What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-01 · 144 added, 119 removed, 475 unchanged (36% of the section changed)

3 unchanged sentences

(in thousands, except par value and share amounts)

September 30,

Current assets:

15 unchanged sentences

Preferred stock, $ 0.0001 par value;

200,000,000 shares authorized at

June 30, 2023 and December 31, 2022;

0 shares issued and outstanding at

June 30, 2023 and December 31, 2022

200,000,000 shares authorized at September 30, 2023

and December 31, 2022;

0 shares issued and outstanding at September 30, 2023

and December 31, 2022

Common stock, $ 0.0001 par value;

350,000,000 shares authorized at

June 30, 2023 and December 31, 2022;

September 30, 2023 and December 31, 2022;

47,907,395 and 46,336,166

shares issued and outstanding at June 30, 2023 and December 31, 2022

shares issued and outstanding at September 30, 2023 and December 31, 2022

Class B common stock, $ 0.0001 par value;

15,368,569 shares authorized at

June 30, 2023 and December 31, 2022;

0 and 1,211,959

shares issued and outstanding at June 30, 2023 and December 31, 2022

September 30, 2023 and December 31, 2022;

0 and 1,211,959 shares issued and

outstanding at September 30, 2023 and December 31, 2022

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,

Operating expenses:

6 unchanged sentences

Other income (expense)

Total other income (expense)

Total other income

Net loss and comprehensive loss

5 unchanged sentences

(in thousands, except share amounts)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Stockholders’

Balance at March 31, 2023

Balance at June 30, 2023

Stock-based compensation expense

3 unchanged sentences

Taxes related to net share settlement of equity awards

Balance at June 30, 2023

Three Months Ended June 30, 2022

Balance at September 30, 2023

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 for Employee Stock Purchase Plan

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

Taxes related to net share settlement of equity awards

Balance at June 30, 2022

Conversion of Class B Common Stock

Balance at September 30, 2022

See accompanying notes.

2 unchanged sentences

(in thousands, except share amounts)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

2 unchanged sentences

Conversion of Class B common stock

Balance at June 30, 2023

Six Months Ended June 30, 2022

Balance at September 30, 2023

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

Conversion of Class B common stock

Balance at September 30, 2022

See accompanying notes.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

34 unchanged sentences

Basis of Presentation

The unaudited condensed financial statements as of June 30, 2023, and for the three and six months ended June 30, 2023 and 2022, 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 financial statements as of September 30, 2023, and for the three and nine months ended September 30, 2023 and 2022, 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 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 development of its product candidates.

As of June 30, 2023, the Company had an accumulated deficit of $ 356.0 million .

As of September 30, 2023, the Company had an accumulated deficit of $ 389.3 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.

1 unchanged sentence

Any of these actions could materially harm the Company’s business, results of operations and future prospects.

In January 2023, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC pursuant to which the Company may, from time to time at its sole discretion, sell shares of the Company’s common stock, with aggregate gross sales proceeds of up to $ 100.0 million.

The Company has not sold any shares of its common stock under the Sales Agreement as of September 30, 2023.

Management is required to perform a two-step analysis of the Company’s ability to continue as a going concern.

8 unchanged sentences

To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash equivalents.

Cash equivalents consist of highly rated securities including U.S.

Government and U.S.

Treasury money market funds, which are unrestricted as to withdrawal or use.

The cash and cash equivalents balance as of September 30, 2023 and 2022 includes $ 0.1 million and $ 0 , respectively, invested in U.S.

Government and U.S.

Treasury money market funds.

Concentrations of Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents.

The Company maintains deposits in federally insured financial institutions in excess of federally insured limits.

The Company maintains deposits in federally insured financial institutions in excess of federally insured limits and may invest cash that is not required for immediate operating needs in highly liquid instruments that bear minimal risk.

