What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-25 compared with 2024-03-19 · 60 added, 97 removed, 154 unchanged (50% of the section changed)

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We undertake no obligation to update forward-looking statements, which reflect events or circumstances occurring after the date of this Form 10-K.

We are a clinical stage biopharmaceutical company.

Our strategy is to focus our efforts on the development of immune modulator product candidates with the potential to treat solid cancers, T cell lymphomas, autoimmune, allergic and infectious diseases.

We have three product candidates that are in clinical development for treatment of various solid tumors, lymphomas and autoimmune diseases.

Our lead product candidate is soquelitinib (formerly CPI-818), a selective, covalent inhibitor of ITK (interleukin 2 inducible T cell kinase) and is in a multi-center Phase 1/1b clinical trial in patients with various recurrent, malignant T cell lymphomas.

Soquelitinib is designed to inhibit the proliferation of certain malignant T cells and also to affect the differentiation of normal T cells, which could enhance immunity to tumor cells.

We believe these properties have the potential to regulate the growth and activity of both abnormal malignant T cells and abnormal T cells involved in autoimmunity and allergy.

Our second product candidate, ciforadenant, is an oral, small molecule antagonist of the A2A receptor for adenosine designed to disable a tumor’s ability to subvert attack by the immune system by blocking the binding of immunosuppressive adenosine in the tumor microenvironment to the A2A receptor.

We are collaborating with the Kidney Cancer Research Consortium to evaluate ciforadenant in an open label Phase 1b/2 clinical trial as a first line therapy for metastatic RCC in combination with ipilimumab (anti-CTLA-4) and nivolumab (anti-PD-1).

Our third product candidate is mupadolimab, a humanized monoclonal antibody that is designed to react with a specific site on CD73.

In both preclinical and in vivo studies, mupadolimab has demonstrated binding to various immune cells and the enhancement of immune responses by activating B cells.

While we believe mupadolimab has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad range of cancers and infectious diseases, we are waiting to initiate a potential Phase 2 randomized clinical trial in order to prioritize the development of our other two lead product candidates.

Angel Pharmaceuticals Co.

(“Angel Pharmaceuticals”) is continuing the development of mupadolimab in China and is enrolling patients in a Phase 1 trial with mupadolimab alone and together with pembrolizumab in patients with advanced NSCLC and head and neck cancer.

Our molecularly targeted product candidates are designed to exhibit a high degree of specificity, which we believe have the potential to provide greater safety compared to other cancer therapies and may facilitate their development either as monotherapies or in combination with other cancer therapies such as immune checkpoint inhibitors or chemotherapy.

We believe the breadth and status of our pipeline demonstrates our management team’s expertise in understanding and developing immunology focused assets as well as in identifying product candidates that can be in-licensed and further developed internally to treat many types of cancer.

We hold worldwide rights to all of our product candidates (other than in greater China).

Our diverse and versatile product candidates also have enabled us to take steps to address markets in foreign countries.

In October 2020, we announced the formation and launch of Angel Pharmaceuticals, a China-based biopharmaceutical company with a mission to bring innovative quality medicines to Chinese patients for treatment of

serious diseases including cancer, autoimmune diseases and infectious diseases.

We formed Angel Pharmaceuticals as a wholly owned subsidiary and it launched with a post-money valuation of approximately $106.0 million, based on an approximate $41.0 million cash investment from a Chinese investor group that includes funds associated with Tigermed and Betta Pharmaceuticals, Hisun Pharmaceuticals and Zhejiang Puissance Capital.

Such cash is not available for our use.

Contemporaneously with the financing, Angel Pharmaceuticals licensed the rights to develop and commercialize our three clinical- stage candidates — soquelitinib, ciforadenant and mupadolimab — in greater China and obtained global rights to our BTK inhibitor preclinical programs.

Under the collaboration, we currently have a 49.7% equity interest in Angel Pharmaceuticals, excluding 7% of Angel’s equity reserved for issuance under the Employee Stock Ownership Plan, and are entitled to designate three individuals on Angel’s five-person board of directors.

