What changed in this filing

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Item 1. Financial Statements

2022-11-04 compared with 2022-08-09 · 153 added, 123 removed, 516 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except par value and share amounts)

September 30,

Current assets:

16 unchanged sentences

200,000,000 shares authorized at

June 30, 2022 and December 31, 2021;

September 30, 2022 and December 31, 2021;

0 shares issued and outstanding at

June 30, 2022 and December 31, 2021

September 30, 2022 and December 31, 2021

Common stock, $ 0.0001 par value;

350,000,000 shares authorized at

June 30, 2022 and December 31, 2021;

35,993,458 shares and 35,799,233

shares issued and outstanding at June 30, 2022 and December 31, 2021

September 30, 2022 and December 31, 2021;

36,365,317 and 35,799,233

shares issued and outstanding at September 30, 2022 and December 31, 2021

Class B common stock, $ 0.0001 par value;

15,368,569 shares authorized at

June 30, 2022 and December 31, 2021;

1,492,059 shares issued and outstanding

at June 30, 2022 and December 31, 2021

September 30, 2022 and December 31, 2021;

1,211,959 and 1,492,059

shares issued and outstanding at September 30, 2022 and December 31, 2021

Additional paid-in capital

6 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Collaboration and other revenue

7 unchanged sentences

Interest expense

Gain on extinguishment of long-term debt

Other income (expense)

Total other income (expense)

6 unchanged sentences

(in thousands, except share amounts)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Stockholders’

Balance at March 31, 2022

Balance at June 30, 2022

Stock-based compensation expense

Issuance of common stock under equity incentive plans

Issuance of common stock under equity incentive plans, net of shares withheld for taxes

Issuance of common stock for Employee Stock Purchase Plan

Taxes related to net share settlement of equity awards

Balance at June 30, 2022

Three Months Ended June 30, 2021

Conversion of Class B common stock

Balance at September 30, 2022

Three Months Ended September 30, 2021

Stockholders’

Balance at March 31, 2021

Balance at June 30, 2021

Stock-based compensation expense

Issuance of common stock, net of issuance costs

Issuance of common stock under equity incentive plans

Issuance of common stock upon exercise of options, net

Issuance of common stock for Employee Stock Purchase Plan

Balance at June 30, 2021

Balance at September 30, 2021

See accompanying notes.

2 unchanged sentences

(in thousands, except share amounts)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Stockholders’

1 unchanged sentence

Stock-based compensation expense

Issuance of common stock under equity incentive plans

Issuance of common stock under equity incentive plans, net of shares withheld for taxes

Issuance of common stock for Employee Stock Purchase Plan

Taxes related to net share settlement of equity awards

Balance at June 30, 2022

Six Months Ended June 30, 2021

Conversion of Class B common stock

Balance at September 30, 2022

Nine Months Ended September 30, 2021

Stockholders’

1 unchanged sentence

Stock-based compensation expense

Issuance of common stock, net of issuance costs

Issuance of common stock under equity incentive plans

Issuance of common stock upon exercise of options, net

Issuance of common stock for Employee Stock Purchase Plan

Balance at June 30, 2021

Balance at September 30, 2021

See accompanying notes.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

2 unchanged sentences

Loss on disposal of property and equipment

Gain on extinguishment of debt

Stock-based compensation

11 unchanged sentences

Payment of initial public offering costs

Proceeds from issuance of common stock

Proceeds from exercise of stock options

Proceeds from issuance of common stock under Employee Stock Purchase Plan

Payments for taxes related to net settlement of equity awards

Net cash used in financing activities

Net decrease in cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

2 unchanged sentences

Property and equipment additions included in accounts payable and accrued expenses

Equity issuance costs included in accounts payable and accrued expenses

Tax related to net settlement of equity awards included in accounts payable and

17 unchanged sentences

became a single legal entity with no consolidated variable interest entities ("VIEs") or subsidiaries.