The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

28 unchanged sentences

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

Six Months Ended

As of September 30,

Common stock options

1 unchanged sentence

Recent Accounting Pronouncements

There were no new accounting standards that had a material impact on the Company’s financial statements during the three or six months ended June 30, 2023, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of June 30, 2023 that the Company expects to have a material impact on its financial statements.

There were no new accounting standards that had a material impact on the Company’s financial statements during the three or nine months ended September 30, 2023, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of September 30, 2023 that the Company expects to have a material impact on its 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

3 unchanged sentences

Fair Value Measurements

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, 2023 and December 31, 2022 , the Company had no financial assets or liabilities measured at fair value on a recurring basis.

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

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.

5 unchanged sentences

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

As of September 30, 2023 and December 31, 2022, the Company had $ 0.1 million and $ 0 , respectively, invested in U.S.

Government and U.S.

Treasury money market funds which are recorded as cash equivalents and represent a Level 1 measurement within the fair value hierarchy.

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

4 unchanged sentences

The components of lease expense included in the Company’s statements of operations and loss 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, 2023 and 2022, respectively.

The Company did not have any short-term leases or finance leases for the three and nine months ended September 30, 2023 and 2022, 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, 2023, future minimum payments under the Company’s non-cancelable operating lease under ASC 842 were as follows (in thousands):

Six months ending December 31, 2023

As of September 30, 2023, future minimum payments under the Company’s non-cancelable operating lease under ASC 842 were as follows (in thousands):

Three months ending December 31, 2023

Total future lease payments

6 unchanged sentences

2020 Equity Incentive Plan

awards, restricted stock unit awards, performance stock awards, performance stock unit awards and other stock-based awards.

As of June 30, 2023 and December 31, 2022 , the total number of common shares authorized for issuance under the 2020 Plan was 9,196,970 and 7,658,509 , respective ly.

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 September 30, 2023 and December 31, 2022 , the total number of common shares authorized for issuance under the 2020 Plan was 9,196,970 and 7,658,509 , 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, 2023 and 2022 has been reported in the condensed statements of operations and comprehensive loss as follows (in thousands):

Stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 has been reported in the condensed 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

3 unchanged sentences

Two board members elected to receive shares of restricted stock in lieu of cash.

For the six months ended June 30, 2023 the Company issued 18,807 shares of fully vested restricted stock to the two board members.

Compensation expense was earned and recognized for these fully vested restricted stock grants in the amount of $ 26,000 and $ 53,000 for the three and six months ended June 30, 2023, respectively.

The following table summarizes RSU activity under the 2020 Plan for the six months ended June 30, 2023:

For the nine months ended September 30, 2023 , the Company issued 34,468 shares of fully vested restricted stock to the two board members.

Compensation expense was earned and recognized for these fully vested restricted stock grants in the amount of $ 27,000 and $ 80,000 for the three and nine months ended September 30, 2023, respectively.

The following table summarizes RSU activity under the 2020 Plan for the nine months ended September 30, 2023:

Weighted - Average

Outstanding at December 31, 2022

Outstanding at June 30, 2023

As of June 30, 2023, total unrecognized stock-based compensation expense for RSUs was $ 5.2 million , which is expected to be recognized over a remaining weighted-average period of approximately 0.9 years .

Outstanding at September 30, 2023

As of September 30, 2023, total unrecognized stock-based compensation expense for RSUs was $ 2.9 million , which is expected to be recognized over a remaining weighted-average period of approximately 0.8 years .

Stock Options

The following table summarizes stock option activity under the 2020 Plan for the six months ended June 30, 2023:

The following table summarizes stock option activity under the 2020 Plan for the nine months ended September 30, 2023:

Weighted - Average

1 unchanged sentence

Balance at December 31, 2022

Balance at June 30, 2023

Vested and expected to vest at June 30, 2023

Exercisable at June 30, 2023

As of June 30, 2023 , total unrecognized stock-based compensation cost for unvested common stock options was $ 21.1 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.2 years.