We are a clinical stage biopharmaceutical company developing product candidates that precisely target proteins that are critical to immune cell maturation and function.

We believe our proprietary product candidates have broad potential to address cancers, immune mediated diseases and inflammatory diseases.

Our lead product candidate, soquelitinib (formerly CPI-818), is designed to bind specifically to a protein, interleukin 2 inducible T cell kinase (ITK), involved in T cell activation, T cell receptor signaling and T cell differentiation and function.

Based on the proposed mechanism of action, we believe soquelitinib has the potential to be utilized to inhibit the production of a number of inflammatory cytokines involved in diseases such as atopic dermatitis, asthma, psoriasis and fibrotic diseases.

In preclinical studies, Soquelitinib has affected T cell differentiation leading to enhanced function of T cells involved in tumor cell killing.

Since the immune cells targeted by our product candidates play a role in many diseases, our strategy is to leverage our research and development capabilities by evaluating our product candidates in clinical trials where there is an understanding of the role of specific T cells in the target indication and where we believe such product candidates have the broadest potential.

We believe this strategy has enabled us to move rapidly from preclinical to clinical trials in diverse disease areas, each with large unmet needs.

Soquelitinib entered a registrational, Phase 3 clinical trial for relapsed T cell lymphomas and is also being evaluated in a randomized, placebo controlled Phase 1 trial in patients with atopic dermatitis.

We have two additional product candidates which are in clinical development for the treatment of various solid tumors, also based on modulation of immune function.

To date, the majority of our efforts have been focused on the research, development and advancement of soquelitinib, ciforadenant, and mupadolimab, and we have not generated any revenue from product sales and, as a result, we have incurred significant losses.

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Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

Since our inception and through December 31, 2023, we have funded our operations primarily through the sale and issuance of stock, including through our initial public offering (“IPO”) in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million and a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million, in each case net of underwriting discounts and commissions and offering expenses.

Immediately prior to the consummation of the IPO, all of our outstanding shares of convertible preferred stock were converted into 14.3 million shares of our common stock.

In March 2020, we entered into an open market sale agreement (the “2020 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of our 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 our sales agent.

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

On March 28, 2023, we 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 our 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 our sales agent.

The issuance and sale of shares of common stock 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 year ended December 31, 2023, we sold 2,461,903 shares of common stock under our at-the-market offering program resulting in net proceeds of $7.8 million.

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

Since our inception and through December 31, 2024, we have funded our operations primarily through the sale and issuance of stock, including through our initial public offering (“IPO”) in March 2016, in which we raised net proceeds of $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of $30.3 million.

Immediately prior to the consummation of the IPO, all of our outstanding shares of redeemable convertible preferred stock were converted into 14.3 million shares of our common stock.

On August 6, 2024, we entered into an open market sale agreement (the “2024 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of our common stock, from time-to-time, with aggregate gross sales proceeds of up to $100.0 million, through an at-the-market equity offering program under which Jefferies will act as our sales agent.

issuance and sale of shares of common stock pursuant to the 2024 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 of up to 3.0% of the gross proceeds of any shares of common stock sold through Jefferies under the 2024 Sales Agreement.

During the year ended December 31, 2024, we did not sell any shares of common stock under our at-the-market offering program and $100.0 million remained available for sale under the 2024 Sales Agreement.

Our three product candidates, soquelitinib, ciforadenant and mupadolimab, are in clinical development by us and / or our partner, Angel Pharmaceuticals.

Except for Greater China, we own the world-wide rights to these product candidates.

We plan to focus our development efforts in 2024 on soquelitinib with the start of a potentially registrational Phase 3 clinical trial of soquelitinib in relapsed PTCL and a randomized, placebo-controlled Phase 1 trial of soquelitinib in patients with moderate to severe atopic dermatitis.

As a result of our ongoing development efforts, we anticipate needing to spend substantial resources for the foreseeable future.