The unaudited condensed consolidated financial statements as of June 30, 2022, and for the three and six months ended June 30, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial statements.

The unaudited condensed consolidated financial statements as of September 30, 2022, and for the three and nine months ended September 30, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial statements.

These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented.

3 unchanged sentences

The Company has incurred cumulative operating losses and negative cash flows from operations since its inception and expects to continue to incur significant expenses and operating losses for the foreseeable future as it continues the development of its product candidates.

As of June 30, 2022, the Company had an accumulated deficit of $ 239.5 million .

As of September 30, 2022, the Company had an accumulated deficit of $ 265.3 million .

The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financings or other sources.

43 unchanged sentences

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalents):

Six Months Ended

Nine Months Ended

September 30,

Common stock warrants

2 unchanged sentences

Recent Accounting Pronouncements

There were no new accounting standards that had a material impact on the Company’s consolidated financial statements during the three or six months ended June 30, 2022, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of June 30, 2022 that the Company expects to have a material impact on its consolidated financial statements.

There were no new accounting standards that had a material impact on the Company’s consolidated financial statements during the three or nine months ended September 30, 2022, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of September 30, 2022 that the Company expects to have a material impact on its consolidated financial statements.

Balance Sheet Details

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

September 30,

Prepaid research and development

2 unchanged sentences

Property and equipment consist of the following (in thousands):

September 30,

Furniture, fixtures and office equipment

3 unchanged sentences

Accounts payable and accrued expenses consist of the following (in thousands):

September 30,

Accounts payable

4 unchanged sentences

The carrying amounts of the Company’s current financial assets and current financial liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.

As of June 30, 2022 and December 31, 2021 , the Company had no financial assets or liabilities measured at fair value on a recurring basis.

As of September 30, 2022 and December 31, 2021 , the Company had no financial assets or liabilities measured at fair value on a recurring basis.

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis.

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

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

market participants would use in pricing an asset or liability.

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

between market participants.

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

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

2 unchanged sentences

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company did no t have any outstanding debt as of June 30, 2022 or December 31, 2021.

As of June 30, 2021, the Company had $ 0.7 million outstanding under a promissory note issued pursuant to the Paycheck Protection Program (“PPP”) of the CARES Act.

The loan was subsequently forgiven in July 2021 and recognized as other income on the Company's Statement of Operations.

For the three and six months ended June 30, 2021 , the Company recognized interest expense related to its outstanding debt of $ 1,000 and $ 3,000 , respectively.

None of the Company’s non-financial assets and liabilities are recorded at fair value on a non-recurring basis.

No transfers between levels have occurred during the periods presented.

The Company did no t have any outstanding debt as of September 30, 2022 or December 31, 2021.

In April 2020, the Company borrowed $ 0.7 million under the Paycheck Protection Program (“PPP”) under the CARES Act.

The loan was subsequently forgiven in July 2021.

The $ 0.7 million balance of the forgiven loan was recognized as other income on the Company's Statement of Operations for the three and nine months ended September 30, 2021.

For the three and nine months ended September 30, 2021, the Company recognized interest expense related to its outstanding debt of $ 0 and $ 3,000 , respectively.

The Company has a single operating lease for its corporate headquarters and laboratory space in San Diego, California.

2 unchanged sentences

The components of lease expense included in the Company’s condensed consolidated statements of operations include (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease expense

2 unchanged sentences

Variable lease costs are primarily related to payments made to lessors for common area maintenance, property taxes, insurance, and other operating expenses.

The Company did not have any short-term leases or finance leases for the three and six months ended June 30, 2022 and 2021, respectively.

The Company did not have any short-term leases or finance leases for the three and nine months ended September 30, 2022 and 2021, respectively.