The weighted- average grant date fair value of stock options granted during the six months ended June 30, 2023 was $ 2.66 per share.

The total fair value of options vested during the six months ended June 30, 2023 was $ 4.4 million.

Balance at September 30, 2023

Vested and expected to vest at September 30, 2023

Exercisable at September 30, 2023

As of September 30, 2023 , total unrecognized stock-based compensation cost for unvested common stock options was $ 17.6 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.0 years.

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2023 was $ 2.62 per share.

The total fair value of options vested during the nine months ended September 30, 2023 was $5.7 million.

On February 26, 2023, the Compensation Committee of the Company’s board of directors approved a modification to the Company’s 2020 Plan to allow vesting of RSUs or stock options, as applicable, subject to the grantee’s continued service to the Company and/or one of its subsidiaries as an employee, non-employee director, or independent contractor.

4 unchanged sentences

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

17 unchanged sentences

The ESPP permits participants to purchase common stock through payroll deductions of up to 15 % of their eligible compensation.

As of June 30, 2023 and December 31, 2022, a total of 1,737,098 shares and 1,229,148 shares, respectively, of common stock were authorized for issuance under the ESPP.

As of September 30, 2023 and December 31, 2022, a total of 1,737,098 shares and 1,229,148 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).

The Company issued 56,793 and 9,482 shares of common stock under the ESPP during the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, 1,521,559 shares o f 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, 2023 and 2022 was immaterial.

The Company issued 56,793 and 9,482 shares of common stock under the ESPP during the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, 1,521,559 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, 2023 and 2022 was immaterial.

Common Stock Reserved for Future Issuance

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

September 30,

Common stock options and restricted stock units issued and outstanding

11 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, 2023 and 2022 , the Company did no t recognize any revenue related to the collaboration agreement with BeiGene.

The Company had a $ 19.8 million liability to licensor as of June 30, 2023 and December 31, 2022.

For the three and nine months ended September 30, 2023 and 2022 , the Company did no t recognize any revenue related to the collaboration agreement with BeiGene.

The Company had a $ 19.8 million liability to licensor as of September 30, 2023 and December 31, 2022.

Service Contracts

2 unchanged sentences

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

The Company did no t recognize any revenue related to its legacy service contracts during the three and six months ended June 30, 2023 or 2022.

The Company did no t recognize any revenue related to its legacy service contracts during the three and nine months ended September 30, 2023 or 2022.

BMS Collaboration

4 unchanged sentences

BMS will provide Opdivo® clinical drug supply at no cost for the combination study trials.

After the completion of the combination therapy trials, the Company is obligated to provide BMS with a final report of the data resulting from the trial.

The BMS Agreement

was amended in October 2022 to include additional territories for our BA3011 and BA3021 combination study trials.

There was no impact to the Company's financial results for the three and six months ended June 30, 2023 and 2022 as a result of this agreement.

After the completion of the combination

therapy trials, the Company is obligated to provide BMS with a final report of the data resulting from the trial.

The BMS Agreement was amended in October 2022 to include additional territories for our BA3011 and BA3021 combination study trials.

There was no impact to the Company's financial results for the three and nine months ended September 30, 2023 and 2022 as a result of this agreement.

Related Party Transactions

6 unchanged sentences

The Company made its final payment under the agreement in January 2023.

For the three and six months ended June 30, 2023 , the Company recognized $ 0 and $ 0.1 million, respectively, in research and development expense related to the agreement, compared to $ 0.1 million, for the three and six months ended June 30, 2022.

The Company did not have any amounts due from or due to Himalaya Therapeutics SEZC as of June 30, 2023 .

For the three and nine months ended September 30, 2023 , the Company recognized $ 0 and $ 0.1 million, respectively, in research and development expense related to the agreement, compared to $ 0.1 million and $ 0.3 million, for the three and nine months ended September 30, 2022, respectively.

