greater than 90 days.

The Company has classified its investments with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

The Company considers its investment portfolio of marketable securities to be available-for-sale.

Accordingly, these investments are recorded at fair value.

Unrealized gains and losses are reported as the accumulated other comprehensive items in stockholders’

Amortization and accretion of premiums and discounts are recorded in other income (expense) within the consolidated statements of operations and comprehensive loss.

Realized gains or losses are included in interest income or interest expense, respectively.

If any adjustment to fair value reflects a decline in value of the investment, the Company considers all available evidence such as industry, financial inputs, and capital markets data to evaluate the extent to which the decline is other than temporary and, if so, marks the investment to market on the Company’s condensed consolidated statement of operations and comprehensive loss.

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2022, in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2023.

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

Recently Adopted Accounting Pronouncements

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

In June 2016, the FASB issued ASU No.

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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.

As per the latest ASU 2020-02, FASB deferred the timelines for certain small public and private entities, thus the new guidance was 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.

The Company adopted the standard on January 1, 2023 and did not 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 September 30, 2022 and December 31, 2021 (in thousands):

September 30,

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, 2023 and December 31, 2022 (in thousands):

Quoted prices

8 unchanged sentences

Government agencies

Asset-backed securities

Total financial assets

5 unchanged sentences

Money market funds

Marketable securities:

Commercial paper

Corporate bonds

Government agencies

Asset-backed securities

Total financial assets

1 unchanged sentence

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

September 30,

Assets under construction

Leasehold improvements

Lab equipment

Office furniture

Less—accumulated depreciation

Property and equipment, net

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.

Depreciation expense was $ 0.3 million and $ 0.3 million for the three months ended March 31, 2023 and 2022 , respectively.

Prepaid Expenses and Other Current Assets

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

September 30,

Prepaid insurance

Prepaid research and development expenses

Prepaid license agreements

Prepaid expenses and other current assets

1 unchanged sentence

Marketable securities consist of the following (in thousands):

September 30, 2022

March 31, 2023

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 nine months ended September 30, 2022 .

Asset-backed securities

December 31, 2022

Amortized Cost

Unrealized Gains

Unrealized Losses

Commercial paper

Corporate bonds

Government agencies

Asset-backed securities

As of March 31, 2023, the unrealized losses on the Company’s investments in U.S.

government agencies securities and corporate bonds were caused by interest rate increases.

The current credit ratings are all within the guidelines of the investment policy of the Company and the Company does not expect the issuers to settle any security at a price less than the amortized cost basis of the investment.

The Company does not intend to sell the investments and it is not probable that the Company will be required to sell the investments before recovery of their amortized cost basis.

As of March 31, 2023, 18 marketable securities with contractual maturities of one year or less were in a unrealized loss position totaling $ 0.1 million.

As of March 31, 2023, all marketable securities held by the Company had remaining contractual maturities of one year or less.

There were no impairments of the Company’s assets measured and carried at fair value dur ing the three months ended March 31, 2023 .

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 29,283,285 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.

The Company had 150,000,000 authorized shares of common stock, par value $ 0.00001 per share, of which 37,800,102 and 37,771,918 shares were issued and outstanding at March 31, 2023 and December 31, 2022, 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.

In addition, the Company authorized 10,000,000 shares of preferred stock, par value $ 0.00001 per share, all of which shares of preferred stock will be undesignated.

On December 5, 2022, the Company issued and sold 7,705,000 shares of common stock, including the full exercise of the underwriters’

option to purchase additional shares at a price to the public of $ 12.00 per share for aggregate gross proceeds of $ 92.5 million in the Follow-On Offering.

The Company received approximately $ 86.7 million in net proceeds from the Follow-On Offering after deducting underwriting discounts, commissions and offering expenses.

On November 1, 2022, the Company filed 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 the Sales Agreement with the Sales Agent to provide for the offering, issuance and sale by the Company of up to an aggregate of $ 75.0 million of common stock from time to time in the ATM under the 2022 Shelf and subject to the limitations thereof.

Stock-Based Compensation

1 unchanged sentence

On December 12, 2018, the Company adopted the Aura Biosciences, Inc.