Consequently, we will need additional financing to support our continuing operations.

Until such time as we can generate significant revenue from product sales, if ever, we

expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties.

Such financing could result in dilution to stockholders and may include the imposition of debt covenants and repayment obligations or other restrictions that may affect our business.

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Adequate additional financing may not be available to us on acceptable terms, or at all.

For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of factors such as the impacts of pandemics, such as COVID-19, and increases in inflation rates or interest rates.

For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of factors such as the impacts of pandemics and increases in inflation rates or interest rates.

As a result, we may face difficulties raising capital through sales of our common stock and any such sales may be on unfavorable terms.

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As of December 31, 2024, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $52.0 million.

Based on our currently available cash resources and our currently planned level of operations and cash flows for the twelve-month period subsequent to the date of issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we will require additional funding prior to the end of 2024.

In accordance with applicable accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within 12 months after the date of the issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Based on our currently available cash resources and our currently planned level of operations and cash flows for at least the 12 month period subsequent to the date of issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we will require additional funding by the first quarter of 2026.

In accordance with applicable accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for at least 12 months beyond the date of issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Under the applicable accounting standards, the receipt of potential funding from future equity issuances cannot be considered probable, as these events are outside our control.

Accordingly, management has concluded that substantial doubt exists about our ability to continue as a going concern for 12 months from the date the consolidated financial statements included elsewhere in this Annual Report on Form 10-K are issued.

Accordingly, management has concluded that substantial doubt exists about our ability to continue as a going concern for at least 12 months from the date the consolidated financial statements included elsewhere in this Annual Report on Form 10-K are issued.

See “Risk Factors—Risks Related to Our Limited Operating History, Financial Condition and Need for Additional Capital.

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Our current planned research and development activities include the following:

● completion of our ongoing Phase 1/1b clinical trial of soquelitinib;

● a potential Phase 3 registrational clinical trial for soquelitinib in PTCL;

● enrollment and completion of our Phase 1b/2 clinical trial with ciforadenant in collaboration with the Kidney Cancer Research Consortium;

● a potential clinical trial of soquelitinib in solid tumors;

● a potential clinical trial of soquelitinib in atopic dermatitis;

● completion of our ongoing Phase 1/1b clinical trial for soquelitinib in relapsed T cell lymphomas;

● enrollment and completion of our ongoing Phase 3 registrational clinical trial for soquelitinib in PTCL;

● enrollment and completion of our ongoing Phase 1 clinical trial for soquelitinib in atopic dermatitis;

● completion of our Phase 1b/2 clinical trial with ciforadenant in collaboration with the Kidney Cancer Research Consortium;

● a potential Phase 2 clinical trial for soquelitinib in atopic dermatitis;

● a potential clinical trial for soquelitinib in solid tumors

● a potential clinical trial for soquelitinib in asthma;

● process development and manufacturing of drug supply of soquelitinib and ciforadenant;

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The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming, and the successful development of our product candidates is uncertain.

The risks and uncertainties associated with our research and development projects are discussed more fully in “Part II, Item 1A—Risk Factors.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval.

The risks and uncertainties associated with our research and development projects are discussed more fully in “Part II, Item 1A—Risk Factors.” As a result of these risks and

uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval.

We may never succeed in achieving regulatory approval for any of our product candidates.

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Gain from sale of property and equipment

Change in fair value of warrant liability

Sublease income - related party

Loss before equity method investment

Loss from equity method investment

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Unallocated employee and overhead costs

For the year ended December 31, 2024, the increase in soquelitinib costs of $3.5 million as compared to the year ended December 31, 2023, primarily consisted of an increase of $2.3 million in clinical trial expenses, an increase of $0.8 million in drug manufacturing costs and an increase of $0.4 million in other outside services.

For the year ended December 31, 2024, the decrease in ciforadenant costs of $0.9 million as compared to the year ended December 31, 2023, primarily consisted of a release of a $0.7 million legacy clinical trial accrual and a decrease of $0.2 million in other outside services.

