What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-07 · 99 added, 130 removed, 364 unchanged (39% of the section changed)

15 unchanged sentences

PART I - FINANCIAL INFORMATION

Unaudited Condensed Financial Statements

Unaudited Condensed Consolidated Financial Statements

CORVUS PHARMACEUTICALS, INC.

1 unchanged sentence

(in thousands, except share and per share data)

September 30,

Current assets:

13 unchanged sentences

Total current liabilities

Operating lease liability

Total liabilities

3 unchanged sentences

$ 0.0001 par value;

10,000,000 shares authorized at September 30, 2023 and December 31, 2022;

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

10,000,000 shares authorized at March 31, 2024 and December 31, 2023;

0 shares issued and outstanding at March 31, 2024 and December 31, 2023

Common stock:

$ 0.0001 par value;

290,000,000 shares authorized at September 30, 2023 and December 31, 2022;

49,038,582 and 46,553,511 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

290,000,000 shares authorized at March 31, 2024 and December 31, 2023;

49,038,582 shares issued and outstanding at March 31, 2024 and December 31, 2023

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

5 unchanged sentences

Sublease income - related party

Loss from equity method investment

Loss before equity method investment

Income (loss) from equity method investment

Net loss per share, basic and diluted

8 unchanged sentences

(in thousands, except share data)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Comprehensive

1 unchanged sentence

Balance at December 31, 2023

Common stock issued on exercise of stock options

Stock-based compensation expense

Unrealized gain on marketable securities

Foreign currency translation adjustment

Balance at March 31, 2023

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 June 30, 2023

Common stock issued on exercise of stock options

Stock-based compensation expense

Unrealized gain on marketable securities

Foreign currency translation adjustment

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

Balance at September 30, 2023

Nine Months Ended September 30, 2022

Balance at March 31, 2024

Three Months Ended March 31, 2023

Comprehensive

1 unchanged sentence

Balance at December 31, 2022

Common stock issued on exercise of stock options

Stock-based compensation expense

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Foreign currency translation adjustment

Balance at March 31, 2023

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Balance at June 30, 2022

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Balance at September 30, 2022

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

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

3 unchanged sentences

Stock-based compensation

Loss from equity method investment

Income (loss) from equity method investment

Changes in operating assets and liabilities:

12 unchanged sentences

Cash flows from financing activities

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

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of the period

7 unchanged sentences

The Company’s operations are located in Burlingame, California.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Corvus Biopharmaceuticals, Ltd.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Corvus Biopharmaceuticals, Ltd.

and Corvus Hong Kong Limited.

All intercompany accounts and transactions have been eliminated from the consolidated financial statements.

All intercompany accounts and transactions have been eliminated from the condensed consolidated financial statements.

Initial Public Offering

12 unchanged sentences

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations.

Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of soquelitinib (CPI-818), ciforadenant and mupadolimab.

Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of soquelitinib, ciforadenant and mupadolimab.

The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of soquelitinib, ciforadenant and mupadolimab, as well as product candidates under the Company’s other development programs.

3 unchanged sentences

Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of soquelitinib, ciforadenant and mupadolimab or any other product candidates.

The Company does not expect its existing capital resources to be sufficient to enable it to fund the completion of its clinical trials and remaining development program of soquelitinib, ciforadenant and mupadolimab through commercialization.

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, 2022 filed on March 28, 2023 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 $ 328.1 million as of September 30, 2023.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 340.4 million as of March 31, 2024.

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 September 30, 2023, the Company had cash, cash equivalents and short-term marketable securities of $ 32.2 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.

As of March 31, 2024, the Company had cash, cash equivalents and short-term marketable securities of $ 22.1 million.

On May 6, 2024, the Company received gross proceeds of $ 30.6 million in a registered direct offering (see Note 15.

Subsequent Events).

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 the next 12 months from the date of the issuance of these condensed consolidated financial statements.

To fund the Company's planned operations, the Company will need to raise additional capital in the future.

The Company intends to raise additional capital through private and public equity offerings, debt financings, and potential future collaboration, license and development agreements.

