What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 54 added, 34 removed, 187 unchanged (32% of the section changed)

15 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 $21.1 million and $44.3 million for the three and six months ended June 30, 2024, respectively, compared to $35.8 million and $63.2 million for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $460.6 million.

Our net loss was $10.6 million and $54.9 million for the three and nine months ended September 30, 2024, respectively, compared to $33.3 million and $96.5 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $471.2 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.

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We expect our expenses, and the potential for losses, to be variable as we focus development efforts on selected assets and indications.

We expect research and development expenses to vary as we continue to advance clinical trials of our lead product candidates, and are expected to decrease in the near term as we complete enrollment and treatment of patients in certain trials.

We expect research and development expenses to decrease in the near term as we complete enrollment and treatment of patients in certain of our trials, but may generally increase in the future as we progress our lead product candidates through the regulatory approval process.

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

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to 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, 2024, our cash and cash equivalents totaled approximately $61.7 million.

As of September 30, 2024, our cash and cash equivalents totaled approximately $56.5 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.

Our current operating plan prioritizes and focuses clinical development of selected assets and indications, and includes completion of certain of our clinical trials and delaying development of certain pre-clinical programs.

Our current operating plan focuses on the clinical development of selected assets and indications, and includes completion of certain of our clinical trials.

Our estimate as to how long we expect our existing cash and cash equivalents to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

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The Company has entered into collaborations and licensing agreements with various third parties that, in some cases, may provide for potential future milestone and royalty payments to us (see Note 7 to our financial statements).

In September 2024, the Company licensed BA3362, a Nectin-4 x CD3 T cell engaging bispecific antibody, to Context Therapeutics (“Context”).

We recognized revenue of $11.0 million during the three and nine months ended September 30, 2024, respectively, related to the licensing agreement with Context.

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 collaborations, licenses, or our legacy service contracts during the three and six months ended June 30, 2024 and 2023, respectively.

We did not recognize any revenue from our legacy service contracts during the three and nine months ended September 30, 2023 and 2024, respectively.

Operating Expenses

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

Comparison of the Three Months Ended September 30, 2024 and 2023

Three Months Ended

September 30,

(in thousands)

Collaboration and other revenue

Operating expenses:

8 unchanged sentences

Net loss and comprehensive loss

Collaboration and Other Revenue

Collaboration and other revenue for the three months ended September 30, 2024 was $11.0 million and consisted of revenue recognized under the Context License Agreement.

There was no revenue recognized during the three months ended September 30, 2023.

See Note 7 to our financial statements for further details regarding collaboration and licensing agreements.

Research and Development Expense

1 unchanged sentence

Three Months Ended

September 30,

(in thousands)

10 unchanged sentences

Total research and development expenses

Research and development expenses were $16.2 million and $31.0 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $14.8 million was primarily driven by a $6.1 million decrease in pre-clinical development costs primarily for BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $4.3 million decrease in manufacturing costs primarily related to evalstotug, a $4.1 million decrease in clinical development costs for our clinical stage programs primarily due to completing Phase 2 enrollment for our ongoing ADC trials for mecbotamab vedotin and ozuriftamab vedotin, a $0.4 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in facility related costs, offset by a $0.3 million increase in personnel related costs.

Research and development expenses were $16.4 million and $28.4 million for the three months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $12.0 million was primarily driven by a $5.4 million decrease in development costs for our pre-clinical programs primarily for BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $4.8 million decrease development costs for our clinical stage programs primarily due to completing Phase 2 enrollment for our ongoing ADC trials for mecbotamab vedotin and ozuriftamab vedotin, a $3.0 million decrease in manufacturing costs for evalstotug, a $0.3 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in facility related costs.

This was offset by $1.8 million in related party expense incurred in connection with the licensing agreement with Context Therapeutics in September 2024, which is further discussed in Note 7 and Note 8 to our financial statements.

General and Administrative Expense

General and administrative expenses were $5.8 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $0.5 million was primarily driven by a $0.8 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in insurance due to a decrease in premiums for our D&O policy, offset by $0.4 million increase in professional services and consulting expenses.

General and administrative expenses were $5.9 million and $6.6 million for the three months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $0.7 million was primarily driven by a $1.0 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.2 million decrease in D&O insurance premiums, offset by $0.5 million increase in professional and advisor fees related to the closing of our licensing agreement with Context Therapeutics in September 2024.

Interest Income

Interest income was $0.9 million and $1.5 million for the three months ended June 30, 2024 and 2023, respectively.

Interest income was $0.7 million and $1.7 million for the three months ended September 30, 2024 and 2023, respectively.

The decrease of $1.0 million was due to lower cash and cash equivalents compared to the same period in 2023.

Comparison of the Six Months Ended June 30, 2024 and 2023

Six Months Ended

Comparison of the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended

September 30,

(in thousands)

Collaboration and other revenue

Operating expenses:

8 unchanged sentences

Net loss and comprehensive loss

Collaboration and Other Revenue

Collaboration and other revenue for the nine months ended September 30, 2024 was $11.0 million and consisted of revenue recognized under the Context License Agreement.

There was no revenue recognized during the nine months ended September 30, 2023.

See Note 7 to our financial statements for further details regarding collaboration and licensing agreements.