For the year ended December 31, 2024, the decrease in mupadolimab costs of $0.7 million as compared to the year ended December 31, 2023, primarily consisted of a decrease of $0.4 million in clinical trial expenses and a decrease of $0.3 million in drug manufacturing costs.

For the year ended December 31, 2024, the increase in unallocated costs of $1.0 million as compared to the year ended December 31, 2023, primarily consisted of an increase of $0.9 million in personnel related costs and an increase of $0.1 million in other outside services.

For the year ended December 31, 2023, the increase in soquelitinib costs of $1.5 million as compared to the year ended December 31, 2022, primarily consisted of an increase of $1.3 million in outside services and an increase of $0.6 million in clinical trial expenses, which was partially offset by a decrease of $0.4 million in drug manufacturing costs.

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For the year ended December 31, 2023, the decrease in unallocated costs compared to the year ended December 31, 2022, was negligible.

For the year ended December 31, 2022, the increase in soquelitinib costs of $2.9 million as compared to the year ended December 31, 2021, primarily consisted of an increase of $1.1 million in manufacturing costs, an increase of $0.3 million in clinical trial expenses and an increase of $0.9 million in other outside services.

Additionally, $0.6 million

in drug manufacturing costs, which were expensed in prior years, were billed to Angel Pharmaceuticals during the year ended December 31, 2021.

For the year ended December 31, 2022, the decrease in ciforadenant costs of $0.2 million as compared to the year ended December 31, 2021, primarily consisted of a decrease of $0.5 million in clinical trial expenses, which was partially offset by an increase of $0.1 million in drug manufacturing costs and an increase of $0.2 million in other outside services.

For the year ended December 31, 2022, the decrease in mupadolimab costs of $4.4 million as compared to the year ended December 31, 2021, primarily consisted of a decrease of $8.6 million in clinical trial expenses and a decrease of $1.0 million in other outside services, which was partially offset by an increase of $5.7 million in drug manufacturing costs as a result of the purchase of antibody for our clinical trial for mupadolimab, which was subsequently paused, under a non-cancelable purchase commitment.

Additionally, $0.5 million in drug manufacturing costs, which were expensed in prior years, were billed to Angel Pharmaceuticals during the year ended December 31, 2022.

For the year ended December 31, 2022, the decrease in unallocated costs of $3.0 million as compared to the year ended December 31, 2021, primarily consisted of a decrease of $3.1 million in personnel and related costs and a decrease of $0.3 million in facility related costs, partially offset by an increase of $0.4 million in outside services.

General and Administrative Expenses

For the year ended December 31, 2024, the increase in general and administrative expenses of $1.3 million as compared to the year ended December 31, 2023, primarily consisted of an increase of $0.9 million in personnel and related costs and an increase of $0.4 million in other outside costs.

For the year ended December 31, 2023, the decrease in general and administrative expenses of $1.2 million as compared to the year ended December 31, 2022, primarily consisted of a decrease of $0.6 million in personnel and related costs and a decrease of $0.6 million in other outside costs.

For the year ended December 31, 2022, the decrease in general and administrative expenses of $1.4 million as compared to the year ended December 31, 2021, primarily consisted of a decrease in personnel and related costs.

Interest Income and Other Expense, net

For the year ended December 31, 2023, the increase in interest income and other expense, net of $0.9 million as compared to the year ended December 31, 2022, primarily consisted of an increase in interest income earned due to an increase in interest rates.

For the year ended December 31, 2024, the increase in interest income and other expense, net of $0.2 million as compared to the year ended December 31, 2023, primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities.

Gain from sale of property and equipment

For the year ended December 31, 2022, the gain from sale of property and equipment consisted of proceeds from the sale of laboratory equipment.

For the year ended December 31, 2024 and 2023, the gain from sale of property and equipment consisted of proceeds from the sale of laboratory equipment.