However, there can be no assurance that the Company will be successful in acquiring additional funding at levels sufficient to fund its operations or on terms acceptable or at all.

If the Company is unsuccessful in its efforts to raise additional capital or if sufficient funds on acceptable terms are not available when needed, the Company could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate one or more of its development programs, out-license intellectual property rights to its product candidates and sell unsecured assets, or a combination of the above, any of which may have a material adverse effect on the Company’s business, results of operations, financial condition or its ability to fund its obligations on a timely basis or at all.

Failure to manage discretionary spending or raise additional capital, as needed, may adversely impact the Company’s ability to achieve its intended business objectives.

Summary of Significant Accounting Policies

5 unchanged sentences

Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented.

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 nine months ended September 30, 2023 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 interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for fair statement of the condensed consolidated financial statements presented.

The condensed consolidated balance sheet as of December 31, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP.

The condensed consolidated results of operations for the three months ended March 31, 2024 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, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 19, 2024.

5 unchanged sentences

The Company uses the equity method of accounting for its equity investment if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee.

The Company’s proportionate share of the net income (loss) resulting from the equity method investment is reported under the line item captioned “loss from equity method investment” in the Consolidated Statements of Operations and Comprehensive Loss and the carrying value of the equity method investments is reported under the line captioned “Investment in Angel” in the Consolidated Balance Sheets.

The Company’s proportionate share of the net income (loss) resulting from the equity method investment is reported under the line item captioned “income (loss) from equity method investment” in the Condensed Consolidated Statements of Operations and Comprehensive Loss and the carrying value of the equity method investments is reported under the line captioned “Investment in Angel Pharmaceuticals” in the Condensed Consolidated Balance Sheets.

The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and the foreign currency translation adjustment as applicable.

3 unchanged sentences

An impairment that is other-than-temporary is recognized in the period identified.

See Note 5, “Equity Method Investment,” for further information.

Concentrations of Credit Risk and Other Risks and Uncertainties

10 unchanged sentences

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.

The Company views its operations and manages its business in one operating segment, that of the development of and commercialization of precisely targeted oncology therapies.

The Company views its operations and manages its business in one operating segment, that of the development of and commercialization of precisely targeted oncology and immune-mediated therapies.

Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 to its consolidated financial statements for the year ended December 31, 2022, included in its Annual Report on Form 10-K.

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2023.

The Company’s significant accounting policies are described in Note 2 to its condensed consolidated financial statements for the year ended December 31, 2023, included in its Annual Report on Form 10-K.

There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2024.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

ASU 2019-12 is effective in 2021 and interim periods within that year and permits for an early adoption.

The Company adopted ASU 2019-12 effective January 1, 2021.

The adoption of the guidance did not have a material impact on its financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset.

Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized.

This new guidance is effective in the first quarter of 2023 for calendar-year SEC filers that are smaller reporting companies as of the one-time determination date.

The Company has adopted the new guidance as of January 1, 2023, and it did not have a material impact on its financial statements and related disclosures.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which modifies the disclosure or presentation requirements related to variety of FASB Accounting Standard Codification topics.

The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K is effective.

If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the associated amendment will be removed from the Codification and will not become effective for any entities.

The Company is currently evaluating the effect of adopting this ASU.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes.

The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024.

Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” As adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis.

The Company is currently evaluating the impact of this ASU but does not expect any material impacts upon adoption.

Net Loss per Share

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Net loss - basic and diluted

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Outstanding options

2 unchanged sentences

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values.

The fair value hierarchy prioritizes valuation inputs based on the observable nature of those

The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs.

The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality.

7 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 September 30, 2023 and December 31, 2022 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, 2023

The following tables present information as of March 31, 2024 and December 31, 2023 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):

March 31, 2024

Fair Value Measured Using

5 unchanged sentences

Marketable securities

As of September 30, 2023 marketable securities had a maximum remaining maturity of nine months .

As of September 30, 2023 and December 31, 2022, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

September 30, 2023

As of March 31, 2024 marketable securities had a maximum remaining maturity of eight months .