Research and Development Expense

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)

10 unchanged sentences

Total research and development expenses

Research and development expenses were $35.1 million and $52.7 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $17.6 million was primarily driven by a $9.8 million decrease in pre-clinical development costs primarily for BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $4.9 million decrease in manufacturing costs primarily for evalstotug, a $2.7 million decrease in clinical development costs for our clinical stage programs primarily due to completing Phase 2 enrollment for our ongoing ADC trials for mecbotamab vedotin and ozuriftamab vedotin, and a $0.8 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, offset by a $0.6 million increase in personnel related costs.

Research and development expenses were $51.4 million and $81.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $29.6 million was primarily driven by a $15.2 million decrease in development costs for our pre-clinical programs primarily BA3142, our CAB B7H3 x CD3 bispecific program, and BA3361, our CAB Nectin-4 ADC program, a $7.8 million decrease in manufacturing costs for evalstotug, a $7.6 million decrease in development costs for our clinical stage programs primarily due to completing Phase 2 enrollment for our ongoing ADC trials for mecbotamab vedotin and ozuriftamab vedotin, a $1.0 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, and a $0.3 million decrease in travel and other expenses.

General and Administrative Expense

General and administrative expenses were $11.4 million and $13.5 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease of approximately $2.1 million was primarily driven by a $1.7 million decrease in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, a $0.3 million decrease in insurance expense due to a decrease in premiums for our D&O policy, and a $0.1 million decrease in travel related costs.

General and administrative expenses were $17.3 million and $20.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease of approximately $2.8 million was primarily driven by a decrease of $2.8 million in stock-based compensation related to awards issued under our 2020 Equity Incentive Plan, a $0.5 million decrease in D&O insurance premiums,

offset by a $0.5 million increase in professional and advisor fees related to the closing of our licensing agreement with Context Therapeutics in September 2024.

Interest Income

Interest income was $2.1 million and $2.9 million for the six months ended June 30, 2024 and 2023, respectively.

Interest income was $2.8 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease of $1.9 million was due to lower cash and cash equivalents compared to the same period in 2023.

1 unchanged sentence

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.

Since July 2020, we have funded our operations primarily through the issuance of equity.

As of June 30, 2024, we had cash and cash equivalents of $61.7 million.

Since July 2020, we have funded our operations primarily through the issuance of equity and via collaborations and licenses.

As of September 30, 2024, we had cash and cash equivalents of $56.5 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 June 30, 2024.

We have not sold any shares of our common stock under the Sales Agreement as of September 30, 2024.

Future Funding Requirements

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We cannot assure you that, in the event we require additional financing, such financing will be available at acceptable terms to us, if at all.

Failure to generate sufficient cash flows from operations, raise additional capital, and reduce discretionary spending should additional capital not become available could have a material adverse effect on our ability to achieve our intended business objectives.

to generate sufficient cash flows from operations, raise additional capital, and reduce discretionary spending should additional capital not become available could have a material adverse effect on our ability to achieve our intended business objectives.

Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated preclinical studies and clinical trials.

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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 and the conflict between Israel and Hamas, 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 wars between Israel and the terrorist groups Hamas and Hezbollah, 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.

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The following summarizes our cash flows for the periods indicated:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

5 unchanged sentences

Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2024 was $50.0 million, which consisted of a net loss of $44.3 million, a net change of $11.0 million in our operating assets and liabilities and $5.3 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $10.9 million and a net decrease in operating lease right-of-use assets and lease liabilities of $0.3 million, partially offset by a decrease in prepaid expenses and other assets of $0.3 million.

Net cash used in operating activities for the nine months ended September 30, 2024 was $55.2 million, which consisted of a net loss of $54.9 million, a net change of $7.9 million in our operating assets and liabilities and $7.7 million of non-cash transactions.

The net change in our operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $8.5 million and a net decrease in operating lease right-of-use assets and lease liabilities of $0.5 million, partially offset by an increase in prepaid expenses and other assets of $1.0 million.

The non-cash transactions primarily consisted of $7.0 million of stock-based compensation and non-cash charges of $0.7 million related to depreciation and amortization.

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.

1 unchanged sentence

Cash Used in Investing Activities

Cash used in investing activities was $0 for the six months ended June 30, 2024.

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

Cash used in investing activities was $0 for the nine months ended September 30, 2024.

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

Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities was $0.2 million for the six months ended June 30, 2024, consisting primarily of the proceeds from the issuance of common stock under the ESPP and the 2020 Plan, partially offset by the payment of taxes related to the net settlement of restricted stock units.

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 provided by financing activities was $0.2 million for the nine months ended September 30, 2024, consisting primarily of the proceeds from the issuance of common stock under the ESPP and the 2020 Plan, partially offset by 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.

Critical Accounting Policies and Estimates

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For a description of our critical accounting policies, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” contained in our Annual Report on Form 10-K for the year ended December 31, 2023.

There have not been any material changes to the critical accounting policies discussed therein during the six months ended June 30, 2024.

There have not been any material changes to the critical accounting policies discussed therein during the nine months ended September 30, 2024.

Off-Balance Sheet Arrangements

3 unchanged sentences

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 2. Management’s Discussion and Analysis