The weighted average remaining lease term and weighted average discount rate for operating leases were as follows:

As of June 30,

As of September 30,

Weighted average remaining lease term (in years)

1 unchanged sentence

Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of operating leases

As of June 30, 2022, future minimum payments under the Company's non-cancelable operating lease under ASC 842 were as follows (in thousands):

Six months ending December 31, 2022

As of September 30, 2022, future minimum payments under the Company's non-cancelable operating lease under ASC 842 were as follows (in thousands):

Three months ending December 31, 2022

Total future lease payments

7 unchanged sentences

The Company may grant awards of common stock under the 2020 Equity Incentive Plan (the "2020 Plan") to the Company’s employees, consultants and non-employee directors pursuant to option awards, stock appreciation rights awards, restricted stock awards, restricted stock unit awards, performance stock awards, performance stock unit awards and other stock-based awards.

As of June 30, 2022 and December 31, 2021 , the total number of common shares authorized for issuance under the 2020 Plan was 7,658,509 and 6,226,540 , respective ly.

As of September 30, 2022 and December 31, 2021 , the total number of common shares authorized for issuance under the 2020 Plan was 7,658,509 and 6,226,540 , respective ly.

On January 1st of each year, commencing with the first January 1st following the effective date of the 2020 Plan, the shares authorized for issuance under the 2020 Plan shall be increased by a number of shares equal to the lesser of 4% of the total number of shares outstanding on the immediately preceding December 31st and such lesser number of shares determined by the Company’s board of directors.

1 unchanged sentence

Awards under the 2020 Plan generally vest at 25 % one year from the vesting commencement date and ratably each month thereafter for a period of 36 months , subject to continuous service.

Stock-based compensation expense for the three and six months ended June 30, 2022 and 2021 has been reported in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 has been reported in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Restricted Stock Units

The following table summarizes RSU activity under the 2020 Plan for the six months ended June 30, 2022:

The following table summarizes RSU activity under the 2020 Plan for the nine months ended September 30, 2022:

Weighted - Average

Outstanding at December 31, 2021

Outstanding at June 30, 2022

As of June 30, 2022, total unrecognized stock-based compensation expense for RSUs was $ 13.3 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.8 years .

During the six months ended June 30, 2021, the Company modified 138,461 RSU's under the Transition Agreement (See Note 9).

Outstanding at September 30, 2022

As of September 30, 2022, total unrecognized stock-based compensation expense for RSUs was $ 11.3 million , which is expected to be recognized over a remaining weighted-average period of approximately 1.5 years .

During the nine months ended September 30, 2021, the Company modified 138,461 RSU's under the Transition Agreement (See Note 9).

Stock Options

The following table summarizes stock option activity under the 2020 Plan for the six months ended June 30, 2022:

The following table summarizes stock option activity under the 2020 Plan for the nine months ended September 30, 2022:

Weighted - Average

1 unchanged sentence

Balance at December 31, 2021

Balance at June 30, 2022

Vested and expected to vest at June 30, 2022

Exercisable at June 30, 2022

As of June 30, 2022 , total unrecognized stock-based compensation cost for unvested common stock options was $ 18.1 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.3 years.

The weighted- average grant date fair value of stock options granted during the six months ended June 30, 2022 was $ 4.07 per share .

The total fair value of options vested during the six months ended June 30, 2022 was $ 3.8 million.

During the six months ended June 30, 2021 the Company modified 7,747 stock options under the Transition Agreement (See Note 9).

Balance at September 30, 2022

Vested and expected to vest at September 30, 2022

Exercisable at September 30, 2022

As of September 30, 2022 , total unrecognized stock-based compensation cost for unvested common stock options was $ 16.4 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.1 years.

The weighted- average grant date fair value of stock options granted during the nine months ended September 30, 2022 was $ 4.01 per share.

The total fair value of options vested during the nine months ended September 30, 2022 was $ 5.4 million.

During the nine months ended September 30, 2021 the Company modified 7,747 stock options under the Transition Agreement (See Note 9).

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

Six Months Ended

Nine Months Ended

September 30,

Expected volatility

18 unchanged sentences

Employee Stock Purchase Plan (the “ESPP”) permits participants to purchase common stock through payroll deductions of up to 15 % of their eligible compensation.