2018 Equity Incentive Plan (the “2018 Plan”).

2018 Equity Incentive Plan, or the 2018 Plan.

The 2018 Plan will expire in 2028.

Under the 2018 Plan, Aura may grant incentive stock options, non-qualified stock options, restricted and unrestricted stock awards and stock right.

The Board of Directors (the "Board") has determined not to make any further awards under the 2018 Plan as of November 2, 2021.

Under the 2018 Plan, Aura may grant incentive stock options, non-qualified stock options, restricted and unrestricted stock awards and stock rights.

The Board of Directors, or the Board, has determined not to make any further awards under the 2018 Plan as of November 2, 2021.

However, the 2018 Plan will continue to govern outstanding equity awards granted thereunder.

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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.

As of March 31, 2023, 955,915 shares were available to be issued under the ESPP.

The Company recognized $ 0.02 million share-based compensation expense related to the ESPP for the three months ended March 31, 2023.

Stock Options

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.

With the transfer of the available options from the 2018 Plan to the 2021 Plan, there were 4,254,417 options and restricted stock units available for grant under the 2021 Plan at March 31, 2023.

The Board is authorized to administer the 2021 Plan.

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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 nine months ended September 30, 2022:

The following table summarizes stock option activity under the 2018 Plan and 2021 Plan for the three months ended March 31, 2023:

Aggregate Intrinsic

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Cancelled/Forfeited

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 nine months ended September 30, 2022 and 2021 was measured with the following weighted-average assumptions:

Nine Months Ended

September 30,

Outstanding at March 31, 2023

Exercisable at March 31, 2023

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2023 and 2022 was $ 7.52 and $ 11.98 per share, respectively.

The fair value of options vested during the three months ended March 31, 2023 and 2022 was $ 1.2 million and $ 0.6 million, respectively.

The total intrinsic value of options exercised was $ 0.1 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

The fair value of the stock options issued for the three months ended March 31, 2023 and 2022 was measured with the following weighted-average assumptions:

Three Months Ended

September 30,

Risk-free interest rate

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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 nine months ended September 30, 2022 is as follows:

A summary of the restricted stock units activity during the three months ended March 31, 2023 is as follows:

Restricted Stock Units

1 unchanged sentence

Unvested at December 31, 2022

Unvested at September 30, 2022

Vested/Released

Unvested at March 31, 2023

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 nine months ended September 30, 2022.

During the three months ended March 31, 2023, no restricted stock units vested.

Stock-based Compensation Expense

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

General and administrative

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.

As of March 31, 2023 , there was $ 16.4 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.62 years.

As of March 31, 2023 , there was $ 5.8 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.45 years.

Common Stock Warrants

In February 2015 and May 2015, the Company issued warrants to purchase 1,650,098 and 887,536 shares of Series B convertible preferred stock, respectively, at an exercise price of $ 1.24235 per share (the "Series B Warrants").

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

1 unchanged sentence

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.

As a result, the 12,686 common stock warrants were converted into equity instruments and remain outstanding as of March 31, 2023.

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 $ 0.4 m illion and $ 0.2 million for the nine months ended September 30, 2022 and 2021 , respectively.

The Company made matching contributions in the amount of $ 0.2 m illion and $ 0.1 million for the three months ended March 31, 2023 and 2022 , respectively.

Commitments and Contingencies

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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 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 .

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 .

Upon the execution of the amendment, which was deemed to be a lease modification, the Company re-evaluated the assumptions made at the original lease commencement date.

The Company determined the amendment consists of two separate contracts under ASC 842.

One contract is related to the modification of term for the original space, and the other is related to a new right-of-use for the two additional spaces, which are to be accounted for as new leases.

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.

The Company has one operating lease for its office and laboratory facility with required future minimum payments as of March 31, 2023 and one operating lease that was terminated in August 2022.

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 , 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 lease requires a letter of credit totaling $ 0.8 million which is classified as long-term restricted cash and deposits on the 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 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 nine months ended September 30, 2022 and 2021 (in thousands):

As of March 31, 2023, the Company has incurred $ 0.1 million of expenses related to the expansion.

