What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-14 · 162 added, 144 removed, 680 unchanged (31% of the section changed)

3 unchanged sentences

(in thousands, except share and par value data)

June 30, 2024

September 30, 2024

December 31, 2023

14 unchanged sentences

Accounts payable

$ 1,397 $ 635

Accrued expenses

5 unchanged sentences

Convertible preferred stock, $ 0.001 par value;

no shares authorized, issued, or outstanding at June 30, 2024;

no shares authorized, issued, or outstanding at September 30, 2024;

authorized shares— 16,940,594 at December 31, 2023;

2 unchanged sentences

Class A common stock, $ 0.001 par value;

authorized shares— 200,000,000 and 39,630,511 at June 30, 2024 and December 31, 2023, respectively;

issued and outstanding shares— 18,994,104 and 2,349,554 at June 30, 2024 and December 31, 2023, respectively

authorized shares— 200,000,000 and 39,630,511 at September 30, 2024 and December 31, 2023, respectively;

issued and outstanding shares— 19,006,904 and 2,349,554 at September 30, 2024 and December 31, 2023, respectively

Class B common stock, $ 0.001 par value;

authorized shares— 20,000,000 at June 30, 2024;

issued and outstanding shares— 6,729,172 at June 30, 2024;

authorized shares— 20,000,000 at September 30, 2024;

issued and outstanding shares— 6,729,172 at September 30, 2024;

no shares authorized, issued, or outstanding at December 31, 2023

Preferred stock, $ 0.001 par value;

authorized shares— 10,000,000 at June 30, 2024;

no shares issued or outstanding at June 30, 2024;

authorized shares— 10,000,000 at September 30, 2024;

no shares issued or outstanding at September 30, 2024;

no shares authorized, issued, or outstanding at December 31, 2023

3 unchanged sentences

( 102,837 ) ( 75,144 )

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total stockholders' equity (deficit)

6 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

License revenue

12 unchanged sentences

Income (loss) before income taxes

Provision for income taxes

Provision for (benefit from) income taxes

Net income (loss)

35 unchanged sentences

( 15,906,236 ) ( 192,620 ) 15,906,236 17 192,603 — — 192,620

Reclassification of warrant from liability to equity

Reclassification of warrants from liability to equity

— — — — 216 — — 216

8 unchanged sentences

— $ — 25,723,276 $ 26 $ 310,174 $ ( 127 ) $ ( 92,570 ) $ 217,503

Exercise of stock options

— — 12,800 — 13 — — 13

Stock-based compensation

— — — — 2,291 — — 2,291

— — — — — — ( 10,267 ) ( 10,267 )

Unrealized gain on marketable securities

— — — — — 688 — 688

Balance at September 30, 2024

— $ — 25,736,076 $ 26 $ 312,478 $ 561 $ ( 102,837 ) $ 210,228

Accumulated Other

31 unchanged sentences

15,222,913 $ 182,378 2,320,744 $ 2 $ 5,755 $ ( 65 ) $ ( 61,124 ) $ ( 55,432 )

Vesting of shares of common stock subject to repurchase

— — 1,528 — 2 — — 2

Issuance of Series C convertible preferred stock, net of offering costs of $ 7

683,323 10,241 — — — — — —

Exercise of stock options

— — 9,927 — 83 — — 83

Stock-based compensation

— — — — 477 — — 477

— — — — — — ( 6,251 ) ( 6,251 )

Unrealized loss on marketable securities

— — — — — ( 24 ) — ( 24 )

Balance at September 30, 2023

15,906,236 $ 192,620 2,332,198 $ 2 $ 6,317 $ ( 89 ) $ ( 67,375 ) $ ( 61,145 )

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

7 unchanged sentences

Change in fair value of warrant liability

Gain on marketable securities

Gain on sale of equipment

(Gain) loss on marketable securities

Change in fair value of investor rights and obligations liability

8 unchanged sentences

Purchase of property and equipment

Proceeds from sale of equipment

Purchases of marketable securities

12 unchanged sentences

Conversion of convertible preferred stock to common stock upon initial public offering

Reclassification of warrant from liability to equity

Reclassification of warrants from liability to equity

Reclassification of deferred offering costs paid in prior year to equity

32 unchanged sentences

Since its inception, the Company has devoted substantially all its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital to support and expand such activities and providing general and administrative support for these operations.

The Company incurred a net loss of $ 9.0 million and $ 17.4 million for the three and six months ended June 30, 2024 , respectively.

The Company had an accumulated deficit of $ 92.6 million as of June 30, 2024 .

From its inception through June 30, 2024 , the Company has financed its operations primarily through issuance of convertible promissory notes, convertible preferred stock financings, a term loan, a global license and development agreement (the “J&J License Agreement”) the Company entered in February 2023 with Janssen Pharmaceutica NV, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, and net proceeds of approximately $ 107.9 million received in April 2024 from the Company's IPO.

As of June 30, 2024 , the Company had cash, cash equivalents and marketable securities of $ 218.7 million.

The Company incurred a net loss of $ 10.3 million and $ 27.7 million for the three and nine months ended September 30, 2024 , respectively.

The Company had an accumulated deficit of $ 102.8 million as of September 30, 2024 .