Sublease income – related party

For the year ended December 31, 2024, the decrease in sublease income – related party of $0.1 million as compared to the year ended December 31, 2023, was due to the expiration of the building sublease agreement with Angel Pharmaceuticals’ in January 2023.

For the year ended December 31, 2022, the increase in sublease income – related party of $0.6 million as compared to the year ended December 31, 2021, consisted of a full year of rent payments made by Angel Pharmaceuticals pursuant to the facility sublease entered into in August 2021.

For the year ended December 31, 2023, the decrease in sublease income – related party of $0.5 million as compared to the year ended December 31, 2022, was due to the expiration of the building sublease agreement with Angel Pharmaceuticals’ in January 2023.

Loss from equity method investment

For the year ended December 31, 2024, the decrease in loss from equity method investment of $2.1 million as compared to the year ended December 31, 2023, primarily consisted of a decrease in our share of Angel Pharmaceutical’s loss for the year ended December 31, 2024.

For the year ended December 31, 2022, the increase in loss from equity method investment of $5.2 million as compared to the year ended December 31, 2021, primarily consisted of an increase in our share of Angel Pharmaceutical’s loss for the year ended December 31, 2022.

For the year ended December 31, 2023, the decrease in loss from equity method investment of $4.7 million as compared to the year ended December 31, 2022, primarily consisted of a decrease in our share of Angel Pharmaceutical’s loss for the year ended December 31, 2023.

Liquidity and Capital Resources

Sources of Liquidity

As of December 31, 2023, we had cash, cash equivalents and marketable securities of $27.1 million and an accumulated deficit of $334.7 million, compared to cash, cash equivalents and marketable securities of $42.3 million and an accumulated deficit of $307.7 million as of December 31, 2022.

Since our inception and through December 31, 2023, we have funded our operations primarily through the sale and issuance of stock, including through our IPO in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million and a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million, in each case net of underwriting discounts and commissions and offering expenses.

On March 28, 2023, we entered into the 2023 Sales Agreement with Jefferies to sell shares of our 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 our sales agent.

The issuance and sale of shares of common stock 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 year ended December 31, 2023, we sold 2,461,903 shares of common stock under our at-the-market offering program resulting in net proceeds of $7.8 million.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $52.0 million and an accumulated deficit of $397.0 million.

Since our inception and through December 31, 2024, we have funded our operations primarily through the sale and issuance of preferred and common stock, including through our IPO in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of approximately $30.3 million.

During the year ended December 31, 2024, we raised net proceeds of $18.6 million from the exercise of common warrants.

During the year ended December 31, 2024, we did not sell any shares of common stock under our at-the-market offering program.

As of December 31, 2024, $100.0 million remained available for sale under the 2024 Sales Agreement.

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We do not have any products approved for sale, and we do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current and future product candidates and/or enter into additional significant collaboration agreements with third parties, and we do not know when, or if, either will occur.

We expect to continue to incur net operating losses for at least the next several years and we expect the losses to increase as we advance our soquelitinib, ciforadenant and mupdolimab product candidates, as well as any future product candidates, through clinical development, seek regulatory approval, prepare for and, if approved, proceed to commercialization and continue our research and development efforts.

We are subject to all the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

We expect to continue to incur net operating losses for at least the next several years and we expect the losses to increase as we advance our soquelitinib, ciforadenant and mupadolimab product candidates, as well as any future product candidates, through clinical development, seek regulatory approval, prepare for and, if approved, proceed to commercialization and continue our research and development efforts.

We are subject to all the risks typically related to the development of new product

candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

We do not yet have a sales organization or commercial infrastructure and, accordingly, we will need to incur significant expenses to develop a sales organization and commercial infrastructure in advance of generating any commercial product sales.

Moreover, we incur substantial costs associated with operating as a

public company.

Moreover, we incur substantial costs associated with operating as a public company.

We anticipate that we will need substantial additional funding in connection with our continuing operations.