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, 2023 and 2022 (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Amortization of finance right-of-use assets

Operating lease costs

2 unchanged sentences

Total lease costs

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

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

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

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

Weighted-average discount rate—finance leases

Weighted-average discount rate—operating leases

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

September 30, 2022

The following table reconciles the future minimum commitments to the Company’s operating lease liabilities at March 31, 2023 (in thousands):

Operating lease payments as of March 31, 2023

Total lease payments

Total operating lease liabilities at September 30, 2022

Total operating lease liabilities at March 31, 2023

current portion of lease liabilities

Lease liabilities, net of current portion

Laser Purchasing Commitment

On April 5, 2019, the Company entered into a purchase agreement for equipment with future commitments payable in three installments of €

0.2 million each.

The first two installments of €

0.2 million were paid by the Company in April 2019 and August 2019.

Upon receipt of the laser systems, the Company will assess whether the laser systems have an alternative future use and, if so, will capitalize the lasers as a component of fixed assets.

License Agreements

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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 nine months ended September 30, 2022 and 2021, respectively.

The Company recognized no expenses related to this agreement and related amendments for the three months ended March 31, 2023 and 2022, respectively.

LI-COR Non-Exclusive License and Supply Agreement

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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 nine months ended September 30, 2022 and 2021, the Company recognized immaterial milestones related to this agreement.

During the three months ended March 31, 2023 and 2022 , the Company recognized no milestones related to this agreement.

Life Technologies Corporation

6 unchanged sentences

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

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.

During the three months ended March 31, 2023 and 2022, the Company recognized $ nil million and $ 0.05 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.

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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

In December 2010, the Company entered into a Biologic Materials License Agreement with NIH for a non-exclusive right to use materials described in Schiller et al., Virology 2004 Apr.10, 321(2):205-16.

This agreement required a one-time non-refundable license issuance fee of $ 0.02 million.

No future milestone payments or royalties are due under this agreement.

During the three months ended March 31, 2023, the Company recognized $ nil million of expenses related to this agreement.

National Institute of Health (NIH)-Collaboration Research and Development Agreement

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

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.

During the three months ended March 31, 2023 and 2022 , the Company paid $ nil million and $ nil 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 nine months ended September 30, 2022 and 2021.

The Company recognized no milestones related to this agreement and related amendments for the three months ended March 31, 2023 and 2022.

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.

During the three months ended March 31, 2023, the Company recognized $nil million of expenses related to this agreement

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

In September 2013, the Company entered into an exclusive patent license agreement (the “NIH Exclusive License Agreement”) with the NIH, that required the Company to pay a license issue royalty of $ 0.1 million and reimburse the NIH for any patent expenses incurred.

In September 2013, the Company entered into an exclusive patent license agreement, or the NIH Exclusive License Agreement, with the NIH, that required the Company to pay a license issue royalty of $ 0.1 million and reimburse the NIH for any patent expenses incurred.

Under the agreement, the Company is required to make low single-digit percentage royalty payments based on specified levels of annual net sales of licensed products subject to certain specified reductions.

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

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

The Company recognized no patent licensing fees for the three months ended March 31, 2023 and 2022, 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.

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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 September 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 nine months ended September 30, 2022 and 2021.

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

(“Clearside”), for the license of Clearside’s Suprachoroidal Microneedle Technology for use in the treatment of indeterminate lesions and choroidal tumors.

The Company did no t incur any expense in the three months ended March 31, 2023 and 2022.

In July 2019, the Company entered into an exclusive license agreement with Clearside Biomedical, Inc., or Clearside, for the license of Clearside’s Suprachoroidal Microneedle Technology for use in the treatment of indeterminate lesions and choroidal tumors.

Upon execution of the License Agreement, the Company paid Clearside an upfront payment of $ 0.1 million which was expensed as incurred.

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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 nine months ended September 30, 2022 and 2021 .

The Company recognized no expenses related to this agreement and related amendments for the three months ended March 31, 2023 and 2022 .