From its inception through September 30, 2024 , the Company has financed its operations primarily through issuance of convertible promissory notes, convertible preferred stock financings, a term loan, a global license and development agreement (the “J&J License Agreement”) the Company entered in February 2023 with Janssen Pharmaceutica NV, a Johnson & Johnson company, and net proceeds of approximately $ 107.9 million received in April 2024 from the Company's IPO.

As of September 30, 2024 , the Company had cash, cash equivalents and marketable securities of $ 213.9 million.

The Company believes its existing cash, cash equivalents and marketable securities will be sufficient to support operations for at least 12 months from the issuance of these unaudited condensed financial statements.

4 unchanged sentences

Unaudited Interim Condensed Financial Statements

The condensed balance sheet as of June 30, 2024 , condensed statements of operations and comprehensive income (loss) and condensed statements of convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2024 and 2023, and condensed statements of cash flows for the six months ended June 30, 2024 and 2023, and related notes to condensed financial statements are unaudited.

The condensed balance sheet as of September 30, 2024 , condensed statements of operations and comprehensive income (loss) and condensed statements of convertible preferred stock and stockholders’ equity (deficit) for the three and nine months ended September 30, 2024 and 2023, and condensed statements of cash flows for the nine months ended September 30, 2024 and 2023, and related notes to condensed financial statements are unaudited.

These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the periods presented.

The condensed results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period.

The condensed results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period.

The condensed balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date.

2 unchanged sentences

Summary of Significant Accounting Policies

During the six months ended June 30, 2024, there were no significant changes to the Company's significant accounting policies as described in the Company's Registration Statement.

During the nine months ended September 30, 2024, there were no significant changes to the Company's significant accounting policies as described in the Company's Registration Statement.

Basis of presentation

The Company has prepared the accompanying condensed financial statements in accordance with accounting principles generally accepted accounting principles (“GAAP”) and the requirements of the SEC for interim reporting.

The Company has prepared the accompanying condensed financial statements in accordance with U.S.

generally accepted accounting principles (“GAAP”) and the requirements of the SEC for interim reporting.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted.

3 unchanged sentences

Use of estimates

During the six months ended June 30, 2024, there were no significant changes to the Company's accounting estimates as described in the Company's Registration Statement.

During the nine months ended September 30, 2024, there were no significant changes to the Company's accounting estimates as described in the Company's Registration Statement.

Recently Issued Accounting Pronouncements

14 unchanged sentences

Marketable Securities

The Company invests its excess cash in marketable securities, including debt securities, commercial paper, asset-backed securities, Yankee debt and U.S.

The Company invests its excess cash in marketable securities, including debt securities, commercial paper, asset-backed securities, Yankee debt, certificate of deposit, and U.S.

Government agency securities.

The following table summarizes the amortized cost and fair value of the Company’s marketable securities by major investment category (in thousands):

As of June 30, 2024

As of September 30, 2024

Maturity in Years

Amortized Cost

US Government agency securities

Government agency securities

3 years or less

Certificate of deposit

Corporate debt securities

3 years or less

Commercial paper

Asset-backed securities

2 years or less

As of December 31, 2023

Maturity in Years

Amortized Cost

US Government agency securities

Government agency securities

2 years or less

Certificate of deposit

Corporate debt securities

2 years or less

Commercial paper

Asset-backed securities

3 years or less

The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, current and expected future economic conditions.

As of June 30, 2024 , the Company did not record an allowance for credit loss related to its investment portfolio.

The Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis.

As of September 30, 2024 , the Company did not record an allowance for credit loss related to its investment portfolio.

Fair Value Measurements

15 unchanged sentences

Inputs (Level 2)

As of June 30, 2024:

As of September 30, 2024:

Cash equivalents

US Government agency securities

Government agency securities

Certificates of deposits

5 unchanged sentences

Cash equivalents

US Government agency securities

Government agency securities

Certificates of deposits

6 unchanged sentences

The carrying amounts of the Company’s financial instruments, including cash, cash equivalents and marketable securities, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities.

Included in cash and cash equivalents at June 30, 2024 and December 31, 2023 are money market funds with a carrying value and fair value of $ 11.3 million and $ 11.8 million, respectively, based upon a Level 1 fair value assessment.

Included in cash and cash equivalents at September 30, 2024 and December 31, 2023 are money market funds with a carrying value and fair value of $ 10.8 million and $ 11.8 million, respectively, based upon a Level 1 fair value assessment.

Upon the closing of the IPO, the warrant to purchase shares of Series B preferred stock converted to a warrant to purchase shares of Class A common stock, and upon conversion the warrant met the equity classification requirements and was reclassified to equity.

The warrant was remeasured to fair value immediately prior to the conversion to a common stock warrant and the Company recognized changes in the fair value of the warrant liability until April 9, 2024.

As of December 31, 2023, the Company had preferred stock warrant liability (included on the balance sheet under other long-term liabilities), which consisted of the fair value of a warrant to purchase Series B convertible preferred stock and was based on significant unobservable inputs, which represent a Level 3 measurement within the fair value hierarchy.