The Company did not have any amounts due from or due to Himalaya Therapeutics SEZC as of September 30, 2023 .

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

21 unchanged sentences

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 loss was $35.8 million and $63.2 million for the three and six months ended June 30, 2023, respectively, compared to $28.9 million and $53.2 million for the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, we had an accumulated deficit of $356.0 million.

Our net loss was $33.3 million and $96.5 million for the three and nine months ended September 30, 2023, respectively, compared to $25.8 million and $78.9 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, we had an accumulated deficit of $389.3 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.

We do not expect to generate meaningful revenue from product sales for the foreseeable future, and we expect to continue to incur significant operating expenses for the foreseeable future due to the cost of research and development, including identifying and designing product candidates and conducting preclinical studies and clinical trials, and the regulatory approval process for our product candidates.

We expect our expenses, and the potential for losses, to increase as we conduct clinical trials of our lead product candidates and seek to expand our pipeline.

We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities as we:

18 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, 2023, our cash and cash equivalents totaled approximately $168.7 million.

As of September 30, 2023, our cash and cash equivalents totaled approximately $141.3 million.

Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations for a period of at least twelve months from the date of issuance of the financial statements included in this report.

However, we have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

Our current operating plan includes plans to stop enrollment in certain dosing regimens for certain indications, delaying development of certain pre-clinical programs, and prioritizing and focusing clinical development on selected assets and indications.

In addition, we have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

Impact of COVID-19 on Our Business

The worldwide COVID-19 pandemic may affect our ability to complete our current preclinical studies and clinical trials, initiate and complete our planned preclinical studies and clinical trials, disrupt regulatory activities or have other adverse effects on our business, results of operations, financial condition and prospects.

In addition, the pandemic has caused substantial disruption in the financial markets and may adversely impact economies worldwide, both of which could adversely affect our business, operations and ability to raise funds to support our operations.

To date, we have experienced modest business disruptions, including with respect to clinical trials we are conducting, and non-material impairments as a result of the pandemic.

Our mecbotamab vedotin Phase 2 sarcoma trial remains on schedule and the Phase 2 interim analysis for mecbotamab vedotin NSCLC and ozuriftamab vedotin studies have experienced some modest delays.

We are continuing to monitor the potential impact of the pandemic, but we cannot be certain what the overall impact will be on our business, financial condition, results of operations and prospects.

The COVID-19 pandemic previously impacted our ongoing operations, including clinical trials.

The extent to which the COVID-19 pandemic may continue to impact our business, financial condition and results of operations cannot be reasonably estimated and will depend on future developments, which are highly uncertain and cannot be predicted, including the severity and duration of any resurgence of COVID-19 and its variants and the actions necessary to contain any resurgence or treat its impact, among others.

We will continue to monitor the COVID-19 situation closely and operate in accordance with all relevant health and safety guidelines as they evolve in response to changing public health conditions.

Financial Operations Overview

5 unchanged sentences

We may in the future seek third-party collaborators or joint venture partners for development and commercialization of BA3071 and additional CAB product candidates.

We did not recognize any collaboration revenue for the three and six months ended June 30, 2023 and 2022.

We did not recognize any collaboration revenue for the three and nine months ended September 30, 2023 and 2022.

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, 2023 and 2022.

We did not recognize any revenue from our legacy service contracts for the three and nine months ended September 30, 2023 and 2022.

Operating Expenses

25 unchanged sentences

Results of Operations

Comparison of the Three Months Ended June 30, 2023 and 2022

Comparison of the Three Months Ended September 30, 2023 and 2022

Three Months Ended

September 30,

(in thousands)

7 unchanged sentences

Other income (expense)

Total other income (expense)

Total other income

Net loss and comprehensive loss

2 unchanged sentences

Three Months Ended

September 30,

(in thousands)

9 unchanged sentences

Total research and development expenses

Research and development expenses were $31.0 million and $20.7 million for the three months ended June 30, 2023 and 2022, respectively.