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

Basic net loss per share is calculated by dividing the net loss per common share by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

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 nine months ended September 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 months ended March 31, 2023 and 2022 as follows (in thousands, except share and per share data):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Accruals of dividends of preferred stock

Net loss attributable to common stockholders—basic and diluted

Weighted-average common stock outstanding

Net loss per share attributable to common stockholders—basic and diluted

Weighted-average common stock outstanding—basic and diluted

Net loss per common share—basic and diluted

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:

Nine Months Ended

September 30,

Convertible preferred stock

Three Months Ended

Stock options to purchase common stock

Restricted stock units that vest into common stock

Warrants to purchase preferred stock

Warrants to purchase common stock

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 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.

The Company estimates an annual effective tax rate of 0 % for the year ending December 31, 2023 as the Company incurred losses for the three months ended March 31, 2023, and is forecasting additional losses through the remainder of fiscal year ending December 31, 2023, resulting in an estimated net loss for both financial statement and tax purposes for the year ending December 31, 2023.

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

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

As of March 31, 2023 , 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 identified the following subsequent events that require disclosure.

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.

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

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

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

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 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 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 the FDA.

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.

Our VDCs are largely agnostic to tumor type and can recognize a subset of modified tumor associated glycosaminoglycans, or GAGs, that are part of the heparan sulphate chain of HSPGs expressed on the cell surface of many tumor cells and in the tumor microenvironment.

Bel-sar, 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.

We have received orphan drug designation for the treatment of uveal melanoma from the U.S Food and Drug Administration, or the FDA, and the European Medicines Agency, or EMA, and fast track designation from the FDA for the treatment of choroidal melanoma.

We have completed a Phase 1b/2 trial using intravitreal administration that has demonstrated clinical proof of concept, assessed using endpoints in alignment with the feedback from the FDA.

We are currently evaluating suprachoroidal, or SC, administration of bel-sar in a Phase 2 trial.

Enrollment is complete in the Phase 2 trial, and updated interim data of patients treated with the therapeutic regimen intended to be used in the Phase 3 trial is on track to be presented in the second half of 2023.

In February 2023 we presented average nine-month interim safety and efficacy data from this ongoing trial at Macula Society’s Annual Meeting which demonstrated a favorable safety profile with no posterior inflammation and no treatment-related serious adverse events, or SAEs, reported as of January 10, 2023.

The results, with an average of nine months of follow up in patients who received a therapeutic regimen with three cycles of therapy, and who match the criteria for the planned global Phase 3 trial (n=8), showed a statistically significant reduction in the tumor growth rate (-0.289 mm/yr, p = <0.0001) compared to each patient’s documented growth rate at study entry, and a 100% (8/8) tumor control.

In addition, the visual acuity preservation in the group of patients was 88% (7/8), with the majority of patients being at high-risk for vision loss with tumors close to fovea or optic disk.

We have selected the SC route to conduct our global Phase 3 trial in alignment with regulatory agencies.

The Phase 3 clinical trial design incorporates guidance and feedback from the FDA following a recent Type C meeting.

The FDA recommended that the Phase 3 trial follow a standard three-arm randomized, controlled and masked design.

The trial is intended to enroll approximately 100 patients and it will be randomized 2:1:2 to receive investigational therapeutic regimen bel-sar, low dose regimen bel-sar or a sham control.

The primary efficacy analysis is planned to be a time to event composite endpoint that will compare the tumor control and visual acuity of the therapeutic regimen group to sham when the last patient meets 12 months of follow up.

We are currently conducting start up activities for the global Phase 3 trial with the goal to dose our first patient in the first half of 2023.

We are also developing bel-sar for additional ocular oncology indications and have an open IND in the United States for choroidal metastasis, supporting the potential of bel-sar to provide a novel treatment option that preserves vision for these patients.

Choroidal metastasis is a high unmet medical need and the most common intraocular malignancy that is caused by multiple primary cancers in the body that metastasize to the eye (e.g., breast and lung cancer).

These patients are treated by the same ocular oncologists that treat choroidal melanoma and there are no drugs approved that can treat the lesion in the eye and preserve vision.