As of June 30, 2022 and December 31, 2021, a total of 1,229,148 shares and 833,993 shares, respectively, of common stock were authorized for issuance under the ESPP.

The number of shares of common stock

authorized for issuance will automatically increase on January 1 of each calendar year, from January 1, 2021 through January 1, 2030 by the least of (i) 1.0 % of the total number of common shares of our common stock outstanding on December 31 of the preceding calendar year (calculated on a fully diluted basis), (ii) 929,658 common shares or (iii) a number determined by the Company’s board of directors that is less than (i) and (ii).

As of September 30, 2022 and December 31, 2021, a total of 1,229,148 shares

and 833,993 shares, respectively, of common stock were authorized for issuance under the ESPP.

The number of shares of common stock authorized for issuance will automatically increase on January 1 of each calendar year, from January 1, 2021 through January 1, 2030 by the least of (i) 1.0 % of the total number of common shares of our common stock outstanding on December 31 of the preceding calendar year (calculated on a fully diluted basis), (ii) 929,658 common shares or (iii) a number determined by the Company’s board of directors that is less than (i) and (ii).

In February 2021, employees began to enroll in the ESPP and the Company’s first offering period commenced.

The Company issued 9,482 common shares under the ESPP during the six months ended June 30, 2022 .

Comparatively, the Company issued 5,280 common shares under the ESPP during the six months ended June 30, 2021.

As of June 30, 2022 , 1,208,484 shares of common stock remained available for issuance under the ESPP.

Stock-based compensation expense related to the ESPP for the three and six months ended June 30, 2022 and 2021 was immaterial.

The Company issued 9,482 common shares under the ESPP during the nine months ended September 30, 2022.

Comparatively, the Company issued 5,280 common shares under the ESPP during the nine months ended September 30, 2021.

As of September 30, 2022, 1,208,484 shares o f common stock remained available for issuance under the ESPP.

Stock-based compensation expense related to the ESPP for the three and nine months ended September 30, 2022 and 2021 was immaterial.

Common Stock Warrants

5 unchanged sentences

The remaining 151,088 warrants with an exercise period of 450 days after the Company's IPO expired unexercised in March 2022.

Accordingly, there are no remaining common stock warrants outstanding and exercisable as of June 30, 2022.

Accordingly, there are no remaining common stock warrants outstanding and exercisable at September 30, 2022.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance are as follows in common equivalent shares:

September 30,

Warrants for the purchase of common stock

7 unchanged sentences

The Company and BeiGene amended the Global Co-Development and Collaboration agreement in December 2019 and in October 2020 (the “Amended BeiGene Collaboration”).

In 2019, BeiGene paid the Company an upfront non-refundable payment of $ 20.0 million and $ 5.0 million for reimbursement of manufacturing costs.

In 2019, the Company received a total of $ 25.0 million in non-refundable payments from BeiGene.

Under the terms of the Amended BeiGene Collaboration, BeiGene was generally responsible for developing BA3071 and for global regulatory filings and commercialization.

8 unchanged sentences

In the event the license is terminated, the liability will be extinguished with no further payment to BeiGene.

For the three and six months ended June 30, 2022 and 2021 , the Company did no t recognize any revenue related to the collaboration agreement with BeiGene.

As of June 30, 2022 and December 31, 2021 , the Company had a $ 19.8 million Liability to Licensor, and $ 19.8 million of deferred revenue which was classified as current, respectively.

For the three and nine months ended September 30, 2022 and 2021 , the Company did no t recognize any revenue related to the collaboration agreement with BeiGene.

As of September 30, 2022 and December 31, 2021 , the Company had a $ 19.8 million Liability to Licensor, and $ 19.8 million of deferred revenue which was classified as current, respectively.

Service Contracts

Prior to developing its own programs, the Company entered into various fixed price research services contracts.

Prior to developing its own programs, the Company entered into various fixed price research service contracts.