As of December 31, 2023, the Company had a preferred stock warrant liability (included on the balance sheet under other long-term liabilities), which consisted of the fair value of a warrant to purchase Series B convertible preferred stock and was based on significant unobservable inputs, which represent a Level 3 measurement within the fair value hierarchy.

The Company classified this warrant as a liability on its balance sheets and remeasured to fair value at each reporting date, and the Company recognized changes in the fair value of the warrant liability as a component of other income (expense) in its condensed statements of operations and comprehensive income (loss).

10 unchanged sentences

An increase in the risk-free interest rate, and/or an increase in the remaining contractual term or expected volatility, and/or an increase in the fair value of the convertible preferred stock would result in an increase in the fair value of the warrant.

The following table summarizes the change in fair value of the preferred stock warrant liability, a Level 3 recurring fair value measurement, for the six months ended June 30, 2024 ( in thousands):

The following table summarizes the change in fair value of the preferred stock warrant liability, a Level 3 recurring fair value measurement, for the nine months ended September 30, 2024 ( in thousands):

Warrant Liability

3 unchanged sentences

Reclassification to equity

Balance at June 30, 2024

Balance at September 30, 2024

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

September 30,

Accrued compensation expenses

8 unchanged sentences

Convertible Preferred Stock

As of December 31, 2023, the Company’s Series A, Series A- 1, Series B, and Series C convertible preferred stock were classified as temporary equity in the accompanying condensed balance sheet given that a majority of the Company’s board of director seats were held and/or voted upon by convertible preferred stockholders and they could cause certain events to occur requiring redemption of the preferred stock that were outside of the Company’s control.

As of December 31, 2023, the Company’s Series A, Series A- 1, Series B, and Series C convertible preferred stock were classified as temporary equity in the accompanying condensed balance sheet given that a majority of the Company’s board of director seats were held and/or voted upon by convertible preferred stockholders, and those convertible preferred stockholders could cause certain events to occur requiring redemption of the preferred stock that were outside of the Company’s control.

The Company did not adjust the carrying values of the convertible preferred stock to the respective liquidation preferences of such shares as the instruments were not currently redeemable and it was not probable that the instruments would become redeemable.

2 unchanged sentences

Shares Issued and Outstanding

Liquidation Preference (in thousands)

Liquidation Preference

(in thousands)

1,786,607 1,786,604 $ 10,000

6 unchanged sentences

Class A common stock has one vote per share and Class B common stock has no votes per share.

As of June 30, 2024 , of the authorized 200,000,000 shares of Class A common stock, 18,994,104 shares of Class A common stock were issued and outstanding, and of the authorized 20,000,000 shares of Class B common stock, 6,729,172 shares of Class B common stock were issued and outstanding.

As of September 30, 2024 , of the authorized 200,000,000 shares of Class A common stock, 19,006,904 shares of Class A common stock were issued and outstanding, and of the authorized 20,000,000 shares of Class B common stock, 6,729,172 shares of Class B common stock were issued and outstanding.

Voting, dividend, and liquidation rights of the holders of the common stock were subject to, and qualified by, the rights, preferences and privileges of the holders of the convertible preferred stock.

1 unchanged sentence

Class A common stock reserved for future issuance consisted of the following:

As of June 30,

September 30,

Convertible preferred stock

5 unchanged sentences

Common stock warrant

Common stock reserved under the 2024 ESPP

Common stock reserved under the 2024 Employee Stock Purchase Plan

Total common stock reserved for future issuance

6,116,050 19,098,896

There are no shares of Class B common stock reserved for future issuance.

There are no shares of Class B common stock reserved for future issuance as of September 30, 2024 and December 31, 2023.

Stock Options

4 unchanged sentences

The number of shares initially reserved for issuance under the 2024 Plan was 2,700,000 .

As of June 30, 2024, there were 2,824,492 shares of the Company’s common stock reserved and available for issuance under the 2024 Plan.

As of September 30, 2024, there were 1,698,056 shares of the Company’s Class A common stock available for issuance under the 2024 Plan.

The aggregate number of shares reserved for issuance under the 2024 Plan will automatically increase on the first day of each fiscal year of the Company, commencing in 2025 and ending in (and including) 2034, by a number equal to the lesser of (a) 5 % of the aggregate shares of Class A common stock and Class B common stock issued and outstanding as of the last day of the prior fiscal year, or (b) a number of shares of Class A common stock determined by the Company's board of directors.

Under the 2024 Plan, the exercise price for options granted under the 2024 Plan may not be less than 100 % of the fair market value of the Class A common stock on the grant date.

Optionees will be permitted to pay the exercise price in cash or, with the consent of the compensation committee (i) with shares of common stock that the optionee already owns, (ii) by an immediate sale of shares through a broker approved by the Company, (iii) by instructing the Company to withhold a number of shares otherwise deliverable upon exercise having an aggregate fair market value that does not exceed the exercise price;

or (iv) by other methods permitted by applicable law.

The Company's board of directors (or a committee thereof to which the Company's board of directors has delegated authority) may amend or terminate the 2024 Plan at any time.

5 unchanged sentences

The new payroll deduction rate may be any whole percentage of the participant’s compensation, but not less than 1 % nor more than 15 %.