We received fast track designation from the FDA’s Division of Oncology and plan to initiate startup activities for the Phase 2 trial in this indication in the second half of 2023.

In addition to our ocular oncology franchise, we are leveraging our targeted oncology platform to develop bel-sar in the field of urologic oncology with an initial indication for the treatment of non-muscle invasive bladder cancer, or NMIBC, where we received fast track designation by the FDA’s Division of Oncology.

We initiated enrollment in a Phase 1 trial and we plan to present initial data from this trial in the second half of 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 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.

From inception through March 31, 2023, we have raised an aggregate of approximately $320.8 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.

On December 5, 2022, we issued and sold 7,705,000 shares of common stock, including the full exercise of the underwriters’

option to purchase additional shares at a price to the public of $12.00 per share, for aggregate gross proceeds of $92.5 million, or the Follow-On Offering.

We received approximately $86.7 million in net proceeds from the Follow-On Offering after deducting underwriting discounts, commissions and offering expenses.

On November 1, 2022, we 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.

We 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 us of up to an aggregate of $75.0 million of its common stock from time to time in “at-the-market”

offerings, or the ATM, under the 2022 Shelf and subject to the limitations thereof.

We issued 732,189 shares of our common stock at an average price of $12.51 for aggregate gross proceeds of $9.2 million as of December 31, 2022 under the ATM, and issued no common stock for three months ended March 31, 2023.

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 initial public offering.

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

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, or IPO.

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

We have incurred significant operating losses in every year since our inception in 2009 and have not generated any revenue.

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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 $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.

Our net losses were $17.5 million and $12.8 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had an accumulated deficit of $228.4 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.

2 unchanged sentences

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

conduct our current and future clinical trials of belzupacap sarotalocan;

conduct our current and future clinical trials of bel-sar;

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

As of March 31, 2023, we had cash and cash equivalents and marketable securities of $173.5 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 2025.

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See “—Liquidity and Capital Resources”

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.

We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it has and will continue to impact our operations and the operations of our suppliers, vendors and business partners, and may take further precautionary and preemptive actions as may be required by federal, state or local authorities.

Impact of the COVID-19 Pandemic

We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it may continue to impact our operations and the operations of our suppliers, vendors and business partners.

In addition, we have taken steps to minimize the current environment’s impact on our business and strategy, including devising contingency plans and securing additional resources from third-party service providers.

For the safety of our employees and families, we have introduced enhanced safety measures for scientists to be present in our labs and increased the use of third party service providers for the conduct of certain experiments and studies for research programs.

To date, we’ve only encountered minor delays in our manufacturing process due to a supply chain constraint with one of our vendors.

To date, we’ve only encountered minor delays in our manufacturing process due to a supply chain constraints.

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 and booster shot campaigns, among others.

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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 belzupacap sarotalocan 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 bel-sar 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 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;

the cost of manufacturing bel-sar, 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 belzupacap sarotalocan 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 belzupacap sarotalocan program.

We allocate our direct external research and development costs across the entire bel-sar 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 belzupacap sarotalocan 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 bel-sar 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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We expect that our general and administrative expenses will increase in the near-term as we continue to build a team to support our administrative, accounting and finance, communications, legal and business development efforts.

We expect to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services;

We expect to incur increased expenses associated with growth of the Company, including costs of accounting, audit, legal, regulatory and tax compliance services;

director and officer insurance costs;

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As of December 31, 2022, we had federal gross operating loss carryforwards of approximately $155.1 million which may be available to offset future taxable income, of which $44.2 million begin to expire in 2029 and go through 2037 and $110.9 million do not expire.

The state gross operating loss carryforwards of $113.6 million, which may be available to offset future taxable income and which would begin to expire in 2030.

The state gross operating loss carryforwards of $127.5 million, which may be available to offset future taxable income and which would begin to expire in 2030, except for $0.7 million of state net operating losses, or NOLs, that do not expire.

As of December 31, 2022, we had federal and state research and experimentation credit carryforwards of $6.4 million and $1.9 million, respectively, which may be available to offset future income tax liabilities and which would begin to expire in 2029 and 2028, respectively.

