What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-08 · 78 added, 58 removed, 441 unchanged (24% of the section changed)

19 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

19 unchanged sentences

$ 0.0001 par value;

10,000,000 shares authorized at June 30, 2022 and December 31, 2021;

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

10,000,000 shares authorized at September 30, 2022 and December 31, 2021;

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

Common stock:

$ 0.0001 par value;

290,000,000 shares authorized at June 30, 2022 and December 31, 2021;

46,553,511 shares issued and outstanding at June 30, 2022 and December 31, 2021

290,000,000 shares authorized at September 30, 2022 and December 31, 2021;

46,553,511 shares issued and outstanding at September 30, 2022 and December 31, 2021

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

9 unchanged sentences

Other comprehensive loss:

Unrealized loss on marketable securities

Unrealized gain (loss) on marketable securities

Cumulative foreign currency translation adjustment

4 unchanged sentences

(in thousands, except share data)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Comprehensive

9 unchanged sentences

Balance at June 30, 2022

Six Months Ended June 30, 2021

Stock-based compensation expense

Unrealized gain on marketable securities

Foreign currency translation adjustment

Balance at September 30, 2022

Nine Months Ended September 30, 2021

Comprehensive

11 unchanged sentences

Balance at June 30, 2021

Issuance of common stock upon exercise of Exchange Warrants

Common stock issued on exercise of stock options

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Issuance of common stock in connection with at-the-market offering, net

Balance at September 30, 2021

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

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

18 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of common stock, net (includes $ 4,850 in aggregate gross proceeds from related parties for the six months ended June 30, 2021)

Proceeds from issuance of common stock, net (includes $ 4,850 in aggregate gross proceeds from related parties for the nine months ended September 30, 2021)

Proceeds from issuance of common stock in connection with at-the-market offering, net

Proceeds from exercise of common stock options

Net cash provided by financing activities

2 unchanged sentences

Cash and cash equivalents at end of the period

Supplemental disclosures of cash flow information

Purchases of property and equipment incurred but not paid

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

15 unchanged sentences

The Company received aggregate net proceeds of approximately $ 70.6 million, after underwriting discounts, commissions and offering expenses.

Immediately prior to the consummation of the IPO, all outstanding shares of convertible preferred stock were converted into common stock.

Immediately prior to the consummation of the IPO, all outstanding shares of redeemable convertible preferred stock were converted into common stock.

Follow-on Public Offerings

12 unchanged sentences

In addition, its operating plan may change as a result of many factors, including those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 10, 2022 and this Quarterly Report on Form 10-Q.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 283.0 million as of June 30, 2022.

The Company has historically financed its operations primarily through the sale of redeemable convertible preferred stock and common stock.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 297.9 million as of September 30, 2022.

The Company has historically financed its operations primarily through the sale of common stock and redeemable convertible preferred stock.

While the Company has been able to raise multiple rounds of financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all.

Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

As of June 30, 2022, the Company had cash, cash equivalents and short-term marketable securities of $ 56.7 million.

As of September 30, 2022, the Company had cash, cash equivalents and short-term marketable securities of $ 49.6 million.

Management believes that the Company’s current cash, cash equivalents and short-term marketable securities will be sufficient to fund its planned operations for at least 12 months from the date of the issuance of these financial statements.

17 unchanged sentences

Since its inception, the Company has incurred significant losses and negative cash flows from operations.

As of June 30, 2022, the Company had an accumulated deficit of $ 283.0 million and cash, cash equivalents and marketable securities of $ 56.7 million.

As of September 30, 2022, the Company had an accumulated deficit of $ 297.9 million and cash, cash equivalents and marketable securities of $ 49.6 million.

The Company has financed its operations primarily with the proceeds from the sale of stock.

4 unchanged sentences

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

The condensed consolidated results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The condensed consolidated results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 10, 2022.

7 unchanged sentences

Financial information is translated from RMB to the U.S.

dollar (the reporting currency) for inclusion in our consolidated financial statements.

dollar (the reporting currency) for inclusion in its condensed consolidated financial statements.

Income, expenses and cash flows are translated at average exchange rates prevailing during the fiscal period, assets and liabilities are translated at fiscal period-end exchange rates, and stockholders’ equity is held at historical rates.

Resulting translation adjustments are included as a component of accumulated other comprehensive income in stockholders' equity.

Out of Period Adjustment

In the three months ended June 30, 2021, the Company recorded a cumulative translation adjustment that affected the Company’s balance sheet at June 30, 2021 by increasing its investment in Angel Pharmaceuticals and accumulated other comprehensive income in the equity section of the balance sheet by $ 1.4 million.

$ 0.9 million of this amount was an out of period adjustment related to the year ended December 31, 2020.

The impact of the out of period adjustment in the quarter ended March 31, 2021 was to reduce its investment in Angel Pharmaceuticals and other comprehensive income by $ 83,000 .

The Company has concluded that the out of period adjustment is not material to the unaudited condensed consolidated financial statements for the quarter ended March 31, 2021.

Concentrations of Credit Risk and Other Risks and Uncertainties

Substantially all of the Company’s cash and cash equivalents are deposited in accounts with two financial institutions that management believes are of high credit quality.

Such deposits may, at times, exceed federally insured limits.

Such deposits may, at times, exceed federally insured

The Company maintains its cash with an accredited financial institution and accordingly, such funds are subject to minimal credit risk.

10 unchanged sentences

The Company’s significant accounting policies are described in Note 2 to its consolidated financial statements for the year ended December 31, 2021, included in its Annual Report on Form 10-K.

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2022.

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2022.

Recent Accounting Pronouncements

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net loss - basic and diluted

1 unchanged sentence

Net loss per share, basic and diluted

Weighted average common shares outstanding for the three and six months ended June 30, 2021 include 1,458,000 shares of common stock issuable on the conversion of pre-funded warrants described in Note 1.

Weighted average common shares outstanding for the three and nine months ended September 30, 2021 include 1,458,000 shares of common stock issuable on the conversion of pre-funded warrants described in Note 1.

The amounts in the table below were excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Outstanding options

12 unchanged sentences

These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default projections based on historical data and other observable inputs.

The following tables present information as of June 30, 2022 and December 31, 2021 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):

June 30, 2022

The following tables present information as of September 30, 2022 and December 31, 2021 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):

September 30, 2022

Fair Value Measured Using

5 unchanged sentences

Marketable securities

As of June 30, 2022, marketable securities had a maximum remaining maturity of eleven months .

As of June 30, 2022 and December 31, 2021, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

June 30, 2022

As of September 30, 2022, marketable securities had a maximum remaining maturity of eleven months .

As of September 30, 2022 and December 31, 2021, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

September 30, 2022

Treasury securities

4 unchanged sentences

Equity Method Investment

As of June 30, 2022 and December 31, 2021, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel ESOP.

The Company recognized its share of losses in Angel for the total amount of $ 1.6 million and $ 2.6 million as loss from equity method investment on the consolidated statement of operations for the three and six months ended June 30, 2022, respectively.

As of September 30, 2022 and December 31, 2021, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel ESOP.

The Company recognized its share of losses in Angel for the total amount of $ 2.7 million and $ 5.4 million as loss from equity method investment on the consolidated statement of operations for the three and nine months ended September 30, 2022, respectively.

Summary Financial Information

1 unchanged sentence

Balance Sheet Data (unaudited)

June 30, 2022

September 30, 2022

December 31, 2021

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Statement of Operations Data (unaudited)

16 unchanged sentences

In addition, Scripps may terminate the license on a product-by-product basis, or the entire agreement, if the Company fails to meet specified diligence obligations related to the development and commercialization of licensed products.

Scripps may also terminate the agreement after the third

anniversary of the effective date of the agreement if it reasonably believes, based on reports the Company provides to Scripps, that the Company has not used commercially reasonable efforts as required under the agreement, subject to a specified notice and cure period.

Scripps may also terminate the agreement after the third anniversary of the effective date of the agreement if it reasonably believes, based on reports the Company provides to

Scripps, that the Company has not used commercially reasonable efforts as required under the agreement, subject to a specified notice and cure period.

Vernalis Licensing Agreement

13 unchanged sentences

Genentech Collaboration Agreements

In October 2015, the Company entered into a clinical trial collaboration agreement with Genentech to evaluate the safety, tolerability and preliminary efficacy of ciforadenant combined with Genentech’s investigational cancer immunotherapy, Tecentriq, a fully humanized monoclonal antibody targeting PD-L1, in a variety of solid tumors in our Phase 1/1b clinical trial.

Pursuant to this agreement, the Company will be responsible for the conduct and cost of the relevant studies, under the supervision of a joint development committee made up of the Company’s representatives and representatives of Genentech.

23 unchanged sentences

Balance Sheet Components (in thousands)

September 30,

Prepaid and Other Current Assets

13 unchanged sentences

Accrued legal and accounting

As of June 30, 2022, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.

As of September 30, 2022, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.

Each share of common stock is entitled to one vote.

Common stockholders are entitled to dividends if and when declared by the board of directors.

As of June 30, 2022, no dividends on common stock had been declared.

As of September 30, 2022, no dividends on common stock had been declared.

In March 2020, the Company entered into an open market sale agreement (the “2020 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s common stock, from time-to-time, with aggregate gross sales proceeds of up to $ 50,000,000 , through an at-the-market equity offering program under which Jefferies will act as its sales agent.

2 unchanged sentences

Jefferies is entitled to compensation for its services equal to up to 3.0 % of the gross proceeds of any shares of common stock sold through Jefferies under the Sales Agreements.

During the six months ended June 30, 2022, the Company did not sell any shares of common stock under it’s at-the-market offering program.

As of June 30, 2022, the Company had sold 6,920,339 shares of common stock for gross proceeds of $ 31.1 million under the 2020 Sales Agreement and $ 18.9 million and $ 40.0 million remained for sale under the 2020 Sales Agreement and 2021 Sales Agreement, respectively.

During the nine months ended September 30, 2022, the Company did not sell any shares of common stock under it’s at-the-market offering program.

As of September 30, 2022, the Company had sold 6,920,339 shares of common stock for gross proceeds of $ 31.1 million under the 2020 Sales Agreement and $ 18.9 million and $ 40.0 million remained for sale under the 2020 Sales Agreement and 2021 Sales Agreement, respectively.

The Company has reserved shares of common stock for issuance as follows:

September 30,

Shares available for future option grants

18 unchanged sentences

Options granted

( 1,704,400 )

Options forfeited

Balance at June 30, 2022

Balance at September 30, 2022

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

General and administrative

During the six months ended June 30, 2022 and 2021, the Company recorded no income tax benefits for the net operating losses (NOLs) incurred due to the uncertainty of realizing a benefit from those items.

During the nine months ended September 30, 2022 and 2021, the Company recorded no income tax benefits for the net operating losses (NOLs) incurred due to the uncertainty of realizing a benefit from those items.

The Company continues to maintain a full valuation allowance against its net deferred tax assets.

11 unchanged sentences

As a result of this lease extension, the Company recorded a $ 2.4 million increase in the operating lease right-of-use asset and a corresponding increase in the operating lease liability .

As of June 30, 2022 and December 31, 2021, the right-of-use asset under operating lease was $ 2.7 million and $ 3.2 million, respectively.

The elements of lease expense for the three and six months ended June 30, 2022 and 2021 were as follows (in thousands):

As of September 30, 2022 and December 31, 2021, the right-of-use asset under operating lease was $ 2.5 million and $ 3.2 million, respectively.

The elements of lease expense for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

Statements of operations and

September 30,

comprehensive loss location

11 unchanged sentences

Discount rate

As of June 30, 2022, minimum rental commitments under this lease were as follows (in thousands):

As of September 30, 2022, minimum rental commitments under this lease were as follows (in thousands):

Year Ended December 31 (in thousands)

10 unchanged sentences

Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.

For the three and six months ended June 30, 2022 the Company recognized $ 0.1 million and $ 0.3 million of sublease income, respectively.

For the three and nine months ended September 30, 2022 the Company recognized $ 0.1 million and $ 0.4 million of sublease income, respectively.

Commitments and Contingencies

As of June 30, 2022, the Company had total non-cancellable purchase commitments of $ 6.2 million for the purchase of drug substance in 2022.

Contingencies

In August 2015, the Company entered into an agreement for a line of credit of $ 0.1 million for the purpose of issuing its landlord a letter of credit of $ 0.1 million as a security deposit under its facility lease.

25 unchanged sentences

Third-party and internal personnel costs incurred by the Company are billed to Angel Pharmaceuticals in the period incurred and recorded as an offset to expenses.

During the six months ended June 30, 2022 and 2021, the Company billed Angel for approximately $ 120,000 and $ 109,000 , respectively, in internal personnel costs and $ 252,000 and $ 286,000 , respectively, in third-party party costs.

During the nine months ended September 30, 2022 and 2021, the Company billed Angel for approximately $ 140,000 and $ 167,000 , respectively, in internal personnel costs and $ 631,000 and $ 470,000 , respectively, in third-party party costs.

In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel Pharmaceuticals.

2 unchanged sentences

Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.

For the three and six months ended June 30, 2022, the Company recognized approximately $ 146,000 and $ 292,000 of sublease income, respectively.

For the three and nine months ended September 30, 2022, the Company recognized approximately $ 146,000 and $ 440,000 of sublease income, respectively.

In July 2021, Linda S.

1 unchanged sentence

ICON is a clinical research organization and provides services to support the Company’s clinical trials.

During the six months ended June 30, 2022 and 2021, the Company recorded approximately $ 173,000 and $ 129,000 , respectively, in clinical trial expenses under its agreements with ICON.

During the nine months ended September 30, 2022 and 2021, the Company recorded approximately $ 330,000 and $ 205,000 , respectively, in clinical trial expenses under its agreements with ICON.

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