As of June 30, 2024, there were 280,000 shares of the Company’s common stock reserved and available for issuance under the 2024 ESPP.

As of September 30, 2024, there were 280,000 shares of the Company’s common stock reserved and available for issuance under the 2024 ESPP.

The number of shares reserved for issuance under the 2024 ESPP will automatically increase on the first day of each fiscal year of the Company, commencing in 2025 and ending in (and including) 2044, by a number equal to the lesser of (i) 280,000 shares, (ii) 1 % of the aggregate shares of Class A common stock and Class B common stock issued and outstanding on the last day of the prior fiscal year, or (iii) a number of shares determined by the Company's board of directors.

The number of shares reserved under the 2024 ESPP will automatically be adjusted in the event of a stock split, stock dividend or a reverse stock split (including an adjustment to the per-purchase period share limit).

During the six months ended June 30, 2024, there were no shares purchased under the 2024 ESPP and the recorded expense was not material.

During the nine months ended September 30, 2024, there were no shares purchased under the 2024 ESPP and the recorded expense was not material.

Stock option activity under the 2024 Plan and 2012 Plan is as follows:

11 unchanged sentences

Options expired

As of June 30, 2024

As of September 30, 2024

4,122,230 $ 9.68 7.59 $ 39,015

Options vested and expected to vest as of June 30, 2024

Options vested and expected to vest as of September 30, 2024

4,122,230 $ 9.68 7.59 $ 39,015

Options exercisable as of June 30, 2024

Options exercisable as of September 30, 2024

2,123,241 $ 4.97 5.93 $ 30,082

The aggregate intrinsic value of options exercised during the period ended June 30, 2024 was $ 0.1 million, determined as of the date of exercise.

Options exercisable include options which are not vested, but are available to be early exercised as of June 30, 2024 .

As of June 30, 2024, there were 133,058 options exercisable that are available to be early exercised.

The aggregate intrinsic value of options exercised during the three months ended September 30, 2024 and 2023 was $ 0.2 million and $ 0.4 million, respectively, determined as of the date of exercise.

Options exercisable include options which are not vested but are available to be early exercised as of September 30, 2024 .

As of September 30, 2024, of the 2,123,241 options exercisable, 83,161 options are available to be early exercised.

The Company estimated the fair value of stock options using the Black-Scholes valuation model.

2 unchanged sentences

The fair value of stock options was estimated using the following weighted-average assumptions:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Expected term (in years)

5 unchanged sentences

Dividend yield

The weighted-average grant-date fair value per share of stock options granted during the three and six months ended June 30, 2024 was $ 13.53 and $ 13.55 per share, respectively.

There were no stock options granted during the three months ended June 30, 2023.

The Company recorded $ 0.9 million and $ 0.6 million in stock-based compensation in general and administrative and research and development, respectively, for the three months ended June 30, 2024.

The Company recorded $ 0.3 million and $ 0.2 million in stock-based compensation in general and administrative and research and development, respectively, for the three months ended June 30, 2023.

The Company recorded $ 1.3 million and $ 1.0 million in stock-based compensation in general and administrative and research and development, respectively, for the six months ended June 30, 2024.

The Company recorded $ 0.5 million and $ 0.5 million in stock-based compensation in general and administrative and research and development, respectively, for the six months ended June 30, 2023.

As of June 30, 2024 there was approximately $ 24.1 million of total unrecognized stock-based compensation related to nonvested stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of approximately 3.2 years.

As of June 30, 2023 there was approximately $ 2.9 million of total unrecognized stock-based compensation related to nonvested stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of approximately 1.0 years.

The weighted-average grant-date fair value per share of stock options granted during the three and nine months ended September 30, 2024 wa s $ 16.21 and $ 13.63 per share, respectively.

The Company recorded $ 1.4 million and $ 0.9 million in stock-based compensation in general and administrative and research and development, respectively, for the three months ended September 30, 2024.

The Company recorded $ 0.3 million and $ 0.2 million in stock-based compensation in general and administrative and research and development, respectively, for the three months ended September 30, 2023.

The Company recorded $ 2.6 million and $ 2.0 million in stock-based compensation in general and administrative and research and development, respectively, for the nine months ended September 30, 2024.

The Company recorded $ 0.8 million and $ 0.7 million in stock-based compensation in general and administrative and research and development, respectively, for the nine months ended September 30, 2023.

As of September 30, 2024, there was approximately $ 22.6 million of total unrecognized stock-based compensation related to nonvested stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of approximately 3.1 years.

As of September 30, 2023, there was approximately $ 2.8 million of total unrecognized stock-based compensation related to nonvested stock-based compensation arrangements, which was expected to be recognized over a weighted-average period of approximately 0.9 years.

The Company’s interim income tax provision consists of U.S.

1 unchanged sentence

Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary.

For the three and six months ended June 30, 2024, the Company did not record a U.S.

For the three and nine months ended September 30, 2024, the Company did not record a U.S.

federal or state income tax provision due to current and expected annual net operating losses for the year ended December 31, 2024.

As of June 30, 2023, the estimated annual effective tax rate for 2023, exclusive of discrete items, was approximately 1.94 % of projected pre-tax income.