In connection with those service contracts, the Company may receive future milestone payments if certain clinical, regulatory and commercialization milestones are achieved.

The Company is also eligible to receive royalties based on certain product sales.

The Company recognized revenue of $ 0.3 million, included in “Collaboration and Other Revenue”, for the three and six months ended June 30, 2021 related to the achievement of a clinical milestone on a fixed price service contract.

The Company did no t recognize any revenue related to its legacy service contracts during the three or six months ended June 30, 2022.

The Company recognized revenue of $ 0.3 million, included in “Collaboration and Other Revenue”, for the nine months ended September 30, 2021 related to the achievement of a clinical milestone on a fixed price service contract.

The Company did no t recognize any revenue related to its legacy service contracts during the three or nine months ended September 30, 2022.

BMS Collaboration

15 unchanged sentences

On March 23, 2021, the Company entered into a transition agreement with Ms.

Anderson Short, our Co-founder and Executive Vice President and Chief of Intellectual Property and Strategy.

Anderson Short, our Co-founder and Executive Vice President and Chief of Intellectual Property and Strategy at that time.

Pursuant to this transition agreement, Ms.

5 unchanged sentences

The modification of these equity awards resulted in an incremental fair value of $ 7.0 million which was recognized on a straight-line basis over the transition service period which ended on the separation date.

For the three and six months ended June 30, 2021 , the Company recognized $ 0.8 million and $ 1.0 million, respectively, related to the lump sum salary payment and target bonus.

The Company also recognized non-cash stock-based compensation charges of $ 8.4 million and $ 9.4 million related to the modified equity awards for the three and six months ended June 30, 2021, respectively.

No unrecognized stock-based compensation remained as of June 30, 2021.

For the three and nine months ended September 30, 2021 , the Company recognized $ 0 and $ 1.0 million, respectively, related to the lump sum salary payment and target bonus.

The Company also recognized non-cash stock-based compensation charges of $ 0 and $ 9.4 million related to the modified equity awards for the three and nine months ended September 30, 2021 , respectively.

No unrecognized stock-based compensation remained as of September 30, 2021.

Himalaya Therapeutics

4 unchanged sentences

Payments are due and payable by BioAtla to Himalaya Therapeutics SEZC on a quarterly calendar basis and are non-refundable.

For the three and six months ended June 30, 2022, the Company recognized $ 0.1 million in research and development expense related to the Clinical Trial Agreement.

The Company did not have any amounts due from or due to Himalaya Therapeutics SEZC as of June 30, 2022.

For the three and nine months ended September 30, 2022 the Company recognized $ 0.1 million in research and development expense related to the Clinical Trial Agreement.

The Company did not have any amounts due from or due to Himalaya Therapeutics SEZC as of September 30, 2022 .

The Company maintains a defined contribution 401(k) plan available to eligible employees.

1 unchanged sentence

The Company, at its discretion, may make certain matching contributions to the 401(k) plan.

As of June 30, 2022 and December 31, 2021 , the Company had no t made any matching contributions.

As of September 30, 2022 and December 31, 2021 , the Company had no t made any matching contributions.

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

You should read the following discussion and analysis together with our unaudited financial statements and notes thereto included in “Item 1.

You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and notes thereto included in “Item 1.

Financial Statements”

11 unchanged sentences

We are a United States-based company with research facilities in San Diego, California and, through our contractual relationship with BioDuro-Sundia, a provider of preclinical development services, in Beijing, China.

Since the commencement of our operations, we have focused substantially all of our resources on conducting research and development activities, including drug discovery, preclinical studies and clinical trials of our product candidates, including the ongoing Phase 2 clinical trials of mecbotamab vedotin and ozuriftamab vedotin, establishing and maintaining our intellectual property portfolio, manufacturing clinical and research material through third parties, hiring personnel, establishing product development and commercialization collaborations with third parties, raising capital and providing general and administrative support for these operations.

Since the commencement of our operations, we have focused substantially all of our resources on conducting research and development activities, including drug discovery, preclinical studies and clinical trials of our product candidates, including the ongoing Phase 2 clinical trials of mecbotamab vedotin and ozuriftamab vedotin and our Phase 1 clinical trial of BA3071, establishing and maintaining our intellectual property portfolio, manufacturing clinical and research material through third parties, hiring personnel, establishing product development and commercialization collaborations with third parties, raising capital and providing general and administrative support for these operations.

Since 2014, such research and development activities have exclusively related to the research, development, manufacture and Phase 1 and Phase 2 clinical testing of our CAB antibody-based product candidates and the strengthening of our proprietary CAB technology platform and pipeline.

1 unchanged sentence

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

Our net losses were $28.9 million and $53.2 million for the three and six months ended June 30, 2022, respectively, compared to $30.4 million and $49.1 million for three and six months ended June 30, 2021, respectively.

As of June 30, 2022, we had an accumulated deficit of $239.5 million.

Our net losses were $25.8 million and $78.9 million for the three and nine months ended September 30, 2022, respectively, compared to $22.9 million and $72.0 million for three and nine months ended September 30, 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $265.3 million.

These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations.

13 unchanged sentences

attract, hire and retain additional clinical, scientific, management, administrative and commercial personnel.

Furthermore, we expect to incur additional costs associated with operating as a public company.

As a result, we will require substantial additional capital to develop our product candidates and fund operations for the foreseeable future.

5 unchanged sentences

If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to raise capital, maintain our research and development efforts, expand our business or continue our operations at planned levels, and as a result we may be forced to substantially reduce or terminate our operations.

As of June 30, 2022, our cash and cash equivalents totaled approximately $202.3 million.

As of September 30, 2022, our cash and cash equivalents totaled approximately $178.1 million.

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations into the second half of 2024.

19 unchanged sentences

In addition, we may in the future seek third-party collaborators or joint venture partners for development and commercialization of additional CAB product candidates.

We did not recognize any collaboration revenue for the three or six months ended June 30, 2022 and 2021.

We did not recognize any collaboration revenue for the three or nine months ended September 30, 2022 and 2021.

Prior to developing our own programs, we received revenue from services performed under fixed price service contracts that, in some cases, provided for potential milestone and royalty payments to us.

We did not recognize any revenue from our legacy service

contracts for the three and six months ended June 30, 2022.

We recognized $0.3 million in revenues from our legacy service contracts for the three and six months ended June 30, 2021, respectively.

contracts for the three and nine months ended September 30, 2022.

For the three and nine months ended September 30, 2021 we recognized $0 and $0.3 million in revenues from our legacy service contracts, respectively.

Operating Expenses

21 unchanged sentences

Personnel-related expenses consist of salaries, benefits and equity-based compensation.

Our general and administrative expenses have increased as a result of operating as a public company and after losing our emerging growth status.

We also expect our general and administrative expenses to increase in the future as we increase our personnel headcount to support our research and development activities to advance our product candidates and clinical stage programs.

3 unchanged sentences

Results of Operations

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

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

Three Months Ended

September 30,

(in thousands)

8 unchanged sentences

Interest expense

Gain on extinguishment of debt

Total other income (expense)

3 unchanged sentences

Three Months Ended

September 30,

(in thousands)

8 unchanged sentences

Total research and development expenses

Research and development expenses were $20.7 million and $14.9 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of approximately $5.9 million was primarily driven by a $3.7 million increase in clinical development for our clinical programs, a $0.8 million increase in pre-clinical development and manufacturing costs for various programs, a $1.1 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, and a $0.2 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan.

Research and development expenses were $19.8 million and $16.6 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of approximately $3.3 million was primarily driven by a $4.7 million increase in clinical development for our clinical-stage programs, a $0.8 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, and a $0.2 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan, offset by a $2.1 million decrease in pre-clinical development and manufacturing costs for various programs.

General and Administrative Expense

General and administrative expenses were $8.3 million and $15.9 million for the three months ended June 30, 2022 and 2021, respectively.

The decrease of approximately $7.5 million was primarily driven by a $8.7 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, including new awards issued under the plan and the modification of awards issued to one of our co-founders in Q2 2021, and a $0.6 million decrease in personnel related expenses, offset by a $1.6 million increase in audit and legal expense.

General and administrative expenses were $6.3 million and $7.1 million for the three months ended September 30, 2022 and 2021, respectively.

The decrease of approximately $0.8 million was primarily driven by a $0.9 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in audit and legal services, offset by an increase of $0.3 million in personnel related expenses.

Interest Income

Interest income was $146,000 and $80,000 for the three months ended June 30, 2022 and 2021, respectively.

Interest income was $370,000 and $76,000 for the three months ended September 30, 2022 and 2021, respectively.

The increase of $294,000 was due to higher yields earned during Q3 2022 compared to the same period in 2021.

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

Six Months Ended

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

Nine Months Ended

September 30,

(in thousands)

8 unchanged sentences

Interest expense

Gain on extinguishment of debt

Total other income

2 unchanged sentences

The following table summarizes our research and development expenses allocated by CAB program for the periods indicated:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

8 unchanged sentences

Total research and development expenses

Research and development expenses were $37.6 million and $25.3 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $12.4 million was primarily driven by a $8.2 million increase in clinical development for our clinical programs, a $1.1 million increase in pre-clinical development and manufacturing costs for various programs, a $2.3 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, and a $0.6 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan.

Research and development expenses were $57.5 million and $41.8 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $15.6 million was primarily driven by a $12.9 million increase in clinical development for our clinical-stage programs, a $3.1 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, a $0.7 million increase in stock-based compensation due to awards issued in connection with our 2020 Equity Incentive Plan, and a $0.3 million increase in facility and other allocated costs, offset by a $1.4 million overall decrease in pre-clinical development and manufacturing costs for various programs.

General and Administrative Expense

General and administrative expenses were $15.8 million and $24.2 million for the six months ended June 30, 2022 and 2021, respectively.

The decrease of $8.5 million was primarily driven by a $10.0 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, including new awards granted under the plan and the modification of awards issued to one of our co-founders in 2021, and a $0.5 million decrease in personnel related expenses, offset by an increase of $1.9 million in audit and legal services, including a $1.0 million legal settlement.

General and administrative expenses were $22.1 million and $31.4 million for the nine months ended September 30, 2022 and 2021, respectively.

The decrease of $9.3 million was primarily driven by an $11.0 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, including the modification of awards in 2021 that were issued to one of our co-founders, and a $0.2 million decrease in personnel related expenses, offset by an increase of $1.0 related to a legal settlement, a $0.7 million increase in audit and legal services and a $0.2 million increase in travel related expenses.

Interest Income

Interest income was $231,000 and $178,000 for the six months ended June 30, 2022 and 2021, respectively.

Interest income was $601,000 and $254,000 for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $347,000 was due to higher yields earned compared to the same period in 2021.

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We have incurred aggregate net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.

As of June 30, 2022, we had cash and cash equivalents of $202.3 million.

As of September 30, 2022, we had cash and cash equivalents of $178.1 million.

On April 22, 2020, we received proceeds from a loan pursuant to the Paycheck Protection Program of the CARES Act, "the PPP Loan", in the amount of $0.7 million from City National Bank, as lender.

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Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control.

For example, market volatility resulting from a variety of causes, including the COVID-19 pandemic, supply chain disruptions, and geopolitical disruptions, including the recent conflict between Russia and Ukraine, could adversely impact our ability to access capital as and when needed.

For example, market volatility

resulting from a variety of causes, including the COVID-19 pandemic, supply chain disruptions, and geopolitical disruptions, including the recent conflict between Russia and Ukraine, could adversely impact our ability to access capital as and when needed.

We may choose to raise additional capital through the issuance of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

To the extent we issue additional shares of common stock or other equity or convertible debt securities in the future, there will be further dilution to our investors and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’

we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, acquiring other businesses, products or technology, or declaring dividends.

If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, acquiring other businesses, products or technology, or declaring dividends.

If we are unable to obtain additional funding from these or other sources, it may be necessary to significantly reduce our rate of spending through reductions in staff and delay, scale back or stop certain research and development programs.

The following summarizes our cash flows for the periods indicated:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

Net cash used in:

Net cash provided by (used in):

Operating activities

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Financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash Used in Operating Activities

Net cash used in operating activities totaled $42.1 million for the six months ended June 30, 2022, which consisted of a consolidated net loss of $53.2 million, a net change of $3.0 million in our operating assets and liabilities and $8.1 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $5.8 million, offset by an increase in prepaid expenses and other assets of $2.6 million.

Net cash used in operating activities totaled $66.1 million for the nine months ended September 30, 2022, which consisted of a consolidated net loss of $78.9 million, a net change of $0.9 million in our operating assets and liabilities and $12.0 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $4.1 million, partially offset by an increase in prepaid expenses and other assets of $2.9 million.

The non-cash transactions primarily consisted of $11.1 million of stock-based compensation and non-cash charges of $0.9 million related to depreciation and amortization.

Net cash used in operating activities for the six months ended June 30, 2021 was $28.5 million, which consisted of a consolidated net loss of $49.1 million, a net change of $3.0 million in our operating assets and liabilities and $17.6 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $5.7 million, offset by an increase in prepaid expenses and other assets of $2.6 million.

The non-cash transactions

primarily consisted of $16.9 million of stock-based compensation and non-cash charges of $0.6 million related to depreciation and amortization.

Net cash used in operating activities for the nine months ended September 30, 2021 was $41.3 million, which consisted of a consolidated net loss of $72.0 million, a net change of $9.1 million in our operating assets and liabilities and $21.6 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $10.8 million, offset by an increase in prepaid expenses and other assets of $1.5 million and $0.2 million of deferred rent.

The non-cash transactions primarily consisted of $21.3 million of stock-based compensation and non-cash charges of $1.0 million related to depreciation and amortization, offset by the $0.7 million gain on the extinguishment of our PPP loan.

Cash Used in Investing Activities

Cash used in investing activities was $0.2 million for the six months ended June 30, 2022 and $0.7 million for the six months ended June 30, 2021, respectively, related to the purchase of property and equipment.

Cash used in investing activities was $0.2 million for the nine months ended September 30, 2022 and $0.8 million for the nine months ended September 30, 2021, respectively, related to the purchase of property and equipment.

Cash Used in Financing Activities

Net cash used in financing activities was $0.5 million for the six months ended June 30, 2022, which consisted primarily of the payment of taxes related to the net settlement of restricted stock units.

Net cash used in financing activities was $1.7 million for the six months ended June 30, 2021, which consisted primarily of our payment of initial public offering costs of $1.9 million, partially offset by the proceeds from the issuance of common stock under our Employee Stock Purchase Plan of $0.2 million.

Net cash used in financing activities was $0.6 million for the nine months ended September 30, 2022, which consisted primarily of the payment of taxes related to the net settlement of restricted stock units.

Net cash used in financing activities was $73.4 million for the nine months ended September 30, 2021, which consisted primarily of the proceeds from the issuance of common stock through a Private Placement of $75.0 million, the proceeds from the issuance of common stock under our Employee Stock Purchase Plan of $0.2 million, and $0.1 million due to the exercise of stock options under our Equity Incentive Plan, partially offset by our payment of initial public offering costs of $1.9 million.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and

liabilities at the date of the financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

There have not been any material changes to the critical accounting policies discussed therein during the six months ended June 30, 2022.

There have not been any material changes to the critical accounting policies discussed therein during the nine months ended September 30, 2022.

Off-Balance Sheet Arrangements

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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