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Results of Operations

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:

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022:

Three Months Ended

September 30,

(in thousands)

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Loss on disposal of assets

Realized loss on marketable securities

Other income (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 September 30, 2022 and 2021:

The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022:

Three Months Ended

September 30,

(in thousands)

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Total research and development expenses

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 $4.8 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)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest income, including amortization of discount

Loss on disposal of assets

Realized loss on marketable securities

Other income (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 nine months ended September 30, 2022 and 2021:

Nine Months Ended

September 30,

(in thousands)

Clinical trials

Manufacturing development

Personnel/overhead expenses

Total research and development expenses

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.

Research and development expenses increased to $14.4 million for the three months ended March 31, 2023 from $8.3 million for the three months ended March 31, 2022, primarily due to ongoing clinical costs associated with the progression of our phase 2 study and CRO costs associated with the start of our Phase 3 global trial, manufacturing and development costs for bel-sar, and higher personnel expenses from growing headcount.

General and Administrative Expenses

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.

General and administrative expenses increased to $5.0 million for the three months ended March 31, 2023 from $4.5 million for the three months ended March 31, 2022, primarily driven by personnel expenses, as well as increases in general corporate expenses related to growth of the Company.

Liquidity and Capital Resources

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

Through March 31, 2023, we have raised an aggregate of approximately $320.8 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.

On December 5, 2022, we issued and sold 7,705,000 shares of common stock, including the full exercise of the underwriters’

option to purchase additional shares at a price to the public of $12.00 per share for aggregate gross proceeds of $92.5 million in the Follow-On Offering.

We received approximately $86.7 million in net proceeds from the Follow-On Offering after deducting underwriting discounts, commissions and offering expenses.

On November 1, 2022, we filed 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.

We also simultaneously entered into the Sales Agreement with the Sales Agent to provide for the offering, issuance and sale by us of up to an aggregate of $75.0 million of our common stock from time to time in the ATM under the 2022 Shelf and subject to the limitations thereof.

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’

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

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

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

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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

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Operating Activities

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.

During the three months ended March 31, 2023, net cash used in operating activities was $16.4 million, primarily due to our net loss of $17.5 million and a decrease in accounts payable related to timing of vendor invoicing and payments, partially offset by an increase in stock compensation expense.

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.

Investing Activities

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.

Net cash used in investing activities during the three months ended March 31, 2023 was $66.9 million primarily due to purchases of marketable securities and property and equipment, partially offset by proceeds from sale and maturities of marketable securities.

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

Financing Activities

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.

During the three months ended March 31, 2023, net cash provided by financing activities was $0.2 million from proceeds from stock options exercises and ESPP purchases.

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

Funding Requirements

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.

Our plan of operation is to continue implementing our business strategy, continue research and development of bel-sar 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 ongoing COVID-19 pandemic;

addressing any potential interruptions or delays resulting from factors related to the 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 September 30, 2022, we had cash and cash equivalents and marketable securities of $111.5 million.

As of March 31, 2023, we had cash and cash equivalents and marketable securities of $173.5 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 2025.

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If we raise funds through strategic collaboration, licensing or other arrangements, we may relinquish significant rights or grant licenses on terms that are not favorable to us.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic and otherwise.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Material Cash Requirements

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

The following table summarizes our contractual obligations and commitments as of March 31, 2023.

Payments Due by Period

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(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.

On May 16, 2022, the Company entered into an office and laboratory lease in Boston, Massachusetts 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.

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Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation.

We have also acquired exclusive and non-exclusive rights to use, research, develop and offer for sale certain products and patents under license agreements.

The license agreements obligate us to make payments to the licensors for license fees, milestones, license maintenance fees and royalties.

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

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

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”

During the three months ended March 31, 2023, 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, 2022, as filed with the SEC.

Recent Accounting Pronouncements

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.

We assessed the recent accounting pronouncements for the three months ended March 31, 2023 and determined no pronouncements have material impact to the condensed consolidated financial statements.

Emerging Growth Company Status

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We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

If we are a smaller reporting company at the time we cease to be an Emerging Growth Company, or EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Quantitative and Qualitative Disclosures About Market Risk.

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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