As of September 30, 2023, the estimated annual effective tax rate for 2023, exclusive of discrete items, was approximatel y 1.96 % of proj ected pre-tax income.

The estimated annual tax expense consists of a provision for federal and state income taxes.

For the three months ended June 30, 2023, due to statutory limitations on the ability to utilize research and development credits and net operating losses to offset year to date taxable income, the Company recorded a tax expense of $ 0.7 million, on a pre-tax income of $ 42.3 million.

For the six months ended June 30, 2023, due to statutory limitations on the ability to utilize research and development credits and net operating losses to offset year to date taxable income, the Company recorded a tax expense of $ 0.7 million, on a pre-tax income of $ 37.5 million.

For the three months ended September 30, 2023, the Company recorded a tax benefit of $ 0.1 million.

For the nine months ended September 30, 2023, due to statutory limitations on the ability to utilize research and development credits and net operating losses to offset year to date taxable income, the Company recorded a tax expense of $ 0.6 million, on a pre-tax income of $ 31.1 million.

Under Section 382 and 383 of the Internal Revenue Code ("IRC"), if a corporation undergoes an ownership change (generally defined as a greater than 50% change in its equity ownership over a three -year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited.

8 unchanged sentences

Significant weight is given to positive and negative evidence that is objectively verifiable.

Based on these factors, including cumulative losses in recent years, the Company continues to maintain a full valuation allowance against its net deferred tax assets as of June 30, 2023.

Based on these factors, including cumulative losses in recent years, the Company continues to maintain a full valuation allowance against its net deferred tax assets as of September 30, 2024.

License Agreement

13 unchanged sentences

The remaining consideration consists of future contingent milestone-based payments and sales-based royalties.

As of June 30, 2024 , all variable consideration under the J&J License Agreement was fully constrained.

As of September 30, 2024 , all variable consideration under the J&J License Agreement was fully constrained.

In August 2023, the Company elected to conduct a Phase 2 trial using PIPE- 307 for patients with multiple sclerosis, which was considered a contract modification under the accounting guidance that added promised goods or services that are distinct at a price that is below the standalone selling price.

3 unchanged sentences

Accordingly, the variable consideration allocated to the Phase 2 trial will be recognized as the study is completed using a cost-based measure of progress and when the amounts are no longer probable of a significant reversal.

As of June 30, 2024 , no amounts had been recognized related to the Phase 2 trial as no additional variable consideration as been received subsequent to the contract modification.

As of September 30, 2024 , no amounts had been recognized related to the Phase 2 trial as no additional variable consideration has been received subsequent to the contract modification.

Net Loss Per Share

The following table sets forth the computation of the basic and diluted net income (loss) per share (in thousands, except share and per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Numerator, basic:

8 unchanged sentences

Net income (loss) attributable to common stockholders

Change in fair value of warrant liability

Change in fair value of put option

5 unchanged sentences

Preferred stock warrant (as converted to common stock)

Preferred stock put option (common stock issued)

Investor rights and obligations

Weighted-average shares used to compute net income (loss) per common share, diluted

1 unchanged sentence

Net income (loss) per share, diluted

For the three and six months ended June 30, 2024, net loss is attributable equally to each share of Class A common stock and Class B common stock and is determined based on the weighted average number of the respective class of common stock outstanding.

For the three and nine months ended September 30, 2024, net loss is attributable equally to each share of Class A common stock and Class B common stock and is determined based on the weighted-average number of the respective class of common stock outstanding.

Weighted-average common shares include shares of the Company's Class A common stock and Class B common stock.

The basic and diluted net loss per share amounts are the same for Class A common stock and Class B common stock.

For the three and six months ended June 30, 2023, there were no shares of Class B common stock outstanding.

The Company’s potentially dilutive securities, which include convertible preferred stock, a common stock warrant, common stock options, common stock reserved under the 2024 ESPP, and a preferred stock warrant have been excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2024 as the effect would reduce the net loss per share.

For the three and nine months ended September 30, 2023, there were no shares of Class B common stock outstanding.

The Company’s potentially dilutive securities, which include convertible preferred stock, common stock options, a common stock warrant, unvested common stock issued upon early exercise of stock options, common stock reserved under the 2024 ESPP, and a preferred stock warrant have been excluded from the computation of diluted net loss per share for the three and nine months ended September 30, 2024 and the three months ended September 30, 2023, as the effect would reduce the net loss per share.

Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potentially dilutive securities, presented based on amounts outstanding at each period end, from the computation of diluted net income (loss) per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

As of June 30,

Convertible preferred stock

The following potentially dilutive securities have been excluded from the diluted per share calculation for the periods presented as they would be anti-dilutive:

Three Months Ended September 30,

Nine Months Ended September 30,

Convertible preferred stock (as converted to common stock)

Common stock options

2 unchanged sentences

Common stock reserved under the 2024 ESPP

Preferred stock warrant

Preferred stock warrant (as converted to common stock)

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

14 unchanged sentences

We completed a Phase 1 clinical trial of PIPE-791 in healthy volunteers in support of clinical development in both IPF and Progressive MS.

We plan to submit a clinical trial application to the Medicines and Healthcare products Regulatory Agency to commence a Phase 1b open-label trial of PIPE-791 to measure the relationship of pharmacokinetics to lung and brain receptor occupancy by positron emission tomography imaging in 2024.