The increase of approximately $10.2 million was primarily driven by a $8.9 million increase in clinical development for our clinical-stage programs including startup activities on our EpCAM bispecific trial, a $0.5 million increase in development costs for various pre-clinical programs including manufacturing, a $0.3 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, a $0.3 million increase in facility related and other costs, and a $0.2 million increase in stock-based compensation related to awards issued under the 2020 Plan.

Research and development expenses were $28.4 million and $19.8 million for the three months ended September 30, 2023 and 2022, respectively.

The increase of approximately $8.6 million was primarily driven by a $6.3 million increase in development for our ongoing clinical-stage programs, a $1.8 million increase in development costs for pre-clinical programs primarily related to our CAB B7H3 x CD3 bispecific, a $0.3 million increase in facility related and other costs, and a $0.2 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs.

General and Administrative Expense

General and administrative expenses were $6.2 million and $8.3 million for the three months ended June 30, 2023 and 2022, respectively.

The decrease of approximately $2.1 million was primarily driven by a $1.4 million decrease in accounting and legal services which included a $1.0 million legal settlement in 2022, $0.3 million decrease in insurance due to a decrease in premiums for our D&O policy, and a $0.3 million decrease in stock-based compensation related to awards issued under the 2020 Plan.

General and administrative expenses were $6.6 million and $6.3 million for the three months ended September 30, 2023 and 2022, respectively.

The increase of approximately $0.3 million was primarily driven by a $0.6 million increase in professional services and consulting expenses, offset by a $0.3 million decrease in insurance due to a decrease in premiums for our D&O policy.

Interest Income

Interest income was $1.5 million and $0.1 million for the three months ended June 30, 2023 and 2022, respectively.

The increase of $1.4 million was due to higher yields earned compared to the same period in 2022.

Interest income was $1.7 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively.

The increase of $1.3 million was due to higher yields earned as compared to the same period in 2022.

Results of Operations

Comparison of the Six Months Ended June 30, 2023 and 2022

Six Months Ended

Comparison of the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended

September 30,

(in thousands)

7 unchanged sentences

Other income (expense)

Total other income (expense)

Total other income

Net loss and comprehensive loss

1 unchanged sentence

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)

9 unchanged sentences

Total research and development expenses

Research and development expenses were $52.7 million and $37.6 million for the six months ended June 30, 2023 and 2022, respectively.

The increase of approximately $15.0 million was primarily driven by a $11.2 million increase in clinical development for our clinical-stage programs including startup activities on our EpCAM bispecific trial, a $2.0 million increase in development costs for various pre-clinical programs including manufacturing, a $0.9 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, a $0.6 million increase in facility and other allocated costs, and a $0.3 million increase in stock-based compensation due to awards issued in connection with the 2020 Plan.

Research and development expenses were $81.1 million and $57.5 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase of approximately $23.6 million was primarily driven by a $14.4 million increase in development for our clinical-stage programs, a $7.2 million increase in development costs for various pre-clinical programs, including primarily our next generation CAB Nectin-4 ADC which we are advancing to IND and our CAB B7-H3 x CD3 and CAB EGFR x CD3 bispecifics, a $1.2 million increase in personnel related costs due to an increase in headcount to support ongoing development activities for our programs, a $0.6 million increase in facility and other allocated costs, and a $0.2 million increase in stock-based compensation due to awards issued under our 2020 Equity Incentive Plan.

General and Administrative Expense

General and administrative expenses were $13.5 million and $15.8 million for the six months ended June 30, 2023 and 2022, respectively.

The decrease of approximately $2.3 million was primarily driven by a decrease of $1.4 million in accounting and legal services including a $1.0 million legal settlement in 2022, $0.6 million decrease in insurance due to a decrease in premiums for our D&O policy, and a $0.5 million decrease in stock-based compensation related to awards issued under the 2020 Plan, offset by a $0.1 million increase in personnel related costs.

General and administrative expenses were $20.1 million and $22.1 million for the nine months ended September 30, 2023 and 2022, respectively.

The decrease of approximately $2.0 million was primarily driven by a $0.9 million decrease in insurance due to a decrease in premiums for our D&O policy, a $0.8 million decrease in accounting and legal services due to a one-time $1.0 million legal settlement in 2022, and a $0.4 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan.

Interest Income

Interest income was $2.9 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively.

The increase of $2.7 million was due to higher yields earned compared to the same period in 2022.

Interest income was $4.7 million and $0.6 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase of $4.1 million was due to higher yields earned as compared to the same period in 2022.

Liquidity and Capital Resources

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, 2023, we had cash and cash equivalents of $168.7 million.

As of September 30, 2023, we had cash and cash equivalents of $141.3 million.

In January 2023, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) acting as sales agent pursuant to which the Company may, from time to time at its sole discretion, sell shares of the Company’s common stock, with aggregate gross sales proceeds of up to $100.0 million.

The Company will pay Jefferies a commission of 3.0% of the aggregate gross proceeds the Company receives from all sales of the Company’s common stock under the Sales Agreement.

We have not sold any shares of our common stock under the Sales Agreement as of September 30, 2023.

Future Funding Requirements

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Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations for a period of at least twelve months from the date the financial statements included in this report are issued.

However, we have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

In addition, we have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

In addition, we will require additional funding in order to complete development of our product candidates and commercialize our products, if approved.

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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 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 supply chain disruptions, and geopolitical disruptions, including the recent conflict between Russia and Ukraine and the conflict between Israel and Hamas, 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’

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 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 provided by:

Net cash used in:

Operating activities

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Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2023 was $46.7 million, which consisted of a net loss of $63.2 million, a net change of $8.6 million in our operating assets and liabilities and $7.9 million of non-cash transactions.

Net cash used in operating activities for the nine months ended September 30, 2023 was $74.1 million, which consisted of a net loss of $96.5 million, a net change of $10.8 million in our operating assets and liabilities and $11.7 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 $12.5 million, partially offset by an increase in prepaid expenses and other assets of $1.3 million and a net decrease in operating lease right-of-use assets and lease liabilities of $0.4 million.

The non-cash transactions primarily consisted of $10.8 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, 2022 was $42.1 million, which consisted of a 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 for the nine months ended September 30, 2022 was $66.1 million, which consisted of a 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.

Cash Used in Investing Activities

Cash used in investing activities was $65,000 for the six months ended June 30, 2023 and $0.2 million for the six months ended June 30, 2022, respectively, primarily related to the purchase of property and equipment.

Cash used in investing activities was $90,000 for the nine months ended September 30, 2023 and $0.2 million for the nine months ended September 30, 2022, respectively, primarily related to the purchase of property and equipment.

Cash Used in Financing Activities

Net cash used in financing activities was immaterial for the six months ended June 30, 2023, consisting primarily of the proceeds from the issuance of common stock under the ESPP and the 2020 Plan, offset by payment of taxes related to the net settlement of restricted stock units.

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 immaterial for the nine months ended September 30, 2023, consisting primarily of the proceeds from the issuance of common stock under the ESPP and the 2020 Plan, offset by payment of taxes related to the net settlement of restricted stock units.

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.

Critical Accounting Policies and Estimates

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Actual results may differ from these estimates under different assumptions and conditions.

Our critical accounting policies are those accounting principles generally accepted in the United States that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition

and results of operations, as well as the specific manner in which we apply those principles.

For a description of our critical accounting policies, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations —

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contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

There have not been any material changes to the critical accounting policies discussed therein during the six months ended June 30, 2023.

There have not been any material changes to the critical accounting policies discussed therein during the nine months ended September 30, 2023.

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