Until we can generate a sufficient amount of revenue from the commercialization of our product candidates or from additional significant collaboration or license agreements with third parties, if ever, we expect to finance our future cash needs through private and public equity offerings, including our “at-the-market” offering program, debt financings, and potential future collaboration, license and development agreements.

Until we can generate a sufficient amount of revenue from the commercialization of our product candidates or from additional significant collaboration or license agreements with third parties, if ever, we expect to finance our future cash needs through private and public equity offerings, including our “at-the-market” offering program, debt financings, the potential exercise of outstanding common warrants with an exercise price of $3.50 per share and potential future collaboration, license and development agreements.

Adequate funding may not be available to us on acceptable terms, or at all.

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We expect to incur substantial additional losses in the future as we conduct our planned research and development activities.

We believe that our existing cash, cash equivalents and marketable securities will only be sufficient to fund our planned operating and capital needs through the fourth quarter of 2024 and will not be sufficient to enable us to fund our projected operations through at least the next twelve months from the date of this Annual Report on Form 10-K.

These conditions raise substantial doubt about our ability to continue as a going concern for a period of 12 months from the date of the issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially based on a number of factors.

The accompanying consolidated financial statements and related notes have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

The consolidated financial statements and related notes do not reflect any adjustments relating to the recoverability and classification of assets or amounts and classification of liabilities that might be necessary if we are unable to continue as a going concern.

We believe that our existing cash, cash equivalents and marketable securities will only be sufficient to fund our planned operating and capital needs into the first quarter of 2026 and will not be sufficient to enable us to fund our projected operations through at least the next 12 months from the date of this Annual Report on Form 10-K.

These conditions raise substantial doubt about our ability to continue as a going concern for a period of at least 12 months from the date of the issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially based on a number of factors.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect.

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● our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company;

● other factors described in the section of this report entitled “Risk Factors.”

● other factors described in the section of this Annual Report on Form 10-K entitled “Risk Factors.”

Summary of Statement of Cash Flows

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Cash Flows from Operating Activities

Cash used in operating activities during the year ended December 31, 2024 was $25.4 million, which primarily consisted of a net loss of $62.3 million, adjusted by net non-cash transactions of $38.5 million, that primarily consisted of $3.0 million of stock compensation expense, $3.2 million of loss from equity method investment and an increase of $33.4 million in the fair value of warrant liability, an increase of $1.6 million in prepaid and other current assets, an increase of $1.1 million in accounts payable, a decrease of $0.3 million in accrued and other current liabilities and a decrease of $0.3 million in operating lease liability net of operating lease right-of-use assets amortization.

Cash used in operating activities during the year ended December 31, 2023 was $23.9 million, which primarily consisted of a net loss of $27.0 million, adjusted by non-cash charges of $6.7 million, primarily consisting of $2.1 million of stock compensation expense and $5.3 million in loss from equity method investment, a decrease of $0.5 million in accounts payable, a decrease of $3.6 million in accrued and other liabilities and a decrease of $0.6 million in accounts receivable – related party.

Cash used in operating activities during the year ended December 31, 2022 was $27.0 million, which primarily consisted of a net loss of $41.3 million, adjusted by non-cash charges of $12.9 million, primarily consisting of $2.7 million of stock compensation expense and $10.0 million in loss from equity method investment, a decrease of $0.6 million in prepaid and other current assets, an increase of $0.4 million in accounts payable, an increase of $0.5 million in accrued and other liabilities and an increase of $0.1 million in accounts receivable – related party.

Cash used in operating activities during the year ended December 31, 2021 was $36.7 million, which primarily consisted of a net loss of $43.2 million, adjusted by non cash charges of $9.8 million, primarily consisting of $4.2 million of stock compensation expense and $4.8 million in loss from equity method investment, and an increase of $0.2 million in other assets, partially offset by a decrease of $2.4 million in accounts payable and accrued and other liabilities, an increase of $0.5 million in accounts receivable – related party, an increase of $0.3 million in prepaid and other current assets and an increase of $0.2 million in operating lease right-of-use asset, net of operating lease liability.