In September 2024, we submitted a clinical trial application ("CTA") to the Medicines and Healthcare products Regulatory Agency ("MHRA") to commence a Phase 1b open-label trial of PIPE-791 to measure the relationship of pharmacokinetics to lung and brain receptor occupancy by positron emission tomography imaging ("PET").

This Phase 1b trial will inform dose selection for our planned future Phase 2 trials of PIPE-791 in IPF and Progressive MS.

1 unchanged sentence

M1R antagonism has been clinically validated in third-party trials in both depression and RRMS by scopolamine and clemastine, respectively.

We have completed two Phase 1 trials of PIPE-307 in healthy volunteers and have initiated a Phase 2 trial of PIPE-307 for the potential treatment of RRMS.

We have completed two Phase 1 trials of PIPE-307 in healthy volunteers, and we are conducting a Phase 2 trial of PIPE-307, which we have named VISTA, for the potential treatment of RRMS.

To our knowledge, PIPE-307 is the most clinically advanced selective M1R antagonist in development.

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We expect our operating expenses to significantly increase as we continue to develop, conduct clinical trials, and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities.

We also expect to incur additional operating expenses as we begin operating as a public company.

We also expect to incur additional operating expenses as we continue operating as a public company.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing and scope of our clinical trials and our expenditures on other research and development activities.

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(ii) the expiration of exclusive marketing rights conferred by a regulatory authority or applicable law (other than patent exclusivity) for such licensed product in such country;

and (iii) ten years after the first commercial sale of such licensed product in such country.

or (iii) ten years after the first commercial sale of such licensed product in such country.

Either party may terminate the J&J License Agreement in the event of an uncured material breach by the other party or a bankruptcy or insolvency of the other party.

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Additionally, we are eligible to receive tiered royalties in the low-double digit to high-teen percent range on net sales of products containing PIPE-307.

We do not have any products approved for sale and we have not yet generated any revenue from product sales.

Operating Expenses

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Certain employee activities that cannot be allocated to any one specific project or management related activities are considered indirect costs.

The following tables summarize our research and development expenses for the three and six months ended June 30, 2024 and 2023.

The following table summarizes our research and development expenses for the three and nine months ended September 30, 2024 and 2023.

The direct external development program expenses reflect external costs attributable to our clinical development and preclinical programs and personnel costs that can be directly attributed to a development program.

The unallocated internal research and development costs include unallocated personnel costs, facility costs, stock-based compensation, laboratory consumables and discovery and research related activities.

Three Months Ended

Six Months Ended

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Results of Operations

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

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

The following table summarizes our results of operations (in thousands) for the periods indicated:

Three Months Ended

Three Months Ended September 30,

License revenue

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Total operating expenses

Income (loss) from operations

Loss from operations

Other income (expense):

Interest income

Interest expense

Change in fair value of warrant liability

Change in fair value of investor rights and obligations liability

Other expense, net

Total other income

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

License revenue.

There was no revenue recognized for the three months ended June 30, 2024.

License revenues were $50.0 million for the three months ended June 30, 2023 and was solely attributable to the upfront payment received from J&J pursuant to the J&J License Agreement.

Loss before income taxes

Benefit from income taxes

Research and development expenses .

Research and development expenses were $7.9 million and $9.5 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease of $1.6 million was primarily due to $3.0 million of contractual milestone payments paid to our consultants during the three months ended June 30, 2023 upon the receipt of the upfront payment from the J&J License Agreement and a $1.8 million decrease in manufacturing expenses for PIPE-791.

Partially offsetting these decreases was the following:

$1.0 million increase in contract research organization costs related to our on-going Phase 2 clinical trial for PIPE-307 for the potential treatment of RRMS and our completed Phase 1 healthy volunteer clinical trial for PIPE-791,

$1.0 million increase in expenses for toxicology studies primarily for PIPE-791,

$0.5 million increase in personnel-related expense, and

$0.4 million increase in stock-based compensation.

Research and development expenses were $9.7 million and $6.5 million for the three months ended September 30, 2024 and 2023, respectively.

The increase of $3.2 million from period to period was primarily due to a $1.1 million increase in contract research organization costs primarily related to our ongoing VISTA Phase 2 clinical trial for PIPE-307 for the potential treatment of RRMS, a $1.5 million increase in expenses for toxicology studies primarily for PIPE-791, a $0.6 million increase in personnel-related expense, and a $0.7 million increase in stock-based compensation.

Partially offsetting these increases was a $0.7 million decrease in manufacturing expenses for PIPE-791.

General and administrative expenses .

General and administrative expenses were $3.0 million and $1.6 million for the three months ended June 30, 2024 and 2023, respectively.

General and administrative expenses were $3.3 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively.

The increase of $1.7 million was primarily due to a $0.2 million increase in consulting and legal expenses, a $1.1 million increase in stock-based compensation, and a $0.3 million increase in personnel-related expenses.

Interest income .

Interest income was $2.0 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively.

The increase was due to an increase in funds invested in marketable securities and an increase in the yields earned on our marketable securities from the three months ended June 30, 2023 to the three months ended June 30, 2024.