As of March 31, 2024 and December 31, 2023, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

March 31, 2024

Treasury securities

4 unchanged sentences

Equity Method Investment

As of September 30, 2023 and December 31, 2022, 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 $ 0.9 million and $ 3.9 million as loss from equity method investment on the consolidated statement of operations for the three and nine months ended September 30, 2023, respectively.

Angel Pharmaceuticals Co.

(“Angel”) is a corporate venture in the People’s Republic of China designed to develop, manufacture, and commercialize soquelitinib, ciforadenant and mupadolimab compounds for distribution within the countries of China, Taiwan, Macao, and Hong Kong based on intellectual property licenses to be contributed to Angel by the Company.

As of March 31, 2024 and December 31, 2023, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel Employee Stock Ownership Plan, and is accounted for as an equity method investment.

The Company recognized its share of income in Angel for the total amount of $ 0.2 million as income and $ 1.7 million as loss from equity method investment in the condensed consolidated statement of operations for the three months ended March 31, 2024 and 2023, respectively.

Summary Financial Information

1 unchanged sentence

Balance Sheet Data

September 30, 2023

March 31, 2024

December 31, 2023

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Statement of Operations Data

(in thousands)

Net income (loss)

Share of loss from investments accounted for using the equity method

14 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

3 unchanged sentences

In February 2017, the Company made a milestone payment of $ 3.0 million to Vernalis following the expansion of a cohort of patients with renal cell cancer treated with single agent ciforadenant in the Company’s Phase 1/1b clinical trial.

During the nine months ended September 30, 2023, no clinical or regulatory milestones were completed or paid to Vernalis and the aggregate potential milestone payments were approximately $ 220 million for all indications as of September 30, 2023.

During the three months ended March 31, 2024, no clinical or regulatory milestones were completed or paid to Vernalis and the aggregate potential milestone payments were approximately $ 220 million for all indications as of March 31, 2024.

The Company has also agreed to pay Vernalis tiered incremental royalties based on the annual net sales of licensed products containing ciforadenant on a product by product and country by country basis, subject to certain offsets and reductions.

The tiered royalty rates for products containing ciforadenant range from the mid single digits up to the low double digits on a country by country net sales basis.

The royalties on other licensed products that do not include ciforadenant also increase with the amount of net sales on a product-by-product and country

by country basis and range from the low single digits up to the mid single digits on a country by country net sales basis.

The royalties on other licensed products that do not include ciforadenant also increase with the amount of net sales on a product-by-product and country by country basis and range from the low single digits up to the mid single digits on a country by country net sales basis.

The Company is also obligated to pay to Vernalis certain sales milestones as indicated above when worldwide net sales reach specified levels over an agreed upon time period.

11 unchanged sentences

The Company recorded these payments as research and development expenses for the year ended December 31, 2017.

The Company is also obligated to pay an annual license maintenance fee to Monash of $ 25,000 until a certain development milestone is met with respect to the licensed product, after which no further maintenance fee will be due.

The Company is also obligated to pay an annual license maintenance fee to Monash of $ 25,000 until a certain development milestone is

met with respect to the licensed product, after which no further maintenance fee will be due.

The Company is also required to make development and sales milestone payments to Monash with respect to the licensed products.

During the nine months ended September 30, 2023, no development or sales milestones were completed or paid to Monash and the aggregate potential milestones were $ 45.1 million as of September 30, 2023.

During the three months ended March 31, 2024 and 2023, no development or sales milestones were completed or paid to Monash and the aggregate potential milestones were $ 45.1 million as of March 31, 2024.

The Company is also required to pay to Monash tiered royalties on net sales of licensed products sold by it, its affiliates and its sublicensees at a rate ranging in the low single digits.

4 unchanged sentences

Balance Sheet Components (in thousands)

September 30,

Prepaid and Other Current Assets

13 unchanged sentences

Accrued legal and accounting

During the three months ended September 30, 2023 and 2022, the Company recorded approximately $ 30,000 and $ 94,000 in depreciation expense, respectively, and during the nine months ended September 30, 2023 and 2022, the Company recorded approximately $ 123,000 and $ 273,000 in depreciation expense, respectively.

As of September 30, 2023, 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.

During the three months ended March 31, 2024 and 2023, the Company recorded approximately $ 23,000 and $ 57,000 in depreciation expense, respectively.

As of March 31, 2024, 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 September 30, 2023, 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.

In November 2021, the Company entered into another Sale Agreement (“2021 Sales Agreement”) with Jefferies to sell shares of its common stock from time-to-time, with aggregate gross sales proceeds of up to $ 40,000,000 .

On March 28, 2023, the Company terminated both the 2020 Sales Agreement and the 2021 Sales Agreement and concurrently entered into a new open market sale agreement (the “2023 Sales Agreement”) with Jefferies to sell shares of the Company’s common stock, from time-to-time, with aggregate gross sales proceeds of up to $ 90,000,000 , through an at-the-market equity offering program under which Jefferies will act as its sales agent.

As of March 31, 2024, no dividends on common stock had been declared.

On March 28, 2023, the Company entered into an open market sale agreement (the “2023 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 $ 90.0 million, through an at-the-market equity offering program under which Jefferies will act as its sales agent.

The issuance and sale of shares of common stock by the Company pursuant to the 2023 Sales Agreement are deemed an “at-the-market” offering under the Securities Act of 1933, as amended.

Jefferies is entitled to compensation for its services equal to 3.0 % of the gross proceeds of any shares of common stock sold through Jefferies under the 2023 Sales Agreement.

During the nine months ended September 30, 2023, the Company sold 2,461,903 shares of common stock under its at-the-market offering program resulting in net proceeds of $ 7.8 million.

As of September 30, 2023, $ 81.9 million remained available for sale under the 2023 Sales Agreement.

During the three months ended March 31, 2024, the Company did not sell any shares of common stock under its at-the-market offering program.

As of March 31, 2024, $ 81.9 million remained available for sale under the 2023 Sales Agreement.

On May 1, 2024, the Company amended the 2023 Sales Agreement to decrease the aggregate gross sales proceeds from $ 90.0 million to $ 8.2 million, which decreased the amount available for sale under the 2023 Sales Agreement from $ 81.9 million to $ 100,000 (see Note 15.

Subsequent Events).

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

( 1,002,000 )

Options exercised

Options forfeited

Balance at September 30, 2023

Balance at March 31, 2024

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Research and development

General and administrative

During the nine months ended September 30, 2023 and 2022, 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 three months ended March 31, 2024 and 2023, 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.

1 unchanged sentence

In January 2015, the Company signed an initial operating lease, effective February 1, 2015 for 8,138 square feet of office and laboratory space with a one year term.

Between January 2015 and September 2021, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the lease to February 2025.

The lease agreement includes annual rent escalations.

5 unchanged sentences

Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.

As of September 30, 2023 and December 31, 2022, the right-of-use asset under operating lease was $ 1.4 million and $ 2.2 million, respectively.

The elements of lease expense for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands):

As of March 31, 2024 and December 31, 2023, the right-of-use asset under operating lease was $ 0.9 million and $ 1.1 million, respectively.

The elements of lease expense for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

Three Months Ended

Nine Months Ended

Statements of operations and

September 30,

comprehensive loss location

11 unchanged sentences

Discount rate

As of September 30, 2023, minimum rental commitments under this lease were as follows (in thousands):

As of March 31, 2024, minimum rental commitments under this lease were as follows (in thousands):

Year Ended December 31 (in thousands)

6 unchanged sentences

imputed interest

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.

Pursuant to the sublease, rent is due monthly and is subject to scheduled annual increases and Angel Pharmaceuticals is responsible for certain operating expenses and taxes throughout the life of the sublease.

The sublease expired in January 2023.

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

For the three and nine months ended September 30, 2023, the Company recognized $ 0.0 million and $ 0.1 million of sublease income, respectively.

Commitments and Contingencies

7 unchanged sentences

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions.

Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party.

Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party

for losses suffered or incurred by the indemnified party.

Some of the provisions will limit losses to those arising from third-party actions.