Cash Flows from Investing Activities

Cash used in investing activities during the year ended December 31, 2024 was $27.5 million, which consisted of purchases of marketable securities of $70.1 million, which were partially offset by maturities of marketable securities of $42.6 million.

Cash provided by investing activities during the year ended December 31, 2023 was $15.5 million, which consisted of proceeds from maturities of marketable securities of $62.6 million, which were partially offset by purchases of marketable securities of $47.0 million.

Cash used in investing activities during the year ended December 31, 2022 was $23.3 million, which consisted of purchases of marketable securities of $66.2 million and purchases of property and equipment of $0.3 million, which were partially offset by proceeds from maturities of marketable securities of $43.2 million.

Cash provided by investing activities during the year ended December 31, 2021 was $21.6 million, which consisted of proceeds from maturities of marketable securities of $30.9 million, which were partially offset by purchases of marketable securities of $9.4 million.

Cash Flows from Financing Activities

Cash provided by financing activities during the year ended December 31, 2024 was $49.0 million, which primarily consisted of net proceeds of $16.4 million from the issuance of common stock, net proceeds of $5.0 million from the issuance of pre-funded warrants, proceeds of $8.9 million from the issuance of common warrants, proceeds of $18.6 million from the exercise of common warrants and proceeds of $0.1 million from the exercise of common stock options.

Cash provided by financing activities during the year ended December 31, 2023 was $7.9 million, which primarily consisted of $7.8 million in net proceeds from the issuance of common stock through our at-the-market offering program.

During the year ended December 31, 2022, there was no cash provided by or used in financing activities.

Cash provided by financing activities during the year ended December 31, 2021 was $62.2 million, which consisted of $32.0 million in net proceeds from our February 2021 follow-on public offering, $29.0 million in net proceeds from the issuance of common stock through our at-the-market offering program, and $1.2 million in proceeds from the exercise of stock options.

Off-Balance Sheet Arrangements

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Contractual Obligations

Our principal commitment consists of obligations under our non-cancelable operating lease for our facilities that expires in 2025.

Our principal commitment consists of obligations under our non-cancelable operating lease for our facilities in South San Francisco, CA that expires in 2028.

Critical Accounting Estimates

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those related to the accrual for certain liabilities, including accrued clinical trial liabilities;

valuations of equity awards used to determine stock-based compensation;

valuation of intangible assets and long-lived assets;

long-lived assets;

going concern assessment;

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Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.

We believe our critical accounting policies relating to clinical trial accruals and stock-based compensation reflect the more significant estimates and assumptions used in the preparation of our consolidated financial statements.

We believe our critical accounting policy relating to clinical trial accruals reflects the more significant estimates and assumptions used in the preparation of our consolidated financial statements.

Our significant accounting policies are more fully described in Note 2 of Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

Cash, Cash Equivalents and Marketable Securities

We consider all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents.

Investments with remaining maturities, at the date of purchase, greater than three months, but less than one year are considered short-term.

We determined the appropriate classification of marketable securities at the time of purchase and evaluates such designation as of each balance sheet date.

To date, all marketable securities have been classified as available-for-sale and are carried at fair value with unrealized gains and losses, if any, included as a component of accumulated other comprehensive income (loss) in stockholders’ equity (deficit).

Interest and realized gains and losses are included in interest income.

Realized gains and losses are recognized based on the specific identification method.

Research and Development Expenses

We record research and development expenses as incurred.

We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made.

Research and development expenses consist of costs incurred by us for the discovery and development of our product candidates and include:

● employee-related expenses, including salaries, benefits, travel and non-cash stock-based compensation expense;

● external research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, academic and non-profit institutions and consultants;

● costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use;

● license fees;

● other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.

Clinical Trial Accruals

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We have one primary business activity and operate as one reportable segment.

See Note 4 in Item 8 “Financial Statements and Supplementary Data.”

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-K

Item 7. Management’s Discussion and Analysis