Change in fair value of investor rights and obligations liability.

During the three months ended June 30, 2023, we recognized a $2.9 million gain related to the decrease in fair value of our investor rights and obligations liability as a result of reducing the Series B convertible preferred stock premium liability to zero.

This was the result of the termination of certain rights due to the change in a specified limited partner’s status in May 2023.

Provision for income taxes .

For the three months ended June 30, 2024, the Company did not record a U.S.

federal or state income tax provision due to forecasted pretax operating losses for the year ended December 31, 2024.

For the three months ended June 30, 2023, the Company recorded a tax expense of $0.7 million on pretax income of $42.3 million.

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

Interest income was $2.7 million and $1.7 million for the three months ended September 30, 2024 and 2023, respectively.

The increase of $1.0 million was due to an increase in funds invested in marketable securities and an increase in the yields earned on our marketable securities from the three months ended September 30, 2023 to the three months ended September 30, 2024.

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

The following table summarizes our results of operations (in thousands) for the periods indicated:

Six Months Ended

Nine Months Ended September 30,

License revenue

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License revenue .

There was no revenue recognized for the six months ended June 30, 2024.

License revenues were $50.0 million for the six months ended June 30, 2023 and was solely attributable to the upfront payment from J&J pursuant to the J&J License Agreement.

There was no revenue recognized for the nine months ended September 30, 2024.

License revenues were $50.0 million for the nine months ended September 30, 2023 and was solely attributable to the upfront payment from J&J pursuant to the J&J License Agreement.

Research and development expenses .

Research and development expenses were $15.7 million and $13.1 million for the six months ended June 30, 2024 and 2023, respectively.

The increase of $2.6 million was primarily due to a $3.0 million increase in contract research organization costs primarily related to our on-going Phase 2 clinical trial for PIPE-307 for the potential treatment of RRMS and our completed Phase 1 healthy volunteer clinical trial for PIPE-791, a $1.9 million increase in expenses for toxicology studies primarily for PIPE-791, a $1.1 million increase in personnel-related expense, and a $0.5 million increase in stock-based compensation.

Partially offsetting these increases was the following:

$2.9 million of contractual milestone payments paid to our consultants during the six months ended June 30, 2023 upon the receipt of the upfront payment from the J&J License Agreement and a $1.7 million decrease in manufacturing expenses for PIPE-791.

Research and development expenses were $25.4 million and $19.6 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase of $5.8 million was primarily due to a $4.1 million increase in contract research organization costs primarily related to our ongoing VISTA Phase 2 clinical trial for PIPE-307 for the potential treatment of RRMS and our completed Phase 1 healthy volunteer clinical trial for PIPE-791, a $3.4 million increase in expenses for toxicology studies primarily for PIPE-791, a $1.7 million increase in personnel-related expense, and a $1.2 million increase in stock-based compensation.

Partially offsetting these increases was a $3.0 million decrease in consulting expense associated with contractual milestone payments related to the receipt of the upfront payment from the J&J License Agreement and a $2.4 million decrease in manufacturing expenses for PIPE-791.

General and administrative expenses .

General and administrative expenses were $5.2 million and $3.1 million for the six months ended June 30, 2024 and 2023, respectively.

General and administrative expenses were $8.4 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase of $3.8 million was primarily due to a $1.3 million increase in consulting and legal expenses, a $1.8 million increase in stock-based compensation, and a $0.5 million increase in personnel-related expenses.

Interest income .

Interest income was $3.6 million and $1.1 million for the six months ended June 30, 2024 and 2023, respectively.

The increase was due to an increase in funds invested in marketable securities and an increase in the yields earned on our marketable securities from the six months ended June 30, 2023 to the six months ended June 30, 2024.

Interest income was $6.4 million and $2.8 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase of $3.6 million was due to an increase in funds invested in marketable securities and an increase in the yields earned on our marketable securities from the nine months ended September 30, 2023 to the nine months ended September 30, 2024.

Change in fair value of investor rights and obligations liability.

We recognized a $2.9 million gain related to the decrease in fair value of our investor rights and obligations liability for the six months ended June 30, 2023 as a result of reducing the Series B convertible preferred stock premium liability to zero.

We recognized a $2.9 million gain related to the decrease in fair value of our investor rights and obligations liability for the nine months ended September 30, 2023 as a result of reducing the Series B convertible preferred stock premium liability to zero.

This was the result of the termination of certain rights due to the change in a specified limited partner’s status in May 2023.

Provision for income taxes .

For the six months ended June 30, 2024, the Company did not record a U.S.

For the nine months ended September 30, 2024, the Company did not record a U.S.

federal or state income tax provision due to forecasted pretax operating losses for the year ended December 31, 2024.

For the six months ended June 30, 2023, the Company recorded a tax expense of $0.7 million on pretax income of $37.5 million.

For the nine months ended September 30, 2023, the Company recorded a tax expense of $0.6 million on pretax income of $31.1 million.

Liquidity and Capital Resources

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We also expect to incur additional costs associated with our operating as a public company, including significant legal, accounting, investor relations, director and officer insurance, and other expenses that we did not incur as a private company.