7 unchanged sentences

Related Party Transactions

As more fully described in Note 5 to the Company’s consolidated financial statements for the year ended December 31, 2022, included in the Annual Report on Form 10-K, the Company holds a 49.7 % ownership in Angel Pharmaceuticals and, in connection with intellectual property licensing agreements between the Company and Angel Pharmaceuticals, the Company provides operational support and clinical drug supplies to Angel Pharmaceuticals.

The Company holds a 49.7 % ownership in Angel Pharmaceuticals Co.

Ltd., a corporate venture in the People’s Republic of China, and, in connection with intellectual property licensing agreements between the Company and Angel Pharmaceuticals, the Company provides operational support and clinical drug supplies to Angel Pharmaceuticals.

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 nine months ended September 30, 2023 and 2022, the Company billed Angel for $ 0.0 million and approximately $ 140,000 , respectively, in internal personnel costs and approximately $ 59,000 and $ 631,000 , respectively, in third-party party costs.

During the three months ended March 31, 2023, the Company billed Angel for approximately $ 48,000 in third-party party costs and there were transactions during the three months ended March 31, 2024.

As of March 31, 2024 and December 31, 2023, the Company had a approximately $ 26,000 in accounts receivable – related party due from Angel Pharmaceuticals.

In addition to the provision of clinical supplies to Angel Pharmaceuticals, Angel Pharmaceuticals may provide clinical supplies or research services to the Company on an as needed basis.

These costs are recorded as research and development expense.

During the three and nine months ended September 30, 2023, Angel Pharmaceuticals billed the Company for approximately $ 9,000 and $ 225,000 million in research services, respectively.

During the three months ended March 31, 2023, Angel Pharmaceuticals billed the Company for approximately $ 0.1 million in research services and there were no transactions during the three months ended March 31, 2024.

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.

Pursuant to the sublease, rent was due monthly and was subject to scheduled annual increases and Angel Pharmaceuticals was responsible for certain operating expenses and taxes throughout the life of the sublease.

The sublease expired in January 2023.

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

During the nine months ended September 30, 2023 and 2022, the Company recognized approximately $ 0.1 million and $ 0.3 million of sublease income, respectively.

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

During the three months ended March 31, 2023, the Company recognized approximately $ 0.1 million of sublease income.

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 nine months ended September 30, 2023 and 2022, the Company recorded approximately $ 0.2 million and $ 0.2 million, respectively, in clinical trial expenses under its agreements with ICON.

During the three months ended March 31, 2024 and 2023, the Company recorded approximately $ 27,000 and $ 118,000 , respectively, in clinical trial expenses under its agreements with ICON.

Subsequent Events

On May 6, 2024, the Company closed a registered direct offering which resulted in gross proceeds of approximately $ 30.6 million.

The financing consisted of the sale of 13,512,699 shares of common stock and accompanying common stock warrants to purchase 13,078,509 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7312 per share, and the sale of pre-funded warrants to purchase 4,144,085 shares of common stock and accompanying common warrants to purchase 4,010,927 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7311 per share.

The common warrants have an exercise price of $ 3.50 per share of common stock (or $ 3.4999 per pre-funded warrant in lieu thereof), are exercisable at any time after the date of issuance, subject to certain ownership limitations, and expire on June 30, 2025.

The pre-funded warrants have an exercise price of $ 0.0001 and are exercisable anytime after the date of the issuance, subject to certain ownership limitations.

As part of the registered direct offering, an institutional investor and 10% shareholder affiliated with one of the Company’s directors, the Company’s chief executive officer, an executive officer of the Company and an investment fund controlled by the founder and current board member of Angel Pharmaceuticals purchased a total of 1,464,085 shares of common stock, 1,444,085 pre-funded warrants and 2,814,725 common stock warrants for a total aggregate purchase price of approximately $ 5.0 million.

Amendment to 2023 Sales Agreement

On May 1, 2024, the Company and Jefferies entered into an amendment to the 2023 Sales Agreement pursuant to which the aggregate gross sales proceeds were decreased from $ 90.0 million to $ 8.2 million, which decreased the amount available for sale under the 2023 Sales Agreement from $ 81.9 million to $ 100,000 .

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