Through June 30, 2024, we have funded our operations primarily through the issuance of convertible promissory notes, the private placements of our convertible preferred stock, the J&J License Agreement, our Loan Agreement with First Citizens, and net proceeds from our initial public offering ("IPO").

Through June 30, 2024, we have raised gross proceeds of approximately $194.0 million from the issuance of our convertible preferred stock and promissory notes and have received an upfront payment from the J&J License Agreement of $50.0 million.

Through September 30, 2024, we have funded our operations primarily through the issuance of convertible promissory notes, the private placements of our convertible preferred stock, the J&J License Agreement, our Loan Agreement with First Citizens, and net proceeds from our initial public offering ("IPO").

Through September 30, 2024, we have raised gross proceeds of approximately $312.8 m illion from the issuance of our convertible preferred stock, promissory notes, our Class A common stock in the IPO, and have received an upfront payment from the J&J License Agreement of $50.0 million.

Upon the closing of the IPO, the Company’s outstanding convertible preferred stock automatically converted into Class A common stock or Class B common stock, as applicable.

In April 2024, we raised approximately $107.9 million in net proceeds from the IPO of our shares of Class A common stock.

As of June 30, 2024, we had an accumulated deficit of $92.6 million.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $218.7 million.

As of September 30, 2024, we had an accumulated deficit of $102.8 million.

As of September 30, 2024, we had cash, cash equivalents and marketable securities of $213.9 million.

Management believes our existing cash, cash equivalents, and marketable securities will be sufficient to support our operations for at least 12 months from the date of this Quarterly Report on Form 10-Q.

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The following table sets forth a summary of our cash flows for the periods indicated (in thousands):

Six Months Ended

Nine Months Ended September 30,

Net cash provided by (used in) operating activities

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Operating Activities

Net cash used in operating activities was $16.5 million for the six months ended June 30, 2024, which primarily related to our net loss of $17.4 million and $0.1 million change in operating assets and liabilities, partially offset by $0.8 million of non-cash charges such as stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense.

Net cash provided by operating activities was $35.4 million for the six months ended June 30, 2023, which primarily related to our net income of $36.7 million from the J&J Licensing Agreement, $0.9 million of non-cash charges such as accretion of debt discount and debt issuance costs, stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense, and $0.6 million change in operating assets and liabilities.

Net cash used in operating activities was $22.6 million for the nine months ended September 30, 2024, which primarily related to our net loss of $27.7 million, partially offset by $2.6 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense and a $2.4 million change in operating assets and liabilities.

Net cash provided by operating activities was $30.1 million for the nine months ended September 30, 2023, which primarily related to our net income of $30.5 million and a $1.8 million change in operating assets and liabilities, partially offset by $2.2 million of non-cash charges such as accretion of debt discount and debt issuance costs, stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense.

Investing Activities

Net cash used in investing activities was $30.2 million for the six months ended June 30, 2024, which primarily related to $99.6 million of purchases of marketable securities and $0.3 million of purchases of property and equipment, partially offset by $69.7 million of sales and maturities of marketable securities.

Net cash used in investing activities was $35.1 million for the six months ended June 30, 2023, which primarily related to $67.8 million of purchases of marketable securities and $0.1 million of purchases of property and equipment, partially offset by $32.8 million of sales and maturities of marketable securities.

Net cash used in investing activities was $60.4 million for the nine months ended September 30, 2024, which primarily related to $172.1 million of purchases of marketable securities and $0.3 million of purchases of property and equipment, partially offset by $112.0 million of sales and maturities of marketable securities.

Net cash used in investing activities was $74.6 million for the nine months ended September 30, 2023, which primarily related to $119.9 million of purchases of marketable securities and $0.1 million of purchases of property and equipment, partially offset by $45.4 million of sales and maturities of marketable securities.

Financing Activities

Net cash provided by financing activities was $108.3 million for the six months ended June 30, 2024, which primarily related to $108.2 million of net proceeds from the issuance of common stock in the Company's IPO and $0.1 million of proceeds from the exercise of stock options.

Net cash provided by financing activities was $46.2 million for the six months ended June 30, 2023, which primarily related to $49.9 million of net proceeds from the issuance of Series C convertible preferred stock, partially offset by $3.8 million of principal payments on debt.

Net cash provided by financing activities was $108.4 million for the nine months ended September 30, 2024, which primarily related to $107.9 mil lion of net proceeds from the issuance of common stock in the Company's IPO and $0.1 million of proceeds from the exercise of stock options.

Net cash provided by financing activities was $56.5 million for the nine months ended September 30, 2023, which primarily related to $60.1 million of net proceeds from the issuance of Series C convertible preferred stock and $0.1 million of proceeds from the exercise of stock options, partially offset by $3.8 million of principal payments on debt.

Funding Requirements

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Our contractual obligations and commitments relate to our operating leases that relate primarily to our leases of office and laboratory space in San Diego, California.

Our total contractual commitments for our lease agreements amount to approximately $7.6 million as of June 30, 2024.

Our total contractual commitments for our lease agreements amount to approximately $7.8 million as of September 30, 2024.

We enter into contracts in the normal course of business for contract research services, contract manufacturing services, professional services and other services and products for operating purposes.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements